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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Suggested Citation:"7 Renewable Energy Resources." National Academy of Engineering and National Research Council. 2008. Energy Futures and Urban Air Pollution: Challenges for China and the United States. Washington, DC: The National Academies Press. doi: 10.17226/12001.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

7 Renewable Energy Resources As noted at the outset of Chapter 2, energy usage in the United States and China is presently dominated by hydrocarbon sources and will continue to be for decades. In the case of petroleum, both countries are highly dependent on imported sources. In the case of coal, they have rich domestic sources, but its use for the generation of electricity presents many challenges for minimizing its contribution to air pollution. The desire to reduce both pollution and foreign energy dependence has driven efforts at development of renewable energy sources. Their benefits are well known: in most cases, they produce little or no pollution emissions and because the resources are renewable, they reduce dependencies on foreign supplies and more importantly on finite resources of any kind. This chap- ter provides a brief discussion of the candidate renewable sources/­technologies that could have an important impact in the medium to long term. It also explores the capacities, consumption, and forecasts (where available) for both countries. Finally, it will discuss the challenges of increased use of renewable energy resources. RENEWABLE ENERGY TRENDS AND CURRENT USE Renewables currently provide 9 percent of U.S. electricity supply, although this varies greatly by region. In China, renewables accounted for 7 percent of total primary consumption (excluding traditional biomass) in 2004, down from 7.8 per- cent in 2002, and this too varies greatly by region. China’s renewable energy industry is growing rapidly, and in recent years, wind and solar power generation have grown 25 percent (NBS, 2005). In order to better assess the potential of these two resources, China opened a new center, the Center for Wind and Solar Energy 207

208 ENERGY FUTURES AND URBAN AIR POLLUTION Assessment, which is part of the Chinese Meteorology Administration. Growth in the renewable energy industry is even more difficult to forecast than for more conventional energy sectors, as it is still a relatively small sector in both countries; it is largely dependent upon conventional fuel prices, and is increasingly being driven by government mandates. In China, much of the recent R&D has focused on rural applications for converting its abundant resources, but there are also important urban applications. This section will examine the history of renewable energy consumption in the United States and then discuss the resources available to each country and prospects for future use. A separate discussion of renewable liquid fuels (biofuels) will follow. Figure 7-1 shows trends in renewable energy consumed by source in the United States, 1949 to 2004, and illustrates that: • Renewable energy has traditionally been dominated by hydroelectricity and wood, although over the past two decades other renewable sources have begun to appear. • Through 2030, hydro and wood will continue to dominate, although the other renewable sources will gradually increase in importance. 8 7 6 5 Quadrillion Btu 4 3 2 Conventional hydroelectric Wood Waste Alcohol fuels 1 Geothermal Solar Wind 0 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 Year FIGURE 7-1  U.S. renewable energy consumption, by source, 1949-2005. NOTE: Data for renewables other than hydro and wood N.A. prior to 1980s. SOURCE: EIA, 2006a. 7-1

RENEWABLE ENERGY RESOURCES 209 Figure 7-2 shows another representation of the sources of renewable energy in the United States in 2005, and illustrates that: • Hydro accounts for 45 percent of renewable energy, and wood accounts for 31 percent. • Much smaller shares consist of biomass, alcohol fuels, solar, and wind. Figure 7-3 shows trends in renewable energy consumed in the United States by sector, 1949-2005, and illustrates that: • Most renewable energy is consumed in the industrial sector, followed by consumption in the residential sector. • Consumption in the transportation sector (alcohol fuels) was negligible for most of this period, but has increased its share recently. A closer look at statistics from 2005 indicates that: • Approximately 60 percent of renewable energy was used in the industrial sector and 21 percent was used in the residential sector. • Fourteen percent was used in the transportation sector, and 5 percent was used in the commercial sector (EIA, 2006a). Solar 1% Wind 2% Geothermal 6% Conventional Alcohol fuels Hydropower 6% 45% Waste and Biomass 9% Wood 31% FIGURE 7-2  Relative shares of renewable energy consumption in the United States, 2005. SOURCE: EIA, 2006a. 7-2

210 ENERGY FUTURES AND URBAN AIR POLLUTION 4 3 Transportation Industrial 3 Commercial Residential Quadrillion Btu 2 2 1 1 0 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 Year FIGURE 7-3  U.S. renewable energy consumption, by sector, 1949-2005. NOTE: Data on renewable fuel (ethanol) used in transportation not available prior to 1981. SOURCE: EIA, 2006a. 7-3 Figure 7-4 shows the renewable energy used in the electric power sector in 2005, and illustrates that: • Hydro dominates, providing over 70 percent of renewable electric power. • Waste and geothermal are the next largest sources. RENEWABLE ENERGY FOR ELECTRICITY AND HEATING Hydropower Hydroelectric generation is a well-established, base load option with signifi- cant air quality advantages. In both countries, conventional hydroelectric power is the dominant renewable resource, although the scale of plants differs in many cases. In the United States, most hydroelectric plants are large-scale plants; in Municipal solid waste, landfill gas, sludge waste, tires, agricultural by-products, and other b ­ iomass.

