China

US-China climate goals go well beyond business as usual

The climate targets announced this month by the United States and China will require a significant effort beyond a business-as-usual scenario for both countries. More details will likely follow in the weeks and months ahead, but here is what we know so far for each country.

China

China announced a goal for its greenhouse gas emissions to peak by 2030 or sooner. This marks the first time that China has pledged a peak or absolute target for greenhouse gas emissions, rather than an intensity-based target. In business-as-usual scenarios, China’s emissions wouldn’t peak until 2040 or later.

China also announced it would boost its share of zero-carbon energy, which includes nuclear, hydropower and renewables, to 20 percent – up from about 13 percent today. Meeting that goal will require a substantial build-out of nuclear power stations, hydroelectric stations, wind turbines, and solar panels, as well as transmission and other infrastructure. In a separate announcement, China said it plans to cap its coal consumption by the year 2020.

China can’t, as critics claim, sit idly by for 15 years and reach these targets. It will need to significantly restructure its energy system. China will have to add more than 1 GW of zero-carbon power a week for the next 15 years – an amount roughly equal to the entire installed electricity capacity of the United States.

Low-Carbon Business Innovation: A Call for U.S. Leadership

Will U.S. companies be ready to compete in the world markets of the future? Global clean energy markets pose a $2.3 trillion opportunity over the next 10 years, providing enormous potential for innovation in new technologies, products and business models. These opportunities will help us achieve the greenhouse gas emission reductions that scientists say are needed to mitigate the worst effects of climate change. 

Yet the United States’ commitment to developing these markets for innovation is lagging. While the Pentagon is calling for improved energy security, the U.S. House of Representatives is proposing funding cuts for energy innovation that would reduce our reliance on fossil fuels. After surviving the FY 2011 federal budget battle by receiving $180 million out of the $300 million requested by the President, on June 15 the U.S. House Appropriations Committee voted to cut FY 2012 funding to $100 million for the Advanced Research Projects Agency-Energy (ARPA-E). The President had requested $550 million for the agency, which funds transformational energy technology research.

Carbon Markets Take Flight (In Europe)

This post originally appeared on Txchnologist

At a time when many are adopting the narrative that carbon markets are faltering, the European Union (EU) is aggressively pursuing the expansion of theirs to include aviation. One of only two mandatory greenhouse gas (GHG) cap-and-trade systems in the world, the EU Emissions Trading Scheme (ETS) plans to fold in a new sector beginning in January 2012. Our research shows reducing GHG emissions from aviation is critical if we are to mitigate the impacts of global climate change. Low-carbon fuel technology and other technologies for airplanes are advancing at a rapid clip, but we need a climate policy – either a price on carbon or something else – to get over the hump.

Energy and Climate Goals of China's 12th Five-Year Plan

Energy and Climate Goals of China's 12th Five-Year Plan
March 2011

By Joanna Lewis

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The 12th Five-Year Plan (FYP) adopted by the Chinese government in March 2011 devotes considerable attention to energy and climate change and establishes a new set of targets and policies for 2011-2015.[1]  While some of the targets are largely in line with the status quo, other aspects of the plan represent more dramatic moves to reduce fossil energy consumption, promote low-carbon energy sources, and restructure China’s economy.  Among the goals is to "gradually establish a carbon trade market."  Key targets include:

  • A 16 percent reduction in energy intensity (energy consumption per unit of GDP);
  • Increasing non-fossil energy to 11.4 percent of total energy use; and
  • A 17 percent reduction in carbon intensity (carbon emissions per unit of GDP).

Energy

The relationship between energy and economic growth matters greatly in China; without a reduction in energy intensity since the late 1970s, the country would need to consume three times the energy it does today to sustain its economic growth.  At the center of China’s 11th Five-Year Plan (2006-2010) was a target to decrease the overall energy intensity of the economy by 20 percent. This target was implemented in response to increases in energy intensity experienced between 2002 and 2005, the first increase experienced after several decades of rapidly decreasing energy intensity.  To reverse the unexpected increases in energy intensity, the government mobilized a national campaign to promote energy efficiency, targeting in particular the largest and least efficient energy consuming enterprises. The Top 1,000 Program targeted approximately 1,000 companies (consuming about one-third of the country’s energy) for efficiency improvements.

The 12th FYP builds directly on the 11th FYP energy intensity target and its associated programs, setting a new target to reduce energy intensity by an additional 16 percent by 2015.[2] While this may seem less ambitious than the 20 percent reduction targeted in the 11th FYP, it likely represents a much more substantial challenge. It is likely the largest and least efficient enterprises have already undertaken efficiency improvements, leaving smaller, more efficient plants to be targeted in this second round. Under preparation is a new “Top 10,000” program, which is modeled after the Top 1,000 Program but adds an order of magnitude of companies to the mix.  But as the number of plants grows, so do the challenges of collecting accurate data and enforcing targets.

