He jiankun: Trend of Energy Conservation and CO2 Mitigation & Strategy of Low Carbon Development in China

Date: Aug 12, 2011      Source: WEC      

China is not only subject to the constraints of  domestic resource endowment and environmental carrying capacity, but also confronted with the challenges associated with climate change and CO2 emissions mitigation during her rapid industrialization and urbanization.

During the period of rapid industrialization and urbanization, the GDP from high energy-intensive industries accounted for a big proportion in China, due to the construction of infrastructures and expansion of the production capacity. The demand for energy services is increasing rapidly. China is confronted with severer challenges and bottlenecked obstacle on energy resource security and environmental capacity.

The demand of energy increases by 200 million tce annually in the recent years.more than 50% of the oil is imported. Although the emissions of the conventional pollutants, such as SO2, decrease year by year, the total amount still exceeds the environmental capacity.

The globe target of controlling 2 ℃ of temperature rise will severely compress China’s carbon emission space, so China have to explore a different modernization path from the developed countries.

Exploring low-carbon development pathway is the key for China to deal with the rapidly increasing demand for energy and address climate change.

China’s actual situation and the development stage she stays result in that China has more difficulties than developed countries in addressing climate change and achieving low carbon development.

China has made significant efforts in energy conservation and efficiency improvement to achieve the greatest progress in energy conservation and emission reduction all over the world.  However due to the rapid growth of GDP, the energy consumption and CO2 emission is large and fast-growing. From 1990 to 2010, the CO2 intensity declined by 57%, that is rare all over the world. From 1990 to 2010, the GDP grew by 7.3 times, and the total energy consumption increased by 3.3 times and the CO2 emission increased by 3.0 times.

On account of big steps forward in energy technological changes, energy efficiency increased rapidly , with the rate of 1%-2%, but as a result of the rapid development of heavy chemical and high energy intensive industries in recent years, the share in the national economy has continued to increase or remain high, which offset or slowed down the GDP energy intensity reduction.

China's renewable and nuclear energy development is remarkable, the share of which in primary energy mix keeps increasing, but still could not meet the new incremental demand for energy services in quite a long time, consequently coal and other fossil fuels consumption will continue to grow.

Green and low-carbon development and mitigating carbon emission are the core part of China’s strategic responses to climate change, and also well reflect China domestic needs for sustainable development, and become an important content of national development strategy

Currently they are well consistent with the objectives of improving energy security, conserving resources and energy, and protecting environment.

In long run, they are well in line with the objectives of pursuing new industrialization road and building resource conserving and environmentally friendly society.

Since pursuing a modernization road characterized by low carbon economy is unprecedented, China needs to take substantial efforts to safeguard success.

China seized the opportunity of peaceful development and economic globalization and achieved remarkable economic development during the first 10 years of the current century. However, the resource-dependent and extensive development mode can hardly carry on.

2000-2010,GDP average growth rate reached 10.4%;GDP ranking rose to the 2nd  from previous 6th place worldwide; GDP increased to 9% of the world’s from previous 3.8%; Average GDP per capita surpassed $4300 from previous $946.

Energy consumption increased 120% during the same time (global increase 20%), accounting for 20% of the world’s energy use from the previous 9.1%; CO2 emission rose from the world’s 12.9% to 24%.

Coal production exceeded 3 billions tons,which is in excess of the capacity of scientific supply.

The 11th FYP shifted the trend of growing energy intensity during the 10th FYP. However, resource constrain might make the situation worse in the 12th FYP.

Transition of development pattern and controlling on fast-growing trend of total energy consumption will be the key measures to achieve Scientific Development and Green,Low-Carbon Development in the 12th FYP.

During the 12th FYP Period, China will take a series of measures to develop green and low-carbon development, energy conservation and carbon emissions reduction,  by transforming the pattern of economic development.

In 12th FYP period, it  is a binding target to reducing the energy intensity by 16% and reducing the CO2 intensity by 17%. The above target will be assigned to the provinces and cities.

As a binding target, from 2010 to 2015, the proportion of non-fossil energy supply will be increased from 8.3% to 11.4%. And at the 2015, the adding  afforestation area and the forest reserves should be increased to 12.5 million hectares and 0.6 billion m3

To start Low-carbon city pilot in 5 provinces and 8 cities and to establish carbon emission statistics, accounting evaluation system, and to explore the establishment of carbon trading market.

