Tuesday, February 2, 2010

China’s Emissions Intensity Target: BAU, Feasible, or Infeasible?

I've put up some slides that I'm planning on using at a forum with some people from the Chinese government here at ANU this week that are a preview of where I'm heading for my presentations at the Environmental Economics Research Hub Workshop and AARES Conference in Adelaide next week. There isn't much text on the slides. The basic story is that I use a model of energy intensity to extract the underlying energy efficiency in each economy controlling for the mix of fuels, the structure of the economy etc. These time paths are shown for China and India and a group of developed and developing economies. China has converged with the other countries over time, which is probably the main reason that its rate of improvement in energy intensity slowed down dramatically in the noughties. If we combine projections for energy efficiency under various scenarios and projections for fuel mix we can come up with projections for energy intensity. If we assume that the average rate of improvement in underlying energy efficiency for 1971-2007 continues in the future, China can just achieve its goal of a 40-45% reduction in emissions intensity between 2005 and 2020. But that is equivalent to all new investment in China being made with average German levels of energy efficiency. China's 15% non-fossil energy target can reduce emissions intensity by another 2%.

If the more recent rate of improvement in underlying energy efficiency prevails in the future then the emissions intensity reduction is only 23%. This could be a more realistic appraisal of business as usual. If the rate of improvement going forward is the same as in the US we reach 29%. As China has converged with other economies it is unlikely to able to progress faster than them in the future. At least, that is, without a concerted policy drive in that direction.

It's not feasible to bridge the gap between 23% and 40% by appealing to increased use of renewables unless the share of electricity in Chinese energy consumption is greater than that predicted by the IEA World Energy Outlook. Some combination of increased renewables and increased efficiency can do the job. Therefore, China's intensity target is feasible but definitely not BAU.

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