On Saturday March 5 2011, during the opening of the National’s People Congress, the Chinese President Wen Jiabao announced the details of the 12th five-year plan for 2011-2015, which includes climate and energy targets as one of the five key goals of the plan. Besides limiting annual economic growth to 7 percent in the next five years, the Chinese government aims at reducing energy consumption and carbon dioxide emissions by 16 percent and 17 percent, respectively, from 2010 levels [1]. 

China already introduced an ambitious medium-term goal to reduce carbon intensity 40-45 percent from 2005 levels by 2020. Moreover, the percentage of non-fossil fuels in China’s energy mix will have to rise from 8.3 % in 2010 to 11.4 percent in 2015. The use of market mechanisms to reach the above targets has been explicitly mentioned in the Draft Work plan of the National Development and Reform Commission (NDRC), although the draft simply stated that pilot programs of “cap-and-trade system for controlling overall energy consumption and trading energy savings” will be implemented, without further details. It is worth mentioning that a rigid system for monitoring and reporting greenhouse gas emissions, necessary for any cap-and-trade mechanism to be credible and feasible has not been implemented yet. One of the Chinese provinces with plans to develop a regional cap and trade system, the Guangdong province, is among the provinces that should receive the toughest energy intensity targets in light of fulfilling the national target introduced [2].

In fact, alongside Shanghai, Jiangsu, Zhejiang and Tianjin, the industrial Guangdong province will have to achieve an 18 percent improvement in energy intensity by 2015. Beijing and the surrounding province should be aiming for a 17 percent target, while poorer regions like Tibet, Qinghai and Xinjiang, and Hainan Island should each be bound to a 10 percent energy intensity improvement target, according to a draft negotiation between the central government and the provinces reported by Pointcarbon, and which is still to be formally approved. 

China is also discussing the introduction of an energy target, which could either cap its energy consumption at 4 billion tonnes of coal equivalent by 2015, up from consumption of 3.25 billion tonnes in 2010, or be focused only on coal consumption or production capacity rather than total energy use. Either cap could play an important role in supporting the increase in renewable energy use to 11.4 percent of total electricity generation in 2015, up from current levels of just over 9 percent. The National People’s Congress has also approved plans to add 120 GW of new hydroelectric capacity the next five years as well as 70 GW of new wind power and 5 GW of solar power.

References:

 International Climate Policy and Carbon Markets

This news is extracted from International Climate Policy and Carbon Markets, a bi-monthly report aiming to provide a clear analysis of the worldwide evolution of the carbon market, and of the international and domestic climate policies. Download the last issue, N. 7 March 2011 [950 Kb].