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Blue Skies for 2012: Cutting Air Pollution and Strengthening Information Transparency in China

2012-01-09T09:34:44Z

Barbara Finamore, China Program Director, Beijing

Power plant emissions and air quality standards targeting some of the most harmful impacts of coal are coming under greater scrutiny starting this year in China. As of January 1, new thermal power plants have tougher restrictions on soot, sulfur dioxide and nitrogen dioxides (92% of the current fleet is coal-fired). Mercury will be controlled starting in 2015. Small particulate matter and ozone standards will take effect nationwide in 2016; Beijing announced just last week that it would publicly release small particulate matter (PM 2.5) data before February of this year. Followed closely by the U.S. unveiling new toxics controls on power plants last month, both countries are in a “race to the top” for greater health and environmental protections for its citizens. This is a race we must all win.

On September 21, China’s Ministry of Environmental Protection (MEP) released new thermal power plant emission standards that will tighten controls on soot, sulfur dioxide (SO2) and nitrogen dioxide (NO2). Newly constructed power plants are obligated to follow the standards which began on January 1, 2012. For existing power plants, the new standards will take effect starting July 1, 2014. Read NRDC’s unofficial English summary (regulations in Chinese). A side-by-side comparison with the European Union is below[1].

Air Pollutant Emission Standards Comparison Table -- China and the European Union (EU) Units: mg/m3

The new standards also set strong limits on the emission of mercury and its compounds. The coal industry is the single largest source of mercury emissions in the world and China leads the pack consuming 47% of the world’s coal. All power plants (new and existing) will be regulated starting in 2015. Studies have shown that high levels of mercury in our fish can be damaging to the nervous system and impair a child’s ability to think and learn.

By setting mercury emission standards, China is not only dealing with pollution’s domestic costs, it is making a global statement. The U.S. just recently inaugurated national limits on mercury or other toxic pollutants released from power plant smokestacks, reaching full compliance by 2016. This is one of President Obama’s “biggest environmental accomplishments” to date. By contrast, the European Union’s Heavy Metal Protocol does not give a specific emission limit value on mercury (pdf).

Some ambiguities in the regulations do require further clarification. Enforcement and participatory supervision of these types of standards have proved difficult in the past, which we are working to strengthen. In addition, key regions with “concentrated development and low environmental capacity” will face even tougher standards (see table 2 in the regulations). However, the geographic scope and timeline are undefined, subject to further regulation by the MEP.

Major energy companies are already complaining that these new standards will be too costly. We’ve heard the same reprieve in the U.S. about mercury and toxics, but the facts are more compelling: health benefits to Americans will be up to nine times greater than the costs of compliance to power plants. The wide losses of Chinese energy giants this year due to the increasing costs of coal are a compelling case for effective pricing reform, not sacrificing public welfare. Market mechanisms – such as the Jiangxi provincial pilot raising electricity prices for a batch of energy-intensive factories through the end of 2011 – will be crucial if China is to achieve its 12th Five-Year Plan goals.

Shortly after publishing power plant emission standards, in November 2011, MEP opened public feedback on revised environmental air quality standards (Chinese) that will include for the first time PM 2.5 (fine particles smaller than 2.5 microns in diameter) and ozone levels. Just last week, Beijing’s Municipal Environmental Protection Bureau announced that it will begin releasing PM 2.5 data to the public before the Chinese New Year on January 23. Currently, China lacks air quality standards for monitoring PM 2.5, which causes aggravated risks for lung and heart disease. MEP says a new air quality index standard, including PM 2.5 and ozone measurements, will be implemented nationwide in 2016.

Though these standards must be tightly controlled and effectively monitored, it is encouraging to see that Beijing is responding to the costs of air pollution and unregulated coal development. With these new emission and air quality standards, China may benefit from fresher air, cleaner water and healthier citizens in 2012 and beyond.

This post was co-authored with NRDC’s Craig Spencer and Michael Davidson.

Summary of the Air Emission Standards on Thermal Power Plants (NRDC, 2012)

[1] “Integrated Pollution Prevention and Control (IPPC), Executive Summary, Reference Document on Best Available Techniques for Large Combustion Plants,” May 2005. Units are in mg/m3. Standards come from plants with a capacity of 100-300 MWth.

Province-by-Province Details of China's Five-Year Energy and Environment Priorities

2011-09-15T14:37:09Z

Barbara Finamore, China Program Director, Beijing

China’s State Council recently announced its work plan for energy-savings and major pollutant emissions reductions through 2015 (“Energy Conservation and Emissions Reduction Comprehensive Work Plan for the 12th Five-Year Plan (2011-2015) Period”). This key guiding document for realizing China’s energy and environment goals sets mandatory energy intensity and major pollutant emissions targets for provinces and highlights a number of key policies to achieve them.

The main numerical targets released in the work plan were the provincial level energy intensity targets for 2015. Nationally, energy intensity should fall by 16% and carbon intensity by 17% as detailed in the 12th Five-Year Plan. Province by province, we now know how that 16% is going to add up:

10% Reduction	15% Reduction	16% Reduction	17% Reduction	18% Reduction
Hainan	Gansu	Anhui	Beijing	Guangdong
Qinghai	Guangxi	Chongqing	Hebei	Jiangsu
Tibet	Guizhou	Fujian	Liaoning	Shanghai
Xinjiang	Inner Mongolia	Heilongjiang	Shandong	Tianjin
	Ningxia	Henan		Zhejiang
	Yunnan	Hubei
		Hunan
		Jiangxi
		Jilin
		National
		Shaanxi
		Shanxi
		Sichuan

Energy intensity reduction targets in China’s 12th Five-Year Plan (2011-2015)

Similar provincial targets for the four criteria pollutants (sulfur dioxide, nitrogen oxide, chemical oxygen demand and ammonium nitrogen) are included. We expect the State Council to issue another separate official document to do carbon intensity index allocation and quota setting.

I’ve written many times about the significance of setting binding targets for China in defining national priorities and mobilizing necessary financial resources. This round of energy and environment-related targets reflects the Chinese government’s determination to rebalance its economic structure towards more energy-efficient growth. We also saw this when the Chinese government toned down the 12th FYP annual economic growth target to 7%.

Yet as we all know, China’s actual economic growth rates have always exceeded targeted growth rates: average GDP growth in the 11th Five Year Plan was 11%, even though the targeted growth rate was 7.5%. It will take all the specific policies in the work plan – such as public finance incentives, taxation policies and financial support measures – in order for this transformation to happen on the ground.

China has good reason for acting. There is a huge market in energy-savings and emissions reductions industries in China. This market is projected to grow from about 1.71 trillion RMB ($268 billion) in 2009 to over 3 trillion RMB ($470 billion) by 2015. An analysis by Worldwatch Institute recently found up to 4.5 million green jobs in three of China’s biggest low-carbon sectors by 2020 – energy, transportation, and forestry.

Last but not least, the work plan reiterates China’s plans to carry out carbon trading pilots. Although the work plan only discusses voluntary emissions trading mechanisms, cap and trade pilots and other market mechanisms are being actively discussed elsewhere. We hope that they are eventually incorporated into the climate change law that China is preparing to draft.

These carbon and energy targets together with continued strengthening and improvement in clean energy incentive policies (such as the recent nationwide solar PV feed-in-tariff) are helping China to make progress on its long-term climate and clean energy priorities.

This post was co-authored with Wang Peng, Alvin Lin and Michael Davidson.

One Year to the Earth Summit: How China Can Advance Sustainable Development Globally

2011-06-07T09:30:40Z

Barbara Finamore, China Program Director, Beijing

Nearly two decades ago, I helped advise China on a blueprint for national sustainability in the 21st century. The blueprint – known as Agenda 21 – was prepared jointly by more than fifty different government agencies, state-owned enterprises and other organizations, led by the then-State Planning Commission and State Science and Technology Commission. Following the first-ever Earth Summit in Rio de Janeiro in June 1992, China was the first country to publish such a document –– and it has fundamentally changed how China views its environment.

Next year, governments, civil society and the business community will converge once more on Rio to orchestrate solutions for prospering economically while preserving the balanced environment upon which economies and societies depend. Earth Summit 2012 has the potential to move beyond previous meetings and inspire action rather than far-away promises. It can fundamentally change the discussion from “who acts first” to “what can we all do” now to meet the mounting challenges of unsustainable development.

These challenges – 30 percent of animal species threatened with extinction, 75 percent of the world’s fish stocks identified as over-exploited, and growing greenhouse gas emissions to name a few – are some of the greatest our countries have ever faced.

Unfortunately, while environmental summits have yielded over five hundred agreements and treaties, global progress on implementation has been lacking, and accountability to these myriad documents unfulfilled.

Unsurprising to me, as an observer over two decades of the changes industrialization and urbanization has brought here, China has proactively joined other nations in responding to environmental degradation, instituting laws to protect its water, air and land, and drafting a climate change law that aims to bring under control its rising carbon footprint. The recently approved 12th Five-Year Plan speaks volumes on the urgency that Chinese leaders feel.

Yet, as I pointed out in a recent China Daily op-ed, more needs to be done. If China cannot broaden economic indicators to include the health of the environment as Premier Wen Jiabao called for in March, China will be unable to respond quickly enough to these threats. And if China acts while the rest of the world does not, the global environment will continue to deteriorate, threatening China even more.

