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Alex L. Wangi

Policy and Law on the Books
Challenges in Practice

THE extraordinary growth of greenhouse gas emissions in China represents the single greatest
challenge to global climate change efforts in coming decades. China is the worlds leading
emitter of greenhouse gases, having surpassed the United States in 2006 (Olivier, et al., 2012).
Chinas greenhouse gas emissions accounted for nearly a third (29 percent) of the global total in
2011, slightly more than emissions of the United States and the European Union combined (27
percent).ii This state of affairs is the result of more than three decades of energy-intensive, coalfired economic growth, wherein Chinas GDP grew by an average of 10 percent a year.iii
And, while emissions in the developed world are steady or declining, Chinas greenhouse
gas emissions are expected to account for half of the global growth in energy-related carbon
dioxide emissions between now and 2030 (IEA, 2012). Without significant contribution from
China, efforts to find a solution to global climate change are unlikely to succeed.
Perhaps recognizing the urgency of the matter, Chinese leaders have begun to implement
a range of policies and laws aimed at improving the energy and carbon intensityiv (though not
absolute emissions) of its economy.v These moves were initially motivated by non-climate
objectives such as economic development, energy security, social stability, and international
reputation, but, since 2007 Chinese leaders have framed their actions explicitly as part of a
comprehensive national climate change program.
Chinas climate change program is designed to address the primary sources of
greenhouse gas emissions: fuel combustion and, to a lesser extent, industrial processes and land

Electronic copy available at: http://ssrn.com/abstract=2498242


use changes.vi The program attempts to address these sources primarily through (1) reduced
reliance on energy-intensive heavy industry; (2) greater energy efficiency and conservation; (3)
increased use of non-fossil energy and less carbon-intensive fossil fuels; and (4) expansion of
carbon sinks (e.g., through afforestation).
Chinas regulatory approach relies heavily on top-down, command-and-control
regulation, built around bureaucratic targets and controls for local officials and state-owned
enterprise leaders. This top-down control is nonetheless coupled with extensive leeway for local
experimentation and flexibility in implementation. More recently, leaders have pressed for
greater utilization of market measures and, to a more modest extent, transparency and public
This chapter offers an overview of Chinas developing climate change response by
examining the framework on the books and significant implementation challenges in practice.
First, it offers background on Chinas contribution to global climate change and its positions in
international climate negotiations. Second, it describes Chinas formal framework of climate
change-related laws and policies. This body of authorities has expanded significantly since the
beginning of Chinas 11th five-year plan in 2006.vii This part also describes the preliminary
results as reported by official and third party sources.viii Finally, this chapter concludes by
discussing several dynamics that will influence the efficacy of Chinas climate change efforts in
practice. These include the evolution of various co-benefits (i.e., economic growth, pollution
reduction, social stability, and enhancement of international reputation) and their impact on
Chinas cost-benefit calculation for climate change action; the extent to which implementation
problems can be resolved; and whether Chinas still developing interior regions continue to be
the locus of carbon outsourcing (from wealthier coastal regions of China) or instead shift toward
a low-carbon growth path.


2.1 Chinas Climate Change Contribution

China is the worlds largest emitter of greenhouse gases and the largest consumer of
energy (Olivier, et al., 2012; Swartz, 2010). This marks a dramatic change over thirty years, as
rapid economic growth has resulted in a six-fold increase in energy consumption.ix Chinas
energy mix is fossil fuel-intensive, with coal supplying nearly 70 percent of total energy.x This
increase in carbon intensive energy use has led to a several-fold increase in greenhouse gas
emissions.xi Put another way, in 2011, China accounted for 10 percent of global gross domestic
product (GDP),xii but used 21 percent of the worlds energyxiii and emitted 29 percent of the
global carbon dioxide emissions.
Chinas energy use and greenhouse gas emissions would be even greater if not for
significant energy intensity improvements. In large part as a result of the introduction of market
reforms and the upgrade of Chinas industrial facilities, [b]y 2000, Chinese economic activity
required two-thirds less energy per unit of output than in 1978 (Bergsten, 2008). Whereas
Chinas real GDP grew by more than six times between 1980 and 2000, energy use only slightly
more than doubled in the same period (DOA, 2013).
But, from 2002-2005, China encountered an investment-led energy surprise when
energy consumption increased more quickly than GDP growth, largely due to expanded

Electronic copy available at: http://ssrn.com/abstract=2498242


investment in energy-intensive industries, such as cement and steel (Bergsten, 2008). This shift
reversed the two-decade long trend of year-over-year energy efficiency improvements. While the
trend toward greater energy efficiency resumed in the 11th five-year plan as the result of a
number of efforts discussed below, continued rapid economic growth has caused absolute energy
use and greenhouse gas emissions to rise sharply nonetheless.

2.2 Chinas Evolving Role in International Climate

Change Negotiations
As its greenhouse gas emissions have increased, Chinese leaders have publicly
acknowledged that China must play a central role in any solution to the challenge of climate
change. But there is deep disagreement between China and other countries about the appropriate
relative allocation of responsibilities among nations (Clark, 2011; Pan, 2008; Harris, 2003).
Chinas official position in international climate negotiations has remained relatively
unchanged over the last two decades, with a continued focus on state sovereignty, Third WorldFirst World inequity, and the responsibility of the advanced industrialized states (Economy,
1997; Bailey, 2013). In particular, China has declared its need for economic development, the
greater historical responsibility of developed countries with respect to cumulative emissions,xiv
its lower per capita emissions, and the balance of emissions embodied in trade to argue against
emission limits for developing countries and in favour of north-south monetary and technology
transfers (Rogers et al, 2011; Pan, et al., 2008; Brahic, 2008). Indeed, as Chinese negotiators
often emphasize, this notion that developed nations should bear a greater burden for responding
to climate change was formally embedded in the 1992 UN Framework Convention on Climate
Change (UNFCCC) and ratified by 195 countries - as the principle of common but
differentiated responsibilities.xv
Nonetheless, given Chinas rapidly increasing contribution to greenhouse gas emissions
and its surging economic growth, the United States and other countries have argued that China
(and other large emerging economies) should take on greater responsibilities commensurate with
the magnitude of their greenhouse gas emissions, growing wealth, and capacity to address the
problem. Indeed, as of 2011, Chinas per capita emissions had increased to a level on par with
the European Union and within the range of major industrialized countries.xvi
Chinas engagement in the international climate change negotiations can be divided,
roughly speaking, into three phases: (i) a learning phase from 1989 to 1995; (ii) a shift toward
more active participation between 1995 and 2007; and (iii) more comprehensive engagement on
climate change domestically and internationally around the time of the UN Climate Conference
in Bali in 2007 (Xu and Zhang, 2013).
According to Zou Ji, a Chinese climate official and researcher, from 1989 to 1995,
China learned about climate change[,] started to participate in international discussions[, and]
mainly went along with the global process (Xu and Zhang, 2013). Nonetheless, China still
actively intervened on certain key issues, such as differentiated responsibilities for developing
countries, in the early international negotiations that led to the UNFCCC at the Rio Earth
Summit in 1992 (Zang, 2009).
The relatively low domestic priority of climate change in China at the time was reflected
in the internal allocation of responsibilities for the climate change negotiations. Chinas early
participation in climate change negotiations was formally led by less powerful agencies with a
scientific or environmental (rather than economic) focus (Zang, 2009; Lewis, 2007-08). For


