China s Green Development and Energy Transformation: Theory and Practices

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1 The 39 th IAEE International Conference Energy: Expectations and Uncertainty China s Green Development and Energy Transformation: Theory and Practices Prof. Dr. WANG Yi CAS Institutes of Science and Development Bergen, 20 June

2 报告提纲 Outline 1 China s Green Targets and Policy during the 13 th FYP Period 2 Future s Challenges and Uncertainties 3 Roadmap to Energy Transition and Green Development

3 中国生态文明建设和绿色发展的路径依赖 Highlights of Ecological Civilization and Green Transformation & Development in China Policy-making path dependency New idea Plan with targets Pilot & program Scaling up Highlights for building an Ecological Civilization (EC) Change of governing philosophy Setting up institution/regulation system first for life-cycle management Governance improvement: top-down + bottom-up, Market + Gov t Reform and innovation-oriented Green development or Greening/ Greenization: environmental quality centered Green Development in a new normal during the 13 th FYP ( ) Resolve the environmental and resource issues Economic restructuring by environmental driver Green industry & industrial greening: resource/energy efficiency, environmental service, clean energy, new energy vehicle

4 中国的新发展理念 Path Dependence: New development idea/targets oriented 2002: New industrialization path 2003: Scientific development concept/balanced development highlight the sustainable development 2004: Resource-Efficient and Environment-Friendly Society (REEFS) and Circular Economy (CE) 2006: Energy efficiency and pollutants reduction approach (the 11 th and 12 th FYPs) 2009: Low-carbon development 2012: Ecological Civilization (EC):new governing philosophy, like Chinese version of sustainable development 2015: Greening/Greenization/Green Development: transition of production and consumption pattern 5 development concepts in one

5 实现发展理念的综合措施 ( ) Comprehensive Measures for Realizing the Development Ideas Legal framework Planning framework: National Five-Year Plan (FYP), sectoral plan, local FYP Mandatory targets: energy efficiency and key pollutants reduction Legally binding domestically, approved by the NPC Action plan and comprehensive implementation program, supporting policies Pilot project: CE, REEFS, Low-Carbon/ETS, EC, etc. Policy review, scale-up, and new ideas

6 十三五规划纲要 : 五大发展理念 The 13 th FYP Outline (approved by NPC on 16 th Mar. 2016) 20 parts and 80 chapters, strategic layout: 5 concepts of comprehensive development Innovation-driven Development Coordinative Development Green Development Opening-up oriented Development Shared Development 5 concepts: strategic layout, linked each other as a whole Market plays a decisive role Innovation-driven development: 1 st driving force Supply-side structural reform: cutting overcapacity, destocking, deleveraging, reducing costs and improving weak links Three key regions: Beijing-Tianjin-Hebei, Yangtze River Economic Zone, One Belt One Road Initiative Key policies, projects and programs for implementation (100)

7 十三五规划纲要 : 五大发展理念 ( 绿色发展 ) The 13 th FYP Outline (approved by NPC on 16 th Mar. 2016) Green development (Part 10 with 7 chapters, entitled as Speeding up to Improving the Environment ) Speed up to build the main function zoning Push intensive and conservative use of resources Enlarge the pollution control Strengthen ecological conservation and restoration Address global climate change Improve ecological safety mechanism Develop the green and environmental service industries

8 十三五规划纲要 : 五大发展理念 ( 绿色发展 ) The 13 th FYP Outline (approved by NPC on 16 th Mar. 2016) Green development in other parts: Innovation-driven development: building new institutional system: market-based instruments, taxation (resource and environmental tax), regulatory, etc. Modern Industry system: eco-friendly agriculture, Made in China 2025 (smart+green, green manufacturing), Emerging green strategic industry, Green logistics, etc. Modern infrastructural network: green and low-carbon transportation, smart and clean energy system, water security program Coordinated development: green city, green building, marine environmental protection, Yangtze economic zone development with protection first Shared development: resolve poverty issue, sharing economy