The closure of inefficient power and industrial facilities also helped contribute to the decline in energy intensity during the 11th FYP period, with a reported 72.1 GW of thermal capacity closed.[3] Total plant closures are equivalent to 16 percent of the size of the capacity added over the period. An additional 8 GW of coal plants are reportedly to be shut down in 2011 alone with further closures no doubt on tap over the next five years.

While final data are not yet available, the country likely fell short of meeting its 11th FYP energy intensity target of 20 percent, instead achieving in the range of 19.1 percent. There is no doubt, however, that much was learned though efforts to improve efficiency nationwide. Many changes were made to how such national targets are enforced at the local level, including the incorporation of compliance with energy intensity targets into the evaluation for local officials.  

The 12th FYP includes a target to increase non-fossil energy sources (including hydro, nuclear and renewable energy) to 11.4 percent of total energy use (up from 8.3 percent in 2010).[4] While not formally enshrined in the 12th FYP, another recent notable announcement is a cap on total energy consumption of 4 billion tons of coal equivalent (tce) in 2015.[5] To meet the cap on energy consumption, annual energy growth would need to slow to an average of 4.24 percent per year, from 5.9 percent between 2009 and 2010. The government is also trying to slow GDP growth rates, targeting 7 percent per year – far below recent growth rates. Lower GDP growth rates make it even more challenging for China to meet energy and carbon intensity targets, since energy and carbon need to grow more slowly than GDP for the country to achieve declining energy and carbon intensity.

Carbon

In the lead-up to the Copenhagen climate negotiations in the fall of 2009, the Chinese government pledged a 40-45 percent reduction in national carbon intensity from 2005 levels by 2020. To achieve this 2020 target, the 12th FYP sets an interim target of reducing carbon intensity 17 percent from 2010 levels by 2015. Whether this target will result in a deviation from China’s expected carbon emissions over this time period depends on the corresponding GDP growth, but many studies have found that this target will be challenging for China to achieve without additional, aggressive policies to promote low carbon energy development.[6]

Also promised in the 12th FYP is an improved system for monitoring greenhouse gas emissions, which will be needed to assess compliance with the carbon intensity target, and to prepare the national GHG inventories that, under the Cancún Agreements, are to be reported more frequently to the UNFCCC and undergo international assessment.

The 12th FYP establishes the goal of "gradually establish[ing] a carbon trade market," but does not elaborate. A handful of provinces have announced interest in piloting carbon trading schemes. The Tianjin Climate Exchange, partially owned by the founders of the Chicago Climate Exchange, is positioning itself to be the clearinghouse for any future carbon trading program.[7] While some have suggested that Guangdong province may be targeted for a pilot program at the provincial level, other reports speculate that the program would begin within a single sector, such as the power sector, or begin by including only state-owned enterprises, which are often the target of early government policy experiments (as was the case with mandatory market shares for renewable energy placed on the large state-owned power companies). Other likely locations for pilots might include China’s low-carbon cities and provinces.[8]

Implementing a carbon trading scheme in China, even on a small-scale or pilot basis, will not be without significant challenges. Concerns have already been raised from both domestic and foreign-owned enterprises operating in China about how the regulation could affect their bottom lines. But the key challenge is likely technical, resulting from the minimal capacity currently in place to measure and monitor carbon emissions in China.

Industrial Policy

The 12th FYP also includes many new industrial policies to support clean energy industries and related technologies. Industries targeted include the nuclear, solar, wind and biomass energy technology industries, as well as hybrid and electric vehicles, and energy savings and environmental protection technology industries.[9]  These “strategic and emerging” industries are being promoted to replace the “old” strategic industries such as coal and telecom, (often referred to as China’s pillar industries), which are heavily state-owned and have long benefited from government support.[10] This move to rebrand China’s strategic industries likely signals the start of a new wave of industrial policy support for the new strategic industries which may include access to dedicated state industrial funds, increased access to private capital, or industrial policy support through access to preferential loans or R&D funds.

