 This is an enormous effort to make to try to figure out how to make this transformation, how to find a pathway to get from where we are, which is in the neighborhood of 80 to 90 percent based on fossil fuels to some number much lower. Three years ago, we undertook a project in which we were looking at the transformation of the U.S. economy and dubbed that the search for a secure low-carbon pathway. We recently undertook a project with the MacArthur Foundation, a project was called Asia's Response to Climate Change and Natural Disasters. There were a few copies out on the side table that you can take, but we probably better to take it and download it, in which we tried to apply that concept to a number of countries in Asia, including China, and realized that it was actually a helpful way to think about this question, to think about the key issues that you have to face in making this transformation of your economy. As a result of that, we continued the project with funding from the Energy Foundation. We do very much appreciate their support to look specifically at China in greater depth and try to understand what are the key drivers and interests that will shape the pathway for China's energy future. And I think there's no reason to think that this audience doesn't understand fully well that that's probably the key issue in looking in the future in terms of energy and climate is what are the choices that China will make and what are the policies that they will follow. So we're really excited about the program we have today. We have, as our keynote speaker, Zhang Kejun, who will be joining us later, has been doing an extensive amount of modeling work on the Chinese economy to look at the trade-offs and look at the ways in which to achieve a secure low-carbon pathway. But we also wanted to talk about some of the issues in more detail, and that's what our two panels will be doing this morning and then this afternoon. This morning, we've got a great lineup of people. We added one to the agenda that we were uncertain whether he was going to make it. So we've got a very full panel, so I would encourage our panelists to be brief. I heard about this new program of 20 slides, 20 seconds per slide. I don't know if you can quite achieve that, but that gives you six and a half minute presentations, but we'll give you a little bit longer than that. I'm only kidding, guys. Don't suddenly get worried. Our first speaker, and the bios are there and available, so I won't go through all of the details, but we wanted to touch on some of the key low-carbon strategies in the first panel. So the first speaker is Kate Jackson, Senior Vice President of Research and Technology with Westinghouse to talk about nuclear power in China. And Westinghouse, of course, is extremely well-placed, having been awarded for contracts to start building a new generation of technology in China. So Kate, why don't you go ahead and start, and are you queued up? Okay, good morning. I want to first thank CSIS. These programs are really wonderful. It's a great opportunity to get a range of people who have interests in multiple topics from different perspectives to come together, and I think that's what's so powerful about these conversations. So good morning. I'm Kate Jackson. I have only recently re-entered the nuclear industry. I've been with Westinghouse two times now. I'm a re-tread like many folks at Westinghouse. Started at the early part of my career, went off to the Tennessee Valley Authority for about 17 years and now have been back a couple of years. And so I'm kind of relearning the nuclear industry as I go. I'm just going to give some brief kind of background material. The world population is going to increase 25 percent in the next 20 years. Clearly, that's an enormous growth in energy requirements. In the United States and in many developed Western world countries, much of the demand is because we buy more things that are powered with electric power. I wandered around here this morning trying to find a place to plug my computer in. And there are hardly any plugs in this room. But so our demand is fairly predictable, whereas in the other countries that are rapidly developing like China and India, the growth is unimaginable. The access to electricity is so powerful, so necessary, and driven by all kinds of things that we can't predict. And the cars is my example. There are going to be 100 million new vehicles by 2020 in China. Obviously, driving those not on gasoline but on electricity will dramatically change the profile of how GDP electricity consumption will change over time. That energy consumption by 2030 and the worldwide is expected to increase by 45 percent. In China, the energy demand through 2030 is going to increase as much as 95 percent with a compounded annual growth of somewhere between 2.8 and 4 percent. That's 40 percent of the total world energy demand is going to be based in China. And because that's such an important component of energy demand, clearly the issues in China are astonishing. They'll roughly between now and 2030 double their consumption of coal, more than 50 percent increase consumption of coal, more than double their consumption of oil, and almost double global greenhouse gas emissions. And at that point, China will account for roughly 28 percent of the global emissions. And so obviously looking for low emission platforms for that growth in the economy is critically important. The China electricity sources are similar to the world sources. Fossil is 70 percent, oil is 20 percent, hydro is 6. Gas is 3 percent, nuclear is 1 percent. It's not very large. So it's although it is a significant investment in China, the energy consumption is so large that it's not a huge percentage. The China Green Energy Commitments in the Copenhagen conference really were focused on reduction of CO2 per GDP. So it's kind of a density indicator of 40 to 45 percent through from now until 2020. And the energy plan said that new energy, meaning non-fossil energy, will be increased dramatically. That's renewables. That's all kinds of smart grid technology, grid technology itself, and increased nuclear capacity dramatically by 2020. Pressurized water reactors, which is what Westinghouse Designs Cells develops, maintains, fuels will be mainstream, but not the only reactor type. And very important to China is having indigenous capability. So it's the ability to fuel those reactors in country, build all the components, be able to construct and maintain those plants. Domestic manufacturing plants are going to be maximized. So the whole plan is to develop self-reliance and then eventually begin to compete internationally. Nuclear itself in China. There are currently 12 operating units, two pressurized heavy water reactors, and 10 operating pressurized water reactors, and 24 under construction, and several more to commence fairly shortly. Four units by Westinghouse. There are two at Tenmen and two at Haiyang. I'll show a map in just a moment. By 2020, forecasted to be somewhere between 80 gigawatts operating and 50 gigawatt electric under construction. A gigawatt electric is roughly one large power unit. So, you know, the 24 there will be online, 80 total operating by 2020 and 50 more by under construction. And then 200 plants operating by 2030 and 400 plants operating by 2040. So total world nuclear right now is about 440 plants. It's huge. That's huge, the program that China has. So what influenced the People's Republic of China's decision to consider the AP1000, which is the design that Westinghouse, the new design that's just been licensed and is the first design Gen 3 plus plant that has been certified by the U.S. Nuclear Regulatory Commission? So part of it is that it's advanced nuclear technology. China has some Gen 2 and Gen 1 plants, which are older plants, large loop type plants. And they very much wanted to begin to base their next phase of growth and then their indigenous capability and then their competitive capability based on the next generation, so that Generation 3. The new passive safety features I will speak about in a moment led to a smaller design, simplified lots of changes in the design itself to make it safer and easier to operate. The smaller nuclear island, the smaller number of safety components, and what that does is drives less risk in the supply chain, it drives easier construction, easier maintenance, standard maintenance. And fundamentally, a different approach to construction, which I'll show in just a minute, but it's have modules, almost like our children play with Legos. It's a new way of constructing a plant and I cannot overemphasize how different this is. When our customers who have built and maintained plants in the United States for 50 years, come and watch the new design, they're astonished that it is not reinforced concrete, it's not stick built, doesn't have to be redesigned for every plant site. You build Lego chunks, equipment already in them and you fab them on site and put them together. All of this reduces the schedule and cost. Also, critical to the selection of Westinghouse in China was our willingness to buy where we build. That's always been our strategy. We don't come to a country with a giant supply chain already linked to us. What we do is look for where we can localize that supply sourcing. That was critical for the Chinese decision because of their goals of indigenous capability. As they looked at Westinghouse in our history in transferring technology to France, transferring technology to Korea, clearly we had a track record for the ability to do that. That was very important. There's a whole separate contract. There's the contract for the plants. There's a whole separate contract for technology transfer. That's not just with us, our construction partner and part owner Shaw company also has a technology transfer to transfer the architect engineering construction and building technology. Also, it was the existing AP1000 was already had a design certification from the Nuclear Regulatory Commission which was very important to the Chinese Nuclear Regulatory Group and they're working very closely together. Lots of flow of information obviously from the NRC to China but now as the construction is ongoing, site safety, site inspection, construction inspection, turning those drawings into reality and construction in concrete. There's lots of information flowing back to the NRC with respect to how things are going, how that construction process is ongoing. I know that was more than 20 seconds for that slide. Okay, so here's a picture of the AP1000. It is the safest, most economic nuclear power plant now available. It's a simplified design, as I said, enhanced by the use of passive safety systems. Okay, I've said that. Well, what the heck does that mean? It means things like gravity. It means natural circulation, much like when you have a tea cup that the heat, the hot comes up to the surface, cools off and then it flows back down. The cooler tea flows back down to the bottom and sets up a natural circulation cell. The cooling in any emergency, postulated emergency, would be based on things like the heavier water because cooler flows downward, cools the containment, condensation, convection cools the containment. You need many fewer pieces of equipment and fewer emergency systems as a result of all of these. We spent roughly a decade proving that gravity would work in these complex systems to the Nuclear Regulatory Commission. It's a completely new way to manage a design, to manage postulated accidents. And so there was lots of integrated testing that had to go on to say, okay, this isn't gonna be driven by pumps and valves and have lots of motors and extra things. As you eliminate all those things, you gotta continue to prove that the safety is achievable. So this plant is 1100 megawatts. Clearly engineers named the plant, AP1000, it's 1117 megawatts. So it's two-loop plant and it's very small footprint, so things are very carefully designed for operability and maintainability. So the key factor is to standardize a design that's simplified and the design itself is simple. So all the passive safety features allowed, as I said, lots of engineered safety systems to go away. There's no offsite power that's required for 72 hours after any postulated accident. That means you don't need diesel generator for safety. You don't need all those pumps and valves and piping. Significant safety, the water that cools the containment is in a giant tank up above the plant. So if there were an incident that would by gravity drain down and cool and flood the reactor cavity. Construction is simplified through modularization, which I mentioned a little bit ago, also procurement. So as you standardize these plants, you're picking from a bin that has SKUs in it that you know you can fill. So there's all those standard parts or pieces are taken so you can simplify that whole supply chain. All your suppliers then can simplify what they do because there aren't parts that are different for every single unit and that's the way existing nuclear plants are. In working for the Tennessee Valley Authority in the heyday of nuclear, TVA ordered one of every kind of plant it could possibly have. And so it was there as a federal agency to demonstrate that nuclear power could work. And so there was our regular pressurized water reactor. There was a fancy ice containment that had ice down in the shield between the two layers of the containment building. There was a boiling water reactor. 