Transcript China 12 th -13 th 5-year plan highlights

Cooperation to promote lowcarbon economic development
Path and vision
26th November 2010
PRIVATE AND CONFIDENTIAL – FOR DISCUSSION PURPOSES ONLY
Global Low-carbon Movement and China's
Growth
 Is Climate Change risky for the World and China?
 Is there a New Industrial Revolution and Transition to low-carbon
growth path?
 What will be the magnitude of the change and implication?
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Current status of greenhouse gas emission in
the world and China
 Greenhouse gas concentrations or stocks have increased from around 285ppm in the
1800s to over 430ppm CO2e today.
 We are adding at a rate of over 2.5ppm per year (likely to accelerate with little or weak
action). Business as usual likely to take us over 750ppm by the end of the century.
 This level of concentration would result in a large probability, perhaps 50%, of an eventual
temperature increase of more than 5°C compared with the pre-industrial era. This would
be enormously destructive.
 Physical and human geography would be transformed. Deserts, coastlines, rivers, rainfall
patterns, the reasons we live where we do, would be redrawn. The planet has not seen
such temperatures for 30 million years. Potential cause of migration of hundreds of millions,
perhaps billions, of people around the world.
 China is especially vulnerable with its large fraction of the population near the coast, its
pressures on water supply, its dependence on the Himalayan region as a water source, and
many populous countries on its borders.
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Current intention in China
 Impossible to ignore the arithmetic. For a 2°C target: global emissions need to be around
44 billion tonnes CO2e in 2020; under 35 billion tonnes in 2030; and under 20 billion
tonnes in 2050.
 China’s emission in 2010 approximately 6 billion tonnes CO2e (or 22.3% of world total).
China overtakes US as world’s biggest CO2 emitter.
 For the world to stay on a 2°C path, China will need to reduce its emissions to around 9
billion tonnes by 2030 (or 29% of world total). The compound annual growth rate is 2.05%
(2010-2030).
 China has indicated voluntary action to decrease carbon dioxide emission per unit of GDP
by 40-45% between 2005 and 2020. Has also indicated targets for non-fossil fuels and for
forestry.
 This target of 2020 is a major contribution to the global effort in tackling Climate Change.
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China 11th 5-year plan achievement
 20% emission reduction targets have been achieved ahead of schedule during China
11th five-year plan. The total emission reductions are estimated around 500 million
tons CO2 in last five years.
 But high energy consumption and high emission industries, still support economic
growth in some areas of China; low-carbon and low-emission models are still not in
the central station of the economic arena.
 Wind power develops rapidly through 11th 5-year plan.
Energy type
Installed capacity
in 2008
Percentage of the
total installed
capacity
Installed
capacity in 2010
Percentage of
the total installed
capacity
602.61 million kw
76.05%
700 million kw
73.68%
173 million kw
21.79%
210 million kw
22.11%
3 million kw
0.38%
5.5 million kw
0.58%
Wind power
12.15 million kw
1.53%
23.8million kw
2.51%
Solar power
0.14 million kw
0.02%
1 million kw
0.11%
Nuclear power
9.1 million kw
1.15%
9.7 million kw
1.02%
794 million kw
100%
950 million kw
100%
Coal-fired power
Hydro power
Biomass power
Total Capacity in
China
Source: State Energy Bureau of China, NDRC
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China 12th-13th 5-year plan highlights
 The emission reduction target of 12th 5-year plan is set around 16%.
 In order to complete the objectives, policies on the incentives needed to protect their
policies to protect their sustainability, equity, and operability.
 The target of 12th 5-year plan is combined with the international carbon emission targets
and worked out, and will also have a significant impact on the existing power structure in
China.
 Nuclear power and solar photovoltaic have been concerned in the medium-term and longterm plans of new energy with the big perspective of demand.
Energy type
Installed capacity
in 2010
The proposed
2015 target
(12th 5-year plan)
The proposed
2020 target
(13th 5-year plan)
Compound
annual growth
rate
(10 years)
Coal-fired power
700 million kw
951 million kw
1205 million kw
5.58%
Hydro power
210 million kw
270 million kw
330 million kw
4.62%
Biomass power
5.5 million kw
15 million kw
30 million kw
18.49%
Wind power
23.8million kw
70 million kw
120 million kw
17.56%
Solar power
1million kw
5 million kw
20 million kw
34.93%
Nuclear power
9.7 million kw
39 million kw
85 million kw
24.24%
Total Capacity in China
950 million kw
1350 million kw
1790 million kw
/
Source: State Energy Bureau of China, NDRC, and Goldman Sachs
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China 12th-13th 5-year plan highlights
 Under the control of the China macroeconomic policy, production model will be
led to a transition from the high energy consumption and high emissions to the
low-carbon, and low energy consumption.
