Mulling an Energy Cap

A five-year limit could boost climate goals in China.
An analysis by Michael Lelyveld
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A coal fired power station in Huaibei, in east China's Anhui province, Aug. 11, 2011.
A coal fired power station in Huaibei, in east China's Anhui province, Aug. 11, 2011.

Nearly two years after refusing to cap emissions as part of a climate change treaty, China is considering absolute limits on energy use and greenhouse gases.

Officials have been debating consumption caps since March, when former National Energy Administration (NEA) director Zhang Guobao said China would restrict total energy use to 4 billion tons of coal equivalent (TCE) by 2015.

At the time, environmentalists hailed the announcement as a breakthrough, since China previously pledged only to cut energy use in proportion to its fast-growing GDP.

During climate talks leading to the U.N.-sponsored Copenhagen conference in 2009, China steadfastly rejected calls for any ceilings on energy use or emissions that might slow its economic growth.

But Zhang said flatly on March 4 that the cap had been included in the draft of the 12th Five-Year Plan, which would be presented to the National People's Congress within days. That prediction proved premature when the plan was unveiled.

"Somewhat surprisingly, there was no mention of a total energy consumption target," the World Resources Institute (WRI) wrote in a report.

After months of debate, officials have now returned to the cap with a modified proposal for a separate five-year "low carbon" energy plan.

Last month, a State Council panel under Premier Wen Jiabao approved a slightly looser goal of 4.1 billion TCE "in principle," Reuters said.

Getting serious

Despite the higher target, environmental advocates are positive about prospects for the energy plan.

"If they set a cap, I will be encouraged," said Deborah Seligsohn, principal adviser to WRI's China climate program, in a phone interview from Beijing.

Some critics note that the cap level would do little more than quantify the government's previous goal of reducing energy use per unit of GDP by 16 percent in the five-year period to 2015. The country used 3.2 billion TCE last year, according to official data.

But Seligsohn said the cap would underscore the government's seriousness about meeting its targets.

"It essentially would achieve the same thing that the energy intensity target would achieve. However, it adds a new level of certainty to the number," she said.

The cap should also focus provincial governments on limits to energy use, even though they often overshoot official GDP targets.

Another benefit is that absolute energy limits could be used to calculate figures for pilot cap-and-trade programs that could spur emissions reductions.

CO2 cap unlikely

Seligsohn said she does not expect China to set caps on carbon dioxide (CO2), since controls are still a subject of negotiations with industrialized nations in the unfinished process of replacing the Kyoto Protocol.

Under the 12th Five-Year Plan, China would reduce CO2 per unit of GDP by 17 percent. In the U.N. climate talks, it also pledged to cut 40 to 45 percent of energy-related CO2 per GDP unit by 2020 compared with 2005.

But targeted CO2 caps are still possible. On Aug. 3, Sun Zhen, a National Development and Reform Commission (NDRC) climate official, said industries in some regions could face carbon caps to achieve the national goals.

Sun told the official English-language China Daily that overall CO2 cuts would still be based on GDP. "But when it comes to reducing the emissions of certain business, that calls for limiting the absolute quantity of emissions," he said.

In any case, energy caps could be used to calculate progress in curbing CO2 emissions, said Seligsohn.

Kevin Jianjun Tu, senior associate at the Carnegie Endowment for International Peace, said there has been a growing discussion about limiting the consumption and supply of coal, the major source of CO2 emissions.

"They're pretty serious about this discussion," said Tu. "However, if you refer this to the carbon emissions issue, I don't believe this could ever happen in China in the near future."

Tu doubts the debate will even result in a fixed figure for energy.

"There's a very slight chance that they may cap coal consumption, but not necessarily energy consumption," he said.

Even if a coal or energy cap emerges in the sectoral plan, it may be seen as a recommendation rather than a mandatory limit, said Tu.

"I doubt that the government could set such a stringent target," he said.

Runaway growth

Although the proposed energy cap figure is not final, the reported adjustment since Zhang's announced target may reflect trouble in restraining China's industry and investment-led growth.

Under the Five-Year Plan, Premier Wen set an average annual GDP growth goal of 7 percent, with 8 percent expected this year. But the economy jumped 9.6 percent in the first half, outstripping the government guidelines.

The rise in the proposed energy cap from 4 to 4.1 billion TCE means that energy use would grow about 5.2 percent a year instead of 4.2 percent through 2015. The higher rate suggests that officials doubt that the lower-growth GDP targets can be met.

The government has also been slow in publishing energy intensity figures for the first half of this year, raising questions about progress on efficiency goals.

In March, the NDRC targeted a 3.5-percent cut in both energy use and emissions per unit of GDP for 2011, but the first-half results have yet to be announced. Last year, the energy efficiency figures for the first half were released on Aug. 3.





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