China’s 12

th

Five Year Plan, Energy Security and Domestic Stability Christopher M. Dent

University of Leeds

China’s 12

th

Five Year Plan Context

• • • China’s FYPs date back to the early 1950s Maps out strategies and goals for economic development, specific projects and reforms Less

dirigste

than before, now officially called ‘guidelines’ rather than ‘plans’

12

th

• •

FYP (2011-2015)

Continuity of objectives from previous FYPs:  greening of economic growth  growth with greater social equity  promoting domestic consumption  improve social infrastructures and safety nets  foster emerging high-tech sectors, e.g. solar … more emphasis on sustainable development

China’s 12

th

Five Year Plan: Key Issues for Energy and Climate Change

CC Related Targets and Policies

• • • Context: CO 2 emissions, tons per capita: China 4.9, EU 9.1, US 18.9

Policies: Improve energy efficiency laws + standards, energy-saving market mech anisms (inc. new taxes), establish carbon markets, improve emission monitoring systems, new energy-efficient transport, limit growth of energy-intensive sectors Targets:  By 2015: coal’s share - 70% to 62%, 17.3% reduction in energy-intensity (20% target met in last plan)  By 2020: wind/solar/biomass: 200GW, nuclear 80GW, hydro 380GW (20% of total energy demand); 40-45% reduction in energy-intensity (CO 2 per GDP unit)

China’s 12

th

Five Year Plan: Key Issues for Energy and Climate Change

Green Energy Sector Development

• • Part of a broader programme of high-tech industrial policy 7 strategic industries for ‘clean’ development: new gen IT, energy-saving and environment protection, renewables, biotech, high-end equipment, new materials and new-energy cars

China’s Provinces

• • ‘Rural modernisation’ and developing new energy infrastructure and production in China’s poorer provinces New engines of growth for the Chinese economy?

China’s Provinces

… some much richer than others… Over US$10,000 US$5,000 – US$10,000 US$3,000 – US$5,000 US$2,000 – US$3,000 Under US$2,000 GDP nominal p/capita, US$ 2009

• •

Populations in millions Richest

Municipality (10,070), Tianjin Municipality (9,136), Zhejiang (6,490), Jiangsu (6,475), Guangdong (5,965)

Poorest

– Shanghai Municipality (11,361), Beijing – Guizhou (1,502), Gansu (1,879), Yunnan (1,975), Tibet (2,216), Guanxi (2,316)

Key Drivers in China’s Energy Security

Maintaining Dynamic Momentum

• • High level energy inputs required to keep high economic growth rates, albeit more socially equitable and e-sustainable Economic development as both a mechanism for further reducing poverty in China and source of geopolitical power

Reducing Supply Risk

• • China’s increasing dependency on imported energy:  diversification of energy partners  domestic coal still viewed as more supply risk averse Renewables, nuclear and strategic oil reserve development also to help mitigate this risk

Key Drivers in China’s Energy Security

Upgrading Old Energy Infrastructure

• • Around half of Chinese industry is still state-owned, energy inefficient and in need of investment Upgrading with clean efficient energy technologies – a huge structural challenge

Reducing Environmental Risk

• • Growing acknowledgement that energy production and consumption are the prime causes of increasingly acute environmental problems in China Health costs, urban degradation, growing civil unrest, resource depletion and other pressures on the govt to find low carbon solutions

China’s Fast Emerging Renewable Energy Sectors

Wind Energy

• • • • • •

World Top 10 Wind Turbine Producers China’s wind energy capacity doubles annually over 2005-2009 2005: 1.2GW capacity 2010: 41.8GW (now the world’s largest, overtaking the US last year) Over 50 Chinese wind turbine producer firms, three in the world top 10 Rate of sector expansion has far exceeded the Chinese govt’s expectations Still huge potential for further sector expansion Company 1. Vestas 2. GE Wind 3. Sinovel 4. Gamesa 5. Suzlon 6. Goldwind 7. Enercon 8. Dongfang 9. Repower 10. Nordex Country Denmark USA China Spain India China Germany China Germany Germany Production (GW) 6.3

5.8 5.8 4.4 3.5 3.4 3.3 3.3 2.9 2.5

China’s Fast Emerging Renewable Energy Sectors

Solar Energy

• • • • •

World Top 10 Solar Photovoltaic Cell Producers This sector is also growing rapidly in China… Now around 500 firms producing PV cells, China has four of the world top 10 producers Past emphasis on export, now on increasing domestic SP capacity However, domestic SP capacity is still very small (0.2GW in 2009) Plans to hit 2.0GW by end of this year Company 1. First Solar 2. Suntech 3. Q-Cells 4. JA Solar 5. Solar World 6. Sharp 7. Trina Solar 8. Yingli 9. Gintech Energy 10. Kyocera Country US China Germany China Germany Japan China China Taiwan Japan Production (MW) 1,322 1,090 1,000 800 710 695 600 600 600 440

China’s Investment in Green Energy

Green Energy Investment in China and Europe (US$ bn)

9.9

12.9

10.7

12.4

7.2

6.7

6.2

6.6

5.5

China

3.2

4.2

3.4

2.5

2.3

2.5

2.8

1.4

1.2

1.3

0.2

0.1

0.3

0.3

0.5

0.6

0.4

Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 22.9

10 16.5

13.2

15.6

12.5

Europe

2.9

2.0

1.8

2.5

3.6

5.4

4.7

5.3

4.7

8.9

4.3

10.4

7.7

9.2

11.3

9.4

10.9

7.9

8.0

7.6

5.6

Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

Source: Bloomberg New Energy Finance

Concluding Points

• • • • Under the 12 th Five Year Plan (2011 2015), China will continue to raise its investment across a number of green energy sectors At the same time, China will maintain its burgeoning demand for oil, coal and gas, and faces a number of structural challenges in improving its energy efficiency levels China’s ‘common but differentiated responsibilities’ view on climate change Positive signs ahead…  recent developments in US-China clean energy diplomacy  expect future enhancement of EU China dialogue on climate change?