RENEWABLE ENERGY RESOURCES 211 Wood 4.5% Waste 9.9% Hydro 72.7% Geothermal 8.6% Solar 0.2% Wind 4.1% FIGURE 7-4  Renewable energy for electricity, by source, 2005. SOURCE: EIA, 2006a. 7-4 China, although major projects such as the Three Gorges Dam garner the most attention, roughly one-third of China’s capacity is classified as small hydro power (<50 MW). In the United States, hydro power accounts for almost 7 percent of total generation, but in the future its growth will be limited. It is projected to decrease to 5 percent due to public concerns over environmental impact, as well as because most sites with large-scale potential to generate power have already been put into use (EIA, 2007). In China, growth potential for hydropower appears to be more promising. China has abundant water resources for power production, with theoretical reserves of 688 GW and annual energy production of 6,040,000 GWh. The technically feasible reserves are 540 GW, with annual energy production of 2,140,000 GWh; and the economically developable reserve is 400 GW, with annual energy pro- duction of 1,280,000 GWh (NDRC, 2005). About 74 percent of water resources are located in southwest China, as shown in Figure 7-5. As of 2004, domestic hydropower generation (including small-scale hydropower) capacity was 108,260 MW, with total energy production of 328,000 GWh (15 percent of total produc- tion), and that would reach 401,000 GWh in 2005 (Figure 7-6). In 2004, small hydropower produced 110,000 GWh, providing electric power for one-third of the country and one-fourth of the population. China has recently been making great progress in programming, exploring, designing, constructing, and researching hydropower. Chinese hydropower construction is approaching the world-class

212 ENERGY FUTURES AND URBAN AIR POLLUTION Northeast East 2% Northwest 4% Central 9% 10% North 1% Southwest 74% FIGURE 7-5  China’s hydropower resources by region. 450 7-5 401 400 354 350 300 288 284 250 222 TWh 200 191 150 127 100 50 0 1990 1995 2000 2002 2003 2004 2005 Year FIGURE 7-6  China’s hydropower generation, select years, 1990-2005. SOURCE: China Electric Power Yearbook, 2005. 7-6

RENEWABLE ENERGY RESOURCES 213 level, as evidenced by the Ertan hydropower plant and other large plants, such as Sanxia (Three Gorges), Xiaowan, Longtan, and Shuibuya. Wind Wind energy is an electric generation option that has received considerable interest in recent years, and is a well-established proven technology that generates few environmental emissions. Wind is one of the most rapidly growing energy technologies in the United States. Areas with high potential include the Mountain West region, the northeast, and certain offshore areas such as the Great Lakes and portions of the North Atlantic coast. Wind power is projected to experience the largest growth of all renewables in the United States through 2030, thanks to state mandates, but also as a result of federal tax credits. Wind growth will likewise depend on fossil fuel prices as well as on environmental impacts; apart from public concern over aesthetics, wind turbines have been criticized for their impacts on migratory bird populations. Nevertheless, through the combination of federal tax credits and state programs, wind power is projected to provide at least 93 percent of capacity additions in the renewable sector (see Figure 7-7). Current federal tax credits are set to expire at the end of 2008, thus favoring technologies with short lead times, such as wind, and placing at a disadvantage, biomass, geothermal, and hydropower technolo- gies (EIA, 2007). 14 12 10 Unplanned 8 Gigawatts Other Planned 6 State Mandates 4 2 0 er s al as r d la as in rm w lG So W om po e fil th ro Bi nd eo yd La G H FIGURE 7-7  Projected additions to U.S. renewable generating capacity, 2004-2030. SOURCE: EIA, 2007. 7-7

214 ENERGY FUTURES AND URBAN AIR POLLUTION Wind resources are most abundant throughout northern China, along with some offshore potential west of Hainan Island. According to the calculation of the Chinese Meteorology Academy of Science, the wind reserves at 10 m are 3,226 GW, with a recoverable quantity of 253 GW on land and 750 GW offshore. By 2004, China had built 44 incorporated wind farms totaling 764 MW of capacity, and by the end of 2005, China had increased this capacity to 1.26 GW. There are about 200,000 small wind-driven generators used by herdsmen, totaling 30 MW of capacity. China has been mass-producing 600 kW wind-power generators, and already 96 percent of such units installed in China are domestically produced. China has also begun domestically manufacturing 750 kW wind-power genera- tors. China has set specific targets for wind-powered generation capacity of 5 GW by 2010, and 30 GW by 2020 (NDRC, 2007). Solar Solar energy can be converted into heat (thermal) or electricity (photovoltaic or PV). Thermal power has applications in heating buildings and water, as well as in creating steam to generate electricity. The southwestern United States has the highest potential for solar thermal use and solar PV use, although larger sec- tions of the Midwest and southeast have only slightly less potential for PV use. In China, most of the potential for solar energy use is in northern and western China. The Qinghai-Tibet Plain is a high-value center of solar energy, where the total quantity of radiation reaches as high as 6,700 to 8,400 MJ/m2 per year, and the sun shines 3,200 to 3,300 hours annually. China is the top producer and consumer of solar-powered water heaters in the world. Solar energy’s primary use in China is to heat water for household use, and the price of heating with solar energy is often less than the price of heating with electricity or gas. The total amount of installed capacity was over 80 million m2 as of 2005, and China’s strategic goal for the industry is to cover 400-750 million m2, or 30 percent of the domestic market for water heaters, mostly in rural areas. China intends to focus first on meeting domestic demand, but the industry’s growth could eventually expand to the international market, and beyond conventional use to other applications such as heating, air conditioning, and seawater desalination. Rizhao City (which means City of Sunshine in Chinese) provides one example of solar’s potential. As a result of a combination of provincial government support (policy and financial), local industrial capacity, and local politi- cal will, the city has increased household solar water heater use to 99 percent in the central urban district, and most traffic signals and outdoor lighting are powered by PV cells. It appears that one key element in Rizhao’s reliance on solar power has been the provincial government’s support for R&D, which helped improve the technologies and ultimately to lower costs to consumers, while strengthening the local manufacturing capacity (Bai, 2007).

