Can a Planned Economy Turn China’s Gray Skies Blue Again?

Can a Planned Economy Turn China’s Gray Skies Blue Again?

China is the world’s largest carbon emitter. But it’s also still a developing country, making it a challenge to strike a balance between environmental protection and economic growth. Now, as China’s growth is slowing and its reliance on heavy industry retreating, the country’s leaders are speaking more forcefully about reducing emissions. At the Two Meetings, the annual legislative sessions held in Beijing each March, Chinese lawmakers will ratify the country’s 13th Five-Year Plan. This important economic document contains new measures to address rampant pollution of the country’s air, soil, and water. In this ChinaFile conversation, experts discuss how the plan can accomplish its goals — and if those goals go far enough.

Deborah Seligsohn, researching environmental governance at the University of California at San Diego, and Angel Hsu, assistant professor at Yale-National University of Singapore College and the Yale School of Forestry and Environmental Studies:

For the first time ever, a senior Chinese leader announced in his work report presented on Mar. 4 to the National People’s Congress, China’s legislature — his most important formal speech of the year — that environmental violators and those who fail to report such violations will be “severely punished.” In the speech, Premier Li Keqiang reported that China had succeeded in meeting or exceeding the previous five-year plan’s environmental goals. The draft 13th Five-Year Plan, released March 5 and scheduled to be passed (likely without amendment) on Mar. 16, builds on that success, requiring greater reductions in the emissions of many pollutants and adding a major air pollutant, volatile organic compounds, to those with specific reduction goals. The headline news for many has been the announcement of a total energy consumption cap of 5 billion tons of what Chinese experts term “coal equivalent,” a standardized measurement used to add all energy sources together — thus for the first time stating that overall energy use, not just coal use, will be limited. At the same time, perhaps in recognition that progress is moving more quickly on air quality than in other areas of environmental concern, the work report and the five-year plan heavily emphasize the need to improve water and soil quality.

China’s announcement of a total energy consumption cap of the equivalent of 5 billion metric tons of coal comes after 12th Five-Year Plan’s success, in which energy and carbon targets were met and surpassed. Between 2011 and the end of 2015, energy intensity (energy consumption per unit of GDP) fell by 18.2 percent and carbon intensity declined 20 percent. These declines are due in large part to the drop in coal consumption: down 3.7 percent in 2015, following a 2.9 percent decrease in 2014. That markedly slowed consumption, coupled with the decline in heavy industry, suggests that achieving a 5 billion metric ton energy cap will not be challenging.

Looking to the next five years, Chinese targets again seem easily manageable, and also put the nation in a good position to meet its commitments under the Paris Agreement on Climate Change, which China signed in December 2015. Under the 13th Five-Year Plan, China plans to reduce energy intensity by 15 percent. Demonstrating that non-fossil energy sources are becoming a more important part of the Chinese economy, the carbon intensity target of 18 percent is now a full three percentage points higher than the energy intensity target. In other words, while five-sixths of the carbon target will be achieved by improving energy efficiency and the shift from heavy industry to less energy-intensive sectors, the remaining one-sixth will rely on rapid growth in renewable and nuclear energy. This is a significant increase in the importance of non-fossil fuel from previous five-year plan targets, in which there was only a one-percentage-point difference in the two targets.

The above post was excerpted from the Chinafile article “How China’s 13th Five Year Plan Addresses Energy and the Environment.”

Sam Geall, research fellow on Low-Carbon Innovation in China at the University of Sussex:

China’s environment and climate efforts under its 13th Five-Year Plan is not yet entirely fleshed out — policymaking will continue throughout the year as various ministries and agencies introduce their plans — but the headline targets are praiseworthy.

Recent data suggest the Chinese government is showing considerable low-carbon ambition in its plans for an economic transition. Scholars John A. Mathews and Hao Tan recently concluded in an analysis of China’s electricity sector, for example, that the country is “liberating itself” from fossil fuels, with all their geopolitical ramifications and environmental drawbacks, becoming the “world’s first case of a country breaking free of carbon lock-in by building its own renewable energy industries.” Encouragingly, this strategy — Mathews and Tan called it “building energy security through manufacturing” — is a self-interested move for China, one driven by immediate pollution and energy security concerns and a longer term industrial strategy, as much as by climate change.

And yet, such a top-down, centralized approach, focused on targets and technology, is rarely enough. In China, it misses both obstacles and opportunities for green transformations at the ground level. First, environmental and climate legislation needs effective enforcement, and this requires popular buy-in, through NGO and public participation, for example, as well as transparency, such as through information disclosure, media reporting, and more. These have historically been supported as key elements of green policymaking in China, but may be imperiled by draconian regulations on foreign NGOs and the curtailment of Internet speech and media reporting. Whether or not the government permits it officially, public anxieties are likely to continue to shape policymaking around the country’s energy choices, particularly where nuclear energy is concerned.

Second, beyond the question of popular sentiment and engagement, there is bottom-up dynamism already driving green transformations in China, which could be harnessed rather than stymied or overlooked. Take the case of solar water heaters: these are indigenous Chinese designs that have barely benefited from state support, yet China has the world’s largest installed capacity. The reason? This disruptive technology is affordable and compatible with existing social practices — it has thus actively and widely been adopted by many, mainly rural, families. Electric bicycles, another enormous unsubsidized success, have also been widely adopted across China. These not only help to mitigate air pollution, but also could potentially revolutionize urban mobility away from high-energy, high-congestion car-based systems. In such cases, much as environmental regulations can benefit from popular input and supervision, China could learn from and support its demand successes in low-carbon innovation and consider both the social barriers and emergent opportunities of the grand, technological transition it hopes to realize.

Li Shuo, senior climate and energy policy officer for Greenpeace East Asia:

The environmental targets announced in the draft 13th Five-Year Plan and the government’s work report are important but hardly surprising, as most of them have already been hinted at or embedded in previous policies and plans. The more important targets, as Geall pointed out in his post, will be released later by individual sectors. Will a coal cap be announced in addition to the existing energy cap? Will China take a further step by introducing an absolute control of its carbon dioxide emissions (current targets are intensity based, making emissions subject to GDP growth)? These are the undecided questions China’s policy makers will debate in coming months.

Whenever these targets are released, they will almost certainly represent a low bar, set with confidence that they will be successfully achieved. From an environmental point of view, this is not necessarily a problem. China’s environmental crisis deserves these targets as the absolute redlines. But for people who are reading between the lines trying to find guidance of China’s environmental trajectory in the next five years, a rigid interpretation of the five-year plan will certainly land them in an overly conservative space.

China is standing at a delicate junction. The 12th Five-Year Plan started with the tail wind of the 2009 stimulus package, with the economy still following its well-trod path of investment-fueled growth. But the beginning of the second half of this decade features a different norm. As we have already seen in many fields, the Five-Year Plan simply has a hard time catching up with rapid changes. The environment is no exception. Just two years ago, it seemed unlikely that China’s coal consumption, the number one contributor to air pollution and the surge of global carbon dioxide emissions, would decline. But China’s appetite for coal has now plummeted two years in a row. This has driven China’s carbon dioxide emissions down. It’s possible that emissions peaked in 2014, a full 16 years ahead of the pledged peak year of 2030.

What this suggests is that the mentality behind setting five-year targets needs to be shifted. Given the severity of China’s environmental crisis, the five-year plan might inject more momentum if the targets are set more ambitiously. After all, since environmental problems are at the forefront of all of China’s social and economic challenges, it wouldn’t be a bad idea to take the first step from there.

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