China needs big strides to achieve its intensity target

24 June 2015

China is expected to announce its emissions target or INDC later this month, so Jonathan Grant and Rob Milnes reflect on the progress it has made since 2000 to lower the carbon intensity of its economy.  Rapid GDP growth has flattered China’s carbon intensity and it is now looking to do more to tackle emissions, particularly from coal.

China’s rapid GDP growth this century, averaging 10% per year, has been main driver of its falling carbon intensity. But that GDP growth will slow according to PwC’s World in 2050 report.  We expect China’s GDP to grow by 6-7% in the coming five years and by just under 4% between 2020 and 2030 as the economy matures.  This slower GDP growth increases pressure on China to tackle emissions if it is to achieve its Copenhagen target of a 40-45% reduction in carbon intensity on 2005 levels by 2020.

China’s average decarbonisation rate this century is 1.6% per year, but has fluctuated significantly year on year by up to 14 percentage points. There are three chapters in China’s carbon intensity story this century. Between 2000 and 2005 carbon intensity rose by 1% per year on average. It then decarbonised at 4% per year up to 2009. This rapid decarbonisation from 2005 is perhaps what prompted China’s Copenhagen target which at the time required annual intensity reductions of 3.4%.

But in the third chapter, since 2010 China’s decarbonisation rate slowed to average only 1.4%.  It was close to zero in 2010 and 2011, but in the last couple of years the rate has picked up to around 4%.  Given this story since 2005 China now needs to reduce carbon intensity by 4.5% per year in order to meet its Copenhagen target.  This carbon intensity reduction is in the same range as those implied in the pack of INDCs published by major economies recently.  And China has shown in the past that 4.5% is achievable.  But with slower GDP growth forecast, it is now focusing on tackling emissions growth, particularly from coal.

Chinas Copenhagen target

 

 

Chinas BAU intensity GDP etc