Understanding China's Action Plan to Reach Peak Carbon Emissions (2023)

China recently released a long-awaited policy document detailing how the country intends to fulfill its target of reaching peak carbon emissions by 2030. The Action Plan for Reaching Carbon Dioxide Peak Before 2030, takes aim at vast areas of the economy, including polluting commodity industries, transport, and domestic waste, and outlines measures for gradually slowing the emission of carbon, transitioning to renewable energy, and reducing waste.

In the lead-up to the COP26 summit that is taking place over two weeks in early November 2021, China released two of the most significant policy documents on its climate response plan.

The documents titled theWorking Guidance for Carbon Dioxide Peaking and Carbon Neutrality in Full and Faithful Implementation of the New Development Philosophy (“Working Guidance”) and the Action Plan for Reaching Carbon Dioxide Peak Before 2030 (“Action Plan”), form the basis of China’s policy framework for reaching its two key carbon reduction targets, reaching peak carbon emissions by 2030 and carbon neutrality by 2060.

The Working Guidance offers an overview of China’s overall plan for reaching both the 2030 and the 2060 goals. The full document is available in Englishhere.

Meanwhile, theAction Plan(Chinese only) provides an extensive overview of the areas of China’s economy that will gradually be reduced or shifted to sustainable energy and methods, in order to slow the growth of high-carbon industries and areas of the economy.

In this article, we take a close look at the 10 key tasks for reaching peak carbon emissions by 2030. Below we provide an overview of the 10 key tasks and take a closer look at five of the most significant areas that will change over the coming decade.

Background: China’s climate policy framework

The two documents mark the official launch of the government’s “1+N” policy framework for tackling the climate crisis. First proposed by the National Development and Reform Commission (NDRC) in March of 2021, the policy framework provides a foundation for China’s long-term carbon emissions strategy by outlining key targets and measures in a wide range of industries and sectors of society.

The framework consists of one main policy document acting the country’s overarching guiding principles, representing the “1”, and a series of auxiliary policy documents targeting specific industries, fields, and goals, representing the “N”.

The Working Guidance, released on October 23, represents the “1” part of the policy framework. The extensive, 37-article long policy document outlines specific areas of the economy and society that need to change or develop in order to meet China’s carbon targets. The Action Plan, released on October 24, is the first of the “N” documents and will be followed by several more in the months and years to come.

Overview of the Working Plan goals

The most significant commitments made in theWorking Guidanceare three major carbon milestones, set for 2025, 2030, and 2060.

By 2025, marking the end of China’s 14th Five-Year Plan (FYP) period, reach:

• 13.5 percent reduction in energy consumption per unit of GDP from 2020 levels
• 18 percent reduction in CO2 emissions per unit of GDP from 2020 levels
• 20 percent share of non-fossil fuel energy consumption
• 24.1 percent forest coverage rate and 18 billion cubic meters in forest stock volume

By 2030, the end of China’s 15th FYP period:

• Significantly reduce energy consumption per unit of GDP
• Decrease CO2 emissions by over 65 percent drop in CO2 emissions per unit of GDP from 2005 levels
• 25 percent share of non-fossil fuel energy consumption
• Over 1200 gigawatts total installed capacity for wind and solar power
• 25 percent forest coverage rate and 19 billion cubic meters in forest stock volume
• Peak and stabilize CO2 emissions

By 2060:

• Over 80 percent share of non-fossil fuel energy consumption
• Reach carbon neutrality

The Action Plan tackles the first part of the above goals, providing the initial framework for measures to implement to achieve them.

Overview of the 10 tasks for reaching peak carbon emissions

To reach peak carbon emissions by 2030, the Action Plan largely focuses on controlling the growth of fossil fuel consumption and controlling the growth of energy-intensive industries. At the same time, the plan proposes measures to gradually transition to renewable energy and increase the energy efficiency of new and existing infrastructure, while promoting the ‘circular economy’ to improve resource use and recycling.

The measures cover a wide range of industries focusing, in particular, on the carbon-heavy industries of steel manufacturing, non-ferrous metals, building materials, petrochemicals, and construction. It also provides more concrete measures for reducing coal consumption and switching to renewables.

Below is a brief summary of the 10 tasks for reaching peak carbon emissions by 2030.

In-depth: How will China reach peak carbon emissions by 2030?

Reducing coal consumption

One of the most critical changes China will need to make is to reduce its consumption of coal. Coal is one of the most polluting forms of energy and is still China’s biggest source of power. The country has cut its overall share of energy derived from coal to 56.8 percent in 2020 from 72.4 percent in 2005, according to statistics from the Ministry of Ecology and Environment (MEE). However, areportby climate and energy think tank Ember shows that the total consumption of coal rose by 19 percent during the 14th FYP period, resulting in China now accounting for 53 percent of the world’s total consumption of coal.

