China's Policies and Actions for Addressing Climate Change

Information Office of the State Council The People's Republic of China

November 2011, Beijing

Contents

Foreword

I. Mitigating Climate Change

II. Adapting to Climate Change

III. Enhancing Basic Capability

IV. Participation of the Whole Society

V. Participation in International Negotiations

VI. Strengthening International Cooperation

VII. Objectives, Policies and Actions during the 12th Five-Year Plan Period

VIII. China's Basic Position in International Climate Change Negotiations

Concluding Remarks

Foreword

Climate change is a global issue of common concern to the international community. In recent years, worldwide heat waves, droughts, floods and other extreme climate events have occurred frequently, making the impact of climate change increasingly prominent. It has become a main world trend that all countries join hands to respond to climate change and promote green and low-carbon development.

China is the world's largest developing country, with a large population, insufficient energy resources, complex climate and fragile eco-environment. It has not yet completed the historical task of industrialization and urbanization and its development is unbalanced. China's per-capita GDP in 2010 was only a little more than RMB29,000. By the UN standard for poverty, China still has a poverty-stricken population of over 100 million, thus it faces an extremely arduous task in developing its economy, eliminating poverty and improving the people's livelihood. In the meantime, China is one of the countries most vulnerable to the adverse effects of climate change. Climate change generates many negative effects on China's economic and social development, posing a major challenge to the country's sustainable development.

The Chinese government constantly sets great store by the issue of climate change and has included addressing climate change into its mid- and long-term planning for economic and social development as a major issue concerning its overall economic and social development. In 2006, China set forth the compulsive goal of reducing its per-unit GDP energy consumption in 2010 by 20 percent from that of 2005. In 2007, China became the first developing country to formulate and implement a national program to address climate change. In 2009, China put forward the goal of action to reduce the per-unit GDP greenhouse gas emission in 2020 by 40-45 percent as compared to that of 2005.

To accomplish the above goals, China adopted a range of major policy measures to mitigate and adapt to climate change during the Eleventh Five-Year Plan (2006-2010) period, and has achieved remarkable results. The Outline of the Twelfth Five-Year Plan for National Economic and Social Development released in 2011 established the policy orientation of promoting green and low-carbon development, and expressly set out the objectives and tasks of addressing climate change for the next five years. China has been playing a constructive role in international negotiations on climate change, actively pushing forward the negotiation process, thereby making a significant contribution to addressing global climate change. This white paper is hereby issued to enable the international community to fully understand China's policies and actions for addressing climate change, and the positive results achieved in this regard during the Eleventh Five-Year Plan period, as well as China's overall arrangements to address climate change and its related negotiating position during the Twelfth Five-Year Plan period (2011-2015).

I. Mitigating Climate Change

During the Eleventh Five-Year Plan period, China accelerated the transformation of its economic development mode, and achieved remarkable results in controlling greenhouse gas emission by promoting industrial restructuring, energy restructuring and energy conservation, improving energy efficiency, and increasing carbon sink.