example, the State Meteorological Administration was tasked with coordinating Chinas
involvement with the Intergovernmental Panel on Climate Change (IPCC), and the State Science
& Technology Commission led the domestic National Climate Change Coordination Group,
created in 1990.xvii In practice, though, the development-oriented agencies, such as the State
Planning Commission, Chinas lead economic planning agency, and the Ministry of Energy, still
dictated the key Chinese negotiation positions in the meetings leading to the UNFCCC and the
Kyoto Protocol (Hatch, 2003).
The second phase of climate engagement from 1995 to 2007 was marked by growing
engagement and a gradual elevation of climate change as a policy priority. China actively
participated in the negotiations that led to the 1997 Kyoto Protocol, and was designated a nonAnnex I country without binding emissions reduction targets under that agreement. The creation
of the high-level National Climate Change Countermeasures Coordination Group in 1998, led by
the powerful State Development and Planning Commission (SDPC),xviii reflected the increasing
policy priority of climate change. An alternative view is that this institutional elevation of
climate change was not primarily an attempt to strengthen state capacity to address climate
change, but rather an effort merely to signal to external and domestic observers alike Chinas
increased concern with climate change. Another view is that the elevation of climate change
reflected concern about the potential constraints climate change policy might place on economic
growth. Thus, the elevation could be seen as a defensive move to ensure that climate change
policy would not unduly hinder economic growth. The institutionalization of the SDPCs leading
role in climate change in 1998 formalized what had always been an implicit development focus
in Chinas climate change positions.
The third phase of climate engagement - beginning around 2006-07 - was marked by a
more comprehensive approach to climate engagement. This included the release of the first
national climate change program and the establishment of the National Leading Group on
Climate Change in 2007,xix led by the Premier of Chinas State Council. This Premier-led
National Leading Group signalled a further elevation of the policy priority of climate change
within the Chinese bureaucracy.xx


Since the beginning of its 11th five-year plan (2006-2011), China has developed an
extensive policy and law framework on the books for addressing climate change. Official reports
and third party analysis suggest that these efforts have helped China to avoid of billions of tons
of greenhouse gas emissions. At the same time, extraordinary continued growth in Chinas
emissions put international goals for climate change mitigation at serious risk. This section will
describe the basic contours of Chinas framework, and preliminary results based on official and
third party reports.
In 2007, six months before the 13th Conference of Parties to the UNFCCC in Bali,
Chinese authorities announced for the first time a comprehensive National Climate Change
Program.xxi The report did not establish new policy, but rather presented a range of existing
policies created earlier to address other energy and environmental issues. Nonetheless, this
marked the first time that China had formally framed these policies collectively as a climate
change program.


Chinas National Climate Change Program focused on four central goals related to
emissions mitigation: (i) adjusting the industrial structure, (ii) improving energy efficiency and
reducing energy consumption, (iii) optimizing Chinas energy structure through the use of
renewables and less carbon-intensive fossil fuels, and (iv) expanding carbon sinks.xxii The 2007
climate program (but not later editions) also listed Chinas family planning efforts as a major
climate initiative, noting that the approximately 300 million averted births from the one-child
policy were equivalent to 1.3 billion tons of avoided CO2 emissions reductions in 2005. While
the main objectives in Chinas national climate change program have not changed since the 2007
program, the number of implementation initiatives has increased significantly.xxiii
With respect to the choice of regulatory tools, policymakers have largely relied on
administrative measures (xingzheng shouduan). These include a range of command-andcontrol approaches organized around bureaucratic targets for carbon and energy intensity
improvements and pollution emissions reduction. More recently, Chinese authorities have
emphasized the need for market measures, and begun to implement subsidies, tax reform, and
pilot experiments with carbon trading.

3.1 Targets
At the heart of Chinas climate change program is a set of quantitative targets, including
carbon intensity, energy intensity, non-fossil energy, and afforestation targets. Like quarterly
earnings targets in a publicly traded corporation, these bureaucratic targets, created as part of the
five-year state planning process, become the focal point of leadership efforts and are supported
by a suite of laws, policies, and fiscal incentives. In theory, promotions, bonuses and other
rewards or punishments for local government officials are closely tied to target performance.xxiv
Economic growth, social stability, and one-child policy targets have been the most important
In 2006, however, Chinas central authorities elevated certain environmental and energy
efficiency targets at least on paper - to the highest level of state priority.xxv Specifically, the
plan established a target to reduce the energy intensity of the economy by 20 percent, and targets
to reduce absolute emissions of two key pollutants, sulphur dioxide for air and chemical oxygen
demand for water, by 10 percent.xxvi Previous five-year plans contained energy efficiency and
environmental targets, but they had always been lower priority non-binding targets. Also, in past
years, environmental targets were typically the responsibility of the specialized agencies. In
contrast, now the leading cadres the most senior officials at each level of government
would be personally responsible for environmental target achievement.
Extending this approach, in 2009, China expanded its national targets to encompass
climate-specific targets. A month before the Copenhagen climate change negotiations, President
Hu Jintao announced at the United Nations in New York that China would implement targets to
reduce carbon intensity by 40-45 percent from 2005 levels by 2020, increase the percentage of
non-fossil energy in Chinas energy mix to 15 percent by 2020, and increase the afforestation
rate to 21.66 percent (State Forestry Administration, 2011). These targets were subsequently
incorporated into Chinas 12th five-year plan (2011-15). The key 12th five-year plan targets
included a 17 percent reduction in carbon intensity, a 16 percent reduction in energy intensity,
and a non-fossil energy target of 11.4 percent of total energy use by 2015.xxvii


Climate Change-Related Five-Year Plan Targets

11th FYP
11th FYP
12th FYP
Energy Intensity




Carbon Intensity


Non-Fossil Energy




Afforestation Rate




Pollution Reduction

Sulfur dioxide








Nitrogen oxides


Ammonia nitrate


These efforts resulted in a reported energy intensity reduction of 19.1 percent during the
11 five-year plan, nearly meeting the target. Only interim performance figures have been
released for the 12th five-year plan targets.xxviii In 2013, officials announced air quality targets
and associated targets for absolute reductions in coal use in parts of the country (State Council,
2013b; MEP, et al., 2013; Guangdong EPB, et al., 2013; Stanway & Edwards, 2013; Stanway,

3.2 Policies and Laws

Central and local authorities have established an extensive framework of policies, laws,
regulations, and financial incentives for each of these targets.
A. Adjusting the Industrial Structure
A central component of Chinas climate program is the restructuring of the economy to
reduce reliance on inefficient heavy industry and exports. The main approaches to achieving this
are campaigns to shutdown small-scale, inefficient industrial facilities, and the promotion of lowcarbon industries, such as services, green industries, and high-tech.
During the 11th five-year plan, for example, Chinas State Council announced a policy
colloquially known as Implement the Big, Crush the Small (shangda, yaxiao) - aimed at
shutting down 50 gigawatts of inefficient power plants, and other backwards facilities (luohou
channeng) (State Council, 2007). 72.1 gigawatts were reportedly closed, surpassing the original
target (Wen, 2011). Environmental regulators supported this effort by limiting the further
construction of heavily polluting, energy intensive industrial facilities. The policy was intended


to accelerate energy efficiency improvements and pollution reduction through rapid shutdown of
backwards facilities and construction of larger, more efficient facilities.
In the 12th five-year plan, the campaign to shutdown backward production capacity has
continued. In 2011 alone, China shut down small thermal power generating units with a total
generating capacity of 8 million kw and millions of tons of obsolete production capacity in
iron smelting, steel, cement, coking, plate glass, paper, electrolytic aluminium, copper smelting,
lead smelting, and coal production (NDRC 2012a; USCBC, 2013).
Strategic Emerging Industries
Another way in which Chinese authorities are attempting to promote economic
transformation is through high-level support of seven low-carbon industries. Three of these socalled strategic emerging industries are energy and environmental industries (State Council,
2009, 2010):