As such, the Action Plan places reducing coal consumption and transitioning to cleaner forms of energy at the top of the agenda.

Among other proposals, the Action Plan calls for:

• Strictly controlling the growth of coal consumption during the 14th FYP and gradual reduction of coal consumption during the 15th FYP
• Strict control over new coal-fired projects, ensuring that new projects adhere to international standards while phasing out the use of outdated coal production
• Ensuring that the proportion of newly built renewable energy capacity does not fall below 50 percent
• Demarcating areas where the ‘scattered’ burning of coal is prohibited, actively introduce measures to replace coal as an energy source in an orderly manner, and gradually reduce and eventually ban the ‘scattered’ burning of coal

Note that the ‘scattered’ burning of coal mentioned in the Action Plan refers to the burning of coal for small-scale use, typically by rural households or for smaller-scale businesses and sectors such as farming and restaurants.

One of the biggest obstacles to reducing coal consumption is balancing the reduction of coal with ensuring energy security for China’s population and large, economically significant industries. Recent attempts to curb the use of coal have led to an energy shortage that left some parts of China without power and caused some factories to have to temporarily shut down. In previous years, China has also made attempts tocurb the ‘scattered’ burning of coal, particularly by rural households who still rely on this form of energy for heating and cooking in some areas, but had to roll back bans due to a lack of alternative energy supplies.

The use of phrases such as reducing the use of coal “in an orderly manner” is likely a means of addressing what has been seen as the overzealous actions of some jurisdictions to cut coal production and consumption, which has led to past and present power shortages and inflated coal prices.

It is therefore clear that, regardless of how ambitious China’s carbon emissions plans or how urgent the international cries for action are, China’s authorities will not allow people to go without power or heating, which will necessarily require the continued burning of coal until all demand can be met by alternative sources.

Replacing coal with alternative power sources

The main alternatives to fossil fuels mentioned in the Action Plan are solar, wind, hydroelectric, and nuclear power, as well as other forms of renewable energy sources.

China has already made significant headway in transitioning to renewable energy. According to the China energy report from Ember, China’s relative share of renewable energy resources has grown significantly in the past five years, with the share of solar and wind energy growing to 10 percent in 2020 from just 4 percent in 2015, which is an annual growth rate of 45 percent.

To wean itself further off fossil fuels, China is planning on adopting and expanding the use of a wide range of power sources. Wind and solar will make up the lion’s share, and the Action Plan has set a target of reaching 1.2 billion kilowatts of installed wind and solar power capacity by 2030.

In places where the environment permits, hydroelectric power will also be an important component. The Action Plan calls for the development of hydroelectric power projects in Western China in particular, in regions including Qinghai, Tibet, Sichuan, and Yunnan. The Action Plan also set a target to add 40 million kilowatts of hydroelectric power capacity.

Nuclear power, meanwhile, must be developed in an “orderly and reasonable” way to ensure its safety. Among other proposals, the Action Plan calls for “promoting advanced reactor-type demonstration projects, such as high-temperature gas-cooled reactors, fast reactors, modular small-scale reactors, and offshore floating reactors.”

The Action Plan also calls for the development of other renewable forms of energy in areas of the country where local conditions allow for their implementation. These include biomass power generation, biomass heating, biogas, geothermal energy, wave energy, tidal energy, and thermoelectric power.

Reaching peak carbon in industry and construction

To curb carbon emissions, Chinamusttackle its most polluting industries.

Steel production is a notoriously polluting industry and China is the world’s biggest producer of the commodity. Making the steel completely carbon-free is not possible with the current technology available, and China, therefore, plans to slow emissions from the industry by cutting capacity and eliminating outdated production capacity.

The government has been promoting this through acapacity swap schemefor a number of years, under which companies who wish to open steel projects in new areas can do so only if they agree to eliminate capacity elsewhere, usually capacity that is created through outdated and more heavily polluting forms of production.

The current capacity swap ratio is 1.5:1, which means companies need to eliminate 1.5 million tons of steel capacity in order to build 1 million tons of capacity elsewhere. The Action Plan does not set a new capacity swap ratio but reiterates the need to strictly implement the current requirements. In addition, it explicitly bans “added capacity” and urges for the reduction of outdated capacity, which means companies will not be able to open new steel production projects outside of the capacity swap scheme.