The solution – as pointed out by the presidents of Brazil and the U.S. and the head of the United Nations Environment Program – lies in the Race to Rio. Over the coming months, civil society will be showing a way to achieve measurable, high-impact objectives in Rio, starting with a draft list of deliverables we would like to see governments commit to. Kelly Rigg of the Global Campaign for Climate Action has already called on the public, businesses and governments to rise to the challenge. As NRDC’s President Frances Beinecke blogged:

Instead of making pledges or agreeing to statements, [we] should join with others in implementing new or reinvigorated initiatives to tackle problems where it really matters – at the national level and below. Promises for others to take action won’t do at this Earth Summit. Everyone must look in the mirror and commit to steps that they’ll take to deal with these challenges.

I would like to see China become a leader on the path to Rio, and also come willing to learn. There is much experience that China could impart to developing and developed countries alike, and still many gaps where it can benefit from cooperation. A good first step would be to identify the strengths and weaknesses in the plans for implementing the ambitious targets set out for 2015 in the 12th Five-Year Plan. This could provide a basis for the coming year of government and civil society preparation.

Ultimately, all countries must come to Rio prepared to deliver.

This blog was coauthored with NRDC China Climate Fellow Michael Davidson.

U.S. Senators See Clean Energy in China First-Hand

2011-04-29T21:34:45Z

Barbara Finamore, China Program Director, Beijing

A group of ten senior U.S. Senators visited China this week (the largest delegation of elected U.S. officials ever to visit the country). Their take-away? China is taking the lead on clean energy and giving the U.S. a run for its money on innovating the next generation of competitive industries.

I had a chance to catch up with the delegation led by Senate Majority Leader Harry Reid and including Sen. Barbara Boxer, Chairwoman of the Environment and Public Works Committee, Sen. Chuck Schumer, Sen. Dick Durbin as well as other leaders in Congress on clean energy and jobs issues. While here, they met with Vice President Xi Jinping as well as leaders of clean energy businesses.

Prior to leaving, Sen. Reid said he wanted to learn from China’s successful investments in renewable energy. These investments, totaling $54 billion in 2010, catapulted China ahead of the U.S. in terms of new wind installations last year by a factor of three. In his home state of Nevada, Sen. Reid is trying to ramp up clean energy industries, which because of a 20% commitment to renewables is expected to add 80,000 clean energy jobs by 2025 (pdf).

While the delegation was touring clean energy facilities and chatting with Chinese government leaders, a report bringing together a number of resources on China’s green success was released: The China Greentech Report 2011 (free with subscription). The 218-page document recounts the story of the phenomenal growth in green technology markets in recent years:

China’s R&D investments in clean energy increased 20% annually from 1995 to 2005.[1]
China’s State Grid Smart Grid Plan ($530 billion by 2020), which controls 80% of China’s electricity, could help abate as much carbon as all of Russia in 2009.[2]
Since China’s first LEED-certified building in 2005, green building floor area has doubled annually, but still remains a fraction of its potential.
High-speed rail lines now stretch 65% longer than Japan (and 12x longer than the U.S.)[3]

While the U.S. is facing high gas prices, Sen. Reid highlighted the role of clean energy: “If we do not want to be dependent on foreign oil, we must develop this sector of our economy. To say that China is leading in this market would be an understatement.”

Perhaps not surprisingly, energy security, in addition to all the environmental concerns, also drives China’s massive scale-up in renewables and efficiency improvements. As I wrote earlier this year, with complementary challenges and opportunities, through continued engagement from both the Chinese and U.S. governments, China and the U.S. are helping each other to realize their clean energy potentials.

This post was co-authored by NRDC China Climate Fellow Michael Davidson.

[1] Steinfeld, Edward S., Playing Our Game: Why China’s Rise Doesn’t Threaten the West (U. S.: Oxford University Press, 2010)

[2] State Grid, State Grid Plan Final Report (Beijing, China: State Grid Corporation of China, 2009)

[3] “High speed lines in the world,” International Union of Railways, 11 Jan 2011: http://www.uic.org/IMG/pdf/20110111_a1_high_speed_lines_in_the_world.pdf

The Next Five Years of Clean Energy and Climate Protection in China

2011-03-24T01:50:37Z

Barbara Finamore, China Program Director, Beijing

With the adoption of its Twelfth Five-Year Plan, the Chinese government has cemented key long-term strategies for greening GDP, controlling energy use, greenhouse gas emissions and key pollutants, and capitalizing on the growing low-carbon economy (full Chinese plan). Environment and climate are given the most prominent position ever in a Five Year Plan, aspirations that will be backed up by a number of concrete planning documents over the coming months.

China has agreed to several binding targets important to making this transition. In the Chinese context, “binding” means that provincial and local officials and leaders of state-owned enterprises will be evaluated on their performance in meeting the targets, and will be promoted or penalized accordingly. Also explicitly stated in this plan, responsible departments must make public yearly progress reports toward meeting the key targets of the plan, which include:

Decreasing energy intensity (energy consumed per unit GDP) by 16% by 2015.
Decreasing carbon intensity (carbon emissions per unit GDP) by 17% by 2015.
Increasing non-fossil energy as a proportion of final energy to 11.4% by 2015, from the current 8.3%.
Increasing R&D expenditures to 2.2% of GDP by 2015, from the current 1.8%.
Decreasing water intensity (water consumed per unit of value-added industrial output) by 30% by 2015.
Increasing forest coverage rate to 21.66% and forest stock by 600 million cubic meters by 2015;
Decreasing sulfur dioxide and chemical oxygen demand (a measure of water pollution) by an additional 8% by 2015 (these were reduced by 14.29% and 12.45% during the 11th Five Year Plan);
reducing two new key pollutants, nitrogen oxide and ammonia nitrogen, by 10% by 2015. Reducing heavy metal pollution from industry will also be a key focus of the plan.

With the addition of the binding 17 percent carbon intensity target that will be allocated to each province and locality, China has linked climate change and low-carbon development strategically with its economic vitality. This comes from a sober realization of the perils of “unsustainable economic growth,” which Premier Wen Jiabao cited following the closing session as the reason for broadening economic indicators beyond simply GDP (original Chinese).

In addition to understanding the perils of not acting to address climate change, China sees clearly the opportunities of a low-carbon economy. That’s why over the next ten years China plans to invest RMB 5 trillion ($760 billion) in “new energy”[1] as one of the central government’s seven “strategic emerging industries.” These industries – which are all high-value-added and R&D-intensive – will have their pick of government incentives to promote innovation and expand production. Low-carbon technologies supported include: energy-saving and environment protection technology, new energy, new-energy vehicles, new materials and next-generation IT. (Skip to page 17 of The Climate Group’s excellent summary of the 12th FYP for more info.)

On renewables, over the next five years, China plans to build at least 70GW of new wind farms and 5GW of new solar farms. These are increases of 225% and 715% over 2010 figures, respectively, but we can expect 2015 numbers to exceed even these. Of the RMB 5 trillion public and private investment in new energy by 2020, renewables and grid investments take the largest shares: wind ($230 billion), smart grid ($210 billion) and solar ($30 billion). In 2010, China’s total clean energy asset investment stood at $51 billion, the highest in the world and more than a fifth of the world’s total $243 billion investment.

These strategic investments will be buttressed by a suite of energy policies, including both long-running, successful policies (such as the Renewable Energy Law) as well as several new ones, including (as discussed in The Climate Group report):

National demand-side management (DSM) regulations (effective January 2011) that require grid companies to achieve energy savings through efficiency programs equivalent to at least 0.3% in sales volume and 0.3% in maximum load compared with the previous year.
Environmental and carbon taxes (environmental tax expected as early as 2011; carbon tax possible in next five years).
New energy quotas for grid companies, similar to renewable portfolio standards in the U.S. (details likely in 2011).

In a month’s time we expect to see the energy-specific plan and the strategic emerging industries development plan. The new energy plan is under review. Chinese officials are also seeking input on a national climate change law (see NDRC’s official request for public input, Chinese), and drafting specific plans for clean vehicles and energy efficiency among others. China faces serious challenges in reining in its emissions and energy consumption growth and transitioning to a more sustainable development path, but the Twelfth Five Year Plan and other recent policy announcements demonstrate that it is taking a proactive approach to expanding clean energy development and climate protection over the next five years.

This post was coauthored with NRDC China Climate Fellow Michael Davidson and NRDC China Climate and Energy Policy Director Alvin Lin.

Note, corrected May 26: changed "primary energy" to "final energy" following second paragraph.

[1] This includes renewables, nuclear and unconventional gas, and is used interchangeably with “alternative energy.”