1. Optimizing Industrial Structure

Reforming and upgrading traditional industries. China has formulated and released plans for restructuring and rejuvenating ten major industries, including automobiles, and iron and steel, revised the Guideline Catalogue for Industrial Restructuring, and issued the Opinions on Curbing Overcapacity and Redundant Construction in Some Industries and Guiding the Sound Development of Industries. China has raised the market entry threshold for high-energy-consuming industries, conducted energy conservation evaluation and examination of fixed asset investment projects, enhanced technology transformation and upgrading in traditional industries, promoted corporate merger and restructuring, adjusted export tax rebate policies, imposed export duties on coal, some nonferrous metals, steel billets and chemical fertilizers, and restrained the export of high-energy-consuming, high-emission and high-resource-consuming products. Efforts have been made to accelerate the pace of eliminating backward production capacity. By implementing the policy of "replacing small thermal power generating units with larger ones," China shut down small thermal power generating units with a total generating capacity of 76.82 million kw, and eliminated backward steel production capacity to the tune of 72 million tons; iron production capacity, 120 million tons; cement production capacity, 370 million tons; coke production capacity, 107 million tons; paper production capacity, 11.3 million tons; and glass production capacity, 45 million cases. The proportion of thermal power generating units with a generation capacity above 300,000 kw each in China's thermal power installed capacity increased from 47 percent in 2005 to 71 percent in 2010; the proportion of large iron production blast furnaces with an capacity above 1,000 cu m each increased from 48 percent to 61 percent; and the proportion of the output of large aluminum electrolysis prebaking tanks increased from 80 percent to above 90 percent. The industry concentration in the iron, steel, cement, nonferrous metals, machinery and automobile sectors among other key industries was remarkably improved, while energy consumption in major industries was dramatically reduced. From 2005 to 2010, coal consumption in thermal power supply dropped 10 percent from 370 to 333 g/kwh; comprehensive energy consumption per ton of steel decreased 12.8 percent from 694 to 605 kg of standard coal; that in cement production, down by 24.6 percent; that of ethylene production, down by 11.6 percent; and that of synthetic ammonia production, 14.3 percent.

Fostering and strengthening strategic and newly emerging industries. China has issued the Decision on Accelerating the Fostering and Development of Strategic and Newly Emerging Industries, which defines the overall principles, key tasks and policy measures for fostering and developing strategic and newly emerging industries. The Chinese government has selected key fields of these industries, implemented a number of major projects and built a range of related programs. China has accelerated the pace of building a national innovation system, implemented knowledge- and technology-innovation projects, and intensified efforts on tackling key technological problems. The government has initiated a venture capital investment program in newly emerging industries, established 20 venture capital investment funds, and supported the growth of innovative enterprises in energy conservation, environmental protection, new energy development and other sectors in strategic new industries. In 2010, the output value of China's high-tech manufacturing industries reached RMB7.6 trillion, ranking the second in the world, and more than twice the figure for 2005.

Accelerating the development of the service industry. China has formulated and implemented the Opinions Concerning Accelerating the Development of the Service Industry, Opinions on the Implementation of Some Policies and Measures for Accelerating the Development of the Service Industry, and other important documents, vigorously promoting the development of production- and life-related service trades. The government has also issued the Guidelines for Accelerating the Development of High-tech Service Industry. From 2005 to 2010, the added value of China's service sector increased 11.9 percent per year on average, with an average annual growth rate of 0.7 of a percentage point higher than that of GDP, and with its proportion in GDP rising from 40.3 percent to 43 percent.

2. Energy Conservation

Enhancing target responsibility assessment. China has resolved and assigned responsibilities to fulfill set targets in energy conservation, and established a statistical monitoring and evaluation system to regularly evaluate the completion of energy conservation targets and the implementation of energy conservation measures by 31 provincial governments and 1,000 key enterprises. In 2010, China launched special supervision over energy conservation and emission reduction in 18 key regions. Strict target responsibility evaluation and accountability contributed to achieving the national energy conservation targets.

Promoting energy conservation in key fields. The Chinese government has carried out ten key energy conservation projects, including upgrading of industrial boilers and kilns, combined heat and power generation, electromechanical system energy conservation and residual heat and pressure utilization, conducted energy conservation in 1,000 enterprises, enhanced energy conservation management of key energy-consuming enterprises, and promoted energy audit and energy efficiency benchmarking activities. It has launched the low-carbon transportation action for automobiles, ships, roads and harbors in 1,000 enterprises, vigorously developed urban public transport. It has also improved the implementation rate of mandatory energy conservation standards of new buildings, quickened the energy conservation transformation of existing buildings, promoted the use of renewable energy resources in buildings, and conducted energy conservation transformation of government office buildings. By the end of 2010, the implementation rate of mandatory energy efficiency standards for new urban buildings reached 99.5 percent in the design stage and 95.4 percent in the construction stage. During the Eleventh Five-Year Plan period, the accumulated total energy-efficient floor space constructed was 4.857 billion sq m, with energy-saving capacity of 46 million tons of standard coal. The government has taken energy conservation actions in the retail sector by restraining the production, marketing and use of plastic shopping bags, and curbing over-packaging.

