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UPDATED: November 28, 2011 NO. 48 DECEMBER 1, 2011
Framework for a Low-Carbon Future
China sets guidelines for its low-carbon economy while contributing to worldwide efforts to reduce emissions and develop new green tech

Future challenges

Qi Ye, Director of the Climate Policy Initiative at Tsinghua University, said local governments face a number of challenges in low-carbon development: To reach the goal of energy saving and emission reduction. The Central Government assigns binding targets to local governments, but many local governments have not done their best in implementing the policies and even approved projects of high energy consumption. Some local governments even had to fulfill their energy saving targets by switching off power supplies at the end of the 11th Five-Year Plan (2006-10).

All local governments have set GDP growth targets higher than the 7-percent target set by the Central Government during the 12th Five-Year Plan period, and accumulated energy consumption targets set by various localities were 500 million tons of coal equivalent higher than the national target, therefore the country's target of energy saving in the next five years is not easy to reach.

Zhang Guobao, Director of the Expert Consulting Committee of the National Energy Commission, said there are many uncertainties for China to realize the target of energy consumption in the next five years.

Qi thought the market-oriented approach to reducing carbon emissions needs to be improved. Research by Climate Policy Initiative found that diversified policies and massive government inputs are basic characteristics of China's low-carbon development, and administrative measures and incentives have played a leading role in saving energy and reducing carbon emissions.

In the past five years, China reduced 473 million tons of carbon emissions with administrative measures and another 777 million tons with incentive measures. However, only 15 million tons of carbon dioxide were eliminated with market-oriented measures. "Market and taxation measures have not played their due roles in resource allocation; a long-effective mechanism for energy saving and emission reduction has not been set up; and in the future the government should strengthen coordination of policies and make further use of market-oriented measures," Qi said.

According to Qi, with low-carbon development in the past five years, China is catching up with developed countries in the capability of technology innovation, and the proportion of domestically developed low-carbon technologies and equipment is remarkably increased. However, low-carbon technologies have not yet been widely used in the country and China still has not mastered some core technologies.

To solve problems that have existed for a long time, such as high energy consumption, low energy efficiency and serious environment pollution, China must thoroughly transform its economic growth pattern and stick to a low-carbon economy that saves energy and protects the environment.

On November 9, the executive meeting of the State Council discussed and passed the scheme of controlling greenhouse gas emissions during the 12th Five-Year Plan period. Four measures of developing a low-carbon economy are included: to develop low-carbon energy sources, increase forest carbon sink, improve public participation and widely expand international cooperation. The scheme also formulates specific targets for various local governments to reduce energy intensity.

Gao Guangsheng, inspector of the Department of Climate Change of the NDRC, said China will do its utmost to fulfill the commitment of reducing emissions, setting up a carbon emission trading market, formulating statistical and assessment indicators of the low-carbon economy to evaluate performances of local government officials.

"The Chinese Government highly stresses climate change and will fulfill its commitment of reducing emissions without any bargaining," Gao said.

More policies needed

According to Gao, China will try to establish and improve its assessment mechanism for greenhouse gas emissions as well as massive trials for low-carbon development. Besides the eight pilot cities selected by the NDRC—Tianjin, Chongqing, Shenzhen, Xiamen, Hangzhou, Nanchang, Guiyang and Baoding—the scale of low-carbon development experiment will be further expanded and various provincial-level governments can select their own pilot cities for low-carbon development. In the meantime, the country will also promote public participation so that governments at all levels, public institutions, enterprises and the public can join the campaign of low-carbon consumption.

He Jiankun, Director of the Institute of Low-Carbon Economy of Tsinghua University, said China should actively cope with the new round of technology innovation and competition featuring in low-carbon technologies, because it has more advantages now than in the past. In traditional technology fields, China falls behind developed countries and needs to introduce foreign technologies. In new energy technology fields, however, China and developed countries are synchronous in research and development. China has seen great progress in R&D investment, as well as improved level of research personnel and R&D conditions, and it even has gained advantages in many research areas.

"Since China has advanced manufacturing industries, once new technologies get mature, industrialization will develop in a high speed with low costs, bringing competitive advantages to China," He said.

Technology innovation and competition featuring low-carbon energy technologies impose the greatest influence to enterprises. When countries worldwide are strengthening the low-carbon technology, low-carbon economic transformation will change the comparative costs, comparative prices, demand structures and production structures of enterprises and then change their comparative competitiveness. The response speed and capability of an enterprise against low-carbon economic transformation will influence its survival and prosperity in some years.

"Fortunately Chinese enterprises have recognized the core role of advanced low-carbon technologies in improving corporate competitiveness, and a large number of enterprises have started to formulate and implement low-carbon strategies and action plans," He said. This is invigorating the development of China's low-carbon economy.

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