Target Allocation Methodology for China’s Provinces: Energy Intensity in the 12th Five-Year Plan

Experience with China's 20% energy intensity improvement target during the 11th Five-Year Plan (FYP) (2006-2010) has shown the challenges of rapidly setting targets and implementing measures to meet them. For the 12th FYP (2011 – 2015), there is an urgent need for a more scientific methodology to allocate targets among the provinces and to track physical and economic indicators of energy and carbon saving progress.

This report provides a sectoral methodology for allocating a national energy intensity target– expressed as percent change in energy per unit gross domestic product (GDP) — among China's provinces in the 12th FYP. Drawing on international experience—especially the European Union (EU) Triptych approach for allocating Kyoto carbon targets among EU member states—the methodology here makes important modifications to the EU approach to address an energy intensity rather than a CO₂ emissions target, and for the wider variation in provincial energy and economic structure in China. The methodology combines top-down national target projections and bottom-up provincial and sectoral projections of energy and GDP to determine target allocation of energy intensity targets. Total primary energy consumption is separated into three end-use sectors—industrial,residential, and other energy. Sectoral indicators are used to differentiate the potential for energy saving among the provinces.

This sectoral methodology is utilized to allocate provincial-level targets for a national target of 20% energy intensity improvement during the 12th FYP; the official target is determined by the National Development and Reform Commission. Energy and GDP projections used in the allocations were compared with other models, and several allocation scenarios were run to test sensitivity. The resulting allocations for the 12th FYP offer insight on past performance and offer somewhat different distributions of provincial targets compared to the 11th FYP. Recommendations for reporting and monitoring progress on the targets, and methodology improvements, are included.