China’s 12th Five Year Plan: Energy and Greenhouse Gas Emissions

Summary:  China recently became the world’s largest emitter of greenhouse gases, overtaking the U. S.  As a result of its intensive program to become a modern industrial state, it has installed, and continues to develop, new energy-producing facilities that emit large amounts of greenhouse gases.

Its new 12^th Five Year Plan seeks to bring China onto a path of increasing the efficiency of its energy production, and the energy efficiency of its economic output.  Its objectives include lowering the emissions intensity per unit of economic output by 17% by 2015, and by 40-45% with respect to the 2005 level by 2020, even while its primary energy consumption will likely increase by up to 5% per year through 2015.  Coal-based energy will continue to play a major role.  China will begin implementing market-based incentives to reduce emissions, and will promote a variety of energy efficiency programs.  Also, it will continue its major effort at reforestation.

China’s 12^th Five Year Plan is ambitious and represents a new departure for the country.  Earlier this year the European Union issued its goal of lowering greenhouse gas emissions by at least 80% by 2050.  Of major emitters, only the U. S. does not yet have a national policy in place for reducing the emission of greenhouse gases.

INTRODUCTION. 

Man-made greenhouse gases, such as carbon dioxide (CO₂), are recognized by climate scientists to cause warming of the planet.   The United Nations sponsored conferences of the world’s nations seeking to reach agreement on measures to limit greenhouse gas emissions, thereby minimizing warming of the planet.  The Kyoto Protocol of 1997 included the world’s developed countries in its coverage, but excluded developing countries, including China, from its jurisdiction.

China has long maintained that, as a populous developing country, an appropriate measure of its energy usage and its emissions of greenhouse gases should be its energy intensity or its emissions intensity, whereby these measures are based on its gross domestic product (GDP), rather than the actual amount of energy used or emissions produced.

This post reviews the energy and emissions goals projected by China in its 12^th Five Year Plan (FYP) issued in March 2011, covering 2011-2015. In the first of three sections we review China’s past energy usage and greenhouse gas emissions.  This section also summarizes projections of China’s energy use and greenhouse gas emissions modeled last year, prior to the release of the 12^th FYP.  These topics were presented in an earlier Warmgloblog post.

With this background, the second section provides a summary of the new FYP.  The third section presents conclusions and analysis of the FYP.

REVIEW OF CHINA’S ENERGY PICTURE AS OF 2010

Overview of Current Energy Production in China

China has embarked on a vast program to expand its economy and bring material benefits to large segments of its population.  From 2000 to 2009 its economy expanded by about 10% per year (U.S. Energy Information Administration (USEIA))

The Wall Street Journal on July 18, 2010 cited the International Energy Agency (Note 1)  as reporting that China has become the world’s largest consumer of energy, outstripping the U. S.

China’s energy use has grown dramatically over the past two decades, as its rapidly expanding economy has depended on new energy-intensive industries and extensive construction of new infrastructure projects (see the graphic below). 

Total primary energy consumption for the U. S. (rose) and China (yellow), in millions of metric tons of oil equivalent from 2000 to 2009 (as estimated).

Source: International Energy Agency.  Format © The Wall Street Journal (http://online.wsj.com/article/SB10001424052748703720504575376712353150310.html?mod=googlenews_wsj#project%3DCHENERGY0719%26articleTabs%3Dinteractive). 

In 2009 China consumed 2.3 billion tons of oil equivalent, while the overall usage in the U. S. was 2.2 billion tons. As recently as 10 years ago, China’s consumption had been only half that of the U. S.  Consumption by the U. S. over the same period has remained essentially constant, and even declined slightly in 2008 and 2009 (see the graphic).

The sectors of China’s economy that use energy and produce greenhouse gas emissions are shown in the following graphic.

CO2 emissions in China by sector of the economy over the period 1990-2008.  Mt, millions of metric tons.  The shading codes for the sectors below the graphic go from darkest to lightest, first left to right, then top to bottom, and in the graphic go darkest to lightest from the bottom to the top.

Source: International Energy Agency, CO₂ Emissions From Fuel Combustion, 2010 Edition http://www.iea.org/co2highlights/co2highlights.pdf © OECD/IEA.

