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february 2014 | Number 008
the center for
E N E R G Y, C L I M AT E , A N D I N N O VAT I O N P rogram
international
THE FLETCHER SCHOOL
environment
resource
&
policy
TUFTS UNIVERSITY
Prospects for
Reducing Carbon
Intensity in China
Xuan Xiaowei
Development Research
Center of the State
Council of China
Kelly Sims Gallagher
The Fletcher School,
Tufts University
Abstract
For the first time, the Chinese government has proposed a
compulsory target to reduce carbon intensity, with a goal
of 17% outlined in its 12th Five Year Plan (between 20112015). Whether or not China can achieve this goal, however,
remains a question. This paper assesses the political and
technical prospects for achieving the new carbon intensity
target by exploring three main questions: (1) Why has the
Chinese government’s attitude towards climate policy
recently changed? (2) What has historically driven carbon
intensity reductions in China? (3) How might carbon
intensity change in China during the next five years? We
argue that Chinese policymakers now recognize climate
change policy as an effective means to induce much-needed
change in Chinese economic and social development, and
that energy efficiency improvements, particularly in the
industrial sector, have been and will continue to be critical
to reducing carbon intensity in China.
Keywords
Climate policy, China, carbon intensity
Acknowledgements
We gratefully acknowledge financial support from BP and
the William and Flora Hewlett Foundation.
F ebruary 2014 | Number 008
the center for
E N E R G Y, C L I M AT E , A N D I N N O VAT I O N P rogram
international
THE FLETCHER SCHOOL
environment
resource
&
policy
TUFTS UNIVERSITY
Prospects for
Reducing Carbon
Intensity in China
Xuan Xiaowei
Development Research
Center of the State
Council of China
Kelly Sims Gallagher
The Fletcher School,
Tufts University
The Energy, Climate, and Innovation Program (ECI) gratefully
acknowledges the support of the William and Flora Hewlett
Foundation and BP International Limited.
The views expressed in this report do not necessarily reflect the
views of any of the supporting institutions.
© 2014 Tufts University
Energy, Climate, and Innovation Program (ECI)
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and the role of technology in the negotiations.
Prospects for Reducing Carbon Intensity in China
Table of Contents
page
Section 1:
Introduction
4
Section 2:
Policy to Date
5
Section 3:
Problems with China’s Traditional Development Model
7
Section 4
Emerging Urgency to “Upgrade” China’s Development Model
10
Section 5:
Warming to Climate Policy
11
Section 6:
Drivers of Carbon Intensity Reductions
13
6.1 Past trends in carbon intensity
13
6.2 Drivers of China’s carbon intensity changes in the past
14
6.2.1
Composition of energy consumption
15
6.2.2
Energy intensity
16
6.2.2.1 Sectoral drivers of energy intensity reductions
16
6.3Summary
18
Section 7:
Prospects for China to Achieve its Targets in the 12th FYP
19
7.1 Composition of energy comsumption
19
7.2 The structure of the Chinese economy 20
7.3 Sectoral energy efficiency
21
7.4Scenarios for China’s carbon intensity in the 12th FYP
21
Section 8:
Conclusion and Policy Implications
25
References:
26
Appendix I: 29
The Calculation of CO2 Emissions in China
Appendix II: The Decomposition of Carbon Intensity Change
(Energy Structure and Energy Intensity)
32
Appendix III: The Decomposition of Energy Intensity Change
(Economic Structure and Sectoral Energy Efficiency)
33
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
1
Prospects for Reducing Carbon Intensity in China
Tables, Figures, and Equations
Table 1:International Comparisons of Savings, Investment, and
Consumption Rates
Table 2: Contributions to Reductions in China’s Carbon Intensity
page
9
16
Table 3:Sectoral Energy Efficiency (sectoral energy intensity)
(unit: tce /10,000 yuan, 2005 constant yuan) 17
Table 4:Decomposition of the Change in Energy Intensity of the Entire
Chinese Economy (unit: tce /10,000 yuan, 2005 constant yuan) 18
Table 5: Share of Non-Fossil Fuel Energy Supply in China
19
Table 6: Industrial Share of GDP in Developed Countries
20
Table 7: Different Scenarios for Carbon Intensity in China in the 12th FYP 22
Table A1:
China GHG Emissions in Official Publication
29
Table A2:
Authors’ Calculations and Result Comparison for 1994 and 2004
31
Figure 1: CO2 Emissions in China
13
Figure 2: Carbon Density in China
14
Figure 3: Composition of Energy Consumption in China
15
Figure 4: Changes in China’s Economic Structure 17
Figure 5:Different Carbon Intensity Scenarios of Carbon Intensity
for China in the 12th FYP 22
Figure A1:
30
Comparison of China CO2 Emissions from Different Sources
Figure A2: Authors’ Calculations of China CO2 Emissions and Results
Comparison31
Equation A2.1: Expression of Carbon Intensity in Terms of CO2, GDP and
Energy Consumption
32
Equation A2.2: E
xpression of Change in Carbon Intensity in Terms of
Changes in CO2, GDP and Energy Consumption
32
Equation A3.1: Calculation of an Economy’s Energy Intensity
33
Equation A3.2: Expression of Change in an Economy’s Energy Intensity in Terms
of Change in Economic Structure and Sectoral Energy Efficiency
33
2
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
Prospects for Reducing Carbon Intensity in China
Acronyms
CH4 Methane
CO2
Carbon dioxide
CO2e
Carbon dioxide equivalent
FYP
Five Year Plan
G-77 Group of 77 at the United Nations
GDP
Gross Domstic Product
GHG
Green House Gases
Gt Gigatonne
GWGigawatt
NDRC
National Development and Reform Commission (China)
MWMegawatt
NPL Non-performing loans
NOx
Mono-nitrogen oxides
NO2 Nitrous oxide
RMB
Renminbi — official currency of the People’s Republic of China
SO2
Sulfur dioxide
tC/tce
ton of carbon per ton coal equivalent
tce
tons of coal equivalent
UNFCCC UN Framework Convention on Climate Change
WTO World Trade Organization
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
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Prospects for Reducing Carbon Intensity in China
1.0 Introduction
In its 12th Five Year Plan (FYP)1, the Chinese government proposed for the first time
a compulsory target to reduce carbon intensity, aiming for a 17% reduction between
2011-2015. This important policy change attracted international attention as it
signaled that the world’s largest aggregate emitter of greenhouse gases (GHG) had
committed to a decisive effort to prevent catastrophic global climate change. If China
does meet this new target, it will be an important signal that the country is shouldering
its global responsibilities, and thus could greatly improve the likelihood of reaching
an international climate agreement. Whether or not China can actually accomplish
this goal, however, is uncertain. This paper explores both the political and technical
prospects for achieving the new carbon intensity target.
Reductions in a country’s carbon intensity (carbon emissions/GDP) reflect national
efforts to decouple economic growth from the carbon emissions that cause climate
change. A country that is becoming less carbon intensive is one that is experiencing
more economic growth than its corresponding increase in emissions. This outcome
can be achieved through many types of policy interventions including, but not
limited to, performance standards, government-induced increases in energy prices,
administrative measures, subsidies, and other financial incentives, as well as switching
to cleaner forms of energy.
Until recently, China’s policy approach to climate change was reactive. It was
responsive to international pressure, but fundamentally passive. The government
avoided strong promises and radical actions, and rarely spoke publicly about GHG
emission reductions and related policies such as carbon taxes or carbon trading.
China has maintained its identity as a developing country, aligning with the G-77
as a negotiating bloc and emphasizing the principle of “common but differentiated
responsibilities”2 in addressing global climate problems. The Chinese government
has argued that the priorities of developing countries first and foremost are economic
development and poverty reduction, and that the international community should
accommodate these growth needs. Officials have also often noted that although China
is now the largest total emitter of GHG, it is not yet the largest in terms of historical
cumulative emissions or per capita emissions (far from it in the latter case). After all,
most developed countries undertook pollution-intensive industrialization during the
19th and 20th centuries that resulted in large cumulative historical emissions.
1 In the paper, “the 12th FYP” is short for “The 12th Five Year Plan (2011-2015) of national economic
and social development in China”, which contains a series of economic development initiatives
mainly used for mapping strategies for economic growth, setting development targets, and launching
reforms. The three main priorities are sustainable growth, industrial upgrading and increased
domestic consumption.
2 This principle is enshrined in the UN Framework Convention on Climate Change in Article 3,
paragraph 1.
4
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
Prospects for Reducing Carbon Intensity in China
The newly announced 12th FYP, however, represents a definitive break from the past.
The Chinese government has set a series of compulsory targets for climate-related
indicators including carbon intensity and the proportion of non-fossil energy resources
in the energy supply. In addition, the plan states that “China must set a reasonable
limit on the total amount of national energy consumption” and “establish a carbon
market step by step.”3 Indeed, Xie Zhenhua, Vice Chair of the National Development
and Reform Commission (NDRC), has even acknowledged publicly that if China’s per
capita emissions reached U.S. levels, it would be a “disaster for the world,” and that
China must “reach the peak” (and thus subsequent decline) of GHG emissions “as soon
as possible” (Black 2011).
