Harvard GCC - Case Discussion on Energy

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Energy and Sustainability Case Study Fall Conference 2012

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Harvard GCC Fall Conference 2012 - Case Study on Energy Development

Transcript of Harvard GCC - Case Discussion on Energy

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Energy and Sustainability Case Study

Fall Conference 2012

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Table of Contents

I. Introduction___________________________________________________3!5

I. What is Renewable Energy?

II. What is Social Entrepreneurship?

III.Your Task

II. Energy and Sustainability in China_________________________________6!10

I. Overview

II. Government Policies in Energy and Sustainability

III.Challenges Facing Social Entrepreneurs in China

IV.Energy Companies in China: A Few Examples

III. Gui Zhou_______________________________________________________11

IV. Addendum: Additional Gui Zhou Fact Sheets

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I. Introduction

I. What is Renewable Energy?

Countries by total carbon dioxide emissions, blue being the highes!1

The world’s heavy reliance on coal, oil, and even natural gas draws upon finite sources that will eventually run out. Unlike fossil fuels, which are exhaustible, renewable energy sources regenerate and can be sustained indefinitely. 2 China is the largest emitter of carbon dioxide in the world, though by per capita, it is not the greatest. Nevertheless, the rising levels of pollution in China require a rising need for sustainable energy practices.

II. What is Social Entrepreneurship?

The number of internationalizing social programs is growing rapidly in China today. The Yearbook of International Organizations report shows the existence of over 25,000 citizen!sector organizations in 2002 compared to a mere 6,000 in 1990.

According to the Skoll Foundation, one of the largest social entrepreneurship foundations, social entrepreneurship has three components:

1. identifying a stable but inherently unjust equilibrium that causes the exclusion, marginalization, or su"ering of a segment of humanity that lacks the financial means or political clout to achieve any transformative benefit on its own

2. identifying an opportunity in this unjust equilibrium and developing a social value proposition3. forging a new, stable equilibrium that releases trapped potential or alleviates the su"ering of the

targeted group.3

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1 http://cdiac.ornl.gov/

2 http://www.renewableenergyworld.com/rea/tech/home

3 http://www.skollfoundation.org/wp!content/uploads/2010/09/2007SP_feature_martinosberg.pdf

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III. Your Task

You are a young college student intensely interested in simultaneously capturing profit and socially responsive opportunities. Despite the various obstacles you will face in China, you believe that if you really dedicate yourself to social entrepreneurship, you will e"ect real change. Additionally, you are encouraged by the fact that in July of 2010, China drafted a philanthropy and social entrepreneurship law, which may aid college students like you in doing social work by providing a stronger legal framework and basis. You and the members of your group will form a social entrepreneurship that will try to aid sustainable energy development and implementation.

Here are some domestic issues you might be interested in addressing #though you are certainly not limited to these$:%• greenhouse gas abatement• increasing energy e&ciency• increasing sustainable electricity access%• air quality amelioration, in conjunction with energy generating companies• industry e&ciency• sustainability education

You will be working with the government and locals in Gui Zhou province, the province with the second lowest GDP in all of China. The government is committed to developing such an area, as outlined in the Medium and Long!Term Development Plan for Renewable Energy #2007$ in China:

“The overall objectives for China's renewable energy development in the coming 15 years are: to increase the proportion of renewable energy in total energy consumption, to resolve the problem of lack of electricity of people living in remote o"!grid areas and the shortage of fuel for daily life needs in rural areas, to stimulate the utilization of organic wastes for energy, and to promote the development of renewable energy industries.”

Because the government has a vested interest in improving places like Gui Zhou, and because it is such a "blank canvas," you have the ability to pilot and lay the foundation for successful and innovative sustainable energy development and transition strategies.

Given this information, along with the provided data, formulate as best you can an innovative way to improve the quality of life of the people of Gui Zhou through sustainable energy development while also tackling government objectives and local needs.

The Rules

First, you will all break into social entrepreneur teams, read the research #10 min$, and create a business plan #40 min$. Then, each team will take turns presenting their business plan to everyone else #20 min total for all groups$. At the end, there will be a vote to decide on the best business plan #5 min$. You must vote on a business model, but you cannot vote for your own.

Points will be awarded and withheld as you present your plan. The process is explained below. The team with the most points wins!

Your social entrepreneurship team must do three things:

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1. Create a business model uniquely suited to the people of Gui Zhou that...• addresses a local environmental concern• uses the local resources

2. Create a list of potential collaborators, or local institutions and partners. Provide a reason why they want to help you and what leverage you have over them. For every one you list, you get 1 point. During your presentation, if someone contests your reasons, a vote will be cast on whether you should no! receive a point for the specific collaboration listed. If a majority agrees that your point is invalid, you will no! receive the point.

3. Create a list of how the local government, business, or people might want to push back on your e"orts. For every concern you can address and incorporate in your business model, you receive 1 point. During your presentation, if someone contests your solutions, a vote will be cast on whether you should no! receive a point for the specific collaboration listed. If a majority agrees that your point is invalid, you will no! receive the point.

You will present these three things with your group at the end of the discussion. After all the groups have presented, you will vote on a business model, but you cannot vote for your ow". Each vote your group receives accounts for 1 additional point.

Time Structure Breakdown

Total Time: 75 minutes

1. Reading research: 10 mina. In the interest of time, consider employing a strategy of dividing the reading between di"erent

group members.2. Discussion/Debate with your social entrepreneurship group: 40 min3. Presentations: 20 min #this is the total time for presentations, so divide this time evenly for each

group$4. Voting: 5 min

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II. Energy and Sustainability in China

I. Overview

The five renewable sources used most often are biomass #including ethanol and biodiesel$, water, geothermal, wind, and solar energy.