CO₂ emissions essentially tripled over the 18 year period shown, reflecting China’s robust expansion in all areas of economic activity over this time.  Electricity generation and heating is responsible for a large fraction of China’s CO₂ emissions; as seen in the graphic, this portion of the emissions increased greatly over 2002-2008.  Electricity accounted for 48% of China’s emissions in 2008; 79% of the electricity was generated from coal.  Most of the remainder originated from hydroelectric power.

Energy Intensity.  As a developing country with a population of 1.3 billion people, the per capita energy use of energy in China is far lower than in the U. S. (see the following graphic).

Total primary energy consumption per capita for the U. S. (rose) and China (yellow) from 2000 to 2009 (as estimated), in metric tons of oil equivalent.

Source: International Energy Agency.  Format © The Wall Street Journal (http://online.wsj.com/article/SB10001424052748703720504575376712353150310.html?mod=googlenews_wsj#project%3DCHENERGY0719%26articleTabs%3Dinteractive). 

The trend in China increases sharply over the decade shown whereas that for the U.S. is steady or even declining in 2008 and 2009.

The emissions intensity based on economic activity for the five nations of the world with the highest emissions all decreased between 1990 and 2008 (see the following graphic, following the vertical axis only).  China made

Trends in CO₂ emission intensities for the top 5 emitting countries over the period 1990 (tan) to 2008 (brown).  The size of each circle represents total CO2 emissions from the country in that year.  Thus this graphic represents three pieces of information: the population intensity of CO₂ emission (tonnes per capita) along the horizontal axis; the economic intensity of CO₂ emission (kilograms CO₂ per 2000 US$ of gross domestic product (GDP) along the vertical axis; and the total amount of CO₂ emitted in 1990 and 2008, proportional to the size of the circles.

Source: International Energy Agency, CO₂ Emissions From Fuel Combustion, 2010 Edition http://www.iea.org/co2highlights/co2highlights.pdf © OECD/IEA

significant progress by this criterion.  China’s emissions intensity based on population, however, almost doubled over this period (following the horizontal axis), and the total amount of CO₂ emissions almost tripled (see the area of the circles, and the graphic third above). 

China’s Predicted Future Energy Use.  The World Energy Outlook, issued by the EIA in November 2010, projected China’s energy usage and sources of energy for the period 2008 to 2035.  Among its predictions, the graphic below shows anticipated electricity generated from coal for China and other regions of the world, based on its New Policies Scenario.  This scenario seeks to predict behavior based on the modest voluntary recommendation included in the Copenhagen Accord of 2009.  Coal-generated electricity in China (brown-orange) is predicted approximately to double in this time period. 

Reproduced from World Energy Outlook 2010 © OECD/IEA.  Data to the left of the solid vertical line at the year 2008 are actual.   Coal-fired generation beyond 2008, to the right of the vertical line, is a projection based on the New Policies Scenario.   A watt-hour (Wh) is a unit of energy used in characterizing electricity generation and usage. TWh, terawatt-hours, or thousands of billion watt-hours.  The author presumes TWh refers to annual production of electric energy.

The predicted changes in the various sources from which primary energy is obtained in the period 2008-2035 is shown for China (brown-orange) in the graphic below.

Reproduced from World Energy Outlook 2010 © OECD/IEA. 

The color scheme is the same as in the first graphic, above.  The bars for coal and oil to the left of the “0” line represent decreases in usage for these fuels over the period 2008-2035 in the OECD countries.  Single-handedly China accounts for profound increases in demand for fossil fuels over this period, as well as for renewable sources of energy.  Mtoe, energy demand (consumption) expressed as equivalents of millions of tons of oil.

Under the New Policies Scenario, China is predicted to consume major amounts of greenhouse gas-producing fuels (coal, oil and gas) over this period, as well as having significant increases in energy equivalents from non-emitting sources (nuclear, hydroelectric and other renewables).

CHINA’S 12^th FIVE YEAR PLAN

Energy and Emissions Targets.  China’s 12^th FYP was made public in March 2011.  The overall Chinese economy is projected to grow at a rate of 7% per year over 2011-2015.  In the face of this growth, the FYP pledges significant reductions in energy intensity and CO₂ intensity over this time, although total usage and emissions increase.

