Friday, February 20, 2009

Heating in China- Inefficiency and Opportunity

Today’s post will focus on China’s extraordinarily inefficient heating system and how to fix it.

Heating in China

Due to China’s geography, heating is required in many regions of the country. As the map below shows, much of China faces cold winters, some of which are severely cold. According to the World Bank, 19% of residential floor area is in “severe cold” regions and 27% is in “cold” regions. As a result, significant amounts of space heating is required to keep occupants comfortable (I use the term “comfortable” verrry loosely, as I will touch on later).

Nowadays heating is slowly creeping southward and entering the “hot summer and cold winter” zones. There was no provision of central heating in these regions until the very late 1990’s, and central heating remains limited. But it’s clear that as China (and particularly southern and central coastal China) continues to get richer, citizens throughout the nation will clamor for more comfortable condition. This China Daily editorial nicely captures that sentiment in it’s title: “freezing Shanghai needs central heating”.

Since the hot summer and cold winter zone accounts for 37% of China’s residential floor area, this southward trend has the potential to dramatically increase the amount of heating in China. Indeed, LBL expects space heating (PDF) to be in 55% of Chinese commercial buildings by 2020, up from 35% in 2000, “as the country’s ‘heating zone’, historically limited to northern China, continues to expand into many southern regions.”

Heating is inefficient and uncomfortable
The problem is China’s space heating is extremely energy inefficient. Wang Qingqin of the Chinese Academy of Building Research estimates (PDF) that buildings in China use 2-3x more energy per square meter for heating than buildings in comparable temperature zones in Europe or the US.

Yet despite all that extra energy use, thermal comfort is significantly lower in China.
Why is this? Well, a number of causes actually. Some central heating systems don’t allow for user control of the heat, so sometimes windows have to be opened to compensate, which is an obvious waste of energy. The billing system also doesn’t help, which I’ll explain later. But certainly the major cause of this inefficiency is extremely poor insulation in Chinese buildings.

Poor insulation

As the results of the Asia Business Council expert interviews above show, the primary factor affecting a building’s heating load is the building envelope and the insulation it provides between the interior of a space and the outdoor environment. The worse the insulation, the more energy transfer between the indoor and outdoor environment. When it’s cold outside, this means the cold air comes in, and the hot air goes out, resulting in a lot of wasted energy as well as occupant discomfort.

As the graph below shows, insulation in Beijing (and the rest of China) is significantly worse than the developed world’s, and allows much more heat (in the form of energy) to escape to the outside.

Graph based on data from Chinese Academy of Building Research

My anecdotal evidence backs this up: I can feel the cold when I put my finger against the glass of almost any window in Beijing, even in high-end apartment buildings. One major exception thus far was the Linked Hybrid, which as I mentioned here, focused on high-quality insulation.

Insulation is a great investment
Investing in improved insulation is a win-win-win, resulting in higher thermal comfort for occupants, and less energy use and GHG emissions at low cost.

Insulation works “year round”, in the sense that improved insulation reduces heating energy use in the winter, but also reduces cooling energy use in the summer. This is really important, since as we can infer from the LBL graph above, in addition to the southward creep of space heating units, there is also a northward creep of air conditioning units.

Maybe the best part about investments in insulation is that they are also a win financially. As the McKinsey global GHG abatement cost curve below shows, investments in insulation are one of the lowest cost sources of carbon emission reductions available.

The need for government policy
So why isn’t their more investment in good insulation, or even more importantly, why isn’t it just built into the buildings from the beginning?

This is primarily a question of government policy. Theoretically, the government mandates higher levels of insulation, but due to lack of enforcement, these levels are not achieved. But as I will describe in a post next week on building codes, many if not most buildings in China don’t actually meet code.

Just as important is the inefficient pricing system for heating in the northern part of the country. The Chinese government views provision of heat in the north as a public good, and therefore has historically mandated that Chinese companies provide heating for their employees. After reforms to that system in 2007, heat is now paid for by tenants, but is still generally sold per the square meter, rather than by the BTU or the KWH. Under this system, no matter how much or little heating a Chinese apartment actually uses, the heating charge is still the same. This helps explain the lack of insulation.

Given the lack of proper pricing structure, there is no financial incentive for the building owner or an ESCO to invest in better insulation. This is why developers usually just skimp upfront on proper insulation. To make matters worse, since Chinese building codes theoretically mandate higher levels of insulation, CDM financing cannot be used to bring these buildings up to code (although as I wrote in a previous post, this should be changed to reflect the reality of the code compliance situation in China).

Luckily, the slow gears of policy change are starting to turn. The government is convinced of the need to price heat properly, and is now just figuring out how to roll out the system without harming low-income Chinese. As this China Daily article noted, some residents already struggle with their heating bill:
But low-income households still find it tough to afford. "We will have to pay 1,700 yuan (US$ 210) for the heating of a 70 square-metre flat under the new system," said 45-year-old laid-off worker Jiang Yongfu in Beijing. "That's almost triple my monthly income."
Hopefully along with pricing heat properly, the government can also start a weatherization program to help lower-income residents like Jiang upgrade their insulation and save money by using less heat.

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