17 other reactors were planned, all of which later were canceled, but it was every plant's different. So you can't train staff with one set of standard operating procedures. There you don't share lessons as easily from one unit to another or from one utility to another. So the whole plan here is to have standard, almost cookie cutter plants. That's true in China. The plants that we've sold in the United States will be exactly the same. So we've also sold six in the United States and some of that construction is currently ongoing in the Southeast. So simple, I keep saying simple. So the fewer resources that you use, the more environmentally sustainable the design. Clearly having nuclear not have emissions with respect to sulfur dioxide and nitrogen dioxide and all of the greenhouse gas emissions is important. But as you look at this slide, you can see that not using as many components is important as well. So 50% fewer valves, 35% fewer pumps, 80% less pipe, 45% less seismic building volume, which is a huge issue, particularly in countries like China where construction is going so fast that the availability of high quality concrete sometimes is critical path. 80% less cable. And then the little embedded drawing in the upper right-hand corner shows the footprint of a generation two old-style Westinghouse pressurized water reactor design compared to an AP1000. And so it's just a smaller footprint. It takes up less land. It takes up fewer resources. It's easier to site. So I talked about the modularization. Construction is forecasted to be 50 months and then another six months to get the plant synced with the grid and all thoroughly tested. That's about three years faster than the average construction historically. And the reason that that's possible is you can see sort of two pathways here. The bottom one is you license the site and you begin to do all the site work, all the surveying, water intake structures, roads, base mat, all those things can be worked in parallel with a modular plant that builds bits and pieces of these modules, ships them to site either by boat or train or truck. And then a fabrication facility is built to prefab those modules and then they're lifted into place like the Lego blocks that I said. So one of the beauties of this is that if you get behind because you're struggling with preparing the concrete that you're gonna begin to load the modules on, you can still be building modules. So you can make up that construction schedule and you're not working always in cereal and that's very powerful. The China projects themselves, okay, there's a little map. The Haiyang project is there just southeast of Beijing and then Sandman is south, mostly south of Shanghai. Four units, two at each of those locations. The first two units, there's Sandman one, delayed by six months, it's Haiyang one, then delayed by six months is Sandman two, delayed by six months is Haiyang two. And so we're just kind of rolling through all of these projects. And the first two units will be operational in 2013 and then two units are operational in 2014 and we are on time and on schedule. And on cost and that's a new thing for the nuclear industry. And as we see some of our competitors, people constantly say, do you look at your competitors and if they're struggling with schedule and cost, is that a good, does that make you feel good? No, it makes us feel terrible because any place that there's a struggle with nuclear, we all have to address the issues or the lessons that they're learning or what the challenges are that those organizations are facing. So we don't ever want to hear anybody's late. We just want to be a little better than our competitors. I mentioned how important technology transfer was. It was really a cornerstone of the negotiations in China and we are transferring our technology to the state nuclear power technology corporation and it is the most significant and advanced. I mean, it's everything. We constantly have Chinese nationals working with us in the United States at manufacturing plants, at our supply chain plants and then also working with their staff and training staff in China. It is the goal of the Chinese, this Chinese company to be able to extend the design into a 1400 megawatt plant, a 1700 megawatt plant, some in conjunction with us and some not. There will be follow on plants. There are already eight of them planned. There will probably be many of those 200 more plants will be AP1000s or AP1400s. However, our scope, Westinghouse scope decreases over time so that we are eventually not providing scope services other than potentially as a subcontractor. So clearly, as all those plants are there, we provide services, we provide fuel, we want to participate and we are working to establish joint ventures with companies in China to be able to do that. But the whole range of things from nuclear island design and engineering to instrumentation and control to fuel operation and maintenance, core design and manufacturing cladding parts for the fuel and also architect engineer technologies. These are just some pictures. The reactor vessel set and the upper left hand side set in three rings and a bottom piece and a top piece, very different than the welded, onsite welded each panel separately. The bottom right picture shows one of the continuous pores of the base mat concrete. Those are 50 hour pores and the first one that we did, there were absolutely no cracks in it whatsoever, suggests great technology transfer, great working with the Chinese folks who are working onsite, good design, lots of preparation. The second pore was six hours shorter. The third pore at the third site was shorter. So every time that Chinese and we are improving how we're building these plants. I just want to show a video to show that it really is different. This is one of the 276 modules that there are. There are 122 structural modules and 154 piping and mechanical equipment modules. This one is the CA-20, it's the largest module. That's as big as a five-story building. It weighs 856 tons. You can see the big counterweight there on the giant crane. There are some tiny little people running around in there. So you can get a bit of sense of scale. So some of these modules have steam generators in them. They have pipes in them, they have cable traces in them and they get set in pieces one after another. And the module is built onsite at the module factory. It's just incredibly different. It's very exciting. So the second, one of the CA-20s that was built was built in significantly less time than the first one. The second containment vessel head placement was significantly faster than the first one. And so transferring those lessons learned is going to be really important. I talked about the lessons learned. Each thing that we've done, the base mat pours, the ultra-large steam generator forgings and reactor vessel forgings were done in significantly less time. There are challenges though. So sharing those lessons learned among those sites. We have multiple customers in China sharing among them, recognizing that each of them is trying to stake out a territory for competition in the future, internal to China, but also establishing platforms for competition over the long term. Staffing requirements, educating folks in China that can operate, can maintain, understand the material science, quality engineers. So that's ongoing and just the sheer magnitude of construction moving that many people and cranes and getting the steel availability is clearly a challenge. Just a couple of words about Westinghouse. We provide fuel, fuel services, operation plant services worldwide. We are only nuclear. Those of you who have Westinghouse televisions, that's not us. Westinghouse Christmas lights, that's not us. We constantly get them back at this time of year when they're not working, but unfortunately that's no longer us. We don't own the Circle Bar W brand, we just own the nuclear space of it. Nearly 50%, 50, 50% of nuclear power plants in operation worldwide and nearly 60% in the United States are based on Westinghouse technology. There are 15,000 employees. We've hired about 1,800 people every year for the past five years or about 750 planned to hire this year in 17 countries around the world. So someone said to me, well, you know, I really want to work for Westinghouse, but I don't want to work in Pittsburgh. I said, okay, have your choice. You can pretty much go anywhere. There are four product line services to keep plants operating, shorten outages, improve the amount of power that you get out of plants, extend plant life, nuclear power plants, which is the new plant business, nuclear fuel, which is all about provision of fuel and decreasing fuel leakers having better and better fuel. Westinghouse provides fuel for roughly every kind of reactor that there is. Gas reactors, Russian reactors, boiling water reactors are competitors, reactors, and our own. We own roughly 50% of the fuel market. We're also working on advanced reactors. I talked about the 1,400 and 1,700 in conjunction with China. In addition, looking at high-temperature gas reactors, burner reactors that are fast spectrum reactors, and then a small passive plant. I'm gonna skip that one, and I'll skip that one. So that's it, thank you. Yep. Thanks, Kate, that was great. I would encourage you to keep notes of questions you want to ask the different speakers because we do have a number of speakers and it's quite a wide range of topics. So by the time we get through the last one, you may have forgotten where we were. Our next speaker is Kang Wu, who is with the East West Center in Hawaii. Kang is a leading expert on oil and gas industry in China, and we thought it would be useful to have him talk a little bit about the unconventional gas discussion that's going on in China now. As you know, in the US, unconventional gas has really changed the picture, and so the real question, and many people believe that China can have a similar experience, and we thought that perhaps Kang could help us to understand where things stand and what do we know. Good morning, everyone. Thank you, Davey. I am very happy to be here and for the invitation of CSIS to share my views with you. And as Davey mentioned, I cover a bunch of issues in China, particularly oil and gas. Today that for a short period of time, what I'm going to do is... Today's topic is supposed to be low carbon potentials for China, so we look at the natural gas and conventional gas as one of the sources of the potentials. Of course, this is not entirely carbon-free anywhere or aware of that. That's why, for what I... In the next few minutes, what I'm going to do is I kind of update you a little bit about the current situation of unconventional gas in China and then move to a little bit bigger topic about the role of natural gas in China's overall energy structure and the contribution to the low carbon thing that we're going to hear more from our main speaker today. For those of you who are familiar with the topics, there are kind of three types of unconventional gas, mainly not exclusively. There is something called tight gas and there is something called the Coben-Methane CBM and there is a shale gas. In case of China, tight gas has been produced for about 10 years already. They are part of the natural gas numbers, natural gas data you've been seeing all the time. So they have already been there about 20% of the production. Usually people, I'm going to skip that, I'm focusing on CBM and shale gas with potential in China. I do have to separate them because they are at different stages of developments. First about the CBM, the resources potential is very, very large and even bigger than the US, if you believe in the numbers. We're talking about 13,300 TCF trillion cubic feet of resources of the CBM in China. But I just want to say that when you're down to the so-called proven reserves of the CBM in the country, it's only 2.2. So the difference between the resources and the proven reserves are very big, indicating that China has a long way to go to developing the resources. I'm going to skip the details about where the resources are located in case there are questions. In terms of shale gas, very similar. And there are different estimates of shale gas resources in China. There is no proven reserves. The proven reserves is zero so far because they just started the exploration in shale gas. Then the resources are also in a range of somewhere 1,000 TCF to something like 1,600 TCF in China. So again, huge numbers. But the work has not started yet. So in terms of that, now let's move to the production side. And here are the huge difference between the CBM, cobalt methane, versus shale gas in China. The cobalt methane in China has about a little over 15 years of development experiences already. They started in 1995 when China looked at the US and the US had a huge co-industry, had a huge cobalt methane production, which at that time was bigger than China's entire conventional natural gas production. So they looked to the US and to other countries like Australia for the potential, for the possibility of developing China's CBM industry. But the results are very disappointing for the past 15 years. And there are many reasons which I probably will not go over all the reasons unless I have some time. And so right now, very simple, that China produced a bigger amount of CBM. The volume is what we call about 7 billion cubic meters, 7 BCM. And out of that 7 BCM is only a 1 BCM is actually produced from commercial wells. Even though China drilled about 4,000 wells already and surface drilling. And another 6 BCM, billion cubic meter is actually from the extraction of the coal mines, coal mines extraction, which is pretty much flared. It's not really much utilized. And production of a shale gas, zero right now. So just the status of that. Then after, now I move back to CBM again in terms of consumption and distribution. Because of the 15 years of the development, they have done a lot of work in this area, but still very much underdeveloped. And out of the, whatever the production in China is a mere about 30% is being consumed. Another 70%, 70% really kind of flared. And mainly because they're produced by coal mines and the first job of the coal mines is really extract coal by methane and release it. So they can make it a little safer. And so they need to improve not only the overall production level, but also the ratio of the consumption. Distribution of CBM is a big issue in China. This is one of the obstacles why in the past 15 years it didn't do very well. Because CBM, the cost of developing the pipelines for CBM is very, very expensive. And it's a chicken egg problem that you need a bigger CBM production to be able to justify the long distance pipeline to distant cities. Then you need the pipeline infrastructure to justify upstream investment. So they go on and on like that. And in the meantime, China's overall infrastructure, particularly 15 years ago of the natural gas infrastructure is very much lacking, which is another obstacle. As a matter of fact, for even though today, China's length of the natural gas pipelines perhaps is about 20% and less of the US, 10 to 20%. Even that is kind of built 80% of that infrastructure we've seen today, which is much bigger than before. 