Other targets encourage increased innovative activity, including a target for R&D expenditure to account for 2.2 percent of GDP, and for 3.3 patents per 10,000 people. During the 11th FYP period, an estimated 15.3 percent of government stimulus funding was directed towards innovation, energy conservation, ecological improvements and industrial restructuring.[11]

 

The old pillar industries

The new strategic and emerging industries

1

National defense

Energy saving and environmental protection

2

Telecom

Next generation information technology

3

Electricity

Biotechnology

4

Oil

High-end manufacturing (e.g. aeronautics, high speed rail)

5

Coal

New energy (nuclear, solar, wind, biomass)

6

Airlines

New materials (special and high performance composites)

7

Marine shipping

Clean energy vehicles (PHEVs and electric cars)

Sources: “Decision on speeding up the cultivation and development of emerging strategic industries,” www.gov.cn, September 8, 2010, http://www.gov.cn/ldhd/2010-09/08/content_1698604.htm; HSBC, China’s next 5-year plan: What it means for equity markets, October 2010. 

Other Targets

The 12th FYP also includes targets to increase the rate of forest coverage by just over 21 percent and the total forest stock by 12.5 million hectares by 2015. Also mentioned are targets for the construction of 35,000 km of high-speed rail and improvements in subway and light rail coverage, as well as a goal to connect every city with a population greater than 500,000.[12]

Outlook

The 12th FYP provides a glimpse into the minds of China’s leadership as it lays out a methodological plan for moving the country forward. It includes a strong emphasis on new energy and climate programs and clearly illustrates China’s commitment to increased environmental protection. The Plan itself provides a framework for progress, but leaves the details of implementation to policy makers, with many new policies and programs likely to follow in the coming weeks.

Some of the targets will no doubt prove challenging to implement. The national energy and carbon intensity targets will prove particularly difficult if economic growth rates slow in line with targets put forth in the plan. Implementation of energy conservation and efficiency programs at the facility level will prove increasingly demanding as more and more facilities are incorporated into current programs. The non-fossil energy target relies on extensive increases in nuclear energy capacity, but growth in nuclear plants may slow as efforts to improve safety and regulation will be implemented in the aftermath of the recent Japanese nuclear disaster.[13] If nuclear targets are reduced, the share of renewable energy will need to increase even more than current targets propose.

Overall, China’s Plan represents many ambitious climate and energy goals, and lays out a strategic roadmap for the county to endeavor to pursue over the next five years.

Notes and References



[2]“Key targets of China's 12th five-year plan,” Xinhua, March 5, 2011. http://www.chinadaily.com.cn/xinhua/2011-03-05/content_1938144.html


[3] Wen Jiabao.  Report on the work of the Government. Delivered at the Fourth Session of the Eleventh China National People’s Congress, March 5, 2011. http://blogs.wsj.com/chinarealtime/2011/03/05/china-npc-2011-reports-full-text/

[4]“China announces 16 pct cut in energy consumption per unit of GDP by 2015,” Gov.cn, March 5, 2011. http://www.gov.cn/english/2011-03/05/content_1816947.htm; “Zhang: ‘Twelfth Five’ push to non-fossil energy to account for 11.4 percent share of primary energy,” people.com.cn, January 6, 2011. http://energy.people.com.cn/GB/13670716.html

[5]Fellman, Joshua. “China to Hold Primary Energy Use to 4.2 Billion Tons in 2015, Xinhua Says.” Bloomberg, October, 20, 2010. http://www.bloomberg.com/news/2010-10-30/china-to-hold-primary-energy-use-to-4-2-billion-tons-in-2015-xinhua-says.html


[6] See, e.g. Cohen-Tanugi, David. “Putting it into Perspective: China’s Carbon Intensity Target.” NRDC White Paper, October 2010.

[7]The Tianjin Climate Exchange (TCX) is a joint venture of China National Petroleum Corporation Assets Management Co. Ltd. (CNPCAM), the Chicago Climate Exchange (CCX) and the City of Tianjin.

[8]In July 2010, NDRC announced the selection of official low carbon pilot provinces and cities, including the provinces of Guangdong, Liaoning, Hubei, Shaanxi and Yunnan, and the cities of Tianjin, Chongqing, Shenzhen, Xiamen, Hangzhou, Nanchang, Guiyang, and Baoding.
 

[9]“Decision on speeding up the cultivation and development of emerging strategic industries," www.gov.cn, September 8, 2010, http://www.gov.cn/ldhd/2010-09/08/content_1698604.htm

[10]Over 70 percent of SOE assets and profits are concentrated in the “old” magic 7 strategic industries. HSBC, China’s next 5-year plan: What it means for equity markets, October 2010.
 

[11]HSBC, China’s next 5-year plan: What it means for equity markets, October 2010.

