ECONOMIC RESEARCH CENTERDISCUSSION PAPER
E-Series

No.E14-1

Development of Low Carbon Economy in China
byTatsuto Yukihara
Quan Bai

February 2014

ECONOMIC RESEARCH CENTERGRADUATE SCHOOL OF ECONOMICSNAGOYA UNIVERSITY

Development of Low Carbon Economy in China
Tatsuto Yukihara, Nagoya University, Japan
Quan Bai, Energy Research Institute of National Development and Reform Commission, China

Abstract
As the biggest developing country and number one population country, China’s energy demand andCO2 emission increased prominently. China made much effort in reducing CO2 emission andpromote sustainable development, and received prominent achievement. There are four main
challenges for China to further reduce its CO2 emission in the next stage. China is fighting hard
toward the 40‐45% emission reduction target by year 2020. Further reduction could not rely on
current administrative measures, more market based tools should be introduced.
Introduction
This article introduce the status quo of China’s economic development, energy development andCO2 emission, history and measures China had taken in recent years, main challenges of further
reducing CO2 emission and long term prospection of CO2 emission toward year 2020 and 2050 in
China.

1. Background
China is the largest developing country in the world. Since the opening and reform policy of 1978,
China’s economy has been booming for over 30 years, with average growth rate of 10.1%. After
more than 35 years’ development, China has become the second largest economy in the world.
However, it is on the way of traditional industrialization development. How to shift from a highcarbon development road toward low carbon development road is a big challenge to China.

2. Development of China’s Low Carbon Economy
2.1 History of Economy Development, Energy Development and CO2 Emission in China
2.1.1 China’s Socio‐economic Development
China is the largest developing country in the world. It has a population of 1.338 trillion in year 2010,
which is about 19.6% of the world. China’s economy has been continuously growing for 35 years
since 1978, when Mr. Deng Xiao Ping raised the concept of opening and reform policy. From year
1978 to 2012, the average growth rate of Gross Domestic Product ( GDP) is as high as 9.83% (seefigure 1). China’s Gross Domestic Production ranking increased from number 11th in year 1980, 6thin year 2000, 3rd in year 2008 and 2nd in year 2010. In year 2010, China’s GDP is 5878.6 trillion USD,
which is about 9.3% of the world.

1

Figure1. GDP and growth rate of China
Source: China Statistical Yearbook 2013
However, China is still less developed. By year 2010, the Gross National Income (GNI) per capita ofChina was merely 4260 USD, with was a Low and Middle Income Country according to World Bank’s
Classification Standard. By year 2012, the GNI per capita of China had reached about 56801
USD(current US $). Therefore, China has stepped into the row of Upper Middle Income Country in
the world. However, among all 214 countries and regions, the ranking of GNI of China is number 77,
which is still very low.
In addition to poverty, development of China is quite unbalanced. Especially in recent years, the gap
between east region and west region, between urban region and rural region, between the rich andthe poor is becoming more and more prominent. The unbalanced dispatch of social wealth has
resulted to more and more social problems. This is a big issue that may result to unstable of thewhole society. Future Development of China’s low carbon economy should in cooperate with China’s
social‐economic development demand, which means not only eliminating poverty, but also
decreasing the gap of each layer.
2.1.2 Energy Consumption of China
2.1.2.1 Total Primary Energy Consumption
Energy is the basis of modern civilization. Along with China’s continuous economic growth, China’s
energy demand increased steadily in the past 35 years. In year 2010, China’s Total Primary Energy
Consumption (TPEC) exceeded United States for the first time, and China became the largest energy
consuming country in the world. Though China’s energy consumption is quite large, the energy
consumption per capita remains low. In 2012, primary energy consumption per capita is only 2.67
tce., which is less than half of the average level of OECD countries.

1

Source: world bank database, http://data.worldbank.org/

2

Figure 2. Total Primary Energy Consumption and GDP Index of China
Source: China Statistical Yearbook 2013
China’s TPEC experienced an unprecedented growth since year 2002. By year 2012, China’s TPEC
reached 3.62 billion tce., which is 2.5 times of year 2000(see figure 2). The average growth rate of
TPEC from year 2000‐2012 reached 7.9%. In comparison, China’s TEPC growth from year 1990 to2000 is merely 4.0%, only half of the recent 12 years.
Table 1 Total Primary Energy Consumption and Elasticity Index of China from 2000-2012
year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

TPEC/100 milliontce14.553115.0406
15.943118.3792
21.3456
23.599725.8676
28.0508
29.1448
30.6647
32.493934.800236.17

growth rate of TPEC
/%
3.53
3.35
6.00
15.28
16.14
10.56
9.61
8.44
3.90
5.21
5.97
7.10
3.94

growth rate of
GDP/%
8.43
8.30
9.08
10.03
10.09
11.31
12.68
14.16
9.63
9.21
10.45
9.30
7.75

elasticity of energy
consumption
0.42
0.40
0.66
1.52
1.60
0.93
0.76
0.60
0.40
0.57
0.57
0.76
0.51

Source: China Statistical Yearbook 2013
The elasticity of energy consumption, which is the ratio of TPEC growth rate to GDP growth rate, ofyear 2002 to year 2005 is relatively high (see Table 1). This shows China’s economic development isheavily rely on the use of energy. The fast growth of China’s energy consumption is due to two main
reasons. First, China has stepped into the phase of “Homeland Construction”. During this stage, hugeamount of industrial enterprises and buildings were constructed. The rise of domestic demand ofiron and steel, cement resulted to the fast development of energy intensive industries. Second, after3

