Carbon Mitigation Strategies in China
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1 China Energy Issues in the 12 th Five Year Plan and Beyond Conference Feb 2012 The Energy Studies Institute at the NUS Carbon Mitigation Strategies in China Can Wang Ti Tsinghua University it 1
2 Outline China s Carbon Mitigation Strategies and Policies Barriers for Further Mitigation in China Conclusion Remarks 2
3 China s Carbon Mitigation Strategies Main mitigation targets set since 2006 Time to Base Target set targets year year Indicator Energy consumption per unit of GDP GHG emission per unit of GDP Ratio of non fossil fuel f l energy in primary energy consumption Energy consumption per unit of GDP CO 2 emission i per unit of GDP Target 20% 40~ 45% 15% 16% 17% 3
4 Carbon Mitigation Achievements Limited energy consumption growth vs. Remarkable economic take-off in the 11 th FYP. In the 11 th FYP, China s energy consumption increased by 6.6% each year; however, it successfully supported the economy to grow at an average speed of 11.2%. Energy intensity decreased by 19.1% in the 11 th FYP, helping to avoid 1.55 bil. tons of CO 2 emission reduction. The amount of CO reduced was nearly equal to 5 times the emission reduction committed by the EU under the KP GDP, TPE EC % GDP 1.6 Total primary energy consumption (TPEC) Annual growth rate of GDP 16% Annual growth rate of TPEC % % 4% 0% of GDP, TPEC Annua al growth rate Ene ergy intensity (tc ce/10,000 Yuan) Note: GDP 2005 =1, TPEC 2005 =1 4 Source: China Statistics Yearbooks ( ), China's policies and actions to address climate change(2011).
5 Key Measures in China s Carbon Mitigation Strategies 6. Sectoral carbon mitigation 1. Optimizing industrial structure 5. Promoting low-carbon development in localities China s Mitigation Strategies 2. Energy Conservation 4. Promoting technology innovation 3. Developing low-carbon energy 5
6 1. Optimizing industrial structure Main targets Mode of economic growth: driven by secondary industry and production expansion driven jointly by three industries and structural optimization Share of tertiary industry in GDP : 40.3% (2005) 43.3% (2010) Share of tertiary industry in GDP : 43% (2010) 47% (2015) Share of strategic and newly emerging industries in GDP: 8% (2015) 15% (2020) Key measures replace small inefficient units with large advanced ones; use command & control and economic measures to restrain the development of energy intensive, resource intensive sectors; adjust export tax rebate policies; publish sectoral admittance standards and products energy consumption limits; Seven strategic and newly emerging industries energy saving and environmental protection industry new generation IT industry biological industry high end equipment manufacturing industry new energy industry new materials industry new energy vehicle industry Key policies Decision on Speeding Up the Cultivation and Development of Strategic and Newly Emerging Industries 国务院关于加快培育和发展战略性新兴产业的决定 (2010) Guidance Catalogue for Industrial Restructuring 产业结构调整指导目录 ( ) Adjustment and Revitalization Plan for Ten Key Sectors 十大重点产业调整和振兴规划 (2009) Opinions on Inhibiting Some Sectors Overcapacity and Redundant Construction and Guiding Industries Healthy Development 关于抑制部分行业产能过剩和重复建设引导产业健康发展的若干意见 (2009) Opinions on Accelerating the Development of Service Industries 关于 promote corporate mergers; develop the strategic emerging industries and the service industries; 加快发展服务业的若干意见 (2007) 6
7 Main targets 2. Energy Conservation till 2010, 20% reduction in energy consumption per unit of GDP from that of 2005 till 2015, 16% reduction in energy consumption per unit of GDP from Key policies that of 2010 Comprehensive Energy Saving and Emission Reduction Program in the 11 th and 12 th FYP 十一五 和 " 十二五 " 节能减排综合性工作方案 Opinions on Implementing the Ten Key Energy Conservation Projects 十一五 十大重点节能工程实施意见 The trend of controlling both total energy consumption and energy intensity is emerging. Key measures Top 1000 Enterprises Energy Conservation Action Implementation Plan 千家企业节能行动实施方案 Notice on Improving the Electricity Price Differentiation Policy 关于完善差别电价政策意见 energy saving target responsibility assessment ten key energy conservation projects 的通知 the Top 1000 Enterprises Energy Efficiency Program promote energy saving technologies and products develop circular economy Example promote energy conservation market mechanism (EMCo) Beijing improve a pioneer related in standards total energy (buildings, consumption industrial control. products, Beijing carbon has set certificate) a preliminary goal of total energy consumption in 2015: 90 million tce. Meanwhile, the share of incentive policies (subsidies, energy price formation mechanism, electricity price high quality energy at the end of 12 differentiation mechanism, heat charging th FYP should reach at least 80%; the coal reformation, resource and import/export consumption in 2015 should be limited within 20 million tons. 7 tax reform) Notice on Launching the Work of Low carbon Pilot Provinces and Cities 关于开展低碳省区和低碳城市试点工作的通知
