China overtook the United States in 2009 as the world’s biggest energy consumer. Now Beijing faces increasing international pressure to take the lead in addressing the global challenge of climate change.
In this Q&A, Wang Tao examines China’s approach to tackling climate change. He explains why China needs to become a global leader by enacting robust policies to support the development of clean technology, especially electric vehicles.
- What is China’s approach to climate change?
- What challenges does China face in this area?
- How is China responding to these challenges?
- Which aspects of China’s green energy sector hold the most potential?
- What are the main obstacles to electric vehicles’ market penetration in China?
- How do international negotiations serve as a platform for China’s energy strategy?
What is China’s approach to climate change?
The Chinese government is very serious about energy conservation and emission mitigation. Its top leaders take part in two high-profile working groups on these topics, headed by Premier Wen Jiabao. These working groups provide a solid framework for clean energy development through goal setting and supportive industrial policies.
China is making its first attempt to establish absolute targets for the reduction of energy consumption and the resulting emissions. In its Eleventh Five-Year Plan (2006 to 2010), the Chinese government set up an energy-intensity (energy consumption per unit of GDP) reduction target of around 20 percent and broke that down into binding energy-intensity targets for each province and metropolitan city.
That effort is continued in the Twelfth Five-Year Plan, with a 16 percent target set for energy-intensity reduction and 17 percent for carbon intensity. China also set goals for 2020, aiming to reduce carbon intensity by 40 to 45 percent and its nonfossil primary-energy consumption by 15 percent by that year. And the Chinese government plans to cap its coal consumption at 3.9–4.2 billion tons by end of 2015.
Local Chinese officials have begun to incorporate more low-carbon development into their overall development plans as well. In late 2010, five provinces and eight cities were chosen for low-carbon-development pilots by the central government, largely due their previous efforts in pursuing low-carbon development under the Eleventh Five-Year Plan.
Apart from goal setting, China has developed strong policy incentives for energy conservation and renewable energy industries. These include special concessions for renewable energy start-ups, feed-in tariffs to support the wind and solar power industries, financial support for clean technology research and development, and subsidies for energy-efficient pr
What challenges does China face in this area?
Energy security is one of the top challenges facing the Chinese government. For the foreseeable future, China will rely on fossil fuels as its main energy source, and much of its rocketing demand for oil and gas will be supplied through imports.
Energy demand in China continues to quickly grow due to the country’s booming economy and ongoing heavy industrialization and urbanization. In 2011, China overtook the United States as the world’s largest car producer and market. In addition, Chinese car manufacturing capacity is expected to exceed the EU’s aggregate capacity in 2013, leaving the Chinese even more thirsty for oil and vulnerable to any supply disruptions.
China imported 57 percent of the oil it consumed in 2011, and China’s oil imports are projected to rise to levels between 70 and 80 percent of consumption by 2030. Thus, the security of China’s energy supply, especially its foreign oil supply, has become an increasingly serious policy concern.
How is China responding to these challenges?
One of major tasks in China’s Twelfth Five-Year Plan is restructuring the economy toward higher-value-added industries whose emissions per unit of economic output are significantly lower than the current output in heavy industries. By transitioning to a more inward-focused and service-based economy, China can target the heavy industries that have been primarily responsible for driving up the country’s carbon emissions over the last decade. Some recent studies point out that China’s planned economic restructuring could potentially contribute to 60 percent of China’s carbon-intensity reduction target for 2020.
Beijing is also continuing to diversify its energy supply from its current dependence on coal and foreign oil supplies. As conventional oil and gas become more difficult to access, unconventional oil and gas resources look increasingly appealing to China. In particular, the Chinese government shows a strong interest in replicating the United States’ “shale gas revolution” and taking advantage of a period that the International Energy Agency has dubbed the “Golden Age of Gas.”
China has also published an ambitious development plan for alternative energy, with projected targets of 150–200 gigawatts for wind, 30 gigawatts for solar photovoltaic, 300 gigawatts for hydropower, and 60–80 gigawatts for nuclear energy. This would account for 15 percent of the overall nonfossil energy demand.
In 2011, China passed the United States to become the world’s largest installer of wind power after doubling its installations annually over the last six years. China is also home to the world’s largest solar photovoltaic industry, which suffered a huge loss during the financial crisis in 2009 but has now recovered to some extent thanks to Chinese-government-subsidized initiatives. But the road will not necessarily be clear. Both the wind and solar photovoltaic industries in China currently face the problems of overcapacity and an innovation deficit due to fierce price competition in recent years. Beyond these advancements in green-energy production, a smart transportation strategy will be essential to improving China’s energy security and air quality.
Which aspects of China’s green energy sector hold the most potential?
Improvements in the technology and infrastructure behind collecting and treating carbon emissions from power plants pushed China’s green technology in a positive direction. These improvements can help reduce the more toxic air pollution, such as photochemical smog and particulate matter less than 2.5 microns that has drawn nationwide attention since 2012.
