19

Energy and CO2 Intensity Reduction Policies in China:
Targets and Implementation
Zhen JIN1*, Takeshi KURAMOCHI1 and Jusen ASUKA1,2
1

Climate Change Group, Institute for Global Environmental Strategies (IGES)
2108-11 Kamiyamaguchi, Hayama, Kanagawa 240-0115, Japan
2
Center for Northeast Asian Studies, Tohoku University
41 Kawauchi, Aoba-ku, Sendai, Miyagi 980-8576, Japan*e-mail: jin@iges.or.jp

Abstract
China announced it would decrease CO2 emission intensity per GDP by 17% by 2015 compared to 2010
levels in its 12th Five Year Plan (FYP12: 2011-2015). This paper assesses the implementation plan of the CO2
intensity target in the FYP12 by comparing it with the implementation of China’s energy intensity reduction
policy during the 11th Five Year Plan (FYP11: 2006-2010) period. While it is difficult to evaluate China’s
Cancun Pledge (CO2 intensity target for 2020), it can be generally agreed that the successful achievement of
the CO2 intensity target in the FYP12 will be crucial for meeting the Cancun Pledge.
To ensure the implementation of the target, the Chinese government applied a Target Responsibility
System (TRS) to the FYP12 CO2 intensity target. National targets are distributed to local governments andenterprises as mandatory targets and the TRS makes it clear which government bodies and personnel areresponsible for achieving the allocated target. Target achievement status is linked to personnel evaluation,with a possibility of punitive measures. China’s distinctive legal and political systems have enabled theintroduction of the TRS: the strong command and supervisory authority of the central government overprovincial governments, the strong binding force of the National Development Plan, and the party’s overall
control of personnel affairs.
The TRS played a crucial role in achieving energy intensity targets in the FYP11 period, but there were anumber of issues observed, such as the unreasonable allocation of targets to some provinces, illegal forced
power cuts by local governments as last-minute methods for achieving their targets, and uncertainty over thecredibility of target achievement results. Based on some of the problematic issues observed, China’s government has introduced various measures such as a more reasonable (perhaps scientifically based) target allocation process, an Energy Forecast and Early-Warning System and Fixed Asset Conservation Measures.
Key words: 12th Five Year Plan, Closure of Small Plants and Outdated Capacity Program, CO2 Intensity
Reduction Policy, energy-saving policy, Target Responsibility System, Top-10,000 program

1. Introduction
China is the largest CO2 emitter in the world today,
accounting for nearly 9 Gt CO2 in 2010 (Olivier et al.,2011). The Chinese economy is expected to grow further
in coming decades, and thus China’s contribution to CO2emissions reduction is crucial to climate change mitigation. In recent years, China has put “significant” effort
into minimizing its increase in CO2 emissions while
meeting its rapidly increasing energy demand and maintaining a rate of energy self-sufficiency. At the 16th
Conference of the Parties (COP16) to the United Nations
Framework Convention on Climate Change (UNFCCC)
in Cancun, Mexico, China made a pledge to reduce its
CO2 emission intensity per unit GDP by 40%-45% by
Global Environmental Research
17/2013: 19-28
printed in Japan

2020 compared to 2005 levels (hereafter, its mid-termtarget). To achieve the Cancun target, China set a targetof reducing its CO2 emissions intensity by 17% by 2015
compared to 2010 levels (hereafter, the 2015 CO2 intensity target) in its 12th Five Year Plan (hereafter, theFYP12 CO2 intensity target). To achieve the CO2 intensity target, the State Council announced in December
2012 a document (State Council Document No.41)
providing concrete measures by 2015. These are toachieve an energy conservation capacity of 300 million
tons of coal equivalent (tce); to reach a ratio of non-fossil
energy consumption to primary energy consumption of
11.4%; to reduce energy intensity per unit GDP by 16%;
to expland its forests by 12.5 million hectares; to increase
forest coverage to 21.66%, and to increase forest stock©2013 AIRIES