9 十三五 期间的绿色指标 Green targets in Mandatory targets: 10 types and 16 targets Resources and Energy: double control (efficiency + cap control) Land: arable land, keep stable at Bn. mu; newly-increased construction land, < Mn. mu Water: water use: 670 Bn. m 3, water use per yuan of GDP, 23% Energy: total energy consumption: 5.0 Bn. tce; energy intensity, 15% (16% in the 12 th FYP) Environment: the quality centered Environmental quality: Air quality: two targets, incl. PM2.5 Quality of surface water: two targets Pollutant reduction: COD 10% (8% in the 12 th FYP) NH 3 -N 10% (10% in the 12 th FYP) SO 2 15% (8% in the 12 th FYP) NOx 15% (10% in the 12 th FYP) Note: the indicator with orange color refers to non-mandatory targets

10 十三五 期间及至 2030 年的绿色指标 Climate targets in 2020 and beyond Climate change targets in : Carbon intensity, 18% (17% in the 12th FYP, non fossil fuel contribution more than that in 12th FYP) Share of non-fossil energy, reach at 15% (12% in 2015) Forest area: 23% (21.7% in 2015) Timber stock volume: 1.65 Bn m 3 (1.51 Bn m 3 in ) Targets in 2030 (China s INDC) Carbon emissions peak by around 2030 or earlier Share of non-fossil energy, 20% Energy intensity, 60-65% ( ) Timber stock volume: 4.5 Bn m 3 ( )

11 十三五期间的应对气候变化政策 Policy framework to address climate change during 13th FYP Main points Control carbon emissions effectively Adaptation to climate change actively Development the international cooperation widely Key incremental policy Double control of energy/carbon intensity and total energy consumption Launch the national Carbon ETS in 2017 Support some prioritized cities to reach at carbon peak earlier Implement demo engineering of near-zero carbon emission district South-south cooperation fund on climate

12 十二五规划目标分解案例 Energy Intensity Target Allocation by province (12 th FYP case) A comprehensive implementation program needed Legal, administrative, economic, and technical measures; top-down approach + bottom-up negotiation; Target allocation by province/industry/enterprise Provinces Energy Intensity Type 1 Shanghai, Tianjin, Jiangsu, Zhejiang, Guangdong 18% Tape 2 Beijing, Hebei, Liaoning, Shandong 17% Type 3 Type 4 Shanxi, Jilin, Heilongjiang, Anhui, Fujian, Henan, Hubei, Hunan, Chongqing, Sichuan, Shaanxi Inner Mongolia, Guangxi, Guizhou, Yunnan, Gansu, Ningxia 16% 15% Type 5 Hainan, Qinghai, Tibet, Xinjiang 10%

13 LC & ETS pilots distribution (1 st round) 27% of population, 36% of GDP, 32% of energy consumption, and 27% of CO 2 emissions 低碳试点分布 辽宁北京 / 天津天津保定 陕西 重庆 湖北湖北 / 武汉 南昌 上海 杭州 LC 云南 贵阳 广东 广东 / 广州 厦门 ETS 深圳 深圳

14 十三五期间的能源发展重大工程 Prioritized Energy Development Program in 13th FYP High-efficient smart power system High-efficient and clean coal technology Renewable energy Nuclear power Unconventional oil & gas Energy delivery channel Energy storage tech/facility Key technical equipment manufacture for energy development

15 报告提纲 Outline 1 China s Green Targets and Policy during the 13th FYP Period 2 Future s Challenges and Uncertainties 3 Roadmap to Energy Transition and Green Development

