China is often viewed as an obstacle to progress in international climate negotiations, but its domestic action in transitioning to a low-carbon economy is very different.
The country already leads the world in wind and solar production and has set carbon intensity targets at 17 percent from 2011 to 2015. By 2020, it plans to reduce carbon intensity by 40 to 45 percent from 2005 levels. China also established carbon trading pilot projects in six provinces, and plans to consolidate these into a national carbon market by 2015.
Despite these ambitious goals, there is still much more that can be done. China is the world’s largest emitter of CO2. And while most countries in the United Nations Framework Convention on Climate Change (UNFCCC) measure their targets based on 1990 levels, China is measuring from 2005, decreasing the significance of the targets when compared to other countries. While the carbon intensity targets may appear to be monumental, intensity targets are very different than overall carbon targets. In a carbon intensity target, carbon is cut per unit of GDP, and in a country where GDP is expected to grow at a high rate, carbon emissions will also increase. By setting intensity targets rather than an overall carbon reduction target, some say that is way for China to avoid reducing emissions.
“Despite these intensity reductions, total CO2 emissions from China will continue to increase in the coming decade. The International Monetary Fund anticipates that China's economy will grow, for the next five years, at a rate of around 9 percent per year. If this growth rate were to continue until 2020, the value of the Chinese economy would increase three-fold compared to 2005. With this growth rate, a 40-45 percent reduction in carbon intensity leads to CO2 emissions from the energy sector increasing from around 6 gigaton (GT) in 2007 to between 10-11 GT in 2020. By comparison, in 2007 the EU's energy sector CO2 emissions were 3.8 GT,” according to Antony Froggatt, senior research fellow in the Energy, Environment and Development Program at Chatham House.
But this uncertainty may all change very soon. China will confirm its full plan to transition to a low-carbon economy later this year, and some details have already emerged. The cornerstone of this plan is a cap on energy consumption, with a total estimated cap of 4.1 billion tons of coal by 2015, exceeding the previous cap by 25 percent last year.
By using an energy consumption cap, the approach can remain flexible. This scheme will most likely require market mechanisms, and the national carbon market will play a key role. Since the cap is based on China’s growth rate, it may not result in further cuts. However, it does add more certainty that the country will reach its carbon intensity goals and promises more effective trading in the provinces’ - and eventually country’s - carbon market.
