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China’s 11th Five-Year Plan (2006-2010) set a target to reduce energy intensity by 20% from 2005 levels.  Climate Policy Initiative’s “Review of Low-Carbon Development in China 2010” discusses China’s energy performance in key sectors, describes the policies and instruments implemented to meet this target, and provides initial insights that may be valuable as China enters its 12th FYP period.  Future research will provide deeper insight on policy impacts and cost-effectiveness.

Key Findings
  1. Through 2009, China was on track to meet its energy intensity targets.  These targets called for a reversal of the trend of increasing energy intensity experienced between 2002 and 2005.
  2. China’s carbon emissions intensity fell largely as a result of reduced energy intensity, demonstrating the important role of energy efficiency in the transition to a low-carbon economy.  With additional carbon-specific policies, China could expect carbon intensity to fall faster than energy intensity in the future.
  3. Our initial analysis indicates that many of the policies implemented to meet the 11th FYP target are top-down administrative measures.  These required significant financial and human resources and may not be the most cost-effective way to achieve future targets.
  4. Much of the low-hanging fruit for reducing energy intensity has been picked, for example, replacing old power plants with new, more energy-efficient plants.  Further reductions in energy intensity during the 12th FYP period could impose higher costs on the economy.
  5. In the power sector, CO2 emission increased 28% during the first three years of the 11th FYP period, but primary energy use per kWh decreased as the efficiency of China’s coal-fired generation capacity improved an average of 5%, primarily due to the closure of old plants and replacement by newer, more efficient plants.  CO2 per kWh decreased 6.5% for the power sector as a whole due to this increased efficiency and the addition of low-carbon generation.
  6. In the industrial sector, carbon emissions and energy use per unit of industrial value added were, respectively, 14.8% and 13.3% lower in 2008 than 2005, reflecting slower growth in energy-intensive heavy industry relative to other subsectors, a shift to higher value added products, and significant efficiency improvements in several subsectors.
  7. In the building sector, energy use grew by 28% and carbon emissions by 25% from 2005 to 2008, primarily due to higher living standards and increased urbanization.  At the national level, energy use per square meter of building stock increased, although this trend slowed in 2008.  Policies targeting district heating in northern China delivered significant reductions in energy consumption per square meter.
  8. Energy consumption in the transport sector grew 25% between 2005 and 2008.  While the energy intensity for most transport modes remained stable or improved slightly, the share of energy intensive transport modes such as road and air transport increased.
  9. Agriculture is the only sector in which direct energy-related emissions declined during the 11th FYP period.  Non-CO2 greenhouse gas emissions were stable, however, CO2 emissions embedded in fertilizer production grew, leading to a small net increase in overall agriculture-related greenhouse gas emissions.  China’s forestry development, especially the large scale of afforestation, contributed significantly to the building of carbon sinks, adding 420MtCO2 per year on average to the current stock, an amount nearly four times of CO2emission from direct fossil fuel combustion in agriculture and forestry.
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