20

Z. JIN et al.

volume by 600 million m3. In particular, State Council
Document No.41 positioned the energy intensity target(16% reduction of energy intensity per unit GDP between
2010 and 2015, established by State Council Document
No.26 in 2011) as one of the key measures for achieving
the CO2 target.
To ensure implementation of the CO2 intensity target,
FYP12 introduced a Target Responsibility System (TRS)
which was adopted in State Council Document No.29.
Under the TRS, national targets are fragmented andallotted to local governments and enterprises as mandatory targets with measures to reward or punish thepersonnel in charge (limited to government-owned enterprises). A scheme similar to the TRS was previously
adopted as an energy-saving policy in the 11th Five Year
Plan (hereafter, the FYP11) and was carried over into the
FYP12.
Therefore, careful design and implementation ofenergy-saving policies as well as monitoring, reportingand verification (MRV) of policy impacts will be crucial
for achieving the target. With regard to the design ofenergy-saving policies, the allocation of CO2 and energy
intensity targets to provinces and lower levels of local
governments through the TRS will become important.
Many studies have emphasized that MRV is the key toeffective implementation of Chinese energy and CO2
policies, and recommendations have been made regarding effective MRV implementation (e.g., Teng et al.,2009; IGES, 2009; Bellevrat, 2012). However, only a few
studies have critically assessed the TRS from the perspective of a legal and political framework (Jin et al.,2011; Tamura, 2012). To date, there has not yet been any
in-depth assessment of the TRS regarding implementation of energy and CO2 policies.
The objective of this paper is to discuss China’s
energy and CO2 intensity targets in the FYP12 and toreview implementation of the TRS in the FYP11 for the
allocation of energy intensity reduction targets in order toobtain insights into policy recommendations for the
FYP12 and the 13th Five Year Plan (hereafter, the FYP13)(2016-2020) for effective achievement of the 2020 CO2emissions reduction target.
The questions this study aimed to answer are defined
as follows:• How does the literature evaluate the CO2 intensity
target in the FYP12 in the context of the Cancun
Pledge?
• How is the TRS legally and politically authorised?
• What are the measures in the TRS that drive local
governments toward achieving policy targets?
• What issues were observed for the TRS with regard toachieving the energy intensity target in the FYP11?
• What are potential options for improvement of the TRS
in the FYP12 and beyond, to achieve the 2020 CO2
intensity target?
The structure of this paper is as follows. Section 2
describes the ambitiousness of the CO2 intensity target in
the FYP12 and the importance of energy intensity
reduction in the context of climate change mitigation.

Section 3 analyses the implementation challenges
regarding energy and climate policies in China by
investigating how the national energy intensity target wasachieved in the FYP11. Section 4 describes some issues
observed regarding the energy intensity TRS in the
FYP11. Finally, conclusions and recommendations are
drawn in Section 5.

2. CO2 Intensity Reduction Targets in the
FYP12 in the Context of China’s Climate
Change Mitigation Efforts toward 2020
The CO2 intensity target in the FYP12 was developedin the context of achieving the 2020 CO2 intensity target
enshrined in the Cancun Pledge. It has been suggested
that the energy intensity target of the FYP12 has also
been set by working backwards from the 40% CO2
intensity reduction in 2020 compared to the 2005 level(Feng & Yuan, 2011).
It is internationally welcomed that China, the largest
CO2 emitting country in the world, has committed itself
to quantitative emissions reduction targets. However,
evaluating China’s Cancun Pledge on CO2 intensity targets is difficult. With regard to the level of ambition,
in-depth analyses seem to agree that the target is by nomeans an easy one to achieve (Stern & Jotzo, 2010;
Carraro & Tavoni, 2010). The argument that the 2020
CO2 intensity target is no different from businessas-usual (BAU) seems to be based on BAU projections
from the International Energy Agency (IEA) or the
Energy Information Administration (EIA) of the U.S.
Department of Energy (DOE), but these BAU projections
already incorporate significant investments in lowcarbon technologies (Carraro & Tavoni, 2010) that canhardly be considered BAU.
Nonetheless, China may surpass the Cancun Pledge if
the proposed policy measures prove to be effective. An
assessment by Climate Action Tracker (CAT) (2011)concluded that China will exceed the 2020 target if ‘itcontinues its efforts on energy savings and non-fossil
energy and economic growth continues to be as high as
predicted.’ Li (2012) also conducted calculations basedon the currently discussed ‘mid-long term roadmap’ andconcluded that all the proposed measures up to 2020 may
reduce CO2 intensity by 18.8% during the FYP12 period
and 47.5% by 2020 compared to the 2005 level if they are
all implemented effectively.
The successful achievement of the FYP12 CO2intensity target will likely be crucial if China is to meetthe 2020 CO2 intensity target of the Cancun Pledge. The
level of required effort up to 2020 is estimated based on
the historic emissions dataset and assumptions on future
GDP growth rates. However, there are questions over theaccuracy of the statistical data on historic emissions andthere is a wide range of estimates on future GDP growth
rates. The reduction in CO2 intensity during the FYP11
period was 15.3% based on the statistics from IEA, indicating that the required CO2 intensity reduction in the
FYP13 period would be as high as 15%-22% even if theEnergy and CO2 Intensity Reduction Policies in China