80% was built after 1995. So you can imagine 15 years ago when China started CBM, the infrastructure was very much kind of in shortage. And that was the reason why. So you cannot develop your own long distance pipelines. You cannot connect to the existing ones because it was nonexistent. Of course, things have changed. That's why the next 15 years may be different. In terms of the shale gas distribution, it doesn't exist just like production. So there is a little bit of a CBM economics in China. This has something to do with overall natural gas pricing regime in the country. Again, this is one of the impediments why CBM was not very well developed because Chinese natural gas price regime is very much regulated, fragmented, and very much kind of depressed in many sense. Although there is a dilemma. If you set the prices too high, consumer cannot pay. But overall, natural gas pricing was regulated and depressed and that also hindered the development of CBM for the past 15 years. But that has improved quite a bit in the past several years. And China continued to reform the natural gas regime and that certainly in many ways helping the unconventional gas, both copper methane and shale gas. And other numbers suggest that the current CBM economics are right in the edge of the natural gas price regime. So they are kind of encouraging if you also consider the government support, which I'm gonna cover a little bit later. And shale gas economics is very hard, very difficult to gauge at this moment. However, if you use CBM as a guidance, there is a chance that the shale gas may also can become economical if the other issue is being solved. Now the players, the main players a little bit, kind of again different among these two types of gases. In the CBM, you have a long history of development and without going too much to the details, today you have the major players in a CBM industry in China is a PetroChina and you have China United Copper Methane Corporation, CUCBM and you have the coal mines, individual large coal mines and then you have a bunch of like a dozen, more than a dozen foreign companies. They have contracts with both PetroChina and CUCBM at present. So we have a number of companies that in case you are a green dragon energy, Far East energy from here and you have Fortune Oil in Hong Kong, Asian American company, there's a long list of the companies and they share the contract with both PetroChina and CUCBM. The provinces that this contract involved mainly in the North China Shanxi province and also neighboring Shanxi province but also in Southwest provinces like Guizhou and Yunnan provinces and in the eastern part of China like Jiangsu province. So there's all over the place but you can see that it's pretty much where the coal resources concentrate. Sheol gas, the player's a little bit different. Sheol gas has nothing to do with coal at least. So the major players are the main state oil companies in China. So you have a CNPC PetroChina again, you have a SenoPak, now you have CNAC and CNOC which is an interesting player. Part of the reason CNOC has become important today and it's not only because of the Chesapeake sort of investment they made just two weeks ago but also because after one of the major players, the China United Cobain Methane Corporation after PetroChina left them three years ago, and they kind of disorganized and they badly need the new kind of blood, new input from other and CNAC expressed interest in joining COCBM. So you can see that suddenly CNAC as offshore company now is jumping in a field to become a player and then you had foreign companies. So because sheol gas started only last year, so unlike CBM, you have over a dozen small companies but also like Shell and Chevron among them for the CBM. But in Shell gas is more currently is mainly the major foreign companies and some Australian companies like Shell, BP and Chevron and also Arrow Energy which is now bought by CNPC and Shell and also spin off of Arrow Energy, Dart Energy in the area. So you have a selective, you have a few foreign companies. It had a cleaner start because everything is no history for this development. Of course PetroChina is already in Canada looking for these kind of experiences of Shell gas and CNAC I already mentioned and CNPC also as mentioned in Australia. In terms of the policy support that government today have pretty much systemized the policy support for CBM. Although the CBM players still believe that it's not enough. There's a few things. The most important one is like value added tax. It's kind of there is reimbursement, accelerated depreciation, there is direct subsidies of the price and resource tax exemption and income tax exemption and reduction. And Shell gas, that's applied for CBM so far and Shell gas pretty much have a similar, although it's not quite final yet but expected to have a similar, enjoyed a similar kind of policy benefits. So the last thing about this one is the future growth. Where China will go? And I know that the units can be a problem that I mentioned seven BCM of the production of CLCBM. There are different numbers reported by China even planned by the authority. Some of them very, very sort of ambitious. For instance, one of the targets in the medium long-term program in China, energy development, saying that by 2020 they were gonna produce a 50 BCM, 50 BCM of copper methane only. So think about it, China's gas production is only 83 something BCM last year. So 50 is a huge number and I think it's really ambitious. But PetroChina and CentralPak now has a more realistic target. CNPC has a target about 10 BCM by 2020 only for CBM. And CentralPak has kind of a 2.5 BCM of unconventional gas combining CBM and Shell gas together. And then you have all kinds of other sort of reports about the targets. And basically what I'm looking at is my base case kind of projection following the production plans of the individual players. I'm just gonna give you a reference number because I'm gonna use this number a little bit later in a minute, that I'm looking at CBM roughly about 20 BCM by 2020 and Shell gas is about eight BCM under 10. So eight BCM by 2020. So we're looking at 29 BCM by 2020. I have a high case in the low case, I'm not gonna show the numbers here. So what is the share of this? What does this mean? What is this 20 whatever BCM means? The Bobak number is by 2020. I'm looking at combining CBM and Shell gas as unconventional gas. It's about 15.15% of China's total domestic gas production combining unconventional and conventional together. It's about 15%. In terms of production, it's about a little under 10%. It's about 9%. That's how I look at it in a base case but there is a high case as well. So now I hope I few more minutes and I moved to bigger issues because unconventional gas is gas, it's not like the totally separate products. So why natural gas? There's issues we already heard earlier that China has a high economic growth and high energy consumption and had the highest, I will say, among the major economies. China has highest dependence on coal and in comparison, the share of natural gas is amazingly very low. It's only 3.4% in a total primary energy consumption. So what is a benefit? So for every 1% of the increase of natural gas replacing coal, the savings of the coal will be 50 million tons of coal savings in today's standard. And by 2020, there'll be almost 100 million tons of coal savings, less of coal consumption for 1% of the natural gas percentage increase. The government has a very ambitious program. They are going to raise the share of natural gas from 4% to 10% by 2020. Actually, by 2020, some mentioned 2015, which is kind of unbelievable, but I'm looking at the double the share from roughly 3.5% to about 7%. Let's say 4% increase by 2020 for China's natural gas consumption that will replace by 2020, 400 million tons of coal consumption. And so that's kind of huge sort of a benefit of doing that. And continuously, why natural gas for China and that not only because of the coal is over dependence on coal and the less development of gas, and China also has a huge gas potential, and we just mentioned, both conventional and unconventional. So that is a kind of benefit of doing that. And China's imports of natural gas is still very low, although China has become the first Asian countries to import both LNG and the peplen gas. Only the first country, even though the volume is very small, but Thailand import peplen gas, but not LNG. Singapore import peplen gas, but not LNG. Japan is a big LNG importer, but no peplen gas. So China is both, from Turkmenistan and from LNG. And energy security implications for using more gas is also there because oil is the issue. And lastly, and that is a cleaner and more efficient fuel, but it's not carbon-free. So what is the common characteristic of natural gas? I think for those of you who know already, carbon is not a big, big sort of benefit, but it's the benefit. It's about roughly 50% less than coal and about 30% less than oil. But again, it's a range, it can be very big. But if you're coming down to the NOx issue, the nitrogen, you talk about sulfur issue other than the sour gas in the Middle East, but China is a sweet gas, so it's a different story. So sulfur is, the benefit is huge, like 80, 90% lower, particularly mercury and other impurities, of course, is really, really a lot of benefits there. And that's the reason that you want to... So what is the challenges for natural gas? Again, I don't want to talk too much about this. Number one is politically, natural gas is still fossil fuel. So many people don't necessarily distinguish between, they don't want to distinguish natural gas from oil. They're all petroleum. So if they're petroleum, they have a trouble, they're fossil energy, so they have a trouble future. And in China, particularly, there is a market fragmentation problem. Natural gas in China is small regionally and is fragmented, so the economy of scale is the issue. And infrastructure is still lacking and improved a lot is still lacking. Pricing issues is still a long way to go, how China can link the price of natural gas with other fossil fuels, particular oil, and how to link, and what about coal? And those kind of issues are still kind of a problem, facing challenges facing the country. And competition from coal and also occasionally from oil, that's the other way to look at this, they do have competition from coal strongly and also like LPG and other oil products. And if you want to import more LNG, then rising international gas prices is a challenge. But in the meantime, it's a challenge for imports, but also the benefits for unconventional gas, which is the higher price means you have a better alternative than to the LNG imports. So I want to come down to the final numbers again, what that unconventional sector supposed to mean again. So come back to unconventional gas issue in China again. I'm not looking at 2050, that long-term, only 2020, that I already mentioned that in terms of the production is about 15% of the total gas production by 2020 and under 10% of consumption by 2020. But in terms of the unconventional gas only, based on my base case scenario, that by 2020, with the amount of unconventional gas that produce and utilize in China, they could save around 50 million tons of coal by 2020. So it's still kind of meager. So we have to be realistic and put into that