China’s INDC

Sebastian Wienges,

Climate Policy Team

April 18, 2016

China’s Role in the international INDC Process

Title of Presentation 2

• Strong supporter of international process:

“To act on climate change (…) is not only driven by

China’s domestic needs for sustainable development (…)

but also driven by its sense of responsibility to fully engage

in global governance (…).”

• China announced (in 2014) to submit their

INDC early, aimed for agreed deadline (March

31, 2015)

Title of Presentation 3

• Understands INDC as commitment, not only

contribution, and supports ambitious

commitments:

“China will take on international commitments that

match its national circumstances, current

development stage and actual capabilities by

enhancing mitigation and adaptation actions and

further strengthening south-south cooperation on

climate change.”

China’s Role in the international INDC Process

China’s Preparation of their INDC

Title of Presentation 4

• Aiming for an ambitious target: absolute target

• Struggled with forecasting rapid urbanization

and industrialization

interest in exchange with developed countries

how to account for development when committing

to targets

• Partnership for Market Readiness supported

economic modelling

China’s INDC

Title of Presentation 5

• Submitted on June 30, 2015

• 15th country which submitted

• 5th developing/emerging country which

submitted

• Intensity target: -60% up to -65% CO2

Emissions intensity per GDP by 2030

• Additional target: Emission Peak around 2030

China’s INDC

Title of Presentation 6

• Includes plans in all GHG emitting sectors:

Energy, Transport, Buildings, Industries, Waste,

Agriculture, Forestry

• Includes quantified sectoral targets for: Energy

(renewable energy, methane), Transport (public

transport), Buildings, Industries (HCFCs),

Forestry, Agriculture (fertilizers)

• Includes market-based policies (ETS, green

procurement, green credit mechanism,

preferential taxation and pricing for RE)

Carbon Markets in China’s INDC Implementation

Title of Presentation 7

• "To build on carbon emission trading pilots,

steadily implementing a nationwide carbon

emission trading system and gradually

establishing the carbon emission trading

mechanism so as to make the market play the

decisive role in resource allocation"

• Committed to promote carbon markets

internationally

Thank you

for your

time and attention

Sebastian Wienges

swienges@worldbank.org

Ana Bucher

abucher@worldbank.org

Reviewing China’s

climate targets

under the 13th Five

Year Plan

April 2016

Agenda

10

Overview of key domestic and international climate targets

Key trends of China’s climate action

Key differences between the 13th FYP and the Paris Agreement

Introduction

Key challenges ahead

Overall coherence of China’s climate targets and strategies

11

• In March 2016, China’s National People’s Congress

passed the 13th Five Year Plan (FYP)

• The 13th FYP can be considered as the country’s

overarching plan for 2016-2020, with a set of binding

targets and guidelines for a range of social, economic

and environmental issues

Introduction

12

Overview of key climate targets as set out in

China’s 13th FYP and (I)NDCsType FYP (2016-2020) (I)NDCs (2020 and 2030 targets)

Emission reduction • By 2020, reduce its carbon intensity per unit of GDP by 18% and energy intensity per unit of GDP by 15% from 2015 levels

• By 2030, achieve the peaking of carbon dioxide emissions and lower carbon intensity per unit of GDP by 60% to 65% from the 2005 level

Energy • Invest a total of RMB 2.3 trillion in clean energy• In the next five years, China plans to more than double

its wind energy capacity, nearly treble its solar capacity• Over the next three years, China plans to cut down 20%

of its coal production

• By 2030, increase the share of non-fossilfuels in primary energy consumption toaround 20%.

