Beijing, 4 March 2011

China's plan for the next five years will put a hard target on overall energy use, capping consumption at 4 billion tonnes of coal equivalent (TCE) by 2015, Xinhua news agency quoted the country's former energy chief Zhang Guobao as saying on Friday. Zhang, who retired earlier this year as head of the National Energy Administration, said the energy cap would be a mandatory ceiling in China's 12th five-year plan.

Experts had been expecting a mandatory energy consumption cap to appear in the plan, but said the critical issue was whether or not the figure would be made public.

"To have an absolute energy target -- everyone knows that's mainly a coal consumption target -- is already a very big step forward," said Ailun Yang, China campaign manager with Greenpeace.

China's energy use was 3.25 billion tonnes of coal equivalent in 2010, up 5.9 percent year on year, government data showed. It was expected to rise by 4.24 percent annually in 2011-2015, Zhang said.

China aims to reduce 2005 levels of carbon intensity -- the amount of carbon dioxide produced per unit of gross domestic product -- by 40-45 percent by 2020, and a target for the

2011-2015 period is also expected to be included in the new five-year plan.

Premier Wen Jiabao said last weekend that China would cut energy and carbon intensity by 16-17 percent over the period.

Wen did not make a distinction between the two targets, but experts suggest energy intensity would need to fall 20 percent if China was to achieve a 18 percent reduction in the amount of CO2 produced per unit of GDP.

Zhang said the amount of energy produced per unit of economic growth dropped 19.1 percent over the 2006-2010 period, falling short of a target of 20 percent.

He also said China would aim to raise the share of non- fossil fuel energy to 11.4 percent of total primary energy use by the end of 2015.

He said it was a mandatory target that would put the country on course to meet its 2020 target of 15 percent.

Non-fossil fuel energy currently accounts for 8 percent of China's total energy consumption.

China’s 5-year plan expected to include little on CO2 markets

Lawmakers gathering in Beijing for the annual National People’s Congress this weekend are expected to dodge specifics on carbon markets.

China’s twelfth five-year plan will cap the total energy consumption of the world’s biggest emitter and might include a carbon intensity target, but few observers expect the plan to pave the way for carbon emissions trading beyond backing the principle of market mechanisms.

A handful of provinces have announced interest in piloting carbon trading schemes, but industry remains wary of seeing their CO2 emissions regulated, and lack of solid systems to measure and report the pollution make trading difficult.

“Without a credible system it is impossible to trade. The market will not be interested in buying credits without value,” Chen Hongbo of the Chinese Academy of Science told a Beijing conference recently.

Regional pilots

Central government officials have said China will have a pilot scheme for carbon trading up and running within the next five years, but lawmakers at the nine-day Congress in Beijing only have vague proposals from provincial governments to consider.

Guangdong, Hebei and Jiangxi provinces have all volunteered to set up schemes, although their ideas lack detail, while an advisory body in Sichuan is also pushing for a local carbon market.

Regional proposals have been sketchy on which sectors would be included in trading schemes, and whether the traded credits would be based on absolute emissions, carbon intensity or energy intensity.

News on Friday that China will impose a cap on its energy use of 4 billion tonnes of coal (toc) equivalent in 2015 could provide some direction as to how CO2 plans might develop later this year if the schemes get the thumbs-up from the congress.

Reuters reported Thursday that provinces such as Guangdong might impose their own energy caps to stimulate city-to-city emission trading.

Academics initially dismissed such strategies, but with a mandatory national cap in place it would be easier for regional governments to follow suit.

Targets

China’s mid-term goal on greenhouse gas emissions is to reduce the carbon intensity of its economy by 40-45 per cent over 2005 levels by 2020.

Premier Wen Jiabao said last Sunday China would implement a 16-17 per cent target for 2015 on energy and carbon intensity, but did not give further details.

He also said China would limit its economic growth to 7 per cent annually over the coming five years.

The 4 billion toc energy target correlates to a 16 per cent improvement in energy intensity assuming an annual GDP growth rate of 8 per cent, which environmentalists say at best is enough to put China on track to meet the lower range of its carbon intensity target.

Yang Fuqiang, director of global climate solutions at the Worldwide Fund for Nature, said cutting CO2 intensity by less than 17 per cent was little more than "business as usual".

"There is a game being played by the central and local governments, and if the central government adopts 16 per cent they will lose their authority because it shows that 'government orders don't go beyond Zhongnanhai'," he said, referring to the Chinese Communist Party headquarters in Beijing.

The National Bureau of Statistics said this week that China achieved a 19.06 per cent reduction in energy intensity over the past five years, failing to meet its 20 per cent target.

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