Toward 2050: China's Low Carbon

Transcription

1 Toward 2050: China's Low Carbon Development Strategy, Policy and Market Outlook in Post-PA Era Dr. CHAI Qimin Director, International Cooperation Department, NCSC, NDRC Professor, Research Center for Contemporary Management, Tsinghua University

2

3 2 Process in Global Climate Change IPCC: (1) Is climate change real? (2) Are human activities responsible for climate change? Countries: Could low carbon development improve international competiveness?

4 3 Paris Agreement: A Detail Framework Paris Agreement is a fair, reasonable, comprehensive, balanced, ambitious, effective, legally binding" agreement.

5 4 Environmental Capability is Overloaded In recent years, severe smog outbreaks struck many areas in China, especially in central eastern China. In 2013, smog weather occurred in more than 100 large and medium-size cities in 25 provinces, covering over 1.4 million square kilometers. More than 800 million people were affected. This massive pollution event drew intensive media attention worldwide. Many believe that the incidents exposed the underlying environment problems in "China Model. SO 2, NO x and PM 2.5 are the main components of smog. Besides climatic conditions, the fundamental reason is rapid increase in anthropogenic emissions, like vehicle emission, coal-fired heating, construction dust, and straw burning.

6 5 NOT at Other Side of Economic Growth Economic evidence makes increasingly clear that smart action on climate change now can drive innovation, strengthen economic growth and bring broad benefits from sustainable development to increased energy security, improved public health and a better quality of life. Tackling climate change will also strengthen national and international security. US-China Joint Announcement on Climate Change, Beijing, 12 Nov 2014 Accelerating ecological progress is the inherent requirement of transforming economic development mode, improving development quality and benefits in China. It is the inevitable choice of building a moderately prosperous and harmonious society, an actively respond to climate change, and a major initiative to maintain global ecological security.(we must) adhere to green, circular and low carbon development as the fundamental approach. CPC/CCSC: Accelerating the Construction of Ecological Civilization, 25 April 2014 (We) must adhere to deepen reform and drive innovation, through innovation and entrepreneurship, build new technologies, new products and new models, strengthen environmental industry, strictly control the expansion of energy and emission intensive industries, develop a energy efficient and low carbon industry system, establish a new growth point. LI Keqiang Li at National Leading Working Group on Climate Change,12 June 2015

7 6 Energy & Power Industry Slow Down Preliminary accounting shows that the total annual energy consumption was 4.3 Gtce, a 0.9% increase compared to the previous year. Coal consumption fell by 3.7%, while the consumption of cruel oil, natural gas and electricity increased by 5.6%, 3.3%, and 0.5% (lowest level since 1974) respectively. Coal consumption accounted for 64.0% of total energy consumption, and clean energy like hydro, wind, nuclear and natural gas accounted for 17.9% National Economic and Social Development Statistics Bulletin

8 7 The 2 nd Economical Transition Policy-induced Change Price-induced Change Cultural Revolution Scientific Development: Comprehensive, Coordinated & Sustainable Development Great Leap Forward Reform & Opening up Initial Stage

9 8 Low Carbon Development in New Normal Joint Statement of China-US (Nov 2014), China-India (May 2015), China-Brazil (May 2015), China-EU (Jun 2015), China s INDC (Jun 2015), China-US Presidential (Sep 2015), China-France Presidential (Sep 2015),China-US Presidential (Apr & Sep 2016) : (1) To achieve the peaking of carbon dioxide emissions around 2030 and making best efforts to peak early; (2) To lower carbon dioxide emissions per unit of GDP by 60% to 65% from the 2005 level; (3) To increase the share of non-fossil fuels in primary energy consumption to around 20%; and (4) To increase the forest stock volume by around 4.5 billion cubic meters on the2005 level. China will promote green power dispatch, giving priority, in distribution and dispatching, to renewable power generation and fossil fuel power generation of higher efficiency and lower emission levels. China also plans to start in 2017 its national emission trading system, covering key industry sectors such as iron and steel, power generation, chemicals, building materials, paper-making, and nonferrous metals. China announces that it will make available 20 billion for setting up the China South-South Climate Cooperation Fund to support other developing countries to combat climate change, including to enhance their capacity to access GCF funds.