 Interest in establishing carbon trading schemes is also growing. The NDRC has
recently announced that China may adopt domestic carbon trading schemes
during the 12th 5-year plan. Leading Chinese power companies have already
piloted GHG emission measurement and reporting in preparation for future
schemes. Market mechanisms may be able to achieve intensity targets and
emissions reductions more effectively, efficiently and equitably than commandand-control type policies.
 Low-carbon growth in China is vital for China’s own future. The urgency, the
scale of the required changes and the magnitude of the opportunities in the
new economy, mean that green policies should be at the heart of the 12th and
13th 5-year plans.
Source: State Energy Bureau of China, NDRC
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Clean energy development
Million KW
Source: State Energy Bureau of China, NDRC
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Business opportunities
 Carbon trading mechanisms can promote low carbon economic development role.
 International emission trading market
Trading mechanisms under the Kyoto Protocol framework
- Clean Development Mechanism (CDM)
(Expected average annual CERs from registered projects of the world total is 397,027,673tCO2e,
including 61.61% of total in China;
Issued CERs of the world total is 455,310,253 tCO2e, including 50.99% of total in China.)
- Emission Trading (ET)
- Joint Implementation (JI)
 Low-carbon market in China
- The rise of voluntary emission reduction markets.
(Growing interest in China’s cities to pilot market-based emissions trading schemes. Shanghai, Beijing
and Tianjin have established voluntary environmental exchanges.)
 Investment in new energy in China equity market
Source: UNFCCC, 22nd Nov. 2010
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China’s new low-carbon policies
 China has promulgated a series of low-carbon policies. Under the promotion of new
low-carbon policies, it will change the business or individual consciousness and
behavior in the energy ideas.
 Many companies have taken "low-carbon economy" and "carbon footprint" as one of
important indicators to measure corporations’ social responsibilities.
 Individuals have reduced the influences from and made compensation to the carbon
footprint produced to a certain extent through the tree planting in the form "carbon
compensation" and "carbon offset".
 State Council approved in principle (8 September 2010) a decision on speeding up
the cultivation and development of emerging strategic industries, the “Magic 7”.
Includes: energy saving and environmental protection; next generation
information technology; bio-tech; high-end manufacturing; new energy; new
materials; and clean energy vehicles.
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Impact of low-carbon economy on China’s
energy structure
 The impact of low-carbon economy on China’s energy structure can be seen from its
power structure in the 12th 5-year plan.
 China’s 12th 5-year plan has made it clear to develop new energy, among which nuclear
energy grows the fastest. Particularly its installed capacity, which has been raised
constantly in the nuclear power plan, from the current 9.77 million kilo watts to 85 million
kilo watts in 2020, increasing by 8.8 times. It is estimated that RMB 990 billion of
construction funds will be required for investment. The market capacity accounting for
nearly 50% nuclear power equipment will be as high as RMB 500 billion, which will be an
enormous market.
 The most potential of the new energy is nuclear energy. It has many advantages in terms
of sustainability and cost performance. With the strong points such as stable return of
investment and good benefits, nuclear power is a kind of currently feasible energy which
can replace coal.
 Horizontal comparison was made among nuclear power, the power generation from solar
energy, and wind power. The nuclear energy enjoys the largest investment amount and
the most obvious benefits to the industrial chain.
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Promulgated renewable energy development
policies in China
 “Renewable Energy Law” 2006.1.1 NPC
 “Renewable Energy Law on the Revision ” 2010.04.01 NPC
 “Management regulations for electricity generation from renewable energy” 2006.2.6
NDRC
 “Tentative management measures for price and sharing of expenses for electricity
generation from renewable energy” 2006.2.10 NDRC
 “Special funds for renewable energy development management practices” 2006.5.30
NDRC/MoF/CSC/MLR
 “Mid-Long term Development Plan for Renewable Energy ” 2007.9.4 NDRC
 “The Eleventh Five-Year Plan for renewable energy development management
practices” 2008.3.8 NDRC
Uncertainty: Stability of China’s clean energy policies and continuity
in the process of implementation.
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Conclusion
 Equity investment on clean energy sector
 Emission permits of carbon trade under low-carbon economy
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