FYP12 target were achieved. According to the emissions
data from the National Bureau of Statistics (NBS), however, CO2 intensity was reduced by 21% in the FYP11
period. Assuming that the FYP12 target is achieved, therequired CO2 intensity reduction in the FYP13 period
would still be a high 8%-16%. In addition, the expected
slower GDP growth in the FYP13 period compared to the
FYP12 period may make CO2 intensity reduction evenmore difficult. Energy consumption generally does notincrease as fast as GDP, so higher GDP growth rates are
more desirable for achieving larger reductions in energy
and CO2 intensity, although they may lead to increases in
the absolute amount of energy consumption and CO2
emissions (CAT, 2011).
From the perspective of meeting the 2°C target
through global burden sharing, the Chinese 2020 CO2
intensity target is rated by CAT as ‘inadequate,’ indicating that China’s proposed emissions target is above theemissions range that would enable it to meet the 2°C
target (CAT, 2012). The GHG emissions level under the
Cancun Pledge is projected to be around 11-13 GtCO2e/yr,
depending on GDP growth assumptions, whereas a‘sufficient’ effort would require the 2020 emissions to be
kept below 11 GtCO2e/yr. The emissions ranges of thefour evaluation categories used in the CAT are based on
the modelling results from a number of studies that havecalculated country-specific emissions pathways undervarious global effort-sharing principles. However, thesereferenced studies were published in 2009 and 2010; they
may not have reflected the faster- han-expected GDP
growth observed in the last several years. The considerable impact of GDP growth assumptions on the projection of CO2 emissions has also been discussed in, e.g.,
Asuka et al. (2011) and Jiang (2011). Moreover, CAT
only evaluates the ambition level of pledges, but not thepolicy measures taken to achieve the pledged targets. As
described above, China may not only meet its Cancun
pledge but go beyond it (CAT, 2012; Li, 2012).
To summarize this section, while there are divergent
views on the ambition level and feasibility of China’s
2020 CO2 intensity target enshrined in the Cancun Pledge,
it can be generally agreed that the 17% CO2 intensity
reduction target for the FYP12 is in any case a minimum
requirement that China must achieve in order to meet the
Cancun Pledge. Therefore, it is most important for China
effectively to implement key policy measures that would
lead to significant CO2 emissions reductions up to 2020.
In particular, the effective implementation of energy
saving measures will be crucial, as this will account for alarge part of the expected CO2 emissions reduction.

3. Analysis of the Implementation of Energy
Intensity Reduction Policy During the
FYP11 Period
This section analyses the implementation of energy
intensity reduction policy during the FYP11 period, fromthe planning stages to the end results.

21

3.1 Description and institutional background of the
TRS
The TRS was established through State Council
Document No. 29 in 2006 to allocate nine mandatory
national targets set in the legally binding FYP11 to all
local governments. The national targets are first translated into provincial targets, then further subdivided andredistributed by provincial governments to their respective lower branches. The central government places particular emphasis on energy-saving and reducing emissions of major pollutants, and both of these policies havebeen combined into a single policy that was adopted
starting in 2007 with State Council Document No. 15
issued on 23 May 2007. Achievement of the energysaving and emissions reductions targets, in particular, notonly affects personnel evaluation by the local government officials in charge, but failure to achieve mandated
targets can also result in punitive measures.
There are three main reasons for adopting the TRS
method to ensure policy implementation: (1) the strong
command and supervisory authority of the central
government over provincial governments, (2) the strong
binding force of the national five year plans, and (3) the
overall control over personnel affairs by the Communist
Party of China (CPC).
3.1.1 Strong command and supervisory authority of
the central government over provincial
governments
There is no regional or local autonomy law in China.
Hence, there is no legislation that defines the division ofadministrative responsibilities between central and local
governments or the role of central government in local
matters. Further, provincial governments are positioned
as administrative bodies complying with the unified command and supervision of the State Council, and a clear
command and supervision relationship is establishedbetween the central and regional governments (Constitution of the People’s Republic of China and Article 55 of
the Organization Law for Local People’s Congresses andLocal People’s Governments).
3.1.2 Strong binding force of the national FYP
The National Five Year Plan (FYP) is legally andstrongly binding for local governments and they are
obligated to comply with the targets allocated by the statecouncil. China’s Constitution gives the State Council theauthority to draw up the FYP for national economic andsocial development and to implement it (Article 89,
Clause 5). Regarding implementation of the plan, theState Council has the authority to adopt administrative
measures, enact administrative rules and regulations, andissue decisions and orders (Constitution, Article 89,
Clause 1; Legislative Law, Article 56, Clause 2).
The local governments are responsible for implementing the National FYP (Article 59, Clause 5 of theOrganization Law). Moreover, higher branches ofgovernment can reprimand local government heads forrefusing to carry out their orders (Ordinance on Dealing

