The Chinese model for developing a low-carbon industry

Aida Szilagyi, president of the National Center for Sustainable Production and Consumption
Alex Petrovici, Director of the Cities Association in Romania

Climate change is a major global challenge for mankind as it is closely linked to human survival and the development of national economies. Developing countries, but also some transition countries, face daunting and growing pressures in international climate negotiations.

To implement initiatives to increase international capacity to combat climate change, initiatives announced by President Xi Jinping at COP21 in the framework of the financial support of international cooperation funds, the National Commission for Development and Reform in cooperation with the Chinese Academy of Sciences Research Environment Program organized the South-South Cooperation for Addressing Climate Change: A Seminar on Energy Conservation and Developing a Low-Carbon Industry. The Seminar was organized to share China’s experience and successful practices on climate change, energy conservation and the development of low-carbon industries with developing and transition countries, and with the technical staff of these countries.

The major themes addressed in the seminar concerned the policies, measures, efforts and contributions of the Chinese government to combat climate change. The seminar included topics such as global climate management, China’s climate change strategy and policy, development of low-carbon industry and technologies, modalities for international transfer and cooperation in technology and knowledge, etc.

The seminar included presentations by leading Chinese personalities, experts and top officials from research institutes, exciting group discussions and visits to specialized companies such as United Power – China’s largest producer and developer of wind farms, Yngly – photovoltaic manufacturing company and multi-purpose PV application developer, environmental research centers and pilot projects in Baoding and Beijing.

80% of Chinese energy is based on coal

China, the country with the largest population and the most dynamic economy in the world, relies 80% on coal energy production and is therefore the largest greenhouse gas emitter on the planet. The fulminant economic development has led to an exponential increase in energy demand; for example, in 2014 there were 42 million companies, 70% of which were in the industrial production sector, 50% more than in 2006, reaching a record number of 70 million in 2017. These companies massively demand electricity, produced in overwhelming proportion by burning coal. Moreover, the increase in living conditions and the development of cities are key factors that contribute equally to increasing energy demand especially during the winter. All these are happening under the conditions that the efficiency of coal energy production remains low, as well as the efficiency of energy distribution systems. Industrial and urban development has been done at a cost, that of pollution which directly affects the health of the population, but also the quality of air, soil and water, a situation which is increasingly understood by the Chinese authorities.

Energy intensity decreased by 33.8% between 2005 and 2015

Industrial policies and economic measures taken over the last 10 years encourage the transition to a low-carbon economy, boosting energy efficiency and renewable energy production. Energy reform has made government agencies more efficient, reformed state-owned enterprises and valuing energy by cultivating a modern and competitive energy market structure. Energy Reform has integrated environmental considerations and promoted a package of policies focused on stimulating renewable energy production through pricing, taxes and incentives, as well as energy efficiency obligations. The actions have increased the production capacity of renewable energy by up to 6.28 times between 2004 and 2015, with an installed solar power of 43 GW and wind power of 130 GW in 2015 at a medium growth rate of 36%, while energy consumption relative to gross domestic product fell by around 33.8% between 2005 and 2015.

One of the promoted pricing policies refers to an additional charging of businesses using obsolete technologies and having low energy and environmental performance, which are required to pay a fee of 0.014 to 0.04 eurocents / kWh, or even to shut down their activity, while the injection of renewable energy into the grid is encouraged with incentives based on volumes introduced into the system. Since 2006, subsidies to fossil fuels have been dramatically reduced, and the liberalization of the price of liquid fuels has accelerated the transition to a market system. A stable capital base was established by setting up a special fund, also by putting additional taxes onto corporations, by cutting some export tax rebates, or by collecting taxes on the sale of liquid fuels or on the possession of motor vehicles.

The target for renewable energy is 13% of consumption

Moreover, energy conservation and renewable energy targets were allocated to large enterprises and to the governments of the Chinese provinces. The Enterprise Program is known as the “Top 1000 of Large Energy Intensive Companies 2006-2010 and respectively 2011-2015”. The obligations transferred to the provinces consist of assuming renewable energy consumption targets of up to 13% of the total energy consumption of the province, which can be achieved by adopting projects based on renewable energy, by refurbishing the thermal power plants or by adopting trading mechanisms of greenhouse emissions. At the same time, the installation of greenhouse gas emission monitoring systems and the assessment of the progress achieved is mandatory. These policies have also had a positive impact on green jobs, with around 600,000 people currently working in 5000 ESCOs with over 50 billion US dollars a year in turnover.

China aims to play a major role in the global climate and to take the lead in the fight to stop climate change. The main engine of China’s new approach is the shift to a new economic development model known as “New Normal”. Starting with the 12th Five Year Plan (2011-2015), China’s economic policy prioritizes the transition from the development of heavy industry, exports and energy-intensive investments to a much more balanced economy, characterized by moderate growth, with an increased role for services and household consumption, including an emphasis on innovation and low carbon technologies. This transition has allowed China to redefine its priorities in international negotiations and to prepare for enhanced cooperation on climate change mitigation with relevant states in this regard.

Romania-China Partnership on Energy-Climate Issues

China is actively contributing to the intensification of cooperation between states, including within international organizations, through South-South Cooperation or One Belt-One Road project. The priorities are to ensure the sustainability of investments in emerging and transition countries, as well as to educate and raise awareness of 10,000 specialists from these countries in programs like the one we had the honor to participate in.

Cooperation is a key word for the Chinese government and business. In this regard, we have been asked to propose models and ideas for cooperation within the Country Report that we have developed during the seminar. These ideas and proposals are presented here in the hope that the Romanian stakeholders will take over and develop them:

  • Implementing an eco-city pilot project with support from experienced Chinese institutions based on the cooperation of selected Chinese and Romanian local authorities
  • Cooperation in emissions trading mechanisms with effect through the establishment of trading schemes between Chinese and Romanian entities. The financial benefits obtained by the entities in Romania could be reinvested in the production of renewable energy, including city-based demonstration projects or other types of RES applications.
  • Transfer of knowledge and technology for the modernization of coal-fired power plants, a modernization which is essential for the significant reduction of greenhouse emissions, pollution and for achieving the targets assumed by the Romanian authorities.
  • New Chinese investments in Romania in the field of renewable energies, including the production of RES technology in Romania, waste recycle and recycling and other areas of interest, based on direct investment or public private partnerships.

Such programs will continue in the future. Experts and representatives of the energy decision makers in Romania are invited to follow this initiative and respond to the invitations that will be launched in the future. Personal and professional experience should be lived and used as sources of inspiration in national policy making, while the determination and professionalism of Chinese institutions should be an example of tackling climate change through energy conservation and use the largest possible scale of renewable energies.

The invitation from the organizers was answered by the National Commission for Development and Reform, the Chinese Environmental Research Academy and the China Clean Production Center, Ms. Aida Szilagyi, President of the National Center for Sustainable Production and Consumption, and Mr. Alex Petrovici, Director of the Cities Association in Romania.

For more information on this program, you can contact the participants, using the email addresses:

Aida Szilagyi, President of the National Center for Sustainable Production and Consumption
Alex Petrovici, Director of the Cities Association in Romania

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