June 11, 2018 By Mark Aspelin
As you can imagine, the State Grid Corporation of China (SGCC) is huge. After all, the company’s 1.72 million employees construct and operate power grids that supply energy to over 1.1 billion people, covering 88% of China. SGCC also owns and operates grids in outside of China, in countries such as the Philippines, Brazil, Portugal, Australia, and Italy. Not surprisingly, this makes SGCC the largest electric utility in the world, and places the company at #2 on the 2018 Fortune Global 500 list.
In reading through SGCC’s 2015 and 2016 Corporate Social Responsibility Reports (the 2017 CSR Report was published in February 2018 but is not available on the SGCC website) and “White Paper on Green Development”, it quickly becomes clear that SGCC’s primary focus from an environmental perspective is on Global Energy Interconnection (GEI), which includes the use of ultra-high-voltage (UHV) electricity transmission, smart grid technologies, and the conversion to clean energy. The reasons for this approach are both practical and strategic. China’s energy resources are located far from the major population centers. For example, most of China’s abundant coal resources are located in the northwest, and its hydropower resources are located in the west, but most of the demand is in eastern and southern China. Ultra-high-voltage electricity transmission enables SGCC to reduce transmission losses to an acceptable level as the electricity is delivered to where it’s needed.
UHV grids also enable SGCC to build new, cleaner, more-efficient power generation plants that are based on wind, solar, and nuclear energy, and then deliver that electricity across long distances to major population centers. And when SGCC says “global energy interconnection” they aren’t kidding. SGCC intends to connect large energy bases and distributed generation at the North Pole (wind) and the Equator (solar) and deliver the energy to customers across the world. As SGCC Chairman Liu Zhenya puts it, “Global energy interconnection can connect power grids in different continents with time zone and seasonal differences to solve energy and environmental problems that have been bothering human development for a long time, ensuring safe, clean and sustainable energy supply. Life will be better as the world is turning into a bright, peaceful and harmonious global village with sufficient energy, green land and blue sky.”
With the help of Global Energy Interconnection, SGCC anticipates that global clean electricity generation will account for 80% of total primary energy by 2050, reaching 66,000TWh, which represents a nearly ten-fold increase from 2010. This will replace 24 billion tons of standard coal every year, reducing CO2 emissions by 67 billion tons and SO2 by 580 million tons.
When it comes to biodiversity and wildlife conservation, SGCC focuses on the link between climate change and biodiversity with the following quote from the Intergovernmental Panel on Climate Change, along with a photo of a polar bear: “If global temperature rises by 1.5 ~ 2.5 ℃, 20% ~ 30% of the assessed species could face extinction. If the temperature rises by over 3.5 ℃, 40% ~ 70% of the assessed species may become extinct. (“IPCC Second Assessment”, 1995).” SGCC also points out that a large number of species are facing extinction risk due to the slow rise of sea levels that can be attributed to the receding and melting of glaciers and permafrost.
Let’s take a quick tour of the SGCC’s efforts to address the following four major threats to biodiversity: habitat destruction, invasive species, pollution, and overharvesting. Even though climate change poses a major threat to habitats, I generally put corporate climate change activities under the Pollution section, since the actions that companies take usually come in the form of pollution prevention initiatives.
Reduce Land Use: SGCC has a goal to reduce land use by 10% and to reduce construction areas by 20%. To accomplish this, SGCC uses several different strategies, which are illustrated by the following success stories.
- In North China Grid Company’s ”11th Five-year Plan”, 50,225,100 square meters of land has been spared by applying compact lines and multi-circuits on the same tower, 533,600 square meters of land were saved by utilizing GIS and HGIS, and 3335 square meters of land was saved by promoting large capacity transformer technology.
- SGCC implemented an “Electricity Caravan” concept to minimize environmental impacts in a fragile plateau environment in the area of Sanjiangyuan National Nature Reserve (pictured below), known as “the water tower of China”. This project between Golog and the main grid of Qinghai needed to adhere to strict environmental and water protection requirements. To do this, workers from SGCC Qinghai Electric Power Company didn’t build any roads or bridges, but used horse caravans known as “Electricity Caravan” to transport the material and facilities needed for the project.