Z. JIN et al.

22with Administrative Body Public Servants [State Council
Order], Article 19, Clauses 34-36: reprimands, warnings,
demotions, suspensions, dismissals).
3.1.3 Overall control of personnel affairs by theCommunist Party of China
Public servant personnel affairs in China, in particularpersonnel at the managerial level (e.g., province heads,
mayors, bureau directors, section heads, etc.), are uniformly controlled by the CPC. In other words, authority
to punish (except for removal from office) administrative
heads lies with the higher branches of government, but
the CPC also has de facto authority to appoint, promote
and transfer personnel to other posts (e.g., from an administrative body to a legislative body) after completionof term of office. For example, provincial heads aresupposedly elected by regional people’s congresses, but
the authority to recommend individuals for these posts
lies with the provincial party committees and requires theapproval of senior officials (members of the Central
Committee of the CPC) (see Rules for Selecting Senior
Party Officials, Article 8 and subseqent articles). The
same process applies to the selection of central government leaders when there is a leadership changeover.
3.2 Target setting process
3.2.1 Further subdivision of the mandatory energy
intensity targets
The decision-making process to determine energy
intensity targets at the local government level can be
explained as follows. Based on State Council Document
No. 29 granting the state the authority to set targets for
local governments, the National Development andReform Commission (NDRC) draws up reduction plans
for the various provincial governments. As shown in
Table 1, the energy-saving targets are differentiatedamong local governments; for example, there is a morethan 2.5-fold difference between the lowest and highest

targets.
The target figures can be roughly divided into those
self-reported by provincial governments and those
calculated by the central government’s policy-making
departments. If the targets declared by provincial
governments are higher than the nationwide averages,
they are allowed to stand as regional targets. If, on theother hand, the targets declared are lower than thenationwide averages, or no targets have been declared to
begin with, targets are worked out in consultation withthe local governments based on regional developmentlevels, industrial structure, total energy consumption, percapita energy consumption, energy self-sufficiency andso forth and decided upon after the NDRC obtains theapproval of the State Council.
There is some flexibility, however, in target setting,taking into consideration the wishes of local governments,
economic conditions, and other factors.
3.2.2 Responsibility of provincial governments forachieving the energy intensity target
Provincial governments are responsible for the implementation of energy policies and further distributionof the targets to lower branches of local government (e.g.,city or prefectural government or administrative region),and energy-consuming enterprises within their jurisdictions (State Council Document No. 29).
To clarify responsibility with regard to energy saving
activities for enterprises, energy-consuming enterprises
are required to submit a pledge to provincial governments. In the case of state-run enterprises that are included in the “Top-1000 energy-consuming enterprises
program” (hereafter the Top-1000 Program), they do not
submit their pledges to provincial governments, but to the
NDRC. Management and supervision of these enterprises
are carried out by the provincial governments based on
authorisation from the State Council (Fig. 1).
The Top-1000 program has aimed to achieve energy-

State Council
Authorisation

Specification

Local government targets
Supervision& manage‐ment
Provincial leveltargetState‐runenterprises:
under thejurisdiction of thestate

Prefecture leveltargetCounty leveltargetTownship leveltargetTargetallocation
Supervision&
Manage‐ment

Otherenterprises:
under thejurisdiction of
local
governments

Targetallocation

Closure of Small Plant
and Outdated Capacity(CSPOC) Program
Cement: 250Mt
Iron: 100Mt
Steel‐making: 55Mt
Electricity : 50Gw
Pulp and paper: 6.6Mt
Alcohol: 1.6Mt
etc.

Top‐1,000 Program:
1. Support local
governments achieving
their allocated targets
2. CSPOC as main measure

Fig. 1 Schematic of the target allocation process and the TRS for the Top-1000 programwith the Closure of Small Plants and Outdated Capacity (CSPOC) program.

