Reining in China’s energy targets

This week, China’s highest state body – the National People’s Congress – is meeting to discuss and determine the country’s economic targets for the next five years: the 12^th Five-Year Plan. One of the strategy’s key aims will be to move China’s economy towards a more sustainable growth model, entailing a strengthened focus on clean-energy development, emissions cuts and energy-intensity reductions.

But not everyone agrees about the best way of achieving this. Here, Pan Jiahua of the Chinese Academy of Social Sciences argues that, when it comes to energy intensity, Beijing should not aim too high, too soon. Read a very different point of view from WWF’s Yang Fuqiang here.

Liu Jianqiang: Over the last five years – the 11^th Five-Year Plan period – China’s energy consumption per GDP unit, or energy intensity, has dropped by 19.06%. This has led some to recommend a 20% decline as the target for the 12^th Five-Year Plan, while others have said 18%. What would you propose?

Pan Jiahua: Personally, I would say 15% is more reasonable.

LJ: Why? That would be less than has been achieved in the past five years.

PJ: First, let’s look at the data from the 11^th Five-Year Plan. During that period, targets were set for a 20% fall in energy intensity and a 10% fall in both chemical-oxygen demand [a measure of water pollution] and sulphur-dioxide emissions. What happened was that, while energy intensity dropped by 19.06%, chemical-oxygen demand and sulphur-dioxide emissions actually fell by 12.45% and 14.29% respectively, thereby beating the targets. This shows that, with more investment, overall emissions of conventional pollutants can be cut. But control of energy intensity isn’t like that because, when investment increases, so does energy consumption.  

The 12^th Five-Year Plan won’t see the same decrease as the 11^th Five-Year Plan as, during the 11^th Five-Year Plan, a lot of China’s small power plants and steelmakers were shut down – now, there’s nothing left to close. Energy efficiency at large Chinese firms is already close to global levels. Thermal-electricity generation is more efficient than in Japan, vehicle fuel efficiency is higher than in the United States. So energy-intensity reductions during the 12^th Five-Year Plan are bound to be less than those of the 11^th Five-Year Plan.

LJ: What is the goal for economic growth during the 12^th Five-Year Plan? And what’s the relationship between that and reductions in carbon intensity?

PJ: The setting of emissions targets for the 12^th Five-Year Plan is of course linked to economic growth. During the 12^th Five-Year Plan, provincial GDP growth targets remain high – for example, 8% for developed cities including Beijing, Shanghai and Zhejiang and 13.5% for Chongqing.

There’s a coefficient of elasticity of energy consumption. For example, every 1% of GDP growth led to 1% of extra energy consumption during the 10^th Five-Year Plan, but during the 11^th Five-Year Plan, 1% of GDP growth caused 0.7% of extra energy consumption. So, during the 12^th Five-Year Plan, even with economic restructuring, that elasticity coefficient is going to reach 0.5. If average GDP growth is around 10%, energy consumption will grow by 5% to 7%, if GDP growth is 8%, energy consumption will grow by 4%. Using those figures, energy-intensity reductions in the 12^th Five-Year Plan will be less than in the 11^th.

LJ: What challenges are there for cutting carbon emissions during the 12^th Five-Year Plan?

PJ: There is the issue of regional differentiation. Eastern developed regions have large cuts to make, and these are expensive and difficult, so they don’t want to take too much on. Central and western parts of China, meanwhile, want to attract energy-hungry industries from the east for the sake of economic development, so they actually want to increase emissions – they’re not willing to make cuts either.

The Chinese government operates top-down management: central government forces local government to make emissions cuts and, to achieve that, local governments have to enforce power cuts. That’s how you end up with power being cut even to hospitals.

LJ: What would you suggest?

PJ: Emissions cuts shouldn’t mean enforced conformity to an arbitrary standard. There should be room for flexibility, according to local conditions. For example, implementation could be over different periods – Beijing can’t make much reduction during the 12^th Five-Year Plan, but perhaps it could make larger cuts during the 13^th Five-Year Plan. There could also be trading between regions – the cost of cuts in Beijing is high, so it could buy emissions reductions from Shanxi.

Also, China is making great efforts to develop renewable energy in order to cut emissions, but there are two problems it needs to watch out for. First, this will result in large increases in fossil-fuel extraction, as wind and solar power are not constant and need to be backed up by fossil-fuel plants in order to meet peak demand. Second, renewable energy is expensive and requires subsidies – where is that money going to come from? It has to come from fossil fuel. So at the moment, China isn’t ready for any great leaps forward in wind power. The technology isn’t mature. There should be more research, not widespread rollouts.

LJ: If that’s the case, can China realise its commitment to reducing carbon intensity by 40% to 45% by 2020?

PJ: Yes, it works. There was a drop of 19.06% in energy intensity in the 11^th Five-Year Plan, which means a drop in carbon intensity of 20% to 21%. If there’s another drop of 15% in the 12^th Five-Year Plan, and 5% to 10% during the 13^th Five-Year Plan, then we’ve met our commitment. So, as a researcher, I propose an energy-intensity target for the 12^th Five-Year Plan of about 15% – no less than 13%, no more than 17%.

LJ: Your proposal is different from many Chinese academics, officials and NGOs. For example, Yang Fuqiang, WWF China’s director of global climate solutions, says the 12^th Five-Year Plan should again set a target of 20% [read Yang Fuqiang’s argument on this on chinadialogue tomorrow].

PJ: I don’t agree with those extreme suggestions. It seems that such radical cuts have very bad consequences, like power to hospitals being cut off. China needs to be responsible and consider people’s quality of life – we can’t forget that for the sake of emission cuts. If we just cut emissions, without giving any thought to the consequences, and then use that to demand the same of other poor nations, where does that leave the world? I don’t agree with being too extreme.

Pan Jiahua is executive director of the Research Centre for Sustainable Development (RCSD) at the Chinese Academy of Social Sciences (CASS).

Liu Jianqiang is the Beijing-based deputy editor of chinadialogue. 

Homepage image from the White House shows Wu Bangguo (left), chairman of the standing committee of the National People’s Congress, standing in the Great Hall of the People.