RENEWABLE ENERGY RESOURCES 215 Solar PV technologies receive considerable federal and state government support in the United States and small-scale solar energy applications are growing rapidly there. Solar generators operate during peak loading periods and, without incentives, it is generally too costly to tie them to the grid. Building these tech- nologies from the design stage can reduce costs (relative to retrofits), offset energy costs, and offer savings over the longer term. Rooftop PV modules/tiles and cur- tain wall or other façade panel installations are examples of building-integrated applications. Second-generation “thin-film” technologies, which utilize a fraction of the active materials and thereby reduce manufacturing costs, may be promising. Some thin films can be incorporated into glass manufacture and provide another opportunity to include solar PV in a building’s envelope. Efforts are under way in both countries to tie these building-scale technologies into the grid, but require policy incentives and improvements in the technologies. China’s solar PV installed capacity was 65 MW in 2004, which provided electricity in more than 700 villages and towns totaling 3 million people, mostly in remote areas (NDRC, 2005). The government began providing support for PV development in the 1980s and since then, with assistance from international organizations such as the World Bank, and partnerships with foreign corporations, annual production is approaching 100 MW. China is the largest manufacturer of PV products, and domestic programs such as the National Brightness Program have helped to electrify remote villages off-grid through solar PV. China and the United States have similar manufacturing capacities (just over 8 percent of the world share) but this far outpaces China’s current domestic demand, which is still less than 1 percent of worldwide demand (NDRC, 2006). However, this may change as the national government has set ambitious targets for growth in the solar PV power generation sector; by 2010 the installed capacity is to be 700 MW, growing to 1.8 GW by 2020 (NDRC, 2007). Geothermal Geothermal power draws its energy from the earth’s core; its applications in power generation are limited geographically. In the United States, Nevada, C ­ alifornia, and Utah represent the areas where geothermal power is a viable source of renewable energy. However, more limited uses for home heating/­cooling and water heating are available throughout the United States via geothermal heat pumps. In China, geological surveys suggest that geothermal energy resources are abundant and widely distributed. However, of the estimated 5,800 MW of poten- tial capacity, only 30 MW is currently being exploited (CREIA, 2007). Heat pumps, however, are beginning to play a role in China and are being implemented in new building projects (NDRC, 2005).

216 ENERGY FUTURES AND URBAN AIR POLLUTION Biomass Biomass sources include wood, agricultural waste, industrial organic waste, municipal solid waste, and various other sources and are available in all regions of the United States and China. Its largest use is in co-firing, but it can also fuel power plants and combined heat and power (CHP) plants and can be used as a feedstock in gasification plants. It is difficult to determine the specific cost of biomass feedstocks, as there are significant differences between the various feedstocks, and transportation distance plays a major role in the delivered price of biomass such as forest thinnings and agricultural residues. Some biomass is produced on-site as a by-product of other operations (e.g., mill residues), and the costs of these materials are determined by the presence or absence of compet- ing market outlets. Biomass delivered costs also exhibit considerable variability depending on the resource moisture content and energy content, in addition to collection and transportation costs. In April 2005, Oak Ridge National Laboratory (ORNL) completed a major assessment of biomass for the U.S. Department of Energy and for the U.S. Department of Agriculture to determine whether the United States is capable of producing a sustainable supply of biomass feedstocks that could be used to displace 30 percent of petroleum consumption by 2030 (ORNL, 2005). Table 7-1 shows the breakdown of potential biomass coming from U.S. forestlands. ORNL makes several important assumptions, including that all forestlands not presently accessible by roads are excluded, all environmentally sensitive areas are excluded, equipment limitations are considered, and recoverable biomass is allocated to both conventional forest products industries and bioenergy and bio-based products. Table 7-2 shows the ORNL breakdown of potential biomass coming from the agricultural sector. The largest contributing source is estimated to be residues from annual crop production (e.g., wheat straw and corn stover), followed by produc- tion of perennial energy crops. Thus, based on the ORNL analyses, it appears that the potential exists for sufficient biomass resources to be produced for use as feedstock in an integrated biofuels industry. Agricultural waste is widespread in China and provides an important energy source; crop residues (primarily stalks and manure) represent roughly 170 Mtce (5.1 EJ). The theoretical quantity of biogas production from industrial organic wastewater is 35 Mtce (1.1 EJ). Forestry residue resources are over 70 Mtce (2.1 EJ). As such, China has been a world leader in developing and implementing biogas technologies, specifically anaerobic digestion (Wu et al., 2007). In 2005, approximately 8 billion m3 (0.32 EJ) of biogas was utilized, providing energy to 14 million rural residents. In China, direct burning is the primary use for biomass; much of this takes place in central and western rural China, and its low thermal efficiency (10- Additional infrastructure will be required to assure adequate consumer access to biomass derived liquid fuels.