perspective. But as many of you realize and other people kind of predict, if there is a similar to the US, if there is a no restriction and everything fully, the full potential realize, the upper limit of the unconventional is really unlimited. So the sky is the limit. And also timing is the issue. Beyond 2030, then the amount of unconventional gas will become much bigger. And when the economics is right. Well, that's pretty much what I want to say and there are some international cooperation issues as well. Then when President Obama visited China, they signed this shell gas cooperation agreement with Chinese and there's a lot of things going on between China and the US in this area. So that is another perspective of this unconventional gas. Still, China has a lot to learn from the US and still have to adopt the right technologies for unconventional gas development. I know my presentation is very short and I'm looking forward to questions and to give more sort of clarifications. Thank you. Thank you. I think we'll go since his presentation, Nate, I think it's your presentation that's up there. Okay, I think why don't we switch then to the renewables question. There's been a lot of debate and a lot of information that's gone around this town for sure on renewable energy in China. So we hope that Nate Ballard from Bloomberg, New Energy Finance, they still have stumbled over that whole name. That's all right. So do you, probably. I still do occasionally as well. Can help us get some perspective on the investment in renewable energy for the future. Thank you. Everybody hear me all right? Yes, this presentation, you've been tantalized by seeing about half of it for the last 20 minutes. I'm with Bloomberg New Energy Finance, which is sort of an independent house within Bloomberg LP that covers clean energy in the carbon markets. My specialty is solar energy in the United States, but as an aspect of that, I deal with all of those sort of trade-weighted implications that come with, well, supply and demand, and not only supply and demand in terms of global numbers, but where those numbers are coming from. My colleagues and I wrote a white paper last year, and I'm sorry, earlier this year rather, on what we call jointed the HIP, the U.S.-China Clean Energy Relationship, and it proved to be quite timely. We were writing this during the early days of this debate when it was about a sort of hypothetical Texas wind farm. I'll get into that actually towards the end, but that debate has actually expanded quite a bit, and so I'm sort of walked through the data behind this discussion of trade, and I'm gonna look at China's low carbon pathway almost purely from an export perspective here, though with a little bit of domestic aspect as well. The implications for trade and some numbers that I think have been neglected in the political debate around not just trade items, but actual energy generation and long-term assets. It's something that is a little bit subtle, I think, for a lot of the political debates that are engaging this dialogue between the U.S. and China. So Kate showed you some numbers like this already. These are just the power production growth numbers, and apologies, that's meant to be terawatt hours and not gigawatt hours. I can assure you there's a little bit more power than that going on in China. The most important thing to note within this is the compounded annual growth rates if you're to compare these two countries. China, about 1% in the United States. And also, as mentioned, there's higher growth rates for every resource besides coal, but coal is still the bottom end and absolutely the backbone of power generation. And even within this, China's becoming a very large electrical system, so a huge growth in renewable energy does not necessarily make it an extremely large part of the overall mix. But what's interesting to watch is what that means in terms of investment, internal investment flow in asset finance. There's a lot of ways to look at the numbers in renewable energy. You can look at numbers that happen in the public markets. You can look at venture capital and private equity. You can look at asset finance. Asset finance is building stuff, so asset finance is what's actually putting plants in the ground. Last year, we did just shy of $100 billion in asset finance globally in clean energy. United States has been always a leader, Europe, ahead of the United States even. But in the last couple of years, China has actually overtaken the United States in terms of asset investment. So hard dollars going into the ground to create fixed assets. China is deploying materially more capital to that end. And with an added wrinkle that given the generally lower costs per megawatt for any of this installed equipment done in China, you're getting proportionally more investment for that dollar put in the ground. That's not to say that China has quite yet overtaken the United States. I mean, you're having games that play in parallel. We could well see this trend sort of continue where you've got United States at a sort of fixed delta above China. Though honestly, I doubt it. I think that you'll see more asset investment in China, especially if you include all of the sort of supporting investment you need in terms of grid development. The other aspect is equipment manufacture. If you want to get into where China really leads right now in an external facing aspect, it's in the manufacture of equipment. Quick show of hands if anybody knows where Ying Li Solmar is based, or if for that matter has even heard of it. On the table, we'll get some people who know it probably. I see two hands. Okay, Solmar Fund, J.A. Canadian Solmar, despite the name is completely a Chinese company. They move their corporate headquarters, these are companies that have rapidly, and I think for those not watching this quite as closely as I watch, very healthily entered the global market for clean energy equipment. And in fact, if you're looking for the largest producers of cells, so the fundamental element of creating a Solmar panel and then creating Solmar Power, China's in the lead. In the top 10 manufacturers, in fact, you have only one that is U.S. On wind, it's a slightly different story. The largest company is in Denmark, the second largest is GE. And while you see four out of the top 15 turbine manufacturers of Chinese, at the moment, none of them are actually strong exporters. Solmar Technology in China is a completely well developed at the moment as an export industry, but interestingly is not much of the domestic project industry yet. China is proceeding at a very measured pace in a very cost-focused manner on deploying Solmar Power in China. Wind, on the other hand, is I think probably equipment wise, and in terms of the ability to raise that, not quite as robust as the Solmar side is, but as a much larger industry within China. China did about 40% more wind investment last year than the United States did, using almost entirely its own equipment. If you want to talk exports, this is those companies that I mentioned, Yingli, Trina, Solmar Fund, and the market share that they've been able to capture in the U.S.'s largest solar market, which is California. This market, two, let's say now three years ago, was almost completely supplied by the United States and by Japan. And in the past several years, you see this progression wherein China takes increasingly more and more market share out of a very cost-focused, and I should say quality-focused and finance-oriented market. So you start to see these proportions in the market, 40%, more than 40%, market share in any given quarter coming from China. Those are hard numbers in the sense that that's actual equipment that will be financed and go into the ground using U.S. lending standards and using the scrutiny of a lot of U.S. equity investors. Important to know, I want to get into sort of the enabling aspects that allow this investment to take place. This is the dollar yuan conversion. This looks like pretty much a uniform function from 2005 to 2010. If you wanted to just draw a graph of what a managed currency looks like, it's this. Just as a quick comparison, that's the U.S. dollar to the euro over the same time period. Currency really helps. Stable currency providing visibility to those who are going to be exporting. Very valuable. This is another aspect. The United States has a great deal of energy applied to stimulus funding for its industries and to using the tax code to incentivize investment of renewable energy through investment tax credits and through manufacturing tax credits. I think China has taken a more direct approach through lending towards supporting industries. This is since April. That's $33 billion in lending from China Development Bank alone to six of the largest clean energy manufacturers in the country. 33 billion is also just as an interesting comparison. Almost the entirety of the money that the Department of Energy has devoted to it in the next several years to get out the door in stimulus funding. These are large numbers. I mean, these are numbers that in many cases exceed the revenue over several years' worth of time for some of these companies. And they're being provided not only sort of expansion funding to build new plants or to make an acquisition or something like that. This is money that's also available to help shore up the balance sheet as an export-oriented measure. This provides some sort of safe harbor for investors who are interested in buying this equipment. It provides a deep, deep line of credit if you're going to be making an asset investment overseas. This is a very direct instrument to help these companies compete internationally. It's also interesting to note that these are companies that were already all leading. None of these companies were laggards by any means. These are all the best-in-class manufacturers in solar and one of the best-in-class manufacturers in wind. And I think this is the fun part, actually, is that in the U.S. and China trade debate, we hear a lot of discussion about equipment flowing from one place to another. So the United States is being filled up with Chinese clean energy equipment. You've seen, David, how many political ads with wind turbines in them this year? Three or four? More than you would expect, especially for a market that doesn't really exist yet. I've seen, we checked and I think I saw four ads on YouTube where a political candidate is saying something about sending jobs to China and use the wind turbine as an example. There's not much of a Chinese wind market yet in the United States, I keep reiterating. But there is a solar market. And one of the things that we did in our analysis was to look into the value chain because Kate already indicated that there's a value chain in place for anything. You build a nuclear plant in China, it has equipment from somewhere else in it. It has expertise from somewhere else in it. You build a solar module in China, it also has equipment from somewhere else in it. So as a thought exercise, we took actual, using our knowledge of what happens in actual components in the value chain, a module made by SunTech. This is a leading company in Jiangsu Province. There's about 20% of the overall value added in the equipment and that actually comes from the United States. You've got silicon that is the highest margin part of the value chain and the most specialized, coming from the US and going to China, going into a PV module that tends to then come right back across to the United States. But as an interesting comparison, we took as well a piece of US equipment. This is a module that's made by SunPower and this data is disclosed through their public filings. This is part of their regulatory filings with the SEC. This is an American piece of equipment. But the polysilicon comes from Korea. The middle phases, where they turn that polysilicon into a wafer and then turn that wafer into a cell so that the fundamental generation unit takes place in Philippines. And then the assembly part can take place almost anywhere. In fact, many of the leading companies do not actually own an assembly plant. It's done on a contract basis. In this case, it can be done in the United States. It can also be done in Mexico or Poland or China. But what you see is that the difference, and this is if you were to use a SunPower module that is actually being built and put together in the United States, is that the proportions of value added are not all of that different. This is an international good regardless of where it comes from. We did the same comparison on wind. For a long time, there was a strong market for US and international turbine providers building factories and selling goods in China for the Chinese wind market. That is, less so the case these days, as you indicated from my earlier slide, there are plenty of people in China providing turbines themselves. But we wanted to look on an installed basis. Let's say that you took a turbine. Well, actually, sorry, I got to the installed basis at the moment. Let's just take a turbine and put that turbine together again by the same value chain. China, international in this case, is anything X China, but it could be the United States. Tends to be Europe. Build this up and you find that a Chinese turbine installed in China is about 60% Chinese, 8% US, 35% though international. Nump that towards the US and you're