10 9 Four Ambitious Targets in NDC (1) China Will Decouple Carbon Emission And Economy by 4% Every Year China will lower its carbon dioxide emissions per unit of GDP by 60% to 65% in 2030 from the 2005 level, which means the carbon intensity will reduced by 3.6% to 4.1% in 25 years. As the economic growth miracle in last 40 years, such improvement in economic efficiency is also unique all over the world. Due to the Chinese Characteristics we called, the goal is generally completed with the highest level or ahead of schedule (2) China Will Consume 1 ton Non-fossil Fuel per Capita Every Year The installed capacity of 60 GW and generated power of 250 Twh are required every year by 2030, among which the new installed capacity of nuclear, solar and wind power are approximately 200 GW (220 nuclear reactors, 14 annually), 300 GW (17000 solar farms, 1100 annually) and 400 GW ( wind turbines, annually) respectively, and the total investment on non-fossil fuel will be about 2.5 trillion US$. (3) China Will Plant Trees Full of Beijing Once Every Year The forest stock in 2014 increased by 2.19 billion cubic meters compared to The forest area increased by 21.6 million hectares, equivalent to 13 Beijing or almost the whole England. The forest stock will increased by 4.5 billion cubic meters by 2030 based on 2005 level, so the above numbers will double then, and the forest carbon stock will increase by 2.55 Gt. (4) China Will Peak as Early as Possible in 15-FYP As modeling analysis, the GDP per capita in China will be about 10,000 US$ (constant price of 2005) when the emissions peak appears. When US and EU arrived the emissions peak, their GDP per capita were already above 40,000 and 20,000 US$ (constant price of 2005). Meantime, the emission per capita in China will be about 8.6 ton CO 2 when the emissions peak appears. When US, Germany and England arrived the emissions peak, their emission per capita were over 19.5, 14.1 and 11.3 ton CO 2.

11 1 0 Green Investments, Jobs and Co-benefits (1) China Will Increase Green Supply, and Invest 1.6 Trillion RMB Annually by 2030 The new investment on energy efficiency in 12-FYP is expected to will reach 2.7 trillion (constant price of 2010, same as follows), and the one on low carbon energy (natural gas, non-fossil fuel, CCUS etc.) will reach 3.1 trillion, the output of low carbon industry will be about 8.4 trillion RMB. It is predicted that the accumulative investment on low carbon development will exceed 41 trillion RMB, among which the energy efficiency and low-carbon energy industry will be about 15.2 trillion and 25.7 trillion RMB respectively, including wind and solar power of 11.3 trillion. The low carbon industry scale will reach more than 23 trillion, as over 16% of GDP by then, and will become the pillar industry of national economy. (2) China Will Promote Green Innovation, and Create 3 Million New Jobs Annually by 2030 The employment of China's energy efficiency and low carbon energy industry is expected to 14 million during 12- FYP. New jobs, departments and enterprises are being created, such as carbon finance, carbon audit, carbon inventory, corporate carbon strategy, carbon management contract, carbon asset custody, renewable energy solutions, new energy automobile manufacturers, internet of energy, big data of climate change and so on. It is expected that low-carbon employment population will reach 63 million by 2030, and more jobs will appear in low carbon transformation and upgrading of the traditional industries. (3) China Will Shape Green Culture, and Reduce Air Pollution by 80% by 2030 It have co-benefits on air pollution especially. According to the research of Tsinghua University, CO2 emission peak by 2030 will greatly help improving air quality, and SO 2, NOx and PM 2.5 emissions will correspondingly drop by 78.9%, 77.6% and 83.3% compared to 2010 level, respectively.

12 1 1 Intro to Climate Regime in China Found in June, 2007 National Leading Working Group on Addressing Climate Change, Energy Saving, & Emission Reduction Office of National Leading Working Group at NDRC Executive Body National Climate Change Expert Committee Advisory Body Department of Climate Change National Center for Climate Change Strategy and International Cooperation (NCSC) Other 21 Ministries China National Climate Change Planning ( ) GHG Emissions Control Working Program in 12&13-FYP

13 1 2 Climate Policy and Market in 13 th FYP - Chapter 3 The Quality of Ecological Environment is overall improved. The green and low carbon level of production and life mode rise gradually. The efficiency of development and utilization of energy resources increase substantially, the cap of energy and water resources consumption, construction land and carbon emissions are effectively controlled, the total discharge of major pollutants reduce quickly. CO 2 emissions Per unit GDP decreased by 18%. - Chapter 46 Balance the mitigation and adaptation, take the initiative in control of carbon emissions, implement the emission reduction commitments, enhance the ability to adapt to climate change, deeply participate in global climate governance, and contribute to global cooperation. - Section 1 Control the greenhouse gas emissions effectively. Control the carbon emissions from electric power, iron and steel, building materials, chemical industry and other key industries, and promote the low carbon development of industrial, energy, building, transportation and other key areas. Development Optimization Zone shall take the lead in carbon emissions peak. Deepen all kinds of low carbon pilots, and implement the demonstration projects of near zero carbon emissions zones. Control the non carbon dioxide greenhouse gas emissions control. Promote the construction of a unified national carbon emissions trading market, and implement reporting, verification, certification and quota management system of key emission units. Improve the statistical accounting, assessment and accountability system, and carbon emission standard system. Promote the use of low carbon technologies and products. 13 th FYP for National Economic and Social Development (March 16, 2016)

14 1 3 Experiences in Seven Pilots Values As of July 2016, the total amount of tradable quotas in the seven pilot markets was trillion tons, the cumulative turnover was 3.18 billion RMB, and the average transaction price is 26.8 RMB/ton. The cumulative amount of CCER validated projects is 2261, 762 projects on record, and 254 projects issued. The total issued amount of emission is trillion tons CO 2 e.