This policy shift will strongly affect China’s prospects for achieving its carbon intensity
reduction commitment in the next five years. This paper will explore why the Chinese
government’s attitude toward climate policy has recently changed, the historical
implications, and what the prospects are for future carbon intensity reductions based
on both technical and policy considerations.
2.0 Policy to Date
During the 11th FYP (2006-2010) the Chinese government undertook a series of
measures to achieve a distinct but related target: a 20% reduction in energy intensity
(energy/GDP). The central government instituted a compulsory target after a
negotiation process with local officials to determine distributed levels of responsibility.
Local governments and major enterprises were required to make concerted efforts to
increase their energy efficiency, greatly contributing to the reduction of national energy
intensity and emissions of many pollutants during the five-year period. As a result of
local government efforts, the energy efficiency target was nearly achieved despite a
concurrent explosion in economic growth.
3 See Chapter 21 (“Address global climate change actively”) of “China’s 12th FYP” (Chinese Version,
http://www.gov.cn/2011lh/content_1825838.htm).
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
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Prospects for Reducing Carbon Intensity in China
It is unclear, however, whether these administrative measures employed during the
11th FYP will be adequate to help China realize the new carbon intensity targets in its
12th FYP. Establishing “target-oriented responsibility and assessment systems for
energy conservation among different levels of local governments” (State Council 2011,
a) was critical to the achievement of the energy efficiency target in the 11th FYP, but this
approach had many drawbacks as well. Provincial and local governments complained
about the “unreasonable allocation” of energy efficiency targets among different
regions. Others raised concerns about “the leaky and inflexible implementation
mechanism,” (Social Sciences Academic Press 2012) which required each region to
meet its assigned target on its own without the use of market-based or other flexibility
mechanisms. In the final year of the 11th FYP, some local governments took extreme
measures to achieve their own targets, including shutting down power plants and
heating supplies, which gravely affected ordinary consumers as well as commercial and
industrial energy users.
Furthermore, many administrative measures to improve energy efficiency taken in
the 11th FYP may now be exhausted. “Build big units and close small units (Shang Da
Ya Xiao 上大压小)” for example, was an important policy to phase out old capacity
and accelerate equipment upgrades. As a result, China closed 72 GW worth of small
power plants in the 11th FYP, and the share of large power plants (greater than 300
MW) increased from 45.5% in 2005 to 70% in 2010. The “build big and close small”
measures may account for as much as 70% of the improvement in coal power efficiency
in the last five years (Xu et al., 2013.) China may face difficulties achieving the same
improvements in the power plant sector in 12th FYP through the utilization of similar
policy measures because many small power plants have already been closed and there
are limited efficiency gains to be made.
In light of these challenges, there were differing opinions among Chinese government
officials about the appropriate magnitude of the carbon intensity target in the 12th FYP.
Some argued that 17% was too low, and that China would reach or even surpass the
goal without substantially new efforts. Others said that the target was too ambitious
given that existing policies had already exhausted the low-hanging fruit. Cai, Wang, &
Chen (2010) point out, for example, that China has become a world leader in coal-fired
power plant generating efficiency, and since most of the remaining small generating
units existed to meet peak load needs, closing them would come at considerable cost.
Sections 6 and 7 explore this debate further, providing a technical analysis of China’s
progress to date, as well as prospects for future carbon intensity reduction based on
historical trends.
6
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Prospects for Reducing Carbon Intensity in China
3.0 Problems with China’s Traditional
Development Model
Though China’s traditional development model has resulted in many achievements, it
also has brought about serious problems. These include tensions between growth and
sustainability, poor coordination, growing social and economic inequality, and domestic
consumption imbalance. Even the central government has criticized the old model as
imbalanced, uncoordinated, and unsustainable, demonstrating that its shortcomings
are widely acknowledged. The following section explores the issues and problems in the
old development model.
The first problem with the old model is the imbalance between economic growth
and environmental resource sustainability. The traditional high investment, high
consumption, and high emission growth model resulted in large consumption of
resources and has grown rapidly, with average annual growth at approximately 10%
(NBS 2011). GDP increased from 0.36 trillion RMB in 1978 to 39.8 trillion RMB in 2010,
surpassing Japan and becoming the second largest economy in the world (WDI 2011).
Major emission levels in China, including CO2, SO2, NOx, and soot now rank first or
second in the world. Further, Chinese foreign dependence on oil, iron ore, aluminum
ore, copper, and other minerals already exceeds 50% (DRC 2011). It is safe to conclude
that China’s total emissions of major pollutants have exceeded the local environment’s
carrying capacity. Most of the rivers crossing through cities are heavily polluted.
Acid rain and soil pollution affect many regions. The acceleration of desertification,
deterioration of grasslands, loss of biodiversity, and the degeneration of many
ecosystems are pressing problems China must tackle immediately (MEP 2011).
Furthermore, local competitive pressures continue to drive artificially high economic
growth. Decentralization of the fiscal relationship between the central government
and local governments incentivizes localities to compete with one another. Local
officials who preside over growth can expect promotions (Brandt & Rawski 2008), and
thus few have an incentive to moderate growth or to undertake measures with higher
upfront investment costs and longer-term returns, even if those returns are substantial.
This has a tendency to create disincentives in energy efficiency investments, as most
energy efficiency measures are characterized by high up-front costs. While returns on
investment are often substantial, they only can be realized in the long term.
The second problem is the lack of coordination between economic growth and social
development. The economy has grown rapidly, but the distribution of benefits has
been highly unequal. The share of labor income to GDP has decreased consistently
from 51.4% in 1995 to 39.7% in 2007. This means an increased amount of the benefits
of economic growth have accrued to enterprises and the government itself; not to the
ordinary labor force (DRC 2011). The improvement of living standards and income
levels lags behind economic growth. Under the traditional economic development
model, governments at all levels put most of the emphasis on economic growth, which
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
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Prospects for Reducing Carbon Intensity in China
led to insufficient fiscal expenditure on public services for citizens (Wong & Bird 2008).
As a result, ordinary people had limited access to affordable housing, good educational
opportunities, health care, and social security.
The third problem is the widening disparity of income distribution among different
regional areas and different groups of people. Income inequality in China has climbed
to dangerous levels (Wang & Woo 2011). The ratio of urban to rural household income
increased from 1.86 in 1985 to 3.23 in 2010 (NBS 2011). Although China does not
release a national Gini coefficient of income distribution publicly, vast research shows
the disparity of income distribution in China has risen significantly during the last
three decades. Meanwhile, interest groups are playing stronger roles in resisting
reforms to move toward a more equal society.
The last problem with China’s traditional development model is the imbalance among
investment, consumption, and exports. In the past, China relied mainly on investment
and exports; the emphasis on consumption, and especially household consumption,
has been small. Different factor prices, including for energy, capital, labor, land, and
water have been kept to artificially low levels. Underestimated capital costs spur excess
investment, underestimated exchange rates boost excess exports, and underestimated
labor costs result in the lower share of labor revenue of GDP. Currently, China has the
highest investment ratio and the lowest consumption ratio in the world. In 2008, the
investment rate in China was 44%, which was much higher than other countries. At the
same time, China’s consumption rate in the same year was only 47%, much lower than
other countries, as shown in Table 1.
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Center for International Environment and Resource Policy, The Fletcher School, Tufts University
Prospects for Reducing Carbon Intensity in China
Table 1: International Comparisons of Savings, Investment, and Consumption Rates
Country
Savings Rate (%)
1970
2008
Investment Rate (%)
1960
2008
Consumption Rate (%)
1960
2008
U.S.A.
18
14
19
18
80
87
U.K.
22
15
19
17
82
86
Average of
developed countries
27
20
26
22
75
79
Poland
31
18
28
24
71
80
Russia
36
32
34
26
65
65
Average of Eastern
Europe and Russia
26
25
31
27
70
69
Argentina
27
25
23
23
77
73
Mexico
20
25
18
26
85
76
Brazil
19
17
20
19
80
81
Average of Latin
American countries
22
24
23
24
76
74
Thailand
22
29
15
29
86
68
Korea
18
31
11
31
98
70
India
15
38
15
40
88
66
China
27
54
36
44
61
47
Average of Asian
and African
countries
23
34
19
29
80
67
Source: World Development Indicators 2010
In light of these issues, the Chinese government needs to broaden its thinking regarding
the most challenging economic and societal problems, particularly with regard to
reducing the disparity between economic growth and social equality.
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
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Prospects for Reducing Carbon Intensity in China
4.0 Emerging Urgency to “Upgrade”
China’s Development Model
China’s competitive advantage in low-cost factors was central to its economic success
during the past three decades. Prices reflected low costs in both labor and capital prices,
but did not internalize the external costs of pollution and other forms of ecological
damage to land, water, energy and other resources, known as externalities. China
had abundant surplus labor, adequate low-cost capital, below-market prices for raw
materials, a relaxed regulatory environment, a strong industrial base, and continuously
improving infrastructure. China’s reform and opening-up strategy over the last three
decades took advantage of a vast international market, and drew upon relatively
advanced technology and management experience from abroad. All of these elements
combined made the Chinese economy a strong competitive force.