China joint World Trade Organization, more and more countries developed business with China. Dueto China’s cheap labour cost and good infrastructure, China became a “World Factory” during thepast 10 years. The rise of external demand increased the energy consumption of China.
Since the 11th five‐year‐plan (2006‐2010), more attention and much effort were devoted to energy
conservation in China. By year 2012, energy consumption per GDP in China decreased by 23.5%
compared with that of 2005. The energy elasticity decreased from 1.52 in year 2003 to about 0.6
since year 2007 (see Table 1).
2.1.2.2 Energy Consumption StructureOver last 60 years, China’s primary energy consumption heavily depends on coal. The world primaryenergy consumption structure has transferred from coal to oil and now is moving towards green
energies, such as natural gas, nuclear power, hydro power and wind power. The share of coal in year
2012 is still in 66.6%, which decreased less than 3 percentage point only than year 2000(see table 2).
Compared with this situation and trend, China’s energy structure made China to a High Carbon
development road. Realizing low carbon development is still very far.
Table 2 Energy Consumption Structure of China
TPEC

Shares in TPEC (%)（100
million
Coal
Crude oil
tce）
2000
14.6
69.2
22.2
2001
15.0
68.3
21.8
2002
15.9
68
22.3
2003
18.4
69.8
21.2
2004
21.3
69.5
21.3
2005
23.6
70.8
19.8
2006
25.9
71.1
19.3
2007
28.1
71.1
18.8
2008
29.1
70.3
18.3
2009
30.7
70.4
17.9
2010
32.5
68
19
2011
34.8
68.4
18.6
2012
36.2
66.6
18.8
Resource: China Statistical Yearbook 2013

Natural gas

Hydro power nuclear
power and others

2.2
2.4
2.4
2.5
2.5
2.6
2.9
3.3
3.7
3.9
4.4
5
5.2

6.4
7.5
7.3
6.5
6.7
6.8
6.7
6.8
7.7
7.8
8.6
8
9.4

2.1.2.3 Energy Consumption by Sector
China is in the middle of its industrialization and urbanization. Therefore, the energy consumption by
sector is greatly difference from developed countries. In 2011, 70% of energy is consumed byindustrial sectors. Service account for 14.8% and household consumption accounts for only
10.7%(see figure 3).

4

Figure 3. Energy consumption by sector
Industrial energy consumption was dominant in China for a long time. In year 1993, the share ofindustrial energy consumption was as high as 76%. After that, the share remains to be about 71% foralmost 20 years. Only after year 2008, the share of industrial energy consumption begins to decreaseslightly(see figure 4).

Figure 4. History of Industrial Energy consumption
2.1.3 CO2 Emission of China
Accompanied by fast increase of coal consumption, China’s CO2 emission increased continuously.
From 1995‐2002, China’s average emission growth rate of CO2 emission is less than 2%. However,from 2002‐2010, the average growth rate of CO2 emission increased to 9.76%. As a result, the share5

of China’s CO2 emission in the world increased from 13.2% in year 1995 to 23.3% in 2010(Excluding
LUCF)2. Presently, China has become the number one CO2 emitter in the world.
Especially in recent years, the contribution of CO2 emission from China is becoming more and more
obvious. From year 2002‐2010, among all the incremental CO2 emission of the world, China hascontributed 61.9%. Therefore, China is blamed by many countries of its large amount and fast
growth of its CO2 emission. It is said that the emission reduction achievements from OECD countries
are offset by the emission growth from China. High pressures were stressed to Chinese society to
reduce CO2 emission.

Figure 5. Total Primary Energy Consumption and GDP Index of China
Source: WRI’s climate database
2.2 The History of China’s Sustainable Development
As a developing country, the concept of environment protection, sustainable development and low
carbon development are introduced from international society. Combined with China’s local
characteristic, China did some explorations to harmonize the conflict between socio‐economic
development and environment protection.
2.2.1 the History of Sustainable Development in the World
Seen from the global perspective, the environment awareness of human being has experienced
three stages.
First stage: the stage of suffering from pollution. Since industrial revolution, human race has
produced huge amount of wealth, however, serious disasters had happened as well. From 1940’s to1970’s, serious environmental pollution disasters had happed in United Kingdom, United States andJapan respectively.

2

Data come from database of World Resource Institute6

Second Stage: the stage of raising environmental awareness. During this stage, more and more
people began to recognize the fault of traditional development mode. Many famous books, such as
Silence Spring, the Limits to Growth etc., were published and widespread to the whole world.
Third Stage: the stage of promoting sustainable development. Through a series of global conferences,including United Nation’s Conference on Human and Environment in year 1972, the first UN
Conference on Environment and Development in year 1992, the World Summit on Sustainable
Development in year 2002, the United Nations Conference on Sustainable Development in year 2012
etc., the awareness of sustainable development was raised. As an important composition ofsustainable development, Climate change and CO2 emission reduction received much attention as
well.
2.2.2 the History of Sustainable Development in China
Influenced by the global development tendency, the awareness of sustainable development in China
increased as well. From historical prospect of view, it could be classified into 5 stages:
1st stage: from 1970’s to 1978. Chinese government sent delegation to attend the United Nation’s
Human and Environment Conference in 1972. In year 1973, the State Council of China organized thefirst National Environment Protection Conference, in which many basic principles of Environment
Protection were raised.
2nd stage: from 1978‐1992. Environment Protection was recognized as a Basic National Policy. 8
regulative policies were developed.
3rd stage from 1992‐2002. Sustainable Development was recognized as a National Development
Strategy. The 21 century Agenda of China was development. Environment protection andenvironment control was promoted during China’s economic growth.
4th stage: 2002‐2012. The Scientific Development Concept was raised as a top leading principle of
China’s socio‐economic development. The goal of building up a resource conservation andenvironment friendly society was put forward. China began to explore a new path of environment
protection, such as total emission control of SO2 emission from year 2006.
5th stage: 2012‐present. A new concept, which is named Ecological Civilization, was raised by in the
18th Chinese Communist Party Congress. A new goal of building a Beautiful China was raised up. It isemphasised that environment protection and sustainable development concept should beincorporated into the overall design of China’s social‐economic development plan. Construction of
ecological civilization should be incorporated to form a “five‐in‐one” arrangement, which means theintegration of economic development, political development, cultural development, social
development and ecological civilization development. More attention and efforts would be made topromote green, recycle and low‐carbon development. These actions will increase the strategic
position of combating climate change in China’s overall economic and social development.
2.3 China’s Policies and Measures to Promote of Low Carbon Economy Development