16 未来中国排放趋势的判断 The Overall Judgment of China s Future Emissions Existing Research on China s Carbon Emissions Peak Research Group The Time of CO2 Emission Peak (Year) The Amount of CO2 Emission Peak (10 9 t) Lawrence Berkeley National Laboratory(2011) Baseline Lawrence Berkeley National Laboratory(2011) Energy Efficiency Scenarios UNDP(2010) Reduction Scenario Research Group of Energy Research Institute, National Development and Reform Commission(2009) Enhanced Low carbon Scenario Chinese Academy of Engineering(2014) Tsinghua University(2013) China Sustainable Development Report 2014(Policy Mix Scenarios,2014) China s population, major resource consumption and pollution emissions will reach its peak in the next 10 to 20 years in succession, and the next 5 to 10 years is a crucial period of China s green & low-carbon transition. As most studies show, China s carbon emissions peak will appear around 2030, and the amount CO 2 emissions peak will be from 8-15 Bn. tons. The most possible is around 1.1 Bn. tons, but there are still some uncertainties which is directly related to the actions, such as a rebound effect Based on the average level of energy use in OECD country or Japan, China s energy consumption will respectively reach at 9.0 or 7.5 Bn. tce in The energy revolution needed.

17 中国的能源消费现状 China s Primary Energy Consumption Energy Share in Coal: 66.0% Oil: 17.1% Gas: 5.7% Non Fossil: 11.2% '80 '85 '90 '95 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 煤炭石油天然气水电 核电 风电及其他 Coal Oil Gas Hydro, Nuke, Wind, and Others In 2015, primary energy consumption 4.3 bn tce (per capita 2.8 tce), 0.4% increase than that in 2014, coal share 64% Carbon emissions would be slightly reduced or flat in 2015

18 非化石能源发展 ( ) Non Fossil Fuel (power) Item 2014 (GW) 2020 (GW) Fund (Bn yuan) Non-Fossil Fuel s share of total power investment Renewables Biomass Wind PV Subtotal 3134 Other clean energy Hydro Nuclear Subtotal 1427 Total 4561

19 中国城市空气质量 China s Urban Air Quality In 2014, only 10% up to standard Monitory: 161 cities ( 87 added than that in 2013) 145 substandard, account for 90.1% City up to standard: including Haikou, Sanya in Haidan province In 2013, 95.9% substandard Under monitory: 74 cities 71 substandard, account for 95.9% City up to standard: Haikou, Zhoushan, and Lhasa Average concentration decreased, but severe smog events in winter 2015

20 基于模拟的政策建议及其挑战 Policy recommendations and challenges for peaking by simulation Integrated policy solutions are needed for realizing the peaks package: target + roadmap/b-model + tech+ +policy mix + fine management + etc. Make sure a multi-step strategy of transition and change of development pattern with overall restructuring (idea, technology, business model, and integration) Reduce energy intensity and adjust energy structure are the fundamental way for reaching peaks Carbon tax, carbon market, and other market-based instruments could work as supplemental measure to reduce CO 2 emissions If China reach at the carbon peak earlier than 2030, it would cause the reduction of global welfare (based on MRICES- CINCIA simulation) Uncertainty/risk, e.g. growth, tech innovation, energy revolution, capacity development, etc.

21 中国经济转型的不确定性 Challenges of China s Economic Transition The new normal of economy 6.5-7% growth expectation in the 13 th FYP L curve or rebound effect Energy elasticity would maintain at or less then 0.3 Structural reform from supply side De-capacity of production, in particular, coal-fired power plant and steel firms; Deal with sunk costs New energy industry development Energy mix optimization Demand-side management

22 报告提纲 Outline 1 China s Green Targets and Policy during the 13th FYP Period 2 Future s Challenges and Uncertainties 3 Roadmap to Energy Transition and Green Development