Energy results obtained in China in the five year plan just concluded, and planned for the coming 12^th and 13^th Five Year Plans, extending to 2020, are shown in the table below (The Climate Group).

KEY ENERGY AND CLIMATE POLICY GOALS AND INDICATORS IN CHINA 2006–2020

	11th FYP (2006-2010) (TARGET)	11th FYP (ACTUAL)	12th FYP (2011-2015) (TARGET)	13th FYP (2016-2020) (TARGET)
INDICATORS
ENERGY INTENSITY REDUCTION IN 5 YRS	20.0%	19.1%	16.0%	NOT SET
CARBON INTENSITY REDUCTION IN 5 YRS	NOT SET		17.0%	40-45% vis-à-vis 2005
NON-FOSSIL ENERGY (% OF PRIMARY ENERGY)	10.0%	9.6%	11.4%	15.0%
GROWTH RATES
PRIMARY ENERGY CONSUMPTION (ANNUAL GROWTH)	4.0%	6.3%	3.75-5%	-
ELECTRICITY ENERGY CONSUMPTION (ANNUAL GROWTH)	-	11.0%	8.5%	-5.5%
ELECTRICTY GENERATING CAPACITY (ANNUAL GROWTH)	8.4%	13.2%	8.5%	-5.0%
GDP (ANNUAL GROWTH)	7.5%	10.6%	7.0%	-

Source: Delivering Low Carbon Growth – A Guide to the 12th Five Year Plan http://www.theclimategroup.org/publications/2011/3/7/delivering-low-carbon-growth-a-guide-to-chinas-12th-five-year-plan/.

The goals for energy intensity and carbon intensity for the 12^th FYP are the first time that China has stated such objectives.  It is noteworthy that the goal for the reduction in carbon intensity for the 13^th FYP is 40-45% below 2005 levels.  However, because of the large annual growth rate of GDP which is naturally energy-intensive, China predicts its actual CO₂ emissions will rise by 1.15 gigatons (Gt) in the 12th FYP, compared to increases of 2.2 Gt in each of the 10^th and 11^th FYPs.  This projected amount of CO₂ emissions, 8.17 Gt, is lower by 0.83 gigaton from potential emission if no policy were in place.  According to The Climate Group, this should permit CO₂ emissions by China to reach a peak before 2030 (Note 2).  

From 2010 to 2015, overall electric generating capacity will increase from about 1000 GW to about 1400 GW.  This increase includes a major and growing amount of generating capacity from coal, a very slight increase in hydroelectric generating capacity, and increases totaling about 1% of total capacity in 2010 to about 3% of total capacity in 2015, for renewable energy. China intends to add 260 GW of coal-fired electric generation, although coal’s share of the energy mix will fall from 72% to 63%.  Generation of energy from fossil fuels is expected to reach a maximum rate of 4 billion tonnes of coal equivalent by 2015, according to Zhang Guobao, former head of the country's National Energy Administration,  Reducing the rate of increase of CO₂ emissions will be aided by beginning to install integrated gas combined cycle coal plants, adding 40 GW of nuclear generation (identified prior to the Japanese earthquake) to its currently installed capacity of 10 GW, 70 GW of new hydroelectric capacity and 50-90 GW of new wind energy. The share of these sources will increase to 11.4%, up from 8.3% in the 11^th FYP.  So far CO₂

capture and storage remains a subject for research and development.     

Market-based incentives.  During the 12^th FYP China will create pilot projects directed toward placing a price on greenhouse gas emissions.  Whether by direct taxes or by a carbon trading program, several provinces plan to set up pilot programs that provide economic incentives to constrain emissions.

Energy efficiency initiatives.  During the 11^th FYP China instituted the “Top 1,000 Program” devoted to identifying the 1,000 installations around the country with the poorest energy efficiency, and improving or closing them.  As part of this program, generating facilities responsible for 72 GW were closed. 

In the 12^th FYP this program will be extended to a “Top 10,000 Program”.  Clearly this will be a greater challenge, and will require increased involvement of regional and local authorities.