RENEWABLE ENERGY RESOURCES 217 TABLE 7-1  Projection of Biomass from U.S. Forestlands for Bioenergy Production Representative BTU as BTU Quantity Moisture Received (dry basis, (million Resource Content (Btu/lb) Btu/lb) bdt/yr)a Urban wood wastes including 10 percent- 4,000-8,000 7,600-9,600 47 construction and demolition 50 percent Fuelwood harvest from forest 40 percent- 4,000-6,400 7,600-9,600 52 lands 60 percent Undergrowth removal for fire 40 percent- 60 protection 60 percent Logging and land clearing 40 percent- ~ 4,500 7,600-9,600 64 60 percent Mill residues including pulp and 10 percent- 4,500-8,000 8,000-9,600 145 paper >50 percent Total 368 abdt: bone dry tons. SOURCE: Kitani and Hall, 1989 and ORNL, 2005. TABLE 7-2  Projection of Biomass from U.S. Agricultural Lands for Bioenergy Production Representative BTU as BTU Quantity Moisture Received (dry basis, (million Resource Content (Btu/lb) Btu/lb) bdt/yr) Grains for biofuels 25 percent- 4,300-7,300 6,500-9,500 87 30 percent Animal manure, process residues, 85 percent 1,000-4,000 4,000-8,500 106 and miscellaneous Perennial energy crops 40 percent- 4,500-6,500 6,500-9,500 377 60 percent Annual crop residues 10 percent- 4,500-6,500 6,500-9,500 428 60 percent Total 998 SOURCE: Kitani and Hall, 1989; ORNL, 2005. 20 percent) and high pollution emissions (significant source of particulate matter) make it a less than desirable fuel source. Anaerobic and gasification technologies are improvements but are not widely used at present. Thus, a major challenge for China will be capitalizing on its abundant biomass resources by upgrading the conversion technologies used, in order to limit the damages caused to human health and the environment. The government has set a target of 3 GW of biomass

218 ENERGY FUTURES AND URBAN AIR POLLUTION power generation by 2020, which will clearly necessitate improved technologies. As of 2006, 39 direct combustion projects totaling 1,284 MW of capacity had been approved, most relying on imported technology (Wu et al., 2007). Research and development of a 1 MW biomass gasification internal combustion engine is also under way; smaller-scale gasification power generators have been in use for decades, mainly utilizing rice husks, but scaling up biomass gasification technolo- gies for commercial use will require large improvements in the overall conversion efficiency (Wu et al., 2002). In Dalian, a pilot project at Sanjiapu is converting agricultural waste into coke, black liquor, and gas which supplies 1,000 local homes and businesses with gas for cooking. A recent technical and economic analysis suggests that decentralized, medium-scale (1-10 MWe) gasification plants may be preferable to larger-scale combustion plants, particularly in rural areas (Wu et al., 2007). These technologies may also benefit from a feed-in tariff result- ing from the 2006 Renewable Energy Law, which establishes a subsidy of 0.25 RMB/kWh (~$0.03/kWh) over the price of desulfurized coal. BIOMASS FOR LIQUID FUEL PRODUCTION Biomass comprises the largest single source of renewable carbon on the planet, and starch and sugars from biomass currently form the basis for a large and growing renewable liquid fuel industry. While China has begun pilot projects in Jilin and Henan provinces to commercialize grain ethanol, the United States is already a major ethanol producer, recently overtaking Brazil as the world’s larg- est producer (Table 7-3). Ethanol production from grain and biodiesel production from fats and oils are commercial industries and will continue to make significant contributions to liquid fuels production. Fuels produced from cellulosic biomass are not currently (as of 2006) cost-competitive with petroleum fuels, or with conventional biofuels. However, research attention is increasingly focusing on low-cost cellulosic materials as well as on municipal waste materials as next- generation feedstocks (Farrell et al., 2006). The U.S. corn-to-ethanol industry produced more than 4 billion gallons of alcohol fuel in 2005, and is on track to significantly increase that in 2006. However, use of starch-based biomass fuels has an upper limit, because of the use of food crops as the starting substrate and the inherent competition with the food markets. The agricultural sector estimated that it can produce between 15 and 17 billion gallons of ethanol from crop-based starches before significant impacts to the food market occur. To meet the growing demand for liquid fuels, it is apparent that lignocellulosic forms of biomass will need to supplant the Itshould be noted that there continues to be debate over the issue of net energy gain or loss with the production of liquid fuels from biomass. A recent study suggested that, from a life-cycle energy bal- ance perspective, ethanol derived from corn is only slightly positive; ethanol from sugarcane shows a slightly better net positive balance, but wide-scale use of ethanol as an alternative to petroleum-based liquid fuels will almost certainly require cellulosic technology (Farrell et al., 2006).

RENEWABLE ENERGY RESOURCES 219 TABLE 7-3  Top Five Ethanol-Producing Countries, Millions of Gallons, All Grades Country 2004 2005 2006 United States 3,535 4,264 4,855 Brazil 3,989 4,227 4,491 China 964 1,004 1,017 India 462 449 502 France 219 240 251 SOURCE: RFA, 2007. current starch substrates. ORNL’s recent study suggested that over 95 percent of the U.S. biomass resources available on a sustained basis in 2030 would be cellulosic resources (ORNL, 2005). Lignocellulosics are what comprise woody types of biomass and include the stalks and leafy material of agricultural biomass. Converting these materials is where the real challenge of biomass to liquid fuel production remains. The Energy Policy Act of 2005 (EPACT) requires a minimum annual renew- able fuels consumption in the United States of 6 billion gallons by 2006, and 7.5 billion gallons by 2012. Beyond this, the Biomass R&D Technical Advisory Committee, a panel established by Congress to guide the future of biomass R&D efforts, envisioned that 30 percent of petroleum could be replaced by biofuels by the year 2030—“30 by 30”; however, current production levels are only a small fraction of this target. Current U.S. ethanol production capacity is 4.4 billion gallons from 97 ethanol refineries, and planned capacity expansions and new capacity under con- struction total another 2.1 billion gallons (USDA, 2006). Thus, ethanol produc- tion will soon exceed the 2006 EPACT target. Ethanol production consumed 1.6 billion bushels of corn in 2005 (about 14 percent of U.S. corn production), and 2.6 billion bushels of corn are expected to be used by 2010 (about 22 percent of an 11.9 billion bushel crop). Despite the rapid increase in production, ethanol consumption has exceeded production for the past few years, which has led to increased imports. Current production costs for the U.S. ethanol industry average about $1.09 per gallon (CARD, 2006). Most U.S. production is based on corn, although other feedstocks include wheat, sorghum, and waste beer. Though China is the third largest ethanol producer in the world, it is impor- tant to note that most of the ethanol (at least 60 percent) is used in the beverage industry. Small-scale operations are well distributed, but are not producing fuel ethanol; China’s four state-owned large-scale fuel ethanol manufacturers produced 1.02 million tons (340 million gallons) of ethanol using stale grain as a feedstock (Wu et al., 2007). The National Development and Reform Commission (NDRC)