Energy efficient and environmental technologies;

New energy (e.g., nuclear, solar, wind, biomass); and
New-energy vehicles (e.g., low emissions, fuel-cell, plug-in hybrid, and pure electric

Strategic emerging industries development is led by the powerful National Development

and Reform Commission and its local affiliates. The other four industries next generation
information technologies, biotechnology, high-end equipment manufacturing, and new materials
- are high value-added industries that use relatively less energy and generate less pollution (State
Council, 2010, 2012b; NDRC, 2011a, 2013b; MIIT, 2012a, 2012b; MOF and NDRC, 2012).
Strategic emerging industries are supported by quantitative targets and supporting
policies and regulations. These industries are expected to account for 8 percent of GDP by 2015
and 15 percent by 2020 (up from 2 to 4 percent in 2010) (State Council, 2010). Supporting
policies include state funding and other incentives, as well as the elimination of existing marketentry thresholds (e.g., governing registered capital, total investment, and land supply) that had
created barriers to private company investment (State Council, 2010; Naughton, 2011). Central
leaders are expecting substantial financial support from the provincial governments and private
entities, and have promised no more than 25 percent of the necessary funding (State Council,
2010; USCBC, 2013; MOF and NDRC, 2012). The 12th five-year plan requires provincial
governments to develop local special funding pools for the strategic emerging industries.
Provinces have already created funds, such as the Jiangsu Special Fund for Software and
Integrated Circuit Industries, the Hubei Special Fund for Major Science and Technology Projects
and the Shanghai Special Fund for the Development of Major Projects of Indigenous Innovation
and High & New Technology Industries (USCBC, 2013).
In practice, policies promoting adjustment of industrial structure have not been effective.
One study found that structural adjustments had a relatively small and fluctuating influence on
energy consumption during the 11th five-year plan in comparison to energy efficiency (Ke,
2012). Efforts to promote structural adjustment continue in Chinas 12th five-year plan.


B. Improving Energy Efficiency

Energy efficiency is another central component of Chinas climate change policy.
Central regulators developed new energy efficiency policies in the early 2000s, not to combat
climate change, but to address energy shortages and a dramatic rise in inefficient energy use
(Levine, 2009). The sharp increase in energy intensity in China between 2002 and 2005, in
particular, spurred the inclusion of energy efficiency as a top priority of the 11th five-year plan.
Two of the most important policy initiatives for energy efficiency were the Top 1,000
Enterprises (qianjia qiye jieneng xingdong) and Ten Key Energy Efficiency Projects (shida
zhongdian jieneng gongcheng) programs. The Top 1,000 Enterprises program set efficiency
improvement targets for the most energy intensive facilities in nine top energy-consuming
industrial sub-sectors in China. These nine sub-sectors are (in decreasing order of energy
consumption): iron and steel, petroleum and petrochemicals, chemicals, electric power
generation, nonferrous metals, coal mining, construction materials, textiles, and pulp and paper
(Price, et al, 2010). These thousand or so facilities accounted for a third of national energy usage
(Price, et al., 2010).
The Top 1,000 Enterprises program established targets for provincial officials and stateowned enterprises. In principle, failure to meet these targets would result in loss of annual
rewards, honorary titles, and, in the worst cases, promotions. In addition to these bureaucratic
sticks, the program established a range of financial carrots, including grants, rewards and
rebates for demonstrated energy efficiency improvements, and differentiated energy pricing (i.e.,
higher energy prices for less efficient industries) (Price, et al., 2010). Financial incentives with
negative impacts on energy efficiency, such as tax rebates on energy-intensive products, were
The 10 Key Energy-Efficiency Projects program provided central and local government
financial incentives for a range of upgrades and retrofits, including renovation of coal-fired
industrial boilers, development of district heat and power cogeneration, projects to utilize waste
heat, installation of efficient lighting, and building energy efficiency design and retrofits. The
other five categories were: oil conservation and substitution, motor system energy efficiency,
energy systems optimization, government procurement of energy efficient products, and
monitoring and evaluation systems (NDRC, 2011b; ChinaFAQs, 2009).
According to official Chinese sources, these programs met their targets and collectively
saved an estimated 743 million tons of carbon dioxide equivalent during the 11th five-year plan
(ChinaFAQs, 2009). In addition, overall energy intensity declined by 20.7 percent from 2006 to
2011, saving 710 million tons of standard coal equivalent.This includes overall efficiency
improvements brought about by the shutdown of smaller, less efficiency power plants and
industrial facilities (State Council 2012a, The country has eliminated small thermal power units
with a total generating capacity of 80 million kw, saving more than 60 million tons of raw coal
annually (State Council, 2012a). Independent researchers have noted that these claims are
difficult to verify because of limited government information disclosure (Ke, et al., 2012).
Central regulators have expanded these approaches in the 12th five-year plan. The
successor to the Top 1,000 Enterprises program is the Top 10,000 Enterprises program, which, as
the name suggests, extends the original program to the next tier of energy-consuming facilities.
Regulators have continued the Top 10 Key Energy Efficiency Projects program as well.


C. Optimizing Energy Structure

The third pillar of Chinas National Climate Change Program is the optimization of the
national energy structure. This includes three major strategies to reduce the carbon intensity of
Chinas energy use: (i) expansion of non-fossil energy use; (ii) increased use of less carbonintensive fossil fuels, like natural gas; and (iii) improved efficiency in Chinas traditional fossil
fuel-based power infrastructure. Overall, Chinas energy policy is to expand all types of energy
resources, while also increasing the relative contribution of natural gas, hydropower, nuclear,
wind, solar, biomass, geothermal, and other forms of energy (State Council, 2012a).
Non-Fossil Fuel Energy
China has established an extensive policy framework for promoting non-fossil energy,
which includes traditional renewable energy, such as hydropower, wind, and solar, as well as
nuclear power. In 2012, China was the world leader in total installed renewable energy capacity
(accounting for one-fourth of installed capacity among G-20 nations), and the number one
destination for clean energy investment (Pew Charitable Trusts, 2012).xxix It ranked first in the
world in hydropower and wind capacity (State Council, 2012a). Renewable energy capacity has
grown at a rate of 23 percent a year on average from 2007 to 2012. This rate of growth places
China fourth behind South Korea, Turkey, and Italy. China has plans to expand its nuclear
power capacity significantly from 12.86 GW to more than 40 GW, which would put China
behind only the U.S., France, and Japan (State Council, 2012a; IAEA, 2013).
China has achieved this rapid growth in non-fossil energy through the establishment of
state planning targets, supported by a range of implementation measures set forth in policies and
laws. Approximately 8 percent of Chinas primary energy consumed is obtained from non-fossil
sources. Official targets aim to increase this to 11.4 percent in 2015, and 15 percent in 2020
(NDRC, 2007b; NDRC, 2008; NDRC, 2012c).

Non-Fossil Energy

8.3% (2010)

2015 Target

2020 Targetxxx



Installed Capacity

230 GW

290 GW

430 GW


47 GW

100 GW

200 GW


12.86 GW*

40 GW

58 GW**

Solar PV

6.5 GW

35 GW***

50 GW

State Council, 2012a; Pew Charitable Trusts, 2012; China Security News, 2010.
IAEA, 2013; ** Xinhua, 2013; *** State Council, 2013a.

Policy measures include a mandatory connection and purchase policy, a national feed-in
tariff system, government investment and concession programs, and other measures (Schuman
and Lin, 2012: 90).