To propose ideas reasonably controlling the total energy consumption in 12th FYP period

In the 12th FYP, the development pattern must shift from the invest-and-export as the dominant driving power pattern, and ultimate consumer market will have more influence on economy

According to the World Bank’s statistic, China’s capital formation accounted for 43% of China’s GDP. The world’s average is 22%; the average of middle income countries is 30%. Family consumption accounted for 37%; the world’s average is 61% and the average of middle income countries is 50%.

China’s export accounted for 20.1% of GDP in 2000 and 32% in 2008. Import and export rose from the 8th place to the world’s second place and its share of the world’s export increased from 3.9% to 9.6%.

The fast growth of investment accelerated the infrastructure construction, capacity expansion and high-quality industry development, however, it is not good for industry structure change and energy intensity decrease.

The 12th FYP is a crucial period for China to change its development pattern and transform to be low-carbon development, appropriately control its GDP growth rate, decrease energy intensity, accelerate energy structure shift and realize its energy consumption control goals.

Limiting investment growth scale and controlling GDP growth rate could reduce the level of energy - intensive investment goods, which can get the multiple effects on optimizing industry structure, reducing energy intensity and controlling the total energy demand and increasing non-fossil energy share. If the investment share of GDP decrease 1 percentage point and consumption increase 1 percentage point, energy intensity will decrease 0.45 percentage point.

China’s GDP share of secondary industry (47%) and  the share of heavy industry in industry sector (71%) both reached or passed the peak of development countries during their industrialization period. Steel, cement and other heavy energy consumption products amounted to half of the world’s production. (18% and 34% respectively in 2020). This could meet the development needs of industrialization and urbanization. Under appropriate economic development rate (8-9%), the production capacity will be saturated during the 12th FYP. Industrial structure change will make a bigger effect on energy saving.

China’s 12th FYP will focus on development mode change and there is a possibility that China’s energy consumption could be controlled to around 4 billion tce until 2015.

Provinces and cities that had a rapid GDP growth, should strengthen their efforts in industrial structure change and propose more progressive energy intensity decreasing goal.

Provinces announced their 12th FYP development plans and only Beijing (8%), Shanghai(8%), Hebei(8.5%), Zhejiang (9%) , Guangdong(8%), Henan(8%) and Shandong(9%), etc have a GDP growth rate lower than 10%. But 13 provinces  GDP growth rates are 12% -13%. The weighted average of growth rate is higher than 9.8% in China. The trend of relying on heavy industry to expand capacity is apparent for provinces and cities that have rapid GDP growth.

GDP growth rate increases every 1 percentage point on the national basis (7~8%), energy intensity decreasing goal  should raise 2-3 percentage point.

A significant reduction in GDP carbon intensity and increase in economic output from carbon emissions in China will be the key measures and breakthrough points to achieve the economic growth pattern transformation and low carbon development.

The Chinese Government has promulgated a CO2 intensity target of 40-45% reduction by 2020 compared to 2005 levels, which integrate the domestic sustainable development and addressing global climate change,  in line with China’s development phase feature, reflects the principle of Common but Differentiated Responsibilities.

The investment  will be greater during 12th Five-Year-Plan period than 11th Five-Year-Plan period . According to estimation by McKinsey, the additional input for energy saving and emission reduction is about 1.5 trillion Yuan during 11th Five-Year-Plan period, and the number will be increased to 1.9-3.4 trillion Yuan during 12th Five-Year-Plan period, of which the rate without return will grow from 20% to 40%.

 The experiences of developed countries indicate that, the uptrend of GDP energy intensity is inevitable during industrialization phases. Japan's GDP energy intensity increased by 23% from 1960 to 1974, and South Korea's increased by 45% from 1971 to 1998. The GDP carbon intensity target in China indicates the determination and effectiveness.

Changing economic growth pattern, improving energy efficiency and developing low carbon energy technologies are three major measures of CO2 emission mitigation.

To achieve the long-term mitigation target, the carbon productivity in China needs to be improved further. The difficulties are even larger than that of developed countries.

The carbon intensity per GDP needs to be reduced by 45% (carbon productivity will double) from 2005 to 2020. The carbon intensity will fall by 80% or more compared with that in year 2005, the carbon productivity will increase five times.

The core content to achieve low carbon development is to build low carbon industrial system and consumption pattern.

Technological upgrading in traditional industries to develop energy efficient production, and shift to the high level of the value chain and improve the value added rate.

Strategically developing the new emerging industries, and optimizing the industrial structure, to achieve industrial restructuring and structural energy conservation.

