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Monday, November 26, 2012
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What to Expect from China in Doha

By Guest Author, Angel Hsu, Project Director, Yale Center for Environmental Law & Policy

This post originally appeared November 22, 2012, on China FAQs.

The next round of United Nations climate negotiations is gearing up to take place starting next week in Doha, Qatar, where countries will look to both China and the United States to see whether domestic political events will provide any momentum for the stalling talks. However, because of the proximity of the U.S. Presidential Election and the start of China’s once-in-a-decade leadership transition that will culminate in March, it is not expected that the world’s two largest emitters of greenhouse gases (GHGs) will be bringing too much by way of game-changing developments to Doha. Instead, we can expect most of the discussions in Doha to focus on securing final details for a second commitment period for the Kyoto Protocol, primarily for the E.U. and now Australia, as well as starting to formulate language for a new deal that will be decided by 2015.

1) Demonstrating Progress toward energy-intensity reduction goals.

Recently released provincial energy consumption data for 2011 shows that China is on its way to meeting the binding energy intensity reduction goals announced last year in the 12th Five-Year Plan. The new data show a 2.01 percent reduction in energy intensity for 2011, the first year of the 12th Five-Year Plan, which is significant considering that only 1.79 percent was reduced in the first year of the 11th Five-Year Plan. Although the goal for 2011 was a 3.5 percent reduction in energy intensity, Chinese officials blamed this miss on faltering hydropower due to droughts in southern China and have vowed to reach goals in subsequent years. Publishing these statistics prior to the Doha negotiations is an important step for China to demonstrate it is making substantial progress toward meeting its energy and carbon intensity reduction goals first made in the watershed Copenhagen climate negotiations in 2009 and then reaffirmed in both Cancun and Durban.

In addition to this release of data, China’s State Council revealed more specifics about how the country aims to achieve the remainder of its energy intensity reduction targets in the publication of its 2012 edition of a White Paper on China’s energy policy. In this high-level policy document, the Chinese government acknowledges challenges for China in making substantial shifts in its energy supply, reductions in consumption, and investments in renewable energy. Acknowledging that its primary energy output in 2011 ranked first in the world at 3.18 billion tons of coal equivalent, the white paper provides some insights on priorities and what the Chinese delegation may be emphasizing in Doha. For one, the White Paper definitively states that fossil energy, including coal and oil, will continue to play a dominant role in China’s energy supply “for a long time to come.” This language may indicate that conversations speculating on when China’s emissions may peak at Doha may be premature, although developed countries will surely try another push for China to include language in the next global agreement defining a peak year for its emissions. The white paper also clearly emphasizes technology innovation, technology transfer, and market mechanisms that will be critical topics discussed in Doha.

We can expect China in Doha to emphasize this progress as well as its 12th Five-Year Coal Plan released in April, which sets limits for coal production capacity at 4.1 billion tons and an annual output target of 3.9 billion tons by 2015 (read more about the Coal Plan in a previous ChinaFAQs blog). China also released more details for renewable energy targets in early August, including a goal for total renewable energy consumption set at 478 million tonnes of coal equivalent or 9.5 percent of the overall energy consumption mix by 2015. Of this goal, total installed hydropower generation capacity is targeted to reach 260 gigawatts; wind to reach 100 gigawatts; solar capacity at 21 gigawatts; and biomass energy at 13 gigawatts.

2) New alliances, such as the “Like-Minded Developing Countries” negotiation bloc.

Given how entrenched country positions and political alliances can be at these meetings, particularly between developed and developing (or Annex I and non-Annex I countries under the UNFCCC), it is encouraging that China, along with around 20 other developing countries from the G77 & China, have formed a new group called the Like-Minded Developing Countries (LMDC) that may help to push through some of previous meetings’ deadlock. Beijing hosted the first meeting of the group in mid-October and in attendance were Bolivia, Ecuador, Egypt, India, Malaysia, Nicaragua, Pakistan, Philippines, Saudi Arabia, Thailand and Venezuela – a geographically, economically, and politically diverse subset of the G77 & China that has bonded together over their “common interests and priorities,” which appear to be focused on the adverse effects of climate change and extreme weather events that have impacted their “survival and development aspirations.” With the Northeastern coast of the United States recently suffering a climate-related extreme weather event in the form of Hurricane Sandy, it will be interesting to see whether the United States will empathize with the LMDC position and form an alliance, perhaps similar to the coalition that formed between the European Union and the most vulnerable small island states and least-developed countries in the Durban talks last year. At very least, the combination of China, along with OPEC-member Saudi Arabia, in addition to Bolivia, which gained notoriety in the Cancun talks two years ago for being the lone country opposing the final agreements would hopefully help to secure consensus amongst the G77 & China for a clear strategy moving for a new global climate deal by 2015. It is nevertheless encouraging to see China playing a leadership role if this signals it is trying to think creatively about the negotiations and for solutions to break the intractable stalemate that often plagues these climate talks.

