Greenhouse Gas Control Policies in China

Published: January 28, 2010, 12:49 pm

Updated: May 7, 2012, 1:34 pm

Source: Crs

Topics:

Environmental Law & Policy (main) Climate Change (main)

See also: Overview of Greenhouse Gas Control Policies in Various Countries (Greenhouse Gas Control Policies in China)

Overall GHG emission target and timing

The Chinese government has not stated a national target for GHG reductions or carbon reductions. The 11th Five-Year Plan set compulsory energy and pollution targets for 2006-2010 that also slow growth of GHG emissions.

The central government has indicated that it will set carbon-intensity targets in its 12th Five-Year Plan, from 2011-2015, along with ambitious targets for energy intensity, inefficient plant closures, and non-fossil energy development. On September 22, 2009, Chinese President Hu Jintao offered to other world premiers that China “will endeavor to cut carbon dioxide emissions per unit of gross domestic product (GDP) by a notable margin by 2020 from the 2005 level.” Although no quantity was revealed, rumors suggest that Chinese leadership may announce a quantitative target at the Copenhagen meeting of the UNFCCC in December 2009.

The Chinese climate change website suggests that Chinese leaders are “mulling” GHG goals of improvement of carbon intensity of 4-5% annually, which could lead to an 85-90% reduction of carbon intensity by 2050 compared to the 2005 rate. (A percentage improvement expressed as carbon intensity would be easier to achieve than the same percentage target expressed as energy intensity, so this rate of annual improvement would be less than the annual energy intensity improvement target in the current five-year plan.)

Principal Policy Instruments

Edicts specify national, provincial, and plant-specific targets or actions. For example, one national goal is to reduce energy consumption per unit of GDP by 20% from 2006-2010. Each province was given a corresponding target in June 2006, and many local governments were assigned energy conservation targets by the National Development and Reform Commission (NDRC) in July 2006. Some of the key instruments the central government is using to meet its targets for 2010 include:

• reducing or eliminating incentives for energy-intensive exports (e.g., export tax rebates);
• implementing a program of “Large Substitute for Small,” closing half of small, inefficient electric power plants by 2010, and banning new small plants;
• removing some subsidies from inefficient or polluting plants;

• setting 2010 energy consumption targets within the Top-1000 Enterprise Program for each large enterprise (in total representing 33% of national energy use in 2004);
• requiring closure of small and inefficient industrial plants, sometimes with compensatory payments;
• setting electricity dispatch rules to favor low-carbon generation, such as feed-in tariffs for renewably-produced electricity that can reach 25-50% higher than coal-based electricity prices;
• providing large subsidies to help finance some large capital investments in efficient or low-emitting technologies;
• allowing energy prices to rise to international price levels in many cases, and imposing (and reportedly beginning to collect) pollution fees;
• setting new vehicle efficiency standards at the Europe-IV level (tighter than U.S.), and making payments to turn in and destroy older, polluting vehicles (like “cash for clunkers”);
• raising investments in inter-city and intra-city rail; and
• tightening building efficiency codes by many municipalities, although enforcement may be spotty.

High-level officials have indicated that the 12th Five-Year Plan will specify carbon-intensity targets, and that several national laws will be amended in the near-term to achieve GHG reductions. Carbon cap-and-trade “pilot” projects will be initiated in “some designated areas and industries.” President Hu has summarized additional targets that likely would help to restrain expected growth of GHG: a target to increase non-fossil fuel share of primary energy consumption to 15% by 2020, and to increase forest coverage by 40 million hectares and forest stock volume by 1.3 billion cubic meters by 2020 from 2005 levels. China also requires strict fuel efficiency standards for vehicles.

Some have argued that China’s policies may be undermined by incomplete implementation, due to sometimes vague statement of requirements, lack of enforcement resources, poor data, conflicting priorities at the local level, and other factors. Though some argue that reporting and enforcement of the targets and regulations have been irregular, there are indications that the central government is working to improve such weaknesses, and to impose career penalties on officials who do not meet their targets. Others are cautious about the central government’s will and ability to gain full implementation of national policies at the provincial and local levels.

Covered Gases and Sectors

Policies are mostly focused on energy reforms not GHG control, though they also reduce CO2 and methane emissions. Some projects under the Kyoto Protocol’s Clean Development Mechanism address many industrial gases (such as hydrofluorocarbons) as well. Sectors addressed include energy, vehicle manufacturing, building, energy-intensive industries, forestry, etc. Agriculture seems engaged only through development of bio-fuels.

Allocation of GHG reductions to various sectors

Many sectors are covered through various programs. Targets and actions are set by enterprise, not industry-wide.

