China's Sustainable Energy Future--Scenarios of Energy and Carbon Emissions

China has ambitious goals for economic development, and must find ways to power the achievement of those goals that are both environmentally and socially sustainable. Integration into the global economy presents opportunities for technological improvement and access to energy resources. China also has options for innovative policies and measures that could significantly alter the way energy is acquired and used. These opportunities and options, along with long-term social, demographic, and economic trends, will shape China's future energy system, and consequently its contribution to emissions of greenhouse gases, particularly carbon dioxide (CO₂). In this study, entitled China's Sustainable Energy Future: Scenarios of Energy and Carbon Emissions, the Energy Research Institute (ERI), an independent analytic organization under China's National Development and Reform Commission (NDRC), sought to explore in detail how China could achieve the goals of the Tenth Five-Year Plan and its longerterm aims through a sustainable development strategy.

China's ability to forge a sustainable energy path has global consequences. China's annual emissions of greenhouse gases comprise nearly half of those from developing countries, and 12% of global emissions. Most of China's greenhouse gas emissions are in the form of CO₂, 87% of which came from energy use in 2000. In that year, China's carbon emissions from energy use and cement production were 760 million metric tons (Mt-C), second only to the 1,500 Mt-C emitted by the US (CDIAC, 2003).

As China's energy consumption continues to increase, greenhouse gas emissions are expected to inevitably increase into the future. However, the rate at which energy consumption and emissions will increase can vary significantly depending on whether sustainable development is recognized as an important policy goal. If the Chinese Government chooses to adopt measures to enhance energy efficiency and improve the overall structure of energy supply, it is possible that future economic growth may be supported by a relatively lower increase in energy consumption.

Over the past 20 years, energy intensity in China has been reduced partly through technological and structural changes; current annual emissions may be as much as 600 Mt-C lower than they would have been without intensity improvements. China must take into account its unique circumstances in considering how to achieve a sustainable development path. This study considers the feasibility of such an achievement, while remaining open to exploring avenues of sustainable development that may be very different from existing models.

Three scenarios were prepared to assist the Chinese Government to explore the issues, options and uncertainties that it confronts in shaping a sustainable development path compatible with China's unique circumstances. The Promoting Sustainability scenario offers a systematic and complete interpretation of the social and economic goals proposed in the Tenth Five-Year Plan. The possibility that environmental sustainability would receive low priority is covered in the Ordinary Effort scenario. Aggressive pursuit of sustainable development measures along with rapid economic expansion is featured in the Green Growth scenario. The scenarios differ in the degree to which a common set of energy supply and efficiency policies are implemented.

In consultation with technology and policy experts domestically and abroad, ERI developed strategic scenarios and quantified them using an energy accounting model. The scenarios consider, in unprecedented detail, changes in energy demand structure and technology, as well as energy supply, from 1998 to 2020.

The scenarios in this study are an important step in estimating realistic targets for energy efficiency and energy supply development that are in line with a sustainable development strategy. The scenarios also help analyze and explore ways in which China might slow growth in greenhouse gas emissions. The key results have important policy implications:

• Depending on how demand for energy services is met, China could quadruple its gross domestic product between 1998 and 2020 with energy use rising by 70% to 130% (Figure 1).
• Continual progress in improving the efficiency and structure of industry is crucial to maintaining economic growth with minimal growth in energy use. In some industries, output may grow with no rise in energy use at all.
• Swelling ranks of motor vehicles will deepen China's dependence on imported oil—up to 320 Mt per year by 2020—an amount that global markets can easily supply.
• To moderate growth in transportation energy use, the strong promotion of convenient public transport will be needed in addition to tighter fuel efficiency standards and advanced vehicles.
• Fuel switching, efficient appliances, better heating and cooling systems, and improved building envelope technologies will be needed in the fast-growing buildings sector.
• By 2020, China will still be dependent on coal for 54% to 65% of its primary energy, even with rapid growth of other fuels and substantial progress in raising the efficiency of coal use.
• Natural gas supplies, including imported pipeline gas and LNG, will have to expand tremendously to meet demand from households, commercial buildings, and electric utilities; obtaining sufficient supply is a crucial uncertainty.
• Sustainable growth in electricity generation will require strong policy support for a range of technologies, including advanced coal-fired generation, natural gas, hydropower, non-hydro renewables, and nuclear.
• If sustainable policies for energy development are not pursued, energy-related carbon emissions could more than double between 1998 and 2020, but if such policies are aggressively pursued carbon emissions could increase by only 50%.

Although China's energy sector faces many future challenges, it is technically feasible for China to progress towards meeting its development goals while limiting the growth of energy use. However, each of the three scenarios in this report will require significant, long-term policy efforts to achieve the energy and emission trajectories described in the following pages.