China Puts Forth Energy Intensity, Carbon Intensity and Total Energy Consumption Targets in Twelfth Five Year Plan in Effort to Tackle "Unsustainable Economic Growth"

2011-03-05T12:49:13Z

Barbara Finamore, China Program Director, Beijing

China’s annual parliamentary session opened Saturday morning, with 3,000 National People’s Congress members and 2,000 members of the Chinese People’s Political Consultative Conference (CPPCC) gathered in the Great Hall of the People to hear Premier Wen Jiabao deliver the annual report reviewing the work of the government in 2010 and looking forward to the Twelfth Five Year Plan, including key targets of the Twelfth Five Year Plan. The key targets for energy and climate are a 16 percent energy intensity reduction target, a 17 percent carbon intensity reduction target, and a target to increase non-fossil energy sources to 11.4 percent of primary energy consumption from the current 8.3 percent. (The Wall Street Journal has uploaded the Report on the Work of the Government delivered by Premier Wen, which sets out the main objectives of the Twelfth Five Year Plan, as well as the National Development and Reform Commission’s report on implementation of 2010 goals and plans for 2011.)

In addition, in an interview on Friday, former National Energy Administration head Zhang Guobao, who is a member of the Standing Committee of the CPPCC, stated that a cap on total energy use of 4 billion tons of coal equivalent would also be included in the Twelfth Five Year Plan (see also the longer Chinese version of Zhang’s interview about the Twelfth Five Year Plan and the New York Times article on the plan’s energy targets). Zhang cites both insecure oil imports as well as the need to promote cleaner energy sources as key reasons for implementing the cap. In the Chinese version of the article, Zhang also notes that the 11.3 percent non-fossil energy target is a mandatory target (约速性指标).

However, the Chinese version of Zhang’s interview, unlike the English articles, is much less clear as to how “mandatory” the total energy consumption target will be in the Twelfth Five Year Plan, and it is unclear whether the target will be included as one of the Twelfth Five Year Plan’s “key targets” (主要目标) in the way that the carbon intensity and energy intensity targets will. Indeed, the carbon intensity targets and energy intensity targets are listed in the annual work report delivered by Premier Wen, while the total energy consumption target is not. One should also remember that the Eleventh Five Year Plan’s Energy Development Plan (Chinese) also set a target of limiting total energy consumption to 2.7 billion tce in 2010, from a base of 2.25 billion tce in 2006, a target which was easily exceeded.

If the total energy consumption target is to be a mandatory one that would be enforced, this would be the first time that China has set a cap on its absolute energy consumption, as opposed to an energy intensity target, and as such would have important implications. Total energy consumption in 2010 was 3.25 billion tce, an increase of 5.9 percent from 2009. Setting a target of 4 billion tce by 2015 would limit total energy consumption growth to an average of 4.24 percent per year.

Setting a 4 billion tce energy consumption target also would have implications for China’s ability to achieve its 16 percent energy intensity reduction target. With the cap, the higher the rate of economic growth, the greater the improvements in energy efficiency that will be needed to meet the energy intensity target. The Twelfth Five Year Plan will lower the target GDP growth rate to 7 percent per year, from 7.5 percent in the Eleventh Five Year Plan, in order to encourage more sustainable economic growth. However, China’s actual economic growth rates have always exceeded targeted growth rates: average GDP growth in the Eleventh Five Year Plan was 11 percent, even though the targeted growth rate was 7.5 percent.

If GDP growth were limited to the targeted 7 percent per year in the Twelfth Five Year Plan, then a 4 billion tce energy consumption cap would translate to an energy intensity reduction of only 12.3 percent. However, if China’s GDP grows at a more realistic 10 percent per year, then the 4 billion tce cap translates to an energy intensity reduction of 23.6 percent, far exceeding the proposed 16 percent energy intensity reduction target.

This points to the important role that the absolute energy consumption target could play in the Twelfth Five Year Plan. Despite the central government’s best efforts to rein in the pace of growth and encourage more sustainable development, local and provincial development always exceeds national GDP growth targets. Setting a cap on total energy consumption and allocating this target in an appropriate manner would place additional pressure on local officials and enterprises to develop in more efficient and sustainable ways, including pursuing economic restructuring to move towards less energy-intensive forms of economic development. An absolute target would also provide local officials with a clearer target, given the challenge of coordinating energy consumption and GDP growth to meet a specific energy intensity target.

Similarly, while the 16 percent energy intensity and 17 percent carbon intensity reduction targets are in line with China’s goal to reduce its carbon intensity by 40-45 percent from 2005 levels by 2020, WWF has called for the Twelfth Five Year Plan to maintain a 20 percent energy intensity reduction target, noting that a higher target is achievable given the momentum that China has gained through implementing energy efficiency programs during the Eleventh Five Year Plan, and necessary in order to provide a target ambitious enough to guide economic restructuring and boost China’s energy security.

As Premier Wen Jiabao warned of in an online chat with citizens last Sunday (Chinese):

We can no longer sacrifice the environment for the sake of rapid development and rash construction; this will only lead to production over-capacity, increased pressure on environmental resources and unsustainable economic growth.

Setting a meaningful target for total energy consumption in the Twelfth Five Year Plan, as well as setting ambitious energy intensity, carbon intensity, and non-fossil energy targets, would provide the guidance needed to push China’s provinces, cities, industries and enterprises to a more sustainable development path.

This post was coauthored with NRDC China Climate and Energy Policy Director Alvin Lin and NRDC China Climate Fellow Michael Davidson.

China's Twelfth Five Year Plan: Top Chinese Officials Give A Preview of Environmental and Energy Priorities for the Next Five Years

2011-03-04T14:51:02Z

Barbara Finamore, China Program Director, Beijing

In a number of high-profile statements over the last week, Chinese officials have signaled that environmental protection and climate change will be at the top of the list when China’s top legislative body, the National People’s Congress, and its top advisory body, the Chinese People’s Political Consultative Conference (CPPCC), convene their annual sessions this week to consider the Twelfth Five Year Plan. Premier Wen Jiabao and Minister for Environmental Protection Zhou Shengxian confirmed that protecting the environment is of paramount concern as China attempts to restructure its economy to be less energy-intensive. Chief climate negotiator Xie Zhenhua, in an op-ed on the UN climate talks, also said that low-carbon development will be strategically placed in the next plan.

As I wrote last October when the Communist Party of China (CPC) submitted its proposal to the State Council, the Twelfth Five Year Plan (2011-2015) will include several new features designed to promote sound environmental governance and economic growth:

Seven new strategic industries. From energy-saving and environment protection technology to new energy and new-energy cars, companies specializing in these fields will have their pick of government incentives to innovate and expand production.
Binding carbon intensity and energy intensity targets, in the range of 16-17% according to Premier Wen.
Strengthening of the target responsibility system for energy savings and emissions reductions.
Carbon markets and environmental tax pilots.

The National Committee of the Chinese People's Political Consultative Conference, the country’s top advisory body, opened on Thursday. Delegates commented on their work on last year’s proposals, and will attend the annual session of the National People’s Congress (NPC), to begin on Saturday. The NPC will conclude in ten days with the formal adoption of the next five year plan.

In an essay published on February 28 on the ministry’s website, Minister for Environmental Protection Zhou Shengxian set out the challenge for China’s rapid development (Chinese): if the economy is to double in size from 2000 levels by 2020 while maintaining the same environmental quality, the external impact of economic activity would have to reduce to a fraction of 2000 levels (one-quarter is the figure he cites). For significant improvement in environmental quality (which Beijing has committed to), the challenge is now to achieve one-tenth the impact.

In addition, the Twelfth and Thirteenth five year plans will have to deal with an array of environmental impacts, from heavy metals in the soil to global warming pollutants in the air. Minister Zhou emphasized the role of improving technology as the key factor in meeting these challenges. In the Eleventh Five Year Plan (2006-2010), for example, SO2 emissions were reduced by over 10%. Two-thirds of this, according to Zhou, was due to technological improvements, while end-treatment and restructuring accounted for only 8% and 26%, respectively.

He also announced the inclusion of risk assessments and mid-to-long term forecasts on air pollution and climate change in the 12th Five-Year Plan. Research will be undertaken on incorporating climate change factors into plan and project environmental impact assessments. By 2015, Minister Zhou called for the creation of a comprehensive climate measuring and warning system. The focus on reducing carbon pollution, he stated, is two-fold: the border-less nature of its effects; and the correlated benefits of saving energy and reducing non-greenhouse gas pollutant emissions.

In addition to supporting “forward-looking” and “strategic” S&T innovations in environmental protection as Minister Zhou laid out, the potential for harvesting low-hanging fruit such as energy efficiency improvements should not be ignored. There is a wealth of experience and technology already available to help China meet its carbon and energy reduction goals.

A day prior, on February 27, in his third annual internet Q&A session, Premier Wen Jiabao gave a stark warning against unrestrained economic development (Chinese): “We can no longer sacrifice the environment for the sake of rapid development and rash construction; these will only lead to production over-capacity, increased pressure on environmental resources and unsustainable economic growth.”

Wen also addressed squarely the perceived negative impact of the energy-saving targets on ordinary citizens. Following Wen’s resolute call last May to meet the 20% energy intensity reduction commitment, several localities imposed rolling black-outs, resulting in power being cut off to households, businesses and even hospitals. Wen called these reactions “deceptions” that call for serious treatment, reminding his viewers that China’s international commitment of a 40-45% reduction in carbon intensity by 2020 would require hard work.

