China’s Five-Year Plan Stalls Climate Progress – Analysis

By Michael Lelyveld

China’s recently announced energy and environmental plans have received poor reviews as climate concerns continue to take a back seat to economic growth.

Analysts voiced disappointment with the economic and emissions targets for 2021 and the five-year period ending in 2025 after they were unveiled by Premier Li Keqiang in his work report to the National People’s Congress on March 5.

Energy experts and climate activists say the annual target-setting exercise has outlined less than ambitious and loose goals, leaving it unclear how President Xi Jinping will make good on his promise last September to reach peak emissions before 2030 and achieve carbon neutrality before 2060.

Environmental advocates had expected to see signs of major policy changes affecting emissions in the 14th Five-Year Plan, which begins this year.

Instead, the government appears to have pushed off the tough tasks of cutting coal use and accelerating efficiency until the future five-year period starting in 2026.

The U.K.-based Sunday Times called the targets “a great leap backwards on cutting emissions” that leaves China free to keep burning more coal.

“Higher emissions in 2021 and the next years will lift up the bar for China to achieve an emissions peak before 2030, requiring more strict measures to be implemented later on,” said Yan Qin, carbon analyst at Refinitiv Carbon, as quoted by Bloomberg News.

The government’s current plan calls for an 18-percent reduction in emissions per unit of gross domestic product, the same amount that was set for the previous five-year period. Per-unit energy use is targeted to improve by 13.5 percent, which is less than the 15-percent savings in the 13th Five-Year Plan.

“This is modest considering that China needs to speed up its action on climate to deliver carbon neutrality,” Li Shuo, senior global policy adviser for Greenpeace East Asia, told the South China Morning Post.

The government has also cut itself plenty of slack in setting a loose goal of “over 6 percent” for economic growth this year, allowing it to claim success for its central planning policies while committing only to “an appropriate range” for growth in the 2021-2025 period.

The leeway leaves the government free to maneuver over the annual efficiency performance and carbon emission ratios.

Political snags

An analysis by the Oxford Institute for Energy Studies (OIES) cautioned that China had outperformed its previous targets for carbon intensity reductions and that tougher restrictions may yet emerge in sectoral plans.

But it concluded that the plan “seeks to balance ambition and political reality. And to an extent, it was short on ambition and big on political reality.”

“Since the draft does not include a carbon emissions cap and continues to set energy intensity and carbon intensity targets per unit of GDP, with continued economic growth through 2025, carbon emissions will still rise every year,” OIES said.

China omitted a GDP target for last year, citing the uncertainty of the COVID-19 crisis. Economic growth fell to 2.3 percent from 6 percent in 2019, according to the National Bureau of Statistics (NBS).

The International Monetary Fund has projected recovery- driven growth of 8.1 percent this year, suggesting that the government will keep its commitments low.

In its outline of the 14th Five-Year Plan, the National Development and Reform Commission (NDRC) addressed the climate challenges only in general terms.

“We will make solid progress toward reaching peak carbon emissions and achieving carbon neutrality,” said the top planning agency.

The NDRC pledged to “formulate a medium- and long-term energy development plan,” without disclosing specifics of timing or content. The agency’s major commitment on coal was to “improve the distribution” and “ensure the supply.”

After the country’s record production of over 1 billion metric tons of steel last year, it is unclear whether the government will impose any significant constraints on high- polluting industries in order to meet climate targets, if it means sacrificing economic growth.

In November, Xi told the Communist Party’s Central Committee that it was “completely possible … to double the total economic volume or per capita income by 2035,” the official Xinhua news agency reported, raising the prospect of an economic growth race in the same time frame as the carbon emission goals.

Philip Andrews-Speed, a senior principal fellow at the National University of Singapore’s (NUS) Energy Studies Institute, noted that the climate consequences are still subject to the NDRC’s five-year energy plan and the sectoral plans for industries, which could be released later this year or in 2022.

“The pressure to keep GDP and employment growing may be in tension with the carbon neutrality goal unless the structure of the economy is radically transformed,” Andrews-Speed said by email.

“It is possible that these tensions will be neatly resolved by the upcoming Five-Year Plans, … but past practice suggests this will not be the case,” Andrews-Speed said in an NUS webinar on Feb. 24.

The calculations surrounding economic and energy targets and their effect on emissions illustrate the shortcomings of per-unit-of-GDP goals.

While the proportional reductions allow the government to claim progress, the absolute volume of carbon emissions has continued to climb with GDP growth.

Official data suggest that China’s emissions have increased with government efforts to boost economic expansion, especially when restraints have been eased after five-year targets have been achieved.

Last year, for example, China’s energy efficiency index for 2020 improved by a minuscule 0.1 percent after five-year goals were met early. The government has set this year’s target at 3 percent.

Similarly, carbon intensity fell by just 0.8 percent last year as the five-year reduction topped the target with savings of 18.8 percent.

Lofty goals

But the backsliding on efficiency has effectively stalled efforts to reach the 2030 and 2060 climate goals.

In a report for the U.K.-based climate group Carbon Brief, analyst Lauri Myllyvirta of the Center for Research on Energy and Clean Air said that China’s carbon dioxide (CO2) emissions jumped more than 4 percent in the second half of 2020, overcoming a first-half decline of 3 percent and pushing the increase for the full year to 1.5 percent over the pre-pandemic pace of 2019.

In December alone, China’s CO2 emissions soared 7 percent from a year earlier, the Paris-based International Energy Agency said.

At the heart of China’s emission problem is the failure to curb coal consumption, which continues to rise in volume terms although its share of total energy use has declined.

Last year, coal consumption rose 0.6 percent, the NBS reported without giving a tonnage figure. The China National Coal Association has estimated that consumption will be capped at 4.2 billion tons in the five-year period, allowing coal use to grow 6 percent by 2025.

So far, China’s energy plans leave room for the added volume of coal despite the goal of increasing the non-fossil share of energy to 20 percent under the 14th Five-Year Plan, up from 15.9 percent last year.

The non-fossil category includes nuclear power as well as renewable sources like wind and solar. The government has signaled a new drive for nuclear projects with a reference in this year’s work report, according to the Communist Party tabloid Global Times.

“While promoting the clean and efficient use of coal, we will make a major push to develop new energy sources, and take active and well-ordered steps to develop nuclear energy on the basis of ensuring its safe use,” Li’s report said.

But the report made no mention of ending the construction of new coal-fired power plants, a hot-button issue for environmental groups and climate change.

Last year, China added 38 gigawatts (GW) of new coal power, the equivalent of about one new plant per week, according to Myllyvirta and Carbon Brief, while 73 GW of new projects were announced.

Advocates argue that the new capacity will lock in a role for coal in the years and decades to come, slowing reductions in carbon emissions.

“Clearly, there’s no preparedness to put a stop to coal expansion,” Myllyvirta told Climate Home News.

The foot-dragging on carbon cuts in the current five-year period means that reductions will have to be accelerated even further in 2026-2030 to meet Xi’s peak emissions goal.

But by then, dozens of new coal plants will be operating with years of useful life remaining, making decommissioning more costly and politically difficult.