Mandatory Connection and Purchase Policy: The Renewable Energy Law sets forth,
among other things, a requirement for grid companies and oil companies to purchase,
respectively, renewable power and liquid bio-fuels (Schuman et al, 2012). Grid
companies are required to obtain, by 2010, 1 percent of total power generation from
non-hydropower renewable power; by 2020, 3 percent (NDRC, 2007b). Grid
companies are required to sign agreements with renewable energy generators to
purchase all electricity produced by these generators (Renewable Energy Law, 2009:
Art. 14).

Feed-in Tariff: The law requires establishment of a feed-in tariff that provides
renewable electricity generators a fixed subsidy over and above the wholesale
electricity price for coal-fired power (Renewable Energy Law, 2009: Art. 19, 20;
Schuman et al, 2012).

Cost-Sharing and Other Financial Support: Rules provide for an electricity price
surcharge to fund the feed-in tariff and other actions required by law (Renewable
Energy Law, 2009: Art. 21). Local governments are also required to set up renewable
energy funds and offer other forms of fiscal and tax support (Renewable Energy Law,
2009: Art. 24).

Less Carbon Intensive Fossil Fuels & More Efficient Coal Use
Chinas energy policy is also aimed at reducing the carbon intensity of Chinas fossil fuel
use through the development of natural gas and more efficient use of coal. Annual output of
shale gas, for example, is expected to increase to 6.5 billion cubic meters by 2015 (State Council,
2012a). National policy also promotes the installation of large-scale coal-fired power plants
based on the most efficient coal-fired power plant technologies (known as supercritical or ultrasupercritical). As of 2012, China had 40 ultra-supercritical power generating units with capacity
of 1 GW or larger, and large thermal power units with capacity greater than 300 MW accounted
for 74.4 percent of total thermal generating capacity in China (State Council, 2012a). This rapid
construction (at a pace of one a month) of advanced technology coal plants and the continued
policy of shutting down backward and small-scale coal-fired power capacity has caused the
overall efficiency of Chinas coal plants to surpass that of the coal-fired power plant fleet in the
U.S. (Seligsohn, et al., 2009; Bradsher, 2009).
According to official Chinese sources, non-fossil energy use avoided the equivalent of
600 million tons of carbon dioxide emissions as of 2011 (State Council, 2012a). The policy to
optimize Chinas energy structure is aimed at lowering the carbon intensity of Chinas energy
utilization. However, given that the overall percentage of Chinas energy mix from non-fossil
energy will remain relatively low for the foreseeable future, it is likely that transition fossil fuels
such as natural gas and more efficient coal technologies will play an important role in Chinas
overall climate strategy in the near-term.
D. Increasing Carbon Sinks
Carbon sinks are the fourth major component of Chinas National Climate Change
Program. These include afforestation, grassland protection and restoration, and agricultural sink


programs. In the 12th five-year plan, this includes, among other things, a target to increase the
forest coverage rate to 21.66 percent and to increase forest stock by 600 million cubic meters.
Chinas afforestation level is low compared to other major economies. By comparison, forest
cover in the U.S. is 33.3 percent; the E.U., 42 percent; Brazil, 61.2 percent; and Indonesia, 51.7
percent (World Bank, 2013). EU Forests and other wooded land now cover 155 million ha and
21 million ha, respectively, together more than 42 % of EU land area (European Commission,
Like other components of Chinas climate change program, these initiatives were initially
instituted to address more immediate concerns, such as flood prevention, desertification, as well
as loss of cropland and wetlands. For example, China instituted a broad-based ban on logging in
natural forests in 1998 in the wake of major floods on the Yangtze and other major rivers (Illegal
Logging Portal, 2004; FAO, 2001). The increasing prevalence of major sandstorms and
desertification drove afforestation efforts in northern China. However, the afforestation programs
are actually increasing environmental degradation in arid and semiarid regions. The planting of
trees unsuitable to these low precipitation regions has resulted in overall tree survival rates of
only 15 percent, reduced vegetation cover, decreased groundwater supplies, and increased wind
erosion of soil (Cao, 2008).
While Chinas National Climate Change Program documents set forth a range of figures
regarding the amount of land area involved in these carbon sink initiatives, the program does not
provide estimates of carbon mitigation impact (NDRC, 2013a).

3.3 Carbon Trading Pilot Projects and Other Market

Chinas 12th five-year plan has emphasized in particular the need to utilize market
measures, such as carbon trading and taxes, to improve environmental policy implementation.
Chinas initial experience with carbon trading was through the Clean Development Mechanism
(CDM) of the UNFCCC. Pursuant to the UNFCCC and its Kyoto Protocol, Annex I developed
countries can meet their emissions reduction obligations in part by purchasing offset credits
generated in developing countries. China has in past years accounted for nearly half of all CDMrelated certified emissions reductions globally, by developing emissions reduction projects such
as HFC-23 destruction projects, energy efficiency projects, wind and solar installations, and
landfill methane capture systems. As of July 2011, China CDM projects accounted for 45.67
percent of registered projects around the world.
China has subsequently established of a number of climate exchanges between 2008
and 2010, including the Tianjin Climate Exchange, the China Beijing Environment Exchange,
the Shanghai Environment and Energy Exchange, and the Shenzhen Environment Exchange.
These exchanges have handled CDM transactions and Voluntary Emission Reductions. The latter
provide a means by which enterprises can gain experience trading emissions on a voluntary
basis. In July 2012, the NDRC promulgated Interim Measures on Voluntary Greenhouse Gas
Emissions Trading. However, there have been very few voluntary trades to date. The exchanges
have thus far played mainly a public relations role and a capacity building function for the
development of registries, standards, and methodologies (Han, et al., 2012: 18-20).
In 2011, Chinas National Development and Reform Commission, looking to develop
experience with the use of market-based programs, announced plans for carbon trading pilots in
seven provinces and cities: Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong, and


Shenzhen (NDRC, 2011c). The goal is to establish the regional trading pilots by 2014 and a
national trading scheme near the end of the 13th five-year plan, though timelines have shifted
numerous times (Haas, 2013). The seven regional pilots alone would likely cover 800 million to
1 billion tons of carbon emissions. This would make Chinas the second largest GHG cap-andtrade program in the world after the European Unions Emissions Trading System (EU ETS).xxxi
In June 2013, Shenzhen became the first city to launch its carbon emissions trading pilot.
The Shenzhen pilot included 635 industrial and construction companies in 26 sectors, which
composed 31.7 million tons of GHGs or 38 percent of Shenzhens total emissions in 2010
(Hook, 2013). Initial trading has been light and the performance of this experiment remains to be
seen (Haas, 2013). All seven trading pilots commenced operation in 2013 and 2014.
A carbon tax proposal is reportedly under consideration; however, no firm announcement
has been made as to whether or when such a proposal would actually be deployed (Caijing,

3.4 Low-Carbon Pilot Projects

In 2010, the NDRC established low-carbon pilots in five provinces and eight cities.xxxii
These pilot jurisdictions account for 36 percent of Chinas national gross domestic product
(GDP), 31 percent of its energy consumption, 27 percent of its energy-related carbon emissions,
and 27 percent of the nations population (Karlenzig & Zhu, 2010: 5). Another 29 pilots were
approved in November 2012.xxxiii The NDRC has described these projects in very broad terms,
stating that they will address greenhouse gas accounting, low-carbon development planning,
industrial and economic policy, government official training, communications and international
cooperation. (Karlenzig and Zhu, 2011: 5; NDRC, 2010; Baeumler, et al.: 39-45). These lowcarbon pilot projects, as a policy matter, are an effort to generate local experience to support the
achievement of national targets. As of February 2011, 230 cities at or above the prefecture level
were proposed to be eco-cities. In addition, nearly half of these cities (133 or 46.3 percent)
have established climate-related low-carbon city targets. These pilot designations have led to
the development of low-carbon planning documents with specific targets for carbon intensity,
energy intensity, new energy development and forestry cover. For example, Baoding City in
Hebei Province established a target to reduce carbon intensity by 35 percent by 2020 (compared
to 2010) and increase new energy to 25 percent of industrial output value.
However, despite this volume of activity, an evaluation of low-carbon eco-city
development in China concluded: it remains unclear what defines a low-carbon eco-city
(Zhou, et al., 2012). Jiang Kejun, a senior Chinese researcher, has said that [t]hese so-called
low-carbon cities are actually high-carbon and suggested that the pilots have been disastrous
(Liu, 2010).

