Will China miss its 2021-2025 decarbonization targets?
Facts, numbers and industrial debates.
Just a heads-up: today's newsletter is a bit longer than usual.
The year 2025 marks the final year of China's 14th Five-Year Plan (2021-2025). Among the targets outlined in the plan, there are differing views on whether China can meet its energy and carbon intensity reduction goals.
Facts & Numbers
Before drawing any conclusions, here are some facts & numbers you need to know:
The 11th Five-Year Plan (2006-2010) introduced energy intensity (energy consumption per unit of GDP) reduction as a binding target (约束性目标); the 12th Five-Year Plan (2011-2015) set carbon intensity (carbon emissions per unit of GDP) reduction as a binding target.
The 14th Five-Year Plan (2021-2025) aims to reduce energy intensity by 13.5% and carbon intensity by 18%.
From 2021 to 2024, energy intensity dropped by: 2.7%, 0.1%, 0.5%, and 3.8%, totaling a 6.96% reduction in 4 years (5-year target: 13.5%).
From 2021 to 2024, carbon intensity dropped by: 3.8%, 0.8%, 0%, and 3.4%, totaling a 7.81% reduction in 4 years (5-year target: 18%).
This leaves nearly 7% more reduction in energy intensity to be achieved by 2025, and nearly 11% for carbon intensity. Based on China's annual performance in the past, reaching these reductions in one year is highly unlikely.
Differing forecasts & reasons
Some have raised concerns that China may not meet its energy intensity and carbon intensity reduction targets for the 14th Five-Year Plan, as the tasks remaining for 2025 are particularly challenging, as shown above. Last year, Dr. Zhang Zhongxiang, the Dean of Ma Yinchu School of Economics of Tianjin University published an article titled "In the 14th Five-Year Plan period, China may for the first time miss both energy intensity and carbon intensity reduction targets" (“十四五”中国将首次不能同时完成五年规划的能源强度和碳强度目标”).
But some scholars disagree, arguing that the energy intensity reduction target remains achievable. They base this belief on the changes to the assessment criteria for energy intensity.
Nine months after the release of the 14th Five-Year Plan, at the 2021 Central Economic Work Conference, the total energy consumption cap was adjusted:
新增可再生能源和原料用能不纳入能源消费总量控制，创造条件尽早实现能耗“双控”向碳排放总量和强度“双控”转变。
The meeting also decided that the newly-added renewable energy and energy used as raw materials would be excluded from the cap on total energy consumption, calling for an early shift from controlling energy consumption amount and intensity to controlling the amount and intensity of carbon emissions.
The reason and rationality of this adjustment is also analyzed by Tang Renhu (唐人虎), the Chairman of SinoCarbon Innovation & Investment, published via Xinhua.
在2020年9月22日我国提出碳达峰、碳中和目标之后，随着我国“双碳”战略稳步推进和“1+N”的顶层设计基本完成建立，之前能耗双控的不足也逐步显露出来。一方面能耗总量控制不仅包含化石能源消费，也包括核能和可再生能源等非化石能源，总量的管控直接影响了可再生能源的开发利用和可再生能源丰沛地区的经济发展。另一方面，能源消费总量中也包含了用于原料的能源消费，从合理性和石化、化工等产业的刚性需求来看有一定的不合理性。以上两方面的不足也造成了能耗双控的要求与我国碳达峰碳中和的目标并未完全衔接。
Since China proposed the goals of carbon peaking and carbon neutrality on September 22, 2020, and with steady progress in the "dual-carbon" strategy and the completion of the "1+N" top-level design of policies, the previous shortcomings in controlling energy consumption amount and intensity have gradually become apparent. On one hand, the control of total energy consumption includes not only fossil energy consumption but also non-fossil energy such as nuclear and renewable energy. The overall control of energy consumption directly affects the development and utilization of renewable energy, as well as the economic development of regions abundant in renewable resources. On the other hand, the total energy consumption also includes energy used for raw materials, which, considering the rationality and the rigid demands of industries such as petrochemicals and chemicals, presents certain inefficiencies. These shortcomings have led to a misalignment between the requirements of controlling energy consumption amount and intensity and China's carbon peaking and carbon neutrality goals.
