HONG KONG — Chinese energy researchers are greeting the government’s latest efforts to reshape China’s energy sector with praise and caution.
In a plan detailed by the state-owned Xinhua News Agency on Saturday, the government announced it will keep overall energy consumption within 5 billion tons of standard coal equivalent by 2020. That marks the first time the world’s top energy user has set such a cap in its economic blueprint.
The same week, Chinese policymakers introduced a long-awaited quota system for regions’ renewable energy consumption, a move to aid domestic wind and solar developers competing with coal on power grids.
Coming on the heels of China’s announcement that it overshot its mitigation goal in 2015, the surge of new policies has heightened hopes that the world’s top climate change polluter will do more to curb greenhouse gas emissions. But will it?
U.S. officials hope so. After meeting his Chinese counterparts last week in Beijing, U.S. Special Envoy for Climate Change Todd Stern told Reuters that countries that were on track to surpass their existing climate targets will come under pressure to raise their goals.
"In 2020, if anyone can see clearly that China is going to peak its carbon emissions earlier than 2030 and that it will post well above a 65 percent improvement in carbon intensity, then it will be up to the Chinese government to decide whether to increase targets. But obviously, there are going to be a lot of public and international opinions looking forward to additional measures," Stern said.
Some experts read between the lines and say China will likely raise its emissions reduction target for 2020.
But the latest policy also illustrates Beijing’s intention to strike a balance between its economic development and climate action. For one, the first-ever energy consumption cap is a ceiling that researchers say should be easy to achieve.
"Based on our calculation, China should be able to cap its energy consumption at a maximum of 4.7 billion tons of standard coal equivalent by 2020," said Jiang Kejun, one of China’s foremost energy modelers at the government-run Energy Research Institute. He viewed the drafted cap as "a floor target" and called it a result of back-and-forth bargaining among Chinese researchers.
"Some experts, particularly economists, had called for a loose target," recalled Jiang, who was among the consultants for China’s 2016-20 development plan. "They were concerned about future economic growth and argued that we may need more energy if the country’s industrial activities would rebound."
Clean energy with nowhere to go
So instead of going for what China could possibly achieve, policymakers chose to set a target that the nation would be sure to achieve. Still, Jiang said, the energy consumption cap will be a boon for the country’s desire to use resources more efficiently.
"The energy consumption cap will send out a clear signal to local authorities across the country," he said. "It shows that the Chinese leadership is taking energy conservation seriously. So officials at a lower level must find ways to curb their demand for energy."
The drafted energy consumption cap, which is scheduled to be approved at the annual legislative meeting this month in Beijing, does not set a limit on the country’s energy demand in post-2020. Jiang and his team expect that China’s energy consumption will grow further to 5.2 billion tons of standard coal equivalent by 2030, though the country’s carbon dioxide emissions may peak sometime between 2020 and 2022.
Part of China’s strategy to meet its growing energy demand without causing further increases in carbon emissions comes from a rapid expansion of cleaner energy capacity. With its slowest growth in a decade, China still delivered 193 billion cubic meters of natural gas to families and businesses last year.
The country has the most ambitious nuclear reactor construction program on Earth, and it has led the world in terms of hydroelectric, solar and wind power installation.
But there is one problem: A big portion of power generation from Chinese renewable energy projects didn’t have a way to reach energy users. Data from the National Energy Administration show that last year, about 15 percent of China’s wind power output had no place to go. A similar problem is also happening across solar projects in the country.
Will the grid fix work?
In a statement released last week, Chinese policymakers made clear that they will try to relieve the country’s power grid bottleneck by slapping quotas on regions’ non-hydro renewable energy consumption.
The quotas for the 31 provinces, autonomous regions and large municipalities range from 5 to 13 percent, depending on their energy consumption and production structure. They will filter down to the state-owned grid operators, which by law were supposed to absorb all renewable energy produced but have often failed to do so.
Chinese power generators will also be subjected to a minimum 9 percent quota on their non-hydro renewable energy output as a portion of their total output by 2020. Industry estimates show that such output amounted to 4 percent of China’s total power generation in 2014.
The quotas aim "to achieve the requirements of the nation’s energy production and consumption revolution," and to promote the use of renewable energy, the National Energy Administration said in a statement accompanying the quotas release. But not everyone is convinced.
Xie Guohui, a researcher at the Beijing-based State Grid Energy Research Institute, a think tank under China’s largest power distributor, said the new policy failed to address transmission network buildup and other key causes of China’s renewable energy curtailment problem.
And for regions that are hit the hardest by grid constraints, Xie said, the quota system won’t make a big difference, either. That’s because the set targets are close to what local grid operators and power generators have already been doing.
"The policy’s impact on solving China’s grid constraints is rather limited," he added.
Carbon intensity curb may surpass targets
But the new quota systems will likely boost the sales of renewable energy in regions that are currently not the hot choice for Chinese wind and solar developers.
Take Jiangsu province in eastern China. For now, renewable energy makes up 2 percent of Jiangsu’s power outputs. To meet its required quota of 7 percent, Xie said, grid operators there will have to hook up more rooftop solar projects.
By the end of 2015, China had built 43 gigawatts of solar projects and 129 GW of wind farms, far beyond the installation of any other nation. Meanwhile, the country’s coal consumption had fallen 2.7 percent compared with 2014 levels, the second straight year of decline in the world’s largest coal market.
As its energy landscape is changing and the economy is losing stream, China may peak carbon dioxide emissions by 2025. That’s five years earlier than the previous plan — if the peak didn’t already happen in 2014, according to a new study published in the journal Climate Policy.
For some, that justifies calling for China to take extra action.
A new global climate change agreement adopted last year in Paris ended the strict division of responsibility between developed and developing countries that characterized earlier efforts. From now on, countries of all levels of wealth and development will curb emissions and will decide their own plans for doing so based on national capabilities. The accord includes requirements that countries regularly report their progress and undergo international reviews.
Chinese officials haven’t publicly responded to Stern’s comment yet. But late last month, China’s top climate change negotiator, Xie Zhenhua, told a forum that his country could cut carbon intensity by about 50 percent below 2005 levels by 2020, a more ambitious outlook than the previous target set by Beijing.
Post-Paris challenges remain
Carbon intensity refers to the amount of carbon dioxide emitted for producing each unit of economic output. At the United Nations’ climate change conference in 2009, China pledged to lower its carbon intensity by 40 to 45 percent in 2020 from 2005 levels.
"Mr. Xie’s remark indicates that China is poised to raise its climate change mitigation target," said Yang Fuqiang, a senior climate expert at the Beijing office of nongovernmental organization the Natural Resources Defense Council.
"Chinese officials may bring it up when global delegates meet in 2017 to review the 2020 targets or anytime during the U.N. climate change negotiations over the next few years. In either case, this is something that China will certainly do," Yang said.
But Song Ranping of Washington, D.C.-based think tank the World Resources Institute took a more conservative position.
"China is indeed on track to beat its target to reduce carbon intensity for 40 to 45 percent by 2020 compared with 2005. However, it is a little bit early to say China will meet its Paris commitments without challenges," Song said.
"China needs to truly transform its economy so it can decouple economic growth with carbon emissions, since the emission reduction will not be sustainable if otherwise," he added. "No other country has done it in a similar development stage before. Therefore, in the short term, I don’t think China will adjust its climate goals before it is confident that the economic transition has [been] completed."