Clean Energy Future

China is the world’s largest emitter of carbon pollution, representing around 20 per cent of global carbon pollution. However, on a per capita basis, Australia’s emissions (27.3 Mt CO₂-e per person) are almost five times those of China’s (5.5 Mt CO₂-e per person)^[1]. Further, in the past 20 years, China has reduced the amount of carbon pollution per unit of GDP faster than any other major economy.^[2] As a developing country, its efforts to limit emissions are substantial.

China’s Five Year Plans are important documents that outline the strategic vision for the country’s economic, social and environmental development. In its 12th Five Year Plan
(2011-15), endorsed by the National People’s Congress in March 2011, China established significant new mitigation targets and identified initiatives to help meet the targets, including regulation, new technologies, capital investment and market mechanisms.

China has announced it will introduce emissions trading progressively, commencing in a number of key cities and provinces, including Beijing, Shanghai and Guangdong (covering well over 100 million people).

China’s emissions reduction commitments

Under the United Nation’s climate change negotiations China has pledged to:

• lower carbon dioxide emissions per unit of gross domestic product (GDP) by 40-45 per cent below 2005 levels by 2020
• increase the share of non-fossil fuels in primary energy consumption to around 15 per cent by 2020
• increase forest coverage by 40 million hectares and forest stock volume by 1.3 billion cubic meters by 2020 compared to forest coverage in 2005.^[3]

China’s 12th Five Year Plan (2011-15), contains several new carbon and energy targets measured against 2010 levels:

• increase the proportion of non-fossil fuels in energy consumption to 11.4 per cent by 2015
• reduce energy per unit of gross domestic product (GDP) by 16 per cent by 2015
• reduce carbon dioxide emissions per unit of GDP by 17 per cent by 2015.

China’s carbon pricing policies

China’s 12th Five Year Plan refers to the ‘step by step establishment of carbon emission trading markets’ establishing low-carbon product standards and improving the statistical accounting systems for greenhouse gas emissions. In March 2011, Chinese Minister Xie Zhenhua indicated China would introduce emissions trading pilots in a number of cities and provinces during the 12th Five Year Plan, including in the industrial centres of Beijing, Shanghai and Guangdong. The World Bank recently noted China’s pilots and indicated that these may be expanded to a national scheme by 2015.^[4]

Separately, the Chinese Government is pursuing other measures to reduce fossil fuel consumption and related environmental impacts, including carbon emissions. On 10 October 2011, China’s State Council announced China will introduce a national resources tax on 1 November 2011.^[5] The decision extends existing provincial trials, which commenced in 2010, to a nation-wide tax on the production of resources, including coal, crude oil, natural gas and metals.

China’s investment in renewable energy technologies and energy efficiency

China has the world’s largest installed renewable energy electricity generation capacity.^[6] Plans for further development of low-emissions energy sources under China’s 12th Five Year Plan include a four-fold increase in nuclear power, expanded hydroelectric and solar capacity, more than doubling of wind capacity, and increased gas-fired generation.^[7]

Over the period of the 11th Five Year Plan, the Central Government invested around AUD 30 billion in energy-saving and emissions reduction projects, generating investment worth an estimated AUD 300 billion. Public and private investment in low-emissions energy is expected to total around USD 760 billion by 2020.^[8]

China’s regulation of energy efficiency, proposed under the 12th Five Year Plan, will include requiring 10,000 companies to meet energy consumption standards. This is an expansion of a regulatory program targeting China’s 1000 highest energy-consuming enterprises under the 11th Five Year Plan. In particular, Chinese industries, including aluminium, face penalties in the form of more expensive electricity surcharges if they do not meet specified energy performance standards.

In the five years to 2010, China decommissioned over 70 gigawatts of smaller, inefficient power plants.^[9] This is greater than the entire registered generation capacity in the National Electricity Market in Australia which was just under 50 gigawatts in the 2009-10 financial year.^[10]

The closure of inefficient coal-fired power stations will continue-closure of plants with total capacity of 86 gigawatts is expected in 2011.^[11] Decommissioned plants have been replaced by larger plants that are economically and environmentally much more efficient.

Footnotes

1. Climate Analysis Indicators Tool, Version 8.0, World Resources Institute, 2010.
2. CO2 Emissions from Fuel Combustion (2010 Edition), International Energy Agency.
3. Report on the Work of the Government, http://online.wsj.com/public/resources/documents/2011NPCWorkReportEng.pdf, accessed 22/03/11; China’s 12th Five-year plan.
4. World Bank State and Trends of the Carbon Market 2011, http://siteresources.worldbank.org/INTCARBONFINANCE/Resources/State_and_Trends_Updated_June_2011.pdf, accessed 25 July 2011
5. Renewables 2010, Global Status Report, http://documents.rec.org/topic-areas/REN21_GSR_2010.pdf, p.10, accessed 22 March 2011.
6. ‘China introduces nationwide resource tax, adjusts tax rate’ in Xinhua News, http://news.xinhuanet.com/english2010/china/2011-10/11/c_131183538.htm, accessed 21 October 2011
7. Delivering low carbon growth: a guide to China’s 12th five year plan, 2011, http://www.theclimategroup.org/publications/2011/3/7/delivering-low-carbon-growth-a-guide-to-chinas-12th-five-year-plan/, accessed 19 July 2011.
8. Delivering low carbon growth: a guide to China’s 12th five year plan, 2011, http://www.theclimategroup.org/publications/2011/3/7/delivering-low-carbon-growth-a-guide-to-chinas-12th-five-year-plan/, accessed 19 July 2011.
9. Report on the Work of the Government, http://online.wsj.com/public/resources/documents/2011NPCWorkReportEng.pdf, accessed 22/03/11; China’s 12th Five-year plan.
10. Australian Energy Regulator, State of the Energy Market Report 2010
11. Delivering low carbon growth: a guide to China’s 12th five year plan, 2011, http://www.theclimategroup.org/publications/2011/3/7/delivering-low-carbon-growth-a-guide-to-chinas-12th-five-year-plan/, accessed 19 July 2011.