Energy and CO2 Intensity Reduction Policies in China

saving of 100 million tce, and has targeted the 998 largest
energy-consuming enterprises across nine sectors withannual energy consumption of larger than 180,000 tce.
The 998 enterprises together accounted, in 2006, for
one-third of China’s total energy use and almost half of
its industrial energy use, and thus the Top-1000 program
was considered to be a key measure for achieving thenational energy intensity target in the FYP11 (for details,see, e.g., Taylor et al., 2010 and Price et al., 2011).
Many enterprises in the Top-1000 program are required to achieve their allocated targets not only by theprovincial government in which they are located, but also
by the central government under the Closure of small
plants and outdated capacity program (hereafter, the
CSPOC program – also known as the “adjusting industrial organizations policy” in China) that includes fourteen high energy-consumption industries such as electric
power and steel making. It is estimated that the closures
will save 118 million tce (State Council Decision No.15).
Also, management and supervision of the CSPOC program is carried out by provincial governments.
Provincial governments are also responsible forestablishing a statistical system to track progress ofenergy saving efforts in their jurisdictions and reporting
the statistics regularly to the central government (StateCouncil Document No. 29). Technical standards fordeveloping a statistical system and evaluation rules fortarget achievement are detailed in State Council Document No.36 promulgated in 2007.
3.3 Measures for ensuring effective policy
implementation
For effective implementation of energy-saving policy,
provincial governments are responsible for creating apersonnel evaluation system that links the status of target
achievement with both rewarding and punitive measures
which have previously been introduced in central andprovincial governments.
The officials in charge of energy policy implementation in either the government (this includes chiefs andvice-chiefs of provinces, cities, prefectures, districts andcounties) or governing agencies (e.g., local development
councils and environment bureaus) can lose their eligibility status for commendation, such as year-end awards
or group or personal honorary titles, if they fail to meettheir energy-saving targets, notwithstanding their highoverall evaluation scores (the so-called One-Vote Veto
System). This also applies to the heads of state-run
enterprises and local government companies in the
Top-1000 program. In addition, false reporting of statistics may lead to dismissal of the responsible personnel
from their offices.
Additionally, local governments with a poor record
may be penalised by having restrictions placed oninvestment projects or regional infrastructural support
projects. Applications for approval of business plans may
be refused (in the case of applications where the central
government holds approval authority) for investment
projects in the area under jurisdiction or applications for23

environmental assessments (Article 16 of the Environmental Assessment Act). Furthermore, central government support for regional infrastructure projects may be
cut back (State Council Document No.29). China has asystem for evaluating whether investment projects (including foreign investment) match the country’s industrial policy. This permit approval system is based on StateCouncil Document No.29 and the “Interim Proceduresfor the Examination and Approval of Enterprise Investment Projects” order of the NDRC, which is not a system
under the law, but reviews items to be adjudicated fromthe viewpoint of securing the right of corporations tomake decisions, and redistributes adjudication authority
between the central and local governments. Such penalties affect regional economic growth considerably andtherefore have a strong impact on the political careerprospects of local government leaders.
3.4 Provincial energy intensity results at the end of
the FYP11
Table 1 presents the provincial energy intensity targets and results for the FYP11 period. National statistics
show that the national energy intensity declined by
19.1% (NBS, 2011) slightly short of the target, with all
regions except Xinjiang meeting their targets. The announcement from the NBS about the top ten provinces
that surpassed their allocated targets indicates that the
Chinese government places importance on how much theprovinces exceed their respective targets. At the time,
many other provinces barely achieved their respective
targets; 10 out of 41 provinces and cities exceeded theirtargets by less than 0.1%-points.
A number of important factors affected the nationalenergy intensity reduction result. Most provinces andcities were found to achieve their energy intensity target
mainly because the economic growth under the 11th FYP
was far higher than expected (Teng, 2012); energy consumption did not increase as fast as economic growth,thus leading to lower-than-expected energy intensity. On
the other hand, revision of the GDP and energy consumption data for the base year, i.e., 2005, led to thecountry as a whole falling short of the national target,
although almost all provinces achieved their respective
targets (Teng, 2012). Moreover, it is also indicated thatthe economic stimulus plan implemented in 2008-2009
following the global economic crisis has impeded energy
saving efforts (Ma, 2011).
3.5 Issues regarding the local energy intensity target
allocation and the TRS in the FYP11
Although the Chinese government claims that theimplementation of energy intensity reduction policy
measures was successful, in the authors’ view there were
three major issues with regard to the TRS in the FYP11.
The first issue related to the provincial target allocation.
The provincial targets were more or less based on theequal- numbers principle, which failed to reflect disparities among provinces such as their levels of economic
and social development, economic structure and techno-

Z. JIN et al.

24

Table 1 Energy intensity targets in the 11th and 12th Five Year Plans and the results for the 11th Five Year Plan. Numbers
in bold represent provincial targets higher than the national target values.

