China's 'Two Sessions' 2016

China caps coal consumption at 5 billion tonnes by 2020 amid fears energy demand may rebound

It is the first time Beijing has set such a limit, signalling the government’s concern over the issue, experts say

PUBLISHED : Thursday, 10 March, 2016, 6:00pm
UPDATED : Thursday, 10 March, 2016, 6:00pm

China has introduced its first limit on annual energy consumption in a five-year plan – by capping total consumption of standard coal at 5 billion tonnes by 2020 – up on 2015’s use of 4.3 billion tonnes.

Experts says the relatively loose and conservative move shows that the government is concerned about energy demand rebounding.

The nation’s 13th five-year plan, released on Saturday, also revealed that energy intensity – the consumption per unit of economic growth – would be cut by 15 per cent compared with 2015 levels, while carbon emissions per unit of economic growth would drop by 18 per cent compared with 2015’s levels.

READ MORE: China could save billions of dollars by bringing coal to peak use by 2020, study finds

“It shows policymakers are concerned about a rebound in energy demand as China has yet to complete its industrialisation and urbanisation,” said Lin Boqiang, director of Xiamen University’s China Centre for Energy Economics Research.

Lin said energy consumption had been increasing at a slower pace over the past few years because of the economic slowdown, but the rate could still pick up in the coming years.

China’s total energy consumption rose by only 0.9 per cent in 2015 compared with 2014 – the lowest increase since 1998 – according to the most recent data from the National Bureau of Statistics.

Yang Fuqiang, a senior adviser at the environmental group, Natural Resources Defence Council, said the cap of 5 billion tonne had been calculated using figures including upper end of the GDP target – a 7 per cent growth rate – and the target of a 15 per cent drop in energy intensity over the next five years.

However, the drop in energy intensity by 2020 was almost certainly going to be steeper than the target as China’s heavy industries – iron and steel, cement – had already lost steam as a result of shrinking demand, both domestically and abroad, Yang said.

The 15 per cent target is lower than the 18.2 per cent cut in energy intensity between 2011 and 2015.

READ MORE: China will face pressure to do more if climate goals ‘too easy’: US official

Yang said China’s economy was now being fuelled more by the service sectors, which consumed a great deal less energy, so such structural change would contribute greatly to improvements in energy intensity.

“A higher [energy intensity] target would put more pressure on officials to restructure the economy … but this is a bit conservative,” Yang said.

Meanwhile, the country’s new five-year plan has pledged to reform its pollution-reduction scheme by ordering all factories to observe emission standards.

China has also added new environmental quality targets for the next five-year plan.

Within five years, city air quality should be rated “good” or better 80 per cent of the time – a slight increase from 76.7 per cent over the past five years.

Cities are also expected to cut levels of PM2.5 – the finest pollutant particles, or particle matter, smaller than 2.5 microns in diameter that can cause the greatest harm to public health – by 18 per cent for the next five years, while the target for the Beijing-Tianjin-Hebei region is 25 per cent.

READ MORE: China to shed 1.8 million coal and steel jobs amid moves to rein in industrial overcapacity

Nearly 300 Chinese cities failed to meet national standards for air quality last year, according to a Greenpeace report.

The World Health Organisation recommends average 24-hour exposure to PM2.5 at 25 or below. But last December the air quality index hit the 500-mark, the maximum, at all monitoring stations in Beijing.