Promoting energy-saving technology and products. China has released a total of 115 state key energy-efficient technology promotion catalogues in three batches, and specially promoted seven energy-efficient technologies in the iron and steel, building material and chemical industries. The government has launched a project to promote energy-efficient products for the benefit of the people, and promoted high-efficiency illumination products and air-conditioners, energy-efficient motors and other energy-efficient products by way of government subsidies. The central treasury has appropriated subsidies to support the production of and promote the use of some 360 million high-efficiency illumination products, 30 million high-efficiency air conditioners and one million energy-efficient motor vehicles, which have realized an annual energy-saving capacity of 20 billion kwh. China has carried out energy conservation and new-energy vehicle demonstration and promotion, and taken the lead in using mixed-power vehicles, electric vehicles and fuel cell vehicles. The government has established a preferential procurement system for energy-efficient products, released a government procurement list of energy-efficient products, and ordered mandatory procurement of nine kinds of energy-efficient products, including air-conditioners, computers and illumination products. During the Eleventh Five-Year Plan period, a large variety of high-efficiency energy technologies were widely applied, including low-temperature waste heat power generation, new type cathode aluminum reduction cells, high-voltage frequency conversion, rare earth permanent magnet motors and plasma oil-less ignition. Meanwhile, the market share of high-efficiency illumination products reached 67 percent, and that of high-efficiency air-conditioners, 70 percent.

Developing a circular economy. National "city mine" demonstration bases have been built to promote the concentrated, circular and high-added-value utilization of obsolete electromechanical equipment, waste household appliances, plastic and rubber, and other waste resources in key cities, and efforts are being made to promote the comprehensive utilization of major industrial solid waste. During the Eleventh Five-Year Plan period, China comprehensively utilized about one billion tons of fly ash, 1.1 billion tons of coal slag, and 500 million tons of metallurgical slag. The central government funded the industrialization of remanufacturing projects. By the end of 2010, China had formed a remanufacturing capacity of automobile engines, gearboxes, steering engines and electric generators, totaling 250,000 pieces (sets).

Promoting energy conservation market mechanism. The government is proactively pushing forward energy management through contract management, power demand side management, voluntary energy conservation agreements and other market mechanisms. In 2010, China issued the Opinions on Accelerating the Implementation of Contract Energy Management and Promoting the Development of the Energy Conservation Service Industry, increased financial support, adopted policy of taxation support and improved related accounting systems and financial services to strengthen support for the energy conservation service industry. From 2005 to 2010, the number of energy conservation service companies increased from 80 to over 800, the number of employees in this sector increased from 16,000 to 180,000, the industry scale was enlarged from RMB4.7 billion-worth to RMB84 billion-worth, and the annual energy-saving capacity rose from some 600,000 to more than 13 million tons of standard coal.

Improving related standards. The government has improved the energy-efficient design standards for residential buildings in three climate zones (freezing cold and cold, hot in summer and cold in winter, and hot in summer and warm in winter); improved energy-efficient design standards for public buildings and the code of acceptance inspection of energy-efficient building construction; issued 27 mandatory national standards for energy consumption quotas of high energy-consuming products and 19 mandatory national energy efficiency standards for major terminal energy-using products; formulated 15 national standards for the discharge of major pollutants; promulgated 71 environmental labeling standards; and released an energy efficiency labeling product catalogue.