However, China’s traditional low-cost advantage is gradually weakening. First of all, the
advantage of low-cost labor has begun to disappear. The growth of a top-heavy aging
population,4 increased social security expenditures, as well as the implementation of new
labor contract law has increased the total cost of labor significantly. Now, the unlimited
supply of surplus labor in rural areas is disappearing,5 and labor wages are rapidly rising.
This means China’s biggest advantage in low-cost labor will not last much longer.
Second, China’s natural resources are relatively scarce on a per capita basis when
compared to global levels. China’s per capita arable land, forest land, grassland, and
water supply are only 43%, 14%, 33%, and 25% respectively of the global average level,
with per capita resource levels for coal, oil, iron ore, and copper ore at 67%, 6%, 50%,
and 25% (Xu 2010).
At the same time, the international financial crisis brought about a rebalancing of the
global economy, which inevitably led to tremendous pressure on Chinese exports. As a
result, China’s growth rate is expected to slow, possibly substantially, after thirty years
of rapid growth. This slowdown will reveal serious problems including declines in
enterprise profits and competitiveness, less fiscal revenue, contraction of asset valuation,
non-performing loans (NPL) problems, and a real estate bubble, all of which double-digit
growth had previously helped conceal (see Wong & Bird 2008, Davis 2011).
In sum, although China’s past development model has largely achieved success in
economic growth and poverty reduction to date, its unsustainability is becoming widely
evident. As such, the central government has begun to recognize that China urgently
needs to find new competitive advantages to maintain its development trajectory.
4 The share of people age 65 and over in China increased from 4.9% in 1982 to 8.9% in 2010 (NBS,
2011). The implementation of China’s family planning policy has now spurred China into an aging
society.
5 The labor force share (the ratio of ages 16-65 to the whole population) in China will peak by the end of
the 12th FYP (UNDP 2011), meaning that China’s demographic dividend will diminish in the next FYP.
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Prospects for Reducing Carbon Intensity in China
5.0 Warming to Climate Policy
Changes to China’s development pathway are not a new phenomenon. For example,
in the 9th FYP (1996-2000), the central government proposed a plan stipulating that
economic growth should change from ‘extensive mode’ to ‘intensive mode’, meaning
that efficiency gains and technological innovation should drive growth, rather than
material inputs. In a series of later documents, the government clarified that reliance
should move from ‘factor input and resource use’ to ‘technological innovation, human
capital, and management reform’ (see, for example, Hu 2007).
The reality, however, has been disappointing. China’s change of development mode
is more evident in the political slogan than actual action. Incentive mechanisms
and institutional arrangements between the central and local governments still
await reform. With China’s heavy industrialization since 2003 energy consumption
has increased substantially and energy intensity and carbon intensity gains have
diminished.6 Subnational levels of governments have been reluctant to undertake
fundamental reforms. As discussed earlier, regional competitiveness is very strong in
China — each region wants to act as an engine of growth. Indeed, many attribute China’s
rapid growth to date to regional competitiveness. According to one analysis, “Local
governments show no sign of willingness to actually cut emissions to lower levels, but
rather simply to reduce the rate of growth in energy consumption” (Qi et al 2008). Local
government officials have introduced large projects and made major investments to
enhance local economic capacity and expand tax revenue even though many of these
large projects have resulted in higher energy consumption, conventional pollution, and
carbon emissions.
As central government officials considered how to solve this problem, they realized that
an initial reform in the energy sector, spurred by the threat of climate change, might
be a viable initial pathway given existing conditions and constraints in China (State
Council 2011, a). First, the central government recognized that the undervaluation
of natural resources has fed the resource-intensive development mode. Under the
traditional development pattern, prices did not consider externalities. This distortion
resulted in energy waste, inefficient use of resources, and damage to the environment.
Instead, reforming the sector through energy and climate policy could optimize
the industrial, export, investment, and consumption structures. The imposition of
reasonable prices that incorporate land, water, energy and other resource usage in
combination with more strict environmental regulation and enforcement measures
could be a tool to help transform China’s growth model from ‘more factor input’ to
‘efficiency gains and technological innovation’.
6 See the data analysis in Section 6.
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Prospects for Reducing Carbon Intensity in China
Another advantage is that energy and climate policy could greatly contribute to
improving local government behavior. As noted above, local government competition
has helped to promote the development of all regions, but it also led to a short-term
growth outlook and extensive environmental damage. Reforming the behavior of local
governments is the most important step toward changing the traditional growth model.
A focus on energy security and climate change mitigation could allow the central
government to leverage international pressure to set targets and timetables for energy
efficiency and emission reductions, and push local governments to improve their
behavior. The model for reform could follow that of China’s accession to the WTO,
which resulted in the acceleration of many reforms and efficiencies. In addition, climate
and energy policy enjoy popular support. Many Chinese accept the concept of ‘green
growth’ in China, and domestic awareness about environmental protection has become
increasingly strong. Thus, local residents could put more pressure on local governments
to improve monitoring and compliance with environmental laws and regulations.
Typically, a government’s attitude and actions to address climate change are based upon
a cost-benefit analysis, in which a comparison is made between the estimated benefits
and costs of a specific climate policy. In theory, this is a desirable way to formulate
policy, because economic efficiency is maximized, but in practice, cost-benefit analysis
for climate policy is difficult and fraught with many uncertainties and ethical dilemmas
(see, for example, Ackerman & Heinzerling 2004). Theoretically, a country would take
preventative actions if the future costs of climate change were deemed to be much
higher than the current cost of reducing emissions. While this approach is frequently
used in the U.S., the Chinese government has not followed the same development
pathway.
Recognizing that its traditional economic development model is unsustainable,
China is at a critical juncture in its development path. The Chinese government has
been seeking new tools to break through domestic resistance to transforming its
development model and has recognized that addressing climate change could play a
vital role in furthering this process of economic and social transition. Specifically, the
central government has realized that climate change policy could be used as a tool to
induce much-needed change at sub-national levels. Premier Wen Jiabao is increasingly
emphatic about the need for change at all levels of Chinese society. One telling example
is from an October 2011 teleconference with local officials, in which he stated, “The
party committees and governments at all levels must consider energy conservation and
emission reduction as the most important task for promoting scientific development, as
the most important measure for transforming the economic development pattern, and
as the most important index for evaluating cadres at all levels” (Wen 2011).7
7 Emphasis added.
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Prospects for Reducing Carbon Intensity in China
6.0 Drivers of Carbon Intensity
Reductions
With the government committed to new climate targets, the next challenge is, of course,
achieving them. This section considers the key drivers of reducing carbon intensity
during the 12th FYP. The 11th FYP, even though its focus was energy intensity, offers
a template for how the Chinese government can implement its new carbon intensity
target. Likewise, we identify here the measures that caused carbon intensity to decline
in the past, and quantify how much each contributed to the overall decline. Then, based
on this evidence, we consider in section 7.0 the prospects for carbon intensity declines
in the future.
Fig. 1 CO2 Emissions in China
Figure 1: CO2 Emissions in China
（Gt）
8.0
6.8
7.0
7.0
7.4
6.3
5.7
6.0
5.2
5.0
3.1
2.7 2.9
2.5 2.6
3.0
2.0
1.5
3.2
3.3
3.3
3.3
3.4
3.5 3.6 3.8
2000
4.0
1999
4.5
1.9
1.0
2009
2008
2007
2006
2005
2004
2003
2002
2001
1998
1997
1996
1995
1994
1993
1992
1991
1990
1985
1980
0.0
Source: Authors’ calculations (see Appendix I).
6. 1
Past trends in carb on intensity
China’s CO2 emissions increased from 1.5 Gt in 1980 to 7.4 Gt in 2009,8 reflecting an
annual growth rate of 5.6% (see Figure 1). The total quantity of CO2 emissions in China,
therefore, increased almost 5-fold during the last three decades. But the Chinese economy
grew even faster. China’s GDP increased from 1.8 trillion yuan in 1980 to 28.5 trillion yuan
in 2009 (2005 constant yuan), and the volume of economic activity increased 16 times
8 See Appendix I for the definition of CO2 emissions used in this paper. Non-CO2 GHG and carbon
sinks are not considered due to lack of available data. CO2 from energy use accounts for more
than 80% of total GHG emissions in China. As Appendix I explains, we are able to tell the main
story of China’s GHG emissions by tracking CO2 emissions from fossil fuel use.
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
13
Prospects for Reducing Carbon Intensity in China
during the same period. This resulted in a dramatic decrease in carbon intensity in China.