talking about something that is more than 40% built in the United States for a Chinese installation. And let's say that you were to take a Sinoval turbine, so one of the largest Chinese companies and do the same in the United States. That's if you're installing the turbine on the ground in say West Texas where this political debate always seems to center. One of the things that rarely actually is going to travel overseas is the tower and the foundation for a wind turbine. That's probably because they're about six meters wide and nobody wants to send them anywhere. Blades do travel sometimes from China but most of the time do not. They're very, very large. What people tend to do is ship the mold for the blade because that costs the same as shipping two blades. Ship the mold and make your blades there. The highest value added aspects in this turbine are still going to be US. That's the control system and the power converter. And what you end up with is in this Chinese turbine installed in the US is that it's still about 40% US. So that's one half of it. That's just the installation but what we think is often missing in the debate is the difference between this as effectively a product, a turbine or a solar panel as something that you build and then buy versus an actual energy production project. I mean, in many ways, building a solar panel is like building a television but the television doesn't continue as a productive asset for 25 or even 30 years. A wind farm is a power project. It's not an investment scheme. It's not a work program. It is a fundamental unit for generating electricity over 20 years. So let's take that wind turbine and turn it not just into an installed asset as I had before or an installed thing, let's say, a product and let's make it into an actual project that's generating power. Over the lifetime of a project, a value creation over, let's say, two decades of power purchase agreement between the project and the utility. Where does all of the value go? What's very interesting to see is this is to take the turbine that is incorporating the most possible equipment coming from China proper and installing it in the United States. A great deal of the value, $301,000 per megawatt over the lifetime comes from construction. Another almost 200 comes from financing. If you use U.S. financing for only 25%, there's no requirement anywhere that you could not do this 100% U.S. financed. We just expect that if you were to do this project now, it would probably be about 75% debt financed by a Chinese entity. Then you've got another one there, O&M. If you wanted to say O&M in a different fashion, that's jobs. That's probably going to be U.S. We don't really have any expectation that once a turbine is installed, there is a non-local work crew maintaining it. That rarely happens anywhere. There are instances in which you need some extremely high-placed expertise specific to a piece of equipment, but it's unlikely to happen in the wind turbine value chain. So that's U.S. effectively. Put it all together and far and away, the largest portion of this project by value creation is U.S. So part of this, I guess what we feel was very important to include in the debate on clean energy, who helps whom, is to see where the long-term value, not just in terms of the trade balance and dollars flowing in one direction and product flowing in another direction in a given year is. But what's the dynamic in terms of creating an energy economy? And that's a little bit more subtle and I guess a little bit more complicated. And I think actually that's it, except for one more thing. I forgot I had this one. There's one last wrinkle, which is for all that talk on investment. I mentioned in the total numbers on clean energy, there's lots of ways to talk about it. And one of the most popular ways here is to talk about venture capital and private equity. This is an instrument of financing, a vector of getting capital into play and for creating companies that the United States really excels at. And in that sense, this is still a United States game and is likely to always remain one. If China might have taken the lead in terms of asset investment, it had only a very brief lead years ago in venture capital and private equity investment in clean energy and the United States has managed to get back on top and stay on top. What you see there in 2006 is actually the money that came in to those solar companies that I mentioned before, which was the last phase of capital before those companies then became public. All of the money that came before was being provided by local and provincial governments and by some local financial institutions. It's now not really there anymore. It's not really needed. These companies are large enough to get a $9 billion loan from the China Development Bank. Seeking venture capital and private equity is not really necessary. But what these figures, the United States figures, 2008, 2009, 2010 represent is companies that are going to be founded in the United States and in many cases are providing part of that value chain that goes back and forth to China in the interaction between the two countries, not just in the one-way trade flow. And I think now that is actually my last slide. So thank you very much. If you guys are interested in the white paper, we actually have it published on our website. It's available for download and it gets into these issues sort of in greater detail and I look forward to the discussion. Thanks. Thanks, Nate. Our next speaker is not on your program because we were actually uncertain that he would be able to be with us today. We didn't really want to do a discussion of secure low-carbon pathways without talking about energy efficiency because it is such a central part of the Chinese policy and approach. We had tried to contact a couple of people who have been working very closely but unfortunately they have now taken on a new endeavor with the Department of Energy had to cancel their participation at the last minute. So got in touch with John Milhohn, an old friend from the Department of Energy who's now at Carnegie and asked him if he'd be willing to step in and after some soul-searching he decided he would come and join us. John, we'll have to get your presentation up. John, it's a long history and energy efficiency worldwide and I think it's going to present something based on the work of Mark Levine at the Lawrence Berkeley Laboratory. Thank you, David. It's good to be here and I am pleased to be able to talk about energy efficiency in an area where energy efficiency is so critical to not only the events in China as far as their economic viability but also their climate characteristics but also to the US and globally. Because I'm scrambling to be able to say something that's helpful in this topic I have used some resources very elaborately including the good work that Mark Levine and his energy group have performed at Lawrence Berkeley National Laboratory. I've plagiarized a good deal of material from what Mark provided. He and Bill Chandler, who's a colleague at the Carnegie Endowment for International Peace, were speakers at a major evening program at the Asilomar program, a summer study sponsored by the ACEEEE and I think it sort of represented the priority that China is getting in the United States and internationally by the fact that one evening was devoted to the description of what was happening in China. In my comments, I will try to be efficient myself. I'm gonna talk a little bit about the history, what's good times and bad that's happened in China, then talk about energy efficiency, particularly the sources and juices, a summary and then a look at the future. The history of energy efficiency and climate change in China has had good days and bad. From 1980 to 2002, there was a significant priority that was given to China by the national government for energy efficiency and you saw quite a rapid improvement in the energy intensity in China. Then in the 2002 to 2005, there was a change. In part, there had been some lack of maintenance in terms of the energy efficiency programs and activities and that showed up. There was a major increase in economic activity and because of this activity, the products that China sold which were energy intensive in the manufacturer had a very fast growing international application so that the energy intensity increased about 5%, whereas prior to this period, it had been intensity had been increasing and it decreased here. Then as a result of recognition that there needed to be change in the 11th five-year plan, major activities were taken to improve the energy intensity in China and very significant activities were made, including an effort to mandate a 20% energy intensity gain in the 11th five-year plan and then support from the Premier and the National People's Congress. Multiple actions were taken at the federal and at the regional and at the local level. This shows the greenhouse, the CO2 emissions that were anticipated prior to that rapid growth. That shows the actual growth in CO2 emissions and how the China CO2 emissions then passed those of the US as a result of that period when the exports and carbon intensity caused this kind of surprising but significant change. Now this shows the implications of those good times and bad times, the good times when the energy intensity decreased, then the period when it increased at 5% and then the result of the 11th five-year plan and the energy efficiency measures that have been undertaken as a result of that five-year plan. One thing that shows is the significance of the national policy in China and the priorities that are set and the way that those priorities are implemented through a variety of different activities and that's something that as we look ahead, we also need to recognize. In my comments, I'm going to talk about the components of the low carbon and energy efficiency activities in Russia, primarily the, and when we're talking about energy efficiency, it's important to look at energy efficiency from the energy sources as well as the end juices because if you save energy in the building sector or industrial sector, that means that you lose, need to use less energy, be it electricity or heat or primary energy fuel so that if you look at the energy end uses in China, the industrial sector oftentimes is described as 70%. That includes some industrial parks where housing, hospitals and commercial buildings are part of the, regarded as part of the industrial sector. If you look at what we would describe more commonly as industrial processes, that's more closer to 61%. If you look at the end use energy as a share of all the energy that's used, if you look at it in this way, it's about 25% and transportation is about 14% but it's going very rapidly. One of the things that I mentioned that difference because oftentimes when we think of energy efficiency, we look only at the end uses. This is something that shows the importance of looking at the end use energy efficiency as it compares with some of the energy supply courses. So we've all heard a great deal about three gorgeous plan and the huge energy production that's come about as that, as a result of that. In this case, I'm comparing that production from the energy savings calculated 10 years after the standard tests were made for applying standards implemented for air conditioners and refrigerators. So you can see that it's important not only in terms of the quantitative value of what you're getting from the energy efficiency measures. We're looking at electricity. Here I'm going to show some examples of what good accomplishments that have been made in some areas where there are still challenges that need to be addressed. One of the significant things in the electricity area has been an increase in the amount of, in the rates that are paid for electricity. For example, energy prices were increased from the equivalent of 4.2 cents per kilowatt hour in 1924, then two years later up to 6.4 cents per kilowatt hour and these changes have continued. At the same time, the electricity prices are regulated, coal prices are not regulated, so that when the coal prices have gone up, there's been an increase in the subsidy that's been required to make up that balance. And because of that, the users of electricity have not seen the real price of electricity and moving more forward to cost-based energy rates, which is the trend but hasn't been achieved yet, will be a significant way to encourage the energy efficiency measures that would save that cost-based electricity. In addition, in the electricity area, importantly, small and efficient coal-based electricity, plants have been closed and employments have been made and coal-fired electricity boilers. This, let's see, I need to go back. Now this is, I'm gonna go back to what I've done here. It was copied some slides from Mark Levine's presentation and those are annual years in the, across the bottom. It doesn't show on the slide, but I apologize for that. Two, 2010. Okay, I'm gonna go back. Okay, I'm, before I leave buildings, there's been the small industrial plants have been closed down. The goal of the top 10 energy enterprises, which make up 50% of the industrial sector, those have been significant improvements, reductions in the energy intensity there. There's been tax rate rebates for exporters have been lowered for the energy-intensive products. So