Incentive policies. China has quickened the reform of the energy pricing mechanism, reformed the taxes and fees of refined petroleum products, adopted a differential electricity pricing policy for high-energy-consuming industries, imposed electricity pricing penalties on products with super-high energy consumption, and promoted the metered charging of heat supply by actual consumption of each household. The government has earmarked special funds for energy conservation and emission reduction. During the Eleventh Five-Year Plan period, the central treasury invested an accumulative total of RMB225 billion to support energy-efficient technology upgrading and the popularization of energy-efficient products, forming an energy conservation capacity of 340 million tons of standard coal. The government meanwhile has been steadily pushing forward the reform of the resource taxation system, improving the export tax rebate system, adjusting the policy on vehicle purchase, and vehicle and vessel tax, using preferential taxation policies to promote energy and water conservation, the comprehensive utilization of resources, and the import of energy-efficient and low-carbon products.

Through the efforts of all sectors, China accomplished its energy conservation goals listed in the Eleventh Five-Year Plan. China's energy consumption per unit of GDP dropped 19.1 percent from that of 2005 accumulatively, or a reduction of 1.46 billion tons of carbon dioxide emissions. During the same period, China's national economy expanded at an average annual rate of 11.2 percent, while its energy consumption grew only 6.6 percent annually on average. The energy consumption elasticity coefficient dropped from 1.04 in the Tenth Five-Year Plan period (2001-2005) to 0.59, which eased the contradiction between energy supply and demand.

3. Developing Low-carbon Energy

Accelerating the development of natural gas and other clean resources. The government is vigorously developing natural gas, encouraging the development and utilization of coal-bed methane, shale gas and other unconventional oil and gas resources, and has enacted a number of policies in this regard, such as financial subsidies, preferential taxation, connecting generated power to grid and electricity price subsidies. China has formulated and implemented an overall plan of management and utilization of coal mine methane, and is forcefully pushing forward the clean utilization of coal, guiding and encouraging the utilization of coal mine methane and the development of ground coal-bed methane. Natural gas production increased from 49.3 billion cu m in 2005 to 94.8 billion cu m in 2010, an average annual increase of 14 percent. In that period, China's natural gas consumption accounted for 4.3 percent of its total energy consumption, and the extraction of coal-bed methane reached 30.55 billion cu m, with the amount utilized reaching 11.45 billion cu m, equivalent to a reduction of 170 million tons of carbon dioxide emissions.

Proactively developing and utilizing non-fossil energy. China has enhanced the development and utilization of hydropower, nuclear energy and other low-carbon energy sources through policy guidance and fund input. By the end of 2010, China's installed hydropower capacity had reached 213 million kw, doubling the figure for 2005; and installed nuclear power capacity had reached 10.82 million kw, with another 30.97 million kw under construction. China supports the development of wind power, solar power, geothermal, biomass energy and other new types of renewable energy. It has improved the pricing policy for on-grid power generated by wind, and launched the "Golden Sun Demonstration Project" to promote the franchise bidding for large-scale photovoltaic power stations. It has improved the pricing policy for power generated by agricultural and forestry biomass energy, increased financial support for the development of biomass energy and enhanced methane development in rural areas. China's installed wind power capacity grew from 1.26 million kw in 2005 to 31.07 million kw in 2010, and installed photovoltaic power capacity increased from less than 100,000 kw in 2005 to 600,000 kw; the number of solar water heaters in use reached 168 million sq m; and installed biomass energy capacity was about 5 million kw. With an annual utilization of methane of about 14 billion cu m, the total number of methane users in China reached 40 million households; utilized ethanol bio-fuel was 1.8 million tons; and the contribution made by all types of biomass energy totaled 15 million tons of standard coal.