23 未来 15 年中国的绿色低碳转型发展 : 立法路径 Future s institutional arrangements: Legislation Paris Agreement will be approved by the NPC standing committee later this year Base on 5-year plan of NPC standing committee: Draft a Nuclear Safety Law, Atomic Energy Law, Environmental Taxation Law, Soil Pollution Control Law, etc. Revise the Circular Economy Promotion Law, Water Pollution Control Law according to an integrated approach and new EPL; revise Energy Conservation Law Speed up drafting a Climate Change Law, Carbon Trading Regulation, and related Institutions, based on emission peaking and carbon cap/assets management Institutional arrangements for environmental quality improvement and Green/Low-carbon development Strengthening enforcement and justice continuously, such as Environmental Protection Law (2014), Air Pollution Control Law (2015) Capacity building of legislation for 284 prefecture-level cities, among them, 235 new

24 未来 15 年中国的绿色低碳转型发展 : 体制改革 Administrative System and Governance Reform Governance of governmental sector, restructuring in 2018 Coordinating mechanism: resolve regulations and procedures conflict MIIT: sectoral energy saving Departments under NDRC: energy mgmt., energy saving, climate protection Potential Mega-ministries + Regulatory agency needed for energy and climate change, resource and ecosystem management, pollution prevention and control Reform within energy sector break the monopoly, reform for market pricing, change of Govt functions, reform of state-owned energy enterprises Establish a vertical environmental regulatory system at the provincial level, pilot and spread out Establish the regional, trans-jurisdiction and river basin management authority Strengthening information disclosure and public participation step by step

25 未来 15 年中国的绿色低碳转型发展 : 完善经济政策 Improving current economic policy toolkit Overcome the obstacles of ETS and market-base instruments Strengthen the foundation of carbon ETS: date, regulation system, rule of game (emissions permit, allocation of primary property right based on regional disparity, auction, income distribution, etc.) Regulation system first for the new man-made market, stakeholder involvement important Suggestion: Pilot province/city Regional pilot National market Improve the existing policies Remove obstacles for PPP Change current VAT policy on environmental service industry Reduce transaction costs of green and low carbon transition/development (incl. sunk cost, social cost, etc.) Alternative polices Green/Low-carbon financing Carbon tax Incentives for Carbon cap management beyond 2020

26 能源和低碳技术政策 Policy for Eco-Innovation and Technology Development Encourage diversified energy/low-carbon tech development, optimize the energy supply mix Policy for investing new energy, new energy vehicle, energy storage and power transmission, distributed energy, smart grid and smart energy system; renewable tech cluster; CCS etc. Source: Energy Science & Technology in China: a roadmap to 2050,Science Press/ Springer, 2009

27 未来 15 年中国的绿色低碳转型发展 : 国际合作 International cooperation Explore a New development model beyond the Paris Agreement Energy transformation / Greenization: sharing cost and risk Advanced tech development: energy/resource efficiency, clean and renewable tech package, integrated tech (smart+green), green tech transfer, Best practice sharing: policy, management, standard/benchmark system, business model, carbon-free demo engineering, etc. Systems innovation and institutional arrangements: such as, new environmental market by region Policy analysis, such as, MRV for the environment, comprehensive assessment (like INDC reviewing), integrated planning, regional development, roadmap/trajectory assessment for decarbonization/green transformation (multi-step simulation), PPP vs. Gov t direct investment, supply chain/lifecycle analysis Governance/management pattern reform: fine management, adaptive management, management of uncertainty and transition Modelling development Building cooperation platform, based on G20,Think Tank network, etc. South-South Cooperation, such as SSCF

28 探索包容 合作与双赢的全球绿色转型发展之路 Explore a inclusive, collaborative, win-win solution to green transition and development China faces unprecedented challenge as there is no mature experience and fixed mode to refer to The relation and diversified goals (SDGs) of development and green should be balanced to raise the synergic effect. Roadmap to a green transition and development is one process requiring continuous learning, practice, reform, and innovation (learning by doing) The green transformation require to take comprehensive measure and systems reform at all round, and to be jointly participated by all the stakeholders (combination of topdown and bottom-top) Establish the global green transition/development partnership: reduce the costs and risks, share the best practice, realize a win-win solution

29 谢谢关注! Thanks for your attention! 29

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