3.5 A Climate Change Law?

Alongside the proliferation of discrete energy and climate related plans, policies and
projects, Chinas National Development and Reform Commission is leading an effort to draft
national climate change legislation. The content of the law remains to be determined, but NDRC
Vice-Chairman Xie Zhenhua has noted that it will incorporate the experience gained from
ongoing emissions trading pilot projects (Bloomberg, 2013). Thus far, however, Chinas climate
change program has not relied on legislative authorization. A substantial program has emerged


through the state planning process and related targets and policy documents. It is unclear what
function legislation would serve that is not already served by state planning documents and their
related targets, policies and regulations. Legislation could serve to memorialize chosen
allocations of authority and regulatory mechanisms in a more permanent way, and the legislative
process could at a minimum provide another forum for competing interests to negotiate Chinas
climate policy.


Laws and policies on the books are one thing, but implementation is, of course, another.
As the Chinese saying goes, the heavens are high, and the emperor is far away. This part
focuses on three dynamics in the domestic context that will affect the implementation of Chinas
climate change framework in practice. First, the value that various levels of the Chinese state
place on a range of climate change co-benefits (such as developing a low-carbon economy,
improving environmental quality and public health, maintaining social stability, and building
Chinas international reputation) will in large part determine the level of political will available
for China to sustain and deepen its climate change program. Second, principal-agent problems of
policy implementation, caused by political, institutional, public choice, and capacity issues, are
rampant in China. The degree to which these problems can be resolved will be critical to the
success of Chinas climate program. Finally, the impact of Chinas regional economic disparities
has not been sufficiently appreciated. The path China chooses for the development of its poorer
interior regions i.e., whether it continues to replicate past models of pollute first, remediate
later or, instead, pushes forward with a low-carbon pathway supported by Chinas more
developed regions will have enormous implications for Chinas overall carbon pathway in the

4.1 Evolving Climate Change Co-Benefits

Domestic and international pressures largely unrelated to climate change have been the
primary motivators of Chinas engagement with climate change to date.xxxiv Nonetheless, these
pressures have compelled China to take actions on energy and environment that, if official data
are to be believed, are playing a role in reducing the growth rate of Chinas climate change
emissions. The co-benefits in each of these areas help to explain Chinas unilateral moves to
develop an extensive national climate change program in the first instance, despite the lack of
binding obligations at the international level for China (Weiner, 2008; Wang, 2013).
Key among motivating factors are: energy security and the reversal of energy efficiency
trends; leadership concerns about the continued viability of an economic model based on
investment in heavy industry; and increased leadership awareness of the economic costs and the
potential for social unrest associated with environmental degradation. On the international stage,
climate change actions may be part of a broader campaign to increase Chinas soft power.
Leadership attitudes towards these factors are not static though, and the Chinese political
will to engage in and deepen climate change actions will be affected to a large degree by future
developments in each of these areas.


A. Economic Transformation
In public statements, Chinese officials have expressed concern about the durability of
Chinas three-decades long economic miracle. This has been the stated justification for
policies to transform Chinas model of economic growth from an export- and industry-based
economy to a consumption-based, services-oriented model (Balme, 2012). The result of such a
shift in economic structure would be a less energy-intensive model of growth. The effort at
economic transformation is an ongoing one, and experts hold sharply divergent views on the
ability of Chinas economy to shift in this way. This chapter will not attempt to predict
whetherthese efforts will succeed. The point is that the success of this shift and the speed at
which it occurs will have a significant impact on Chinas climate change program.
An economic slowdown could lead to a loosening of Chinese commitments to energy
efficiency, renewables, and lower carbon intensity and a clinging to old familiar ways of doing
business i.e., heavy industry and investment-led growth. Concerns about unrest due to
insufficient jobs and worsening economic well-being create pressure in this direction. But a
downturn could just as plausibly lead to further efforts to stimulate the development of lowcarbon industries and technologies, which generate GDP, mitigate energy security problems, and
create jobs.
Another area of uncertainty is the extent to which vested economic and political interests
will resist the proposed economic transformation. In some regards, carbon-intensive economic
interests are aligned with the interests of the climate program. The national power companies, for
example, have been heavy investors in Chinas renewables sector. Similarly, state oil concerns
are investing in shale gas. But powerful, largely state-owned, economic interests in the carbonintensive industries such as steel, cement, and chemicals - may also see the shift in economic
structure as a destabilizing reorganization of economic power, or even an existential threat.
B. Environmental Quality
Another significant co-benefit of climate mitigation is the reduction of traditional air
pollution. Thus, unlike in developed nations where the costs of responding to climate change are
being assessed at a time when traditional pollution problems have already been mitigated to a
large degree, in China, the cost-benefit balance is altered by the opportunity for a given
investment to provide both climate mitigation and pollution and health co-benefits.
Since the 1990s, various studies have attempted to quantify the costs of air pollution
health and otherwise in China and found them to be substantial (Ho and Nielsen, 2007; World
Bank, 1997). For example, a 2007 study by the World Bank and Chinas Ministry of
Environmental Protection found that the combined health and non-health cost of outdoor air and
water pollution for Chinas economy comes to around $100 billion a year (or about 5.8% of the
countrys GDP [at the time]) (World Bank, 2007). Outdoor air pollution was the cause of
approximately 1.2 million premature deaths in China in 2010 (Wong, 2013a). Current climate
change policies, which include plans to shut down outdated power plants, improve energy
efficiency through substitution of heavy industry, and increased reliance on renewable energy
have the potential to mitigate these environmental and health costs as well. Indeed, Chinas 2013
national Air Pollution Action Plan, issued in the wake of emergency levels of air pollution in
many regions of the country, contains measures that in significant part overlap with key elements


of the National Climate Change Program, such as low-carbon economic transformation,