220 ENERGY FUTURES AND URBAN AIR POLLUTION has set targets of 5 million tons of fuel-grade ethanol by 2010, and 10 million tons by 2020. Presently in China, 27 cities utilize ethanol in their public transportation systems, and cities such as Dalian have been blending ethanol into gasoline since 2000. Plans for expanded production and consumption tend to favor non-food feedstocks. Research is under way to expand the use of sweet sorghum stalks in Northeastern China, and cassava in Southern China, as well as other crops suitable for marginal or alkaline land—though storage and pretreatment present obstacles which must be overcome (Wu et al., 2007). Additionally, the Ministry of Science and Technology is funding research on cellulosic conversion, in order to make use of China’s abundant cellulosic resources. BOX 7-1 Reformulated Gasoline (RFG) and Air Quality Goals Reformulated gasoline (RFG) is increasingly being used to reduce emissions from motor vehicles. What began as a program to prompt refineries supplying nine metropolitan areas of the United States in non-attainment for ozone levels has e ­ xpanded to a nationwide effort to blend petroleum with additives in order to reduce emissions of volatile organic compounds, NOx, and other toxics. During its incipient phase in the 1990s, the price differential was noticeable in the metropolitan areas required to sell RFG, but as petroleum prices have risen and more states and metropolitan areas encourage RFG use, price differentials between conventional gas and RFG have become almost negligible.a Moreover, since RFG is mandated for certain areas, the element of choice for consumers is eliminated. RFG consists of petroleum mixed with a cleaner-burning fuel such as ethanol or methyl tertiary-butyl ether (MTBE). Although peak ozone levels in major U.S. metropolitan areas decreased through the late 1990s, a review of the RFG program indicated that little of the reduction seemed to be attributable to use of RFG, and in the case of ethanol, may actually increase O3 levels (NRC, 1999). Ethanol was first utilized in select markets in the Midwest as the favored additive in RFG over the more effective and generally less costly MTBE. Ethanol use benefited many Midwestern farmers and, because of low transportation costs (if produced and consumed locally), the price differential made it roughly competitive with MTBE for those markets. More recently, MTBE has been determined to pollute local water resources, so many in the industry have been moving away from MTBE due to liability issues and states have taken action to phase out and at least partially ban its use (EIA, 2006a). aAccording to EIA statistics, when introduced in 1995, price differential between RFG and conventional gasoline was greater than 60 cents per gallon. By 1999 the price disparity had settled slightly above 20 cents per gallon, and has decreased since. Recent figures for 2006 show price differentials of less than 10 cents per gallon, representing a 3-5 percent difference from conventional gasoline.

RENEWABLE ENERGY RESOURCES 221 Although ethanol currently accounts for approximately 90 percent of total biofuel production, world biodiesel production has been increasing rapidly. Biodiesel can be produced from waste grease and recycled cooking oil, and thus it provides opportunities to recycle waste materials, though it can also be ­produced from dedicated crops, such as soybeans. A recent study indicated that a 20 percent biodiesel blend (B20) has no net effect on NOx emissions; earlier studies had pointed to an increase in NOx emissions (NREL, 2006). The National Biodiesel Board (NBB) estimates that U.S. production of biodiesel reached 75 million gallons in 2006, compared to 25 million gallons produced in 2004. The NBB estimated in October 2006 that total production for 2006 would triple yet again, approaching 250 million gallons, aided in large part by state and federal tax credits and grants. U.S. on-highway use consumed 37.1 billion gallons of diesel in 2003 and, at that level of consumption, 2005 biodiesel production represents 0.2 percent of supply. NBB estimates that cur- rent U.S. biodiesel manufacturing capacity is 290 million gallons per year—180 million gallons from dedicated biodiesel plants and 110 million gallons within the oleochemical industry (NBB, 2005). China’s biodiesel production represents less than 10 percent of its overall biofuel supply (less than 30 million gallons). Most of this is currently being utilized as industrial fuel oil, particularly in areas lacking access to conventional petroleum-based fuels. Primary feedstocks are rapeseed and soybeans, but both produce edible oils and thus their potential for expanded production is limited. Restaurant waste resources are small and might serve niche markets (e.g., a city’s public transportation system), but jatropha (an inedible tree-grown oil seed) has shown promise, particularly in southwest China, where it grows rapidly on mar- ginal lands (Wu et al., 2007). Taken together, the combined capacities of the U.S ethanol and biodiesel industries are approximately 95 million boe (0.6 EJ) per year. However, in 2004, U.S. petroleum consumption for transportation was approximately 13.86 mil- lion barrels per day, or just over 5 billion barrels (31 EJ) per year (EIA, 2006a). Thus, the current biofuels industry provides less than 2 percent of annual U.S. consumption for transportation, or about 1 percent of total petroleum consump- tion. ORNL projected that by 2030, the United States could sustainably produce over 1.3 billion tons of biomass per year, measured on a bone dry ton (bdt) basis (Figure 7-8), and this would be sufficient feedstock to produce about one-third of U.S transportation fuels. The total resource potential is based on an increase of over seven times current biomass production levels. However, the authors believe that the 1.3 billion tons can be produced with relatively modest changes to land use and agricultural and forestry practices. The values in the report should not be thought of as upper limits, but just one scenario for a set of assumptions. Over the coming years, significant additional research will be undertaken.

