What to make of China’s efforts to meet its energy intensity targets

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Adam Moser at Vermont Law School’s China Environmental Governance blog drew a contrast between a blog post of mine discussing China’s efforts to meet its energy targets, and a post by Michael Levi at the Council on Foreign Relations positing the view that China’s energy statistics “have become pretty meaningless.”   Mr. Moser frames our posts as being on opposite sides of the argument (“circus or savior”), but it is perhaps more accurate to say that we are looking at different aspects of the same picture. 

There are really two key questions being addressed here. 

  • First, what is China doing to address its contribution to global climate change? 
  • Second, are these efforts achieving the reported levels of success? 

I focus primarily on the first question.  Mr. Levi on the second. 

What is China doing?

I won’t rehash my post here, but my point was simply to point out a fact that many outside have failed to appreciate:  while national climate legislation in the U.S. has languished, China has over the last five years been putting in place the framework for a massive, national effort to reduce energy intensity.   A lot of attention has been paid to China’s moves on renewable energy and clean energy technologies, but less has been said about this very fundamental change in governance.  China has made its 20 percent energy intensity and 10 percent pollution reduction targets national targets of the highest priority and has said that government officials and managers in state-owned facilities will face serious consequences for failing to meet the targets.  Moreover, China has already announced that it will rely on this system to achieve its announced 40 to 45 percent carbon intensity reduction target by 2020.  Earlier this week, a Chinese official said that China will seek to achieve a 17.3 percent reduction in its energy intensity for the 12th Five-Year Plan (FYP) period (2011-15), and a 16.6 percent reduction for the 13th FYP period (2016-20).

The pressure to meet the target has driven a great deal of action, particularly this year, the final year before accounts are settled for the 11th FYP.  The effort has revolved around the shut-down of outdated capacity, differential pricing policies, limits to “high energy intensity, high pollution” projects, an increase in inspections to enforce energy efficiency standards, and so on (Chinese).*  There has also been a greater level of transparency (at least at the macro level) about performance against targets (Chinese).  Here is a selected list of announcements:

  • NDRC has invested over 200 billion yuan in energy efficiency and pollution reduction measures and projects in the 11th FYP period (Chinese). 
  • Jiangsu Province announced shut down of “outdated capacity” in 142 companies (Chinese), and has implemented punitive pricing for excessive energy consumption (Chinese). 
  • Guangxi Autonomous Region announced it had met its targets for retiring outdated capacity: 644 MW of power generation capacity, 2 million tons of steel production capacity, 4.464 million tons of cement production capacity, 112,300 tons of paper production capacity, and 21,000 tons of iron alloy production capacity (Chinese). 
  • Inner Mongolia triggered a contingency plan to limit production in certain high-energy using industries and a variety of other measures (Chinese).
  • Shandong Province has taken emergency action against 773 energy-intensive enterprises to achieve its energy intensity target (Chinese).

Some of the more recent and extreme actions to reduce energy consumption (e.g., intentional citywide blackouts) don’t represent sustainable energy conservation policies, but can be explained by the extreme pressure that local governments are under to meet their energy intensity reduction targets by the end of this year.  In Anping County in Hebei Province, for example, the local government cut off power to hospitals and streetlights in an attempt to meet its energy saving targets.  Strict targets often lead to this kind of gaming and to unintended behaviors and outcomes.  Indeed, there is a rich body of academic literature that addresses the kinds of governance challenges that arise in implementing China’s target responsibility systems (see for example, here, here, and here).   The central government has responded to these draconian measures and told local and provincial level leaders that such unsustainable and heavy-handed measures are not permissible (Chinese).  As China continues to rely heavily on the target responsibility system to achieve its energy efficiency and emissions reduction goals, continued vigilance needs to be paid to preventing this sort of gaming and instead encouraging long-term investments and incentives for energy efficiency in industry and buildings.

Are China’s actions working?

If we believe the announced numbers, China has made a substantial reduction in its energy intensity over the last four years, reducing energy intensity by 15.61 percent over 2005 levels by the end of 2009.  One question is how much of this is due to long-term improvements in efficiency vs. short-term gaming.  The question Mr. Levi raises is whether we can believe the energy intensity numbers that China reports at all [his colleague at the Council on Foreign Relations, Elizabeth Economy, also raises the equally critical question of what the U.S. is doing in this regard].

We know that overly strict targets can lead to falsification of data.  If you have watched The Wire or read this article about manipulation of crime statistics in New York City, you get a sense of the perverse incentives and possibilities for data falsification that an extreme focus on achieving targets can create even in the U.S.  But is Chinese data as “meaningless” as Mr. Levi suggests?  It is hard to argue that China’s energy intensity and energy efficiency have not improved through the numerous energy efficiency programs that China’s government has implemented over the last four years, like the Top 1000 Enterprises program, small plant closures, etc.  (see this Lawrence Berkeley National Laboratory assessment for an excellent review of China’s efficiency programs in the 11th Five Year Plan.)  However, it is also true that people in and out of China have reason to be uncertain about the energy data that China reports. 

Away from the politically-charged atmosphere of the climate negotiations, there is a great deal of technical and policy work going on in China to improve monitoring of energy consumption and emissions and data quality.  My colleague Barbara Finamore recently wrote about some of China’s domestic efforts.  From our vantage point on-the-ground here in China, we are aware of the serious work that China is doing to improve energy efficiency and reduce pollution, and the efforts to improve measurement, monitoring and reporting in these areas.  We also know that thought is being put into how to deal with the challenges of implementing China’s energy and environmental targets. 

The best thing China can do at this stage is to continue to strengthen its efforts to build internal capacity for monitoring and assurance of data quality, and to share this information openly in China and on the international stage.  This won’t be any easy task, but by doing so China will strengthen its ability to measure its progress in achieving its own domestic climate change objectives, get recognition for its efforts abroad, and take a leadership role in the global battle to solve climate change.

 

* Many of the sources hyperlinked in this post are Chinese-language only.  For English-only readers, go to translate.google.com for a somewhat workable automatic translation.

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