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China's Pathway Towards a Low Carbon Economy

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China's Pathway Towards a Low Carbon Economy China Council for International Cooperation on Environment and Development Task Force Report China’s Pathway Towards a Low Carbon Economy China Council for International Cooperation on Environment and Development 2009 Annual Meeting (2009.11.11-13) China’s Pathway Towards a Low Carbon Economy CCICED Policy Research Report 2009 CCICED 2009 Annual General Meeting November 11-13, 2009 I Members of the Task Force Co-chair*: Liu Shijin, Member of CCICED, Vice President of Development Research Center of the State Council Gordon Conway, Member of CCICED, Professor, Imperial College; former Chief Scientist of UK Department for International Development Bjorn Stigson, Member of CCICED, President of World Business Council for Sustainable Development Task Force Members*: Feng Fei, Director-General of the Industrial Economics Research Department, Development Research Center, the State Council Hu Angang, Director of Center for China Study, Tsinghua University Xia Guang, Director of Policy Research Center for Environment & Economy, Ministry of Environmental Protection Pan Jiahua, Director of Research Centre for Sustainable Development, Chinese Academy of Social Sciences Jiang Kejun, Research Fellow, Energy Research Institute of National Development & Reform Commission Tomas Kaberger, Director of Swedish Energy Agency Knut Alfsen, International Climate Change and Environment Research Institute, Norway Haw Kuang Lim, Executive Chairman of Shell China Mattia Romani/Melinda Robson, Climate Change Economist, UK Office of Climate Change Trevor Houser, Visiting Fellow, Peterson Institute for International Economics (until June 2009) Research Support Team: Shi Yaodong, Deputy Director of the Industrial Economics Research Department, Development Research Center, the State Council Liang Yangchun, Research Fellow of the Industrial Economics Research Department, Development Research Center, the State Council Wang Jinzhao, Associate Research Fellow of the Industrial Economics Research Department, Development Research Center, the State Council Wang Xiaoming, Associate Research Fellow of the Industrial Economics Research Department, Development Research Center, the State Council Wei Jigang, Associate Research Fellow of the Industrial Economics Research Department, Development Research Center, the State Council Xu Wei, Assistant Research Fellow of the Industrial Economics Research Department, Development Research Center, the State Council Hu Xiulian, Research Fellow, Energy Research Institute of National Development & Reform Commission II Liu Qiang, Research Fellow, Energy Research Institute of National Development & Reform Commission Zhuang Xin, Research Fellow, Energy Research Institute of National Development & Reform Commission Zhuang Guiyang, Research Fellow with Research Centre for Sustainable Development, Chinese Academy of Social Sciences Guan Qingyou, Research Fellow, Energy Economics Institute, China National Offshore Oil Corporation (CNOOC); the Post-Doctor with Center for China Study, Tsinghua University Bernice Lee, Research Director - Energy, Environment and Resource Governance, Chatham House Antony Froggatt, Senior Research Fellow, Chatham House Felix Preston, Research Fellow, Chatham House Willian Blyth, Associate Fellow, Chatham House Liu Xiaowei, Public Relations Director of Shell China Alexon Khor, General Manager, Future Fuels & CO2, Alliance, Shell International Petroleum Co., Ltd. Cho-Oon Khong Chief Political Analyst, Shell International BV Implementation agencies: The Industrial Economics Research Department, Development Research Center, the State Council Chatham House – Royal Institute of International Affairs, Energy, Environment and Development Programme Convener: Feng Fei, Director-General of the Industrial Economics Research Department, Development Research Center, the State Council Coordinators: Wang Jinzhao, Associate Research Fellow of the Industrial Economics Research Department, Development Research Center, the State Council Liang Yangchun, Research Fellow of the Industrial Economics Research Department, Development Research Center, the State Council Wang Guoqian, Climate Change Adviser, UK Department for International Development China Office Bernice Lee, Research Director - Energy, Environment and Resource Governance, Chatham House Philip Reuchlin, Personal Assistant to the President, World Business Council for Sustainable Development * Co-Chairs and Task Force members serve in their personal capacities III Acknowledgments: Financial support for research is provided by the China Council for International Cooperation on Environment and Development (CCICED), who also convened the Task Force. The Support from CCICED has enabled sufficient