3) Emissions Trading Pilots.

China has continued preparation for the launch of seven carbon-trading pilots by next year and an eventual nationwide carbon-trading program in 2015. The emissions trading programs are currently being piloted in the cities of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen and the provinces of Hubei and Guangdong. These pilots will provide inputs into the design of an eventual nationwide program, and in large part will shape the future of carbon markets in China. China’s leadership on this front may help to encourage other countries that are considering developing similar domestic carbon trading schemes, and for eventual linkage of national schemes to a global carbon market, as Australia is considering for a national registry to be launched in 2013 and connected to the EU Emissions Trading Scheme (EU ETS) by 2015. These pilots could also galvanize other emerging economies such as India and Brazil to follow suit, as well as help to shape the discussion of new market mechanisms for climate mitigation in Doha.

A key issue that will be discussed in Doha that may have bearing on China’s emissions trading pilots and its national system in 2015 is with respect to accounting rules for GHG emission baselines, inventories, and registries. The pilots have not yet released details about specifications for accounting rules. China still has a ways to go with respect to developing transparent energy and climate accounting methods that are consistent across entities both amongst regions in China and internationally. Already, a number of reports questioning the accuracy of China’s energy statistics have brought increased international scrutiny of the country’s data. High-quality GHG emissions data will also be imperative if China is to be successful in ramping up its seven emissions trading pilots to the national level. In the European experience with the EU ETS, the price of trading allowances dropped after emissions data was released – something that could have been avoided if data had been reported more transparently. It appears that the success of the pilots largely hinges on transparent and effective MRV mechanisms, particularly if China hopes to expand these programs regionally within the next few years.

It is clear that transparency and quality of data in MRV will build a foundation of international trust. This has implications not only for climate change negotiations, but also for multinational firms dealing with different MRV systems, which may also stand to benefit from improved market stability that comes with more frequent data. China has already made strides in showing its commitment to transparency with the release of its second national climate change communication to the UNFCCC earlier this month, which includes an update to its national GHG emissions inventory that includes data for 2005. GHG emissions data are disaggregated by sector and by gas, with an explanation of uncertainty estimates and methodologies used – key elements that establish China’s progress on data transparency. China will hopefully be able to incorporate further discussions on accounting rules, market mechanisms, and MRV in Doha to ensure the pilots and the eventual national scheme can effectively link globally in the future.

4) Hints from the new Chinese leadership.

A discussion of what to expect from China in Doha would be incomplete without talk of any implications China’s leadership transition could have in Doha. Unfortunately, there are so far not many indications as to how a new Chinese leadership under Xi Jinping and Li Keqiang might impact energy and climate issues. At very least, with the 12th Five-Year Plan set in stone until 2015, we can expect the new leaders to follow a course to achieve the range of energy and environmental targets in the Plan. In particular, at the 18th National People’s Congress meetings that started immediately following the U.S. Presidential Election, outgoing President Hu Jintao stressed the need to incorporate “ecological progress” into all aspects of the nation’s development moving forward. He also declared that his “Scientific Outlook on Development” first introduced in 2003 was the most important Party achievement in the past decade, cementing it as the guiding ideology for the Communist Party moving forward. Therefore, we can anticipate that the new Chinese leaders will continue to emphasize its commitments to energy, climate change, and the environment with a people-centered, scientific approach.

In Doha, China will also look toward the United States for leadership, although China may take a similar approach in its messaging as it did last year in Durban – testing several new ideas and being more proactive on discussions such as legally-binding agreements and absolute emission limits that seemed to have helped pressure the U.S. to concede to an agreement with “legal force” in the final hours of the negotiations.

Look for more of my updates coming from Doha by following the action in real-time on Twitter at @DecisionMakr and blogs on ChinaFAQs.

Posted in: Environmental Law & Governance

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