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China issues action plan to peak carbon emissions by 2030

Highlights

Covers next two 5-year economic plans

Hard to abate sectors like steel and industries included

Paves way for caps on coal-fired power, oil refining

China launched its action plan to peak carbon emissions before 2030 on Oct. 26, just a few days ahead of the COP 26 global climate change summit in Glasgow, outlining several measures that will be implemented across major sectors with the objective of chalking a path towards carbon neutrality.

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The action plan by the State Council, the country's top executive body, comprises several new initiatives, including formalization of curbs on coal consumption growth by 2030, capping oil refining capacity at around 20 million b/d by 2025, achieving peak oil consumption for land transportation by 2030 and including hard-to-abate industries like steel and metals for the first time.

The plan primarily covers actions to be taken over the 14th and 15th Five-Year Plan periods and will form the basis for more detailed steps to be taken on a sector-level and further planning by provincial government authorities.

Over the 14th Five-Year Plan period from 2021 to 2025, the focus will be on adjusting the industrial structure and the energy mix, wherein energy efficiency will be improved, strict controls will be placed on coal consumption growth, and construction of "new energy" power generation will speed up.

"By 2025, the share of non-fossil fuels in total energy consumption will reach around 20%, while energy consumption and carbon dioxide emissions per unit of GDP will drop by 13.5% and 18%, respectively, compared with 2020 levels, laying a solid foundation for carbon dioxide peaking," the plan stated.

After this, the 15th Five-Year Plan from 2026 to 2030 will see acceleration in the buildout of the low-carbon energy system as new technologies take root and industries reach international standards of energy efficiency.

"By 2030, the share of non-fossil energy consumption will reach around 25%, and carbon dioxide emissions per unit of GDP will have dropped by more than 65% compared with the 2005 level, successfully achieving carbon dioxide peaking before 2030," the plan stated.

New Milestones

The action plan contains several new initiatives that will force a reassessment of carbon-intensive energy use in major sectors from refining to steelmaking.

China will "strictly and rationally limit the increase in coal consumption over the 14th Five-Year Plan period and phase it down in the 15th Five-Year Plan period," along with severe restrictions on new coal-fired generation projects, orderly phase-out of outdated coal-fired capacity, and limiting coal's transition into a power source for basic needs and system regulation.

The plan reiterated an existing target of 1,200 GW of wind and solar power by 2030, but also said 40 GW of hydro power will be installed in the same period. It said structural reforms in the power sector and development of a unified national electricity market will be sped up.

Under energy savings, the plan proposes to put all data centers with annual energy consumption in excess of 10,000 tons of standard coal-equivalent under online monitoring and energy audits.

One of the biggest steps taken is peaking industrial emissions.

This includes hard-to-abate sectors like steelmaking, where supply-side structural reforms will be pushed and additional production capacity strictly prohibited, and non-ferrous industries like aluminum and building materials.

"By 2025, domestic capacity for primary refining of crude oil will be kept below 1 billion metric tons (20 million b/d), and the utilization rate of production capacity for main products will rise to 80% or more," the plan outlined for the petrochemical industry.

Another key focus area will be promoting green and low-carbon transportation, under which oil-fueled new car sales will be reduced, public transport will be replaced with electric vehicles and heavy trucks will shift towards electricity, hydrogen, and LNG.

By 2030, around 40% of incremental vehicles in China will be fueled by new energy sources and peak in petroleum consumption for land transportation will be reached.

Other measures include boosting the local ecosystem to act as carbon sinks and steps to "develop green, low-carbon and circular agriculture."

"We will expand forest coverage around 25% of China's total land area and increase forest stock volume to 19 billion cubic meters by 2030," the plan said.

The plan said China must play an active role in international dialogues related to global carbon pricing mechanism, green financing standards, and international maritime and aviation emissions.

TABLE: Key Targets in China's 2030 Carbon Peaking Action Plan

Key Performance Indicators

Targets

Target Year

Energy Intensity

(Energy consumed per Yuan of GDP)

Reduced by 13.5% from 2020 level

2025

Carbon Emission Intensity

(CO2 emitted per Yuan of GDP)

Reduced by 65% from 2005 level

2030

Renewables' share in energy mix

25%

2030

Total solar and wind capacity

1,200 GW

2030

New hydropower capacity

80 GW

2030

Total storage using new technologies

30 GW

2025

Total pumped hydropower

120 GW

2030

Primary oil refining capacity

Capped at 1 bil mt/year (20 mil b/d)

2025

Utilization rate of refining facilities

Above 80%

2025

Total oil consumption for land transport

Peaked

Before 2030

Aviation and shipping

40% of new vehicles by clean energy

2030

Source: State Council of China