222 ENERGY FUTURES AND URBAN AIR POLLUTION Total 1366 Agricultural 998 Resources Forest 368 Resources 0 300 600 900 1200 1500 Million dry tons/year FIGURE 7-8  U.S. annual biomass potential. SOURCE: ORNL, 2005. 7-8 CHALLENGES TO INCREASING RENEWABLE ENERGY USE Renewable energy generation is expected to grow in China and in the United States in the future. In the United States, total renewable generation, includ- ing CHP and end-use generation, is projected to grow by 1.5 percent per year, graph redrawn from 357 billion kWh in 2005 to 519 billion kWh in 2030 (EIA, 2007). China’s estimates are less certain, but the government’s goals are a generation capacity of 30 percent renewable sources by 2020, supplying 400-500 Mtce (12-15 EJ), accounting for 15 percent of primary energy consumption (NDRC, 2007). In both countries, hydropower will continue to be the dominant renewable source for electricity production, though wind-power generation is expected to enjoy the largest annual increase in terms of percentage. Nevertheless, a realistic technologi- cal and economic assessment of the characteristics of these options for generating electricity reveals challenges, as well as the more advertised opportunities. Most major hydroelectric capacity options in the United States have long since been exploited, and proposals for new or expanded hydro facilities often encounter resistance. Further, hydro facilities can have serious negative conse- quences for land use and regional ecosystems, particularly fish populations. Wind energy conversion systems (WECS) present two major problems. First, wind is intermittent and unreliable, and basically operates in a fuel-saver mode. WECS has a capacity factor of about 20 percent, and without adequate storage and/or conventional power generation backup, wind is simply not a long-term, viable option. Second, wind is not entirely without environmental problems. Aside from aesthetic and noise complaints, avian mortality is a challenge, and it

RENEWABLE ENERGY RESOURCES 223 is noteworthy that the National Audubon Society has successfully intervened to prevent the development of some wind projects in California due to the danger they pose to endangered condors. Biomass power has the great advantage of being able to supply reliable, base load power and liquid fuels. However, it has at least three major concerns to address. First, virtually all current biomass plants in the United States use waste from the wood products industries as feedstock. But to become a major source of electricity generation, a large number of dedicated silviculture biomass planta- tions will have to be developed and maintained to provide fuel for closed-loop biomass systems. Such plantations have yet to be successfully developed, and the commercial and economic feasibility of such plantations has not been established. Second, a prodigious amount of land may be required for biomass energy planta- tions. This poses challenges in terms of not only land use, but the water use and ecosystem impacts it entails. Biomass combustion is also an environmentally degrading energy source. Though it is widely used in co-firing operations (along with coal) in order to reduce SO2 emissions, it still emits various other criteria pollutants, notably PM2.5. Thus the vastly increased use of biomass combustion to generate electricity in an increasingly emission-constrained environment must be carefully assessed. Biomass gasification significantly reduces air pollution emissions and provides opportunities to extract high-value chemicals and other by-products, but it is not yet commercial in the United States or in China, and it will face challenges in terms of feedstock uniformity and gas cleanup. The remaining two renewable energy options for large-scale electricity gen- eration are central receiver solar thermal power and utility-scale PV. Both have serious, unresolved issues: • Solar PV has not yet been proven technologically viable for substantial, long-term, reliable electricity generation. • Both are far from being cost competitive. • Both suffer from intermittency and unreliability problems worse than for even those of WECS (e.g., the wind may blow at night but the sun does not shine at night). • Due to their high solar radiation requirements, both options are unsuitable for the climatic and weather conditions in much of the United States. • The land requirements for both options are substantial, and for 1,000 MW could range between 40,000 and 70,000 acres. In addition, the environmental effects of the large amounts of materials required in solar thermal and PV systems are, at present, incompletely understood. For example, there are substantial environmental, health, and safety hazards asso- ciated with the manufacture, use, and disposal of solar PV cells. Some feedstock materials used in PV cells are toxic, carcinogenic, pyrophoric, or flammable, and

224 ENERGY FUTURES AND URBAN AIR POLLUTION the actual hazards to health posed by these materials depend on their inherent toxicological properties and the intensity, frequency, and duration of human expo- sures. Widespread utilization of PV technologies, such as the installation of 130 km2 of PV cells to approximate a generic 1,000 MW power plant, will require that serious attention be given to these hazards as they relate to the sources, processing, usage, and end-of-product-life disposal. Overall, costs and distribution of resources are two overriding challenges to wide-scale use of renewable energy resources. With regard to costs, wind power is an exception, as it has become cost-competitive in some markets without the help of subsidies. However, Figure 7-9 projects that levelized costs would stay above avoided costs for other sources of power generation through 2015 (aside from limited areas with geothermal resources), and that solar thermal generation may still be prohibitively costly in 2030 (EIA, 2007). Due to restructuring in the U.S electrical power sector, more technology R&D will likely need to be underwritten by state and federal governments (NRC, 2000). Programs exist in many U.S. cities which allow individuals and commercial businesses to purchase electricity from renewable resources, albeit at a slightly higher cost, referred to as a green pricing program. A 2000 National Research Council (NRC) report suggested that the U.S. DOE could play a role in encourag- ing a public demand for “green power” (NRC, 2000). As of 2004, U.S. electrical 2015 Wind Biomass Solar thermal Geothermal Avoided cost 2030 Wind Levelized cost Biomass Solar thermal Geothermal 0 20 40 60 80 100 120 140 2004 mills per kWh FIGURE 7-9  Levelized and avoided costs for new renewable plants in the northwest, 2015 and 2030. SOURCE: EIA, 2007. 7-9