7

As the largest CO2 emitter and the largest developing country in the world, China’s attitude andreactions that fight against climate change is quite active. China has taken CO2 emission as animportant issue, and worked hard to induce China to take a low carbon development road.
Especially in recent years, main activities had been organized. Main activities including:
2.3.1 Strengthening Government Institution
As a country shifting from planning economy to market economy, government of China takes adominant role in socio‐economic development of China. The State Council has recognized climatechange is an important challenge that China will face in the future. In order to promote low carbon
development, a series of new government institutions were setup in both central government andlocal government.
In year 2007, Chinese State Council established National Leading Group for Addressing Climate
Change, Premier Wen Jiabao was the group leader, and ministers from National Development andReform Commission, Ministry of Foreign Affair, Ministry of Finance etc. are group members. With
the change of the Chinese government in year 2012, the State Council made an adjustment to thecomposition and personnel of the National Leading Group for Addressing Climate Change in in 2013.
The new Premier, Mr. Li Keqiang, acted as group leader. Also, several functional departments, suchas Ministry of Industry and Information Technology, were added. The National Leading Group for
Addressing Climate Change is the top leading organization that makes important decisions in China.
Under the Leading Group, many ministries are involved in the climate change affair. China’s National
Development and Reform Commission is responsible for centralized administration. Ministries suchas Ministry of Foreign Affair, Ministry of Finance etc. have their own responsibilities, as well. In 2012,
the National Development and Reform Commission established a new institution, which is named
the National Strategic Research and International Cooperation Center for Climate Change. Thisinstitution is specially aimed to provide decision consulting and a supporting service for climatechange.
All the provincial level government (including the autonomous regions and municipalities directly
under the central government) have established their leading groups for addressing climate changewith the province governor serving as group leader respectively. Functional department of theprovincial government is responsible for both provincial governor and related ministry of the central
government. The provincial leading group is a inter‐departmental coordination mechanism. Similar
to central government, a number of provincial research institutions have been established tocombat climate change and promote low‐carbon development. For example, Tianjin Low‐Carbon
Development Research Center (TLCC) was founded in Tianjin City. Zhejiang Center for Climate
Change and Low‐carbon Development Cooperation was founded in Zhejiang Province. Beijing
Climate Change Response Research and Education Centre (BCCRC) was established in Beijing City.
Therefore, a climate change consulting and decision supporting system was formulated.
2.3.2 Legislation of Climate Change Laws
Not only government emphasized climate change, China’s National People’s Congress (NPC) is also
preparing to establish a Climate Change Law. In recent years, the Environment Protection and8Resources Conservation Committee of the NPC is working together with the Legislative Affairs Officeof the State Council to draft the Climate change law. A leading group of Climate Change Law Drafting
was setup, and a basic legislative framework was established.
In the provincial level, provincial climate change laws are being drafted at the same time. Shanxi
Province had issued the Measures on Addressing Climate Change in Shanxi Province. and Qinghai
province have issued the Measures on Addressing Climate Change in Qinghai Province. Legislation in
Sichuan and Jiangsu provinces are currently on a steady track. In October 2012, the Shenzhen
Municipal People’s Congress passed the Provisions of Carbon Emissions Management of theShenzhen Special Economic Zone to strengthen the management of carbon emissions trading in
Shenzhen. This is the first special law for carbon emission trading in China.
2.3.3 Composing Low Carbon Development Plan and Decomposition Responsibilities
The Outline of the 12th Five‐Year Plan for National Economic and Social Development is the overallplanning that guide China’s economic development from 2011 to 2015. In the plan, there were 24
indicators were setup. Among all the indicators, 12 are binding indicators that requires central andlocal government to devote more efforts and support to realize. Among the 12 binding indicators,
there were three indicators are related to China’s low carbon development. They are: reducing
energy consumption per unit of GDP by 16%c, cutting CO2 emissions per unit of GDP by 17%, andraising the proportion of non‐fossil fuels of TPEC to 11.4% by 2015 comparing to year 2010.
Accordingly, ministries related with CO2 emission reduction in China developed low carbon
development plan in their functional field. For example, Ministry of Industry and Information
Technology developed Action Plan for Addressing Climate Change in Industry (2012‐2020), Ministryof Science and Technology developed the National Plan for the Development of Science andTechnology on Climate Change during the 12th Five‐Year Plan etc. All related ministries wereactivated by the low carbon development requirement raised by the State Council.
The requirement raised by the Outline of the 12th five‐year plan is a heavy task, not only for all
ministries in central government, but also for all provinces in all regions. The CO2 emission intensity
target of 17% decrease by the central government was decomposed to all provinces (including theautonomous regions and municipalities directly under the central government) in mainland China.
Quantitative targets of each province during the 12th Five‐Year‐Plan Period are given by central
government (see Table 3). In this way, China’s government system has built a target responsibility
decomposition system of carbon intensity reduction. This could convey the pressure of the central
government to the local government.
In order to evaluate the progress of each region’s CO2 emission reduction, central government sent
examination groups to provincial government to assess their work progress and listen to their
feedback. In 2013, the National Development and Reform Commission, together with the relevant
departments, formulated the first tentative assessment of the completion of the greenhouse gas
emission control target of all provinces. Target achievement progress, carbon reduction measures,
basic works, and capacity building activities at the provincial level in 2012 were evaluated by theassessment group from central government. This is a practical and efficient measure in China to9stimulate the awareness of local government in China of low carbon development in the kick‐offstage.
Table 3 CO2 Emission Reduction Responsibility of Provinces in mainland China
Target of CO2 Emission
Reduction Per Unit GDP (%)
18
19
18
17
16
18
17
16
19
19
19
17
17.5
17
18
17
17
17
19.5
16
11
17
17.5
16
16.5
10
17
16
10
16
11

Target of Energy Consumption Reduction Per
Unit GDP (%)
17
18
17
16
15
17
16
16
18
18
18
16
16
16
17
16
16
16
18
15
10
16
16
15
15
10
16
15
10
15
10