• Control total coal consumption; enhancethe use of clean coal

Clean transport • By 2020, China aims to increase cumulative production and sales of clean energy vehicles by tenfold, to 5 million each

• Control emissions from buildings and transport

Infrastructure • 800 billion RMB to rail projects investment to enhanceenergy efficiency of intercity travel

• China will also continue large-scale investment in lowcarbon infrastructure – RMB 3.8 trillion on rail and RMB2.4 trillion on grid (including an estimated investment ofRMB 175 billion on smart grid) during the 13th FYP

• To promote the share of public transport inmotorized travel in big-and- medium-sizedcities reaching 30% by 2020

• To scale up distributed energy andstrengthen the construction of smart grid

Forest • By 2020, reach 23.04 % forest coverage. • By 2030, increase the forest stock volume by around 4.5 billion cubic meters on the 2005 level

Cross-cutting • Government is required to develop the rules and regulations to manage the program oversight of the national emission trading scheme, which it plans to launch in 2017

• Scale up cross-cutting policies like emissions trading and improve emissions-accounting systems

13

• Level of detail and clarity

• The FYP provides more measurable targets and lays out specific tools

and foundations (However, follow-up plans are expected to provide

more detailed targets for specific provinces and sectors)

• NDCs are limited in measurable targets and lack clarity in certain

aspects

• Level of bindingness

• FYPs are introduced via a top-down approach

• The FYP sets binding targets on energy intensity and carbon intensity

• China has a laudable record in meeting or exceeding many of its

targets in previous FYPs

• NDCs under Paris Agreement are not legally binding and will rely on

the UNFCCC transparency framework

• Nevertheless, many believe that China will overachieve its international

carbon intensity targets for 2020 and 2030

Key differences between the 13th FYP and the

Paris Agreement

14

• In terms of coherence of overall targets,

strategies and focus policy areas, China’s

climate legislation is relatively well developed

• Both international and domestic targets indicate

that China is serious about the transition to a

low carbon economy

• There is also evidence that targets trickle down

to the policy level (e.g. emission trading

scheme and the TOP-1000 program)

Overall coherence of China’s climate targets and

strategies

15

• Reduce coal

• Over the next three years, cut down 20% of its coal

production

• Promote low carbon energy

• 15% of primary energy from non-fossil fuel sources by

2020

• Promote “innovation”, “openness”,

“coordination”, and a “green” and

“inclusive” growth

Key trends of China’s climate ambition

16

• Social challenges associated to shutting down

coalmines and coal power plants in China

• Curtailment of wind as a result of overcapacity

• Structural issues with measuring, reporting and

verification (MRV) standards

• Lack of transparency regarding the origin of data and

methodologies for emission scenarios

• Mismatch between national and provincial data

Potential challenges ahead

17

• “Sustainable development” is a key

development strategy

• A comprehensive set of climate actions across

key sectors will be used to achieve emission

reduction targets

• Challenges should be addressed to ensure a

successful implementation of climate targets

Summary

18

Annex: Overview of China’s institutional setup for

addressing climate change

Level Institutions Descriptions

Legislation National People’s Congress Exercises legislative power of the state; approves FYP

as well as other laws and targets

State Council Highest executive and administrative body; introduces

mandates and targets

Program National Leading Group on

Climate Change

The highest administrative body overseeing mitigation

policies and actions

National Development and

Reform Commission

Lead ministry on coordinating climate and energy

strategy and actions

Provincial Local Development and

Reform Commission

Leading group on climate change; overseeing and

coordinating provincial mitigation policies and actions. All

provinces have established their own leading groups to

address climate change with the provincial governors

chairing them.

External e.g. Energy Research

Institute, Tsinghua University,

Chinese Academia of Social

Science

Provide direct support to China’s climate policy

development through research

Thank you for

your time and

attention

Rachel Chi Kiu Mok

rmok@worldbank.org

Potential Applications for the Networked Carbon Market (NCM) Initiative in China

Dr Xi LIANG CFA

18/Apr/2016

Presentation at the World Bank

29-Apr-16 21

Overview of China’s Carbon Markets

Apply NCM Framework for Domestic Linkage

Apply NCM Framework to Improve Linkage Compatibility

Introduction to the NCM Scoping Project

Content

22

National ETS Link with other ETSPilot ETS in 7 regions

2011 2016 - 2017 Post-2020

• Timeline of ETS developing in China

29-Apr-16 23

• Provincial DRC are required to submit the list of companies involved in the national ETS (the threshold is 10,000 tonne metric coal energy consumption or equivalent per year);