Specifically, carbon intensity decreased from 8.5 tons CO2 /10,000 yuan of GDP in 1980
to 2.59 tons CO2 /10,000 yuan in 2009. The cumulative change was a reduction of almost
70%, with an annual rate of change of 2.4% (see Figure 2). It should be noted that China’s
carbon intensity was not in constant decline during this period, however. In fact, China’s
carbon intensity actually increased slightly during the 10th FYP (2001-2005), which was
a time with accelerated development of energy intensive industries such as steel and coal,
the GDP shares of which increased during that period.
Fig.
2. Carbon
Intensity
in China
China
Figure
2: Carbon
Density in
9.0
(Unit: tons CO2/10000
CO2/1000 yuan;
yuan;2005
2005 constant
constant yuan)
8.50
8.0
7.0
6.52
6.0
5.74
5.55
5.10
5.0
4.73
4.41
4.0
4.23 3.96
3.61
3.34
3.0
3.22
3.05
2.87
2.80
3.10
2.96 3.12
2.87
3.02
2.69
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1985
1980
2009
2.59
2.0
Source: Authors’ calculations
6. 2 Drivers of China’s carb on intensity changes in
the past
Changes in carbon intensity are often attributed to changes in the composition of
energy consumption and changes in energy intensity (see Appendix II). We explore
next the degree to which each of these factors contributed to observed carbon intensity
reductions in China. In addition, we consider the key drivers, including structural shifts
in the composition of the Chinese economy and sector efficiency improvements.
14
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Prospects for Reducing Carbon Intensity in China
6. 2 . 1
C omposition of energy consumption
Energy consumption composition refers to the mix of energy sources used. Coal is much
more carbon intensive than natural gas, for example, so shifting to more reliance on gas
would cause a reduction in emissions per unit of energy consumption and likewise in
carbon intensity. Shifting to lower carbon energy sources like nuclear, renewable energy,
and hydro can provide even greater benefits. Unfortunately, China’s composition of
energy consumption has only changed modestly during the last three decades. Coal has
consistently maintained its dominant share of the sector — it accounted for 72.2% of
total energy consumption in 1980, decreasing slightly to 70.4% in 2009. During the same
period, oil’s share decreased from 20.7% in 1980 to 17.9% in 2009, natural gas increased
from 3.1% to 3.9%, and non-fossil fuel energy increased from 4.0% to 7.8% (see Figure 3).
Fig. 3. Composition of Energy Consumption in China
Figure 3: Composition of Energy Consumption in China
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
coal
oil
gas
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
0%
non-fossil fuel energy
Source: China Statistical Yearbook 2010 (NBS)
Source: China Statistical Yearbook 2010 (NBS)
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
15
Prospects for Reducing Carbon Intensity in China
Table 2. Contributions to Reductions in China’s Carbon intensity
Year
Change in Carbon
Intensity (%)
Share contributed
by change in energy
intensity (%)
Share contributed by change
in composition of energy
consumption (%)
1989-1990
-1.94
93.1
6.9
1994-1995
-3.65
89.6
10.4
1999-2000
-4.52
84.4
15.6
2004-2005
-0.67
148.5
-48.5
2008-2009
-3.57
97.1
2.9
1990-2009
-53.01
97.6
2.4
Source: Authors’ calculations
This consistency in China’s fuel mix means that there have been only limited
improvements in CO2 emissions per unit of energy; China emitted 2.5 tons CO2/tce
(tons of coal equivalent) in 1980 and 2.4 tons CO2/tce in 2009.
6. 2 . 2 E nergy intensity
In contrast to the modest changes in the composition of energy consumption, the energy
intensity of the economy changed substantially during the same period; it went from 3.4
tce/10,000 yuan (2005 constant yuan) in 1980 to 1.08 tce/10,000 yuan in 2009. Given this,
we conclude that the improvements in China’s carbon intensity to date have been driven
primarily by the steady reductions in energy intensity of the economy. From 1990 to 2009,
carbon intensity decreased by 53%. Energy intensity reductions accounted for 97.6% of
this improvement, while shifts in the composition of energy consumption contributed
only 2.4% (see Table 2).
6. 2 . 2 . 1 S ectoral drivers of energy intensity reductions
Clearly, improvements in energy intensity played the dominant role in reducing China’s
carbon intensity. What drove these energy intensity improvements? During this period,
the economic structure of the economy changed, as did energy efficiency within key
sectors, but did both of these developments spur energy intensity reductions? We
will now decompose the change in energy intensity to quantify the separate impacts
resulting from changes in the structure of the economy versus energy efficiency
capabilities in different sectors of the economy (see Appendix III for a full analysis).
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Prospects for Reducing Carbon Intensity in China
Fig. 4 Changes in China’s Economic Structure
Figure 4: Changes in China’s Economic Structure
0.50
GDP Share of different sectors
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
agriculture
industry
construction
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
0.00
service
Source: Authors’ calculations based on data from China Statistical Yearbook 2010 (NBS), (sectoral
Source:
Authors’
calculations
based
on data
from China Statistical Yearbook 2010 (NBS), (sectoral GDP
GDP share
is calculated
by 2005
constant
yuan)
share is calculated by 2005 constant yuan)
The most significant change in the economic structure of China since 1980 has been the
enormous decrease in agriculture’s share of GDP, which fell from 38.0% in 1980 to 9.4%
in 2009. At the same time, industry and services have become increasingly important.
Industry’s share of GDP increased from 26.9% to 42.1%, and services increased from
29.6% to 42.1% (see Figure 4). In Table 3, a huge difference in energy intensity among
the sectors can be observed. The energy intensity of industry was 1.9 tce/10,000 yuan
in 2008, which is almost eight times the amount for agriculture and construction, and
three times as much as services; this means that increasing industry’s share of GDP
should result in higher energy intensity. Considering only the effect of compositional
changes to the Chinese economy, we would expect to have seen a substantial increase in
energy intensity over the last three decades.
Table 3. Sectoral Energy Efficiency (sectoral energy intensity)
(unit: tce /10,000 yuan, 2005 constant yuan)
Year
Agriculture
Industry
Construction
Service
1995
0.36
3.44
0.29
0.98
2000
0.34
2.18
0.36
0.81
2005
0.37
2.17
0.35
0.75
2008
0.23
1.90
0.25
0.66
1995-2008 (%)
-34.3
-44.8
-13.6
-32.7
Source: Authors’ calculations based on data from China Statistical Yearbook 2010 (NBS)
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
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Prospects for Reducing Carbon Intensity in China
Table 4. Decomposition of the Change in Energy Intensity of the Entire Chinese
Economy (unit: tce /10,000 yuan, 2005 constant yuan)
Period
Change in energy
intensity overall
The contribution from
economic structural
changes
The contribution
from sectoral energy
efficiency changes
1995-1999
-0.397
0.074
-0.471
2003-2004
0.067
0.010
0.057
2007-2008
-0.062
0.003
-0.065
1995-2008
-0.592
0.163
-0.755
Source: Authors’ calculations based on data from China Statistical Yearbook 2010 (NBS)
We therefore must also consider the effect of improvements in energy efficiency.
Every sector of the Chinese economy experienced substantial improvements in energy
intensity; agriculture’s energy intensity fell from 0.36 tce/10,000 yuan in 1995 to 0.23
tce/10,000 yuan in 2008, and the cumulative reduction for industry, construction,
and service was 44.8%, 13.6% and 32.7% respectively (again, see Table 3). From 1995
to 2008, the energy intensity of the entire economy decreased 0.592 tce/10,000
yuan. This is in spite of the effects of structural changes to economic activity, which
actually increased energy intensity by 0.163 tce/10,000 yuan. The energy efficiency
improvements actually led to a reduction of 0.755 tce/10,000 yuan, offsetting the
increase caused by structural changes and moreover yielding the overall decline in
energy intensity of the economy (see Table 4). Of these improvements between 1995
and 2008, agriculture accounted for 8.2%, industry 76.2%, construction 0.5%, and
services 15.1%. Our analysis is consistent with previous findings from Price et al.
(2011) showing that improvements in energy efficiency offset increases in activity and
structural changes within the manufacturing and construction sector. We can conclude
that improvements in industrial energy efficiency were the most important drivers of
reductions in national energy intensity during the 11th FYP.
6. 3 S ummary
China’s carbon intensity declined from 8.50 tons CO2/tce in 1980 to 2.59 tons CO2/tce
in 2009. Changes in the composition of energy supply only account for less than 5% of
the overall improvement, whereas more than 95% of the improvement can be attributed
to improvements in the energy intensity of the entire economy. Industry, especially the
energy intensive steel, power, metal, and cement industries, played a crucial role. The
improvement in industrial energy efficiency explains about 70% of the total decline in
carbon intensity, and more specifically, improvements in energy efficiency within the
energy intensive industries account for 50% of the overall carbon intensity reduction.
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Prospects for Reducing Carbon Intensity in China
7.0Prospects for China to Achieve Its
Targets in the 12th FYP
We now analyze the probable changes in carbon intensity that will be caused by each factor discussed above in the new 12th FYP (2011-2015). We then synthesize their combined
impacts to determine whether or not China is likely to achieve its carbon intensity goal.