The other industries that have made it into the spotlight are non-ferrous metals, building materials, and petrochemicals. The Action Plan also mentions implementing capacity swap schemes for these industries, while calling for the replacement of fossil fuels with renewable energy, such as wind, solar, and hydroelectric power, as well as increasing the reuse of waste resources.

Turning to green transport

Transportation contributes a significant portion of China’s overall carbon emissions, and as China continues to expand its transport infrastructure, emissions will continue to rise without intervention. The Action Plan takes aim at multiple areas of the transport industry, from private vehicles to freight transport.

One obvious strategy to reduce future carbon emissions is to increase the adoption of electric vehicles. China is already the largest auto market – and largest electric vehiclemarket – in the world, and the government has already set targets for electric vehicle penetration, requiring that 20 percent of all new car sales be electric by 2025.

The Action Plan expands on this target, requiring 40 percent of new vehicles sold in the year 2030 to be electric, and for a 9.5 percent reduction in carbon emission intensity of operating vehicles from 2020 levels by 2030. Of course, as electric vehicles get their power from the grid, this part of the infrastructure will also have to be decarbonized in order for them to have an impact on carbon emissions.

The Action Plan’s measures for curbing carbon emissions from the logistics and public transport industries revolve largely around increasing efficiency and conserving energy. For freight, this will involve creating more energy-efficient transport routes, such as railway and waterway transport, as well as building more urban and rural distribution centers and “innovating green, low-carbon, intensive, and efficient distribution models”.

Finally, the Action Plan calls for building green and low-carbon public transit systems as well as upgrading existing architecture to be greener, requiring that at least 70 percent of transport infrastructure in cities with over 1 million people be green by 2030.

Developing the circular economy

Another aspect of China’s carbon peak plan is further developing the circular economy. The circular economy refers to China’s plan to increase resource efficiency and the lifecycle of products and commodities. The Action Plan takes aim at a wide section of the economy, from industrial to domestic waste, and sets specific targets for the reuse and recycling of various resources.

For industry, the Action Plan calls for increased recycling capacity in industrial parks. This primarily involves increasing the reuse of waste products created in the industrial process, such as residual energy, water, and gas.

For industrial production in core industries, the Action Plan offers a two-pronged approach: the use of bulk solid waste produced as a byproduct of industrial production processes and the recycling of industrial products and resources.

The bulk solid waste mentioned in the Action Plan includes the coal production byproducts of coal gangue and fly ash, which can be used in building materials, tailings, or the waste remaining from mineral extraction, slag, a byproduct from smelting metal, andstraw, an agricultural byproduct. The Action Plans targets for the volume of bulk solid waste used to reach 4 billion tons per year in the years leading up to 2025, and for the annual volume to reach 4.5 billion tons in the years leading up to 2030.

The plan also mentions nine key resources that should be recycled, including scrap iron, steel, copper, and aluminum, mandating that 450 million tons be recycled by 2025 and 510 million tons be recycled by 2030.

Finally, the Action Plan tackles the issue of domestic waste, calling for both the reduction of domestic waste and the implementation of waste sorting systems. Larger Chinese citieshave already begun implementing waste sorting systems, withwaste sorting plans going back to 2017. The plan aims to extend this to cover all urban areas and increase the use of domestic waste to 65 percent by 2030.

The start of China’s long road to net-zero

In anofficial interviewpublished on the State Council website shortly after the release of the two documents, the authorities stated that future “N” policies will include a number of supporting measures to help reach these targets.

They include scientific and technological support, carbon sink capacity, statistical accounting, and inspection and assessment, as well as fiscal, financial, and price guarantee policies. The aim of the “N” documents is to develop a complete policy framework that outlines clear goals, a reasonable division of tasks, and effective measures for achieving peak carbon emissions and carbon neutrality.

The Action Plan itself also stresses the need to establish new standards for carbon accounting and energy conservation, revising energy consumption quotas, setting mandatory national standards for product and equipment efficiency, and raising energy-saving and carbon-reduction requirements. It also states the need to formulate new laws and amend existing laws, such as theEnergy Conservation Law, theElectricity Law, theCoal Law, and the Renewable Energy Law, among others, presumably to make them more oriented towards carbon-cutting goals.

We therefore expect many more policy documents, environmental regulations, and pieces of legislation to appear in the coming months and years, as more and more government bodies step in to guide and regulate polluting industries and incentivize the transition to clean energy and sustainability.

In the coming weeks, China Briefing will be releasing articles on China’s green industry to explore the opportunities for foreign investors to participate in China’s plans for tackling climate change and environmental degradation.