Beijing
Tianjin
Hebei
Shanxi
Inner Mongolia
Liaoning
Jilin
Heilongjiang
Shanghai
Jiangsu
Zhejiang
Anhui
FujianJiangxi
Shandong
Henan
Hubei
Hunan
Guangdong
Guangxi
HainanChongqing
Sichuan
Guizhou
YunnanTibet
Shaanxi
Gansu
Qinghai
Ningxia
Xinjiang
Source: Working Scheme of GHG emission control of the 12th five‐year plan
http://qhs.ndrc.gov.cn/zcfg/t20120228_467501.htm

2.3.4 Promoting Low Carbon Industry
The shift from high carbon development towards low carbon development requires the change ofChina’s economic structure. Historically, China’s economic development strongly relies on heavy
industry, i.e. iron and steel production, cement production etc. Especially during year 2002 to 2008,
heavy industry in China developed even faster. After year 2008, China begins to pay more attention
10

on the development of service industry and high‐tech industry. Many favourable policies were given
to support their development.
Since 2012, the central government decided to take a reform to replace the business tax with avalue‐added tax in the service industry. This is a very effective incentive policy to accelerate thedevelopment of service industry. Also, central government issued a series of policies, such as old‐age
service favourable policy to promote the development of service industry. By the end of year 2012,
the share of service industry in China’s economic structure increased 1.5 percentage point comparedwith year 2010.
Since 2009, Chinese government begins to select some new emerging industries to promote toincrease a new incremental point to China’s economy. After years of discussion, 7 Strategic Emerging
Industries were selected, which are: energy conservation and environmental protection industry,
new‐generation of information technology industry, biology industry, high‐end equipment
manufacturing industry, new energy industry, new material industry and new‐energy vehicleindustry. The demand of the product from these industries is huge, and producing these products
requires the latest technology advancement of the modern world. It should be notice that thedevelopment of these 7 emerging industries will be beneficial to the development of low carbon
economy in China, especially the manufacture of energy efficient devices, renewable energy
equipment and new energy vehicles.
China’s central government issued a series of plans and policies to promote the development of
seven strategic emerging industries. For example, the State Council issued the 12th‐Five‐Year
Development Plan of National Strategic Emerging Industries in 2012. Ambitious goal of promoting
the seven strategic emerging industries were put forward. Including: increasing the share of strategic
emerging industry of total GDP to 8% by year 2015 and 15% by year 2020; promote the developmentof strategic emerging industry to annual growth rate of 20% etc. In order to realized the target, 20“key Projects” was put forward in the plan, including: the project of the industrialization of energy
conservation technology and equipment, the project of industrialization and demonstration ofenvironmental protection and equipment, the project of broad‐band China, the project of new typeflat panel display etc. Central government and local government will provide favourable policy andgovernment related investment towards these industries.
In China, there are some government involved capitals, such as the Special Fund of Strategic New
Emerging Industry Development managed by Ministry of Finance. Many government funding had
invested into these industries already. The planning developed by government of China raised theenthusiastic of the whole society. Many social venture capitals invested in these industries as well.
By the end of year 2012, 138 venture capital funds have been set up, managing 38 billion RMB(about 6.1 billion USD). There are 38 venture capitals, with total amount of 11 billion RMB, aredesigned to stimulate the development of the energy‐saving, environmental protection and newenergy development.
2.3.5 Accelerating Technology Advancement
Technology is the kernel of low carbon development. In order to accelerate the shift from highcarbon technology towards low carbon technology, much work had been done in China. Addressing
11

to existing production line and new established production line, different policies were developed by
Chinese government.
Firstly, addressing to low efficient and out‐dated industrial production lines, elimination policies
were strongly propelled by Chinese government. The target of eliminating backward production
capability during year 2011‐2015, which is enlisted in table 4, was raised in the Energy Conservationand Emission Reduction 12th five‐year Plan issued by the State Council. In order to realize this plan,
the Ministry of Industry and Information Technology developed detail work schedule of all provinces
and each year from 2011‐2015. In each year, a name list of the enterprises with outdated production
line is publicized in its website. Central government decompose the tasks to provinces. Provincial
government breaks down the tasks and assign them to government of cities, towns and enterprises.
Central government and local government will provide compensate to enterprises that obsoleted
the backward equipment. Annually, central government will do evaluation of the progress in allprovinces last year. After the evaluation in 2012, China eliminated obsolete production capacity inthe following industries: iron smelting, 10.78 million tons; steel production, 9.37 million tons; coke,
24.93 million tons; cement (clinker and mill), 258.29 million tons; plate glass, 59.56 million cases;
paper, 10.57 million tons; printing and dyeing, 3.26 billion meters; lead battery, 29.71 million kvah.
Table 4 Target of Eliminating Backward Production Capability during 2011‐2015 (digested)

Industry

Power
Generation

Main content
Single unit under (or equal) 100MW conventional coal-fired
power generation unit in the main grid coverage. Single unit
under (or equal) 50MW conventional power generation unit.
Single unit under (or equal) 50MW oil-fired boiler and power
generation unit.etc.

Unit

Capability
to beeliminated

10MW

2000

Iron Production Blast Furnace under (or equal) 400cubic meters

10 thousand ton 4800

Steel
Production

10 thousand ton 4800

Rotary Furnace and Electric Furnace under (or equal )30 ton

Calcium carbide Single unit under( or equal ) 12500 KVA and open unit

10 thousand ton
10 thousand ton

380

Electronic
Aluminium

Pre-baked Cell under ( or eqal) 100kA

Cementshaft kiln, dry kiln etc.

10 thousand ton 37000

Glass

Pull processes flat glass production line etc.