there have been a number of factors there as well. Move on to the building sector. Building codes have been initiated and have been expanded country-wide and they've been in strength, but slowly in strength there, there has been limited progress in the retrofit of existing buildings. One of the success areas is mandatory appliance standards introduced in 1990. Now they've been expanded to 23 products, including most residential and commercial appliances. One of the important areas is government procurement. Government has mandated the procurement of more energy-efficient products. That has been extended and that has made a significant purchasing power for more energy-efficient products. This shows one of the differences in the performance in some of the buildings area. The heat supply reform in buildings which is shown on the right has made significant improvements. One of the areas where little progress has been made is in the improvement in the retrofit of existing buildings so that the indication on the left, that column, shows the lack of significant progress based upon the goals that had been set in the retrofit of existing buildings. In the area of, could I have a little water? In the area of transportation, there's been progress through the mandatory fuel standards for vehicles, 16 different weight classes and these have been significantly increased although and rank favorably compared with some of the US standards, for example. In the emissions standards, China has followed the European standards on emissions and there have been taxes on vehicles and those have been higher for larger energy-intensive vehicles. On summary then, the aggressive top-down priority that China has given to energy efficiency has achieved unparalleled results. The challenge now is to build an implementation capacity so that the goals and policies that have been set are more effectively implemented to strengthen the compliance with the programs and to prioritize and integrate these various results. The issue now is what's the way ahead? The reports being received from China's 12th five-year plan which is just getting, excuse me, which is just, I didn't know much, which is just getting announced recently and we will be hearing more and more about the effects of that as we go forward but the signs from what we've seen so far are encouraging. That of the tough targets that have been set in the 11th five-year plan appear to be continued into the 12th five-year plan and to be included in terms of energy efficiency and carbon change. The plan is expected to see a 15 to 20% reduction in energy intensity to continue the guidance that have been taken in the 11th five-year plan. A spending program of a significant amount, $754 billion for alternative energy the next 10 years is one of the expectations. This information is from Climate Wire which is providing sort of the earliest reports that I've seen in terms of the content of the 12th five-year plan. It'll be very important and interesting to see as these get defined and rolled out and we'll get more information but the direction now appears to be very positive in terms of the future direction sustaining the effort that has been made on energy efficiency in the 11th five-year plan. Many of the things that were identified in the 11th five-year plan are still in the process of being implemented and this I think is indication that those efforts such as the expansion of the government procurement they are stronger standards in terms of labels. Moving towards the gasoline tax that these kinds of measures that haven't been fully implemented it sounds as if the commitment is being made to continue these activities in the future. I'm going to finish up with some projections that have been made by the China Energy Group that Mark Levine showed at the presentation in Asilomar because it looks to me as if that is a significant part of the program that's being considered today. They have developed a model on China's energy group that's fairly extensive and you can find that on the China Energy Group webpage and this is an effort that they've made in terms of looking at what they anticipate the changes will be over the next period of time. Continued improvements are expected and with accelerated improvement, accelerated attention to energy efficient this is the forecast that they're looking at with the different colors representing the blue is industrial the yellow is I think transportation and the others are buildings, residential and commercial buildings. So you can see that they peek out a little bit earlier according to the information that they are using, finding from their models and this provides some information in terms of how and their projections, their model, they think these changes are a significant part of China and their projections, their model, they think these changes would be taking place. These include the saturation effects, slow down in urbanization, lower population growth and change in exports to high value added products. So this is an overview of the energy efficiency history, the measures that are being undertaken and the anticipated future in China. I think I would say that this conference at CSIS is called, is critical because it shows the key dominating role that China's policies will have on global climate change and the future. I think the information on energy efficiency shows that the energy efficiency contribution to those improvements has been very significant in the pattern that we've seen in the past and will be very significant in the future if it continues to be aggressive, assertive, improving, pulling the pieces together and combining them into the kind of significant accomplishments in terms of reduced greenhouse gas emissions, improved energy efficiency coupled with a strong economic development that's based upon the economic attractiveness of moving in that direction. Thank you very much. Thank you, John, and you set the stage for some dueling modeling projections and Jean Guéjun presents his results in a little while, so we'll have to compare those charts. The final speaker for this panel is Xiaomei Tan with, she is now a senior associate with the International Financial Flow and the Environment Program at World Resources. One of the topics that is discussed continually here in Washington is the process for technology development. How do we bring technologies into the marketplace? So we thought it would be important for Xiaomei building on some of the work she's done to give us some insights into the approach China has taken to develop new technologies. Xiaomei, one second. Thank you. Thank you. Good morning, everyone. I will provide you an overview of the strategies China take to improve its R&D and innovation in energy technology. The goal is to highlight how governments in developing countries can craft effective energy technologies against the backdrop of a pending international climate agreement, which is expected to deliver financing for clean technology transfer and deployment. In the past decade, China has taken a number of measures to create an enabling environment for clean technology R&D and innovation. Today, I would like to especially highlight four approaches China take. One is to establish a medium to long-term science and technology national plan and formulate short-term technology development plan, rapidly grow R&D funding by the central and local governments. Finally, it's to promote international cooperation. And in January 2006, China published a mid to long-term science and technology national plan. The plan established the central governments on front and center role in determining the direction, quality and quantity of China's R&D and innovation efforts through 2020. The plan set up four quantitative targets and five strategic focuses. Under these targets and focuses, there are 11 key fields and 68 priority subjects. Out of the five focuses, we can see the top focus is devoted to developing technologies in energy, water resources and environmental protection. Based on this national science and technology plan, the energy bureau of NDRC formulated a mid to long-term energy development plan, which is totally focused on energy sector. We can see by 2020, China's energy plan set up two key projects. One is to exploit and develop a larger scale oil gas and CBM fields. Two is to build larger scale and advance the PWR, pressurized the water reactor and high temperature gas cooled reactor. Both projects, we can see the goal is to reduce China's dependence on foreign energy and increase the energy security. In addition to this mid to long-term national science plan, the government also make short-term technology development plan, which corresponds to China's five-year plan. We all know that China has a five-year plan. For example, the 11th five-year science and technology national plan set up a short-term goals and targets for China's science and technology development from 2006 to 2010. Right now China is developing this constructing 12th five-year science and technology plan. And the plan is led by Wang Gang, who's the minister of science and technology, advised by a group of experts. The experts come from different sectors in China. And simultaneously, China is also developing this 12th five-year energy development plan, which is being finalized. According to a latest issue of Liao Wanzhou Kan, which is outlook weekly, we can see that this energy focus has five strategic centers. One is to develop new energy industries. New energy industry, it includes all the renewable energy and also nuclear energy. Nuclear is considered a new energy source in China. Second is the strengths in traditional energy industries, which means China wanna create some large-scale energy bases. And for the developer, larger-scale energy power generation and power transmission enterprises try to create economy of scale. Third is to improve energy security. Energy security is a focus of 12th five-year energy plan. According to our experts, Zofan Qi, who's the former head of energy bureau of NDRC, he pointed out that China now, 51% of China's oil relied on imports. This is way higher than the normal 40% dependency rate. So China wanna further reduce its dependence on foreign oil. So energy security, improve energy security, is a focus of 12th five-year plan. And the first focus is enhanced technology innovation. Fourth is to improve electricity provision conditions of rural and urban residents. In addition to a long-term and short-term science technology national plan, China also dramatically increase its R&D spending. We can see from 1998 to 2009, the R&D spending, the speed of the increase is dramatic. The yellow bar represents public spending and the green bar represents total gross spending, which include both private and public spending. This is, we can see an important trend is that the private spending actually is increasing quickly. In 1998, we can see that the total spending is pretty much the government spending took accounted for a significant part of China's gross spending. Now to 2009, this private spending almost accounted for half of the total China's gross spending R&D. At the same time, China's R&D intensity also keep growing. We can see that 2009, the intensity is slightly lower than 2008, but we expect that in 2010, this intensity would dramatically increase because according to the 11th five-year science and technology plan, by 2010 China's R&D intensity is expected to get a rich 2%. So in order to reach that goal, the spending we expect to a dramatic increase in 2010. So the government spending is, we can distinguish them by central government spending and local, many provincial government spending. We can see that the provincial government has also scaled up its spending in R&D. In 2007, the first time, totally provincial government spending surpassed the central government spending. In 2008, Guangdong province topped the nation, its R&D spending in terms of absolute number is the highest, but in terms of R&D intensity, Shanghai topped the nation. Shanghai's, almost 5% of Shanghai's R&D GDP is devoted to science and technology. China manages and spends its R&D spending through different government programs. Here I would like to introduce the four major programs. The first is the 863 program. We also called national high-tech R&D program. Second is the National Natural Science Fund. This fund is mainly devoted to life science and engineering. The third is the key technologies, R&D program. This is more focused on technology deployment. And the fourth is 973, which we call the National Basic Research Program, which is focused on basic research. 