RENEWABLE ENERGY RESOURCES 225 industries reported 928,333 customers participating in green pricing programs, and 93 percent of these customers were residential customers (EIA, 2006b). Shanghai has experimented with a similar program, the “Shanghai Green Power Program.” However, renewable power generation accounted for only 0.02 percent of Shanghai’s total generation, and with costs nearly double that of coal-generated electricity, the program has received only limited support (CASS, 2006). Distribution of resources is another difficulty, particularly in China’s case. There is a reverse distribution of the most promising renewable energy resources, relative to population. This is beneficial for remote areas in early stages of urban- ization, for they have an opportunity to meet their rapidly increasing energy needs with clean renewable sources. However, renewable resources appear to have far fewer large-scale applications in eastern and coastal China, home to the majority of the population. Nonetheless, smaller-scale applications can supplement and thereby reduce coal consumption in cities, as well as create opportunities for local industries (e.g., manufacturing or biorefineries). Domestic production capacity for renewable energy technologies is an impor- tant consideration. The international market provides increasing opportunities for renewable energy technologies, both as a source of imported technologies, as well as a larger market for domestically produced technologies (NRC, 2000). In some instances, China is already able to satisfy local demand and is poised to enter the international market. However, in other instances, it could benefit from international cooperation (Zeng, 2005). The Clean Development Mechanism (CDM) provides one such opportunity to foster international collaboration on renewable energy technologies. CDM projects, a result of the Kyoto Protocol to reduce greenhouse gas emissions, have been undertaken in China since 2002, and investments totaled nearly US$1 billion through 2005 (CASS, 2006). The CDM is an opportunity for developed countries to work towards meeting their reduction goals by investing, generally at lower cost, in projects to reduce emis- sions in developing countries, relative to a business-as-usual scenario. While the United States has not ratified the Kyoto Protocol (as of 2007) and is therefore not eligible to partake in CDM projects, it nonetheless has a history of cooperating with China to develop renewable energy resources (Box 7-2). Hydrogen As a resource, hydrogen is the third most abundant element on earth, but most of this is contained within H2O and organic compounds and thus must be extracted for use as a fuel. Most hydrogen is currently produced by applying heat to natural gas to extract the hydrocarbons. While effective for limited applica- tions, given the high price of natural gas, this does not appear to be feasible as a long-term strategy, should hydrogen become a more commonly used fuel source. Electrolysis is another means to obtain hydrogen and, in this process, an electrical current separates water into its elemental components. This process is plagued

226 ENERGY FUTURES AND URBAN AIR POLLUTION BOX 7-2 United States-China Renewable Energy Development and E ­ nergy Efficiency Protocol Renewable energy collaboration between the U.S. Department of Energy (DOE) and China’s Ministry of Science and Technology (MOST) began in early 1995. In December of 2006, the protocol was renewed to continue to facilitate programs that create and implement energy efficient and renewable energy technologies using “solar, wind, biomass, geothermal, and hydrogen energy” (DOE, 2006a). Five sec- tions of the protocol relate to renewable energy. First, a plan for rural, village-scale renewable energy projects focuses on providing rural areas throughout China with energy and electricity. The project’s preliminary steps have begun in rural villages of China, where these energy needs are being met by companies such as the Asia Pacific Economic Cooperation and the Tibet Solar Electrification Project. Another aspect of the protocol relates to wind energy development that includes both grid-connected and off-grid power. A pilot project that uses a “wind/diesel/battery­ systems” is currently being tested and has the ability to provide ­electricity to 120 households on the island of Xiao Qing Dao in the Yellow Sea (DOE, 2006b). The protocol has also encouraged United States-China cooperation on a series of workshops and outreach activities that facilitate U.S. renewable energy compa- nies’ interests in doing business in China. Additionally, geothermal production has increased as a result of United States-China collaborative efforts to provide a market for this energy source in China. Geothermal production ­occurs when high temperatures are used to generate electricity and low to medium temperatures are needed for heating/cooling. The protocol has also increased the number of programs that promote renewable energy policy and planning. Projects, such as the National Township Electrification Program, gather policy makers and technical experts from around the world to discuss how to provide electricity to townships and villages in China that are currently lacking. by inefficiencies, particularly if the initial electricity is produced by fossil fuel combustion, which is often the case. More efforts are needed to extract hydrogen using renewable energy (e.g., wind), thus realizing the full benefits of hydrogen as a “clean” fuel. Hydrogen from coal is yet another means to utilize an abundant domestic resource while significantly reducing emissions. Much of the research taking place is a result of public-private RD&D in cooperation with the U.S. DOE’s National Energy and Technology Laboratory. Hydrogen as a fuel source is appealing because it holds the potential to replace gasoline in the transportation sector, exclusively using domestic resources, thereby significantly reducing dependence on foreign oil. In addition, it can poten- tially eliminate almost all criteria pollutants and greenhouse gases from vehicular emissions. These factors led the United States to announce in 2003 its intention