10 thousand
heavy box

9000

Incandescentlight bulbs

60 watt incandescent lamp for lighting

100 million
unit

6

90

Source: digested from Energy Conservation and Emission Reduction 12th five‐year PlanAt the same time, advanced low carbon technologies are demonstrated and promoted in China.
NDRC issued the 5 batches of the Catalogue on the Promotion of National Key Energy Saving
Technologies to the public, which enlisted 186 advanced technologies totally, from year 2007 to
2012. Users from enterprises could find latest energy efficient technologies from the catalogue. Also,12

enterprises that conduct energy conservation retrofit could receive subsidy from central and local
government. In year 2012, 2411 energy conservation retrofit projects from enterprises received
subsidy of 7.5 billion RMB (1.2 billion USD) from central government to improve its energy efficiency.
In addition, during the 12th Five‐Year Plan period, NDRC initiated the National Low Carbon Tech
Innovation and Model Industries Projects. According to this activity, 34 model projects have beenlaunched in the coal, electric power, and building materials industries in 2012. Therefore advancedenergy efficient technologies are promoted very quickly.
Carbon capture, use and storage technology (CCUS) is an important low carbon technology in future
low carbon development. China has started to use CCUS on projects with the help of Chinese
government. Sinopec Group has established the first full‐phase demonstration project in China using
CCUS for coal‐fired power plants. By 2012, Shenhua Group's CCUS demonstration project has stored
57,000 tons of CO2 in total. By June 2013, China’s first CO2 geological storage demonstration projectin Ordos, Inner Mongolia has sequestrated 120,000 tons of CO2.
In order to promote technology innovation and research of low carbon technology, Chinese
government developed a series of plans and favourable policies. For example, the Ministry of
Science and Technology released Specific Plans for Clean Coal Technology During the 12th Five‐Year
Plan Period. In the plan, clean coal technology is regarded an important direction. Efficient cleancoal‐fired power generation, advanced coal conversion, advanced energy‐efficient technology,
pollution control and resource efficient utilization technologies are the focus of future development.
As a research result, commercial demonstration of coal‐based Integrated Gasification Combined‐
Cycle (IGCC) power station came into operation in Tianjin City by Huaneng company in December
2012. This power station is designed, constructed and operated by China independently. Its alandmark of China’s breakthrough in next generation of clean coal power generation technology. Asa coal base energy structure, the technology innovation of clean coal technology will bring strong
influence of China’s energy strategy and low carbon development in the future.
Due to strong government push and market pull, the penetration rate of low carbon technology
increased very quick. For example, the share of thermal power units above 300GW increased from
42.7% in year 2000 to 75% in year 2011, the share by output of new type dry kiln in cement industry
increased from 12% in year 2000 to 89% in year 2011. There are 54 supercritical coal‐fired power
generation units were in operation in China, with largest installation amount in the world.
Table 5 technology penetration rate improvement in different industries in China
IndustryPowergeneration

Iron andSteel

Cokingtechnology
Share of units above (oreqal ) 300MW thermal power
generation unit /%continuous casting ratio ofsteelmaking big iron andsteel enterprises /%Penetration rate of dry cokingof big enterprises/%
TRT penetration rate of BF
above 1000 cubic meters /%Share of machinery coking tocoke output/%

2000

2006

2008

2010

2011

42.7

48.3

66.1

72.7

75

82.5

98.6

99.2

99.47

99.50

6

40

50

82.6

84.1

50

95

98.6

100

100

72

88

96.3

99

99

13

Electrolytic
Aluminium

Building
materials

share of large pre-baked cellto aluminium output /%Share of new dry kiln of all
cement output%
Share of floating method
glass production of all grass
output /%Share of new type of wallmaterial of all wall material
output /%

52

82

86

90

95

12

50

61.8

80

89

57

82

83

86

89.2

28

40

50

55

61

Source: Wang Qingyi, Energy Data Collection 2012.
2.3.6 Promoting Low Carbon Energy
Energy structure is a decisive factor of low carbon development, which requires more renewableenergy and nuclear energy. China had attached great importance on the development of low carbon
energy. Total consumption of non‐fossil energy in China increased from 93.1 million tce in year 2000
to 340.0 million tce in year 2012, with average growth rate of 11.4%.

Figure 6. Consumption of non‐fossil energy in China
By year 2012, the installation of hydro power plant in China reached 249 million kW, ranking first in
the world. On‐grid wind power installation capacity was 61.42 million kw, which was largest in theworld. On‐grid solar power reached 3.41 million kW, growing 60.6 percent from year 2011. Nuclear
power plants installation reached 12.57 million kW, and the scale of nuclear plants underconstruction is the largest in the world. The share of power generation installation of non‐fossil fuelis 28.5%, which is 4.2 percentage points higher than that of 2005. The share of electricity generated
by non‐fossil fuel occupies 21.4% of total on‐grid electricity by 2012.
China’s nuclear power development was influenced by the Fukushima nuclear accident whichhappened in year 2011. The construction of new nuclear power station was delayed for some time.
However, after careful study and overall weighting between the defect of developing nuclear energy
and the fast growth of energy demand, the urgent need of environment protection and GHG
mitigation, the State Council of China decided to continue to develop nuclear energy in China.
Nuclear power still remains to be an important measure to solve energy supply problem, and it isimpractical to abandon nuclear completely, at least in next two decades.