Province/
regionNational target
Beijing
Tianjin
Hebei
ShanxiNeimenggu
Liaoning
Jilin
Heilongjiang
Shanghai
Jiangsu
Zhejiang
Anhui
FujianJiangxi
Shandong
Henan
Hubei
Hunan
Guangdong
Guangxi
HainanChongqing
Sichuan
Guizhou
YunnanXizangShaanxi
Gansu
Qinghai
Ningxia
Xinjiang

11th FYP (2006-2010)
2010
2005
Target vs.2005
Intensity(% )(tce/10,000RMB)
1.22
-20
0.8
-20
1.11
-20
1.96
-20
2.95
-22
(originally -25)
2.48
-22
(originally -25)
1.83
-20
1.65
-22
(originally -30)
1.46
-20
0.88
-20
0.92
-20
0.9
-20
1.21
-20
0.94
-16
1.06
-20
1.28
-22
1.38
-20
1.51
-20
1.4
-20
0.79
-16
1.22
-15
0.92
-12
1.42
-20
1.53
-20
3.25
-20
1.73
-17
1.45
-12
1.48
-20
2.26
-20
3.07
-17
4.14
-20
2.11
-20

Actualreduction
(％ )
-19.1
-26.59-21-20.11

12th FYP (2011-2015)
2015
2015
Target vs.2005
Target vs.2010
(%)
(% )
-16
-32
-17
-39.1
-18
-35.2
-17
-33.7

-22.66-16-35-22.62-15-34.2-20.01-17-33.6-22.04-16-34.5-20.79-20-20.45-20.01-20.36-16.45-20.04-22.09-20.12-21.67-20.43-16.42-15.22-12.14-20.95-20.31-20.16-17.41-12-20.25-20.26-17.04-20.09
-8.91

-16
-18
-18
-18
-16
-16
-16
-17
-16
-16
-16
-18
-15
-10
-16
-16
-15
-15
-10
-16
-15
-10
-15
-10

-33.5
-34.4
-34.8
-34.4
-33.1
-29.8
-32.8
-35.3
-32.9
-34.2
-33.2
-31.5
-27.9
-20.9
-33.6
-33.1
-32.1
-29.8
-20.8
-33
-32.2
-25.3
-32.1
-18

Source: State Council Document No.94 (2006),NBS (2011),State Council Document No.26 (2011)

logical performance (Teng, 2012). In addition, because
neither the NDRC nor provinces realized the potential
impacts of such targets, the NDRC did not object to extremely ambitious targets proposed by the provinces atthe start of the FYP11 (Feng & Yuan, 2011). As seen in
Table 1, there are three provinces (Shanxi, Neimenggu
and Jilin) that readjusted their initial targets during the
FYP11. For these provinces, mid-period evaluations in2008 indicated that the original targets were too ambitious to achieve. Nevertheless, the adjusted targets werestill higher than 20% (Feng & Yuan, 2011). The unreasonable target allocation described above may have put
some local governments with unfeasible targets under
extreme pressure under the TRS. Xie Zhenhua, theDeputy Director-General of the NDRC admitted that theindividual targets assigned to provincial governments in
the FYP11 may not have weighed relevant local con-ditions adequately in September 2010 (China Net, 2011).
In other words, it is necessary to improve the target
allocation process so as to prevent excessively ambitious
targets (Feng & Yuan, 2011).
The second issue concerns the last-minute measurestaken by some provinces to achieve their energy intensity
targets. According to domestic news reports, in 2010, thefinal year of the FYP11, there were many cases of local
authorities taking illegal last-minute measures such as
cutting off power to meet energy saving targets (Power.
IN-EN.com, 2012). Such incidents were a result of
unreasonable target allocation and an increase in energy
consumption due to the economic stimulus plan of
2008-2009. These last-minute measures caused majorsocial problems that the CPC’s internet newspaper
People’s Daily set up a site inviting readers to report such
incidents, and by the end of 2010, more than 1,000 mes-

Energy and CO2 Intensity Reduction Policies in China

sages related to this matter had been received (People’s
Daily Online, 2010). To resolve the problem, the StateCouncil issued an emergency decision forbidding illegal
and unwarranted power interruptions for the purpose of
meeting the energy policy targets. This demonstrates that
local government leaders are under strong pressure tomeet their targets. Responding to public anger over themeasures, Zhang Ping, the Chair of the NDRC made apublic apology on March 6, 2011, admitting that theinstitution had made errors due to a lack of experience(Feng & Yuan, 2011).
The third issue concerns the credibility of target
achievement. The National Audit Office (NAO) conducted audit investigations on the reporting of energy
conservation and emissions reduction between 2007 and2009 for power, steel and cement companies in 20 provinces. The finding showed that, as of the end of 2009,
eight power generation companies (total 492.5 megawatt
capacity), 121 steel companies (total 23.479 million tonnes
iron production capacity), and 54 cement companies(total 9.1555 million tonnes cement production capacity)
made overstatements on the shutdown of small andinefficient facilities under the CSPOC program (NAO,
2011). Considering that the audit investigations wereconducted in only 20 provinces, there are probably many
more companies that violated the reporting regulations
across the country. Not only do uncertainties about thecredibility of the target achievement remain, these audit
results also indicate that the TRS may not be functioning
as it is expected to be.
Although the TRS played a crucially important role inmeeting the energy intensity target of the FYP11, there
were some shortcomings within the implementation of
the TRS during the FPY11. In order to make implementation of the TRS more efficient and smooth, it will be11th FYP (2006-2010)