- The Fujian Baihua-Bili 220kV Transmission Project includes 2-circuit 220kV and 4-circuit 110kV lines. “The project performs remarkably with less land occupation and less consumption of materials and resources, reducing the crossover of 25 civil buildings, 114,724 square meters of land occupation, over 120m of corridor width, and 13% of steel consumption, on the other hand, increasing the unit corridor transmission capacity by 235%, thus bringing down the total investment of RMB 5.32 million.”
- SGCC estimates that it reduces the amount of land needed by 25% – 50% by using EHV AC lines rather than transporting coal by railroad and sea.
Charitable Giving and Volunteer Efforts: In 2015, SGCC gave 128 Million RMB (~$19 Million US Dollars) in public donations, provided 15 Million RMB (~2.2 Million US Dollars) via the State Grid Foundation for Public Welfare, and staff provided 2 million hours of volunteer work to support various efforts, such as poverty alleviation and scholarship funds. In addition, 2.8 million employees have participated in 1,365 tree planting activities, resulting in the planting of 677,811 trees over a period of 5 years.
There is no mention of any efforts to address invasive species in SGCC’s various reports and website.
Climate Change and Renewable Energy: The primary effort that SGCC is focused on from a biodiversity and wildlife conservation perspective is to reduce its contribution to climate change through the development of a strong and smart grid. SGCC is actively pursuing the use of clean energy alternatives to fossil fuels, such as wind, hydropower, solar, and nuclear energy. In addition SGCC has actively supported the development of electric automobiles by building 1,537 charging stations, 29,600 charging piles, and a quick charge network that covers 81 cities and 11,000 kilometers of highways. In rural parts of China, SGCC is also partners with the government to implement projects that substitute electricity for coal, oil, and firewood.
Pollution Control: SGCC’s primary pollution control efforts come through its reduction of greenhouse gases. For example, one of its pollution control strategies is focused on recollecting sulfur hexafluoride (SF6). SGCC established SF6 gas recollection and treatment center at a provincial level to strengthen the regulation on the recollection, treatment, and recycling of air, which contributes to the reduction in the emission of greenhouse gases. In 2015, these provincial centers recollected and treated 47.1 tons of SF6 gas, which is equivalent to a reduction of 1.126 million tons of CO2 emissions.
Training: SGCC organizes a variety of environmental protection training activities. “In 2015, the company organized 112 training courses on environmental protection with 4,550 participants, and organized more than 180 activities concerning the development of grid, energy conservation, and emission reduction.”
Overharvesting and overhunting threats to biodiversity are not addressed in SGCC’s website or reports.
The CSRs and White Paper do not provide much in the way of return on investment data for the company’s environmental efforts. Nearly all of the RMB figures in the two reports specify how much the company has invested, rather than return on investment. For example, SGCC reports the following environmental investments:
- Total investment in environmental protection: RMB 5.72 billion
- Investment in environmental protection for construction projects: RMB 5.32 billion
- Investment in environmental protection during grid operation: RMB 230 million
- Investment in environmental research and special areas: RMB 170 million
- Investment in environmental protection management: RMB 120 million
- Investment in environmental protection governance: RMB 93 million
- Cost of environmental protection facilities’ operation and maintenance: RMB 15 million
We can compare SGCC’s clean energy capacity figures with the company’s overall revenues, as summarized below, to give us a rough idea of what priorities SGCC is focused on in the world of clean energy, with the assumption that these efforts must be profitable in some way or else SGCC would not pursue these options.
Energy Source (Integrated Capacity in GW)
- Nuclear Power: 6.4 GW in 2011, 17.02 GW in 2015
- Hydropower: 156.17 GW in 2011, 207.82 GW in 2015
- Solar (Photovoltaic) Power: 2,320 GW in 2011, 44,465 GW in 2015
- Wind Power: 35,190 GW in 2011, 116,640 GW in 2015
Total Revenues (Billion RMB)
- Total Revenues 2011: 1675.4
- Total Revenues 2015: 2075.0
SGCC does provide some return on investment data for the following efforts:
- Jinyun, Zhejiang In Jianchuan County, Xinjian Town, implement pilot projects of distributed PV (solar) generation for 60 low-income families. These projects earned over 2,000 RMB per household every year, and most of the farmers were able to get out of poverty.
