The next five years are set to be exciting for China. With the recent publication of the country's 12th Five-Year Plan (2011-2015), China's shift toward a more energy efficient, lower-carbon economy looks set to accelerate, driven largely by action at the city and provincial level. This is good news not just for China and its citizens, but for the international community as well. As the world's second largest economy and a manufacturing powerhouse the pace and direction of China's low-carbon efforts matter more than ever.
A recent analysis undertaken by The Climate Group in conjunction with HSBC concluded that the 12th Five-Year Plan will accelerate China's low-carbon ambitions, "bending" the country's carbon emissions growth curve. This means that although China's total emissions will increase, this will be at a lower rate than previously projected by the International Energy Agency. This is welcome because it shows that China is taking its global climate change responsibilities seriously. But while China is undoubtedly setting a leading example, its pace of change, like other major emitters, still falls short of what is required by the climate science.
Our report shows China's growth in energy supply will incorporate an increasing share of non-fossil fuel sources. Nuclear and hydroelectric power will play an important part here, and so will wind and solar energy, with wind power capacity expected to double by 2015. While coal will continue to dominate China's energy mix, its total share is expected to fall from 72 percent to 63 percent.
The Five-Year Plan's aggressive growth plans for strategic emerging industries will accelerate the deployment of low-carbon technologies, both at home and abroad. Sectors to benefit will include electric vehicles, energy efficient products and renewable energy. China's large scale manufacturing capacity will be crucial to driving down international prices for a broad range of technologies necessary for delivering a global clean revolution.
To help deliver these new technologies, the 12th Five-Year Plan is set gradually to open up opportunities for greater foreign investment in China.
To make all this happen as efficiently and effectively as possible, our report highlights that China's approach to managing energy is evolving and is set to become more market orientated under the 12th Five-Year Plan. Market mechanisms such as energy price reform, carbon trading pilots, energy labelling of consumer products and support for energy service companies will be developed and are likely to form a key element of China's energy policy framework by 2015.
Challenges of course remain. Some local governments are likely to struggle with limited capacity to implement changes. Access to capital for energy efficiency and renewable energy projects may cause bottlenecks. And stronger provisions for deploying carbon capture and storage technology will be needed at some point to deal with China's continuing reliance on coal.
Cities will be at the heart of dealing with many of these challenges as well as the opportunities presented by the 12th Five-Year Plan. With urbanization continuing to accelerate, Chinese cities are the main drivers of energy and resource consumption and already consume three-fourths of the country's energy. Hence, the global battle against climate change is likely to hinge on the actions taken by China's cities.
In particular, provincial and "tier 2" cities like Tianjin, Shenzhen and Baoding will bear much of the responsibility for delivering the 12th Five-Year Plan's targets. These cities have a significant percentage of China's urban population and therefore generate much of its economic growth and employment.
Ensuring these cities, and governments that run them, have the skills and knowledge necessary for implementing low-carbon policies and measures will be critical to the success of the 12th Five-Year Plan.
It is essential for Chinese cities to overcome these challenges to play the part expected of them. For this reason, The Climate Group is launching its "China Redesign" initiative, a leadership platform to support cities in planning and executing low-carbon growth plans. The prize for such leadership is a slice of the $2.2-trillion global low-carbon sector that HSBC calculates will exist by 2020.
China Redesign is a three-year project built around four work streams focused on capacity building, demonstration projects, policy advocacy and finance, and communication and outreach. Among other outputs, the initiative will help build city managers' knowledge of low-carbon policies and solutions, produce case study evidence of successful low-carbon projects, recommend specific policy reforms and financing models, and generate a range of media materials and events.
The initiative will mobilize low-carbon solution providers and financial institutions to help achieve and even exceed China's 40-45 percent carbon intensity reduction goal and other low-carbon targets. Working with government and business partners, China Redesign will cover seven key sectors ranging from renewable energy, through to sustainable transport and finance.
China Redesign will be a collaborative initiative. The lessons learnt by business and government partners will be shared with other cities in China and abroad. The China Redesign cities with will be laboratories for the low-carbon, clean-tech economy that the 12th Five-Year Plan is seeking to establish.
Making all this happen will ensure that China is well placed to lead the Clean Revolution necessary for addressing climate change and delivering a sustainable, prosperous global economy. The prize is there to be seized by low-carbon leaders willing to act. China's 12th Five-Year Plan and the efforts of its city leaders suggest that the country is ready for the challenge. It is indeed an exciting time for China.
The author is CEO of The Climate Group.
Online interview with The Climate Group CEO can be accessed at chinadaily.com.cn/video.