Targets for the Provinces: Energy Intensity in the 12th Five-Year Plan

With Premier Wen Jiabao’s announcements on the 12th Five-Year Plan (12th FYP), China is tasked with improving the national energy intensity of its economy (energy per unit of GDP) by 16% over the next five years.1 Attention now turns to allocation of local-level targets. For the 12th FYP, the Chinese government has indicated that it seeks to use a more scientific methodology to better estimate the varying potential for energy saving across the provinces, to facilitate a structural shift to low-carbon development, as well as to achieve an equitable distribution of targets. What would such a methodology look like, and what targets would result from it?

Lawrence Berkeley National Laboratory (LBNL), with collaboration from China’s Energy Research Institute (ERI), has developed a sector-based methodology for target allocation among the provinces. The methodology utilizes measurable indicators of each province’s energy and economic conditions to show transparency and effectiveness in meeting the national goal. Findings and analysis are available in a March 2011 report and highlighted here.2

Three Energy Sectors and GDP

The new sector-based methodology developed by LBNL with collaboration from ERI considers China’s goals and characteristics, along with international experience in target setting, such as the European Union three-sector approach for allocation of the Kyoto Protocol carbon target among EU Member States. Because energy intensity varies dramatically among different sectors of the economy, and because absolute energy consumption differs widely among provinces and economic sectors, the allocation methodology for China’s intensity target disaggregates total provincial energy use into three end-use sectors:

  1. Industrial Energy (heavy and light),
  2. Residential Energy, and
  3. Other Energy (transport, service sector, agriculture, etc.).

These sectors focus on end-use energy consumption under the jurisdiction of the provinces. The three energy sectors, in combination with total provincial GDP, yield provincial economic energy intensities.

Sectoral Indicators

An important feature of the methodology is the use of measureable indicators to estimate potential energy savings and targets for each sector. Some indicators are snap-shots in time, such as the Industrial share of energy, while others indicators represent trends over time, such as growth rates in Other Energy. For Residential Energy, the methodology uses a per capita convergence approach, adjusted for weather, aimed at providing a common level of comfort to residents in all provinces. All of the indicators enable comparison across provinces of different sizes, and can help to track progress toward the targets.

Target Allocation Scenarios

LBNL looked at several approaches to distributing targets, emphasizing different energy and economic conditions of the provinces. Scenario 1 (Energy Saving Potential) emphasizes recent trends and potential for energy saving in each province, and uses sector-specific growth rates and targets energy savings based on industrial energy intensity and other indicators. Scenario 2 (Equal Rates) considers the dynamic nature of China’s provinces and the possibility of changing trends over the next five years; it uses equal growth rates along with targeted energy savings. Scenario 3 (Economic Capacity) emphasizes each province’s level of economic development, in terms of GDP per capita. All scenarios meet the official national intensity target of 16% and are based on the official GDP targets for the 12th FYP.

Draft Allocations Circulating

A news report from mid-March indicates that NDRC circulated a draft target allocation plan to local DRCs and Economic Trade Commissions to ask for comments, before the national intensity target was officially announced. The draft plan (“十二五”节能 指标初步分解) calls for China’s 31 provinces to be divided into five groups, with a target assigned to each group.3 Overall, the draft targets range from 10% to 18% reduction of energy intensity from 2010 to 2015. The draft plan is said to emphasize the economic development level of each province, but details of the approach have not yet been released.

Analysis of Target Scenarios and Draft Official Targets

Analysis of the draft NDRC targets and three LBNL target scenarios,shows that the official allocations vary in approach, with some provinces receiving a target based on economic capacity, others with targets based on energy savings potential, and still others not aligned with any of the scenarios. For Guangdong, China’s second largest energy consumer and least energy-intensive province, the proposed 18% official target matches Scenario 3, emphasizing Guangdong’s economic strength rather than its potential for energy saving (a 14% target under Scenario 1). In contrast, the draft 17% target for Shandong—with the largest energy consumption and greater share of industrial energy—matches Scenario 1, emphasizing Shandong’s energy saving potential. The proposed 16% target for Sichuan, a moderately poor province, is tougher than any of the sector-based scenarios (11%-13%); the basis for the official target is unclear. For the heavily industrial, fast growing province of Inner Mongolia, NDRC allotted a low target of 15% compared to scenario targets of 18% to 20%, despite Inner Mongolia’s very high energy intensity and high GDP per capita.

Negotiation Ahead. Provinces have been conducting their own analyses during the past year and are in the midst of tough negotiatiations with the central government over the final 12th FYP intensity targets. Western provinces are calling for a lighter burden, while low-intensity provinces like Guangdong ask for recognition of the investments and savings already accomplished.4 Analysis by ERI, along with the sector-based methodology offered by LBNL, can help the provinces and the center reach fair targets. The use of measurable indicators as a basis for target setting can also help to track progress and identify meaningful strategies to achieve targets over the next five years.

Stephanie Ohshita is an Associate Professor of Environmental Science at the University of San Francisco, and a Visiting Faculty (2009-2010) in the China Energy Group of Lawrence Berkeley National Laboratory.
Lynn Price is a Staff Scientist in the China Energy Group at Lawrence Berkeley National Laboratory


References:

  1. Key Targets of China’s 12th FYP.” China Daily. 2011.3.5. http://www.chinadaily.com.cn/xinhua/2011-03-05/content_1938144.html ; “China Unveils Economic Plan With Focus on Raising Incomes and Reining in Pollution.” New York Times. 2011.3.4. http://www.nytimes.com/2011/03/05/world/asia/05china.html
  2. The full LBNL report is available on the LBNL China Group website in English and in Chinese.
  3. “十二五”节能指标初步分解 指标细节存争议 [Debate over details of the Draft 12th FYP energy saving target decomposition]. 2011.3.16. http://content.caixun.com/CX/01/fi/CX01file.shtm
  4. Ma, Haibing. 2011. “Can China Do a Better Job Delegating Its 2015 Energy and Emissions Targets?” Worldwatch Blog. 14 Jan. Online: http://blogs.worldwatch.org/can-china-do-a-better-job-delegating-its-2015-energy-and-emissions-targets/