Additionally, the new plan reorients the importance placed on various sectors of the economy.  New emphasis is placed on energy saving and environmental protection, on new non-fossil fuel-based energy sources, and on clean energy vehicles including plug-in hybrid electric vehicles, electric cars and fuel cell vehicles.  The plan also targets adding 35,000 km (21,700 mi) high speed rail connecting China’s major cities, and expansion of urban mass transit.  8,400 km (5,200 mi) of high speed rail was in place in 2010.  Efficiency awareness by measures such as appliance labeling and improvements in housing energy usage also are planned to contribute to efficiency gains.

Reforestation.  An important aspect of the Cancun Agreements was the preservation of and addition to world-wide forests as carbon sinks.  The 12^th FYP envisions adding significantly to new forest cover, by 12.5 million hectares (30.9 million acres; 48,200 sq. mi.) by 2015.  More broadly, China’s objective is to increase forest cover by 40 million hectares (98.8 million acres; 154,000 sq, mi.) over 2005 levels by 2020.

Measurement and reporting of greenhouse gas emissions, and validation of the results was an important feature of the Cancun Agreements.  In its 12^th FYP China is committing to develop these capabilities in response to its responsibilities under the Agreements.  They are clearly necessary for the success of any market-based programs.

CONCLUSION

China’s Apparent Change in Outlook.  China is increasing its efforts to rein in emissions of greenhouse gases and to conform with other aspects of the Cancun Agreements, which were concluded in December 2010 under the auspices of the U. N. Framework Convention on Climate Change.  The participating nations committed to limiting the average global temperature increase to 2°C (3.6°F) or less as a result of emissions of man-made greenhouse gases, i.e., limiting atmospheric CO₂ concentrations to 450 parts per million (ppm) or less.  Reflecting on the deliberations at the Cancun conference, the U. S. representative, Todd Stern, noted that China may now realize that it is in its own interest to work toward reducing global warming emissions. 

Comments on the 12^th Five Year Plan.  One commentator believes, in response to the 12^th FYP, that China is now undertaking to work toward reducing greenhouse gas emissions to an extent greater even than called for to stabilize CO₂ concentrations at 450 ppm.

According to several analysts, China Increasingly understands the importance of including greenhouse gas limitations in its economic development objectives.  Building low-carbon industries is now a central feature of the country’s development strategy.  It views reducing carbon intensity as not only an environmental objective, but one that contributes to China’s competitiveness in the world’s economy. 

An important remaining challenge, however, is China’s continued near-term reliance on coal as a source of energy; this may compromise its commitment to a low-carbon economy.  According to Mark Kenber, CEO, The Climate Group, China’s commitment to reducing carbon emissions “should be a wake-up call to Europe and North America policy-makers that a clean tech race is well under way. This bold policy plan unequivocally aims to set China on a clear low carbon trajectory and will ensure the country remains a major global hub for clean energy technologies for years to come.”

Relation to Policies in Other Regions.  Early in 2011 the European Union put forth a policy of reducing greenhouse gases by at least 80% by 2050. 

In the face of China’s apparent adoption of policies that support the Cancun Agreements, and of the European Union’s recent action, the U. S. remains the only emitter of large amounts of greenhouse gases that does not have a national energy plan.  President Obama recently outlined certain energy objectives directed primarily at reducing the reliance of the U. S. on imports of crude oil.  As a result of the U. S. Supreme Court decision in Massachusetts et al. v. Environmental Protection Agency (EPA) et al.

decided April 2, 2007, the EPA is in the process of preparing greenhouse gas emissions standards and issuing them by the end of 2012.  This process is currently the subject of active Congressional debate, directed to proposed legislation that would bar the EPA from issuing such regulations. 

The absence of a national energy policy in the U. S. has led in recent years to three regional programs, the Western Climate Initiative, the Midwest Greenhouse Gas Reduction Accord, and the northeast and mid-Atlantic Regional Greenhouse Gas Initiative.  This patchwork of plans begs for a single nation-wide plan.

Notes

1. The International Energy Agency (IEA) is an autonomous organization associated with the Organization for Economic Cooperation and Development (OECD).  The IEA has 28 member states among developed countries of the world, including most European countries, the U. S., Japan, and Australia.

Xu, Bo et al. (June 1, 2010). An analysis of Chinese carbon dioxide mitigation strategy. Royal Institute of Technology, Sweden. Retrieved February 15, 2010 from www.kadinst.hku.hk/sdconf10/Papers_PDF/p263.pdf

© 2011 Henry Auer