[12]Seligsohn, Deborah and Angel Hsu. “How does China’s 12th Five-Year Plan address energy and the environment?” China FAQs, march 7, 2011. http://www.chinafaqs.org/blog-posts/how-does-chinas-12th-five-year-plan-address-energy-and-environment

[13]Yue, Yang. “China may revise nuclear power target.” Marketwatch.com from Caixin Online, March 29, 2011.
http://www.marketwatch.com/story/china-may-revise-nuclear-power-target-2011-03-29

 

Joanna Lewis
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Global Climate Landscape - Elliot Diringer on Australian National Radio

Promoted in Energy Efficiency section: 
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March 2011

Click here to listen to the interview and read the transcript.

Elliot Diringer, Vice President for International Strategies, discusses what actions the United States, China, Europe, and Australia are taking in regard to climate change and clean energy in an Australian Broadcasting Corporation Radio National interview.

"I worry that countries like the United States and Australia risk cutting their long-term economic throats by not positioning their economies to compete in the 21st century economy. And this is exactly what we see China doing,"  says Diringer. "China is moving on this issue I think in part because it recognises that it like everyone else faces some serious consequences as the planet warms. I mean they have a fairly large population, and things like drought and flooding and sea level rise are very real threats. But what I see in China is that there is also an ability at the leadership level to take the long view here. The over-riding priority for them is strong, sustained economic growth. But they recognise that they can't achieve that, relying over the long term, on exhaustible resources, so they are beginning to make the transition towards sustainable resources, and they're investing very heavily with clean energy and renewable energy, far more heavily than anyone else at this point."

Updated Climate Change 101 Series Released

Kicking off the new year, we released an update of its Climate Change 101 series. Climate Change 101: Understanding and Responding to Global Climate Change is made up of brief reports on climate science and impacts; adaptation measures; technological and business solutions; and international, U.S Federal, State, and local action. Last released in January of 2009, the updated reports highlight the significance of the global negotiations, climate-related national security risks, local efforts to address climate change, the most recent predictions on global temperature changes, and more.

One Less Excuse to Avoid Acting

Only time will tell whether the deal struck in Copenhagen proves a true turning point in the effort against climate change.  Flying home after two chaotic and exhausting weeks, I find I’m of two minds.  

The deadline of December 18, 2009, in fact drove many governments further than before.  In the weeks preceding, the United States, China, India and others felt compelled to come forward with explicit emission pledges.  Under the Copenhagen Accord, countries have until January 31 to put these numbers on record; then there is no taking them back. 

These pledges are not binding.  They are statements of intent, not obligation.  But that is not what disappoints me.  I never expected Copenhagen to produce more than a political accord.

What troubles me is that governments did not resolve to move next to a legally binding treaty.  That goal was part of the tentative agreement announced by President Obama.  But then he left, and in final deal-making, it somehow vanished.  The negotiations will of course continue.  Governments agreed they’d meet next year in Mexico, the year after in South Africa.  But with what type of agreement in mind?  That’s unclear.

Where's the U.S. on Verification and Compliance?

“Verifiable.”  That is arguably the most important word in the Bali Action Plan, the agreement two years ago that launched the global climate negotiations about to culminate in Copenhagen.  Our future climate commitments and actions, governments agreed, must be “measurable, reportable and verifiable.”

This construct is critical because, done right, “MRV” offers the promise of a global climate agreement in which countries can confidently ascertain whether others are doing what they promised.

Yet many governments now seem decidedly uncomfortable with the concept.  Developing countries say MRV shouldn’t apply to any actions they take on their own, only those receiving international support (a point underscored last week by China when it announced its new carbon intensity target).  In the case of a country like China, that means virtually none of its actions would be subject to international verification.

The United States, for its part, has offered up an MRV proposal that avoids the term verification altogether.  This is a worrisome omission, one that underscores perhaps the most glaring weakness in the U.S. position going into Copenhagen – its absolute silence on the question of compliance.

The U.S. is Hardly Alone

BANGKOK -- It’s no surprise, in the pre-Copenhagen posturing, that the United States is once again seen by many as the single greatest obstacle to an effective global climate effort.  The truth, though, is that the U.S. is hardly alone.  On all the key issues – emission targets, developing country commitments, and finance – other key players aren’t ready to strike a final deal either.

In his address last week to a high-level UN climate summit, President Obama offered an impressive list of early accomplishments.  Yet as was painfully evident, absent comprehensive legislation from Congress, the administration comes to the negotiating table with loads of good intention, but not yet prepared to take on binding international commitments.

Other countries, meanwhile, appear to be showing some movement. 