Biomass

Biomass is organic material made from plants and animals. Biomass is a renewable energy source because we can always grow more trees and crops, and waste will always exist. Some examples of biomass fuels are wood, crops, manure, and some garbage.

In China, the government is actively endorsing the production of biomass fuels in the following ways:1. The government has started supporting selected new biodiesel projects and new ethanol projects

using non!grain as feedstock.2. Same prices as comparable gasoline are enforced by government to make sure that consumers do

not pay extra for gasohol.3. The consumption tax that applies to conventional gasoline is waived for ethanol gasoline.

However, there are also obstacles in the market for biomass fuels:The expansion of biomass fuel creates the need for more arable land, and land availability is a constant problem. Also, water scarcity in parts of China have pressured local o&cials to be cautious about expanding feedstock and biofuel production.

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An additional cause for concern in the biofuel market is the volatility of oil prices. Though the general trend has been for oil prices to move up, they do drop at times and can make biofuel investment uneconomical.

Water

“According to the results of the 2003 Nationwide Hydropower Resource Assessment, China's total potential capacity of technically exploitable hydropower is 540 GW, with an annual power generation potential of 2470 TWh. The total potential capacity of economically feasible hydropower is 400 GW, with an annual power generation potential of 1750 TWh. These hydropower resources are distributed mainly in the nation's western regions, with 70 percent of the total located in Southwest China”.4

Geothermal

“According to preliminary assessment, the geothermal energy resources spread across China are mainly of the low and medium temperature types, which are suitable for industrial!use heat, space heating, agricultural use, use in animal husbandry, etc. High temperature geothermal resources suitable for power generation are relatively less plentiful. They are mainly located in Tibet, Sichuan, and Yunnan and have a total potential power capacity of about 6 GW. According to preliminary estimates, the total exploitable geothermal potential in China is about 3.3 billion tce.”5

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4 Medium and Long Term Development Plan #2007$, National Development and Reform Commission

5 Ibid

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Wind

“According to the most recent wind energy resource assessment, the nation's exploitable potential onshore wind capacity is 300 GW. Together with o"shore wind resources, the total potential wind capacity is about 1,000 GW. These resource are mainly distributed in two major “wind belts”: the “Sanbei Region” #or “Three Norths Region,” which includes Northeast China, the northern part of North China, and Northwest China$, and East China #including coastal areas, o"shore areas, and nearby islands$. Aside from these, there are also some fragmented areas rich in wind resources distributed in some inland areas of China.”6

Solar

“Two!thirds of China 's territory enjoys over 2,200 hours of sunshine annually, with total solar radiation per unit area of over 5000MJ/m2. These regions have favorable conditions for solar energy development, with extremely favorable conditions found in West China.”7

II. Government Policies in Energy and Sustainability

Is the government giving subsidies or tax benefits to companies that are going green?The government is providing subsidies, as dictated in the Renewable Energy Law, 2005, amended 2009:

Article 24'The Government budget establishes renewable energy development fund to support the following:1. Scientific and technological research, standard establishment and pilot project for the development and utilization of renewable energy;2. Construction of renewable energy projects for domestic use in rural and pasturing areas;3. Construction of independent renewable power systems in remote areas and islands;4. Surveys, assessments of renewable energy resources, and the construction of relevant information systems;5. Localized production of the equipment for the development and utilization of renewable energy.

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6 Ibid

7 Ibid

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%

Article 25'Financial institutions may o"er preferential loan with financial interest subsidy to renewable energy development and utilization projects that are listed in the national renewable energy industrial development guidance catalogue and conform to the conditions for granting loans.%

Article 26'The Government grants tax benefits to projects listed in the renewable energy industrial development guidance catalogue, and specific methods are to be prepared by the State Council.%

Article 27'Power enterprises shall authentically and completely record and store relevant materials of renewable energy power generation, and shall accept the inspection and supervision of power supervisory institutions.Power supervisory institutions shall do the inspection in accordance with stipulated procedures, and shall keep commercial secret and other secret for inspected units.

What kind of sustainable energy is the government focusing on?The National Development and Reform Commission outlined several “priority sectors” in their 2007 Medium and Long!Term Development Plan for Renewable Energy in China. In Chapter 2.3, they outlined that they supported “combining short!term utilization with long!term technology development. Priority should be put on those renewable energy technologies that have both market demand in the short!term and large development potential for the long!term. Importance should be attached to technologies mature in the current market, such as hydropower, biomass power, biogas, biomass pellet fuel, wind power, and solar thermal. At the same time, importance should also be attached to those less mature technologies that have good future prospects, such as solar PV and liquid bio!fuels.”

III. Challenges of Social Entrepreneurship in China8

1. Funding shortagesa. “There are few donors exclusively focusing on supporting social enterprises in China right now,

and it is notoriously di&cult for small to medium sized enterprises to get loans, let alone social enterprises which face much more challenges to balance the social outputs and business performance. China Social Entrepreneur Foundation is the only one which primarily supports social enterprise development in China. Many international foundations, such as Ford Foundation, Asia Foundation, and “Development Market” program of World Bank , etc., as well as some local ones such as Narada Foundation and Lenovo Venture Philanthropy Fund, all make contributions to social enterprise development in China.”9

2. Diverse and inconsistent levels of support from the local government3. Lack of credit access and insu&cient technical expertise cited as challenges to business growth4. Operational disparities and misunderstanding may take place due to piracy and legal challenges,

language barriers, and technical disparities5. Due to China’s guanxi culture, business people with better social ties tend to have more e&cient

business operations.

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8 http://www.upg!bulletin!se.ro/archive/2009!2/1.(20Munoz.pdf

9 http://dsi.britishcouncil.org.cn/images/BC_China_Social_Enterprise_Research_Report.pdf

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