promotion of non-fossil energy, and energy efficiency (MEP, et al., 2013).
The more immediate costs of air pollution, including the very visible nature of the
emergency-levels of air pollution in China today, offer an immediate impetus for air quality
measures that have significant climate change mitigation benefits as well. Air pollution concerns
have led to additional measures with significant air pollution and climate change benefits. The
most important examples of this are planned absolute caps on coal use in several provinces
(Beijing, Tianjin, Hebei, Shandong, and Guangdong), established as part of the 2013 Air
Pollution Action Plan. Nonetheless, some measures designed to improve air quality actually
increase climate change emissions. For example, Chinas more than 40 planned projects to
produce natural gas from coal will provide eastern urban areas with much needed cleanerburning natural gas (Yang, 2013). This would have air pollution benefits in eastern urban areas
that use the gas; however, the process of converting coal to gas is itself extremely carbon
intensive, producing greenhouse gas emissions seven times greater than conventional natural gas.
Thus, the urgency of air pollution prevention in China could prove a boon to Chinas
climate change program, creating near-term political will for aggressive implementation. But, if
carbon impacts are not properly considered, air pollution action could also lead to significant
increases in climate change emissions.
C. Social Stability
Heavy air pollution from power plants and other industrial facilities has triggered social
unrest and strong public dissatisfaction in China. Protests in Guangdong province against a
proposed coal-fired power plant, major protests in Xiamen, Dalian, Kunming, Ningbo and other
cities against proposed paraxylene (PX) chemical plants, and dozens of protests over heavy metal
pollution from smelters and battery plants are but a few examples of tens of thousands of
environment-related protests in China each year. The effort of Chinese authorities to shift away
from coal and to limit the growth of heavy industry has the potential advantage of relieving some
of these pressures as well.
Social stability is an overriding political priority in China. Despite continued efforts at
political, media, Internet and other controls, technological advances and greater access to
information have enabled citizens to better recognize risks and to organize accordingly. Officials
have the opportunity to improve social stability through the enactment of a range of climate
mitigation actions that also reduce more immediate harms from pollution (Bradsher, 2012).
D. International Reputation
Looking outward, high-level concerns about international reputation have the potential to push
China either toward more or less action on climate change. In fact, a 2003 strategic assessment
by the leading State Council think tank made explicit concerns about energy security and
international pressure to reduce GHG emissions that motivated Chinas move toward the
development of climate change policy (Chen, et al, 2003). Chinas growing energy needs and
economic expansion have created tensions with other nations that could be ameliorated through
climate change action. Chinese leaders have talked about seeking to increase Chinas soft
power and reducing domestic and international climate change risks would be a means of
building Chinese national strength through contribution to a global public good (Nye, 2004).


Nonetheless, Chinese leaders may find that that taking a stance of resistance to international
pressures on climate change action can garner support from nationalist constituencies
domestically, and protect Chinese politicians from accusations of being too compliant in the face
of foreign demands.
None of these four factors economic transformation, environmental quality, social
stability, and international reputation - inevitably push China toward more or less climate change
action. Yet it is critically important to understand how each of these factors may influence
Chinese climate change policies. Each is dynamic and subject to rapid, potentially dramatic
change, with resulting impacts on the shape and effectiveness of Chinese climate change policy.
The more climate change action supports other priorities important to Chinas self-interest, the
more likely it is that authorities will grant the necessary policy focus and resources to bring about
effective climate change mitigation.

4.2 Persistent Barriers to Implementation

Even if climate change is an important state priority in China, there is no guarantee that
authorities will be able to overcome a range of pathologies of implementation. In the
environmental context, there is a rich literature regarding the factors that have limited
implementation.xxxv These include bureaucratic fragmentation, corruption, interference from
economic and political interest groups, political metrics prioritizing economic growth and social
stability, and local protectionism enabled by significant local discretion in implementation.
These include informal political factions, government ministries and other institutions, local
governments, and business interests (state-owned, private, and foreign). For example, Chinas
state-owned oil companies long resisted making fuel quality standards more stringent to avoid
additional costs in the refining process (Wong, 2013b). Chinas environmental regulatory system
has been hampered by capacity problems, insufficient transparency, lack of diversity in
enforcement channels, and weak citizen involvement. All of these factors have created an
overwhelming culture of non-compliance that compounds implementation problems. Finally,
data quality problems render it difficult to identify and ascertain the extent of implementation
Implementation problems in the climate change context are exacerbated by the
complexity of climate change regulation. Common regulatory tools for climate change require a
high degree of regulatory sophistication. For example, a carbon trading system, generally
speaking, requires five components: (i) the establishment of a cap; (ii) allocation of the cap
among emitters; (iii) GHG accounting and verification rules; (iv) registries, exchanges, or other
trading mechanisms; and (v) a framework for punishing and deterring non-compliance (Han, et
al., 2012). Each component is a complex endeavour that requires expertise and a strong
regulatory backstop to prevent cheating or misfeasance.
Chinese authorities have begun to implement a range of initiatives designed to counter
these implementation problems, including investment in monitoring and environmental
infrastructure and governance reforms to strengthen top-down control.
China has invested substantial resources in improved environmental monitoring and
environmental infrastructure. In principal-agent terms, investment in environmental monitoring
is a way for central regulators to reduce information asymmetry. This includes expansion of both
ambient monitoring networks and a mandated installation of facility-level continuous emissions


monitoring in key state-controlled polluting facilities (Wang, 2011; Zhang and Schreifels, 2011).
Central government mandates and funding support have created incentives for substantial
investment in energy efficiency and pollution control as well. The installation of environmental
infrastructure is no guarantee of its proper use, but is a necessary first step in implementation.
Central authorities have also implemented a range of initiatives for improving top-down
control of local agents. Party authorities have been given greater authority to punish bureaucrats
and state-owned enterprise leaders for failing to meet energy, carbon, and pollution targets; in
practice, it is not clear that this authority is being utilized (van Aken, 2012/13; Landry, 2008).
To counter capacity problems, central agencies issued detailed implementation rules and offered
trainings to assist local government actors in implementation.xxxvi To counter information
problems and cheating on target implementation, central regulators developed multiple data
sources and more readily observable proxies for target implementation (Wang, 2013).
Authorities have apparently limited propaganda restrictions on reporting of environmental
problems and increased environmental information disclosure, possibly to encourage so-called
public supervision (shehui jiandu) or fire alarm supervision over environmental policy
implementation. Studies have shown that in practice enforcement is becoming more stringent
and legalistic in certain (typically wealthier) parts of China (van Rooij and Lo, 2010).
In addition to these efforts, greater Chinese government, business, and citizen
engagement with international actors has influenced enforcement in a number of ways, including
through government-to-government knowledge transfer, informal supply chain regulation, and
greater transparency of environmental information. For example, government researchers are
active in researching international experience (such as the EU emissions trading system, and
trading of sulphur dioxide emissions rights in the U.S.) to develop best practices for the Chinese
context. Various levels of the Chinese government have executed agreements with foreign
governments on policy design collaborations, such as the U.S.-China Strategic & Economic
Dialogue and the NDRC-State of California Memorandum of Understanding on Climate Change
(U.S. Dept. of State, 2013; Dearen, 2013).
The extraordinary amount of manufacturing within China for global supply chains
delivering finished goods to the U.S., E.U. and other developed regions has created an
opportunity for informal regulation of Chinese polluters by multi-national corporations and civil
society groups. These efforts are typically motivated either by corporate interest in cost reduction
(such as through energy efficiency improvements)xxxvii or public pressure that threatens multinational corporations with reputational damage (Plambeck, et al., 2012). This is an example of
what Julia Black has called decentered regulation, which emphasizes the role of nongovernmental organizations, businesses, technology, and other non-state factors in regulation
(Black, 2002).
These various efforts hold out the possibility that environmental enforcement and
implementation in China could improve substantially in coming years. But improvement is not
assured. Changing priorities, corruption, collusion, interest groups opposed to environmental
protection, and other factors could just as easily overwhelm initiatives to improve


