1. For 2010 EASS Meeting Co-control of GHGs and Air Pollutants Under China’s 12th Five-Year Plan HU Tao Policy Research Center of Ministry of Environmental Protection (MEP) Sept 24, 2010, Tsinghua University, Beijing

2. 2 Outline Introduction National Pollution and GHGs Reduction Program Under China’s 12th Five-Year Plan and implication for energy sector Co-control of Greenhouse Gas Emissions and Other Air Pollutants Conclusion

3. 3 Introduction National strategies Laws Programs

4. 4 Introduction National strategy China’s Agenda 21 and Sustainable Development as a national strategy Environmental Protection and population control as two basic national policies Scientific Concept of Development and transmission from pollution heavy, energy and resource intensive economy to technology and service oriented economy structure From red 1949, to blue 1979 and now to green

5. 5 Introduction Laws Energy Saving Law Renewable Energy Law Basic Energy Law being revised Environmental Protection Law Air Pollution Prevention and Protection Act Circular economy law Cleaner production law

6. 6 Introduction Programs 11th five year plan National climate change plan (NCCP)

7. 7 Introduction - 11th Five Year Plan (2006-2010) 20% energy and GHGs intensity reduction 14.38% by end of 2009 10% of SOx reduction 13.14% by end of 2009

8. 8 Introduction - National Climate Change Plan (NCCP) Issued on June 5, 2007 Major components State of Art impacts of climate principle and objectives policy and measures international cooperation Key principles Sustainable development Mitigation and adaptation Policy integration and coordination with other sector policies Technology innovation Common but differentiated responsibilities Active international cooperation

9. 9 Introduction - National Climate Change Plan (NCCP) Targets Mitigation Adaptation R&D Public Awareness and local management

10. 10 National Climate Change Plan (NCCP) Quantitative Targets Mitigation 20% energy intensity reduction during 2006- 2010 By 2010 renewable energy taking up 10% of total energy and nuclear energy 4% of total By 2010 N 2 O keeping at the same level of 2005 Control paddy rice and animal methane 50 million ton of carbon sequestration increasing during 2005-2010

11. National Pollution and GHGs Reduction Program under 12 th five year plan and implication for energy sector

12. 12 National Pollution and GHGs Reduction Program under 12 th five year plan and implication for energy sector Draft of 12 th five year plan (2011-2015) SO2 emissions 10%, responsible by MEP Power sector and non-power sector NOx emissions x%, responsible by MEP Power sector Meeting vehicle emissions standards of G4/Euro IV PM? Carbon intensity 20% to reflect 40-45% target by 2020, responsible by NDRC Renewable energy taking up y% of total energy mix by 2015, responsible by NDRC

13. 13 National Pollution and GHGs Reduction Program under 12 th five year plan and implication for energy sector Reduction approaches Structure adjustment Economy structure Energy structure Low tech, high tech structure Efficiency improvement by engineering and management Energy-saving, energy efficiency improving De-sulfur engineering De-nitrogen engineering Scale control Control scale of production by reducing demand and exporting –Iron and steel, cement, coke etc –Discouraging exports of high carbon, heavy pollution products

14. 14 Impacts on energy sector efficiency of energy use to be improved a lot the win-win measure for both carbon and sulfur, nitrogen the low cost (even benefits) measure from economic aspect MIIT is promoting the energy efficiency program for industries changes in energy use towards lower carbon More wind power, solar and small and micro hydro by y% More natural gas, oil and biomass less coal, from 68% to z% National Pollution and GHGs Reduction Program under 12th five year plan and implication for energy sector

15. 15 Impacts on energy sector Energy price Shadow energy prices increasing Energy price still under control by central government because of social concern and inflation concern Governmental command and control interventions to fill the gap between shadow price and actual price Fuel imports may increasing for energy security reason and rapid growing conventional vehicles may not increasing due to constrains of geo-politics and electrical cars growing and renewable growing National Pollution and GHGs Reduction Program under 12th five year plan and implication for energy sector

16. 16 Impacts on energy sector electricity generation built Coal based: –Super-critical, super-super critical and testing IGCC –phase out the small power plants under 200 MW capacity Natural gas based Renewable energy –Wind –Solar –Small and micro Hydro Nuclear National Pollution and GHGs Reduction Program under 12th five year plan and implication for energy sector

17. 17 Impacts on energy sector future energy supply and demand in China BAU scenario Green scenario Brown scenario Means of implementation Moral education Mandatory order Market force –Carbon tax –resources tax –sulfur and NOx tax/fee National Pollution and GHGs Reduction Program under 12 th five year plan and implication for energy sector

18. 18 Impacts on energy sector Whom to be involved to implement the program Producers Consumers Exporters, importers and consumers abroad –23% of carbon emissions –38% of sulfur emissions –18% of COD emissions National Pollution and GHGs Reduction Program under 12 th five year plan and implication for energy sector

19. 19 Co-control Under China’s 12th Five-Year Plan What Why How

20. 20 What is co-control ?