142.3. 7 Promoting Regional Low Carbon Development Demonstrations
China is trying to find a low carbon development path towards a low carbon society. However, there
is no existing model that could be copied to China. It is recognized that different regions withdifferent resource condition, population density and different development stage, should adopt
different low carbon development mode. In order to explore the successful mode in China’s low
carbon development, five provinces, which are Guangdong Province, Liaoning Province, Hubei
Province, Shanxi Province and Yunnan Province, and eight cities, which are Tianjin City, Chongqing
City, Shenzhen City, Xiamen City, Hangzhou City, Nanchang City, Guiyang City and Baoding City wereselected to be the first group of regional pilot of low‐carbon development. Each province and city
developed their own plan, including optimizing energy structure, promoting low‐carbon
development in industrial sector, transportation sector and building sector, demonstrating low‐
carbon lifestyle, increasing forest area etc. In year 2012, 2nd group of low carbon provinces and cities,
including 29 provinces and cities, such as Beijing City, Shanghai City, Shijiazhuang City, Hainan
Province, were selected for low carbon pilot.
Active GHG emission goal are put forward by all these provinces and cities. In order to assess theresult, carbon emission statistics and management systems of greenhouse gas emission are required
to establish. Many activities and information campaigns, such as advocating low‐carbon green
lifestyle and conservative consumption model, were conducted in these regions. Some regions madecommitment on total GHG emission control target and emission peak year of the region.
2.3.8 Starting Emission Trading Scheme Pilot
Emission trade is regarded as a useful tool to introduce market mechanism to make carbon emission
more cost effective. In year 2011, five regions in China are permitted by National Development andReform Commission to initialize carbon emission trading. These regions are: Beijing City, Tianjin City,
Shanghai City, Chongqing City, Shenzhen City, Hubei Province and Guangdong Province. In October
2012, Shenzhen government issued management regulations of CO2 trading. From July to August,
2013, carbon emissions trading management regulations develop by Shanghai City, Guangdong
Province and Hubei Province respectively are open for public to receive comments andrecommendations. The range and number of enterprises that participate in the emission trading
scheme are selected based on the local economic development trend, local energy saving andemission reduction target, the emission of individual enterprise and the emission level of the wholeindustry. Emission quotas were allocated to related enterprises by local government. Carbon
emission and reduction calculation approaches and standards were developed. Historical data ofenterprises' carbon emissions were collected. Government of Shanghai City issued carbon emission
calculation guidelines for industries, such as Iron and steel Industry and power generation industry in
October 2012. Government of Shenzhen City issued data reporting and verification guidance anddetailed rules for construction industry in 2012 and April 2013 respectively. By the end of year 2013,
the total trading volume conducted through carbon emission trading platform of Shenzhen City has
been more than 110 thousand ton, and the turnover is more than 7 million RMB ( 1.1 million US $).
2.3. 9 Collecting Basic Information

15

Statistic data is the basis of policy development and carbon emission control. Comparing with OECD
countries, the carbon statistical data and related accounting system in China is rather weak.
Addressing to this situation, the National Bureau of Statistics developed detailed rules to establish astatistical indicator system of greenhouse gas emissions statistics. Presently, all industrial enterprises
with energy consumption above 5000 tce are required to report their own energy use data andenergy efficiency data to National Bureau of Statistics. Greenhouse gas emission inventories of year
2005 and year 2010 were developed in all 31 provinces (including autonomous regions andmunicipalities). Through this procedure, the basic information of greenhouse gas emissions is madeclear.
Energy consumption data is not only collected by National Beau of Statistics, but also by related
government departments at the same time. Government departments that in charge of energy
conservation in industrial sector, building sector and public institution sector are collecting basic
data through their own system respectively. For example, Government Office Administration of theState Council, which is in charge of energy conservation of public institutions, had collected energy
consumption data and water consumption data of public Institutions of year 2011 and 2012. Data
sheet from over 690,000 public institutions nation‐wide were reported to Government Office
Administration of the State Council. In order to provide more detailed and dynamic data of energy
use and carbon emission, government of 23 cities decided to establish energy data centres in theirown city.
Regarding the carbon sink data, the State Forestry Administration collected provincial forest
resources and other forestry statistics, and measured the forested area and the changes in different
provinces across the country.
2.3.10 Promoting Clean Development Mechanism Projects
Clean Development Mechanism (CDM) is a trade mechanism between OECD countries under Kyoto
Protocol and developing countries. By the end of August 2012, there were 4540 CDM projects were
ratified by Chinese government. These projects covers wide ranges, including new energy andrenewable energy, energy conservation and the energy efficiency improvement, methane recycling
etc. Estimated annual certified emissions reduction (CER) of these projects has reached 730 million
tons of CO2 equivalent. Among these projects, there were 2364 projects had been registered in the
United Nations Clean Development Mechanism Executive Board, accounting for 50.41% of the total
registered project in the world. The estimated certified emission reduction (CER) has reached 420
million tons of CO2e annually, accounting for 54.54% of the global total. China tops the list in both
numbers of registered projects and annual certified emissions reduction (CER). By the August of year
2012, there were 880 projects that registered had been approved, with total volume of 590 million
tons of CO2e.
2.4 Persecutions of China’s Low Carbon Development Path
Although China had made some progress in low carbon development, there is still a huge challenge
in the coming future.
2.4.1 Challenges of China’s Low Carbon Development
16

There are four main challenges for China to realize its low carbon development, which are: fast
growth of energy demand, coal dominant energy mix, double burden of environmental issues, andmiddle income trap.
2.4.1.1 Grow of Total Energy Demand
China’s energy demand is still increasing with a high volume. From year 2005 to 2012, the annual
demand increased 180 million tce, which is the same as total energy consumption of Australia.
Although China is the largest energy consumer in the world, its demand of energy has not reach its
peak. By year 2011, the energy consumption per capita of China is only 2.9 tce, which is only 47% of
the average of OECD countries (see figure 7). As a most energy efficient country, Japan’s energy
consumption per capita is still 5.2 tce, which is 1.8 times of China’s current level. At the time that
China reach its peak of energy consumption per capita, assuming China could gain 20% energy
efficient than Japan’s current level, China’s energy consumption per capita will reach 4.1 tce.
Multiplied by China’s estimated population by year 2050, the total primary consumption of China atthat time might reach 5800 million tce, which is 1.6 times of current level. However, this is a rather
ideal case. If China’s current economic structure and lifestyle remain unchanged, the total energy
consumption will be much higher than 5800 million tce by year 2050.

