China trims Its energy efficiency goal

After claiming big gains in energy savings last year, China has sharply lowered its conservation target for 2015, signaling greater concern about economic growth.

As smog smothers its major cities, China has been struggling to control its “energy intensity,” the amount of energy consumed to produce each unit of gross domestic product (GDP).

Although the volume of China’s energy use keeps expanding along with the economy, the intensity index is a measure of efficiency and waste in creating economic growth.

And while China has regularly reported annual drops in its energy intensity, its largely coal-fired economy still lags behind the efficiency of other countries in both the industrialized and developing worlds.

The result is that China has recorded decreases in intensity year after year, but the volume of its consumption keeps increasing, giving citizens little relief from pollution and smog.

In 2011, for example, China used 3.3 times as much energy as the United States per unit of GDP, 5.4 times as much as Japan and 40 percent more than India, according to U.S. Department of Energy (DOE) data for the most recent year available

But in 2014, China cited major progress, cutting intensity by 4.8 percent, the most in at least a decade, at a time when its GDP growth of 7.4 percent slipped to its slowest rate in 24 years.

The efficiency gain exceeded the government’s revised annual target of 3.9 percent by a wide margin, putting China back on track to meet a five-year goal of a 16-percent reduction by the end of 2015 compared with 2010.

The improvement last year made up for less efficient energy performance in the early years of the current Five-Year Plan, offering hope for greater gains to come.

Energy savings target

But in delivering his government work report to China’s annual legislative session on March 5, Premier Li Keqiang set an energy savings target for this year of just 3.1 percent, the smallest of the past decade, over 20 percent below the goal for last year and 35 percent less than officially achieved.

The decision suggests that government leaders are more occupied with risks to the economy than the environment this year, as Premier Li lowered the government’s economic growth target from 7.5 to 7 percent.

“The government appears to be concerned that the slowdown is going beyond their expectations,” said David Fridley, staff scientist at the China Energy Group of the DOE’s Lawrence Berkeley National Laboratory, which has tracked the intensity data since the 1980s in support of China’s efficiency goals.

“Stimulus this year will support continued heavy industrial activity and thus the lower target, plus it simply gets harder and harder to reduce intensity as the low-hanging fruit are picked,” Fridley said.

The choice of the 2015 target appears to be the result of a precise calculation.

At 3.1 percent, it is just barely enough to meet China’s five-year goal of a 16-percent reduction, based on official estimates for the previous four years.

According to RFA’s calculation, the five-year figure would be 16.08 percent if the 2015 goal is achieved. Although it could be exceeded, the government seems to be easing pressure for conservation and encouraging the economy by setting a lower standard for the year.

The five-year target itself was lower than that for the previous five-year period, when the government set the bar at a 20-percent reduction in energy intensity and realized a savings of 19.1 percent.

The calculation over the 2015 target is a sign of the government’s delicate balancing act between environmental and economic concerns.

In his work report, Premier Li said the government would “fight to win the battle of conserving energy, reducing emissions and improving the environment,” without commenting on the reasons for the lower efficiency goal.

“Environmental pollution is a blight on people’s quality of life and a trouble that lays on their hearts. We must fight it with all our might,” Li said.

At a press conference on March 15 at the end of the legislative sessions, Li pledged to punish those who obstruct environmental policies, the official Xinhua news agency reported.

“We need to make the cost for doing so too high to bear,” Li said.

The reduced target also appears to be at odds with President Xi Jinping’s pledge of tougher measures in the “war against pollution” that the government declared last year.

“We are going to punish with an iron hand any violators who destroy ecology or (the) environment, with no exceptions,” Xi said at the legislative sessions, comparing environmental protection to “caring for one’s own eyes and life.”

Mixed reports on progress

Government reports on China’s progress in the war on pollution last year have been mixed.

The percentage of days with severe air pollution in 74 major cities fell to 5.6 percent last year from 8.6 percent in 2013, the official English-language China Daily reported, citing the Ministry of Environmental Protection (MEP).

But in February, the National Bureau of Statistics (NBS) reported that 90 percent of 161 monitored cities failed to meet air quality standards in 2014, according to Xinhua.

China’s campaign to cut carbon intensity seems to be following a similar pattern, although a report from the Paris-based International Energy Agency (IEA) on March 13 concluded that there was no global increase in carbon dioxide (CO2) emissions from energy last year, thanks in part to China’s efforts.

“In China, 2014 saw greater generation of electricity from renewable sources, such as hydropower, solar and wind, and less burning of coal,” the IEA said.

On March 6, Xu Shaoshi, minister of the National Development and Reform Commission (NDRC) planning agency, said China had lowered carbon intensity by a substantial 6.2 percent last year, in keeping with the improvement in energy efficiency.

But in his work report, Premier Li announced a 2015 target of just 3.1 percent for carbon intensity, without explaining the reason for the lower goal, which is only half the rate of last year’s reduction.

While official statements on carbon intensity have been infrequent, the lower target appears to be calculated to meet the government’s five-year goal of a 17-percent decrease compared with 2010, but not much more.

Ambivalence over the environment and economic development may also be the cause behind the government’s decision to ban “Under the Dome,” the popular documentary on air pollution, from video websites on March 6, shortly after the legislative sessions began.

David Fridley said there are major questions about the energy consumption and growth figures that seem to be the basis for calculating this year’s energy conservation goal.

Fridley noted that the recent NBS Statistical Communiqué for 2014 cites a 2.2-percent rise in total energy consumption from the prior year. But based on the consumption figures for 2013 from the previous communiqué and the recently-published China Statistical Yearbook, the increase would be 14 percent, he said.

“They can’t have it both ways,” Fridley said.

The inconsistency suggests that the NBS may be in the midst of revising the energy numbers. If that is the case, it may also have to change its claim to big gains in energy efficiency and carbon intensity last year.

That could affect the goals that the government has set for 2015, unless the NBS is also going to revise its GDP reports. In that case, all bets are off.