“十二五”末期以来，我国实施的是碳排放强度控制目标。但在2030年前实现碳排放达峰，就需要我国需要逐步把碳排放总量纳入考虑。实施碳排放双控可以有效避免能源总量控制的局限性，在控制化石能源消费的同时鼓励可再生能源发展，并且给予地方政府更多的绿色空间。
Since the end of the 12th Five-Year Plan, China has been only controlling carbon intensity. However, to achieve carbon peaking by 2030, it is necessary to gradually include the total carbon emissions into control. Controlling both the amount and intensity of carbon emissions can effectively avoid the limitations of total energy consumption control, while encouraging the development of renewable energy and providing more green space for local governments.
So, how much energy intensity has been reduced after excluding renewable energy and energy used as raw materials? When elaborating on the 2024-2025 Energy Conservation and Carbon Reduction Action Plan《2024—2025年节能降碳行动方案》, a senior official from the National Development and Reform Commission noted:
初步测算，扣除原料用能和非化石能源消费量后，“十四五”前三年，全国能耗强度累计降低约7.3%。
Preliminary calculations show that, excluding energy used as raw materials and non-fossil energy consumption, energy intensity in the first three years of the 14th Five-Year Plan (2021-2023) decreased by about 7.3%.
And I did a quick math: without excluding energy used as raw materials and non-fossil energy consumption, energy intensity only decreased by around 3.28% over the three years.
As you can see: 7.3% vs 3.28%. From this perspective—excluding raw material energy use and non-fossil energy consumption—some scholars believe that the energy intensity reduction target for the 14th Five-Year Plan is still achievable.
Above are the two main views within academia.
My take
In case you need my two cents:
It is essential to acknowledge the many uncertainties in the energy transition. For example, when the 14th Five-Year Plan was formulated, it was difficult to predict the significant impacts of factors like geopolitical conflicts and the COVID-19 pandemic. The targets set at that time were reasonable given the circumstances.
Indeed, achieving the energy intensity and carbon intensity reduction targets in the 14th Five-Year Plan will likely be very challenging. Therefore, it is essential to systematically analyze the underlying reasons and learn from these challenges.
More importantly, these experiences should inform the more realistic and rational planning of emission reduction targets for the 15th Five-Year Plan.
Last but not least, it is unwise to solely criticize China for insufficient carbon reduction efforts. An important aspect that cannot be overlooked is that, according to an official from the National Bureau of Statistics:
2013—2023年，我国以年均3.3%的能源消费增速支撑了年均6.1%的经济增长，能耗强度累计下降26.1%，是全球能耗强度降低最快的国家之一。
From 2013 to 2023, China supported an average annual economic growth of 6.1% with an average annual energy consumption growth rate of 3.3%. During this period, its energy intensity decreased by a cumulative 26.1%, making China one of the fastest countries in the world to reduce energy intensity.
In light of this, I have summarized and translated several relevant pieces. By doing so, I wish to contribute to a more informed and well-rounded discussion on the evolving dynamics in this regard.
The following consists of two pieces: an analysis of whether the energy intensity and carbon intensity targets in the 14th Five-Year Plan can be achieved, and a prospect for the 15th Five-Year Plan.
“十四五”中国将首次不能同时完成五年规划的能源强度和碳强度目标
In the 14th Five-Year Plan period, China may for the first time miss both energy intensity and carbon intensity reduction targets
The piece is written by Dr. Zhang Zhongxiang 张中祥, the Dean of Ma Yinchu School of Economics of Tianjin University and the President of China Academy of Energy, Environmental and Industrial Economics. The original piece is published on the website of "Low Carbon China 中国低碳网" in 2024. Below is my translation of the article.