Figure 7. Comparison of TPEC per capita in China, OECD average and Japan
Source: IEA, Key World Energy Statistics 2013

Figure 8. Comparison of TPEC per capita
Source: IEA, Key World Energy Statistics 201317

Also, electricity consumption per capita is another important indicator that shows living standard
and economic development of a country. By year 2011, China’s electricity consumption per capita is3312 kWh/pop, which is only 40.3% of average level of OECD countries and 42.2% of Japan (seefigure 8). That means when China reaches its goal of middle developed countries by year 2050, total
installation of power generation stations will be at least doubled.
2.4.1.2 Difficulties in Energy Mix Optimization
In the next 30 years, the first urgent issue of China is to satisfy its huge energy demand. During thisprocedure, China should do its best to optimize its energy mix. Seen from the long history of humanbeing, there had been two major energy mix shifts happened in the past thousands of years. The
first major shift is from biomass to coal, which had started from 1860’s. At that time, the innovationand fast promotion of steam engine enabled machinery to substitute human labour. After 50 years,
coal became dominant energy in global energy mix and reached its peak in the energy structure. The
second major shift is from coal to oil, which had started from 1880’s. At that time, electricity
generation device, electric motor and internal combustion engine were invented. With thedevelopment of human society, the better performance of oil product was accepted by more andmore people. Thus, oil became dominant energy resource since 1970’s, and the share of in energy
mix peaks in 1980’s ( see Figure 9). Until present days, oil is still occupies 33% of total energy
consumption in the world. The evolvement of energy mix in the world is the result of people’s
demand of an economic, convenient, efficient and clean fuel. Resource scarcity is not the main
restrain of last two energy shifts.

Figure 9. Evolvement of energy mix in the world
Source: Jiangzemin, Reflections of Energy Issue in China, Journal of Shanghai Jiaotong University
Comparing with involvement of world energy mix, China’s energy mix optimization is only in the
preliminary stage. Coal occupies about 70% of total energy consumption in China. China is abundantin coal resource and scarce in oil and natural gas resource. Comparing with oil, natural gas, nuclear
electricity and renewable energy, coal is the cheapest in China’s domestic energy market. This is themain reason of large CO2 emission.
Regarding to Chin’s low carbon development, there are two ways to reduce the emission from coalutilization: the first way is to continue to use coal, but adopt clean coal technology and introduce
CCS technology as soon as possible. This road is determined by technological advancement of clean
18coal technology and CCS technology. It is commonly recognized that CCS technology could not comeinto commercial operation before 2030. The second road is to promote compulsory policies (either
administrative measures or taxation measures) to control the usage of coal. Some experts begins to
discuss control the consumption of coal, but this is really tough if the market signal, which is related
to coal price and CO2 tax, remains unchanged.
2.4.1.3 Double Burdon of Environmental Tasks
The influence of economic development to environmental could be divided into local influence andglobal influence. Usually, local pollutions could raise the alert of people much easier than the global
one. From the experience of human development history, it could be noticed that developed
countries had solved their local pollution problems first. For example, there were Los Angeles Smog
Disaster in 1943 in the United States, London Smog Disasters in 1950 in UK, Minamata disease inJapan in the 1960’s. After years of fighting, these local pollutions were well treated. Global warming
and climate change issue was realized and wide spread by scientist only after year 1980. In year
1992, United Nations Framework Convention on Climate Change was held at the United Nations
Conference on Environment and Developmentsigned in Rio de Janeiro, Brazil. After the winning thecombat of local pollutant, the developed countries have more strength to devote into the fighting
against global environmental issues.
However, China is a developing country which its industrialization has not been completed. China’s
local pollution is becoming more and more serious, especially in recent years. Since year 2013, theair quality in China became even worse due to wide range of haze, which is mainly PM2.5. Besides
PM2.5 pollution, other environmental problems such as acid rain, water pollution, soil pollution,
food safety is still sever. China has to fight against local pollution and GHG emission simultaneously.
Therefore, the stress of China is much larger than developed countries and other developing
countries.
2.4.1.4 Difficulties in Economic Development
As china has stepped into high middle income countries, the difficulties of further development of its
economy is becoming even more difficult. According to the economics research result, there is aphenomenon called Middle Income Trap. It means that when a country reaches the level of middle
income, the former advantages (such as cheap labor cost) will be lost and new disadvantages (suchas the unequal dispatch of social wealth) will appear. Therefore, the nation’s economy will be stuckin the same level and could not further develop anymore. Brazil and South Africa had been stuck inthe middle income trap for a long time.
After 30 years of economic development and accumulation of social wealth, the gap between therich and the poor is becoming more and more obvious. Social problem has become more and more
serious in recent years. At the same time, the overcapacity of happens among half of industrial
sectors. According to the survey by National Development and Reform Commission, among all 39
industrial sectors in China, there are 21 sectors is in the status of overcapacity. In year 2013, theprofit of producing a ton of steel is only 0.84 RMB, which is not enough to buy a bottle of Coke Colain China. The income of industrial workers is influenced as well. China’s economic growth rate had
19decreased from 14.2% in year 2007 to 7.7% in year 2012. How to avoid the middle income trap is still
wait to be seen.
2.4.2 China’s low carbon development road in the future
Although there are great challenges in future development of China, China had decided to shift fromhigh carbon development road to low carbon development road. Detailed quantitative targets ofyear 2015 and 2020 are put forward.
2.4.2.1 Reducing CO2 emission density 40‐45% by year 2020
In year 2009, Chinese premier Wen Jiabao made a formal commitment of reducing unit CO2
emission per GDP by 40%‐45% by year 2020 compare to year 2005. This is regarded a binding goal
for China to design its social and economic development road. In the 11th five‐year period, China’s
unit CO2 emission per GDP had decreased about 21%. This is the first step of realizing the 2020
target. The design of China’s 12th five‐year plan (2011‐2015) is the second step, in which the CO2
reduction target was set to 17%. If the first two steps could be realized, then the goal of 13th five‐
year plan could be calculated. According to author’s calculation, if the 2020 reduction target is 40%,then the target of the 13th five‐year period will be about 8.5%; If the 2020 reduction target is 45%,then the target of the 13th five‐year period will be about 16.1%. That means the CO2 emission
intensity reduction target in the 13th five‐year will be 8.5%~16.1%, if the 12th five‐year CO2 emission
reduction target could be realized smoothly.
However, realizing China’s 12th five‐year CO2 emission reduction target is not easy. Mr. Xie Zhenhua,
Deputy Chairman of National Development and Reform Commission had express during the COP 19
conference that China had reduced its CO2 emission intensity by 28% from year 2005‐2012. Much
capital investment had been devoted into CO2 emission reduction. However, there is still a big gap
towards the 40%‐45% emission reduction target. In the future, the basis of emission reduction will
be larger, and there are less and less “low hanging fruits”. The difficulties will be much larger. He
further confirmed that although there is great difficulties, China will not revise the 2020 emission
reduction target, and do its best to get a better result.
2.4.2.2 CO2 emission in the long run
Nearly all estimations by research institutions showed that China will continue its CO2 emission
before year 2020 without any doubt. The question is: when will China peak its CO2 emission? At
present stage, no one can say for sure. According a report issued by Energy Research Institute of
National Development and Reform Commission in year 2009, China’s CO2 emission will continue togrow before year 2035. After year 2035, China’s emission may vary in different scenarios. In themost ideal scenario, if most of the emission by OECD countries could be reduced strongly withwidespread of CCS technology, China’s CO2 emission may reduce to the year 2005 level. In the worst
Energy Conservation scenario, the peaking period of CO2 in China will be very late, even later thanyear 2050. In the Low Carbon Scenario, China may begin to decrease its CO2 emission slowly after
year 2035 (see figure 10).