• Conduct corporate audit, third party verification, and prepare government reports for the NDRC (year 2013, 2014, 2015 data);

• Train and select third party verification institutes and staff; and

• Strengthen capacity building

2016 Work Plan for National ETS Development Released by NDRC in Jan 2016

The study’s current linkage readiness index between the EU ETS and the GD ETS scored 6.3 out of 10

Findings from an early study from EU-Guangdong ETS Linkage Research Project

25

BACKGROUND OF CARBON MARKETS IN CHINA

• A scoping study in China will be led by Tsinghua University, University of Edinburgh, and the China Beijing Environment Exchange (CBEEX) to explore opportunities for the NCM Initiative to support China’s international linkage efforts

• The study will conduct stakeholder outreach to explore opportunities for the NCM Initiative to support China’s international linking efforts and identify potential for conducting regional pilots

NCM ACTIVITIES

Planned Scoping Study on ‘Networking’ in China

7 Pilot ETSs (2013-2015/6)

Varying levels of economic development in participating

regions

Local governments given significant flexibility in

designing pilot ETSs

Resulted in ETSs with fairly heterogeneous structures

National ETS Phase 2 (post-2020)

The second phase would start to explore pilot regional or

sectoral international linkage and implement concepts

networked carbon market opportunities

National ETS Phase 1 (2017-2020)

The first phase will focus on refining the national carbon

market framework and convince Chinese stakeholders

consider apply NCM framework for ETS linking in

the national ETS design.

Image source: SEI (2012)

29-Apr-16 26

• Stakeholder Consultation

• Research Paper

Section 1: Conceptual review - risks and opportunities of ETS linkages in China and options for applying the NCM initiative to support linking efforts

Section 2: Recommendations for developing international linkage opportunities in China

• Apply NCM Framework to Improve Linkage Compatibility

• The 2nd China’s market international linkage workshop

Work Plan for the Scoping Study on ‘Networking’ in China (to be completed by 30 Sep 2016)

29-Apr-16 27

The 1st China’s Carbon Market International Linkage Workshop held in Beijing on 8/Jul/2015 (Right)

Plan to host the 2nd China’s Carbon Market International Linkage Workshop in Beijing in Summer 2016

29-Apr-16 28

Let’s hope to apply NCM in the Chinese context. From CCS Readiness to ETS Linkage Readiness

Guangdong Government and China Resources Power Jointly Launched 1st CCS Readiness Power Plant Design in China in Mar 2015 (Right)

29

Acknowledgements感谢支持

30

University of Edinburgh Centre for Business and Climate Change爱丁堡大学气候变化与商业中心教职人员

Xi LiangCentre Director& Senior Lecturer in Energy Finance

Gbenga IbikunleMSc Carbon Finance Programme Director, Lecturer in Carbon Finance

Francisco AscuiSenior Lecturer in Business and Climate Change

Craig MackenzieSenior Lecturer in Corporate Social Responsibility, Senior Strategic Analysts in Aberdeen Asset Management

Matthew BranderSenior Fellow in Business and Climate Change

Sarah Ivory Early Career Fellow in Climate Change and Business Strategy

Kathi KaesehageEarly Career Fellow (ECF) at the University of Edinburgh Business School

- CBCC established in 2008, started the first MSc in Carbon Finance in the world in 2010

- 7 Faculty working on low-carbon and energy finance and business

- Research interests of Centre Members：Low-carbon policy, carbon market linkage, carbon market microstructure, low-carbon investment and financial innovation, carbon capture utilization and storage, energy system modelling for low-carbon building

- In China, formal collaboration with Tsinghua 3E, PKU Guanghua, China Carbon Exchange (Guangzhou), and co-established the UK-China (Guangdong) CCUS Centre

- Opening MSc in Energy Finance and Market in 2016/17