The Chinese government has unveiled the summary of the country’s five-year plan for 2021 to 2025, amid a heavy smog in Beijing. Among other things, the plan sets a target of “basically eliminating” heavy air pollution days by 2025.
As China is responsible for almost 30% of global energy sector CO2 emissions, and emissions have returned to growth in recent years, the new plan gives critical insight into how fast the country is planning to start limiting emissions growth and making progress towards the goal of achieving carbon neutrality by 2060, announced last autumn.
The plan sets a target of 20% non-fossil energy in total energy consumption, and a target to reduce the CO2 emissions per unit of GDP by 18% from 2020 to 2025. Most notable was that two targets that have regularly featured in earlier five-year plans were dropped: a 5-year GDP growth target and a target for limiting total energy consumption. CO2 intensity fell by 18.8% from 2015 to 2020, so the 18% target does not represent an acceleration from past targets and trends.The target for reducing energy consumption per unit of GDP is lower than in earlier plans: 13.5%, compared with 15% in the previous one.
Less obsessed about GDP?
The abandonment of GDP targets, long the cornerstone of the five-year planning process, is momentous, even if it was largely expected. The government will continue to set annual targets for GDP growth, only doing away with a fixed five-year target. This is potentially good news for the environment, as it should give the government more flexibility to pursue other targets, and reduce the pressure to prop up GDP numbers at all costs. The lack of a GDP target does however mean that the implications of the CO2 intensity target are harder to assess.
For 2021, the government is targeting a 6% GDP growth rate. At this rate of growth, the intensity target doesn’t do much at all to limit the growth in CO2 emissions. However, the targeted growth rate in the following years could be lower, as this year is expected to see a rebound from the COVID-19 economic shock and low growth rate last year. China has also tended to significantly over-achieve the intensity targets.
Slowing down emissions growth – maybe
China’s CO2 emissions increased by approximately 1.7% per year from 2015 to 2020, and kept growing at 1.5% even in 2020, despite the pandemic. Assuming that GDP growth over the period averages 5.5%, CO2 emissions could grow at 1.1% from 2020 to 2025, and still meet all the targets announced today. This would be a slight deceleration compared with past years. However, if there is a strong rebound in growth this year and the rest of the period averages 6%, CO2 emission growth could even accelerate under these targets, compared with the past five years.
|GDP growth, 2022-2025, per year||5%||5.5%||6.0%|
|Energy intensity reduction 2020-2025||-13.5%||-13.5%||-13.5%|
|Total energy consumption growth, 2021-2025, per year||2.3%||2.7%||3.1%|
|CO2 intensity reduction 2020-20||-18.9%||-18.9%||-18.9%|
|Coal consumption growth, 2021-2025, per year||0.1%||0.5%||0.9%|
|Oil consumption growth, 2021-2025, per year||2.7%||3.1%||3.5%|
|Gas consumption growth, 2021-2025, per year||5.2%||5.6%||6.0%|
|Non-fossil energy production growth, 2021-2025, per year||7.1%||7.5%||7.9%|
|CO2 emissions growth, 2021-2025, per year||1.0%||1.4%||1.7%|
Indicative calculations of China’s energy consumption and CO2 emissions trends until 2025 under the five-year plan targets, depending on the GDP growth rate. The table assumes that GDP growth in 2021 will be 6.5% and looks at the effect of different growth rates in the following years. The calculations assume that the energy intensity target (-13.5%) and non-fossil energy target (20%) are met but not exceeded – in reality, both could be exceeded. The assumption about the shares of coal, oil and gas is 51%, 19% and 10%, respectively; varying this assumption has only a minor impact on the results for CO2.
Without the energy consumption control target, there’s even less in this five-year plan to constrain emissions growth than in the previous ones. As a result, there’s no guarantee that emissions growth will slow down, let alone stop, by 2025. So it’s leaving the decisions about how fast to start limiting emissions growth to the energy sector five-year plan and other plans expected at the end of the year.
The other headline target, a share of 20% non-fossil energy in total energy consumption by 2025, also largely continues the trend of the past years: the share increased from 12.3% in 2015 to 15.9% in 2020, a 3.6%-point gain. Therefore, the targeted 4.1% increase by 2025 signals a modest acceleration.
A slightly more promising sign was a recent statement by the China Coal Association that coal consumption in 2025 would be capped at 4.2 billion tonnes – close to current level. This target would likely be included in the energy sector plan later, and indicates that the government could target peaking coal consumption before 2025. However, oil and gas consumption are still expected to grow, so peaking and declining CO2 emissions requires coal consumption to not only stop growing but to begin falling again in absolute terms.
A shot in the arm for nuclear?
In a bit of a surprise, the plan includes a target for nuclear power capacity in 2025, of 70 gigawatts, from 52 gigawatts currently. This is less than the increase achieved from 2015 to 2020, but a surprisingly ambitious target given that there is much less capacity under construction currently than is needed to get there. So it can be read as a high-level signal to speed up new projects – such a specific capacity target would usually be relegated to more detailed sectoral plans.
A “major push” for clean energy – while also investing in coal
No specific targets were set for wind, solar, hydro, coal or other energy sources, as was expected – this is a high-level “plan of plans”. However, the language in the document promises a “major push” for clean energy. A wind&solar capacity target of 1200GW by 2030 was already announced by Xi Jinping in December – although more will very likely be needed to hit the other targets, particularly the target for 25% non-fossil energy in 2030. The plans also contain language on “promoting the clean use of coal”, so the contradiction between targeting low-carbon development and continuing to invest in coal and fossil fuels still seems stark in China’s plans.
Overall, the picture is one of very gradual progress in aligning China’s energy and emissions trends with the target of achieving carbon neutrality by 2060. The overall five-year plan just left the decision about how fast to start curbing emissions growth and displacing fossil energy to the sectoral plans expected later this year – particularly the energy sector five-year plan and the CO2 peaking action plan. The central contradiction between expanding the smokestack economy and promoting green growth appears unresolved.