To round it all out, chief climate negotiator Xie Zhenhua in the People’s Daily on March 1, in a piece accurately titled “Cancun Agreements Made Considerable Progress for Climate Change Negotiations,” highlighted China’s critical role (as I blogged about from Cancun): through “arduous and meticulous work” China helped push through agreements on long-term targets and transparency. Vice-Minister Xie also said that the 12th Five-Year Plan “will place climate change and green, low-carbon development at an even more important strategic position, raising countries’ shared confidence in facing climate change.”

This post was co-authored by Michael Davidson, NRDC China Climate Fellow.

A Clean Energy Future: A Shared Vision of Presidents Obama and Hu

2011-01-28T08:51:24Z

Barbara Finamore, China Program Director, Beijing

Two days ago here in China, I listened attentively to President Obama’s State of the Union address, where he set forth an ambitious new economic agenda based on innovation and clean energy. Notably, the President proposed a goal of obtaining 80% of America’s electricity from clean energy sources by 2035.[1]

“Instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s,” he said.

NRDC’s Frances Beinecke has applauded this agenda, calling on the U.S. to follow through on this agenda, for the sake of our environment, health and economy. It is now more important than ever that the U.S. government take a strong role in promoting a robust global transition to clean energy.

Last year at the opening of China’s National People’s Congress, Premier Wen Jiabao, in the closest Chinese equivalent to a State of the Union address, also put front and center the need for a low-carbon economy. He emphasized stepping up development of new and renewable energies as well as smart grid technologies.

$243 billion and growing

Just two weeks ago, Bloomberg New Energy Finance (BNEF) released its 2010 clean energy statistics on new investments. Globally, the clean energy market was $243 billion in 2010. This is an increase of 30% from 2009 (revised to $186b), a doubling over the last four years, and a five-fold increase over the last six years.

The Chinese market was the largest by far, at $51 billion, which was a 30% increase over 2009. This should come as no surprise given the progressive policies China has put in place to encourage innovation, manufacture and deployment of clean energy technologies, which it has continued to strengthen.

As my colleague Jake Schmidt wrote about last year when China overtook the U.S. in total clean energy spending, the opportunities for countries that pursue clean energy as a major driver of economic and innovative growth are increasing every day. There’s a $13 trillion clean energy market over the next two decades for those countries that capture this opportunity.

In the 12th Five-Year Plan (2011-2015) that China is currently drafting, the government will continue to reduce the energy and carbon intensity of its economy through binding targets; establish seven new strategic industries, including new energy and other areas crucial to its development; and begin experimenting with carbon markets.

BNEF reported that global wind investment grew 31% in 2010, to $96 billion, with investment in China and large offshore wind farms in Europe accounting for 38% of this total. In addition, the American Wind Energy Association just released its 2010 report on the global wind industry, indicating that China has surpassed the U.S. in cumulative wind energy installations, increasing capacity by 62% last year (after four years of consecutive doubling). China had 41,800 MW, and the U.S. 40,180 MW, as of the end of the year.

The U.S. and China teaming up

In the midst of this race to a clean energy future, one aspect President Obama did not highlight in his speech but that resounded last week during Chinese President Hu Jintao’s visit is clear: we need to enhance bilateral cooperation on energy and climate issues. Whether in the areas of energy efficiency, clean energy or the climate talks, the tangible benefits of working together are great.

I wrote about the many significant clean energy cooperation initiatives that were announced at the summit last week. These include government MOUs (such as an EV demonstration project between the U.S. DOE and the Chinese Ministry of Science and Technology), government-facilitated partnerships (such as the work plans for the joint Clean Energy Research Centers), and a host of new business ventures on clean energy.

The BNEF report Joined at the Hip released last April articulated the new reality clearly: the U.S. and China rely on each other to achieve their respective carbon and energy goals. The U.S. has laid out an ambitious target of 80% clean electricity by 2035. Similarly, China has a target to obtain 15% of its total energy from non-fossil fuel sources by 2020. To reach these – and make even deeper commitments – both will need to build public and private clean energy partnerships across the Pacific.

Over the last five years, China has achieved a lot, but there is still more work to be done. For example, the 11th Five-Year Plan set a goal of achieving 10% of total energy from non-fossil sources by 2010; earlier in the month China Change Department Director Su Wei noted that only 8% was achieved (Chinese only). China is likely to set a clear interim target for 2015 in the 12th Five-Year Plan to help put it on the path to achieving its 15% non-fossil goal by 2020. The US-China clean energy partnerships and commercial deals are helping China to realize this potential.

As I wrote last year, it is no longer a question of who will win and who will lose, but how we will continue to move forward together. With both Presidents Obama and Hu championing clean energy-based economic growth, the United States, China and the whole world are moving in the direction needed to realize the benefits of a clean energy future.

This post was coauthored with NRDC China Climate Fellow Michael Davidson.

[1] The President defined clean energy to include solar and wind as well as “clean coal”, nuclear and natural gas.

President Hu and President Obama in Washington: Advancing the clean energy partnership between the United States and China

2011-01-22T09:59:26Z

Barbara Finamore, China Program Director, Beijing

President Hu Jintao concluded his visit to the United States Friday, after meeting with President Obama and other top government and business leaders in Washington, D.C., and Chicago. Among the many issues on the agenda for these two leaders, strengthening cooperation on climate change and clean energy is an area where real progress is being made. As NRDC, Brookings and the Asia Society argued in 2009, both the United States and China are indispensible in the effort to address climate change given their positions as the two largest greenhouse gas emitting countries, their common interests in improving their energy security, the environmental and health costs of their dependence on coal and oil, and the substantial scientific, engineering and manufacturing capabilities that both countries can contribute to developing clean energy.

Significant steps have been taken in establishing meaningful, concrete clean energy cooperation projects since President Obama’s visit to Beijing in November 2009, when a number of important US-China clean energy agreements were signed. In their joint statement, both countries “applauded the progress made in clean energy and energy security since the launch of the U.S.-China Clean Energy Research Center, Renewable Energy Partnership, U.S.-China Joint Statement on Energy Security Cooperation, and Energy Cooperation Program.” And they agreed to work together to support the implementation of the Cancun Agreements and support efforts to achieve a positive outcome at the December 2011 climate change conference in South Africa.

New US-China Clean Energy Agreements and Initiatives

Several announcements on US-China clean energy cooperation during the state visit demonstrated progress on new and continuing programs, including:

The three US-China Clean Energy Research Center (CERC) consortia finalized their work plans on building efficiency, advanced coal and carbon capture and storage (CCS), and clean vehicles. See below for more details.
The announcement of two new Ecopartnerships: “The City of Charlotte, the State of North Carolina, and Duke Energy will form a three-tiered EcoPartnership with the City of Langfang, Hebei Province, and ENN/Xin’ao Group to exchange policy best practices (e.g., renewable portfolio standards), carry out joint demonstration projects (e.g., residential building efficiency demonstrations), and conduct trials for innovative clean energy technologies (e.g., exploring more effective ways to deploy smart meters). . . . Case Western Reserve University will cooperate with the Chinese National Offshore Oil Corporation to research new energy efficiency techniques and new methods of lowering greenhouse gas emissions.” (See Duke Energy’s announcement, Case Western’s news release and the list of existing Ecopartnerships.)
An agreement between the U.S. Department of Transportation, the National Development and Reform Commission, and other Chinese agencies to cooperate on next generation aviation biofuels, congestion and multimodal transportation planning, and livable communities.
A Statement of Intent between US DOE and China’s Ministry of Science and Technology on data sharing for electric vehicle demonstrations projects between the cities of Los Angeles and Shanghai that will accelerate the deployment of electric vehicles.
Announcement of a joint U.S.-China Eco-city Initiative between the US DOE and China’s Ministry of Housing and Urban-Rural Development, under which both sides will develop guidelines and policies to support the integration of energy efficiency and renewable energy into city design and operation.

(For a brief outline, see the White House Factsheet on US-China cooperation on climate change, clean energy and the environment.)

In addition, both sides are continuing to make progress on other clean energy cooperative initiatives announced during President Obama’s November 2009 visit including exchanges, workshops and a wide array of research collaborations on electric vehicles, energy efficiency, and renewable energy topics. (See the US DOE Progress Report on US-China Clean Energy Cooperation.)

US-China Clean Energy Center Consortia Release their Joint Work Plans

As I noted in a previous post, the American and Chinese participants in the three US-China Clean Energy Research Center (CERC) consortia on building efficiency, advanced coal and carbon capture and storage (CCS), and clean vehicles met in Washington during Hu’s visit to finalize the joint five-year work plans (see them for the building efficiency, advanced coal and CCS, and clean vehicles consortia). Organized on the U.S. side by the Department of Energy, the consortia are public-private partnerships of government laboratories and agencies, universities, industry and non-profit organizations (NRDC is part of the building consortium). The consortia are being led by Lawrence Berkeley National Laboratory (building efficiency), West Virginia University (advanced coal and CCS) and the University of Michigan (clean vehicles) on the US side, and the Ministry of Housing and Urban-Rural Development (building efficiency), Huazhong University of Science and Technology and China Huaneng Group Clean Energy Research Institute (advanced coal and CCS), and Tsinghua University (clean vehicles) on the Chinese side. Each consortium is funded over five years by $25 million in government and consortia member funding on the US side (totaling $75 million), with a similar amount of funding on the Chinese side for a total of $150 million.

