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China issued top-level guidance on the country's work to
achieve carbon peak and neutrality
On 24 October, the Central Committee of the Communist Party of
China (CPC) and the State Council made public the Opinion on
Completely, Accurately, and Comprehensively Implementing New
Development Concept and Achieving Carbon Peak and Carbon Neutrality
(the Opinion). Two days after the Opinion was made public, the
State Council issued the Action Plan for Carbon Peaking Before 2030
(the Action Plan). The two documents officially kick-start the
establishment of China's climate policy framework "1+N," with the
former document representing the overarching "1", and the latter
leading the "N" series of forthcoming sectoral policy documents.
While the Opinion addresses both the 2030 carbon peak and the 2060
carbon neutrality goals, the Action Plan specifically focuses on
plans to reach carbon peak before 2030.
Both documents stressed that decarbonization will be pursued
with economic development and energy supply security taken into
full consideration.
Energy system transformation remains the core of China's
decarbonization strategy
Energy-related targets listed in these two policy documents
primarily concern the carbon peak goal before 2030 and mostly
reiterate previously announced ones, including the share of
non-fossil fuels in the primary energy mix, reduction of energy
consumption per unit of GDP, and reduction of carbon emissions per
unit of GDP. Hitting these targets would not require much of a
paradigm shift beyond the progressive acceleration of the same
development trajectory that the country has already been
on—thanks to its broader economic and energy transition
strategy applied from a decade ago.
Controlling coal consumption and replacing coal-fired power
capacity with renewables remains the key pathway
The Action Plan sets an overarching target to tightly and
reasonably control coal consumption growth over the 14th Five-Year
Plan (FYP) and gradually decrease it in the 15th FYP. This sets the
policy tone for coal in the next decade to come and sends out an
important message that China will not haste to reduce coal
consumption in absolute terms until after 2025, in recognition that
coal is still an important source of energy critical for energy
supply security at the current stage.
China's primary focus in coal-fired power control in the next
decade is to strictly control new capacity additions, accelerate
the retrofit of existing coal-fired power generation fleet for
energy efficiency improvement, combined heat and power supply, and
flexibility service provision, as well as to gradually idle
outdated and inefficient plants.
According to the Action Plan, China will continue to deploy both
utility-scale and distributed solar and wind power at scale. It
will selectively develop bi omass power in suitable areas and
support research on the development of alternative renewables such
as geothermal and tidal energy. It will continue relying on a
renewable portfolio standard (RPS) scheme. It will bring the total
installed capacity of wind and solar to at least 1,200 GW by 2030,
reaffirming a target first announced by President Xi at the Climate
Ambition Summit last December.
In addition to renewables, hydro and nuclear power will continue
to be developed to further reduce coal reliance, while energy
storage will grow to enhance the flexibility of the
renewables-centered power system. Other key low-carbon
technologies, including hydrogen and carbon capture and storage
(CCS), will receive enhanced research and development support. The
government on the other hand calls for an "orderly" growth of gas
consumption.
Energy efficiency improvement is the most prioritized
demand-side decarbonization strategy
Energy efficiency improvement will unleash significant emissions
reduction potential, with the added benefit of energy cost savings
for end users. The Action Plan makes it explicit that China's
"dual-control" measures, which impose annual targets on energy
intensity reduction and total energy consumption, will remain a
primary policy tool to help meet the country's carbon pledges
through the strong synergy between energy efficiency improvement
and emission reduction.
Energy efficiency improvement will also be a critical lever to
drive industrial upgrade and restructuring. China will increasingly
use energy efficiency benchmarks and standards to back force
industrial upgrade and restructuring to facilitate the low-carbon
reconfiguration of the broader economy.
Conserving and enhancing nature-based carbon sinks is
attached a high level of strategic importance
China will improve its nature-based carbon sink potential both
through the conservation of existing carbon sinks as well as
through the enhancement of carbon sinks through afforestation,
reforestation, avoided deforestation, and damage restoration. This
echoes on an even higher strategic level with China's macro
development framework of what President Xi phrases as ecological
civilization, a philosophy that roots the economic development upon
environmental sustainability and nature preservation.
The Action Plan calls for the establishment of compensation
mechanisms for nature-based carbon sink programs and touches upon
their participation in the national emissions trading scheme (ETS).
This implies that nature-based carbon sink programs will likely
begin to have a much larger presence in the Chinese Certified
Emissions Reduction (CCER) market once the government reopens the
application.
Posted 25 November 2021 by Lara Dong, Senior Director, Greater China Power and Renewables, S&P Global Commodity Insights and
Xiaonan Feng, Senior Research Analyst, Climate and Sustainability Group, IHS Markit