RENEWABLE ENERGY RESOURCES 227 to transition to a hydrogen economy. In some instances, notably in California, states have pushed ahead with this initiative. California is currently developing the Hydrogen Highway Network, using partnerships between government and the private sector. This Hydrogen Highway would be comprised of hydrogen fueling stations located approximately every 20 miles along state and federal highways, effectively giving all Californians access to hydrogen for fuel-cell vehicles by 2010. This is an ambitious target and well ahead of national forecasts of a transi- tion taking place by 2050. In order for hydrogen to become a viable alternative fuel source and to replace fossil fuels, it must overcome a number of challenges. First, it must prove to be cost-effective. Hydrogen is currently produced at reasonable cost for industrial purposes, but large-scale use would require production using renewable energy, which is still often prohibitively costly. Transmission and storage are key cost issues as well; costs increase drastically when the H2 must be distributed over dispersed locations (NRC, 2004). Therefore, it is difficult to imagine a centralized network for production and distribution, particularly in the short term. References Bai, X. 2007. Rizhao: Solar-Powered City. State of the World 2007: Our Urban Future. Washington, D.C.: World Watch Institute. CARD (Center for Agricultural and Rural Development). 2006. Policy and Competitiveness of U.S. and Brazilian Ethanol. Iowa Ag Review Online 12(2), retrieved from http://www.card.iastate. edu/iowa_ag_ review/spring_06/article3.aspx. CASS (Chinese Academy of Social Sciences). 2006. Understanding China’s Energy Policy: Economic Growth and Energy Use, Fuel Diversity, Energy/Carbon Intensity, and International Coopera- tion. Background Paper prepared for Stern Review on the Economics of Climate Change. CREIA (Chinese Renewable Energy Industries Association). 2007. http://www.creia.net/ (accessed January 30, 2007). DOE (U.S. Department of Energy). 2006a. U.S. and China Announce Cooperation on FutureGen and Sign Energy Efficiency Protocol at U.S.-China Strategic Economic Dialogue. DOE. 2006b. Fact Sheet: Cooperation with the People’s Republic of China. Editorial Board of the China Electric Power Yearbook. 2005. China Electric Power Yearbook. Beijing: China Electric Power Press. EIA (U.S. Energy Information Administration). 2006a. Annual Energy Review 2006. Washington, D.C.: U.S. Department of Energy. EIA. 2006b. Renewable Energy Annual 2004. Washington, D.C.: U.S. Department of Energy. EIA. 2007. Annual Energy Outlook 2007. Washington, D.C.: U.S. Department of Energy. Farrell, A.E., R.J. Plevin, B.T. Turner, A.D. Jones, M. O’Hare, and D.M. Kammen. 2006. Ethanol can contribute to energy and environmental goals. Science 311(5760):506-508. Kitani, O. and C.W. Hall, eds. 1989. Biomass Handbook. New York: Gordon and Breach Science Publishers. NBB (National Biodiesel Board). 2005. U.S Biodiesel Production Capacity. NBS (National Bureau of Statistics—China). 2005. China Statistical Yearbook. Beijing: China S ­ tatistics Press. NDRC (National Development and Reform Commission). 2005. Overview of Renewable Energy Development in China: Recent Progress and Future Prospects.

228 ENERGY FUTURES AND URBAN AIR POLLUTION NDRC. 2006. Report on the Development of the Photovoltaic Industry in China. China Renewable Energy Development Project Office. NDRC. 2007. Medium- and Long-Term Renewable Energy Development Plan. NREL (National Renewable Energy Laboratory). 2006. Effects of Biodiesel Blends on Vehicle Emis- sions, Fiscal Year 2006 Annual Operating Plan: Milestone 10.4 Report, October. Washington, D.C.: Office of Energy Effficiency and Renewable Energy. NRC (National Research Council). 1999. Ozone-Forming Potential of Reformulated Gasoline. Wash- ington, D.C.: National Academy Press. NRC. 2000. Renewable Power Pathways: A Review of the U.S. Department of Energy’s Renewable Energy Programs. Washington, D.C.: National Academy Press. NRC. 2004. The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs. Washington, D.C.: The National Academies Press. ORNL (Oak Ridge National Laboratory). 2005. Biomass as Feedstock for a Bioenergy and Bioprod- ucts Industry: The Technical Feasibility of a Billion Ton Supply, prepared under contract to the U.S. Department of Energy and the U.S Department of Agriculture. RFA (Renewable Fuels Association). 2007. http://www.rfa.org. USDA (U.S. Department of Agriculture). 2006. Ethanol Reshapes the Corn Market. Amber Waves. http://www.ers.usda.gov/AmberWaves/April06/Features/Ethanol.htm. Wu, C.Z., H. Huang, S.P. Zheng, and X.L. Yin. 2002. An economic analysis of biomass gasification and power generation in China. Bioresource Technology 83:65-70. Wu, C.Z., X.L. Yin, Z.H. Yuan, Z.Q. Zhou, and X.S. Zhuang. 2007. The development of bioenergy technology in China. Int. J. Energy, in press. Zeng, P.Y. 2005. Keynote Remarks on Beijing International Renewable Energy Conference, N ­ ovember.

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The United States and China are the top two energy consumers in the world. As a consequence, they are also the top two emitters of numerous air pollutants which have local, regional, and global impacts. Urbanization has led to serious air pollution problems in U.S. and Chinese cities; although U.S. cities continues to face challenges, the lessons they have learned in managing energy use and air quality are relevant to the Chinese experience. This report summarizes current trends, profiles two U.S. and two Chinese cities, and recommends key actions to enable each country to continue to improve urban air quality.

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