8 Mi Main targets t 3. Developing low carbon energy till2015: Ratio of non fossil fuel energy in primary energy consumption reached 11.4% (8.3% in 2010) till 2020: Ratio of non fossil fuel f lenergy in primary energy consumption reached 15% Key measures: financial subsidy, tax incentives, subsidies for power generation Examples: Key policies Enterprises get a certain amount of financial subsidy Renewable if they Energy replace Law water 可再生能源法 gas with natural gas (e.g., in Jiangxi, the subsidy is 0.35 Yuan/m 3 ). Renewable Energy Mid- and Long-term Development Plan 可再生能源中长期发展规划 Energy Development Plan in the 11 Enterprises who utilize coal bed methane for power generation can get a subsidy th Five-Year Period 能源发展 of 0.25 十一五规划 Yuan/kWh. Interim Management Measures of Special Fund for Renewable Energy Development 可再生能源发展专项资金管理暂行办法 Wind: VAT halved policy; divide China into four wind resource Pilot Management areas Measures and for set Pricing benchmark and Cost-sharing prices of Renewable Energy 可再生能源发电价格和费用分摊管理试行办法 for wind power for each area respectively; the part The of Twelfth price Five-Year higher Plan than for local the Development desulfurization of Coal-bed coal fired units will be covered by the national renewable Methane 煤层气 energy ( 煤矿瓦斯 tariff ) 开发利用 surcharge. 十二五 规划 The Notice on Improving the Pricing Policy of Wind Power 关于 Solar PV: The Golden Sun Demonstration Project, which 完善风力发电上网电价政策的通知 helps cover 50%~70% of total Interim Management Measures of Financial Subsidy for Golden investment costs and gives certain interests discount/subsidies Sun Demonstration for Projects provinces 金太阳示范工程财政补助资金管理暂, aims to support the demonstration and industrialization of key solar 行办法 PV technologies. 8
9 3. Developing low carbon energy Massive development of new and renewable energy in the 11 th FYP Wind and other new/renewable energy s annual growth rates reached 90% and 21% respectively. The growth rates and the absolute amount of increase both topped the whole world. 9
10 4. Promoting technology innovation Main targets till 2010: Ratio of research and experiment expenditures in GDP reaches 2% till 2015: Ratio of research and experiment expenditures in GDP reaches 2.2% National Climate Change Science Technology Special Action: Greatly improve the capacity of independent innovation in the area of climate change; make breakthrough in a number of key mitigation technologies with independent IPR and deploy them widely in the society Key measures Key policies: increase the investment in R&D 气候变化科技专项行动 use financial i subsidies and tax incentives to support the demonstration ti projects launch Knowledge Innovation Project 家中长期科学和技术发展规划纲要 and Technical Innovation Project initiate venture capital plan for emerging industries National Climate Change Science and Technology Special Action 中国应对 National Mid and Long term Science and Technology Development Plan 国 The Outline for Chinese Energy saving Technologies 中国节能技术大纲 Work Program of Controlling GHG Emissions in the 12 th FYP 十二五 控制温室气体排放工作方案 promote international i technology transfer and South South S htechnology cooperation The Decision on Accelerating the Cultivating and Development of Strategic Emerging Industries 关于加快培育和发展战略性新兴产业的决定 10
11 5. Promoting low carbon development in localities Main targets Each province has a carbon intensity target till For example, Beijing 18%; Guangdong 19.5%; Tibet 10%; establish domestic carbon emission trading market in the 12 th FYP Key measures Key policies: establish leading group on climate change at provincial level and launch target responsibility assessment 温室气体排放工作方案 5 pilot low carbon provinces and 8 pilot low carbon cities; 7 pilot cities for carbon emission trading, to start cap and trade program since 2013 Work Program of Controlling GHG Emissions in the 12 th FYP 十二五 控制 Low carbon Development Plan in Each Province 各省制定的低碳发展规划 The Decision on Carrying Out the Work of Low carbon Pilot Provinces and Cities 关于开展低碳省区和低碳城市试点工作的通知 make and launch low carbon development plan at 31 provinces Pilot Program 关于开展碳排放权交易试点工作的通知 establish GHG emission statistics system and the management system The Notice on Carrying Out the Work of Carbon Emission Trading financialsubsidy (energy saving andemission reduction fund, renewable energy development fund, CDM fund ) use tax incentive, bank loan policies, pricing and industrial policies to support emission reduction Public involvement efforts to promote low carbon consumption mode 11