4.3 The Two Chinas Problem

A third major challenge for climate mitigation arises out of Chinas sharp regional
economic disparities, and the possibility that this will lead to carbon outsourcing to the poorer
parts of the country in coming decades (Wang 2014).
In the climate change debate, Chinas rising economic clout have drawn two common
reactions. On one hand, it has led to calls for China to take on more substantial international
obligations for mitigation and adaptation. For example, in international treaty negotiations, the
United States has often argued that China should be treated as a major polluter or an
emerging economy. Such categorization would place China in a different position than the
prototypical developing, non-Annex I country not a developed country, but also not quite a
developing nation either. On the other hand, others have argued that China remains, on average,
a poor country. Professor Zou Ji, deputy director of Chinas National Centre for Climate Strategy
and International Cooperation, put it this way (Xu and Zhang, 2013):
The international community has some misconceptions, such as believing China
is now a developed nation. This could mean China ends up taking on more global
responsibility than its capabilities allow. Weve held the Olympics and sent
astronauts into space, but you cant look at the richest parts of Beijing and
Shanghai and assume the whole country is like that. The welfare of hundreds of
millions of rural residents isnt yet assured Overall, China is still a developing
Scholars have begun to acknowledge, however, that China is not a monolith and by virtue
of its size and relatively sharp geographic disparities in wealth can (and should) be
conceptualized as a jurisdiction containing a quasi-developed country and a quasi-developing
one (Farber, 2013).xxxviii
The Chinese government itself has in fact formally divided China into at least three
Chinas - eastern, central and western. The eastern provinces are the most economically
developed, the western provinces the least, and the central provinces somewhere in between.
This three-region designation first appeared in the 7th five-year plan (1986-90). Chinas 7th fiveyear plan (1986-1990) set forth a framework by which the poorer interior regions would support
the economic development of eastern regions through the provision of raw materials and energy:
[r]egional economic development in China must correctly resolve the
relationships among the three economic regions - eastern coastal, central, and
western. During the 7th five-year plan through the 1990s, we must accelerate the
development of the eastern coastal region. At the same time, we must focus
heavily on energy and raw materials development in the central region, and
vigorously make incremental steps to prepare for the development of the western
region. We should connect up the development of the eastern coastal region and
the exploitation of the central and western regions, creating a situation of mutual
support and promotion.
Towards the end of the 20th century, China began to devote more resources to Western
development, or the acceleration of economic development in Chinas interior provinces (China


Development Gateway, 2010).

In the climate context, this internal development pattern has resulted in an outsourcing of
carbon dioxide from the wealthier eastern provinces to the interior provinces. Feng, et al., have
shown that the production, consumption, and export of high-value goods and services in rich
regions depend upon the emissions-intensive products from poorer regions in China, consistent
with what has become clear about embodied carbon in international trade (Feng, et al., 2013;
Qi, et al., 2013; Peters and Hertwich, 2008). This dynamic is due to the expansion of traditional
energy-intensive industries (such as energy and raw materials) in the interior, as well as
migration of energy-intensive industry from the coastal provinces.
The question for the future then is whether China will engage in a pattern of domestic
development that essentially duplicates what has happened at the global level, whereby wealthier
countries (provinces) outsource polluting industries to developing countries (provinces).
This underappreciated dynamic could lead to Chinas carbon emissions growing for a longer
time than predicted by current emissions models (Abebe and Masur, 2010; Wiener, 2010).
Such an outcome is not inevitable, however. For one, a pollute first, clean up later
approach in the interior provinces is constrained by the same domestic dynamics that are
generating political will for climate mitigation in China nationwide an imperative for economic
transformation, emergency levels of pollution, environment-related protests, and leadership
desire to improve international relations and Chinese soft power (Wang, 2014; Wiener, 2008;
Wiener, 2010).xxxix
Moreover, Chinas sharp regional economic disparities also provide some potential
advantages or benefits in support of achievement of these economic, environmental, and sociopolitical co-benefits. The primary advantage is lower marginal costs of abatement (in labor,
materials, etc.). Thus, Chinese authorities can utilize the interior provinces as a low-cost
laboratory for development of renewable energy, energy efficiency, environmental infrastructure,
and services industries. Another advantage is that the interior provinces are still relatively
undeveloped and good planning can build greater efficiency and lower pollution into new build
industrial facilities, buildings, and transport infrastructure rather than having to rely on more
expensive retrofit.
Regional economic disparities also provide a source of funding for greener development
in Chinas interior. Wealthier coastal provinces can both subsidize green development in the
interior and take on greater environmental obligations commensurate with their rapidly growing
economic power. Such an approach (which is not currently Chinese policy) would be analogous
to the common but differentiated responsibilities approach to climate mitigation at the
international level.xl However, such an approach has the potential to work more effectively at the
domestic level for a number of reasons (Wang, 2014).
First, wealth transfers to Chinas interior are arguably appropriate as a matter of
reciprocity. Chinese policy over the last 35 years has explicitly required interior provinces to
support economic development in the coastal provinces. This debt to the interior provinces has
been a part of leadership rhetoric since Deng Xiaoping.
Second, greener development in Chinas interior provinces contributes to achievement of
a number of other state priorities, including poverty alleviation, mitigation of internal migration
of rural workers to coastal cities and associated costs, and national unification. Thus, direct
support for development in the interior provinces accrues to the benefit of the state in various
ways, rather than just to an amorphous global commons.


Third, coastal provinces benefit directly from support for the interior provinces in the
form of reduced conventional air pollution. There is already precedent in China for this sort of
payment for ecosystem services. Existing experiments in eco-compensation (shengtai
buchang) schemes involve transfer payments from more developed regions to subsidize pollution
reduction (mostly in the water pollution context) in developing parts of the country. A recent
example in the air pollution context concerns the substantial amount of pollution that interior
(and much less developed) Hebei Province contributes to developed Beijing. Commentators have
raised the idea of wealthier Beijing paying Hebei Province not to pollute (Jiang, 2013). A central
compensation scheme announced in late 2013 offers payments to poorer provinces around
Beijing as an incentive for air pollution reduction (that could also double as climate change
Thus, the rough foundations for a different (more efficient, lower carbon) development
model are in place in China, but at the same time the path of least resistance would likely be a
continuation of the so-called two highs, one resource (lianggao yizi) referring to high energy
consuming, high pollution, and resource-intensive production model of economic growth that
has driven Chinese economy for nearly four decades. How the battle between these two
approaches plays out will have major implications for climate mitigation in China in the coming

China is without a doubt an indispensable component of any effective solution to climate
change. Chinese authorities have established a more extensive climate change program on the
books than is commonly recognized outside of China. However, questions remain as to whether
Chinas climate change policies will be properly implemented in practice, and whether they are
sufficiently ambitious to address global climate change even if fully implemented. What is clear
is that tremendous efforts must still be made if China is to reduce its contribution to global
climate change.

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Assistant Professor of Law, UCLA School of Law. The author is grateful to the editors of this volume,
and to Edward Parson, Jonathan Zasloff, Tim Malloy, Sam Bray, Christina Ho and Alvin Lin for their
thoughtful comments on earlier drafts of this chapter.
Excluding land use change and forestry (LUCF), as well as emissions from flaring gas during oil and
gas production and underground coal fires. The U.S. accounted for 16 percent, E.U. for 11 percent (Joint
Research Centre EDGAR, 2013).
This growth resulted in a nearly 20-fold increase in overall GDP between 1978 and 2010 (DOA, 2010).
Intensity refers to the amount of energy or carbon emitted per unit of economic output.
China is not subject to an internationally binding greenhouse gas emissions reduction target.
In China, fuel combustion causes 91 percent of non-land use emissions; industrial processes 9 percent
(Cohen-Tanugi, 2010).
Five-year plans, a feature of the planned economy era, remain an important governance tool in China.
These plans set forth essential guidance on the direction of economic and social development. In
practice, priorities set forth in the plan receive significant financial, policy, and legal support (Wang,
It can be difficult to verify the accuracy of official Chinese data sources and commentators have raised
questions about the quality of such data in a number of contexts. See Wang (2013): 424-429 for a fuller
discussion of these issues.
Chinas total primary energy consumption was 17.29 quadrillion BTU in 1980 and 109.62 quadrillion
BTU in 2011, a 6.34-fold increase (EIA, 2014b). Over the same period, U.S. total primary energy
consumption increased by 1.25 times, albeit from a much higher baseline (78.07 quadrillion BTU in
1980; 97.47 in 2011) (EIA, 2012).

