Alun GuInstitute of Energy, Environment and Economy

Tsinghua University

Marrakech 2016

Co-benefits of GHG Emission Reduction Policy in China: Opportunities and

Challenges

1

China as the engine of global growth

25%

China contribute 25% of global growth

Potential for further growth still remains

2030

Have chance to become high income country and top one economy before 2030

7 9

15 15 11

53

45 39 39

26

CHINA AVERAGE

GD SH BJWORLD

AVERAGE

USGERMANY

UKJAPAN KOREA

GDPGDP Per capita (Current $)

2013

WDI, Source: WDI, staff calculation

1990-2000 2000-2010

Top five contributors to growth

WDI, Lin 2011 Source: WDI, Lin 2011

2

China’s efficiency improvement break record30 GDP

3.7% 20132005

28.5% 4%

China’s carbon intensity per unit of GDP decreased by 28.5% in year 2013 from 2005 level, 4% on annual average during that period, and 3.7% on annual average for last 3 decades

The annual improvement ratehas break all record of majordeveloped economy, induration and intensity.

Country10

The best ten years10

%Best 10 years efficiency improvement rate (%)

UK

US

Germany

Japan

0

1000

2000

3000

4000

5000

6000

-500

-400

-300

-200

-100

0

100

200

300

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

kgCO2/ GDP) kgCO2/ GDP)

kgCO2/ GDP) )

3

Total air pollutants control made progress

GDP

Total air pollutants control made remarkable progress, result in a continuous decline of SO2 and dust emission, and air pollutant intensity, while NOx under control

;

Policies and measures taken in key sectors achieved marked effect, including power, iron and steel, cement and transportation;

02468101214161820

02000400060008000

1000012000140001600018000

2005 2006 2007 2008 2009 2010 2011 2012

-60%+74%

Coal consumption and SO2 emission in power sector

SO2 emission Coal consumption 4

But, haze bring air quality down

PM10PM2.5

Air pollution is serve. The major characteristic is the high concentrations of particulate matter, leading to frequent smog in many regions.

PM2.5

50%-70%Coal burning is the major source of PM2.5. In Jing-Jin-Ji region, Yangtze River Delta and Pearl River Delta, coal burning is responsible for between 50% and 70% of PM2.5pollution.

5

Call for synergy economy, energy and environmental goals

Economy

•

•The slowing down growth of economy needs new drivers to avoid middle income trap

Energy

•

•Energy consumption will surpass supply capacity, requires for improved energy security

Environment

• 2030

•The Grade II standard of air quality needs to beachieved in year 2030

Through synergy governance on economy, energy and environment, China can a triple win to ensure healthy economic development, improve energy security and reduce climate risks

6

Synergy governance require additional efforts

CERS AERS2010 2020 2030 2020 2030

tceTotal energy consumption (108tce)

32.5 49.2 62.5 47.5 59.0

GDP 2010 100Energy intensity of GDP (2010 as 100)

100 73.4 54.6 70.6 51.6

CO2 CO2CO2 emission (108t)

72.5 104 127 96.8 106

GDP CO2 2010 100Carbon intensity of GDP (2010 as 100)

100 69.6 51.1 64.8 41.5

%Share of non-fossil fuel (%)

8.6% 14.5% 20% 15% 23%

2030 CO22020

To stabilize emission around 2030, China need additional efforts on energy conservation, economic and energy structure adjustment with a view to stabilize coal consumption around 2020;

2013-2030 3.3%4.3% 4% 20

The rate of carbon intensity reduction needs to be improved from 3.3% (under CERS) to 4.3%, expand the 4% reduction trends for another two decades; 7

• 2030 SO2 Nox PM25 2010 21.15% 22.44% 16.68%20% 20% 20%

• 2030 69%~76% 24%~31%

• LP 8

27%

10%5%

36%

10% 6% 7%1% 1%

18%

3%

2%

4%

1%1%

0%

0% 0%

14%

3%

2%

10%

2%2%

7%

1% 1%

19%

10%

9%

15%

5%5%

4%

1% 1%

13%

5%

3%

6%

2%2%

15%

12%7%

8%

1%

1%

3%

1%1%

47%

4%

4%

0%

0%

0%

21%

18%

5%

5%

1%

1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2 0 1 0 E P C 2 0 3 0 C O C 2 0 3 0 2 0 1 0 E P C 2 0 3 0 C O C 2 0 3 0 2 0 1 0 E P C 2 0 3 0 C O C 2 0 3 0

S O 2 N O X P M 2 5

Pollutants control achievements of synergy control scenario

Source: Tsinghua University

The battle to air pollution can be won, but require additional efforts

2030 PM2.52030

35μg/m3

Maintaining the intensity of current policy, the PM concentration will be substantially reduced, but still sufficient to achieve the air quality standard;

;

Even with the strictest end-of-pipe treatment measures, almost half of Chinese cities risk failing to meet air quality standards in 2030. 9

The battle to air pollution can be won

With those additional efforts, combined with most stringent environmental policy, most major cities can achieve air quality targets;

Targets for air quality are only achievable through a combination of accelerated economic restructuring, energy conservation, fuel switching and environmental policy.

10

GGDPGDP cost can be managed and can be offset

GDP 1%Under the assumption of “tax neutral”, the GDP loss can be managed within 1%;

2020 6%The impact on energy intensive industry is remarkable, the impact on coal industry is higher than 6% in year 2020

GDPWhile considering the environmental and health benefit of accelerate efforts, a large portion of GDP cost can be offset

Improve energy structure without increasing energy cost and enhanced economicresilience to energy price risk

11

Strategy and Policies

Introducing a total emission reduction target first for energy intensiveindustries and for developed economies of Eastern China, gradually expanded to all industries and all regions.

Reform energy pricing system to reflect the hidden cost of environmental externalities to promote a conducive market for clean energy.

2020Limiting total coal consumption with a view to be stabilized around 2020.

A gradual increasing carbon price to promote structure adjustment.

Implement low carbon planning and carbon management at city level.

12

KKey Messages

Through synergy governance on economy, energy and environment, China can a triple win to ensure healthy economic development, improve energy security and reduce climate risks

it is possible for China to achieve the goals of increasing people's standard of living, improving ecological and environmental quality and reducing the risks of climate change at the same time, providing a positive example to the rest of the world.

13

gal@Tsinghua.edu.cn

Thank you very much!

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