Regulations or exemptions specific to trade-sensitive sectors

Many Chinese industry-specific policies seem aimed at eliminating the most energy-intensive and inefficient facilities within a sector. Many of China’s exporting firms perform close to or at international energy-intensities. In 2007, China removed or reduced export tax rebates for many types of export products, including for energy-intensive, trade-sensitive industries. These adjustments generally have the effect of reducing incentives to export. Examples of additional programs are provided below.

Iron and Steel: The Chinese government has been emphasizing restructuring and improving the overall production efficiency of the iron and steel industry, much of which is likely also to reduce direct and indirect emissions. Closures are mandated in 2006-2010 of 100 million tons of iron production capacity and 55 million tons of steel capacity using inefficient and old technologies. From 2006-2008, 61 million tons of iron and 43 million tons of steel capacity were closed, according to government statistics. Mergers and acquisitions are being encouraged to increase concentration and efficiency in the industry. The adjustment and revitalization plan also envisions shifting the product composition of the sector’s production, as well as shifting to integrated capacity.

Aluminum: Chinese requirements for energy savings and emissions reductions in its aluminum industry have been estimated to achieve its target of reducing GHG from the industry by 25% by the end of 2010. The central government mandated closures of inefficient aluminum smelting capacity in 2006-2010. China’s Ministry of Finance announced it would levy a 15% export tariff on non-alloy aluminum rods and poles, and eliminate the 5% import duty on electrolytic aluminum and many other energy-intensive commodities, in order to “further restrict exports of high energy-consuming and polluting resources products and encourage imports of raw materials,” as well as to suppress China’s trade surplus.

The Chinese government has removed preferential electricity rates for metal producers, so manufacturers now pay market prices. The (U.S.-based) Aluminum Association also notes,

“Additionally, China has invested in alternative energy systems that will begin paying off in 2009, namely solar and hydroelectric power, which will reduce the cost of energy.” This is likely also to reduce associated GHG emissions.

Cement: China set a target to reduce energy intensity in its cement industry by 20% in the 11th Five-Year Plan (2006-2010), using plant closures and installing state-of-the-art technologies. China’s cement production is about 50% of the global total. The central government mandated closures of inefficient cement production capacity in 2006-2010, with closures of about 140 million tons of production capacity achieved from 2006-2008. One program is set to “design an economically-viable, environmentally-friendly alternative fuel and raw materials co-processing program, which will include conducting demonstrations in six Chinese plants, and developing, documenting, and disseminating technical guidelines for co-processing.... [T]ools, training materials, and results from the project will be disseminated to further enhance the capacity building of the entire Chinese cement industry. An integrated national database on energy efficiency and emissions for Chinese cement industry, using worldwide recognized methodologies and tools, will also be established.”

Motor Vehicles: New vehicle efficiency standards have been set at the Europe-IV level (stricter than US standards). National policy and investment promotes rail rather than road transport. China has enacted its version of the “Cash for Clunkers” program: from Aug 1, 2009 to June 30, 2010, consumers may receive 3,000-6,000 Yuan (US$440-875) per vehicle to replace “yellow tag” passenger cars, vans, and trucks that exceed emission standards, or are 8-12 years old. Previous changes in vehicle taxes, with higher rates for large cars and lower rates for small ones, resulted in increased small car sales in 2008.

The total trade-in subsidy, mainly targeting light commercial vehicles, is likely to cost the government around 5 billion Yuan.

Figure A-1. Comparison of International Fuel Economy and GHG Standards. Source: Feng An, “Revised Chart for World Standards,” Innovation Center for Energy and Transportation
(iCET) (2009). Available at http://www.icet.org.cn.

Figure A-2. Standardized Comparison of Select Vehicle Efficiency Standards Internationally (standards as of mid-2009). Source: Feng An, “Revised Chart for World Standards,” Innovation Center for Energy and Transportation (iCET) (2009). Available at http://www.icet.org.cn.

References

Note: The first version of this article was drawn from R40936 An Overview of Greenhouse Gas (GHG) Control Policies in Various Countries by Jane A. Leggett, Richard K. Lattanzio, Carl Ek, and Larry Parker, Congressional Research Service, November 30, 2009.

Disclaimer: This article is taken wholly from, or contains information that was originally published by, the Congressional Research Service. Topic editors and authors for the Encyclopedia of Earth may have edited its content or added new information. The use of information from the Congressional Research Service should not be construed as support for or endorsement by that organization for any new information added by EoE personnel, or for any editing of the original content.

Citation

(2012). Greenhouse Gas Control Policies in China. Retrieved from http://editors.eol.org/eoearth/wiki/Greenhouse_Gas_Control_Policies_in_China