7. 1 C omposition of energy consumption
The new 12th FYP includes a target for the non-fossil share of energy consumption of
11.4% by 2015 and 15% by 2020. These targets are clearly ambitious given the historical
trends; it means that China must increase its annual rate of conversion to non-fossil
energy sources by 0.6% during the 12th FYP and 0.7% during the 13th FYP. These rates
are more than twice the rate of conversion achieved during the 11th FYP period that
recently concluded (see Table 5).
Table 5. Share of Non-Fossil Fuel Energy Supply in China
Year
Share of non-fossil fuel energy (%)
1990
5.1
2000
6.4
2005
6.8
2009
7.8
2015 (12th FYP target)
11.4
2020 (announced target)
15
Annual Change
1990-2009
0.14
2000-2005
0.08
2005-2009
0.25
2009-2015 (to achieve target)
0.60
2015-2020 (to achieve target)
0.72
2005-2020 (to achieve target)
0.55
Source: China Statistical Yearbook 2010 (NBS) and Authors’ Calculations
The use of wind, hydro, nuclear and other non-fossil fuel energy resources has recently
grown very quickly in China. China’s wind power capacity already ranks second in the
world and it is expected that by 2011 China’s wind capacity could rank first. Still, major
obstacles stand in the way of large-scale development of non-fossil energy. These obstacles stem not only from the uncertainty about future technological progress in cleaner
technologies, but also from policy and institutional uncertainties. For example, the state
grid company has been reluctant to accept wind electricity mainly because of lagging
reform in the electric power system, and it is not clear how much progress China can
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Prospects for Reducing Carbon Intensity in China
achieve in this area during the next five years. Also, the Fukushima nuclear power plant
accident in Japan has slowed approvals and construction for new fission power plants in
China. In light of these challenges meeting the non-fossil target will be a difficult task.
7. 2 T he structure of the Chinese economy
A popular view is that China could easily achieve its carbon intensity goal if a growth
in services decreases the industrial sector’s current share of GDP. However, the next
five years will likely be a period characterized by continued industrialization and
urbanization; industry’s share of GDP is unlikely to decrease significantly before
2015. Indeed, most developed countries have followed a similar industrialization
pattern where industry accounts for a rising share of GDP until it reaches a peak — at
approximately 44% — and then declines. Some countries have peaked at a considerably
lower rate, but others have peaked at a much higher rate – 53% in Germany’s case. The
per-capita GDP that coincides with the peak appears to be about 8,000 (1990 $) (see
Table 6). Currently, industry’s GDP share in China is 42.1%, and per capita GDP is 6,725
(1990 $). China’s industrial sector therefore likely has more room to develop.
According to other indicators of industrialization, such as per capita energy
consumption and per capita steel consumption, China is much lower than other
developed nations. The per capita energy consumption of China was 1.47 tce in 2008,
compared with Japan’s 4.03 tce, Korea’s 4.59 tce, Germany’s 4.03 tce, and France’s 4.14
tce. The United States, which is perhaps an outlier due to its relatively high energy
intensity, has a per capita energy consumption of 7.76 tce (WDI 2010). Per capita steel
consumption in China was less than 0.5 tons in 2009, much lower than Japan and
Korea. Based on these comparisons, we would again expect to see industry’s share of
GDP in China increase somewhat during the 12th FYP.
Table 6. Industrial Share of GDP in Developed Countries
Industrial share of GDP
Country
Peak Level (%)
Year
Per capita GDP at the time
(1990 Int. GK$)
US
39
1952
10414
UK
48
1957
8003
Germany
53
1960
7693
Japan
46
1970
9662
France
48
1960
7449
Italy
41
1964
7534
Portugal
38
1967
4586
Spain
41
1974
8190
Netherlands
44
1962
8695
Average
44
1963
8025
Data sources: Maddison (2010), Palgrave International Historical Statistics (2002), WDI (2010)
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Prospects for Reducing Carbon Intensity in China
Holding other factors constant, if the share of industry as a percentage of GDP
continues to rise, it will contribute to a decreased level of carbon intensity during the
12th FYP. More stringent sectoral efficiency or GHG mitigation policies will need to be
implemented if China is to counteract this trend.
7. 3 S ectoral energy efficiency
We have concluded that improvements in sectoral energy efficiency account for most
of the gains in carbon intensity to date. These gains can largely be attributed to policy
initiatives that were implemented during the 11th FYP, including ‘establishing targetoriented responsibility and assessment systems for energy conservation for local
governments’, the ‘build big and close small’, ‘one thousand enterprises action’ (NBS
2007), and the ‘major energy conservation project’ (State Council 2011, b), etc.
In the 12th FYP, the Chinese government will undoubtedly continue these policies
given their success, so we estimate that the energy efficiency of some sectors, especially
the most energy intensive ones, will continue to decrease to some extent. However,
as we have previously pointed out, the marginal benefit of these policies will decrease
or become more expensive. For example, China’s coal power efficiency increased
substantially in the 11th FYP, mainly because of the structural adjustments triggered by
‘build big and close small’. When most small power plants are closed, efficiency can no
longer be improved as significantly as before (Xu et al. 2013).
7.4 S cenarios for China’s carb on intensity in
the 1 2th FY P
China declared its own national climate target at the Copenhagen Climate Change
International Conference in 2009, namely to reduce carbon dioxide emissions per
unit of GDP by 40-45% by 2020 from 2005 levels. Then in the 12th FYP in 2010, China
set the carbon intensity reduction aim of 17% based on the above target. The Chinese
government explicitly requires all levels of government to take climate change into
account when setting up the local medium- and long-term development strategy, which
feeds into the National Economic and Social Development Plan.
The central government has already established low carbon pilot projects in 13 regions
(five provinces and eight cities including Guangdong, Liaoning, Hubei, Tianjin, and
Chongqing) to encourage them to explore a low carbon model of development. Many
provincial governments have also established local climate change programs and
proposed the guidelines, principles, and objectives for addressing climate change,
including the key areas of mitigation and adaptation. A number of provincial and some
municipal local governments have set up specialized committees on climate change —
headed by the governors or mayors — to draft the priorities and measures to address
climate change.
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
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Prospects for Reducing Carbon Intensity in China
Table 7. Different Scenarios for Carbon Intensity in China in the 12th FYP
Year
Carbon Intensity (Unit: tons CO2 /10,000 yuan, 2005 constant yuan)
Commitment
scenario
Composition
of energy
consumption
scenario
Economic
structure
scenario
Sectoral
efficiency
scenario
Combined
scenario
2010
2.64
2.56
2.59
2.49
2.51
2012
2.45
2.51
2.60
2.31
2.29
2014
2.27
2.46
2.62
2.15
2.09
2015
2.17
2.43
2.62
2.07
2.00
Change in carbon
intensity (%)
-17.8
-5.1
1.2
-16.9
-20.3
Source: Authors’ calculations
Figure 5. Different Carbon Intensity Scenarios of Carbon Intensity for China in
Fig. 5 Different
carbon intensity scenarios of carbon intensity for China in the 12th
the 12th FYP
3.2
Carbon
Intensity
tons
/10,000 yyuan,
Carbon intensity(Unit:
(unit: tons CO
CO2/10000 uan, 2005
2005 cconstant
onstant yyuan)
uan)
2
3.0
2.8
2.6
2.4
2.2
2.0
commitment Scenario
economic structure scenario
combined scenario
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
1.8
energy consumption's composition scenario
sectoral energy efficiency scenario
Source: Authors’ calculations
22
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Prospects for Reducing Carbon Intensity in China
Building on this context, Table 7 and Figure 5 illustrate different scenarios for China’s
carbon intensity trends during the 12th FYP:
– T
he “commitment scenario” refers to what China would need to do in the 12th FYP
(2011-2015) to achieve the target of 45% reduction of carbon intensity from 2005 to
2020.
– T
he “composition of energy consumption scenario” refers to what the carbon intensity
of the economy would look like if only the share of different energy consumption
areas change while other factors remain constant in the 12th FYP.
– T
he “economic structure scenario” refers to what the carbon intensity of the economy
would look like if only the economic structure changes, and all other factors are held
constant.
– T
he “sectoral efficiency scenario” refers to what the carbon intensity of the economy
would look like if only energy efficiency changes in 12th FYP, and all other factors
remained constant.
– T
he “combined scenario” shows all three scenarios together; namely, the “composition
of energy consumption scenario”, the “economic structure scenario” and the “sectoral
efficiency scenario” to see the combined effect on carbon intensity.
Scenario Assumptions
Commitment
scenario
Composition
of energy
consumption
scenario
Economic
structure scenario
Sectoral efficiency
scenario
Combined
scenario
Assumption:
Achieves
an annual
decrease
in carbon
intensity of
3% compared
to the level
of 2005, it is
corresponds
to the official
45% target
between
2005~2020.
