China’s New Energy Consumption Control Target

China’s State Council in late January approved an “energy consumption control target” to keep the country’s total energy consumption below the equivalent of 4 billion tonnes of coal per year by 2015. China’s Bureau of Statistics reported in early 2013 that the country’s energy consumption in 2012 was 3.62 billion tonnes of coal equivalent (TCE), meaning the Chinese government is trying to cap total energy growth at just above 3% per year through 2015.

The Nature of the Target

Although the new control target is ambitious, previous “control targets” for total energy consumption have only been partially successful. This is the not the first time the national government has adopted a “control target” for total energy consumption. The 11th Five Year Plan (FYP) for Energy Development set the “control target for total energy consumption” at approximately 2.7 billion TCE. Total energy consumption in 2010 was 3.25 billion TCE, or 20% higher than the target.

The “energy consumption control target” is an example of an “expected target” (Yuqi Xing 预期性). This means that the government is supposed to use macro-adjustment polices, such as fiscal, industrial, and investment policies to create the enabling economic, institutional and market environment for reaching the goal. The government also uses “bounded targets,” such as the energy intensity target of the 12th Five Year Plan, in which the government may use administrative means to ensure its attainment. “Expected targets” are generally less likely to be achieved precisely as they are accomplished by manipulating secondary forces rather than using direct intervention.

However, this time around, the government seems to be more serious about controlling energy consumption. The 12th FYP for Energy Development makes energy consumption control its main theme, stating that control of energy intensity and total energy consumption is the primary goal of the plan. It is also the first time the central government has disaggregated total energy consumption,, placing the responsibility for achieving the target on the local governments. In a centralized political system like China, this has proved to be an effective way to spur action. In the 11th FYP, the energy intensity target was disaggregated, but not the total energy consumption target. As a result there was a reduction of 19.1% in energy intensity (the target was 20%), while the total energy consumption was 20% over the target.

It is also noteworthy that the energy intensity reduction goal in the 12th Five Year Plan is 16% over five years. Assuming this is a hard target which will be met and doing some quick math, I found that the current total energy consumption target can be met when annual GDP growth is around 7.95% or less. The projected economic (GDP) growth annual goal in the 12th Five Year Plan is 7%.

Ambition Level on Coal

The 12th FYP for Coal Industry Development sets an expected target of 3.9 billion tonnes of coal consumption by 2015. This calculates to roughly 2.785 billion TCE. The 12-FYP for Energy Development set an expected target for coal to account for 65% of total energy consumption which calculates to 2.6 billion TCE (it was about 69.4% in 2011). Therefore, the 12th FYP for Energy Development actually has higher ambition than the 12th FYP for Coal Industry Development to limit coal consumption.

Although the previous coal-cap (set by the 12th FYP for Coal Industry Development ) is an “expected target”. and the total consumption target is also an “expected target”, the disaggregation does give the total consumption target more teeth which may significantly smooth out its implementation.

It is worth noting that in the previous draft version of the 12th FYP for Energy Development, the total energy consumption target was 4.1 billion TCE. The 0.1 billion TCE downward change from the draft may reflect the desires of high level leadership. The plan anticipates 7.8% annual growth for coal-fired power plant installation capacity, which is higher than the coal consumption growth in general.

From various media reports, Chinese experts deem the coal target to be very demanding, but fear that China may not be able to meet such an ambitious target. (Zhongshan Wu from ERI)

The 12th FYP for Energy Development contains other energy targets for 2015:

  • Natural gas to account for 7.5% of the total consumption. It was 4.4% in 2010. The plan also has a expected target for natural gas production to grow by 10.5% per year (including a 16.2% growth rate per year for electricity production from natural gas)until 2015
  • Non-fossil fuel to account for 11.4% of the total energy consumption and 30% of the installed capacity for power generation. Solar and wind power generation to have annual growth of 89.5% and 26.4% respectively until 2015.

Ranping Song is the Team Lead of the Climate & Energy Program in WRI’s China Office. Photocredit: Wikimedia Commons