Beijing’s carbon reduction goals could vault it to the front of the pack

17 May 2011

First published on Global CCS Institute

by Adam Aston.

Headlines about China’s environment are more often dominated by alarming details about polluted air and tainted water than news of efforts to cut pollution or improve energy use.

Yet evidence of such eco efforts continues to multiply, and grow in scale. The scope of these goals even hit a new high with publication of details of China’s latest Five Year Plan in March.

Indeed, as summarized by Rupert Posner, Global Director of Energy, The Climate Group, Beijing’s ambitions in carbon reduction could vault it to the front of the pack, where not long ago it was barely in the race.

I was intrigued to learn more. And I got the chance to do so in April, when two of The Climate Group’s top China gurus passed through New York City. From Beijing, Changhua Wu, Greater China Director, and Chicago-based Allison Hannon, Senior Finance Sector Manager, shared their views on China’s greener growth strategy. Both contributed to The Climate Group’s recent report, Delivering Low Carbon Growth: A Guide to China’s 12th Five Year Plan.

China’s carbon strategy has been gaining momentum. Is it right to call this Five Year Plan a milestone for China’s carbon policy?

CW - The 12th Five Year Plan is a truly comprehensive guideline for China’s national economic and social development goals. It’s not just about carbon, it’s about everything. There are a few important developments in this plan, which show you China’s priorities. They’re saying “We need to grow”, but to balance that growth in a more sustainable way, and to balance that growth between regions and across sectors.

Threading between these themes is a consistent approach, over the next five years, to use growth to restructure and transform the economy. There’s a recognition that China can’t grow the way it has over the past three decades, which has been very fast, very resource intensive and very polluting.

That’s the context in which you see the carbon issue addressed. Compared with the 11th Five Year Plan, the 12th sets carbon and clean energy higher up on the agenda. Planners are using carbon as one of the levers to drive the higher priority economic transformation I mentioned above. This means using carbon and energy policy as a way to steer away from older, dirtier industries to newer, cleaner ones.

What targets is China setting for energy and carbon?

CW – The new plan aims to lower energy use per unit of GDP by 16%. It sets out a similar goal to lower carbon intensity per unit of GDP by 17%.

Attaining these targets will be a challenge. China has had difficulty keeping its economy from growing too fast. Five years ago, Beijing set a GDP growth goal of 7.5% per year, but the economy has averaged 10.6% since. The new goal of the 12th FYP is even lower, at 7%.

This 12th Five Year Plan also sets a goal for non-fossil energy in the economy. Starting at about 7.5% in 2005, the economy today gets about 8.3% of its energy from non-fossil sources. The goal for the 13th Five Year Plan, during 2016-2020, is 15%, economy wide. This will be a challenge. China leads globally in the deployment of solar and wind, but new generating capacity from fossil fuels is growing even faster.

AH – These policies will dramatically effect China’s emissions, if it can meet these targets. In the past two Five Year Plans, we saw growth in additional emissions of around 2.2 gigatons annually. If China can hit its new goals, they’ll slow the growth rate, and avoid 0.83 gigatons per year. That means just one additional gigaton annually if so. China is starting to bend the curve of their energy and carbon intensity.

As China looks to lower emissions and develop CCS, is the focus more on the power sector, or industrial emissions?

AH – The last Five Year Plan focused heavily on trying to rein in control of smaller, more polluting coal plants. Even as the country was building new coal-fired capacity, it was very effective at shutting down older, more polluting capacity.

In the new Five Year Plan, the emphasis is increased on large energy-intensive industrial facilities. They’ve been successful at installing more efficient power plants, and renewables. The challenge now is on the demand side: 70% of China’s emissions are from heavy industry.

CW – There’s excess capacity in many energy intensive industries—iron, steel and other metals, as well as petrochemicals. All the major energy-intensive industries have between 15-25% excess capacity. To reduce those emissions you also have to find a way to shift those workers.

AH – That’s the heart of the Five Year Plan. It’s the highest challenge China is trying to address here: how to restructure its macro-economy in order to continue growing, while also meeting social and environmental goals. That’s why part of the 12th Five Year Plan is to develop so-called ‘strategic emerging industries.’

Read our report, Delivering Low Carbon Growth:  A Guide to China's 12th Five Year Plan

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