Assumption:
In 2015, the
share of
different energy:
Assumption:
In 2015, the
share of
different sector:
Assumption:
In 2015, the
energy efficiency
of different sector
(tce/10000 yuan):
Coal:
63.0%
Agriculture: 6.7%
Agriculture: 0.172
Assumption:
The
combination
of the
other three
scenarios
Oil:
17.3% Industry:
Gas:
42.3%
8.3% Construction: 6.6%
Renewable: 11.4% Service:
(Other factors
unchanged)
44.5%
(Other factors
unchanged)
Industry:
1.535
Construction: 0.205
Service:
0.517
(Other factors
unchanged)
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23
Prospects for Reducing Carbon Intensity in China
The “commitment scenario” achieves an annual decrease in carbon intensity of 3%,
which corresponds to the official 45% target. In this scenario, China’s carbon intensity
would decrease from 2.64 tons CO2 /10,000 yuan to 2.17 tons CO2 /10,000 yuan, and the
accumulated decrease would be 17.8% during the 12th FYP — almost the same as the
target declared in the 12th FYP.
The “composition of energy consumption scenario” estimates how much carbon
intensity would change if the share of non-fossil energy could reach the target of the
12th FYP. Here we consider only the effect of changes to the composition of energy
consumption. If the target is reached, the supply of lower-carbon fuels would lead to a
decrease in carbon intensity of 5.1%, from 2.56 tons CO2 /10,000 yuan in 2010 to 2.43
tons CO2 /10,000 yuan in 2015.
In the “economic structure scenario,” which analyzes only the effect of compositional
shifts in the economy, we find that carbon intensity would increase from 2.59 tons
CO2 /10,000 yuan in 2010 to 2.62 tons CO2 /10,000 yuan in 2015. This is because
industry’s share of China’s GDP is likely to continue to increase during the next FYP.
We therefore expect that sectoral energy efficiency improvements will have to play the
dominant role in reducing carbon intensity during the 12th FYP. In the “sectoral energy
efficiency scenario,” carbon intensity decreases 16.9%.
Combining all of the above scenarios, China’s carbon intensity decreases from 2.51
tons CO2 /10,000 yuan in 2010 to 2.00 tons CO2 /10,000 yuan in 2015, resulting in a
combined decrease of 20.3%, which is greater than the 12th FYP target.
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Center for International Environment and Resource Policy, The Fletcher School, Tufts University
Prospects for Reducing Carbon Intensity in China
8.0 Conclusion and Policy Implications
In the 12th FYP, the Chinese government proposed a carbon intensity reduction target
for the first time. The attitude of Chinese policymakers toward climate change policy
recently underwent a radical change, from having no explicit climate change policies
to a Presidential commitment to reduce carbon intensity. The 12th FYP mentions the
need to control total energy consumption, and to gradually establish a carbon market.
We posit that the motivation for this radical shift can be attributed to rising concerns
about the projected impacts of climate change in China, and also the government’s
recognition that China’s traditional development model is unsustainable, not only
environmentally, but also from the standpoint of social and economic development.
The Chinese central government has been searching for mechanisms to transform
China’s development trajectory, and climate change policy represents a new and
justifiable tool that can help the government transform economic development in
China, especially because climate policy can be used as a new central government
instrument to guide and control the behavior of local governments.
China’s carbon intensity declined from 8.5 tons CO2 /10,000 yuan in 1980 to 2.59
tons CO2 /10,000 yuan in 2009. More than 95% of this decrease can be attributed
to improvements in energy intensity, which is logical since China relies so heavily
on coal, the most carbon intensive of all fossil fuels. Improvements in industrial
energy efficiency explain about 70% of the carbon intensity changes during the last
three decades, and efficiency improvements in the energy intensive industries alone
contribute half of the total improvements in carbon intensity in the past.
Based on scenario analysis, we conclude that China has significant potential to achieve
its carbon intensity goal in the 12th FYP, but it will not be easy. While the intent of this
article is not to propose specific policies, our analysis indicates that new economic
incentives for industry to improve energy efficiency, especially more market-oriented
policies such as a cap-and-trade system or a carbon tax for certain sectors, would
improve the prospects of reaching the target reduction. In addition, energy price
adjustments, consistent with the desired changes in China’s development mode, would
help to encourage energy conservation and likely be effective in spurring industrial
efficiency measures since this sector consumes such a large quantity of energy. Further,
measures to stimulate more energy conservation in the transport sector, such as a
gasoline tax, are also needed given the great and rising demand for automobiles in
China. Finally, a GHG data reporting and assessment regime is critical in order to
inform policymaking and facilitate enforcement.
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Prospects for Reducing Carbon Intensity in China
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Center for International Environment and Resource Policy, The Fletcher School, Tufts University
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Prospects for Reducing Carbon Intensity in China
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28
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
Prospects for Reducing Carbon Intensity in China
Appendix I — The Calculation of CO2
Emissions in China
The calculation of CO2 emissions in the paper includes those caused by mankind’s use
of fossil fuels (coal, oil, and gas). It does not include other types of greenhouse gases
such as CH4, and it does not consider carbon sinks (for example, forests).
As a Non-Annex I country under the Kyoto Protocol, China does not have the
responsibility to report its GHG emissions annually. However, the UNFCCC required
that China issue an “Initial National Communication on Climate Change” in 2004,
which revealed that China’s GHG emissions in 1994 were 4.06 Gt CO2e. The amount
of CO2 from the use of fossil fuels was 3.07 Gt, accounting for 75.6% of the total GHG
emissions. In 2007, the NDRC (National Development and Reform Commission)
published the “National Climate Change Programme,” which showed that GHG
emissions had increased to 6.1Gt CO2e in 2004. CO2 emissions were 5.07 Gt, accounting
for 83.1% of total GHG emissions (See Table A1). Although we did not consider noncarbon GHG or carbon sinks in this paper due to a lack of data, because CO2 emissions
have accounted for such a significant share of China’s total carbon emissions, we were
still able to tell the main story of China’s GHG emissions in the 12th five-year period by
tracking CO2 emissions from fossil fuel use in China.
Table A1: China GHG Emissions in Official Publication
1994
2004
Total GHG emissions (Gt CO2e)
4.06
6.1
Net GHG emissions (Gt CO2e)
3.65
5.6
CO2 (Gt CO2e)
3.07
5.07
CH4 (Gt CO2e)
0.73
0.72
N02 (Gt CO2e)
0.26
0.33
Carbon Sink (Gt CO2e)
0.41
0.5
Share of CO2 in the total GHG emissions (%)
75.6
83.1
Source: “China Initial National Communication on Climate Change” (2004) UNFCCC, “China National
Climate Change Programme” (2007) NDRC
We were able to obtain China’s CO2 emissions data from official publications in some,
but not all, years. There were additionally many resources and institutions that
provided us with the annual data of GHG or CO2 emissions for different countries.
These included CAIT (Climate Analysis Indicators Tool) from WRI (World Resources
Institute), WDI (World Development Indicators) from the World Bank, as well as the
IEA, BP, and others.
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
29
Prospects for Reducing Carbon Intensity in China
As Figure A1 shows, the difference between the Chinese CO2 emissions data from these
different sources was very small, so it was reasonable for us to choose any source from
among those available. Since these sources only gave the gross CO2 emissions data for
China, this meant that understanding the CO2 emissions from different sectors and
different energy types, which would be very important in order to conduct a detailed
analysis of CO2 emission in China, was impossible. Therefore, we selected a method
that calculated CO2 emissions by using official energy consumption data9 and CO2
emission factors10 by energy type.
Figure A1: Comparison of China CO2 Emissions from Different Sources
8.0
（Gt）
7.0
6.0
5.0
4.0
3.0
2.0
1.0
WDI
BP
WRI
IEA
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
0.0
NDRC
Source: WDI (2010), BP (2010), WRI (2010), IEA (2009) and NDRC (2007)
Figure A2 and Table A2 reflect the authors’ calculations for China CO2 emissions as
well as a comparison among the different data sources. The Figure and Table show
that our calculations very closely follow data from the other sources. For example, the
difference between our result and official data for years 1994 and 2004 was only -0.64%
and 5.18% respectively; our method of calculation is justified by this data comparison.
9 From “China Statistical Yearbook (2010)” and “China Energy Statistical Yearbook (2010)”.
10From BP (2010) Statistical Review of World Energy. The CO2 emission factors are 1.08 tC/tce
(Coal), 0.84 tC/tce (Oil), 0.64 tC/tce (Gas) respectively.