863, we can see in 2008 the total spending in 863 programs was 795 millions. And among them, 10% went to energy-related research. During the 11th five-year plan, 863's energy focus, many focus on hydrogen and fuel cell, energy efficiency technology, clean coal technology, and renewable energy technologies. This focus changed as China entered the 12th five-year plan. The 973 program, which focus on basic research, the spending in basic research in China is much less than what's spent in applying the science. This has a long-term effect in China's technology development, which we can discuss later if you are interested. But we can see in 2008, the total spending in 973 program was only 292 million, which is only one-third of the spending in 863 program. Among them, 11% is devoted to energy research. And they are also a number of energy focus that's what 973 should focus on related to energy. Finally, I would like to highlight another approach is to promote international collaboration. In November 2007, the most is the Ministry of Science Technology. And NDRC jointly launched the International Science and Technology cooperation program. The launch of this program has two purposes. One is to diversify the sources of China's technology imports. The second purpose is to speed up the technology chains for speed between China and other developing countries. By the end of 2009, China has already signed over 100 cooperation agreements with 97 countries. We can see that China's cooperation with international partners also has focused their five technology focuses. So in addition to these four approaches, I introduced the government also made other approaches such as encourage the private sector increase spending in R&D and also encourage technology export, encourage industry and academic research synergy. So finally, I would like to, because of time, I'm not going to detail those approaches. Finally, I would like to conclude my presentation with three points. One is to make a deliberate holistic plan and long-term commitment to innovation and technology development. Second is to establish direct R&D funding programs to support energy technology innovation. Third is to rely on international cooperation to pursue new to market technology and knowledge. That's it, thank you. Well, thank you, Xiao Mei. Okay, so now that you've listened to some excellent presentations, we have some time for questions and answers. And so we have a couple of ground rules here, CSIS. One, if you could please identify yourself and your affiliation when you do that. And secondly, if you can pose whatever you have to say in the form of a question, that would be helpful. So you can make a comment, but if it ends with a question mark, that's always a good sign. So please, do we have some questions from the floor? Okay, start here and then take that one back. Give energy daily? The third rule was if you could wait for the microphone. I'm sorry. You don't think it's okay? My name is, there it's working. My name is John Rickman. I'm a news reporter for the Energy Daily. This question is for Mr. Kang Wu. How would you describe the business environment in China for foreign investors, energy companies into China to develop unconventional or to explore for unconventional gas? And how would you characterize the regulatory regime for gas, unconventional gas development? Thank you for the question. I think in the unconventional gas again, there is a little difference between CBM and a shale gas compared to like a conventional upstream hydrocarbons oil and gas. This area for the CBM for instance, the policy and the environment seem to be liberal and it seemed to be favorite. And the dozen plus companies signed contracts, signed contract with mostly COCBM and later with Petro-China really obtained kind of favorable terms. However, as you can see that the macro environment for the CBM development was not very favorable. So it's not just foreign companies, it's also Chinese companies. That's why it didn't do very well for the past. And I list a few impediments, there are more impediments. Those impediments, they are really facing both foreigners and Chinese companies. So that's why, that's the reason. For shale gas, and for CBM again, that since have changed now, they have a better organizational structure in China. They have a better pricing of natural gas, a little bit better infrastructure. And the government is a little eager to treat uncomforted gas as a future source of supply. So the horizon for CBM has been changing now and that almost automatically applied to shale gas. So in a way that I believe there is a lot of opportunities and compared to other upstream oil gas business onshore particularly, there is a huge, there's how to say that there is still a lot of good terms and a lot of opportunities needs to be explored. And I think it's a good time for foreign companies to look into this area. A lot of uncertainties, but probably the foreign companies and their Chinese hosts can help shape the business picture in this area. And I thank you very much. I think there's a question over. Hi, my name is Peter Masters. I'm with the Woodrow Wilson Center. My question is for Dr. Wu as well, regarding shale gas development. Here in the US, at least I know shale gas can run into a lot of issues with water both in terms of potential contamination as well as it requires a lot to start these wells. Do you see that as a potential constraint in future shale gas development in China? Well, I want to mention the Samuel here and he is organizing the 10th US China on gas industrial forum just last month in Fort Worth. And there was a lot of discussions in a very technical discussion in that area. I think just one thing that all the papers is available, right, Samuel? Sam, on that, the DOE website. So it's a lot of discussion about, including that your questions. I think it's still too early to say that that is the issue, mainly because shale gas has just barely started in China. The good thing is they are, so far, the exploration areas like Tyrone Basin and Sichuan and other areas, they are, well, they're kind of remote area and the investors are big companies, a little bit different from the US. The big companies are the same PC center pack and now maybe CNARC and other companies. And the foreign partners are also kind of mostly majors. So they are, it seems that unlike the other small developments in China or even CBM, I think shale gas, they probably have a better technology, how to say, technology equipment better with technologies to deal with the water issues. I don't think that there is a problem yet because it's barely started. They need to fund the shale gas first and before they can even consider those issues. So development stage is still a later stage. I think the issue may come up later but right now they are busy just funding and even proven the reserves of shale gas in China. So we have one here and then one followed by. My name is Martin Apple from the Council of Scientific Society Presidents. This is for Dr. Shomei Tan. You talked about China's trying to get a 2% of its GDP as R&D and it's reaching towards that. It's R&D, I mean it's GDP is growing. It's round numbers 10, 12% a year, whatever year. So that means R&D must be increasing 15% or whatever or more every year. You showed us that they were only spending $263 million for basic science in all those areas. What's the purchasing power parity of that number and how fast is that going to grow? The number I showed you was 2009 spending in 973 program, that's $282 million. So I don't understand exactly your question and you mean? The purchasing power parity of that number. In other words, a dollar spent in China is the equivalent of what $5, $10 spent in the United States? Oh, the conversion rate I used is $1 equal to 6.5 yuan. No, no, no, purchasing power parity. PPP? Sorry, I don't know. Maybe you can talk about that sort of on the side. So question back. Yeah, thank you. My name is Christopher Krauss and I'm from the National Environmental Education Foundation. On the topic of water, Kate, I was wondering if maybe you could talk a little bit about the AP1000, the new reactor, how much water does it need and how does that compare to traditional reactors? It's roughly the same currently as traditional reactors, although we are trying to examine opportunities for dry cooling and more efficient cooling technology. So right now, the standard plant does not require any particular cooling technology. So it's dependent upon the site requirements. So if there's available water, then you could have a standard open cycle, a regular cooling tower, or you could have closed cycle with a hyperbolic cooling tower. It just depends on what the site characteristics are, but there is not right now a set of criteria associated for a reduction of the amount of water per kilowatt hour generated. So it's roughly the same as Gen 2 plants right now. If I could follow up a little bit on the nuclear question. The buzz in the nuclear sphere in the US now are small modular reactors. To what extent is this an interest area either from the companies you interact with as Westinghouse and looking at the other nuclear companies are from the innovation point of view? Is there much interest in that in China or is the growth such that it's really large reactors that will be needed for the future? Well, I think it's an interesting question combined with the water question, recognizing that if you have lots of sites right along the major water sources or along the ocean, then traditional cooling technologies are fine. But if you go to inland sites, either the grid will not support a large 1,000 or 1,700 megawatt plant or there's not cooling capacity for it and so China is looking at smaller design but it is a growth issue. Where they need the growth mostly is where there's also water availability and so larger plants are making sense. Generally though, small modular reactors are really interesting to do a couple of things. One is to be able to repower and I use that in quotation marks recognizing that when in the United States or in Western Europe, when we're gonna repower a fossil unit, take it off for environmental reasons or because they're myriad of them are built in the 50s and 60s. And so as you begin to roll those off the grid, you need something that's roughly the same size, megawatt hour production size so that you can essentially level that site and put a new power system there. So you use the site, you use the water intake structure, potentially the transmission system. So modular reactors could potentially extend the footprint of carbon free electricity production and so they're very interesting from that perspective. So one of the challenges though will be as you get into lower megawatt electric sizes, the economy of scale curve begins to curve up. So you need, you still need a lot of containment, you need lots of concrete. So can you by building everything in the factory and shipping fully made modules to site, can you flatten that economy of scale curve at those lower megawatt electric ratings such that you could get within striking distance of existing nuclear plant installed capacity prices but go to a construction schedule that's much more similar to a combustion combined cycle. So if you could get to an 18 month construction, then you're making electrons a lot faster and those electrons are cheaper and then you can roll that into the increased capital costs. So I think folks are examining whether or not that's possible and that's what you hear here in the United States driving the small modular reactor discussion. If that's possible, then that's very appealing from the carbon perspective. Can I ask a question to Kate? Oh sure. Yes. This is even better. Right. What's the biggest barrier for Westinghouse to transfer technology to China? Is the IP issue or the regulatory environment or possibly lack of human capacity? What's the biggest? So the barrier with respect to transferring the technology I think largely for two years of negotiation it was the negotiations over how that would work. So that was a long and drawn out process recognizing that Westinghouse needs to compete continued in the future. And so we want to make sure that as we improve the our ability to transfer technology to China we don't necessarily lose our ability to compete in the future. So what are the limitations with respect to that technology transfer? And right now it is based on the fact that there is a megawatt electric capacity limitation on the usability of that intellectual property. I know that's a confusing thing. So our plant is 1,117 megawatts electric. And so if that plant size is uprated existing IP operated just for efficiency and can you get more out of the plant? For example, if you have colder water coming into the plant you make more electrons per molecule of water per amount of fuel. Below 1,300, a little bit lower than that that plant is still linked to our technology transfer. So if the Chinese can develop the next next generation plant that is a larger megawatt size with maybe some help from us in a separate contract then they're free to compete in the open market on that. So there were some limitations in that but with respect to the challenges of transferring clearly language barriers, even though many folks in China speak English to speak English well enough for a US person who we don't speak other languages. So I can say excuse me and hello experienced teacher in Chinese because my 11 year old is learning Chinese but it's not as though it's a normal thing for us to speak another language. So that cultural barrier is very challenging. In addition, talked a little bit about the skills. The Chinese are rapidly educating massive numbers of capable, extremely capable engineers but getting them in the pipeline and interfacing significantly enough so that they can embed a really fundamental understanding of how the technology works is a challenge. And so it's just that time for that interface to happen in a really sophisticated way. So it's a time issue more than anything else. Hi, I'm Damian Ma. I'm a China analyst at Eurasia