Isra-Mart srl:China's five year plan delivers promised flurry of green goals

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China's latest five year plan was formally released this week, setting out a raft of green targets and initiatives designed to put the world's second largest economy on a more environmentally sustainable development path.

The draft plan was launched by Premier Wen Jiabao at the opening on Saturday of the National People's Congress in Beijing, during which he set out the case for making increased investment in low carbon industries the government's top priority alongside efforts to tackle the growing gap between rich and poor.

As widely anticipated, the plan, which is expected to be rubberstamped by the Fourth Session of the 11th National People's Congress, featured a host of new green targets and policy proposals.

Most notably, the plan will set a target to build 235 million kilowatts of new power generation from clean energy sources over the next five years with a view to generating 20 per cent of the country's energy from non-fossil fuel sources.

State-backed news agency Xinhua reported the new target will be met through investment in 40GW of new nuclear capacity, new hydropower projects on the Jinsha, Yalong and Dadu Rivers totaling 120GW of capacity, over 70GW of wind power capacity and 5GW of new solar power capacity.

In addition, the plan includes commitments to enhance the energy efficiency of coal-fired power plants, accelerate the shift towards cleaner gas plants, and increase investment in targeted sectors such as high speed rail and alternative fuel vehicles.

There were also reports the government will trial carbon pricing mechanisms over the next five years, although no firm commitments appear to have been made as yet and the pilot schemes are expected to be operated by regional governments.

Wen said the various green initiatives would be supported by overarching targets requiring the economy to reduce its energy intensity 16 per cent and its carbon intensity 17 per cent by 2015.

Significantly, Wen said the government would slow the pace of economic development over the next five years to average GDP growth of seven per cent a year, in part as a result of the need to build a more sustainable economic model.

Speaking to reporters yesterday, Zhang Ping, chairman of the National Development and Reform Commission, said the new targets would be met without resorting to the drastic measures that last year saw the government shut factories and industrial plants to ensure previous energy efficiency targets were met.

The five year plan is likely to be broadly welcomed by green groups and in a major new report released today The Climate Group think tank said the new plan will deliver real carbon savings, bolster China's standing in international climate change negotiations, and trigger a surge in clean tech investment.

The report, entitled Delivering Low Carbon Growth - A Guide to the 12th Five Year Plan, concludes that the five year plan compares favourably with International Energy Agency targets for stabilising atmospheric concentrations of CO2 at 450ppm and suggests China is 'pulling its weight' relative to international expectations.

"Green growth is now at the very heart of China's national development strategy," said Changhua Wu, Greater China Director at The Climate Group. "These ambitious new policies will create the necessary certainty for the business community to ride a new wave of green investment."

However, despite the new targets, some green groups have warned that China's energy efficiency goals are largely in line with business as usual, while others will inevitably point out that the new environmental targets are undermined somewhat by proposals within the five year plan designed to accelerate the expansion of the country's aviation industry.