Target higher
than 20%

Target lower
than 20%

important to make it more predictable in the beginningstages and give it an effective monitoring mechanism.
In addition, the TRS is a top-down regulatory
mechanism and exclusively focused on the most energy
intensive and traditional sectors. As some have argued,
the same policy framework to reduce energy intensitythat was adopted in virtually all the provinces, such as the
CSPOC program, did not fully take into account thedifferences among provinces, so they may not always
have been cost-effective (Teng, 2012). Therefore, it
seems that a more flexible mechanism needs to be introduced to complement the TRS, such as creating a market
for energy-saving target certificates among local governments.

4. Framework for Executing Energy and CO2
Intensity Targets in the FYP12
4.1 Target setting process
Compared to the FYP11, some improvements havebeen made in the implementation of the TRS in the
FYP12. Firstly, for TRS target allocation during the termof each FYP, a three-stage process is used to allocate
provincial-level targets (Feng & Yuan, 2011). Provincial
governments initially submit their proposed target to thecentral government and the NDRC responds with an
adjusted target. This adjustment routine is then repeated.
Finally, the provinces submit a third figure, which is
examined and approved by the National People’s
Congress (NPC) before being announced as part of official provincial tasks. This process has been improved for
the FYP12 so that there is increased coordination
between the central and local government compared with
the TRS process in the FYP11, and also intervention by
the NPC in the target allocation process (Fig. 2).
12th FYP (2011-2015)
Approval of
the State
CouncilApproval of the State Council②Submission

25③Submissionof the NDRC
decision

National
People’s
Congress⑦Approvalby the NPC③Decisionby the NDRC

⑥Submission

NDRC②Adjustedtarget④Readjusted
targetNDRC①Submission

Local
Development and Reform
Commission
Adjustment

Local government③2nd
submission①1st
submission⑤Finalsubmission

Local
Development and Reform
Commission
Adjustment

Local government

Fig. 2 Changes in the provincial target setting process between the 11th and 12th Five Year Plans.

26

Z. JIN et al.

The methods of target setting have also been improved. The Chinese government is trying to use a morescientific methodology to achieve an equitable distribution of targets. In recent years, many groups have evaluated their experience in the 11th FYP and conductedanalyses for a more reasonable allocation of provincial
targets in the 12th FYP. At the provincial level, local
Development and Reform Commissions (DRCs) andEconomic and Trade Commissions (ETCs) have beenworking with local universities to recommend specifictargets and their own methodology and criteria (Ohshita
et al., 2011). The US Lawrence Berkeley National
Laboratory (LBNL), in cooperation with China’s Energy
Research Institute (ERI), has also developed a sector-based target allocation methodology, which takes into
account provincial circumstances (e.g., GDP, population,
economic structure and industrial energy intensity).
Table 1 shows the provincial energy intensity targets in
the FYP12. While an overall goal to cut energy-intensity(energy consumed per unit of GDP) by 16% was set for
the nation, provincial targets have been adjusted up or
down to suit local conditions. Provinces are indicated forclassification into four groups for target differentiation:
coastal developed, developed, central and western (Teng,2012), while five different target values are observed(Table 1).
An LBNL study (Ohshita & Price, 2011) compared
the draft provincial targets of the Chinese government
with the allocation results of three scenarios that they
investigated in Ohshita et al. (2011). The results indicatethat the draft official targets are a mix of three scenarios.
It is also mentioned that the draft official targets have atighter range of targets than the three scenarios. These
results suggest that the draft official targets are acompromise between political negotiations and the consideration of differences in energy and economic
circumstances among provinces.
It should, however, be noted that the Chinese
government has not disclosed the energy intensity
reduction at the national level when the provincial targets
are added up. A recent study (Guan et al., 2012) showsthat there is a 1.4 gigatonne CO2 emissions gap between
the emissions data from the NBS and the sum of emissions data from the statistical departments at provincial
and county levels. Such a large uncertainty in official
energy and emissions data raises major concerns as towhether the achievement of provincial targets would leadto the achievement of national targets.
4.2 Measures for ensuring system implementation
Another improvement under the FYP12 is that the
TRS will be strengthened to meet the energy and CO2
intensity targets. There are several differences comparedto the TRS in the FYP11. The new TRS for the control of
total energy consumption is implemented in a way that
ensures whole-process monitoring. The energy control
TRS has been expected to play an important role inproviding predictability of the energy-saving TRS administration.