But technological improvements in electric vehicles hold the most potential for China’s green-energy sector. Transportation produces approximately 23 percent of the world’s carbon dioxide emissions from fuel combustion; in China, transportation produces less than 10 percent of the total carbon dioxide emissions (though different sources provide a different number).
Although this is relatively low, the transportation sector is the fastest growing source of emissions and is expected to grow much more as car ownership increases. In large cities like Beijing and Shanghai, emissions from transportation already account for between one-third and one-half of the total greenhouse emissions.
Electric vehicles are key to reducing carbon emissions. They would also increase China’s resilience to any disruptions in the oil supply. And electric vehicles present China the opportunity to catch up to the West before the next industrial revolution, led by low-carbon technology, takes off.
Since 2009, the Chinese government initiated large-scale new-energy-vehicle pilot programs in ten cities, starting with the promotion of electric vehicles in the government and public sector. It was then expanded to twenty-five cities with consumer incentives in five of them to boost acceptance in the private car market.
In July 2012, the Chinese government published the “Energy Conservation and New Energy Vehicles Industry Development Plan 2012–2020,” which stated its ambitious goal of selling 500,000 electric and hybrid vehicles by 2015 and five million by 2020. The government plans to spend 100 billion renminbi on new energy vehicles over the next ten years.
Despite the Chinese government’s strong support, electric vehicles have still struggled to take off in China. At the end of 2011, only 8,000 electric vehicles were sold in China, many of which were subsidized electric buses and taxies. The original targets of the twenty-five pilot cities seem unlikely to be achieved if the general public does not take to electric vehicles more.
What are the main obstacles to electric vehicles’ market penetration in China?
Policy is one barrier to increasing electric vehicle use. Current Chinese government policies supporting electric vehicles focus on production and purchases. This overlooks the fact that electric vehicles have a long post-purchase life cycle.
Instead, policy should focus on building infrastructure and funding for electric vehicle charging, parking, and use. Otherwise, it will take a long time for private consumers to accept this new technology.
The lack of technological capacity has also limited the expansion of electric vehicle use. The lack of charging flexibility in particular has been the primary barrier to increased purchases of electric vehicles.
The electric vehicle industry needs to develop better core technology in components like the battery. Improved core technology will help cut down on the cost of electric vehicles, spurring purchases. Specifically, China needs to develop better charging solutions to accommodate the various customer-use patterns of electric vehicles in the country.
Developing technological capacity is critical to expanding the market and ensuring the long-term profitability of electric vehicles. New policies that support electric vehicle technology improvement will encourage consumer acceptance and purchases. Supportive policies and improved technology can also demonstrate that electric vehicles are safe and practical, which is a priority for potential customers.
How do international negotiations serve as a platform for China’s energy strategy?
A large part of China’s overall energy security strategy is its role in international negotiations about climate change, such as the United Nations Framework Convention on Climate Change. China’s stance is that climate change is a global problem that needs a global solution, so an international platform is needed to develop international coordination and supervision. In addition, it is China’s view that the least-developed countries absorb the worst impact of climate change, and policies are needed to address this inequality, which can only be done on a global scale.
China plays a critical leadership role in these international negotiations. However, on their own, developing countries like China cannot be expected to assume full leadership without reinforcement at the domestic and regional levels. Still, only an international treaty can accommodate the needs of all parties with a binding and legal framework that will deliver a long-term science-oriented solution for climate security.
The Durban Platform, which was forged in South Africa in December 2011 and reaffirmed in Doha in December 2012, is one of the most significant outcomes achieved through the Framework Convention on Climate Change in recent years. To some extent, this came as a shock, given the gloomy international economic circumstances. But despite the low expectations ahead of the Durban conference, the major carbon-emitting countries, including the United States, China, Brazil, and India, demonstrated flexibility and a willingness to reach an agreement. The EU also played an important role by shoring up the support of the least-developed countries and small island states.
With the Durban Platform, all major carbon-emitting countries in the world for the first time agreed to a post-2020 climate framework, which was designated a “protocol, legal instrument or agreed outcome with legal force.” This outcome suggests that world’s largest emitters, including China, are serious about mitigating emissions and curbing climate change impacts.
It also provided an effective setup for the Kyoto Protocol to be extended at the Doha conference in December 2012 to a second commitment period of 2013–2020. This is significant because the Kyoto Protocol is the only legally binding international climate treaty the world has ever achieved after nearly twenty years of negotiation.
However, Canada, Japan, New Zealand, and Russia all left the Kyoto Protocol, and the remaining parties, especially the EU, failed to present an ambitious target at the Doha conference. Distrust between the developed and developing world deepened, which does not bode well for future climate talks under the Durban Platform.
In the past year, the world has faced the highest costs of climate change in the form of extreme weather and natural disasters. While climate change negotiation is slowly winding its way toward a global consensus, climate change is becoming a real threat to more and more countries, rich or poor. Bold political willingness and decisive action are demanded from those most severely affected. Politicians from all major emitters need to make sure they respond to that demand.