20

Figure 10. Long Term Emission Estimation of China (Unit: 100 Mil. ton of CO2)
Source: Energy Research Institute, China’s Low Carbon Development Pathways by 2050
It has to be noticed that compared with the reality, ERI’s estimation is still an ideal forecast. Actually,
the CO2 emission of year 2010 of China has reached 7710 million tons of CO2. This is 7% higher thanthe Energy Conservation Scenario in year 2010, which is the highest point in the figure.
2.4.2.3 How to promote CO2 emission further
As described above, China had been fighting hard for its CO2 emission reduction. Much effort weredone and the result is obvious. However, it could be noticed that almost all activities are dominatedby Chinese government system, including different ministries in the central government and all levelof government from different regions. A government dominate CO2 emission reduction activity has
its own benefit, such as more easy to get government commitment, quick kicking off, easy to getgovernment funding etc. However, it has its own defect: 1) the internal enthusiasm of enterprises
could not be fully motivated; 2) supervision of all key energy users requires huge amount of humanlabour and work, which is a heavy burden of government budget and reduce the efficiency of
government; 3) the risk of fake data and fake information reported from enterprises and basic
government might mislead the decision making. After several years implementation, the defect ofadministrative measures is becoming more obvious.
In order to further promote CO2 emission reduction in China, besides the administrative measures,
it is recommended to induce more market based measures in the next stage. This requires an in‐
depth reform of China’s energy pricing system and taxation system. Currently, energy pricing in
China could not reflect the supply and demand balance of the market, could not the scarce of local
resource depletion and could not reflect the economic externalities of energy resource. Energy
pricing reform, combined with taxation reform, including resource tax, CO2 emission tax etc., should
receive much emphasis in policy development. As a country shifting from planning economy towards
market economy, most officials are used to use administrative measures in policy development.
They are not familiar and confident to use market based measures. However, after more than five
years administrative policies, the marginal benefit of administrative policies are decreasing. There
are less and less “low hanging fruit” in administrative policy development. Therefore, more andmore market based policies should be adopted as soon as possible.
21

Conclusion(1) Although China is a developing country, it has become the largest energy consumer and CO2
emitter. Taking a low carbon development road is not only the reaction from international stress,
but also the internal demand of China’s own sustainable development.
(2) A series of efforts were made in China with the strong propulsion of Chinese government. Good
achievements were accomplished. From year 2005 to 2012, CO2 emission per GDP decreased 28%.
(3) There are four risks in CO2 emission reduction of China in the next stage, which are: fast growthof energy demand, coal dominant energy mix, double task of environment treatment, and step overthe middle income trap. As there are less and less “low hanging fruit”, its more and more difficult infurther emission reduction.
(4) Reducing CO2 emission intensity targets is regarded as a binding indicator for China’s low carbon
development before 2020. Long term emission reduction is still uncertain. Combined with current
administrative measures, China should adopt more market measures, such as pricing reform andcarbon tax, to further activate the internal enthusiastic of enterprises and the whole society.

References
1. Energy Research Institute, China’s Low Carbon Development Pathways by 2050, Science Press,2009
2. Jinjun Xue, China Annual Report of Low‐carbon Economic Development 2012, (eds.), Social
Science Academy Press (in Chinese and English), 2012.
3. BP，Statistical Review of World Energy 2013，http://www.bp.com/
4. IEA, Key World Energy Statistics, http:// www.iea.org/
5. World Bank, world bank data base, http://data.worldbank.org/
6. National Statistical Bureau of China, China Statistical Yearbook, China Statistic Press
7. National Statistical Bureau of China, China Energy Statistical Yearbook, China Statistic Press
8. National Development and Reform Commission of China, China's Policies and Actions for
Addressing Climate Change, 2013
9. National Development and Reform Commission of China, Working Scheme of GHG emission
control of the 12th five‐year plan22

10. National Development and Reform Commission of China, Energy Conservation and Emission
Reduction 12th five‐year Plan
11. Jiangzemin, Reflections of Energy Issue in China, Journal of Shanghai Jiaotong University
12. Wang Qingyi, Energy Data Collection 2012

Figure captions
Figure1. GDP and growth rate of China
Figure 2. Total Primary Energy Consumption and GDP Index of China
Figure 3. Energy consumption by sector
Figure 4. History of Industrial Energy consumption
Figure 5. Total Primary Energy Consumption and GDP Index of China
Figure 6. Consumption of non‐fossil energy in China
Figure 7. Comparison of TPEC per capita in China, OECD average and Japan
Figure 8. Comparison of TPEC per capita
Figure 9. Evolvement of energy mix in the world
Figure 10. Long Term Emission Estimation of China (Unit: 100 Mil. ton of CO2)

TablesTable 1 Total Primary Energy Consumption and Elasticity Index of China from 2000‐2012
Table 2 Energy Consumption Structure of China
Table 3 CO2 Emission Reduction Responsibility of Provinces in mainland China
Table 4 Target of Eliminating Backward Production Capability during 2011‐2015 (digested)
Table 5 technology penetration rate improvement in different industries in China

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