ChinaвЂ™s 12th Five Year Plan, Energy Security and Domestic Stability Christopher M. Dent University of Leeds ChinaвЂ™s 12th Five Year Plan Context вЂў ChinaвЂ™s FYPs date back to the early 1950s вЂў Maps out strategies and goals for economic development, specific projects and reforms вЂў Less dirigste than before, now officially called вЂ�guidelinesвЂ™ rather than вЂ�plansвЂ™ 12th FYP (2011-2015) вЂў Continuity of objectives from previous FYPs: пѓ�greening of economic growth пѓ�growth with greater social equity пѓ�promoting domestic consumption пѓ�improve social infrastructures and safety nets пѓ�foster emerging high-tech sectors, e.g. solar вЂў вЂ¦ more emphasis on sustainable development ChinaвЂ™s 12th Five Year Plan: Key Issues for Energy and Climate Change CC Related Targets and Policies вЂў Context: CO2 emissions, tons per capita: вЂў вЂў China 4.9, EU 9.1, US 18.9 Policies: Improve energy efficiency laws + standards, energy-saving market mechanisms (inc. new taxes), establish carbon markets, improve emission monitoring systems, new energy-efficient transport, limit growth of energy-intensive sectors Targets: пѓ� By 2015: coalвЂ™s share - 70% to 62%, 17.3% reduction in energy-intensity (20% target met in last plan) пѓ� By 2020: wind/solar/biomass: 200GW, nuclear 80GW, hydro 380GW (20% of total energy demand); 40-45% reduction in energy-intensity (CO2 per GDP unit) ChinaвЂ™s 12th Five Year Plan: Key Issues for Energy and Climate Change Green Energy Sector Development вЂў Part of a broader programme of high-tech industrial policy вЂў 7 strategic industries for вЂ�cleanвЂ™ development: new gen IT, energy-saving and environment protection, renewables, biotech, high-end equipment, new materials and new-energy cars ChinaвЂ™s Provinces вЂў вЂ�Rural modernisationвЂ™ and developing new вЂў energy infrastructure and production in ChinaвЂ™s poorer provinces New engines of growth for the Chinese economy? ChinaвЂ™s Provinces вЂ¦ some much richer than othersвЂ¦ Over US$10,000 US$5,000 вЂ“ US$10,000 US$3,000 вЂ“ US$5,000 US$2,000 вЂ“ US$3,000 Under US$2,000 Populations in millions GDP nominal p/capita, US$ 2009 вЂў Richest вЂ“ Shanghai Municipality (11,361), Beijing вЂў Municipality (10,070), Tianjin Municipality (9,136), Zhejiang (6,490), Jiangsu (6,475), Guangdong (5,965) Poorest вЂ“ Guizhou (1,502), Gansu (1,879), Yunnan (1,975), Tibet (2,216), Guanxi (2,316) Key Drivers in ChinaвЂ™s Energy Security Maintaining Dynamic Momentum вЂў High level energy inputs required to keep вЂў high economic growth rates, albeit more socially equitable and e-sustainable Economic development as both a mechanism for further reducing poverty in China and source of geopolitical power Reducing Supply Risk вЂў ChinaвЂ™s increasing dependency on вЂў imported energy: пѓ� diversification of energy partners пѓ� domestic coal still viewed as more supply risk averse Renewables, nuclear and strategic oil reserve development also to help mitigate this risk Key Drivers in ChinaвЂ™s Energy Security Upgrading Old Energy Infrastructure вЂў Around half of Chinese industry is still вЂў state-owned, energy inefficient and in need of investment Upgrading with clean efficient energy technologies вЂ“ a huge structural challenge Reducing Environmental Risk вЂў Growing acknowledgement that energy вЂў production and consumption are the prime causes of increasingly acute environmental problems in China Health costs, urban degradation, growing civil unrest, resource depletion and other pressures on the govt to find low carbon solutions ChinaвЂ™s Fast Emerging Renewable Energy Sectors Wind Energy вЂў ChinaвЂ™s wind energy вЂў вЂў вЂў вЂў вЂў World Top 10 Wind Turbine Producers capacity doubles annually over 2005-2009 2005: 1.2GW capacity 2010: 41.8GW (now the worldвЂ™s largest, overtaking the US last year) Over 50 Chinese wind turbine producer firms, three in the world top 10 Rate of sector expansion has far exceeded the Chinese govtвЂ™s expectations Still huge potential for further sector expansion Company Country Production (GW) 1. Vestas Denmark 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. Enercon Germany 3.3 8. Dongfang China 3.3 9. Repower Germany 2.9 10. Nordex Germany 2.5 ChinaвЂ™s Fast Emerging Renewable Energy Sectors World Top 10 Solar Photovoltaic Cell Producers Solar Energy Country Production вЂў This sector is also growing Company (MW) вЂў вЂў вЂў вЂў rapidly in ChinaвЂ¦ Now around 500 firms producing PV cells, China has four of the world top 10 producers Past emphasis on export, now on increasing domestic SP capacity However, domestic SP capacity is still very small (0.2GW in 2009) Plans to hit 2.0GW by end of this year 1. First Solar US 1,322 2. Suntech China 1,090 3. Q-Cells Germany 1,000 4. JA Solar China 800 5. Solar World Germany 710 6. Sharp Japan 695 7. Trina Solar China 600 8. Yingli China 600 9. Gintech Energy Taiwan 600 10. Kyocera Japan 440 ChinaвЂ™s Investment in Green Energy 12.9 Green Energy Investment in China and Europe (US$ bn) 12.4 10.7 9.9 7.2 6.2 6.7 6.6 5.5 China 0.2 Q1 04 4.2 3.4 3.2 2.5 0.3 0.5 0.6 0.1 0.3 0.4 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 1.4 1.2 1.3 Q4 05 Q1 06 Q2 06 Q3 06 2.3 2.5 Q4 06 Q1 07 2.8 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 8.0 7.6 Q2 10 22.9 16.5 15.6 13.2 12.5 11.3 10.4 Europe 10 Q1 04 1.8 Q2 04 Q3 04 7.9 7.7 4.7 5.3 5.6 4.7 4.3 3.6 2.0 9.4 9.2 8.9 5.4 2.9 10.9 2.5 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 Source: Bloomberg New Energy Finance Concluding Points вЂў Under the 12th Five Year Plan (2011- 2015), China will continue to raise its investment across a number of green energy sectors вЂў At the same time, China will maintain its burgeoning demand for oil, coal and gas, and faces a number of structural challenges in improving its energy efficiency levels вЂў ChinaвЂ™s вЂ�common but differentiated responsibilitiesвЂ™ view on climate change вЂў Positive signs aheadвЂ¦ пѓ�recent developments in US-China clean energy diplomacy пѓ�expect future enhancement of EUChina dialogue on climate change?