discussion, communication, and surveys among experts from China and internationally, which have served as the essential foundation of the research work. Special thanks to the Chief Advisers of CCICED Advisory Committee, Professor SHEN Guofang and Dr. Art Hanson, Leader of Chief Advisers‟ Support Team Dr. Ren Yong, and the CCICED Secretariat and support office in providing information and organization and coordination support. The Task Force extends cordial thanks to the CCICED. As part of the research process, eight discussion forums were held including three in Sweden, the United Kingdom, and Norway. Thanks to the hosts for organizing visits to local demonstration projects on low-carbon economy, relevant research units and government departments. Also thanks to the British Embassy in China who organized a small seminar following the completion of the first draft of the report to ensure expert inputs. We are honored to receive comments from Lord Nicolas Stern of the London School of Economics, Su Ming, deputy director of Research Institute of Fiscal Science of the Ministry of Finance, Professor He Jiankun and Professor Zhang Kunmin from Tsinghua University, Professor Cui Dapeng from the Chinese Academy of Social Sciences, and Tang Min, Deputy Secretary-General of China Development Research Foundation. IV Contents 0. INTRODUCTION 1 0.1. A low carbon economy: compatible with existing Chinese development concepts 2 0.2. Defining the low carbon economy 2 0.3. Overview of report 4 1. THE GLOBAL SHIFT TO A LOW CARBON ECONOMY 6 1.1. Business as usual: not an option 6 1.2. Policies and measures: ever more ambitious 13 1.3 Leadership from businesses 23 1.4 Capitalizing on innovation 25 2. THE NECESSITY AND URGENCY OF DEVELOPING A LOW CARBON ECONOMY IN CHINA 29 2.1 A low carbon economy: inevitable for China’s future development 30 2.2 Strategic objectives 35 2.3. Climate change: a threat to China’s development 37 2.4. The benefits to China of a low carbon economy 40 2.5. The rationale for immediate action 48 3. MEETING THE CHALLENGES AND OPPORTUNITIES FOR CHINA IN PURSUIT OF A LOW CARBON ECONOMY 53 3.1. Saving energy and reducing emissions 53 3.2. Opportunities for technological Innovation, transfer and deployment 59 3.3 Establishing a long-term effective mechanism and institutions 64 4. SCENARIO ANALYSIS OF A LOW CARBON ECONOMY 70 4. 1 Methodology 70 V 4.2 Scenario settings 74 4.3 Settings of technology parameters in the model 81 4.4 Energy Consumption, Emissions and Cost in Different Scenarios 83 5. A ROADMAP FOR CHINA’S LOW CARBON DEVELOPMENT 94 5.1. A major strategic choice for China 94 5.2. Strategic objectives for a low carbon economy 96 5.3. Five pillars for low carbon development 99 5.4. Promote innovation and application of low carbon technology, and improve the international competitiveness of key industries 116 6. POLICY RECOMMENDATIONS 120 6.1. Start the development of a low carbon economy as soon as possible 120 6.2. Reform energy pricing 121 6.3. Build a green tax system and increase public funding for the development of a low carbon economy 121 6.4. Using the market mechanism to promote the development of low carbon economy 123 6.5. Aggressively support technological innovation, diffusion and international cooperation 123 6.6. Improve legislation and regulations, strengthen the enforcement of laws and standards 124 6.7. Improve the quality of energy and carbon statistics and measurement 125 6.8. Include the requirements of the low carbon economy in urban planning and run demonstration projects 125 7. REFERENCES 127 8. APPENDIX 129 VI TABLES Table 1.1: Characteristics of various emissions trajectories to achieve stabilization of greenhouse gas concentrations ................................................................................................................................. 7 Table 1.2: Strategic actions for a low carbon economy – selected countries ................................ 13 Table 1.3: The climate change investment dimension of stimulus plans ...................................... 26 Table 2.1: Percentage of global carbon dioxide emissions from six major economies in the world‟s total, 1960–2030 ........................................................................................................................... 34 Table 2.2: An international comparison of per capita primary energy consumptiona 1820–2005 43 Table 2.3: Estimate of China‟s primary energy consumption,a 2005–2030 .................................. 47 Table 2.4: Overview of carbon trading market, 2004–2008 ......................................................... 51 Table 3.1: Barriers to the deployment of energy-efficient technologies and practices ................. 63 Table 4.1: The four scenarios: a description ................................................................................
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