As one can see from the joint work plans, the CERC is aimed at furthering development of key technologies that have the potential to reduce energy consumption and greenhouse gas and other pollutant emissions in each sector. And, just as importantly, researching ways that these technologies can be deployed in the marketplace, because even the most efficient and advanced technology will not be effective unless we can develop the policy tools and understanding to increase their market deployment at scale. For example, the building consortium will be researching technology such as building energy monitoring and simulation, building envelope technologies, advanced heating and cooling, and lighting, and also focusing on policies such as building energy efficiency codes and labels to promote building efficiency. The advanced coal and CCS consortia will research several technologies for reducing emissions from coal, including integrated gasification combined cycle (IGCC) power plants and CCS, post-combustion CCS technology, geological sequestration, and using algae to bio-fix CO2 emissions from power plants, and it will be evaluating the cost of bringing these technologies to the market. Finally, the clean vehicles consortia will research electric vehicles (including advanced batteries, advanced EV technologies, and interaction with the grid), advanced biofuels, and advanced lightweight materials, as well as focusing on energy systems analysis and technology roadmaps.

Although we are just at the beginning of this five-year endeavor, I am heartened to see this level of engagement between our two countries, because this is the kind of sustained and focused cooperation that we need to make real progress on developing the key low-carbon technologies of the future. Both countries will benefit from the US-China CERCs, in terms of economic and scientific development, reducing greenhouse gas and other pollutant emissions, and fostering the enterprises and skilled workforce that will push these technologies forward.

US-China Business Cooperation on Clean Energy

In addition to the projects covered above, US companies announced several deals with Chinese partners related to clean energy that will create American jobs and exports. General Electric signed five clean energy, railway and aviation deals worth over $2 billion that will reportedly support 4,500 American jobs. These include a joint venture with Shenhua Group to develop coal gasification technologies in China, an agreement with China Huadian Corporation to develop distributed energy combined heat and power projects, and a letter of intent with China’s Ministry of Railways to reaffirm both parties’ intent to collaborate on High-Speed Rail (HSR) and electric rail opportunities in North America. (See GE’s press release on the deals.)

American Electric Power also signed two cooperative agreements. The first one with China Huaneng, the US DOE, and China’s National Energy Administration would evaluate a post-combustion, advanced amine carbon capture technology developed by China Huaneng and share data about power plant operation efficiencies. The other agreement with State Grid Corporation of China would “jointly evaluate and potentially advance six transmission and distribution technologies, including ultra-high-voltage transmission equipment, advanced energy storage technologies, smart-meter technologies, and distributed generation technologies.” (See AEP’s press release on the deals.)

UPC Management, a wind power developer based in Miami, announced an agreement with China Guodian Corporation to jointly develop seven wind power projects in China with a combined capacity of over 1,075 MW and valued up to $1.5 billion. AES Corporation, based in Arlington, Virginia, also announced an agreement with Chongqing Energy Investment Group to jointly develop, construct and operate a series of renewable energy projects in China, including hydroelectric, wind, ventilation air methane, clean coal and low carbon technology projects.

Smaller U.S. firms are also innovating in this space, with the New York-based startup Ener1 entering into a joint venture with a unit of China’s largest auto-parts maker Wanxiang Group to build up to 40,000 battery packs for electric vehicles and power grid energy storage by 2014.

(See the White House Factsheet on US-China Commercial Relations for further details on US-China business deals, including others related to clean energy and green technologies.)

Building a Firm Foundation for US-China Clean Energy Cooperation

The announcements this week during President Hu’s visit remind us that China and the United States have much to benefit by cooperating on clean energy and climate, and that both bring enormous talents and resources to these endeavors. While there are bound to be some differences between the countries on climate and energy issues in the future, the US-China Clean Energy Research Center, Ecopartnerships, and the many other public and private clean energy initiatives between our two countries make clear how much we each have to offer the other in the fight to address climate change and to secure a cleaner, more secure and healthier future for our people.

These agreements will lead to tangible deployment of low-carbon technologies in both countries which will benefit not only the US and China, but also the world. After all, widespread deployment of clean energy solutions in the world’s two largest economies will make these solutions more common and more affordable for all, making a crucial contribution to the world’s efforts to address climate change.

See also these related posts by my colleagues: Michael Davidson on the Strategic Forum on Clean Energy Cooperation held during President Hu’s visit and Jake Schmidt on the US and China’s contribution to five key aspects of the international response to climate change.

This blog was coauthored with NRDC China Climate and Energy Policy Project Director Alvin Lin.

Energizing efficiency in the U.S.-China relationship

2011-01-19T04:28:35Z

Barbara Finamore, China Program Director, Beijing

Yesterday, before Chinese President Hu Jintao’s plane even hit the tarmac, senior energy experts from both countries gathered to inaugurate the U.S.-China Clean Energy Research Center (CERC), the latest in a series of initiatives building on the historic November 2009 summit between Presidents Hu and Obama. NRDC is a proud member of the building energy efficiency consortium. Together with the national demand-side management (DSM) regulations that came into effect on January 1st, these programs in energy efficiency hold some of the greatest promise for reducing the burden on China’s growing energy demand while promoting goodwill and broad cooperation in the bilateral relationship.

Building efficiency

In China, the benefits of energy-efficient buildings are great. In our report From Gray to Green: How Energy-Efficient Buildings Can Help Make China's Rapid Urbanization Sustainable, we highlighted:

Operating residential and commercial buildings accounts for 25 percent of China’s energy use
Buildings use more energy than the cement, iron and steel sectors combined
More than any other sector, greenhouse gas mitigation in buildings is cost-effective, saving on average 461 RMB per ton of CO2 abated
Even a modest increase of energy efficiency in buildings could reduce CO2 emissions by 170 million tons by saving 170 million kWh by 2015, equivalent to:
- Not building 50 additional coal-fired power plants
- Two dams the size of Three Gorges
- Turning off all the lights in the U.S. for one month.

The CERC on building efficiency – complementing two other joint R&D programs, in clean vehicles and advanced coal – seeks to capture key technologies and markets to make these reductions possible in both countries. Led on the U.S.-side by Lawrence Berkeley National Lab, a consortium of seventeen institutions and businesses will partner with Chinese colleagues led by the Ministry of Housing and Urban-Rural Development (MHURD) and Tsinghua University in examining the following research areas:

Monitoring and Simulation – grappling with the raw numbers of buildings through real-time data collection and analysis
Building envelope – insulating, ventilating and providing shade through new materials and research on sustainable design
Building equipment – developing efficient heating, cooling and lighting systems, and integrating renewable energy
Building integration – country-specific case studies on the whole performance of green buildings
Commercialization research – policy and market research, including research on policies to promote implementation, evaluation and certification of building energy efficiency codes and labels; mechanisms and policies for market promotion of building energy efficiency; expanding expert exchanges

The full work plan signed yesterday is available here.

Demand-side management (DSM)

In a complementary move, as of January 1, China has begun implementation of nationwide utility demand-side management regulations, known as DSM. These regulations, which were implemented previously only in select provinces, require for the first time utilities to spend a portion of their revenues in developing large-scale energy-saving programs in factories, businesses and homes across China. (See here for the official DSM government announcement in Chinese, here for the official DSM regulations in Chinese for the regulations in Chinese, and here for our unofficial English translation of the DSM regulations).

These regulations incorporate a number of key provisions, which I blogged about here in November, including:

Integrated resource planning – the regulations consider both supply-side and demand-side measures, but give preference to demand-side, because the cost of energy-saving devices is cheaper than building additional coal-fired power plants.
Energy efficiency resource standard – the regulations establish a minimum amount of savings each utility must achieve through DSM programs; specifically, an amount equivalent to at least 0.3% of the sales volume and 0.3% of the maximum load of the previous year.
Funding mechanism for energy efficiency investments – the regulations authorize three sources of funding critical to the sustainability of DSM programs, namely, public utility surcharges, revenue from differentiated electricity prices, and government budget allocations.

While the target of 0.3% may seem like a relatively small contribution to total sales, when implemented nationally, this translates to 11 billion kWh of avoided generation needs.[1] Also, it is important to keep in mind that many DSM programs start small, ramping up over several years.

In November, in Illinois, Commonwealth Edison, NRDC, and other parties and regulators signed a three-year DSM agreement that will save $497.7 million and 16 million MWh. This agreement will implement a 2007 Illinois energy efficiency resource standard law requiring utilities to displace 2% of their annual sales with energy efficiency savings by 2015. The ComEd standard starts at 0.2%, increases to 1% of sales in 2012, and will continue to increase until it reaches 2% of sales in 2015.

Similarly, the first three years of our cooperation with Jiangsu beginning in 2004 resulted in 300MW in avoided new power generation capacity. It has now more than doubled, to 680MW, translating to 3.5 million MWh annual savings. We can expect similar learning curves for the national standard and deeper savings over the next few years.

Currently, nineteen U.S. states have adopted EERS. NRDC and the China-U.S. Energy Efficiency Alliance helped broker a DSM agreement in 2005 between Jiangsu and California – one of the leaders in DSM in the U.S. The states’ average target is higher than China’s minimum 0.3%, but China’s is distinguished because it is being implemented nationwide. Existing provincial targets will remain in place, so this provides an opportunity to bring all the other provinces up to speed.

