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                                                                                                 March 23, 2016

China's Greenhouse Gas and Energy Proposals for 2016-2020


On March 16, 2016, China's National People's Congress
adopted a 13th Five-Year Plan (FYP), for 2016-2020, that
sets goals of tighter limits on polluting emissions and
accelerating a shift away from coal-fired electricity supply
toward greater efficiency and non-fossil energy. Questions
remain on specific measures to achieve targets-
particularly regarding electric grid interconnection and
other policy reforms, performance data quality, and
effective enforcement. Despite questions about data quality,
it appears that China met related goals in its 12th FYP.
Some in the U.S. Congress consider the value of U.S.
greenhouse gas (GHG) reductions to be partly contingent
on China's emissions performance.


The legitimacy of the Communist Party of China depends
on continued improvement in the well-being of the people.
For decades, well-being was usually measured primarily by
economic growth, such as increases to Chinese gross
domestic product (GDP) per capita. The emphasis on GDP
growth came at the expense of other aspects of well-being,
such as healthful air. By the mid-2000s, in the 1 1th FYP
(2006-2010), central policymakers publicly recognized the
high costs to China's environmental quality and public
health of a growth-at-any-cost focus. Three problems
converged:
    1. Increasingly severe domestic air, water,
        and soil pollution and regional water
        scarcity;
    2. International pressure on China (which
        depends heavily on coal) to reduce its
        GHG emissions associated with global
        climate change; and
    3. Growing dependence on foreign energy
        supply.
China's 13th FYP continues a shift toward limiting the
adverse environmental consequences of economic
development. In a recent press conference, Chinese Vice
Minister of Environmental Protection Wu Xiaoqing stated
that China shall not trade environment for GDP growth in
the short term, which is not sustainable
(http://news.xinhuanet.com/english/2016-03/07/
c_135164022.htm).

China surpassed the United States to become the largest
emitter of GHG globally around 2006. It releases more than
one-quarter of all fossil-fuel-related carbon dioxide (C02)
emissions. Halting the increase of atmospheric
concentrations of CO2 would be extremely difficult without
China reducing its net emissions to near zero along with
other major emitters. Other nations also require China's
participation in GHG reductions to avoid adverse effects on
trade competitiveness and leakage of emissions-that is,
activities shifting to locations without comparable controls.


The Chinese government pledged to participate in a global
effort to address GHG emissions. In the context of the 2015
Paris Agreement under the United Nations Framework
Convention on Climate Change, China pledged to:

* peak CO2 emissions around 2030, perhaps earlier;
* launch in 2017 a national GHG emissions cap-and-trade
   system covering electricity and five other industries;
* increase the non-fossil share of China's energy to
   around 20% by 2030;
* lower CO2 emitted per unit of GDP by 60-65%
   compared with 2005;
* expand forest stock volume by around 4.5 billion cubic
   meters; and
* control emissions of hydrofluorocarbons (HFCs)-
   another type of potent GHG-by 2020.
China's statement included a host of existing and planned
measures to achieve these and additional targets.

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The 1 3th FYP ratchets up domestic targets affecting GHG
emissions and related energy structures. Lower envisioned
economic growth than in recent years-the new
normal-will suppress the growth of demand for energy
and related emissions, as will a promoted shift toward
services and higher value-added production.

The 1 3th FYP lists a better-quality, more efficient,
upgraded economy as the second among the five major
national targets. It aims at GDP growth of 6.5-7.0%
annually in 2016-2020. At the same time, the plan caps
primary energy consumption at 5 billion metric tons of coal
equivalent (compared with about 4.3 billion in 2015). The
plan includes targets to:
* reduce CO2 emissions per unit of GDP (CO2 intensity)
   by 40-45% by 2020 compared with 2005, cutting CO2
   intensity byl8% (-3.9% annually) during 2016-2020;
* reduce energy consumption per unit of GDP by 15%
   (-3.4% annually) in 2016-2020; and
* increase the share of non-fossil fuels in the primary
   energy supply to 15% by 2020, compared with 12% in
   2015.
The plan also proposes a ban on commercial logging in
natural forests. Overall, the 1 3th FYP would shift from
boosting energy supply to achieving the real low-carbon
economy by providing incentives aimed at enterprises,
consumers, investors, and investments to promote
technology advances. Identification of concrete measures
are expected in a promised strategy to 2030 for
revolutionizing energy generation and consumption, push
forward the transformation and development of the energy
sector, and exercise control over both the total amount and


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