21. 21 Concept of co-control Objective: to maximize net benefits (benefits minus control costs) by designed control measures Total costs of control measures of air pollutants and GHGs Benefits of health, vegetation and global warming as well as other external benefits Target: both air pollutants and GHGs Ways: to actively control both GHGs and local pollutants To maximize net benefits Net benefits = Integrated Benefits – Integrated Costs To maximize it! Dimensions: technology, project, program, plan, policy etc

22. 22 Review of co-benefit development in China History of research Ancillary benefits estimation with OECD, ECON, SEPA Shijiazhuang Case, West-east Pipeline Case under support of SEPA, Petro- China Shanghai Case, Beijing Case, National assessment of co-benefits under support of USEPA-IES Shangxi Taiyuan case by CICERO, ECON, NILU etc GAINS model of China by IIASA, ERI Panzhihua case study support by OECC RFF-Harvard, Tsinghua Univ. study Energy Foundation-Renmin University of China in Henan Province Co-control policy design by MEP/DRC - ECON/CICERO team

23. 23 Review of co-benefit development in China Stage 0 pre-co-benefit period: local pollution control policy and climate change policy were considered independently without links Stage 1 Ancillary benefit or Secondary benefit period: Ancillary benefits or secondary benefits of GHGs reduction were aware

24. 24 Review of co-benefits development in China Stage 2 co-benefit measurement period: it ’ s realized that local pollution and GHGs are mutually linked to each other and efforts are made to measure co-benefits Stage 3 co-control period: co-control policies/programs/projects are designed and proposed in order to maximize co-benefits co-control policy and projects are designed and implemented

25. 25 Relations between co-benefit and co-control Energy and GHGs Reduction Pollution control Co-benefits Counter- benefits Impact analysis of existing policy/program And seeking net benefits Co-control design for Policy/Program/project To maximize it!

26. GHGs Environmental Improvement Co- benefits Co-control GHGs reduction With maybe Counter-benefits Environmental Improvement With maybe counter-benefits Co-benefits

27. 27 Why co-control? New situation of energy-saving and emissions reduction Good to have control targets of both energy- saving and air pollutants in 11 th five year plan of State Council but, existing potential conflicts between energy- saving and air pollutants reductions End-of-pipe control technology Implemented by NDRC and MEP separately due to different mandates assigned by State Council

28. 28 Why co-control ? GHGs control China ’ s official commitment by 2020, 40 － 45 ％ carbon intensity How to achieve it by a lower cost way to gain co- benefits? MEP ’ s niche in climate regime CO2+SO2 ＋ NOx + PM and … Co-control is the best NAMAs for China

29. 29 How to co-control Principle The fundamental principle we apply for is cost- benefit/effective, in terms of control of several pollutants and GHGs. We believe this principle should be the base of rational decision-making under market economy system. Hypothesis This study assumes: root-of-pipe control is more cost-effective than end-of-pipe control of air pollutants and GHGs, when all of environmental costs are internalized.

30. 30 How to co-control Policy instrument to find the right policy to achieve the target and be coherent and coordinated among existing policies To avoid high administrative and management costs To internalize all of the environmental cots to drive from end-of-pipe technologies to root-of-pipe technologies Governance support Implementation rate? to find a proper institutional arrangement to support the implementation of policy, structure adjustment and control measure

31. 31 How to co-control in iron and steel sector

32. 32 How to co-control in power sector

33. 33 How to co-control Supporting elements How to choose policy instrument to achieve the goal of co-control Taxation for carbon and sulphur and pricing How to make institutional arrangements to ensure the policy to be implemented NDRC or MEP? NDRC and MEP? State Council?

34. 34 Conclusion Introduction to China’s GHGs and air pollution strategies, laws and programs Draft of 12 th five year plan and implications for energy sector What, why and how to co-control of GHGs and air pollutants

35. 35 Thanks ！ hu.tao@prcee.org hu.tao@prcee.org