Taken together, these programs are leading us on the path to the 2.4-gigaton wedge that McKinsey has calculated for potential greenhouse gas reductions in China through efficiency by 2030. They are also some of the strongest and synergetic avenues of climate and energy cooperation between our two countries. You can expect continued progress on all of these fronts.

This post was coauthored with NRDC China Climate Fellow Michael Davidson.

[1] China’s total electricity consumption in 2010 was 4.190 trillion kWh, http://news.xinhuanet.com/english2010/china/2011-01/17/c_13693802.htm.

China's announcements on energy and climate in advance of Presidential summit

2011-01-18T08:48:13Z

Barbara Finamore, China Program Director, Beijing

Today, Chinese President Hu Jintao will be arriving in Washington, D.C., for a three-day U.S. visit. This is the second state-level visit between him and President Obama, including Obama’s visit to Beijing in November 2009, which set forth an ambitious energy and climate cooperation agenda between the two countries. These cooperative initiatives have steadily moved forward in the past year, including finalization of the funding, research consortia members and work plans for the three US-China Clean Energy Research Centers on building efficiency, carbon capture and storage, and electric vehicles; continued meetings on improving cooperation on efficiency and renewables; and the formation of the Energy Cooperation Partnership to explore how U.S. and Chinese clean energy companies can help meet the energy and climate goals of each country.

Meanwhile, Chinese officials at home are taking stock of the progress that China has made on its energy and climate goals in 2010 and in the Eleventh Five Year Plan overall, and signaling that there will be expanded efforts on these issues in the 12th Five-Year Plan (2011-2015). The plan will be issued in March during the annual meetings of the National People’s Congress and Chinese People’s Political Consultative Conference.

At a national work conference on energy held January 6-7 in Beijing, outgoing National Energy Administration Director General Zhang Guobao laid out a plan to meet China’s long-term non-fossil fuel energy target of achieving 15 percent of its energy from non-fossil sources by 2020. Zhang Guobao announced a robust expansion of clean energy over the coming decade, starting with several new gigawatt-scale windfarms (a gigwatt is roughly equivalent to the annual electricity consumption by 2 million homes in China). The market will move from what Zhang called “purely onshore” to a dual focus on on-shore and off-shore potential. A 500MW solar project in northwestern Qinghai Province will also be opened for bidding. This is on the heels of the recent deal between First Solar and China Guangdong Nuclear to build a 2GW thin film solar photovoltaic farm over the next ten years. There are also plans for 140GW of new hydro by 2015. (A full listing of China’s new clean energy targets is here; Chinese only.)

Over the last five years, according to Zhang, China saved 1.8 billion tons of coal, much of which is due to clean energy deployment. Approximately one-sixth of this saving is also due to the success of the flagship program to replace small, inefficient factories and power plants with state-of-the-art technologies. (The full description of China's five-year progress in clean energy is here; original Chinese only.)

Looking ahead, in order to meet its 2020 target to increase the proportion of non-fossil fuels in the primary energy mix to 15 percent, Zhang laid out an interim target of 11.4 percent by 2015. Over half of this will be met by increased hydropower. (This was Zhang’s final work conference as head of the National Energy Administration; he will be succeeded by Liu Tienan).

As I blogged about here when the draft proposal for the 12th Five Year Plan was issued, the next five-year plan will take several significant steps aimed at guiding China along the path toward a low-carbon economy, namely:

Developing seven new strategic industries, many of which are crucial to clean energy
Adopting binding energy intensity and carbon intensity reduction targets consistent with China’s Copenhagen pledge
Strengthening the target responsibility system for energy savings and emissions reductions
Improving its energy and GHG emissions monitoring and statistics

We also heard from National Development and Reform Commission (NDRC) Chairman Zhang Ping at the conference that the central government has reduced its economic growth target in order to take into account the toll on natural resources:

We should maintain a certain amount of economic growth but also be mindful of energy and environment goals. GDP growth targets should not be set too high, as energy use is not unlimited.

He specifically called on local governments to consider the burden on energy and natural resources when setting their economic targets.

On January 12, NDRC Vice-Chair Xie Zhenhua and senior climate negotiator Su Wei announced details of the “National Plan to Address Climate Change” (国家应对气候变化规划) to be included as a separate chapter in the 12th Five-Year Plan to be issued in March. Su Wei announced that the share of non-fossil fuel energy will join energy intensity and carbon intensity as binding targets. (We discuss the relationship between these targets in our recent working paper on China's carbon intensity target.)

Following the hottest year on record according to the U.S. NOAA (2010 was tied with 2005 for surface temperature readings dating back to 1880), and a year when China experienced an “extremely abnormal climate” of high rainfall and hot days according to the China Meteorological Administration (Chinese only), it is appropriate that the governments of both countries have elevated cooperation on climate and energy to the top of their bilateral agenda. In addition to expected progress this week on the US-China Clean Energy Research Centers, we will be watching to see whether the summit results in a joint statement and what it might offer concerning future bilateral cooperation on climate and energy issues. We also expect more detailed announcements from China over the next two months on its medium- to long-term climate and energy plans, continued progress on the federal and state levels to address climate change in the United States, and deepening cooperation between both countries to developing the technologies and policies to transition to a clean economy.

This blog was coauthored with NRDC China Climate Fellow Michael Davidson and NRDC China Climate and Energy Policy Director Alvin Lin.

China and U.S. Played Key Roles in Reaching Cancun Agreements

2010-12-11T14:42:49Z

Barbara Finamore, China Program Director, Beijing

China and the U.S., the world’s two largest emitters of greenhouse gases, played key roles in the Cancun Agreements, the pact on climate change that nearly all the world’s nations just adopted here in Mexico. Both countries have worked hard in Cancun to set a positive tone in their public statements and avoid the fingerpointing that has plagued earlier climate conferences. As late as yesterday, however, the two countries were still at loggerheads in the negotiating room, both insisting that the other country move forward first on their top issues. This impasse could easily have led to another climate deadlock and jeopardized the future of the entire UNFCCC process as well as the future of our planet. Yet in the final hour, under the leadership of Mexico, both countries managed to achieve a compromise that enabled the world to move forward in the fight against climate change.

In a briefing for NGO representatives on Friday, Minister Xie Zhenhua, China’s top climate negotiator, told us that progress on financing of climate mitigation and adaptation was an essential first step to show the sincerity of developed countries and build mutual trust. He also said that China would not support a deal until a basic agreement had been reached on technology transfer and continuation of the Kyoto Protocol. In a similar briefing for NGOs, Deputy Special Envoy for Climate Change Jonathan Pershing told us that the United States would only agree to the details on climate financing if countries agreed to a similar level of detail in reporting progress in reducing emissions. He also said that the U.S. wanted the emission reduction pledges made in Copenhagen to be anchored in an agreement in Cancun. Even though it’s common for negotiators to stand firm until the last minute, it was not at all clear that these two key countries were going to be able to find common ground.

In the final day of negotiations, the U.S. and China seem to have heeded the call of Mexican Foreign Secretary Patricia Espinosa, the COP President, to negotiate in a spirit of compromise in order to reach a balanced agreement. The result, in the Cancun Agreements, is a series of visionary yet practical principles that represent real progress in the fight against climate change (as detailed by my colleagues Alvin Lin and Jake Schmidt). In the end, neither the U.S. nor China got everything they wanted, but they put aside national differences in order to work together, as Chinese and US civil society did last week in our own agreement for long –term cooperation. We hope that the results here in Cancun will signal a new way forward for the world’s two largest greenhouse gas emitters to work together to cope with our global climate challenge.

Civil Society Shows the Way Towards Long-Term Sino-American Cooperation on Climate

2010-12-10T06:01:31Z

Barbara Finamore, China Program Director, Beijing

With two days left in the climate negotiations in Cancun, a group of Chinese and American NGOs showed last night what can be done when we roll up our sleeves and work toward common solutions. With representation across all fields and age ranges, we produced what we hope to be a model for how our two countries can achieve better mutual understanding and mount an effective response to the threats of climate change.

The “Agreement on Long-Term Cooperative Action Between Members of the Civil Societies of China and the United States” (see text below in English and Chinese), drafted late into the morning, was signed today on the grounds of the Moon Palace, where negotiators from our respective countries are trying to hammer out a way forward in the tense climate talks.

U.S. and Chinese NGOs have gathered informally to share tactics and strategies previously, but we have not enjoyed a stable, institutional arrangement and concrete set of objectives to leverage our collective strengths.

Based on a set of principles – including the urgency of facing human-caused climate change whose effects are already being felt and the need to acknowledge the role of civil society in this fight – we have agreed to four essential activities:

1) Enhance public understanding of the good faith progress our two governments have made, and push them to do more;

2) Hold exchanges and workshops in order to build capacity amongst civil society groups, especially the youth;

3) Provide funding to support these activities – in a symbolic gesture, starting at US$30 from contributions of those present – but ramping up to have something in place by South Africa next year;

4) Encourage civil society groups across all countries to join us in this endeavor.

