China’s 14th Five Year Plan Sends an Indecisive Cimate Signal
On 5 March, Chinese Premier Li Keqiang presented key elements of the draft 14th Five Year Plan on National Economic and Social Development (the 14th FYP) in a speech at the annual session of the National People’s Congress.
The draft 14th FYP revealed some key targets concerning climate and energy. In 2021-2025, China aims to
- Lower energy intensity by 13.5%
- Lower carbon intensity by 18%
- Increase non-fossil energy’s share in the energy mix from 15.8% in 2020 to about 20% in 2025
- Increase the forest coverage to 24.1%
Unlike previous FYPs, no explicit five-year GDP growth target is set for the 14th FYP period, instead, the target will be decided on a yearly basis according to the actual circumstances.
Last September, President Xi Jinping pledged to peak carbon emissions before 2030 and reach carbon neutrality by 2060. As the first FYP following China’s new climate commitments, the 14th FYP will be assessed on whether it places China on the right path towards a carbon neutral future.
The draft 14th FYP is being reviewed by NPC members and will be approved at the end of the NPC session on 11 March. The full text of the 14th FYP will be made public after approval. The headline targets in the draft plan are not expected to change.
The Chinese government sets major social and economic development objectives in a 5-year policy planning cycle. This mechanism dates back to 1953, and it remains as the fundamental framework guiding the policy-making process at all levels and across sectors. 2021 marks the start of the period covered by the 14th Five Year Plan. China accounts for 26% of global emissions. The strategy on economic and energy transition outlined in the 14th FYP will largely shape China’s emissions trajectory in the next 5 years and beyond.
Since China’s climate pledge in September, climate and energy experts in China have been urging tougher emissions reductions targets in order for China to fulfill its commitment. Top policy experts believe that for China to stay in the course of carbon peaking before 2030 and reach carbon neutrality by 2060, assuming an annual GDP growth rate of 5.3% in the next 5 years China would need to reduce its energy intensity by 14%, and the Co2 intensity by 19.4%. Though the figures unveiled are close to that analysis, the absence of the economic growth goal in the five-year term has made gauging the ambition level, and the actual emissions reduction effect, difficult.
Many have also called for China to set up overall emissions caps – in particular a carbon emissions cap – alongside existing efficiency targets in the 14th FYP. By far the absolute carbon emissions cap has not surfaced.
What’s in the 14th FYP concerning climate and energy?
The 14th FYP sets a range of topline targets concerning China’s economic growth, welfare system, energy consumption and environmental protection. There are three key targets concerning climate and energy: energy consumption per unit of GDP (energy intensity), carbon emissions per unit of GDP (carbon intensity) and share of non-fossil fuels.
The GDP growth rate – the target which usually receives the most attention – is also important since it defines the basic context of China’s development on different fronts including on climate and energy.
The 14th FYP aims to lower energy intensity and carbon intensity by 13.5% and 18% respectively in 2021-2025, and increase non-fossil energy to around 20% in the energy mix. The 18% carbon intensity target maintains the same rate of reduction as in the last five year plan, which was already considered moderate. On the other hand, five year targets are normally set as baselines, so the likely overachievement of these targets preserves the possibility of more action. Most objectives related to climate and environment in the 13th FYP have been realized ahead of schedule.
The 14th FYP will not set an explicit five-year target on GDP growth, instead, the target will be decided on a yearly basis. The absence of a five-year GDP target makes China’s emissions growth over the period even more uncertain. Analysis done by Draworld Environment Research Center shows that if the actual annual GDP growth is above 3.9% in the 14th FYP period, China’s carbon emissions will continue to increase (see quote below).
Last September, President Xi Jinping pledged to peak carbon emissions before 2030 and reach carbon neutrality by 2060. In his speech, Premier Li re-affirmed the government’s decision to make an action plan ensuring peaking emissions before 2030.
Following the approval of the 14th FYP, government departments and local governments will come up with their own special plans.
There are several important sectoral plans concerning climate change, including plans for energy and the power sector which are drafted by the National Energy Administration. The sectoral 14th FYP on energy will set an absolute cap on coal consumption and energy consumption. Climate groups advocating for the adoption of an absolute cap on carbon emission in that plan. There will also be a dedicated 14th FYP plan on tackling climate change. The work is led by the Ministry of Ecology and Environment in response to the new climate pledge announced by President Xi. The sectoral FYPs are expected to be finalized in the second half of 2021, however, the process could take longer as there’s no set deadline.
How to interpret the targets? Expert comments：
Dr. Zhang Shuwei (张树伟), Chief Economist, Draworld Environment Research Center：
“As the first five-year plan after China committed to reach carbon neutrality by 2060, the 14th FYP was expected to demonstrate strong climate ambition. However, the draft plan presented today does not seem to meet the expectations. Overall, the plan doesn’t contain enough details on how China plans to accelerate the economy’s decarbonization, nor does it offer much strategic guidance on how to peak carbon before 2030 and reach carbon neutrality by 2060. It is a rather modest goal setting.” “The 14th FYP targets on energy intensity and carbon intensity are rather moderate. The plan doesn’t include an explicit five-year target on GDP growth, however, our calculations show if the actual annual GDP growth is above 3.9% in the 14th FYP period, China’s absolute emissions will continue to increase.”
Dimitri de Boer, China chief representative for ClientEarth, an environment law charity：
“The top-line climate targets for 2025 are hard to interpret in the absence of a five-year target for GDP growth. What matters now is whether we see a quick transition to clean energy. The energy authorities were criticized for not taking the transition seriously, as many new coal plants were approved in 2020. We hope many of those projects will still be cancelled.”
Swithin Lui, the Climate Action Tracker’s China lead, of NewClimate Institute：
“In terms of the climate, initial indications from China’s 14th Five Year Plan are underwhelming and shows little sign of a concerted switch away from a future coal lock-in. While it’s positive that this plan does reiterate its commitment to carbon neutrality by 2060, and peaking emissions before 2030, there is little sign of the change needed to reach that goal. We hope to see a coal cap in the more detailed energy sector and climate five year plans later this year, which will help shed light for the international community on the future of China’s emissions growth and its climate commitments.”