Both China and India, long viewed as the other principal barriers to agreement, are signaling a new willingness to act - at least domestically.  President Hu Jintao told the UN summit that China will set a goal to reduce its carbon intensity by a “notable margin.”  India’s government is talking about setting domestic goals to limit its greenhouse gas emissions.  These steps are encouraging, and may help inoculate the two countries against blame in the event Copenhagen is a failure.  But in neither case has the government offered specific numbers or said it is prepared to translate its actions into international commitments.

Yukio Hatoyama of Japan did come to the summit with a number.  Two weeks earlier, fresh from his landmark election victory, the new prime minister had set aside the previous government’s goal of reducing emissions 15 percent below 2005 levels by 2020, a target roughly in line with the numbers being debated in Washington.  In its place, he declared a far more ambitious goal of 25 percent below 1990 levels – provided other major economies pony up their fair share. 

China and Climate Change

Energy and Climate Goals of China's 12th Five-Year Plan
Click here for the summary.

The 12th Five-Year Plan (FYP) adopted by the Chinese government in March 2011 devotes considerable attention to energy and climate change and establishes a new set of targets and policies for 2011-2015.  While some of the targets are largely in line with the status quo, other aspects of the plan represent more dramatic moves to reduce fossil energy consumption, promote low-carbon energy sources, and restructure China’s economy.  Among the goals is to "gradually establish a carbon trade market."  Key targets include:

  • A 16 percent reduction in energy intensity (energy consumption per unit of GDP);
  • Increasing non-fossil energy to 11.4 percent of total energy use; and
  • A 17 percent reduction in carbon intensity (carbon emissions per unit of GDP).

 

C2ES Report: Market-Based Climate Mitigation Policies in Emerging Economies

Used by governments for decades, market-based policies are mechanisms to control environmental pollution at various leverage points. This brief provides an overview of market-based policies aimed at reducing GHG emissions in several major emerging economies: Brazil, China, India, South Africa and South Korea. By implementing regulatory and market-based policy instruments across their economies, these countries are seeking to promote cleaner technologies and behavior change while also promoting economic development and growth.    

 

U.S.-China Workshop: Domestic MRV of Climate Efforts
Learn more about this event.

This workshop focused on domestic monitoring and evaluation of mitigation-related efforts, and on the role of measurement, reporting and verification (MRV) in effective emissions markets, drawing in both areas on domestic experiences in the United States and China.

 

Beijing Workshop on Reporting Practices Related to Climate Change and Other International Challenges
Learn more about this event.

The workshop focused on four topics: domestic MRV of mitigation efforts in China and the United States; MRV of support; reporting and review processes in other multilateral regimes such as the WTO, the IMF, and the Montreal Protocol; and lessons for international MRV of climate action.

 

Coal in China: Resources, Uses, and Advanced Coal Technologies
Click here for this publication.

China’s energy-development pathway has increasingly become a topic of international attention, particularly as China has become the largest national source of annual greenhouse gas emissions. At the forefront of this pathway is a reliance on coal that has spanned many decades. In a world faced with increasing environmental pressures, China must develop ways to utilize coal more efficiently and more cleanly. Its ability to do so will be crucial for its domestic energy security, for its local environment and the well-being of its population, and for the future of the global climate.

 

Common Challenge, Collaborative Response: A Roadmap for U.S.-China Cooperation on Energy and Climate Change 
Learn more about the roadmap.

A new report released by the Center and the Asia Society outlines a roadmap for a more comprehensive program of U.S.-China collaboration on energy and climate change.  The report was produced in partnership between the Center for Climate and Energy Solutions and the Asia Society’s Center on U.S.-China Relations, in collaboration with The Brookings Institution, Council on Foreign Relations, National Committee on U.S.-China Relations, and Environmental Defense Fund.

A related article by Eileen Claussen discusses the importance of a U.S.-China partnership on climate change.  

 

Climate Change Mitigation Measures in China
Read the China Fact Sheet.

China is now the world’s largest greenhouse gas (GHG) emitter, and its emissions are increasing rapidly with economic growth and rising energy demand. The United States remains the largest historic GHG emitter. China's emissions have grown by about 80% since 1990, driven heavily by increased consumption of electricity generated from coal.

As total emissions have grown, China has significantly reduced its emissions intensity (emissions per unit of GDP). China’s per capita emissions are below the world average and about one-fifth those of the United States.

 

China Releases Climate Change Plan
Read China's National Climate Change Programme

On June 4, 2007, China released its first national climate change plan. Prepared by China’s National Development and Reform Commission, the plan outlines China’s strategy for addressing climate change through national programs aimed at mitigation, adaptation, science and technology research, and increasing public awareness.

Read Eileen Claussen's Statement

Coal in China: Resources, Uses, and Advanced Coal Technologies. Click here for this publication.
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