‘Green’ China needs to rethink its energy and carbon policies

Author: Yuhan Zhang, Columbia University While many Chinese pundits and scholars are applauding for China’s Twelfth Five-Year Plan (2011-2015) as a milestone for China’s green revolution, the country’s march to low energy consumption and low carbon economy is not going to be a smooth or straight one. China’s five-year plans, albeit strategically sound, are not likely to change the short- and medium-term energy and climate landscapes. Challenges will remain. In the last decade China’s economic growth has skyrocketed, expanding at around 10 per cent annually in real terms. But China’s soaring appetite for energy and increasing greenhouse gas emissions, incurred by its rapid development, suggests China’s growth is unsustainable from these perspectives. In the foreseeable future, much more oil will not only be used in industry and agriculture but also by the phenomenal expansions in passenger vehicles. Increasing world oil prices will also add to already elevated inflation in China, which worries China’s leadership. China is also expected to continue its coal-dominated energy portfolio since coal is the cheapest and most readily available bulk energy source in the country. Although China has shut down a large number of small-sized old coal-fired plants, and built some new ones using the best coal technologies available, many of China’s power stations still burn coal with inefficient, outdated technologies, which might result in energy consumption surge and carbon emissions. Moreover, China’s energy consumption and carbon emissions are influenced by its gross domestic growth. If China could limit its economic growth rate to 7 per cent over the next five years, then energy consumption and carbon emissions would be controlled significantly. Still, China’s actual economic growth rates have always exceeded targeted ones, so energy consumption and carbon emissions will likely increase more than expected. Worse yet, China still does not perform very well in collecting and reporting energy and carbon emissions data, despite attempts to improve their monitoring of energy use and emissions. There are two major reasons behind such problems. At the national level, official data records suffer from periodic revisions from a variety of agencies in China, leading to inconsistency and uncertainty. At the local level, Chinese local officials sometimes misreport data or inhibit transparency so as to please higher-ups or make for more favourable employment evaluations. Notably, among all of China’s energy use data, coal is well known as the least accurate, partly because China has more than 1,100 counties with operating coal mines. Take coal data in 2002: after two revisions,  the final consensus increased coal consumption by more than 9.2 per cent from the original estimate. Over the long term, China’s best bet is to scale up clean technology development and deployment — particularly solar, wind, electric vehicles, carbon capture and storage, and biofuels. Increasing non-fossil energy to 11.4 per cent of China’s total energy mix by 2015 and to 15 per cent by 2020 is plausible yet insufficient to decrease overall energy consumption and carbon emissions in the next two decades. Notably, China’s current non-fossil energy development strategies rely too much on nuclear power, a troublesome reliance particularly in the aftermath of the Fukushima. In addition, China cannot control or decrease energy consumption and carbon emissions growth without accelerated structural reform. It is best for China to reach the peak of its energy use and carbon emissions in the 2020s rather than 2030s under the business-as-usual scenario. Energy-intensive industry, including steel, cement, chemical, power, transport and manufacturing sectors, is expected to decline significantly as share of gross domestic growth. But the current phase of industrialisation and urbanisation make such changes very difficult unless China’s service sector booms quickly. Finally, China needs to continue to enhance its capacity to collect, verify and report energy use and emissions. China does poorly in monitoring energy data and even worse for carbon data. On the one hand, China should look for a wide array of national and international organisations to collect and report a range of complementary information on China to cross-check the data. On the other hand, China should collaborate with foreign government agencies to obtain know-hows and other relevant skills. If China is to adopt a smart and comprehensive policy portfolio, then only by looking beyond the initiatives of the current Five-Year Plan will it find meaningful solutions. Yuhan Zhang is an International Fellow at Columbia University and a former research fellow at the Carnegie Endowment for International Peace. An assessment of China’s energy conservation and carbon intensity Indonesia climate green paper: towards carbon pricing, geothermal power and regional incentives China’s energy intensity target: On-track or off?

