China could start to cut its consumption of coal by 2020

China’s consumption of coal could reach a peak by 2020, or even earlier, as part of its plans to pursue more sustainable economic growth, according to a new report published today (12 May 2014) by the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at London School of Economics and Political Science.

The policy paper by Fergus Green and Nicholas Stern notes that discussions are already taking place in China about the possibility of setting a target for ending the rise in its annual consumption of coal before the end of its 13th Five-Year Plan, which will cover the period from 2016 to 2020.

The paper states: “China could intensify its efforts to reduce its reliance on coal, in the form of a plan to peak its coal consumption by 2020 (or earlier), as has been suggested as a possibility in some discussions occurring in China, and phase it out thereafter”.

The paper, which is based on a presentation by Lord Stern to the China Development Forum in March 2014, points out that limiting coal consumption could have substantial benefits for China’s economy, including a cut in the risk of shocks to the supply of energy, reduced pressure on its water supplies, an improvement in air quality, and the mitigation of climate change.

Phasing out the use of coal could be achieved through clear planning regulations and a coal tax, which could potentially raise revenue equivalent to between 7 and 9 per cent of China’s GDP to invest in low-carbon innovation and infrastructure, to protect poorer people from the impacts of the transition to low-carbon economic growth, and to reduce other taxes.

The paper also suggests that effective planning to promote the growth of compact and energy-efficient cities with good public transport “is likely to be essential to China’s future environmental and economic success”.

The paper states: “China’s ambitions for more sustainable growth, its urbanisation plans, and its strategic emerging industry policy suggest the potential for a powerful vision: over a billion people living and working in appealing cities, in which services, high-technology industries, and innovation are the engines of growth and prosperity”.

However, the paper also warns that “achieving these benefits will require major structural changes, with some inevitable dislocation, in the short term” in China’s economy.

It concludes: “At present there is ignorance in many places over China’s plans and achievements. China can develop its influence by informing the world of its plans as its 13th Five-Year Plan is developed. China’s contributions are credible given past performance and do not necessarily have to be expressed in formal treaty terms. They could be expressed in terms of a range of outcomes, the upper bound of which could reflect ambitious yet likely achievable goals on emissions, coal consumption and low-carbon technology, although it would be recognised that these could not be guaranteed.”

“Contributions of this nature by China could raise substantially the likelihood of more ambitious mitigation action by developed and other emerging economies. China would be well-positioned to both lead and share in much of the resulting global growth and would benefit immensely from the associated reduction in risks from climate damages.”

NOTES FOR EDITORS

1. The ESRC Centre for Climate Change Economics and Policy is hosted by the University of Leeds and the London School of Economics and Political Science. It is funded by the UK Economic and Social Research Council. The Centre’s mission is to advance public and private action on climate change through rigorous, innovative research.

2. The Grantham Research Institute on Climate Change and the Environment was launched at the London School of Economics and Political Science in October 2008. It is funded by The Grantham Foundation for the Protection of the Environment.