China's five-year plan includes a range of indicators. Some are aspirational, such as GDP growth, energy production, and total electricity consumption, while others are binding, such as energy consumption per unit of GDP and carbon dioxide emissions per unit of GDP. Aspirational targets are typically viewed as goals to aim for, whereas binding indicators are considered mandatory benchmarks.
Since China's 11th Five-Year Plan first set energy intensity (measured as energy consumption per unit of GDP) as a binding target, and the 12th Five-Year Plan subsequently established carbon intensity (measured as carbon dioxide emissions per unit of GDP) as a binding target, the 14th Five-Year Plan will mark the first instance in which China will be unable to achieve both targets simultaneously.
The 14th Five-Year Plan calls for a 13.5% reduction in energy consumption per unit of GDP and an 18% reduction in carbon dioxide emissions. However, according to the Statistical Communiqué of China on the National Economic and Social Development released by the National Bureau of Statistics for 2021, 2022, and 2023, nationwide energy consumption per 10,000 yuan of GDP decreased year-on-year by 2.7%, 0.1%, and 0.5% respectively; and carbon dioxide emissions per 10,000 yuan of GDP dropped by 3.8% and 0.8% in 2021 and 2022, while in 2023, they remained unchanged compared to the previous year.
This indicates that over these three years, the total reduction in energy consumption per unit of GDP and carbon dioxide emissions was only 3.28% and 4.56%, respectively—far short of the targets set in the 14th Five-Year Plan. With only about 25% of the plan's goals achieved in the first three years, the remaining two years must accomplish 75% of the tasks to meet the overall objectives.
According to the 2024 Government Work Report, the target for 2024 is a 2.5% reduction in energy consumption per unit of GDP. This means that by the end of 2024, if the expected target for the year is met, China's energy intensity will have decreased by only about 5.69% from 2020 to 2024. Achieving 58% of the five-year target in just 2025 would be nearly impossible.
This means that, since the 11th Five-Year Plan first set energy intensity per unit of GDP as a binding target, China will fail to meet its energy-saving goals for the third time, following the unfulfilled targets in both the 11th and 13th Five-Year Plans.
According to the national energy reduction target for 2024 mentioned above, even considering clean energy, it is still impossible to achieve the carbon intensity reduction target set in the 14th Five-Year Plan. This means that China will miss its carbon intensity target for the first time in a five-year plan.
Photo by Marcin Jozwiak via Unsplash
The deviation from the 2025 energy-saving and emission reduction targets is partly due to the growing objective demand for energy, driven by improving living standards, while low-cost energy-saving and emission reduction opportunities are becoming increasingly scarce, making energy conservation and emissions reductions more challenging.
On the other hand, this is also related to the accelerated growth of coal consumption and new coal-fired power projects in recent years. Although China has led the world in clean energy investment for 13 consecutive years, in 2023, China's installed capacity of renewable energy generation surpassed that of thermal power for the first time in history. The share of hydropower, wind power, and solar power in total installed capacity increased to 50.4%, exceeding the 47.6% share of thermal power. In addition, the new installed capacity of renewable energy in 2023 accounted for more than half of the global total, achieving the target set in China's 14th Five-Year Plan to have renewable energy generation capacity exceed 50% by the end of 2025 ahead of schedule.
China's efforts to advance economic transformation and upgrading, energy mix optimization, as well as energy conservation and emission reduction are a long and challenging journey that requires continued, tireless effort! Enditem
“十四五”碳强度目标不能完成，“十五五”怎么办
If carbon intensity reduction target of the 14th Five-Year Plan missed, what should be done in the 15th Five-Year Plan?
The original piece is published on the public WeChat account "Global Net-Zero 环球零碳"in 2025. This public account, according to its introduction, focuses on topics such as energy transition, technological innovation, policy interpretation, etc. Below is my translation of selected excerpts from the article.
The reduction of energy intensity is a binding target outlined in China's "14th Five-Year Plan," and meeting these goals is mandatory. In areas that fail to meet the targets, the National Development and Reform Commission (NDRC) will have talks with the local heads of the Development and Reform Commissions.