30
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
Prospects for Reducing Carbon Intensity in China
Figure A2: Authors’ Calculations of China CO2 Emissions and Results Comparison
8.0
(Gt)
7.0
6.0
5.0
4.0
3.0
2.0
1.0
WDI
BP
WRI
IEA
NDRC
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
0.0
author calculation
Source: WDI (2010), BP (2010), WRI (2010), IEA (2009), NDRC (2007) and Authors’ Calculation
Table A2: Authors’ Calculations and Result Comparison for 1994 and 2004
Data Comparison
Official Data (NDRC, 2007)
CO2 Emissions (1994)
CO2 Emissions (2004)
Different
Sources
(Gt)
Difference
compare to
official data (%)
Different
Sources
(Gt)
Difference
compare to
official data (%)
3.07
0
5.07
0
WDI (2010)
3.06
-0.46
5.09
0.41
BP (2010)
3.06
-0.38
4.96
-2.25
WRI (2010)
2.95
-3.75
5.03
-0.78
IEA (sectoral approach)
—
—
4.55
-10.32
IEA (reference approach)
—
—
4.66
-8.16
3.05
-0.64
5.18
2.17
Authors’ Calculations
Source: Authors’ calculations
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
31
Prospects for Reducing Carbon Intensity in China
Appendix II — The Decomposition of
Carbon Intensity Change
(E nergy Structure and Energy Intensity )
Calculating carbon intensity by dividing CO2 emissions by GDP in equation (A2.1), we
are able to decompose the change in carbon intensity into the change in CO2 emissions
per unit of energy consumption (energy consumption composition) and the change in
energy consumption per GDP (energy intensity).
Equation A2.1: Expression of Carbon Intensity in terms of CO2, GDP and Energy
Consumption
CO 2
CO 2
Energy
（A-1）
=
*
GDP Energy GDP
CO 2
CO 2
Energy
（A-1）
=
*
GDP
Energy
GDP
CO
2
CO
2
Energy
CO
2
CO
2
Energy
CO
2
Energy
CO
Energy*
（A-1）
Equation
of Change
Δ 2 == CO
=A2.2:
Δ2( **Expression
) ≈ Δin
( Carbon )Intensity
+（A-1）
Δ( in Terms
) of Changes in
GDP
Energy
GDP
GDP
Energy
GDP
Energy
GDP
（A-2）
GDP
Energy
GDP
CO
2 andCO
2 Consumption
Energy
CO 2
Energy
, GDP
Energy
CO
2
= Δ(
*
) ≈ Δ(
) + Δ(
)
GDP
Energy
GDP
Energy
GDP
（A-2）
CO
2
CO
2
Energy
CO
2
Energy
CO 2 * Energy ) ≈ Δ( CO 2 ) + ΔEnergy
ΔΔ CO 2 == Δ
Δ((
*
) ≈ Δ(
) + Δ( (
) )
GDP
Energy
GDP
Energy
GDP （A-2）
（A-2）
GDP
Energy GDP
Energy
GDP
where：
Δ
CO2：CO2 emissions
where：
Where:
CO2：CO2
emissions
GDP：Gross
domestic Products
where：
where：
CO2CO2 emissions
GDP：Gross
domestic
Products Products
Energy：Energy
GDP
Grossconsumption
Domestic
CO2：CO2
emissions
CO2：CO2
emissions
Energy：Energy
consumption
Energy Energy
GDP：Gross
domesticconsumption
Products
GDP：Gross
domestic
Products
CO 2
The
calculation
of
Energy：Energy
consumption
Energy：Energy consumption
Δ(
) on the right side of equation (A-2) signifies the change in CO
Energy
2
The calculation of Δ( CO
on
the right side of equation (A-2) signifies the change in CO2
)
Energy
emissions
per unit
of CO
energy
consumption.
Because the (A-2)
emissions
factors
of different
energ
2
The
calculation
of
the right side
signifies
thethe
change
in CO
( CO 2 ) on
The
calculation
ofofΔΔenergy
sideofofequation
equation
(A-2)
signifies
change
in 2CO
(Energy consumption.
) on the rightBecause
emissions
per
unit
the
emissions
factors
of
different
energy
typ
were
relatively of
constant,
the on
changes
in side
CO2ofemissions
per unit
of energy
consumption refl
The calculation
the right
equation (A2.2)
signifies
the change
Energy
were
relatively
constant,
the
in CO2Because
emissions
unitif
of
consumption
reflecttyp
th
in CO
emissions
per
ofchanges
energy
consumption.
Because
the
emissions
factors
of
emissions
unit
of unit
energy
consumption.
theper
emissions
factors
of
energy
change
energy
composition.
For
instance,
theenergy
share
of different
renewable
2 in per
emissions
per
unit consumption
of energy consumption.
Because
the emissions
factors
of
differentenergy
energy
change
in energy
consumption
composition.
instance,
the
share
of renewable
energy
incre
different
energy
types
were
relatively
constant,
the
changes
in
CO
emissions
per decrease,
were
relatively
constant,
the
changes
in
CO
emissions
perifunit
of
reflect
th
2 energy consumption
by
a relatively
large
measure,
the
CO
per2For
unit
of
energy
consumption
would
and
2 emissions
were
constant,
the
changes
in
CO
emissions
per
unit
of
energy
consumption
refle
2
unit
of
energy
consumption
reflect
the
change
in
energy
consumption
composition.
by
a
large
measure,
the
CO
emissions
per
unit
of
energy
consumption
would
decrease,
and
carb
2
change
in would
energy also
consumption
composition. For instance, if the share of renewable energy incre
intensity
decline.
For instance,
ifalso
theconsumption
share
of renewable
energy increased
by a large
CO2
change
inwould
energy
composition.
For instance,
if themeasure,
share ofthe
renewable
energy i
intensity
decline.
by
a
large
measure,
the
CO
emissions
perwould
unit ofdecrease,
energy consumption
would decrease,
and carb
2
emissions
per
unit
of
energy
consumption
and
carbon
intensity
would
by a large measure, the CO2 emissions per unit of energy consumption would decrease, and
intensity
would also decline.
also decline.
The
second
partalso
of the
right side of the equation (A-2), seen as Δ( Energy ) , expresses the c
intensity
would
decline.
The second part of the right side of the equation (A-2), seen as Δ( Energy
GDP
) , expresses the chang
The second part of the right side of the equation (A2.2), seen as
GDP , expresses
Energy
The
second
part
of theconsumption
right
side thereby
ofper
theGDP,
equation
(A-2),
astheΔ
expressesofthe
energy
consumption
per
GDP,
reflecting
theseen
change
in(change
energyin
thechang
entir
) ,intensity
the
change
in
energy
thereby
reflecting
energy
Energy
energy
consumption
per right
GDP,side
thereby
reflecting
change
in energy
intensity
of the entire
The second
part of the
of the
equationthe
(A-2),
seen
as ΔGDP
,
expresses
theeco
ch
(
)
intensity
of the entire
economy.
else equal,
the more the
energy
intensity
decreases,
All
else equal,
the more
energyAllintensity
decreases,
more
carbon
intensity the
falls.
GDP
All
else equal,
the more
energy
intensityreflecting
decreases,
the
more in
carbon
intensity
falls.
energy
consumption
per
GDP,
thereby
the
change
energy
intensity
of
the
entire
eco
more carbon intensity falls.
energy
perenergy
GDP, intensity
thereby reflecting
in energy
intensity
All elseconsumption
equal, the more
decreases,the
the change
more carbon
intensity
falls. of the entire
Appendix
III-The
Decomposition
of
Energy
Intensity
Change
Appendix
III-The
of Energy
Intensity
All else equal,
the Decomposition
more energy intensity
decreases,
theChange
more carbon intensity falls.
(Economic
Structure
and
Sectoral
Energy
Efficiency)
(Economic
Structure
and Sectoral
Energy
Efficiency)
Appendix
III-The
Decomposition
of Energy
Intensity
Change
32
Center for International Environment and Resource Policy, The Fletcher School, Tufts University
Appendix
III-The
Decomposition
of Energy
Change
(Economic
Structure
and Sectoral
EnergyIntensity
Efficiency)
Asexpressed
expressed
equation
(A-3),
energy
intensity
ofeconomy
an economy
canobtained
be obtained
by cal
As
inin
equation
(A-3),
thethe
energy
intensity
of an
can be
by calculat
The second part of the right side of the equation (A-2), seen as Δ( Energy ) , expresses the c
GDP
Prospects for Reducing Carbon Intensity in China
energy consumption per GDP, thereby reflecting the change in energy intensity of the enti
All else equal, the more energy intensity decreases, the more carbon intensity falls.
Appendix III — The Decomposition of
Appendix III-The Decomposition of Energy Intensity Change
Energy
Intensity Change
(Economic Structure and Sectoral Energy Efficiency)
(E conomic Structure and Sectoral Energy Efficiency )
As
expressed in equation (A-3), the energy intensity of an economy can be obtained by cal
As expressed in equation (A3.1), the energy intensity of an economy can be obtained by
sum
of sectoral
energy
efficiency
and
sectoraland
share
multiplied.
Therefore,Therefore,
the energy inten
calculating
the sum
of sectoral
energy
efficiency
sectoral
share multiplied.
the energydepends
intensityon
of the
economy depends
onand
its economic
structure
and sectoral
economy
its economic
structure
sectoral energy
efficiency
(sectoral energy
energy efficiency (sectoral energy intensity).