We conclude the letter by urging the countries here to continue to allow civil society a voice within the UN talks, and to listen to that voice. We also urge China and the U.S. to cooperate responsibly toward lasting and effective solutions to climate change.

Our goal with this collaboration is to show our governments how to see beyond the day-to-day minutia, and look beyond to the climate solutions we both know we need. Both countries are doing a lot to counter global climate change. But they can and should do more. We as civil society can perhaps show them how.

This post was coauthored by NRDC China Climate Fellow Michael Davidson.

AGREEMENT ON LONG-TERM COOPERATIVE ACTION

BETWEEN MEMBERS OF THE CIVIL SOCIETIES OF CHINA AND THE UNITED STATES

The undersigned members of the civil societies of China and the United States,

Affirming that climate change is a common and urgent challenge for our two countries requiring long-term cooperative action;

Affirming that anthropogenic climate change is causing serious harm around the world that threatens our mutual prosperity;

Recognizing the role of civil society in strengthening and enhancing trust and mutual understanding between our governments and peoples;

Recognizing the principle of common but differentiated responsibility and the respective capacities of civil society groups to act;

Resolve to:

Enhance public understanding of the good faith progress that our two countries have made in combating climate change, and contribute to addressing climate change domestically and internationally, and raising the level of ambition of our two governments;

Establish an open and inclusive platform of informational and professional exchanges, workshops, working groups and informal networks to share best practices and build capacity and understanding amongst civil society, including youth groups;

Establish immediately a fast-start fund of US$30 [RMB 200] [MXN 360] to support civil society cooperation on climate change, with a view to establishing a long-term financing mechanism for adoption at the seventeenth session of the Convention of the Parties of the United Nations Framework Convention on Climate Change;

Encourage civil society organizations of all countries to participate in and review the progress of our cooperation; and

Urge:

Parties to the Convention to acknowledge the contributions of civil society organizations in achieving progress toward a fair, ambitious and binding (FABulous) climate change agreement; and

China and the United States to seek common ground and cooperate responsibly with all countries in order to pursue timely, effective and lasting solutions to climate change for current and future generations on our planet.

9 December 2010

350.org

Cascade Climate Network

China Green Student Forum

China Youth Climate Action Network

Conservation International

COP16 China Youth Delegation

Forward Works

Friend of Nature

Green Anhui

Green Anhui Student Form

Green Earth Volunteers

Green Kunming

Green Stone Environmental Action Network

Green Wing Environment and Development Association

Green Zhejiang

Greenfinger

Greenriver

Guangxi Regional Green Organization Alliance

Hangzhou Ecology Culture Association

Huaihe Youth Environment Act

Institute of Environment and Development

Natural Resources Defense Council

National Wildlife Federation

Oil Change International

SHANSHUI Conservation Center

Shenzhen Home Road, Culture Communication Co., Ltd.

Sierra Club

SustainUS

TCKTCKTCK

Union of Concerned Scientists

USCAN

Wuhu Ecology centre

Xiaoyagaga foundation

Taking Action to Meet its Climate Pledge - China Enacts National Energy Efficiency DSM Regulations to Dramatically Scale Up Investments in Energy Efficiency

2010-11-29T23:32:45Z

Barbara Finamore, China Program Director, Beijing

This post was co-authored with NRDC China Energy Efficiency/DSM Project Director Mona Yew and NRDC legal fellow Bruce Ho.

As we begin a new round of international climate negotiations in Cancun, China has taken another potentially giant step towards meeting its climate pledge. On November 4, 2010, China’s central government enacted national energy efficiency regulations that will establish national utility demand-side management, or DSM programs. (See here for the official DSM government announcement in Chinese, here for the regulations in Chinese, and here for our unofficial English translation). These game-changing regulations will, for the first time, require China’s power grid companies to use a portion of their electricity revenues to develop large-scale programs for helping China’s factories, businesses and homes invest in energy efficiency. The regulations will require grid companies to achieve specific energy savings targets, similar to Energy Efficiency Resource Standards passed in 19 states in the U.S. These regulations have the potential to help China dramatically scale up its efficiency programs to substantially reduce energy consumption and emissions growth. For more than a decade NRDC has been pushing for such a national policy to require that electricity companies invest in energy efficiency programs for their customers. We are delighted that these efforts have finally paid off.

The new DSM regulations (“DSM Implementation Measures”), which will come into effect on January 1, 2011, were jointly issued under the auspices of the State Council by six commissions and ministries, led by China’s most powerful government agency, the National Development and Reform Commission. The regulations are significant in a number of ways:

Integrated Resource Planning: First and foremost, the regulations call for integrated resource planning that considers both supply side and demand side options. The regulations further specify that demand side measures should be considered and given priority in meeting demand growth. The regulations require local authorities to incorporate these energy efficiency savings into their power industry development plans, energy development plans and local economic development plans. These provisions are key since they mean that China’s grid companies and local governments must give priority to meeting the country’s explosive growth in power demand through energy efficiency rather than more coal-fired power plants.

This is a positive development for China’s economy as well as the environment not only because saving electricity through efficiency is much cheaper than generating additional power but also because it avoids pollution and carbon emissions from power plants. The International Energy Agency estimates that, on average, each additional $1 spent on more efficient electrical equipment, appliances and buildings avoids more than $2 in investment in electrical supply.
Energy Efficiency Resource Standard: In addition, the regulations place responsibility for DSM implementation squarely on the shoulders of power grid companies by requiring these companies to achieve energy savings through DSM equivalent to at least 0.3% in sales volume and 0.3% in maximum load compared with their previous year.

Once fully implemented, this target, also known as an energy efficiency resource standard (EERS) will achieve considerable energy savings. China’s total electricity consumption in 2009 was 3.643 trillion kWh[1], so a 0.3% reduction would roughly translate to 11 billion kWh – enough electricity to supply 1 million average U.S. households[2] (or 10 million Chinese homes[3]) for a year.
Funding Mechanism for Energy Efficiency Investments: Furthermore, the regulations authorize three sources of DSM funding: public utility surcharges beyond the electricity rate, revenue from differentiated electricity prices, and/or other government budget allocations. In addition, legitimate expenses in DSM implementation by power grid companies may be incorporated into power supply cost. These regulations will therefore help establish a national long-term sustainable funding mechanism for energy efficiency investments in China – an essential step in unlocking China’s vast energy efficiency potential. A World Bank study concluded that with the proper policies and incentives, DSM programs could reduce China’s electricity needs by 220 terawatt hours[4] and avoid the need to build more than 100 GW of new electric capacity by 2020.
Monitoring and Verification of Energy Savings: Finally, the regulations encourage – though do not go so far as to require – verification of energy savings through independent third parties. Nevertheless, during offline conversations with various entities, it seems that many government officials are supportive of developing an independent third party verification system. Such a system, which is already being developed in China, could support a national system for monitoring, reporting and verification (MRV) of China’s greenhouse gas emission reductions (as I’ve blogged about here).

Although China has enacted many energy efficiency policies and measures, these new DSM regulations can help take the country’s ambitious energy saving programs to an entirely new level. Even though China announced last week that it will reach its 20 percent energy intensity reduction target for 2005-2010, in large part by closing many inefficient and highly polluting plants, some of the savings were from temporary measures that will have little long-term impact (as my colleague Alex Wang has blogged about here). The DSM regulations will help China develop policies and structures that incentivize enterprises to ramp up significantly their investments in energy efficiency, and will collectively bundle these improvements in end-use energy efficiency into virtual “efficiency power plants (EPPs)” that avoid the need to build conventional power plants. These are long-term, sustainable measures for reducing energy consumption and emissions.

Jiangsu’s Leadership in Demonstrating the Benefits of DSM: NRDC, along with our long-term partners, the Energy Foundation and the Regulatory Assistance Project, helped bring DSM policies to China through advocacy and technical cooperation in Jiangsu Province that first started a decade ago. In 2004, we worked with China’s national government and Jiangsu Province to help launch China's first large-scale DSM pilot program in Jiangsu. In 2005, NRDC and the China-U.S. Energy Efficiency Alliance helped broker and implement an agreement on DSM cooperation between the California Public Utilities Commission, the California Energy Commission, and the Jiangsu Economic and Trade Commission. These initial efforts laid the foundation for demonstrating in China the value of establishing large-scale DSM programs to meet environmental and energy goals.

In the first three years of our cooperation, Jiangsu estimates that its DSM investments avoided the need to build 300 MW in new power generation capacity and 580 MW of peak load. Since then, Jiangsu has avoided another 300 MW of new power—600 MW in total—and is now saving 2 terawatt hours of electricity annually. These programs are reducing CO2 emissions by 2.24 million tons a year. By the end of 2010, they will have eliminated more than 13 million tons of cumulative CO2 emissions from the atmosphere. All of this has been achieved at a cost of less than $15 million a year to the Jiangsu government—an investment that has more than paid for itself since investing in efficiency measures costs one-third the cost of building a conventional power plant.