4. Controlling Non-energy-related Greenhouse Gas Emission

The government has enhanced control over greenhouse gas emission in industrial and agricultural production, waste disposal and other fields. China has applied the raw material substitution technology such as replacing limestone with carbide slag in the cement clinker production process, applied the technique of producing cement with blast furnace slag and fly ash as added mixed materials, applied secondary- and tertiary-stage treatment to address the discharge of nitrous oxide during the nitric acid production process, applied catalytic decomposition and thermal oxidative decomposition to address the discharge of nitrous oxide during the adipic acid production process, and thermal oxidative decomposition to capture and remove HFC-23. China has quickened transformation in the mode of animal husbandry production, and reduced the emission of methane and nitrous oxide in cropland, and poultry and livestock farming. The government has launched the soil organic matter advancement subsidy project, and promoted returning straw to farmland, green manure growing, adding organic fertilizer and other technologies to an accumulated total area of about 30 million mu (a Chinese unit of area equal to 1/15 of a hectare). The government has improved urban waste disposal standards, adopted a household garbage charging system, promoted advanced waste incineration technology, and formulated incentive policies for landfill gas recovery. China also carries out research and demonstration for carbon capture, utilization and sequestration technologies. Statistics showed that by the end of 2010 China's nitrous oxide emission in industrial production generally remained at the level of 2005, and the growth of methane emission was basically brought under control.

5. Increasing Carbon Sink

Increasing forest carbon sink. China is continuously carrying out ecological protection projects, such as the key shelterbelt construction project in northwest, northeast and north China and along the Yangtze River, and projects to return farmland to forest, natural forest protection project, the program to control sandstorms in the Beijing and Tianjin area. It has carried out a pilot afforestation project with an aim to expand carbon sinks, enhanced sustainable forest management, and increased the forest stock volume. The central finance has raised the standard for afforestation investment subsidy from RMB100 to 200 per mu, and established the China Green Carbon Fund. Currently, China's man-made forest reserve has reached 62 million ha; its national forest coverage has reached 195 million ha, with the forest coverage rate rising from 18.21 percent in 2005 to 20.36 percent in 2010, with a forest stock volume of 13.721 billion cu m. China's total carbon storage in forest vegetation has reached 7.811 billion tons.

Improving farmland and grassland carbon sinks. China is implementing the systems to promote grass-livestock balance, prohibiting or temporarily banning pasturing in certain areas, and regionally rotating pasturing, so as to control the livestock-carrying capacity of pastures and curb pasture degeneration. It is expanding the project of returning grazing land to grassland, strengthening the construction of man-made forage meadows and irrigated pastures, enhancing the prevention and control of grassland natural disasters, and increasing the grassland coverage rate and grassland carbon sinks. By 2010, protective farming technology had been applied to an area of 64.75 million mu; the no-tillage mechanical seeding area had reached 167 million mu; and mechanically-crushed straw had been returned to farmland in a total area of 428 million mu.

6. Promoting Low-carbon Development in Localities

Promoting low-carbon pilot projects in selected provinces and cities. In 2010, China launched a national "low-carbon province and low-carbon city" experimental project. The first batch of selected localities included five provinces, namely, Guangdong, Hubei, Liaoning, Shaanxi and Yunnan, and eight cities, namely, Tianjin, Chongqing, Hangzhou, Xiamen, Shenzhen, Guiyang, Nanchang and Baoding. Currently, all the pilot provinces and cities have established leading work teams, formulated implementation schemes, and promulgated their respective goals for carbon intensity reduction in the Twelfth Five-Year Plan period -- and 2020. They have also vigorously promoted the transformation of the local economic development mode, took major actions to advance the construction of key low-carbon development projects, and vigorously developed low-carbon industries to promote green and low-carbon development.

Actively drawing on low-carbon development experience. To build a "culture-enriched, technology-empowered and environmentally-friendly Beijing," Beijing, the capital city of China, has accelerated the development of the green, low-carbon and circular economy, vigorously developed strategic newly emerging industries and modern service industries, quickened the low-carbon transformation of existing buildings and transport systems, and advocated low-carbon consumption and a low-carbon lifestyle. Shanghai has sped up the pace of optimizing its energy structure, launched low-carbon development pilot projects in Hongqiao CBD and Chongming Island, implemented the concept of low-carbon development in the design, construction and operation of the Shanghai World Expo Park, and carried out "voluntary emission reduction activities to achieve a low-carbon World Expo." Jiangsu Province has selected four cities, ten industrial parks and ten enterprises for pilot experiments in developing a low-carbon economy.