Greatly developing new and renewable energy, and reducing the fossil energy share in primary energy mix.

Effective public participation and consumption pattern changes is  the social foundation to transform to a low carbon economy, and  demand-driven force to low carbon industry development.

A significant reduction in the GDP carbon intensity and raise the economic output from carbon emissions in the short and medium term, and control CO2 emissions to decouple economic growth and CO2 emissions in the long term.

The significant support to achieve the low carbon development is to strengthen the technological innovation and develop new emerging low carbon industries.

The urgent global climate change situation induces large demand for  low carbon technologies and promotes low carbon technological innovations and industrializations.

Energy conservation and efficiency technologies such as ultra-energy-efficient building, new energy and electric vehicles, waste heat utilization and clean coal technologies

New energy technologies such as wind and photovoltaic power technologies, biofuels, advanced nuclear energy and hydrogen technologies

Carbon capture and storage technologies (CCS)  etc.

Large-scale low carbon infrastructure constructions will bring substantial investments in new energy and energy efficiency industries. As new drives for economic growth, low-carbon energy and smart grid will be the two major new industries.

According to UNEP estimates, if the world achieve the target of halving greenhouse gas emissions in 2050, low carbon technology investment will be as 10 times during 2005 to 2050 as the in baseline scenario, and then the annual average is1.2 trillion.

Catch the golden opportunity of the 2nd 10-year peaceful development period and realize development pattern change towards green and low-carbon development under a relatively lenient environment.

For the 1st 10-year period, grasp the opportunity and accelerate development to become a big economy.

For the 2nd 10-year period, accelerate development pattern shifting to realize green, low-carbon and sustainable development. Change from a big economy to a strong economy.

resource dependence and extensive expansion à technology innovation and connotation enrichment

focus on economic growth rate à focus on economic growth quality and returns

imitative,pursuant and high-carbon development roadmap  àIndependent Innovation  and green, low-carbon development

Try to achieve development mode change in the 10-year period and realize green, low-carbon and sustainable development and make the foundation for future quantifiable emission reduction obligation.

To strengthen the industrial structure restructuring, give a full play to the role of energy saving of structure in the 12th FYP. In the Scenario of GDP growth rate (>8%)and GDP energy intensity decreasing target(16%),the required energy savings should more than that in the 11th.

Five-province and eight-city low-carbon demonstration is expected to lead green and low-carbon development concept spreading, planning and implementation.

The Low-carbon development concept should be understood more deeply and the low-carbon development goal should be progressive.

CO2 emission intensity should decrease 45% in 2020 compared to 2005 level. Some cities should have a 40-50% emission reduction during the same period. Guangdong province proposed to try out the total emission control target in the Pearl river delta region.

Clear goals and specific implementation rules well planned for development mode change, industrial structure change of development, and industrial, transport and construction sector energy saving and new energy and renewable energy development.

Reinforce emission statistic, test and management system in most pilot cities and explore carbon trade mechanism in an active manner.

The trend for some of the pilot provinces and cities to rely on heavy industry to expand their capacity and spur economy is still apparent.

Make a unified and coordinated plan with arrangement in advance so as to take into consideration China’s domestic sustainable development and the global environment of coping with climate change; near and long term goals; and the 12th FYP and the 13th FYP

Shifting the development pattern and go along the road of green and low-carbon development  are the strategy choice of addressing climate change and in accord with internal requirement of sustainable development,thus which has synergistic effects .

During the 12th FYP, the bounded target of energy intensity reduction and CO2 emission reduction is the second interim target to realize a 40-45% CO2 emission reduction in 2020.

The share of the non-fossil energy rose 3 percentage point during the 12th FYP; CO2 emission intensity decreased 2~3 percentage point faster than the energy intensity; In 2020, the share of the non-fossil energy will account for 15% of the total energy use and CO2 emission intensity decrease from 2005 level will be 5 percentage point faster than the energy intensity.

If the CO2 emission intensity could decrease 21%, 17% and16% respectively during the 11th FYP, 12th FYP and 13th FYP, the 2020 goal of reducing CO2 emission intensity 45% on 2005 basis will be realized.

In the long run, the global target to prevent the temperature from rising more than  2℃ will place a more and more strict restraint on China’s carbon emission. A meeting will be held in Durban, South Africa at the end of this year to discuss the long-term goal of carbon emission reduction and peak emissions for each country. Therefore, the challenge of carbon emission restraint must be faced with in the long term.

A long-term strategy to address climate change and related legislations should be discussed and proposed.

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