12 National Pilot Program on Low-Carbon Provinces and Cities include work on climate change in their local five-year plans and formulate low- carbon development plans formulate supporting policies to facilitate low carbon development accelerate the establishment of low- carbon industrial structure establish a statistics and information management system for GHG emissions actively promote low-carbon lifestyle and consumption patterns in order to reduce GHG emissions The first batch of low-carbon pilot provinces and cities accounts for 34% of China s GDP and about 30% of China s emissions. 12
13 6. Sectoral carbon mitigation Mi Main targetst Power generation sector: till 2015, coal consumption per kwh of power generation should reach or get lower than 330g. (already realized in 2011) Key policies: Iron & steel sector: till 2011, 72 million tons of backward iron making capacity and 25 Action Plan to Address Climate Change in China s Forestry Sector 应 million tons of backward steel making 对气候变化林业行动计划 capacity should be retired; comprehensive energy consumption per ton of steel should be less than 620 kgce; CO 2 emissions per ton of steel production should be less than 1.6t; 耗限额标准 100% recycle rate of secondary energy. similar targets in other industrial sectors Guidance Catalogue for Industrial Restructuring 产业结构调整指导目录 ( ) Forestry: from 2011 to 2020, annual average afforestation area should reach 5 million hectares; national forest coverage 调整和振兴规划 rate should (2009) increase to 23%; forest stock volume should reach 14 billion m 3 Key measures Hundreds of energy consumption limits of products 多达百项的产品能 Adjustment and Revitalization Plan for Ten Key Sectors 十大重点产业 Opinions on Inhibiting Some Sectors Overcapacity and Redundant Construction and Guiding Industries Healthy Development 关于抑制部分行业产能过剩和重复建设引导产业健康发展的若干意见 (2009) establish sectoral action plan to deal with climate change (e.g., Action Plan to Address Climate Change in China s Forestry Sector) replace small inefficient units with large advanced ones (in the 11 th FYP, this measure had realized 280 million tons of CO 2 reduction in China s power generation sector ) Set up higher h industrial i entry benchmark and more stringent tenergy consumption limitsit improve the recycle rate of secondary energy 13
14 Major industrial sectors in China have all over-fulfilled the backward production capacity replacement plan in the 11 th FYP. China has eliminated i 77GW backward production capacity in power generation sector, 123 MT in iron making sector, 72 MT in steel making sector, and 370 MT in cement sector in the 11 th FYP, surpassing the original plan by 55%, 23%, 31% and 48% respectively. Leve el of retire ement (GW W, MT) Target in 11th FYP Power Iron making Steel making Cement generation production 14
15 Looking to the future for further mitigation 1. The current stage of development determines that the rapidly growing trend of energy consumption and CO 2 emissions in China can hardly be changed within short period. CO 2 emissions per capita in 2008 in China reached 5.4 tons, surpassing the world average of 4.5 tons. Nearly 1/3 of US level World average 4.5 t Cumulative CO 2 emissions per capita in China are far less than the developed countries. About 1/6 of US level and 1/3 of EU-27 level 400 ssions per Metric tons) ative CO 2 emis ) (M Russia Korea EU Italy 1.3 South Africa Cumula capita ( China India Brazil US Canada Japan Germany UK France 0 10,000 20,000 30,000 40,000 50,000 GDP per capita in 2008 (USD) Source: CAIT Version
16 1. The current stage of development determines that the rapidly growing trend of energy consumption and CO 2 emissions in China can hardly be changed withinshort period. 18 EIA High Case m energy in issions from (bn. tons) ted CO 2 emi China Project EIA Reference Case EIA Low Case IEA China NEA (Policy) ERI(Policy) ERI(Advanced) Tsinghua(Policy) Tsinghua(Advanced) Source: EIA, IEA, NEA, Tsinghua. 16
