Christopher M. DentChristopher M. DentUniversity of LeedsUniversity of Leeds

China’s 12China’s 12thth Five Year Plan, Five Year Plan, Energy Security and Energy Security and Domestic StabilityDomestic Stability

China’s 12China’s 12thth Five Year Plan Five Year Plan

ContextContext• China’s FYPs date back to the early 1950sChina’s FYPs date back to the early 1950s• Maps out strategies and goals for economic Maps out strategies and goals for economic

development, specific projects and reformsdevelopment, specific projects and reforms• Less Less dirigstedirigste than before, now officially called than before, now officially called

‘guidelines’ rather than ‘plans’‘guidelines’ rather than ‘plans’

1212thth FYP (2011-2015) FYP (2011-2015)• Continuity of objectives from previous FYPs:Continuity of objectives from previous FYPs:

greening of economic growthgreening of economic growthgrowth with greater social equitygrowth with greater social equitypromoting domestic consumptionpromoting domestic consumption improve social infrastructures and safety netsimprove social infrastructures and safety nets foster emerging high-tech sectors, e.g. solarfoster emerging high-tech sectors, e.g. solar

• … … more emphasis on sustainable developmentmore emphasis on sustainable development

China’s 12China’s 12thth Five Year Plan: Five Year Plan:Key Issues for Energy and Climate Key Issues for Energy and Climate

ChangeChangeCC Related Targets and PoliciesCC Related Targets and Policies• ContextContext: CO: CO22 emissions, tons per capita: emissions, tons per capita:

China 4.9, EU 9.1, US 18.9China 4.9, EU 9.1, US 18.9• PoliciesPolicies: Improve energy efficiency laws : Improve energy efficiency laws

+ standards, energy-saving market mech-+ standards, energy-saving market mech-anisms (inc. new taxes), establish carbon anisms (inc. new taxes), establish carbon markets, improve emission monitoring markets, improve emission monitoring systems, new energy-efficient transport, systems, new energy-efficient transport, limit growth of energy-intensive sectorslimit growth of energy-intensive sectors

• TargetsTargets: : By 2015By 2015: coal’s share - 70% to 62%, : coal’s share - 70% to 62%,

17.3% reduction in energy-intensity 17.3% reduction in energy-intensity (20% target met in last plan)(20% target met in last plan)

By 2020By 2020: wind/solar/biomass: 200GW, : wind/solar/biomass: 200GW, nuclear 80GW, hydro 380GW (20% of nuclear 80GW, hydro 380GW (20% of total energy demand); 40-45% total energy demand); 40-45% reduction in energy-intensity (COreduction in energy-intensity (CO22 per per GDP unit) GDP unit)

China’s 12China’s 12thth Five Year Plan: Five Year Plan:Key Issues for Energy and Climate Key Issues for Energy and Climate

ChangeChangeGreen Energy Sector Green Energy Sector

DevelopmentDevelopment• Part of a broader programme of high-Part of a broader programme of high-

tech industrial policytech industrial policy• 7 strategic industries for ‘clean’ 7 strategic industries for ‘clean’

development: new gen IT, energy-development: new gen IT, energy-saving and environment protection, saving and environment protection, renewables, biotech, high-end renewables, biotech, high-end equipment, new materials and new-equipment, new materials and new-energy carsenergy cars

China’s ProvincesChina’s Provinces• ‘‘Rural modernisation’ and developing Rural modernisation’ and developing

new energy infrastructure and new energy infrastructure and production in China’s poorer provincesproduction in China’s poorer provinces

• New engines of growth for the Chinese New engines of growth for the Chinese economy?economy?

China’s China’s ProvincesProvinces

… … some much some much richer than richer than others… others…

GDP nominal p/capita, US$ 2009GDP nominal p/capita, US$ 2009• RichestRichest – Shanghai Municipality (11,361), Beijing – Shanghai Municipality (11,361), Beijing

Municipality (10,070), Tianjin Municipality (9,136), Municipality (10,070), Tianjin Municipality (9,136), Zhejiang (6,490), Jiangsu (6,475), Guangdong (5,965)Zhejiang (6,490), Jiangsu (6,475), Guangdong (5,965)

• PoorestPoorest – Guizhou (1,502), Gansu (1,879), Yunnan – Guizhou (1,502), Gansu (1,879), Yunnan (1,975), Tibet (2,216), Guanxi (2,316) (1,975), Tibet (2,216), Guanxi (2,316)

Populations in Populations in millionsmillions

Over US$10,000 US$5,000 – US$10,000 US$3,000 – US$5,000 US$2,000 – US$3,000 Under US$2,000

Key Drivers in China’s Energy Key Drivers in China’s Energy SecuritySecurity

Maintaining Dynamic Maintaining Dynamic MomentumMomentum

• High level energy inputs required to High level energy inputs required to keep high economic growth rates, albeit keep high economic growth rates, albeit more socially equitable and e-more socially equitable and e-sustainablesustainable

• Economic development as both a Economic development as both a mechanism for further reducing poverty mechanism for further reducing poverty in China and source of geopolitical in China and source of geopolitical powerpower