15 1 4 Planning for National ETS Preparation Pilot programs Full implementation National Prepare management framework Introduce reporting guidelines Improve infrastructure Establish management report Supervise historical emission data collection Phase I Unify the rules Start carbon trading Phase II Expand coverage Improve system Global connection Local Organize capacity building activities Establish the list of participating parties, conduct historical emission data accounting; Allocate quotas based on a unified approach. Annual quotas allocation Organize annual compliance inspection Update and improve local ETS Companies Participate in capacity building activities Establish internal carbon reporting system; Compliance with reporting and external accounting requirement Non-list companies could participate in the carbon trading through CCER. Compliance with reporting and other requirements Improve carbon asset investment and management system Voluntary emission trading to reduce costs Help improve the system

16 1 5 National ETS Transaction Forecast Emission 3 to 4 Gt Carbon Futures 0.6 to 4 trillion RMB Carbon Spot billion RMB

17 1 6 Regional Climate Cooperation/Integration The Article 4.16, 4.17, 4.18 and Article 20 in Paris Agreement indicated that, the internal protocols reached by Parties, including regional economic integration organizations and their member States, can coexist with the Agreement itself. On the basis of economic and trade cooperation and the shared needs in mitigate and adaption to climate change, Parties are likely to form new climate clubs", to enhance the actions for shared benefits, and bridge the gaps of ambitions and global goals in Agreement. Article 6.2: Parties shall, where engaging on a voluntary basis in cooperative approaches that involve the use of internationally transferred mitigation outcomes towards nationally determined contributions, promote sustainable development and ensure environmental integrity and transparency National or regional carbon markets are now free to link without top-down regulations, and these markets are possible to form a new, substantive international rules for investment and financing. Article 6.8: Parties recognize the importance of integrated, holistic and balanced non-market approaches being available to Parties to assist in the implementation of their nationally determined contributions, in the context of sustainable development and poverty eradication, in a coordinated and effective manner, including through, inter alia, mitigation, adaptation, finance, technology transfer and capacity-building, as appropriate. Efforts should be made to promote green and low-carbon infrastructure construction and operation management, taking into full account the impact of climate change on the construction. We should promote ecological progress in conducting investment and trade, increase cooperation in conserving eco-environment, protecting biodiversity, and tackling climate change, and join hands to make the Silk Road an environment-friendly one. Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road

18 1 7 Climate Change Facts in Asia Compounding the risk for coastal communities, Asia has more than 90% of the global population exposed to tropical cyclones. Asia is predominantly agrarian, with 58% of its population living in rural areas, of which 81% are dependent on agriculture for their livelihoods. Rural poverty in parts of Asia could be exacerbated due to negative impacts from climate change on rice production, and a general increase in food prices and the cost of living.

19 1 8 Shared Vision for ALCC Cooperation Vision ALCC set the concept framework and pragmatic goal based on but not limited by Paris Agreement. Using a bottom-up approach, ALCC shall let the member countries play their dominant roles, focus on the establishment of long-term cooperation and mechanisms, and don't care about the gains and losses now. Priority There are two ways to identify the priorities of cooperation. One is by sectors, which divided into low carbon energy community, industrialization community, urbanization community, transportation community and green financing community; the second is according to the functional elements, which divided into mitigation, adaptation, finance, technology and capacity building. Mechanism The cooperation mechanism design for ALCC can be considered as three levels. One is the decision-making level, to establish a high level platform for economic, social and climate negotiation; the second is the implementation level, to establish a regional center for climate change and green development, and probably the Asian Climate Change and Green Development Fund; and the third is the market level, to establish an emission trade scheme and market for Asia region. In addition to the carbon market, the investment on energy conservation, low carbon energy (natural gas, nuclear and renewable energy) and related infrastructure is expected to over $10 trillion in next 15 years, New green employment will increase by about 90 million. Low carbon development will bring new prosperity and high quality growth in the emerging markets of Asia, Asian countries and China jointly build Green Silk Road, and promote environment improvement and sustainable competitiveness.

20 1 9 Top Design for ALCC Mechanism China announced the establishment of an RMB 20 billion South-South Climate Cooperation Fund, and will launch cooperation projects to set up 10 pilot low-carbon industrial parks, start 100 mitigation and adaptation programs in other developing countries and provide them with 1,000 training opportunities on climate change.

21 2 0 Investment & Financing System of ALCC The green investment and financing system of ALCC can be based on Asian Climate Change and Green Development Cooperation Fund. The sources of funding are mainly from the Asian Infrastructure Investment Bank, Silk Road Fund, China South-South Climate Cooperation Fund, China Clean Development Mechanism Fund, hosted by AIIB. The board members of the fund can be selected and recommended by Members of the ALCC for decision making on big investments.

22 2 1 Emerging Asian Green Finance Market ALCC ETS market is expected to cover 20 Gtons of carbon dioxide emissions, and the transaction can achieve about $80 billion in spot trading and $4 trillion in futures trading.

23 2 2 Thanks for Your Attention! Dr. CHAI Qimin chaiqm@outlook.com