China’s 13th Five-Year Plan – Planning for a Greener Economy

Last month China’s thirteenth “Five-Year Plan” (FYP13) was approved, setting out a social and economic development blueprint for the country for the next five years. The plan lays out specific economic targets such as GDP growth rates and social development goals in tackling environmental, healthcare and education issues. Notably, FYP13 has a strong focus on tackling environmental challenges, with targets and measures to address several sustainability issues including climate change, air pollution, urbanisation and transportation.

These targets will guide Chinese regulators throughout the five-year implementation period of the plan and point to how China will balance growth with its commitment to a transition to a low-carbon economy.

At the Conference of the Parties in Paris in December 2015, China pledged to reduce total carbon emissions for a long-stop peak in 2030 and to reduce its carbon emissions per unit of GDP by 60 percent from its 2015 levels within the same timeframe. Such commitments “underscore the fact that the country is no longer merely concerned with the pace of growth, but with the quality of growth” according to the World Resources Institute. FYP13 is the first plan to include specific guidance on energy consumption control. Under the plan, China will limit its overall energy use to the equivalent of 5 billion tons of standard coal by 2020 (with coal historically being the prevalent source of energy in China, FYP13 measures energy consumption by reference to a coal equivalent).

So how exactly does China plan to meet this commitment when it simultaneously aims to develop its economy, targeting growth of more than 6 percent per year from 2016 until 2020? FYP13 provides some detail on a number of the strategies in place to tackle this challenge:

  • Service industry focus: Increased growth will come from developing the service industry, a sector that typically has lower greenhouse gas emissions than more traditional growth sectors, like heavy industry and construction.
  • Global issues, global solution: FYP13 notes that China will further deepen bilateral dialogue on carbon issues and climate action with its international counterparts.
  • An emerging Green bond market: China will also develop its green finance market. Chinese banks and corporate institutions are reacting positively to China’s increasingly developed green bond market. China has recently issued green bond guidelines and created a pilot green bond exchange on the Shanghai Stock Exchange.
  • Carbon trading market: China will launch a unified, national carbon emissions trading market in 2017, which will be the largest in the world.
  • Increased reporting: Effective nationwide implementation of emissions reporting and third-party verification for key industry sectors, such as steel and coal. While information is limited at present, this proposal will determine the effectiveness of the new carbon emissions trading market.
  • Championing renewables: China is likely to continue to be the largest manufacturer of wind and solar energy, and its investment in clean energy outpaces the United States, France and the United Kingdom combined. FYP13 also outlines a strategy to liberalise the oil and gas and electricity markets by way of reductions in government subsidies.
  • Reenergising transportation networks: China will push for expansion of alternate energy vehicles and there will be a new focus placed on public transportation, in particular rail travel. In conclusion, at this stage, China has set itself a very targeted goal for the next five years in respect of its economy and has committed to making it greener and doing so quickly.

According to NRDC, FYP13 “targets make clear that [China] intends to ‘deepen’ the transition to clean energy and low carbon development in the next five years”. In comparison to the climate actions targeted in the last five year plan (FYP12), FYP13 provides an interesting contrast by setting quantified targets and detailing environmental actions. Although FYP12 was the first five year plan to consider the issue of climate change it did not provide a total energy consumption target nor provide as much granular detail on the mitigation techniques themselves. The increased detail in FYP13 is indicative of the increased focus and resources China is dedicating to climate action.

Read more on China’s plan for a greener economy:

China Revises Hazardous Substances Restriction Laws

China’s NDRC Issues New Carbon Trading Guidance

China Progresses with Increased Environmental Accountability for Industry and Government Authorities

China Gives Green Light for Green Bonds

What Multinationals Need to Know About China’s Amended Environmental Protection Law