17 CO 2 TOE GDP CO 2 POP TOE GDP POP Carbon Energy CO 2 = content of Intensity of emissions the energy the economy Production per capita Population Energy structure optimization Technology progress Industrial structure adjustment The Kaya equation clearly shows that technology progress, industrial i structure t adjustment, t and energy structure optimization are the key measures to realize e carbon reduction. 17
18 2. China, as a whole, still has comparatively large potential to improve the technical efficiency. However, in some specific sectors and areas, along with the continuous progress of energy saving and emission reduction, the mitigation potential from technical progress has become very limited. International ti comparison of energy Composition of China s installed capacity intensity in 2007 (toe/mil.usd) in power generation sector in 2010 For China as a whole, there is still big room for further improvements in energy efficiency About 50% of the installed capacity are built in the 11 th FYP. 1000MW +, 4.46% 300MW, 27.37% MW~ 1000MW, 32.31% 300MW~ 600MW, 35.86% 18 Source:IEA, Source: State Electricity Regulatory Commission, 2011.
19 2. China, as a whole, still has comparatively large potential to improve the technical efficiency. However, in some specific sectors and areas, along with the continuous progress of energy saving and emission reduction, the mitigation potential from technical progress has become very limited. International comparison of energy conversion efficiency of coal-fired generating units in the world s top 10 power generating countries 煤电厂能源源转换总效率 50% 40% 30% 20% 10% 0% 42.05% 42% 39% 38% 38% 36% 36% 32% 29% 27% China 中国 Japan 日本 France 法国 Germany 德国加拿大 Canada 美国 USA 韩国 Korea 俄罗斯 Russia 巴西 Brazil 印度 India Note: China s data was in 2007; while other countries data were the average values for Source: IEA, Energy Efficiency Indicators for Public Electricity Production from Fossil Fuels China Electricity Council, 2009.
20 3. China s mitigation potential will rely more and more on industrial and economic structural adjustment. However, these structures are not subjective choices, but are up to the role that China is playing in the international industrial chain. Therefore, structural adjustment will need quite a long. Different economic structures lead to different emission structures as well as different mitigation challenges. Besides electricity sector, most emissions from developed countries come from transport sectors, therefore their mitigation strategies lie mainly on reducing emissions from consumption; however, in developing countries such as China, most emissions come from manufacturing and construction sector (plus, 20% of China s emissions are embodied in export goods). Other sectors 5% Residential 6% Transport 31% Emission structure in US Manufacturing industries and construction 11% Electricity and heat production 42% Other energy industry own use 5% Other sectors 4% Residential 4% Transport 7% Emission structure in China Manufacturing industries and construction 33% Other energy industry own use 4% Electricity and heat production 48% 20 Source: IEA, CO2 Emissions from Fuel Combustion
21 4. Although new and renewable energy are developing very rapidly in China, the coal dominant energy structure in China will continue for a long period, which constrains the pace of China s mitigation Comparison of primary energy structure in Hydro Nuclear Coal Gas Oil Source: BP Statiscial Review of World Energy, June 2010.
22 Conclusion Remarks The achievement of low carbon development in China deserves significant ifi recognition. There was also tangible improvement in technological progress and in reforming and upgrading energy intensive industries, eliminating inefficient production capacity. A system of policies and institutions for low carbon development has been established, and is improving. Facing the urgent task of carbon mitigation, China is experiencing huge challenges from the size of her emissions, the trend of continuous growth in emission, the shrinking of mitigation potential from technology progress, the slow and difficult mitigation from structural t adjustment, t and the inherent high carbon energy structure. In the 12 th FYP and beyond, changing the development pattern, controlling the emissions during development, continuously pushing forward technical efficiency improvement and reducing the emissions embodied in international trade are the most important measures to control China s emissions. 22
23 Thank you for your attention! 23
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