Its new role will be enabled through the Energy
Forecast and Early-Warning System (hereafter, EarlyWarning System) and Provisional Measures on theAssessment and Examination of Energy Conservation of
Fixed Asset Investment Projects (hereafter, Fixed Asset
Conservation Measures). The Early-Warning Systemaims to grasp every region’s energy consumption in atimely manner and then demand that each local government take prompt action to remediate over-consumption(State Council No.26). The Fixed Asset Conservation
Measures issued in September 2010 (Administrative
Rule of NDRC, 2010) require entities considering an
investment in fixed assets to perform an energy conservation assessment prior to applying for project approval(Grobowski et al., 2010). The energy conservationassessment is allowed to be made more stringent inprovinces and other lower branch governments whereenergy conservation is projected by the Early-Warning
System to be more difficult.
The third improvement is that the “Top 10,000
Energy-Consuming Enterprises Program” (hereafter theTop-10,000 Program) was implemented from 2012,
aiming to promote an effect framework for achieving the2015 energy intensity targets. The Top-10,000 Program
maintains a similar framework to the previous Top-1000
program as described above, but there are some differences. Firstly, the target entities have been expanded tomore than 15,950, covering a wide range of sectors, suchas the manufacturing industry and transportation as well
as service and commercial sectors (hotels, restaurants,
department stores, universities). Secondly, the project hasestablished an energy-saving target of 250 million tce,
2.5 times larger than that of the Top-1000 program.
Moreover, most cheap, quick energy-saving measures
such as the CSPOC program have exhausted their potential over the last five years, and there is now less leeway
for shutting down out-dated facilities (Feng & Yuan,2011), so enterprises need to improve their energy-saving
technologies, energy management skills, etc., further.
This is expected to promote an energy efficient market. In
fact, the Chinese government has been considering the
introduction of a national carbon credit market or
national energy-saving credit market to provide incentives to various stakeholders (State Council Document
No.41).
The final improvement noted is that the Chinese
government has been considering introducing the Total
Energy Consumption Control Program that was plannedin State Council Document No. 26 in 2011. This was
mentioned in the Report on the Work of the Government
delivered by Premier Wen Jiabao at the Fifth Session of
the Eleventh National People's Congress on March 5,
2012. In this program, an energy consumption cap of
about 4.1 billion tce has been introduced through the TRS.
If it becomes established, it will mean that China will
create an energy-saving certificate market under the new
TRS system.

Energy and CO2 Intensity Reduction Policies in China

27

5. Conclusions and Recommendations

References:

Irrespective of its level of ambition, China’s CO2
intensity target for 2020 is widely considered to be challenging. Meeting the target and putting the country on
track to achieve a 2°C target requires not only ambitious
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Acknowledgments
This research was supported by the Environment
Research and Technology Development Fund (S-6-1) of
the Ministry of the Environment, Japan.

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Zhen JIN
Zhen JIN is an Associate Researcher with the
Climate Change Group at IGES. His researchinterests cover various aspects of low-carbon city
policies, especially energy-saving policies in
China and eco-friendly building policies in Japan.
His areas of specialization are administrative law
and environmental law, and he obtained his
doctorate from the Law Department of Kyoto University in March 2009.

Takeshi KURAMOCHI
Takeshi KURAMOCHI is a Climate Policy Researcher at the Institute for Global Environmental
Strategies (IGES), where he conducts a wide
range of research activities on energy and climate
policies, from techno-economic analyses ofgreenhouse gas mitigation options to assessmentsof climate finance flows to developing countries.
He holds a B.Eng. degree from the University of Tokyo (Japan) and M.Sc.
and Ph.D. degrees from Utrecht University (the Netherlands).

Jusen ASUKA
Dr. Jusen ASUKA is a Professor at the Center for
Northeast Asian Studies, Tohoku University,
Sendai, Japan. He also works for the Institute for
Global Environmental Strategies (IGES) in
Hayama, Japan, as Director of the Climate
Change Division. He holds a Ph.D. from the
Graduate School of Engineering, Research Center
for Advanced Science and Technology, the University of Tokyo; an MBAfrom INSEAD; and an M.S. from the Graduate School of Agriculture, theUniversity of Tokyo. He was a Visiting Associate Professor at the Instituteof Economic Research, Kyoto University, Kyoto, Japan, and SeniorResearcher of the Energy System Group, Economic-Social ResearchInstitute, Central Research Institute of Electric Power Industry (CRIEPI).
His primary areas of interest are energy policy, climate policy andinternational environmental/energy cooperation. He is regularly involvedin expert networks as well as policy making on energy/climate policy
issues.

(Received 5 July 2012, Accepted 6 December 2012)