An important sign

The new targets for renewables, greenhouse gas emissions and energy efficiency all matter. The targets for the growth of renewables are both ambitious and realistic. By 2015, their share of primary energy consumption is to increase from the current 8.3 % to 11.4 %. Some of the old plan’s targets were actually surpassed. At the end of 2010, China, with 44.73 gigawatts, had installed more wind capacity than the USA.

The new five-year plan includes China’s first carbon reduction target. Carbon intensity (carbon emissions per unit of economic output) is to drop by 17 % from 2010 to 2015. That is in line with the overriding target that the Chinese government reported to the UNFCCC in January 2010. At the time, it stated it would reduce carbon intensity by 40 to 45 % from 2005 to 2020. By mentioning a related target in the five-year plan, the Chinese government has turned its international pledge into national policy. In doing so, China is once again a step ahead of the US.

Nonetheless, China’s greenhouse gas emissions will continue to increase in absolute terms. Its tremendous growth will outstrip emissions reductions. It is not yet clear, moreover, how the nuclear disaster in Fukushima will lead China to reassess its plans for nuclear power. So far, the Chinese government was in favour of building nuclear reactors because they do not entail significant carbon emissions.

China’s efforts to boost energy efficiency, however, are quite modest. The new target is for energy intensity (energy consumption per unit of economic output) to drop by 16 %. One reason is probably that the energy efficiency target in the past five-year plan was only reached thanks to absurd means. The plan was to reduce energy intensity by 20 %, and when that looked beyond reach in early 2010, Premier Wen ­Jiabao demanded swift action; 2,000 old, inefficient plants were closed. Overzealous provincial governments even cut the ­power supply to hospitals without further ado.

In the end, energy intensity dropped by 19.1 %. Energy efficiency can therefore no longer be easily improved in China. The low-hanging fruit was already picked in the last five-year period.

Mere regulation, moreover, will not take the country much further. Additional energy savings will require structural reforms. Indeed, the Chinese government intends to rely more on market instruments. Plans for a carbon tax and pilot projects for emissions trading are already being discussed. It remains to be seen how effective such market-based instruments will prove in a system that is still making the transition from a planned to a market economy.

Finally, China’s new five-year plan will make a difference in the UNFCCC negotiations on the monitoring, reporting and verification (MRV) of national climate protection policies. After all, China’s new policy requires authorities at the local, provincial and national level to set up a carbon monitoring system. China will thus gain crucial experience in collecting and analysing greenhouse gas data, and Chinese climate protection will become more transparent.

Overall, China’s new five-year plan points in the right direction. The government is promoting low-carbon technologies, even though its targets are not very ambitious. Experience tells us, moreover, that not all goals that are spelled out in five-year plans eventually materialise. For the sake of climate protection, one must hope that competition in eco-friendly markets will indeed lead to greenhouse gas reductions as stipulated in the five-year plan. An international climate agreement in the UNFCCC context would certainly contribute to making that happen.