- The Fujian Baihua – Bili 220kV Transmission Project includes 2-circuit 220 kV and 4-circuit 110kV lines. The project performs remarkably with less land occupation and less consumption of materials and resources, reducing the crossover of 25 civil buildings, 114,724 square meters of land occupation, over 120m of corridor width, and 13% of steel consumption, on the other hand, increasing the unit corridor transmission capacity by 235%, thus bringing down the total investment of RMB 5.32 million.
Biodiversity & Wildlife Conservation Performance Assessment
SGCC has adopted climate change as its key issue of concern. This shouldn’t come as a big surprise given that SGCC is in the electric power industry, coupled with the fact that China has an abundance of dirty coal and a shortage of electricity. China needs to look at alternative energy options in order to make progress on its commitment to achieve a 40-45% reduction in CO2 emissions per unit of gross domestic product from by 2020, using the year 2005 as a baseline. To its credit, SGCC is aggressively pursuing alternative energy and smart grid technologies to help achieve that objective.
I was also happy to see SGCC’s goal to reduce land use by 10% and to reduce construction areas by 20%. However, SGCC’s CSRs and White Paper are relatively weak when it comes to discussing the company’s direct impact on biodiversity and wildlife. With 889,900 km of transmission lines in China alone, SGCC’s operations certainly have a significant, direct impact on biodiversity and wildlife. As the U.S. Fish & Wildlife Service points out on its website:
“Transmission lines and other linear developments like pipelines, roads and trails, can increase human access into natural areas, displace wildlife from their habitat, act as barriers to wildlife movement and affect migration routes. They have the potential to impact sensitive ecosystems such as wetlands, impact high quality fishery resources when waterways are crossed, and create pathways for the spread of invasive species. Operation and maintenance of transmission line right-of-ways (ROWs) may also result in environmental impacts. ROW maintenance often involves the chemical or mechanical control of vegetation that can contribute to the loss of native plant species diversity. Cleared ROWs may be a continuous source of sedimentation into waterways. In addition to these potential impacts, transmission lines can pose collision and electrocution risks to migratory birds.”
In addition to transmission line corridors, the utilities industry also has the potential for significant biodiversity and wildlife impacts through extensive water use and the siting of new infrastructure. Any company with such a large ecological footprint and direct impact on wildlife should have more to say on the topics of biodiversity and wildlife conservation. This is an opportunity for SGCC to consider in future CSRs.
However, based on SGCC’s stakeholder and customer analyses, where the company plots environmental topics on a graph with a value creation dimension (relevance, importance, and feasibility) on the x axis and a social concern dimension on the y axis, biodiversity is not even on the list of contenders. The top environmental issues that were identified include governing air pollution, combatting climate change, constructing electric vehicle (EV) charging facilities, and improving energy efficiency. In addition, a major reporting standard, the Sustainability Accounting Standards Board (SASB), considers biodiversity to be “not likely a material issue” for companies in the utilities industry, although SGCC uses the GRI reporting standard for its CSR. These factors may explain why SGCC chooses not to cover biodiversity and wildlife conservation in more detail in its various communications.
SGCC was the first state-owned enterprise in China to issue a Corporate Social Responsibility Report (in March of 2006), and I applaud SGCC’s efforts to share its environmental performance in its CSRs and White Paper. I hope to read more about SGCC’s progress in its efforts to protect wildlife and biodiversity in the years to come.
For our next company, we won’t have to journey far. We’re just headed down the street in Beijing to learn about Sinopec, #3 on the list of the Global 500. We’ll explore what Sinopec is doing in the areas of biodiversity and wildlife conservation. Zàijiàn!
Thanks for reading!