China on track to cut energy intensity by 20 percent
WASHINGTON (Reuters) - China is on track to cut its energy intensity -- the amount of power consumed for every dollar of economic output -- by 20 percent from 2005 levels, a Chinese environmental policy expert said on Tuesday.
As of 2009, the most recent year considered in the report by the non-governmental Climate Policy Initiative, China is on its way to meeting its own ambitious targets for 2010, according to Qi Ye, the group's director at Tsinghua University in Beijing.
China's overall emissions of climate-warming carbon dioxide are rising fast as its economy grows but more energy efficiency is helping to bring down energy intensity, Qi said at a briefing at the Brookings Institution think tank.
Qi attributed the progress to a renewable energy law that spurs development of hydro-electric and solar power, the construction of large-scale power plants and the closing of small, inefficient power plants.
He said the problem now is that China's next five-year plan calls for continued cuts: a 16 percent reduction in energy intensity and a 17 percent decrease in carbon intensity -- the amount of carbon emitted for each unit of economic output, usually gross domestic product.
The reductions made during the last five-year plan, the 11th, will be tough to duplicate, Qi said. Most were mandated by top-down administrative measures and not necessarily cost-effective.
"The policies in the 11th five-year plan were effective but not efficient," he said. "Looking back, many of the low-hanging fruits are gone and looking ahead is going to be extremely challenging for meeting the targets."
CHINA CARBON TAX?
The only sector of China's economy that showed an absolute reduction in energy use from 2005 through 2009 was agriculture, the report found.
In the next five years, China will try hard to restructure its economy for more balance between high-emitting heavy industries and low-emitting service industries. Qi said two-thirds of China's energy use comes from production and one-third from consumption, the opposite of the U.S. ratio.
A pilot program of emissions trading is starting this year and more stringent measures may be in prospect.
"It is possible in the next year we'll see some kind of carbon tax implemented," Qi said, adding that in certain provinces, the Chinese government "is considering an absolute cap on coal consumption."
China also wants to have 15 percent of its energy to come from non-fossil fuels by 2020, another difficult goal, said Trevor Houser, of the New York-based Rhodium Group, which conducts economic research.
If China meets this goal and limits its economic growth to 7 percent, it would have to add 320 gigawatts of non-fossil energy to the power grid, as much as eight times what the United States would be expected to add, Houser said.
"Even if they (the Chinese) get halfway there, this will transform fundamentally the global market for clean energy technology," Houser said at the same briefing. "It'll change its price-points, it'll change the relative economics of low-carbon technology versus high-carbon technology, and not just in China but other places."
(Editing by Bill Trott)