(Update: Jiangsu has just published the new statistics on its DSM program that demonstrate even greater energy and carbon savings at a lower cost. Here is a revised paragraph with the new statistics: "In the first three years of our cooperation, Jiangsu estimates that its DSM investments avoided the need to build 300 MW in new power generation capacity and 580 MW of peak load. Since then, Jiangsu has avoided more than 300 MW of new power—680 MW in total—and is now saving 3.5 terawatt hours of electricity annually. These programs are reducing CO2 emissions by about 3.4 million tons a year. All of this has been achieved at a cost of 240 million RMB over the four year period from 2006-2009 (or $9 million a year on average) to the Jiangsu government—an investment that has more than paid for itself since investing in efficiency measures costs one-third the cost of building a conventional power plant".

Chinese Premier Wen Jiabao has hailed Jiangsu as a national model, and China’s new national DSM regulations are proof that this subnational initiative has had a major influence on the country’s energy policies.

U.S. States Also Leading on DSM: Jiangsu’s success in building a DSM program drew on the expertise and experiences of California’s regulators, utilities and businesses in a highly successful capacity-building effort that shows the benefits of U.S.-China cooperation on climate and clean energy. In fact, the California-Jiangsu partnership has been so successful that in 2009, California and Jiangsu signed a new agreement to cooperate on climate change (also see my posting here) – China’s first-ever subnational agreement to reduce greenhouse gas emissions. NRDC is helping implement this agreement by working with Jiangsu to save energy and reduce greenhouse gas emissions through new DSM efforts in the building sector (see my recent post about the importance of building energy efficiency in China).

In California, DSM energy efficiency programs have provided nearly $5 billion in net benefits to customers statewide over the last decade alone (see more details here). New programs planned over the next three years are expected to provide even greater savings to California consumers while creating more than 15,000 skilled green jobs. In 2008 alone, the pollution savings from efficiency programs (which have accumulated since the state first began programs in earnest in the mid-1970s) totaled nearly 1,000 tons of smog-forming nitrogen oxides and provided global warming pollution savings equivalent to the emissions from 3 million cars. Other states are also pursuing DSM programs to meet their energy goals (e.g., just two weeks ago, in Illinois, Commonwealth Edison, NRDC, and other parties and regulators signed a DSM agreement that will result in massive savings for ratepayers and potentially eliminate the need for new dirty coal plants in the region).

Countries Must Continue to Move Forward on Climate Change: The current average target of those U.S. states that have adopted EERS is higher than China’s 0.3% target, and some state EERS are much higher. Yet China has leapfrogged the U.S. by adopting a national EERS, applicable to every grid company in the country. The U.S. still lacks a national EERS, though an EERS provision was included in the comprehensive climate and energy legislation passed by the U.S. House of Representatives last year.

As my colleague Jake Schmidt pointed out in a recent blog, countries are not waiting around for an international climate agreement before taking action at home. China certainly isn’t. The implementation of the national DSM regulations could significantly increase China’s ability to tap its enormous potential for energy efficiency, which in turn would go a long way toward meeting China’s target of reducing its carbon intensity by 40-45% by 2020 from 2005 levels.

[1] http://news.xinhuanet.com/english/2010-01/06/content_12763227.htm

[2] In 2008, the average annual electricity consumption for a U.S. residential utility customer was 11,040 kWh. (http://www.eia.doe.gov/ask/electricity_faqs.asp)

[3] Based on average household consumption of 87 kWh per month.

[4] A terawatt is equivalent to 1 trillion watts.

China renews efforts on climate change and clean energy in its Twelfth Five Year Plan

2010-10-28T13:48:03Z

Barbara Finamore, China Program Director, Beijing

Last week, the Communist Party of China (CPC) adopted a proposal for drafting the 12th Five Year Plan (2011-2015) that reiterates clean energy development and greenhouse gas emissions reductions as key priorities of the Chinese leadership. (The Chinese version of the proposal is available here.) China’s Five Year Plans are the key economic planning documents for the state and determine all significant development goals, including those related to climate, energy and environmental protection. The actual 12th Five Year Plan is being drafted by the State Council and is expected to be finalized next March at the annual session of the National People’s Congress.

The proposal, adopted by the Fifth Plenum of the 17th CPC Central Committee meeting, reiterates China’s commitment to making its energy and carbon intensity reduction targets binding domestically in order to effectively address greenhouse gas emissions. China will seek to reasonably control energy demand growth and control energy-intensive industries from growing too quickly. It will also seek to improve energy efficiency laws and standards, build energy-saving market mechanisms and continue with its step-by-step efforts to establish carbon markets. China will also seek to strengthen the target responsibility system for energy savings and emission reductions and improve its energy and GHG emissions statistics and monitoring systems, since meeting the targets also depends on China continuing to strengthen its governance system and get a handle on its data. (See paragraph 22 of the Chinese-language proposal.)

China also plans to invest in RD&D of low-carbon technologies. In particular, China will seek to develop 7 new strategic industries, many of which are crucial to clean energy development: new-generation information technology, energy-saving and environmental protection technology, new energy, biology, high-end equipment manufacturing, new materials and new-energy cars. (See paragraph 13 of the proposal.) China will also seek to expand the services sector, using tax and pricing systems to incentivize growth. This will be important to support efforts to reduce the dominance of China’s energy and emissions-intensive heavy industries. There is also a renewed emphasis on conserving and protecting the quality of water, a resource inextricably linked with rising energy demand.

Also last week, an official from China’s National Energy Administration, Deputy Director Huang Li of the Energy Conservation Department, stated that China would adopt a 17.3 percent energy intensity reduction target in the 12th Five Year Plan (2011-15) and a 16.6 percent energy intensity reduction target in the 13th Five Year Plan (2016-20) (Chinese news). As other commentators have noted, these are not official or finalized, but they are in line with the final numbers (between 15 to 20 percent) expected to be announced in the coming months.

Huang also stated that China would seek to increase the installed capacity of hydropower to 380 GW, nuclear to 80 GW, and wind, solar and biomass power, collectively, to 200 GW by 2020. He noted that expansion of natural gas, nuclear and renewables such as hydro and wind would reduce the share of coal in China’s primary energy consumption from the current 70 percent to 62 percent by the end of the 12th Five Year Plan (2011-15).

While setting energy intensity reduction targets of 20 percent over the next two Five Year Plan periods would signal a push for even deeper efficiency gains and greater economic restructuring, the targets cited by Director Huang represent a substantial commitment by China to rein in its rapid energy demand and emissions growth. China’s top leaders have also made it clear that these energy intensity reduction targets are matters of national importance, and provincial and local officials are in an all-out push over the next few months to meet their share of the 11th Five Year Plan’s national 20 percent energy intensity reduction target (an effort which shows the seriousness with which officials are treating the targets, though some actions such as cutting off power to hospitals and for street lights have been ill-advised, as my colleague Alex Wang has blogged about here).

NRDC recently released a working paper analyzing China’s commitment to reduce its carbon intensity by 40-45 percent by 2020 compared to 2005 levels. In our analysis, we examined three scenarios based in part on different assumptions about China’s energy intensity reductions in the 12th and 13th Five Year Plans[i]:

In the Previous Commitments Scenario, China fulfills only the energy intensity reduction targets it set under the 11th Five Year Plan, and enacts no additional policies in the 12th and 13th Five Year Plans, leading to a 31 percent reduction in energy intensity and 37 percent reduction in carbon intensity by 2020 compared to 2005 levels.

In the Extended Efforts Scenario, China makes extended efforts including reducing its energy intensity by 16 percent and 14 percent in the 12th and 13th Five Year Plans, respectively, leading to a 42 percent reduction in energy intensity and 48 percent reduction in carbon intensity by 2020 compared to 2005 levels.

In the Economic Restructuring Scenario, China is successful in achieving fundamental economic restructuring, making consecutive 20 percent reductions in energy intensity in the 12th and 13th Five Year Plan periods, leading to a 49 percent reduction in energy intensity and 57 percent reduction in carbon intensity by 2020 compared to 2005 levels.

The energy intensity targets that Director Huang put forth last week fall in between the last two scenarios, resulting in a cumulative energy intensity reduction of 45 percent from 2005 to 2020 and putting China on a pathway that would be consistent with its commitment to reduce carbon intensity by 40-45 percent by 2020 from 2005 levels. Of course, China’s ultimate success in meeting its 2020 carbon intensity reduction target will depend not only on its success in reducing its energy intensity, but also its progress in expanding the share of non-fossil fuels and reducing the share of coal in the energy mix and expanding the use of natural gas. Director Huang’s announcements about China’s nuclear, hydro, wind, solar and natural gas development plans make it clear that China is planning to push forward on all these fronts.

As I have discussed before, China’s carbon and energy targets (including its pledge to increase the share of non-fossil energy in its primary energy consumption to around 15 percent by 2020) are significant actions. The announcements coming out of the CPC Central Committee plenum last week highlight that China is committed to continuing to take the actions needed to meet the climate and energy targets it set for itself at Copenhagen, and to inscribe these in the 12th Five Year Plan, demonstrating continued ambition on the part of the Chinese leadership to expanding clean energy and addressing climate change.

[i] As we have noted in our analysis, China’s carbon intensity will depend not only on its success in reducing its energy intensity but also its progress in increasing the share of non-fossil fuels and improving the relative shares of fossil fuels in the energy mix, as well as GDP growth assumptions.

This post was coauthored by NRDC China Climate Fellow Michael Davidson and NRDC China Climate and Energy Project Director Alvin Lin.