Author: Yuhan Zhang, Columbia University

While many Chinese pundits and scholars are applauding for China’s Twelfth Five-Year Plan (2011-2015) as a milestone for China’s green revolution, the country’s march to low energy consumption and low carbon economy is not going to be a smooth or straight one.

China’s five-year plans, albeit strategically sound, are not likely to change the short- and medium-term energy and climate landscapes. Challenges will remain.

In the last decade China’s economic growth has skyrocketed, expanding at around 10 per cent annually in real terms. But China’s soaring appetite for energy and increasing greenhouse gas emissions, incurred by its rapid development, suggests China’s growth is unsustainable from these perspectives.

In the foreseeable future, much more oil will not only be used in industry and agriculture but also by the phenomenal expansions in passenger vehicles. Increasing world oil prices will also add to already elevated inflation in China, which worries China’s leadership. China is also expected to continue its coal-dominated energy portfolio since coal is the cheapest and most readily available bulk energy source in the country. Although China has shut down a large number of small-sized old coal-fired plants, and built some new ones using the best coal technologies available, many of China’s power stations still burn coal with inefficient, outdated technologies, which might result in energy consumption surge and carbon emissions. Moreover, China’s energy consumption and carbon emissions are influenced by its gross domestic growth. If China could limit its economic growth rate to 7 per cent over the next five years, then energy consumption and carbon emissions would be controlled significantly. Still, China’s actual economic growth rates have always exceeded targeted ones, so energy consumption and carbon emissions will likely increase more than expected.

Worse yet, China still does not perform very well in collecting and reporting energy and carbon emissions data, despite attempts to improve their monitoring of energy use and emissions. There are two major reasons behind such problems. At the national level, official data records suffer from periodic revisions from a variety of agencies in China, leading to inconsistency and uncertainty. At the local level, Chinese local officials sometimes misreport data or inhibit transparency so as to please higher-ups or make for more favourable employment evaluations. Notably, among all of China’s energy use data, coal is well known as the least accurate, partly because China has more than 1,100 counties with operating coal mines. Take coal data in 2002: after two revisions,  the final consensus increased coal consumption by more than 9.2 per cent from the original estimate.

Over the long term, China’s best bet is to scale up clean technology development and deployment — particularly solar, wind, electric vehicles, carbon capture and storage, and biofuels. Increasing non-fossil energy to 11.4 per cent of China’s total energy mix by 2015 and to 15 per cent by 2020 is plausible yet insufficient to decrease overall energy consumption and carbon emissions in the next two decades. Notably, China’s current non-fossil energy development strategies rely too much on nuclear power, a troublesome reliance particularly in the aftermath of the Fukushima.

In addition, China cannot control or decrease energy consumption and carbon emissions growth without accelerated structural reform. It is best for China to reach the peak of its energy use and carbon emissions in the 2020s rather than 2030s under the business-as-usual scenario. Energy-intensive industry, including steel, cement, chemical, power, transport and manufacturing sectors, is expected to decline significantly as share of gross domestic growth. But the current phase of industrialisation and urbanisation make such changes very difficult unless China’s service sector booms quickly.

Finally, China needs to continue to enhance its capacity to collect, verify and report energy use and emissions. China does poorly in monitoring energy data and even worse for carbon data. On the one hand, China should look for a wide array of national and international organisations to collect and report a range of complementary information on China to cross-check the data. On the other hand, China should collaborate with foreign government agencies to obtain know-hows and other relevant skills. If China is to adopt a smart and comprehensive policy portfolio, then only by looking beyond the initiatives of the current Five-Year Plan will it find meaningful solutions.

Yuhan Zhang is an International Fellow at Columbia University and a former research fellow at the Carnegie Endowment for International Peace.

  1. An assessment of China’s energy conservation and carbon intensity
  2. Indonesia climate green paper: towards carbon pricing, geothermal power and regional incentives
  3. China’s energy intensity target: On-track or off?

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‘Green’ China needs to rethink its energy and carbon policies