Reducing Supply RiskReducing Supply Risk• China’s increasing dependency on China’s increasing dependency on

imported energy:imported energy: diversification of energy partnersdiversification of energy partners domestic coal still viewed as more domestic coal still viewed as more

supply risk aversesupply risk averse• Renewables, nuclear and strategic oil Renewables, nuclear and strategic oil

reserve development also to help reserve development also to help mitigate this riskmitigate this risk

Key Drivers in China’s Energy Key Drivers in China’s Energy SecuritySecurity

Upgrading Old Energy Upgrading Old Energy InfrastructureInfrastructure

• Around half of Chinese industry is Around half of Chinese industry is still state-owned, energy inefficient still state-owned, energy inefficient and in need of investmentand in need of investment

• Upgrading with clean efficient Upgrading with clean efficient energy technologies – a huge energy technologies – a huge structural challengestructural challenge

Reducing Environmental RiskReducing Environmental Risk• Growing acknowledgement that Growing acknowledgement that

energy production and consumption energy production and consumption are the prime causes of increasingly are the prime causes of increasingly acute environmental problems in acute environmental problems in ChinaChina

• Health costs, urban degradation, Health costs, urban degradation, growing civil unrest, resource growing civil unrest, resource depletion and other pressures on the depletion and other pressures on the govt to find low carbon solutionsgovt to find low carbon solutions

China’s Fast Emerging Renewable China’s Fast Emerging Renewable Energy SectorsEnergy Sectors

Wind EnergyWind Energy• China’s wind energy China’s wind energy

capacity doubles annually capacity doubles annually over 2005-2009over 2005-2009

• 2005: 1.2GW capacity2005: 1.2GW capacity• 2010: 41.8GW (now the 2010: 41.8GW (now the

world’s largest, overtaking world’s largest, overtaking the US last year)the US last year)

• Over 50 Chinese wind Over 50 Chinese wind turbine producer firms, turbine producer firms, three in the world top 10three in the world top 10

• Rate of sector expansion Rate of sector expansion has far exceeded the has far exceeded the Chinese govt’s Chinese govt’s expectationsexpectations

• Still huge potential for Still huge potential for further sector expansionfurther sector expansion

Company Country Production (GW)

1. VestasDenmark

6.3

2. GE Wind USA 5.8

3. Sinovel China 5.8

4. Gamesa Spain 4.4

5. Suzlon India 3.5

6. Goldwind China 3.4

7. EnerconGermany

3.3

8. Dongfang China 3.3

9. RepowerGermany

2.9

10. NordexGermany

2.5

World Top 10 Wind Turbine World Top 10 Wind Turbine ProducersProducers

China’s Fast Emerging Renewable China’s Fast Emerging Renewable Energy SectorsEnergy Sectors

Solar EnergySolar Energy• This sector is also This sector is also

growing rapidly in growing rapidly in China…China…

• Now around 500 firms Now around 500 firms producing PV cells, producing PV cells, China has four of the China has four of the world top 10 producersworld top 10 producers

• Past emphasis on Past emphasis on export, now on export, now on increasing domestic SP increasing domestic SP capacitycapacity

• However, domestic SP However, domestic SP capacity is still very capacity is still very small (0.2GW in 2009)small (0.2GW in 2009)

• Plans to hit 2.0GW by Plans to hit 2.0GW by end of this yearend of this year

Company Country Production (MW)

1. First Solar US 1,322

2. Suntech China 1,090

3. Q-CellsGermany

1,000

4. JA Solar China 800

5. Solar WorldGermany

710

6. Sharp Japan 695

7. Trina Solar China 600

8. Yingli China 600

9. Gintech Energy Taiwan 600

10. Kyocera Japan 440

World Top 10 Solar Photovoltaic Cell World Top 10 Solar Photovoltaic Cell ProducersProducers

Green Energy Investment in Green Energy Investment in China and Europe (US$ bn)China and Europe (US$ bn)

1010

0.2 0.1 0.3 0.3 0.5 0.6 0.4

1.4 1.2 1.3

2.52.3 2.5

3.2

4.2

3.4

2.8

7.2

6.26.6

5.5

6.7

9.9

12.9

10.7

12.4

Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

2.92.0 1.8

2.53.6

5.44.7

5.3 4.7

8.9

4.3

10.4

7.7

9.2

11.3

22.9

9.4

13.2

15.6

10.9

7.9

16.5

12.5

8.0 7.6

5.6

Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

China

Europe

Source: Bloomberg New Energy Finance

China’s Investment in Green China’s Investment in Green EnergyEnergy

Concluding PointsConcluding Points• Under the 12Under the 12thth Five Year Plan (2011- Five Year Plan (2011-

2015), China will continue to raise 2015), China will continue to raise its investment across a number of its investment across a number of green energy sectorsgreen energy sectors

• At the same time, China will At the same time, China will maintain its burgeoning demand for maintain its burgeoning demand for oil, coal and gas, and faces a oil, coal and gas, and faces a number of structural challenges in number of structural challenges in improving its energy efficiency improving its energy efficiency levelslevels

• China’s ‘common but differentiated China’s ‘common but differentiated responsibilities’ view on climate responsibilities’ view on climate changechange

• Positive signs ahead…Positive signs ahead…recent developments in US-China recent developments in US-China

clean energy diplomacyclean energy diplomacyexpect future enhancement of EU-expect future enhancement of EU-

China dialogue on climate China dialogue on climate change?change?