For 2010 EASS Meeting Co-control of GHGs and Air Pollutants Under China’s 12th Five-Year Plan

1. For 2010 EASS MeetingCo-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. 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. Introduction • National strategies • Laws • Programs

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

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

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 N2O 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 12th five year plan and implication for energy sector

12. National Pollution and GHGs Reduction Program under 12th five year plan and implication for energy sector • Draft of 12th 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. National Pollution and GHGs Reduction Program under 12th 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. National Pollution and GHGs Reduction Program under 12th five year plan and implication for energy sector • 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%

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

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

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

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

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

20. What is co-control ?

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

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

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 11th 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. 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. 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. 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. How to co-control in iron and steel sector

32. How to co-control in power sector

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

35. Thanks！hu.tao@prcee.org