China to Limit Support for High-Carbon Projects, Begin Nationwide Carbon Cap-and-Trade by 2017
In its latest effort to ram down carbon emissions and address air pollution, China will strictly limit public financing to coal and other high-carbon projects and begin a national program in 2017 to cap and trade greenhouse gas emissions.
The country's emission trading system will cover power generation, steel, cement, and other key sectors. China will also implement a "green dispatch" system to prioritize power generation from renewables as well as establish guidelines to accept electricity first from the most efficient and lowest-polluting fossil fuel generators.
Significantly, China-one of the largest providers of public financing for infrastructure worldwide-agreed with the U.S. to work towards strictly controlling public investment flowing into high-carbon projects both domestically and internationally. The U.S. made a similar commitment in 2013, to end support for funding for new overseas coal projects without carbon capture and storage.
The measures were announced as China's President Xi Jinping concludes talks at the White House that have resulted in, among a number of initiatives, broad agreements on cybersecurity and climate change.
China this July submitted its Intended Nationally Determined Contribution (INDC) for reducing carbon emissions to the United Nations in preparation for the COP21 climate negotiations in Paris later this year. It pledged to cut its carbon emissions relative to its gross domestic product to 60% to 65% of 2005 levels by 2030. That compares to a 2009 pledge to cut emissions to 40% to 45% of 2005 levels by 2029, a level it is close to achieving. Current emissions are 33.8% below 2005 levels. To reach newly pledged goals, China wants to increase non-fossil generation to 20% of its generation mix, and make low-carbon development national policy.
Details about the cap-and-trade program weren't immediately available.
As the U.S. coal industry reels from new regulations-including the newly finalized Clean Power Plan-China's recent measures to swiftly tamp down rampant air pollution have arguably been stricter (for more, see POWER's in-depth feature, "China's War on Pollution").
While it depends on coal power for 66% [infographic] of its total energy consumption, China's newest key energy strategy caps coal consumption. China has also embarked on shuttering inefficient coal plants en masse: According to the National Bureau of Statistics, the country scrapped as much as 3.3 GW in 2014, and it plans to close a further 20 GW of capacity that doesn't meet new environmental standards by 2020. It is building many more advanced new plants however: In the first half of 2015, for example, 23.4 GW of 43.4 GW of new capacity added was thermal. More recently, China's National Energy Administration issued an action plan spanning 2015 to 2020 to increase clean coal technology use in its coal power fleet.
Meanwhile, the U.S. and China have embarked on partnerships to further climate and clean coal efforts. In August, the two countries finalized a memorandum of understanding that will allow them to jointly advance carbon capture, utilization, and storage for commercial use.
-Sonal Patel, associate editor(@POWERmagazine, @sonalcpatel)
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