China Studying Timeline for Carbon Cap To Include in Next Five-Year Plan

Bloomberg BNA — China is reportedly studying a timeline for an absolute cap on carbon dioxide emissions, as it prepares climate change policies to include in its forthcoming 13th Five-Year Plan (2016-2020), although an announcement of such a policy is premature, analysts told Bloomberg BNA June 4.

The policies are expected to include measures to meet a previous carbon intensity target, as well as expansion of pilot plans on capping coal-consumption and moving toward a national carbon emissions trading system (ETS) as part of the country's overall climate change policy.

Responding to a report by Reuters on June 3, which quoted He Jiankun, a climate policy adviser for the Chinese government and director of the Low Carbon Economy Lab at Tsinghua University in Beijing, as saying China would implement an absolute cap on carbon emissions starting in 2016, analysts with understanding of the government's planning suggested he was misunderstood and that the remarks were his opinion on what the government should do.

‘Lot of Discussions'

Yang Ailun, a senior associate at the World Resources Institute in Washington, told Bloomberg BNA by phone June 4 that He's remarks “confirm there are a lot of discussions” about setting carbon emissions peak goals, and that the “technical conditions are now right for China to consider” such caps, but “that is very different than saying China will have an absolute cap” in the next five-year plan.

Yang Fuqiang, a senior adviser on energy, environment and climate change at the Natural Resources Defense Council, told Bloomberg BNA by phone from Beijing on June 4 that he thought He's remarks had been misunderstood as an announcement directly from the government.

Many analysts in China are estimating an emissions peak of around 2030, though even that date is “quite controversial,” Yang Ailun said, which would put a peak sometime into the 15th Five-Year Plan. “Some people think that 2030 is even too ambitious, with the key assumption being the impact on GDP growth.”

With a carbon intensity target of 40 percent to 45 percent based on 2010 levels by 2015 already set, and coal-consumption control measures that are currently being piloted, Yang Ailun said “there is room to say that this [peak] could be achieved earlier.”

Coal-Consumption Caps

As part of China's Air Pollution Action Plan issued in September 2013, areas inside the three key air pollution control regions—the Beijing-Tianjin-Hebei region, the Yangtze River Delta region around Shanghai and the Pearl River Delta region in Guangdong province—are putting into place coal-consumption cap measures.

Beijing-Tianjin-Hebei, Shandong, Shaanxi provinces and Chongqing municipality have already set coal-consumption caps, while the Pearl River Delta (Shanghai municipality and Zhejiang and Jiangsu provinces) and Guangdong province have begun setting negative coal-consumption growth targets.

These areas cover about 44 percent of China's total coal consumption, Yang Ailun said.

Leading from this will probably be a national coal-consumption cap and sectoral coal-consumption caps in industries like iron, steel, cement and coal chemical production, the power sector and the construction sector, Yang Fuqiang said.

“If coal consumption could peak by 2020, and then you also have to factor in a lot of new growth from gas and oil use, so there could be a delay between the coal-consumption peak and the emissions peak, maybe five to 10 years,” Yang Ailun said, which would put the peak between 2025 and 2030.

Timelines for Announcements

There are two timelines for when China may announce major goals on peak emissions, Yang Fuqiang said. One would be the UN climate talks in Paris at the end of 2015, when it needs to finalize a proposal for a new UN Framework Convention on Climate Change (UNFCCC), and the other would be sometime during the 13th Five-Year Plan, but he added that the focus currently is on setting coal-consumption caps before any kind of absolute emissions cap.

“We will see if they can reach a coal-consumption cap,” Yang Fuqiang said. “If they can reach the coal-consumption cap by 2020, that would increase the Chinese government confidence in setting an absolute emissions cap.”

A June 3 report from China News Service (CNS), one of China's two major state-run news agencies, reported on He's speech at a joint Tsinghua-Harvard University seminar on low-carbon development in Beijing on June 3. The report didn't mention any remarks of an absolute cap on carbon emissions, only that He suggested China needs to move further in promoting the pilot ETS system as a way to set a price on carbon emissions and expanding beyond the regional pilots to incorporate a national ETS.

Possible Carbon Taxes

At the moment, while the ETS is being piloted, the Ministry of Finance (MOF) is also studying the possible implementation of carbon taxes. Yang Fuqiang said the National Development and Reform Commission favors the ETS system and the MOF the tax system, but it is uncertain which will be the leading policy in the end.

According to the CNS report, He also said nonfossil-fuel-based sources are expected to reach 15 percent in 2020, to reach 20 percent to 25 percent in 2030, and to hit 33 percent to 50 percent of the energy mix by 2050 in China.

Text of a speech by He given at a Low Carbon Development Forum at Tsinghua University in March shows he is in favor of setting caps on coal consumption and carbon emissions beyond the carbon intensity targets that have already been set, to “give stronger binding targets to promote the transformation of the current economic growth model,” but He did not suggest any policies had officially been set by the central government for the next planning period.

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