Equation A3.1: Calculation of an Economy’s Energy Intensity
Ei ∑ eiYi
Energy ∑
i
e
=
=
= i
=
GDP
GDP GDP
∑ e × y × GDP
i
i
i
GDP
= ∑ ei yi
(A-3)
i
Where:
Where：
e:
e:
Energy intensity
whole economy
Energyofintensity
of whole economy
Ei
Energy
consumption
by
the
i sector
Energy consumption
by the i sector
E i：
Yi: Value added by the i sector
Y i:
Value added by the i sector
e i:
Energy intensity of the i sector (ei= Ei / Yi)
y i:
GDP Share of the i sector
ei:Energy intensity of the i sector (ei= Ei / Yi)
yi: GDP Share of the i sector
The change in energy intensity of the whole economy can be decomposed into the change of
economic
structure
and intensity
the changeofofthe
sectoral
energy
efficiency.
Seedecomposed
the equation (A3.2).
The
change
in energy
whole
economy
can be
into the change
economic structure and the change of sectoral energy efficiency (See the equation A-4).
Equation A3.2: Expression of Change in an Economy’s Energy Intensity
t1 t1
t0
22 Δe = of
ett11Change
− ett 00 = ∑
y − ∑ eitt 00 yStructure
it 0
in Terms
ineitEconomic
and Sectoral
Energy Efficiency
1 it1
Δe = e − e = ∑
i ei yi − ∑
i ei yi
t1
t0
t1 t1
t0 t0
Δe = eet t0t11−y te1 −t 0 = ∑
t1i t1te1i t 0yi − ∑
ti0 t1eti0t 0yi
eyit1i yet1i−
et 0 y t 0 ) + (∑ eit1 yit1 − ∑ eit 0 yit1 + ∑ eit 0 yit1 − ∑ eit 0 yit 0 )
t1 +
t1 e eiy y
t0 −
t0
Δe = eΔt1e(∑
−=eet1it1 −=it1e∑
∑
t0 ∑
t1 ∑
i i t1e
i t 0it 0yt 0 ∑ it 0 it 0
=ei i ∑
i
∑
it 0yy+
i −−
i y−
i i e y ) + ( i e t1 y t1 − i e t 0 y t1 + i e t 0 y t1 − i e t 0 y t 0 )
Δ
=
−
=
e
e
e
e
e
(
e
y
−
e
y
e
y
i
i
∑i i i ∑ it 0 it 0 ∑ it1 it1 ∑ it 0 it1 ∑ it 0 it1 ∑ it 0 it 0 (A-4)
i
i
= ∑ it1 it1 i ∑∑
iit1 it 0 i ∑ i it1 it 0
i
it 0 eit 0 yi ) +
i e yi − ∑
i te
i e
i eti0 yti 0 ) (A-4)
( i t1ei t1yi t1− t∑
(∑
1i te0i t1yi t 0+ ∑
0 i t 0ty
1i t1+ ∑
t1i et i0t1yi t 0− ∑
t 0i t 0yt1i t1− ∑
t1
t 0y t 0)
(∑=eit(1∑
y
−
e
y
+
e
yetii0t 0)yt+i0t 0 ()22∑
ei it1 yeit1iitt11 y−
0
0 t+
1 ∑
t1 ∑
yt1i −−i ∑
yt i0∑
−e∑
+((∑
+∑
i i et1i ∑
i i et1i yt∑
i yiet1i −
iei ety
i ei et i0yiyt1i −−
i ee
∑
i e
∑
∑
i ++ i∑
i −− ∑
i iyyi +
(
e
y
e
y
e
y
−
y
)
+
e
y
e
e
y
−
eit i0 yyiit i0 ))(A-4)
=
1
1
∑
∑
∑
∑
∑
∑
∑
∑
i
i
i
i
i
i
i
i
i
i
i
i
i
i
t 0i
t1 i
t1 i t 0 i
t1
t1i
t0
i
i t 0i
i i
i i
i i i
i
i
(A-4)
(A-4)
(eit 0 + eit1i )( yit1 − yit 0 )i + 1 ∑ ( yiti0 + yit1 )(e2it1 − ei it 0 )
= =
i
i
i
i
=1 ∑
(A-4)
=
2
= 12 ∑
e
−
e
)
2
i (ei + ei )( yi − yi ) + 2 ∑
i ( yi + yi )(
it1
it 0
1
2
0
1
1
0
0
1
t
t
t
t
t
t
i (ei + ei )( yi − yi ) + 2 ∑
e −e )
1 = 1221∑
1 121 i t 0( yi t 0+t1 yi t1)(
0
t10
t1 i t1 t 0 i t 0
Where：
= (eit∑
+eyetit1it11)()(
+ (∑
yte1i )(
)(e−et1i e−i−e)et i0 ))
= ∑
−yyyt1iti1t −0−)y+yt i0t 0))+∑
yi i ((y+yt i0y+i+)(
i +(eti0 )(
i
=
(
e
+
y
∑i i i in ienergy
∑ i i i i
i
i 2
Where：
i 22
22 change
intensity
ofi iwhole economy (From period t0 to period t1）
Δe2 : i the
Where：
Δ
e : the change in energy intensity of whole economy (From period t0 to period t1）
Where： change in energy intensity of whole economy (From period t0 to period t1）
Where：
Where：
Where:
energy intensity of the i sector in period t1
eΔitt11e：: the
the change
energy
intensity
ofwhole
whole
economy
(From
period
periodt1）
t1）
e::change
：
energy
of
theintensity
i sector
in
period
t1
the
inintensity
energy
intensity
of whole
economy
(From
period
t0 t0
tototo
period
Δe : eΔΔ
the
ininenergy
of
economy
(From
period
period
it1e
Thechange
change
in of
energy
intensity
of whole
economy
(Fromt0period
t0t1）
to period t1)
intensity
the i sector
in period
t1
e ：: energy
i tt10
ti1 ：
： energy
energyintensity
intensityof
ofthe
theiisector
isector
sectorinin
inperiod
periodt1t1
t0
intensity
period
i : energy
intensity
of theof
i the
sector
period
eit1 ： eeeeenergy
intensity
iinsector
int1period
i t 0：
： Energy
energy intensity
ofof
thethe
i sector
in period
t0 t1
it 0
energy intensity
ofof
thethe
i sector
in period
t0 t0
eyittt010：
Energy
intensity
i sector
in period
::：GDP
share
of the iof
sector
in
period
t1
energy
intensity
of
theiisector
sector
periodt0t0
intensity
the
ininperiod
1 ： energy
intensity
of
the
i
sector
in
period
t0
eit 0 ：eyeiiitienergy
i sector
in period
t1 t1
t1 :: GDP
GDPshare
shareofofthethe
i sector
in period
yi : GDP share of the i sector in period t1
yyyt 0t1
y y
yi t 0: GDP share of the i sector in period t0
Center
International
Resource
yt 0 : forGDP
share of Environment
the i sector inand
period
t0 Policy, The Fletcher School, Tufts University
t 0 yi i : GDP share of the i sector in period t0
1
y : GDP share of the i sector in period t0
t0
t1
t1
t0
1 :: GDP share of the i sector in period t1
t 1 itti0
:GDP
share
the
i sector
in t1
period
i sector
in period
t1t0 t0
i : GDP
shareshare
of theofof
i the
sector
in period
i : GDP
it 0 : GDP share of the i sector in period t0
i
33
The first part of the right side of equation (A-4), seen as ∑ (e + e )( y − y ) , expresses the change
The first part of the right side of equation (A-4), seen as 12 i (eit 0 + eit1 )( yit1 − yit 0 ) , expresses the change
yit 0 : GDP
of the
i sector
iniperiod
yit 0share
: GDP
share
of the
sector t0
in period t0
Prospects for Reducing Carbon Intensity in China
t0
, expresses
the change
The first part
thepart
right
of equation
seen
as 1seen
The of
first
of side
the right
side of (A-4),
equation
(A-4),
+ e1t1 )( y(t1et−0 +y te0 t)1 )(
y t1 − y t 0 ) , expresses th
∑ (eas
The first part of the right side of Eq. (A3.2), seen as 2
i
i
i
2
∑
i
i i
i i
, expresses
i
i
f economic
structure.
The second
of
the
right
side
ofthe
equation
(A-4),
as seen
theeconomic
change of economic
structure.
The
second
rightof
side
of Eqseen
(A3.2),
as as
of
structure.
Thepart
second
part
ofpart
the of
right
side
equation
(A-4),
seen
1
1
change
sectoral
energy
efficiency
(sectoral
energy
intensity).
is the
theinchange
change
sectoral
energy
efficiency
(sectoral
energy intensity
)(e(ity1 it−0 +eit 0y)it1,)(iseit1the
ininsectoral
energy
efficiency
(sectoral
energy
− eit 0 ) ,, is
∑ ( yit 0 + 12yit∑
2 i
i
intensity).
23 34
23 Center for International Environment and Resource Policy, The Fletcher School, Tufts University
Energy, Climate, and Innovation Program (ECI)
Center for International Environment and Resource Policy (CIERP)
The Fletcher School
Tufts University
Cabot Intercultural Center, Suite 509
160 Packard Avenue
Medford, MA 02155
www.fletcher.tufts.edu/cierp