Climate change mitigation in China

Abstract: China has been experiencing great economic development and fast urbanisation since its reforms and opening-up policy in 1978. However, these changes are reliant on consumption of primary energy, especially coal, characterised by high pollution and low efficiency. China’s greenhouse gas (GHG) emissions, with carbon dioxide (CO2) being the most significant contributor, have also been increasing rapidly in the past three decades. Responding to both domestic challenges and international pressure regarding energy, climate change and environment, the Chinese government has made a point of addressing climate change since the early 2000s. This thesis provides a comprehensive analysis of China’s CO2 emissions and policy instruments for mitigating climate change.In the analysis, China’s CO2 emissions in recent decades were reviewed and the Environmental Kuznets Curve (EKC) hypothesis examined. Using the mostly frequently studied macroeconomic factors and time-series data for the period of 1980-2008, the existence of an EKC relationship between CO2 per capita and GDP per capita was verified. However, China’s CO2 emissions will continue to grow over coming decades and the turning point in overall CO2 emissions will appear in 2078 according to a crude projection. More importantly, CO2 emissions will not spontaneously decrease if China continues to develop its economy without mitigating climate change. On the other hand, CO2 emissions could start to decrease if substantial efforts are made.China’s present mitigation target, i.e. to reduce CO2 emissions per unit of GDP by 40-45% by 2020 compared with the 2005 level, was then evaluated. Three business-as-usual (BAU) scenarios were developed and compared with the level of emissions according to the mitigation target. The calculations indicated that decreasing the CO2 intensity of GDP by 40-45% by 2020 is a challenging but hopeful target.To study the policy instruments for climate change mitigation in China, domestic measures and parts of international cooperation adopted by the Chinese government were reviewed and analysed. Domestic measures consist of administration, regulatory and economic instruments, while China’s participation in international agreements on mitigating climate change is mainly by supplying certified emission reductions (CERs) to industrialised countries under the Clean Development Mechanism (CDM). The most well-known instruments, i.e. taxes and emissions trading, are both at a critical stage of discussion before final implementation. Given the necessity for hybrid policies, it is important to optimise the combination of different policy instruments used in a given situation.The Durban Climate Change Conference in 2011 made a breakthrough decision that the second commitment period under the Kyoto Protocol would begin on 1 January 2013 and emissions limitation or reduction objectives for industrialised countries in the second period were quantified. China was also required to make more substantial commitments on limiting its emissions. The Chinese government announced at the Durban Conference that China will focus on the current mitigation target regarding CO2 intensity of GDP by 2020 and will conditionally accept a world-wide legal agreement on climate change thereafter. However, there will be no easy way ahead for China.