Fossil fuels accounted for 91 percent of total energy consumption in 2011 (69 percent coal; 18 percent
oil; 4 percent natural gas) (EIA, 2014a). This compares to 80 percent of primary energy consumption
from fossil fuels in the U.S. in 2011 (20 percent coal; 35 percent oil; 25 percent natural gas).
Chinas annual carbon dioxide emissions from fossil fuel consumption increased from 1.448 to 8.715
billion metric tons of CO2 from 1980 to 2011 (EIA, 2014c).
10.3 percent in 2011 (World Bank, 2011).
20.53 percent in 2011 (EIA, 2012).
China's Chief Negotiator Su Wei warned developed countries that their historical responsibility for
climate change is unavoidable [sic] (Xinhua, 2013; Xinhua, 2010; Ellerman, 2011).
This was the idea that developed countries, due to more than 150 years of industrial activity, were
principally responsible for the current levels of GHGs in the atmosphere, and would thus take the lead
in combatting climate change through binding emissions reduction commitments, and support for
developing countries in the form of funding and technology transfer (UNFCCC: Art. 3.1).


Note that in 2011, Chinas average per capita carbon dioxide emissions increased by 9 percent to
7.2 tonnes CO2 [T]his is similar to the per capita emissions in the European Union of 7.5 tonnes in
2011 China is now well within the 6 to 19 tonnes/person range spanned by the major industrialised
countries (Olivier et al, 2012).
National Climate Change Coordination Group - guojia qihou bianhua xietiao xiaozu,
(Peoples Daily, 2009). This group was under the State Councils State Environmental Protection
Commission (Guowuyuan huanjing baohu weiyuanhui, ). The State Science &
Technology Commission was reorganized as the Ministry of Science & Technology in 2003.
National Climate Change Countermeasures Coordination Group guojia qihou bianhua duice xietiao
xiaozu, (Peoples Daily, 2009). The State Planning Commission was
reorganized as the State Development and Planning Commission in 1998. The SDPC was restructured as
the National Development and Reform Commission in 2003.
The National Leading Group on Climate Change guojia yingdui qihou bianhua lingdao xiaozu
(NDRC, 2013c).
See endnote [xviii], supra, for caveats regarding the policy significance of such institutional
Chinese authorities have released new editions of the Program annually, except for 2010 (NDRC
2007a, 2009, 2012a, 2013a; State Council 2008, 2011b). This document has no legal or otherwise binding
force on its own, but is rather a summary document issued pursuant to Article 4.1 of the UNFCCC.
Although this Chapter focuses on climate mitigation, China also has an extensive policy framework on
adaptation to climate change (NDRC 2013a; Farber, 2011).
These elements of the program were formalized in a range of domestic planning, policy, and legal
documents during the 11th and current 12th five-year plan periods; they were first framed as a climate
change program during the 12th five-year plan. See the 12th five-year plan (PRC, 2011), the State Council
12th Five-Year Work Plan on Controlling Greenhouse Gas Emissions (State Council, 2011a) and a
range ancillary official documents pursuant to these.
Poor performance, however, typically does not result in commensurate punishments in practice
(Landry, 2008).
These were known as the energy saving, emissions reduction (ESER, or jieneng jianpai) targets,
which in the 11th five-year plan were designated as binding hard targets.
Reductions from 2005 levels by 2010.
The intensity targets refer to reductions from 2010 levels by 2015. Non-fossil energy (nuclear and
renewables) made up 9.6 percent of Chinas energy mix in 2010 (Wang, 2010).
Carbon intensity fell by 3.5 percent in 2012 (Xu and Stanway, 2013). Energy intensity fell by 1.9
percent in 2011 and 3.6 percent in 2012 the first two years of the 12th five-year plan (Houser, 2013).
The Pew definition of clean energy includes: solar, wind, small hydro, geothermal, marine, and
biomass energy. It does not include large hydropower and nuclear, which are included in official Chinese
definitions of new and renewable energy or non-fossil energy.


Chinese planning is primarily operationalized around five-year planning cycles. The state does engage
in longer term planning exercises that result in publicly announced medium- or long-term targets such as
the ones in this chart. Interim five-year and annual targets are typically set with these longer term goals in
mind, but short-, medium- and long-term goals are all subject to change and in practice it is not unusual
for targets to be modified.
The E.U. ETS covers 2.1 billion tons from 31 countries. Australias carbon trading system covers 380
million tons. Californias system covers 165 million tons (UPI, 2013).

Five provinces: Guangdong, Liaoning, Hubei, Shaanxi, Yunnan. Eight cities: Tianjin (provincelevel), Chongqing (province-level), Shenzhen (Guangdong), Xiamen (Fujian), Hangzhou (Zhejiang),
Nanchang (Jiangxi), Guiyang (Guizhou) and Baoding (Hebei).



Province: Hainan. Cities: Beijing (province-level), Shanghai (province-level), Shijiazhuang (Hebei),

Qinhuangdao (Hebei), Jincheng (Shanxi), Hulunbeier Prefecture (Inner Mongolia), Jilin (Jilin), Daxing
Anling Prefecture (Heilongjiang), Suzhou (Jiangsu), Huaian (Jiangsu), Zhenjiang (Jiangsu), Ningbo
(Zhejiang), Wenzhou (Zhejiang), Chizhou (Anhui), Nanping (Fujian), Jingdezhen (Jiangxi), Ganzhou
(Jiangxi), Qingdao (Shandong), Jiyuan (Henan), Wuhan (Hubei), Guangzhou (Guangdong), Guilin
(Guangxi), Guangyuan (Sichuan), Zunyi (Guizhou), Kunming (Yunnan), Yanan (Shaanxi), Jinchang
(Gansu), and Urumqi (Xinjiang). Only Hunan, Ningxia, Tibet and Qinghai do not have at least one lowcarbon pilot.
This is not to say that concerns about climate change are not a motivating factor of policy making.
Indeed, Chinas official documents, particularly since 2007, express concern about the harms to human
health, increased disease and greater prevalence of natural disasters, among other things. Public
awareness of climate change, particularly in relation to extreme weather events, has been rising. However,
this Chapter takes the position that near-term socio-economic factors are still the most salient motivator of
policy change towards climate change.
For a few examples, see: Ma and Ortolano (1999); van Rooij (2006); Zhao and Ortolano (2010);
Kostka and Hobbs (2010); Wang (2013).

Interview with central government environmental official (noting that local officials found
achievement of central targets to be difficult in the absence of specific implementation guidance).
PR Newswire (2013) a Walmart press release notes efforts that reduced greenhouse gas
emissions in Walmart stores by 11.3 percent in 2012 compared to a 2005 baseline.

Wang (2013) notes Chinas common but differentiated responsibilities approach to allocation of
provincial pollution reduction targets). Abebe & Masur (2010) argue that severe income disparities may
lead to growing GHG emissions for longer than predicted by many extant models. Hu (2009a, 2009b)
proposes a framework for allocating carbon reduction targets among Chinese provinces according to their
Human Development Index level and emissions volume.


See Part III(A), supra.

At the international level, countries have attempted to mitigate global greenhouse gas emissions, while
also taking this economic disparity into consideration, according to the principle of common but
differentiated responsibilities. Thus, the Kyoto Protocol creates binding reduction targets for developed
countries but not developing countries, and developed countries support mitigation in developing
countries through funding and technology transfers. This approach has failed to stem the growth of
emissions and has led to gridlock in the treaty negotiations process.