For instance, in September 2023, the NDRC’s Department of Resource Conservation and Environmental Protection held regulatory talks (约谈) with the heads of the Development and Reform Commissions in Hubei, Shaanxi, Gansu, and Qinghai provinces due to the slow progress in achieving the energy-saving targets of the 14th Five-Year plan.
The readout from these talks noted that these regions saw rapid growth in energy consumption and slow improvements in energy efficiency. After excluding energy use for raw materials and renewable energy consumption, the decline in energy intensity was still falling behind the progress required by the 14th Five-Year plan, with some regions even seeing an increase instead of a decrease. There was also a lack of strict energy-saving reviews in these areas, with poor management of high-energy, high-emission, and low-level projects, making the energy-saving situation quite critical.
The talks emphasized that Development and Reform Commissions in the relevant regions must fully implement the spirit of the 20th National Congress of the Communist Party of China and fully embrace the new development philosophy. They should stay focused on the energy-saving targets in the 14th Five-Year plan, strengthen the enforcement of energy intensity reduction, and take swift action to overcome the current passive approach to energy-saving efforts.
Therefore, as a long-term plan approached its conclusion, some regions resorted to measures like "cutting production" and "power restrictions" to meet carbon emission and energy consumption targets. For example, in 2010, under pressure to meet binding targets, several provinces struggling with energy-saving and emission reduction progress started implementing power cuts, with Zhejiang, Jiangsu, and Shanxi being the most typical examples.
So, why have many regions stopped to resort to "power cuts" as the 14th Five-Year Plan near completion in 2025?
This change is due to a shift in policy approach. The NDRC has previously stated that power cuts under the guise of decarbonization should be firmly avoided.
More importantly, China is transitioning from controlling energy consumption amount and intensity to controlling the amount and intensity of carbon emissions.
This shift not only eliminates unreasonable restrictions on renewable energy and energy use for raw materials, but also creates more space for local governments and businesses to pursue green development.
With the "14th Five-Year Plan" targets not fully met, the big question now is how to formulate the "15th Five-Year Plan."
The first step is to optimize the policy framework. The entire economy is now moving from controlling energy consumption amount and intensity to controlling the amount and intensity of carbon emissions.
Evaluation of local governments should also shift from a "GDP competition" to a "low-carbon competition." New indicators, such as "non-fossil energy consumption share" and "carbon sink increment," should be added and incorporated into the performance evaluation system for officials.
Additionally, a differentiated management for different regions and industries should be implemented. High-energy-consuming sectors, like coal chemical and steel, will face "list-based" carbon controls, while regions rich in renewable energy, such as the northwest, will see more relaxed energy consumption limits and will prioritize green electricity projects. In the Three-North region (northeastern, northwestern and northern China) , for example, new wind and solar projects can foster low-energy industries without increasing carbon emissions, thus overcoming the economic constraints imposed by traditional energy consumption targets.
The next step is to replace administrative measures with optimized market mechanisms.
For example, the carbon market should be expanded, and financial tools should be innovated. Currently, the national carbon market only covers the power sector, but during the "15th Five-Year Plan," it will include eight high-energy-consuming industries, such as steel and cement. The market will also explore derivatives like carbon futures and carbon insurance to enhance liquidity.
In the green finance sector, eligible companies should receive interest-subsidized loans and tax breaks.
Especially in foundational carbon emission systems, efforts should focus on improving emission accounting methods and promoting transparency in carbon emission data, which will help accelerate the development of mechanisms for the transition.
The unfinished business of the "14th Five-Year" carbon intensity goals highlights the deep contradictions between traditional development models and the decarbonization targets. The balance between economic growth and emission reduction targets can only be achieved through the collaborative innovation of policies, technology, and markets, transforming challenges into opportunities for both businesses and local governments.
Thanks for explaining the challenges China faces. Hope China manages to achieve its targets despite these challenges.