Group and this is a question for Dr. Kang Wu again. I just wanna talk a little bit about the broader natural gas question in China. Most people in China think the next decade will be the era of natural gas in China. While I broadly agree they have really ambitious targets as you said I think the NEA said they want 8.3% of primary energy consumption to come from natural gas by 2015 which first of all, do you find that target credible and if it is credible is it gonna get ridden into the 12 five year plan? And if it does or if a target close to that gets ridden into the next five year plan what would you say are the demand drivers that would produce such a consumption change? And is it urbanization? Is it public transport? Is it fuel switching from coal to gas? And you know, or is it all of the above? Thank you. Thank you for your question. I think that's the target is a bit ambitious because from one percentage increase is a big deal given the large base of the primary energy consumption in China. I think my, the starting point is about the same as in China cited about 3.5, mine is a 3.4, I think it's about the same the starting point but go to 8% in 2015 I think it's very ambitious to be honest and with every effort made to do the modeling we show that by maybe by 2020 it can be about 7% in my kind of calculation that even depressing the share of coal quite a bit and oil is okay and normal growth but so that's my view and in terms of driver but regardless whether it's 7% or 8% but certainly you have a few percentage increase in a share which is a lot of translating into a lot of growth. I think there are drivers, there are many drivers overall is that the whole country needs energy so natural gas is underutilized so it's certainly an important source of the growth and then most specifically because natural gas in China is still partially, well in a large extent I still call partially but largely is a supply driven so when the reason they consume this much is simply the gas is not there as you produce only so much and importing takes time, it's happening now, it takes time so talking about supply driven when you relax the supply then the consumption will increase so that's kind of strange, it's not just a demand issue it's a supply kind of a relaxation so talking about that, the China actually from three sources of the supply they have a better future domestic production conventional is going up fast it's in a range of 10% versus like other than this year the oil production is about 5% to 6% thanks to offshore, the new fields in offshore particularly the conical fields and other fields but usually for the past 20 years the oil production is about 1% growth but natural gas is about 10% but natural gas is about 10% growth and continue to be 10% growth 8 to 10% growth for the next 10 years and more so that one source of the supply is relaxing and then you have unconventional gas we just mentioned and imports, China started from zero like 2005 so the first importation of LNG occurred in 2006 now it's a number five in Asia but going up relatively fast then you had a first drop of gas coming from Turkmenistan and going to like 30 billion cubic meters maybe by 2014, 2015, reaching full capacity so the supply source is getting there so providing the condition and then on the demand side is certainly the government desire for cleaner fuels and the residential sector has a room to replacing first number one coal LPG is being squeezed and then industrial sector China continue to use a lot of coal and that is facing out so it's a lot of room to grow in the industrial sector power sector is very tough that for the future growth of natural gas they need power sector cannot be without growth of the power sector but competition is the most fierce there there's in certain areas and with government support and policy issues there's in East China and South China so gas is being gradually favored in the power sector and being preferred but not all over the country so I will say that number one industrial sector still and number two residential sector number three power and coupled with overall economic growth relaxation of the demand supply so those are factors contributing to the higher growth of natural gas used in China my name is Sun Guo-shun from the Chinese Embassy here I would like to ask Kate a question in your presentation you mentioned that now in China there are 12 operating nuclear units and still there are 24 under construction and by 2040 there will be 200 operating units and 400 under construction so what will be the total cost for these 400 units and what will be the power generating capacity and what is the proportion of these generating or these units in the Chinese energy mix so the goal for the 400 gigawatts electric the capacity is gigawatt electric so 400 by 2040 the goal is to get to 10% but the issue is even with dramatic growth it's difficult to increase the percentage obviously so that's enormous and the price will be very much dependent upon as all these technologies are transferred to China as I said the next 10 units Westinghouse will have less and less scope in so as they move out they will all be indigenous to China so I can't speak at all to the internal Chinese price sorry I think that was mostly your question was there another one 400 gigawatts electric 10% okay we're getting close I've seen three hands so if we can collect the questions quickly so each of you ask your questions then the panelists can start to put one here and there was one there and then back in the back Hi, John Romankowitz from State Department Office of Climate Change my question is for Nat Bullard China seems to be pretty dominant in crystal and silicon will they be a growing dominant force in thin film solar and what are the dynamics there is thin film going to become more important anyway because we already know U.S. is pretty dominant in thin film why don't you wait and we'll collect all the questions Hi, Catherine Silverthorn with E3G my question is for Kate I was wondering if you could speak a little bit to how modular construction impacts the life cycle carbon emissions I'm wondering if centralizing the construction has an impact on the life cycle carbon emissions associated with nuclear plants and then there was the lady there at the table we'll actually collect four but quick in the answer Hi, my name is Sophie Liu, I'm a student at SIS and also a research assistant at the rapid end group my question is for Kong Wu and also for Nat Bullard if you could give us a little if from your discussions within the industry if you could give us a little insight into what you think the Chinese NOCs what their driving motivations may be the acquisition of foreign equity and energy in unconventional gas and shale oil particularly with respect to their recent equity infusion to the Eagle Ford shale investment there is some speculation as to whether or not that's purely just an equity investment and just an asset diversification strategy or if there's a long term goal to obtain technology transfer for China in the long term if you could just speak a little bit about that and then the last question in the back, in the back Christopher Payne with the Natural Resources Defense Council for Kate by 2020 what fraction of China's uranium supply will be sourced domestically and then could you project that out to 2040 with supposedly 400 gigawatts electric operating and same for separate work units and fuel fabrication so why don't we start, Nate if you want to start on the crystalline John's question is pretending to two technologies for semiconductor use in solar crystalline silicon is the most common it's the most widely deployed worldwide and is the most widely manufactured within China thin films is a process that is more akin to spray painting on glass or a metal substrate produces a similar semiconductor surface they are inherently less efficient and therefore take up more space per unit of generation China really has done a great deal of deployment or at least factory deployment of thin film a lot of capital equipment was sold by the United States companies such as Applied Materials into China to do developments of thin film however thin film is a moving target as is crystalline silicon so as crystalline silicon becomes cheaper and cheaper your thin film product has to become commensurately cheaper and higher in efficiency in order to compete on a levelized cost basis and what we found is that a lot of the manufacturers in China actually drew back from some of their thin film goals the ability to invest in their already decreasing costs in crystalline silicon would go that way is it going to be in the long run a more important part of the energy mix? potentially the key number is always the cost of energy generated not the cost of the equipment if there are applications wherein thin film makes more sense such as building integrated materials or if there are places where it yields more energy because of the yield curve inherent in the semiconductor given particular environmental conditions then you can see it deployed is there going to be a technology developed sort of native to China in thin film? potentially what we've seen so far have been adoptions of technologies that are proven on the lab bench or started to be proven in factories in Europe and the United States deployed at scale in China but we've also seen Chinese companies that have adopted proprietary processes from the United States on a licensing basis so there's the potential always to have a lot of deployment coming from the Chinese sector thanks to expertise in manufacture so I guess that would be that okay I think China's overseas energy investment and shale gas investment you mentioned just want to say quickly that all the factors you just mentioned all played a role and what the Chinese state oil companies or national oil companies going overseas they have a lot of motivations by themselves they want to grow and getting bigger and expand themselves and in terms of the government national oil companies relationship by going overseas these state oil companies they win very quick approval by the government mainly because of the rising concern since 2000 by the government on energy security so government is concerned about energy security and in a way that the national oil companies kind of take advantage of that basically and so if you want to do one billion dollars investment inside China today even by these state oil companies it's very difficult you have to wait for a long time and turf fights and about the approval process takes months, years but if you go overseas you win very quick approval and that's how the internal sort of competition and among the national oil companies so overall they are going everywhere overseas including this shale gas but this shale gas and CBM in Australia Cosim gas in Australia that also has a component that they want to gain experiences and gain technologies so they can do a better job at home for China's own unconventional gas exploration so I mean your points are well taken I think for many of your kind of views thanks I'll start with the life cycle carbon issue we've only started examining the life cycle carbon footprint of the AP1000 so I don't have an answer for you but what I can tell you is upwards of 10 to 15% of the total cost of a nuclear plant is in transportation so it's really expensive for example you send a steam generator from there are a couple or three steam generator manufacturers in the world it costs maybe a million dollars to send a steam generator somewhere so it's a significant impact for the cost that doesn't speak to the carbon but it does suggest that there is a significant opportunity financially to bring the construction of the components and the construction of the modules closer but I think that the carbon benefit is probably swamped by the reduction of resource utilization so if you cut the amount of concrete in half you have a significant carbon decrease in just the construction and utilization of the concrete so we're just beginning to ask ourselves those questions we don't have those answers on the fuel supply issue Westinghouse has the first core contract for all four of those units in China we do not have follow on so the goal for China is to be completely indigenous they currently project they're going to be continuing to source uranium from Uzbekistan and Kazakhstan and some of those countries however they have an enormous indigenous supply of thorium so if you look out to 2040 that's a really really long time you have an opportunity to completely change the fuel cycle and China is putting significant R&D money into looking at ultra high density fuel new cladding for fuel and can you have completely different fuel cycles including thorium which would make them largely completely indigenous for the fuel source I don't have that smooth evaluation numbers I know what that is though please join me in thanking the panel for a very wonderful setup presentation and if you have more questions I hope that they will be staying for the lunch we'll have we don't have a set speaker for lunch so maybe you can seek them out but if they want to make their escape we're going to take maybe five minutes to bring Jean-Cajun up and get set up so if you want to take a break we've kept you going for a long time and then we'll resume in let's say five minutes, thank you