electricity demand growth, wind and solar curtailment in the first half of 2016 increased to 38.9%
and 19.7% respectively. Wind and solar curtailment
greatly reduces the economic benefits of renewable
energy investment and weakens the sustainable
development of renewable energy. Therefore,
addressing wind and solar curtailment has been a
top priority of renewable energy development in the
13th Five-Year Plan (2016–20) and will remain so
in the medium and long terms.
3.3.2 Carbon Pricing Policy
Due to the strong connection between energy
demand and greenhouse gas emissions, China’s
climate policy will have a profound impact on
the country’s energy demand. On December 12,
2015, 195 countries entered into an historic
agreement on global climate change at the United
Nations Framework Convention on Climate
Change (UNFCCC) in Paris. Signatories to the
Paris Agreement committed to strengthen the
global response to climate change by keeping the
increase in global average temperature to well
below 2°C above pre-industrial levels and by
striving to limit the increase to 1.5°C. On
November 4, 2016, the Paris Agreement came
into effect. It is the second legally binding climate agreement following the Kyoto Protocol of
1997, and provides an institutional basis for the
global response to climate change after 2020.
China is the world’s largest emitter of greenhouse gases and plays a key role in combating
climate change across the world. As a responsible developing country, China has made a positive contribution to the adoption and
implementation of the Paris Agreement. Within
the framework of the agreement, China submitted its ambitious intended nationally determined
contributions (INDC). By 2030, China will:
(i) reach peak CO 2 emissions and make its best
effort to achieve peak carbon earlier; (ii) lower
CO 2 emissions per unit of GDP by 60–65% from
the 2005 level; (iii) increase the share of
non-fossil fuels in primary energy demand to
around 20%; and (iv) increase its forest stock
volume by around 4.5 billion cubic metres from
the 2005 level. This is the first time the Chinese
government has set goals for its total carbon
emissions, which is of great significance to
advance the global response to climate change.
The carbon pricing mechanism is a
market-based policy tool for reducing greenhouse gas emissions. It is a major institutional
innovation in combating climate change that has
been used in recent years by more and more
countries and regions in their emission reduction
practices. It is cost-efficient, environmentally
effective and politically feasible to enact.
According to the World Bank, by 2015, some 40
countries and more than 20 regions had adopted
or planned to adopt carbon pricing instruments,
including carbon trading schemes, covering 12%
of global carbon emissions. Carbon pricing
instruments are valued at close to $50 billion,
and their scope and scale are expected to expand.
As a key measure to tackle climate change,
China started to roll out a national carbon trading
market in 2017 on the basis of seven pilot
regional carbon trading schemes. The carbon
market will be built in three phases. In phase 1,
the IT system for data reporting, registry and
trading will be built, which will take about a year.
In phase 2, which will take another year or so,
trial operation will start for the power generation
industry. In phase 3, power generators will be
able to transfer and trade carbon credits. The
scope of participation will gradually extend to
beyond the power generation sector, with more
trading products and transaction types introduced.
The carbon pricing mechanism will influence
future fossil energy demand—and thus the
energy mix—by affecting the relative price
competitiveness of fossil energy. For China,
where coal consumption plays a dominant role,
the implementation of carbon pricing is of great
significance for the country’s future energy
demand. Even if China’s adoption of clean coal
technologies leads to fewer constraints on haze
and other pollutants, in the present and in the
medium terms—due to the various obstacles
facing carbon capture and storage (CCS) technology—China is unlikely to have effective carbon solutions for coal at the end-use point.
Therefore, when established, China’s national
carbon market is likely to reduce the country’s
consumption of fossil fuels, especially coal. The
Special Report 2: Research on China’s Energy Demand Revolution
251
and 19.7% respectively. Wind and solar curtailment
greatly reduces the economic benefits of renewable
energy investment and weakens the sustainable
development of renewable energy. Therefore,
addressing wind and solar curtailment has been a
top priority of renewable energy development in the
13th Five-Year Plan (2016–20) and will remain so
in the medium and long terms.
3.3.2 Carbon Pricing Policy
Due to the strong connection between energy
demand and greenhouse gas emissions, China’s
climate policy will have a profound impact on
the country’s energy demand. On December 12,
2015, 195 countries entered into an historic
agreement on global climate change at the United
Nations Framework Convention on Climate
Change (UNFCCC) in Paris. Signatories to the
Paris Agreement committed to strengthen the
global response to climate change by keeping the
increase in global average temperature to well
below 2°C above pre-industrial levels and by
striving to limit the increase to 1.5°C. On
November 4, 2016, the Paris Agreement came
into effect. It is the second legally binding climate agreement following the Kyoto Protocol of
1997, and provides an institutional basis for the
global response to climate change after 2020.
China is the world’s largest emitter of greenhouse gases and plays a key role in combating
climate change across the world. As a responsible developing country, China has made a positive contribution to the adoption and
implementation of the Paris Agreement. Within
the framework of the agreement, China submitted its ambitious intended nationally determined
contributions (INDC). By 2030, China will:
(i) reach peak CO 2 emissions and make its best
effort to achieve peak carbon earlier; (ii) lower
CO 2 emissions per unit of GDP by 60–65% from
the 2005 level; (iii) increase the share of
non-fossil fuels in primary energy demand to
around 20%; and (iv) increase its forest stock
volume by around 4.5 billion cubic metres from
the 2005 level. This is the first time the Chinese
government has set goals for its total carbon
emissions, which is of great significance to
advance the global response to climate change.
The carbon pricing mechanism is a
market-based policy tool for reducing greenhouse gas emissions. It is a major institutional
innovation in combating climate change that has
been used in recent years by more and more
countries and regions in their emission reduction
practices. It is cost-efficient, environmentally
effective and politically feasible to enact.
According to the World Bank, by 2015, some 40
countries and more than 20 regions had adopted
or planned to adopt carbon pricing instruments,
including carbon trading schemes, covering 12%
of global carbon emissions. Carbon pricing
instruments are valued at close to $50 billion,
and their scope and scale are expected to expand.
As a key measure to tackle climate change,
China started to roll out a national carbon trading
market in 2017 on the basis of seven pilot
regional carbon trading schemes. The carbon
market will be built in three phases. In phase 1,
the IT system for data reporting, registry and
trading will be built, which will take about a year.
In phase 2, which will take another year or so,
trial operation will start for the power generation
industry. In phase 3, power generators will be
able to transfer and trade carbon credits. The
scope of participation will gradually extend to
beyond the power generation sector, with more
trading products and transaction types introduced.
The carbon pricing mechanism will influence
future fossil energy demand—and thus the
energy mix—by affecting the relative price
competitiveness of fossil energy. For China,
where coal consumption plays a dominant role,
the implementation of carbon pricing is of great
significance for the country’s future energy
demand. Even if China’s adoption of clean coal
technologies leads to fewer constraints on haze
and other pollutants, in the present and in the
medium terms—due to the various obstacles
facing carbon capture and storage (CCS) technology—China is unlikely to have effective carbon solutions for coal at the end-use point.
Therefore, when established, China’s national
carbon market is likely to reduce the country’s
consumption of fossil fuels, especially coal. The
Special Report 2: Research on China’s Energy Demand Revolution
251