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9 December 2021

China’s Ministry of Industry issues green industry plan

China’s Industrial Green Development Plan for the Fourteenth Five-Year period has been issued by the Ministry of Industry and Information Technology. The Fourteenth Five-Year period runs from 2021 to 2025, and this new Plan envisages a carbon intensity reduction of 18% per unit of industrial added value in that time.

More detailed targets include a 13.5% reduction in energy consumption for industrial units above a designated size threshold; a recycling rate of 57% for bulk solid waste, 480 million tons of recycling per year of steel, metals, papers, plastics, and so on; a 16% reduction in water consumption per unit of added value; and 10% reduction in certain pollutant emissions.

The value of the environmental protection industry in the country is planned to reach $1.7 trillion.

The Green Industry Plan has an overall structure of “focusing on one major action, building two significant systems, promoting six key transformations, and implementing eight large projects”. The “one major action” is China’s 2030 peak carbon emissions target, while the “two systems” are low-carbon technology and a support system for green manufacturing.

The vagueness and lack of many sector-specific targets has been criticized including certain Chinese institutions – so really this is more of a draft or proposed policy, which will have detail added in due course. The Ministry of Industry has promised to impose production capacity limits on steel, cement and aluminum for example.

The “six transformations” cover everything from a shift to higher-end manufacturing, low-carbon energy sources, recycling, clean processes, product supply, and digitalization, while the “eight projects” are similarly varied and general, but include water-saving as one of the more specific points.

That is all rather dry, but the country recently had a dramatic and explicit conflict between industrial demand and the green agenda with the power cuts of September and October. At first it appeared that the problem was just a coal shortage, rather like the gas troubles in the US and EU, but it soon became apparent that to a large extent the centrally ordered power cuts were not so much because coal had actually run out – though it was indeed running dangerously low – but rather because more generation meant bringing online older, dirtier coal plants, as well as resorting to using lower-quality coal – and this conflicted with emissions regulations.

The swift end to China’s power supply issues was certainly due to frenetic activity at the heights of its government, securing new supplies at home and abroad, but one also gets the impression that the emissions regulations were held in abeyance as far as practical enforcement goes, at least for a matter of months. Electricity-intensive industries in China could be affected by any future electricity price rises – a 20% rise was permitted – or “orderly use power control orders,” including the solar industry.

China accounted for 27% of global CO2 emissions in 2019, despite being “only” 26% of manufacturing globally, plus 16% of GDP and population. Its emissions and manufacturing shares have probably only risen since 2019, as one of the least affected economies by the pandemic lockdowns. The country’s oil imports have fallen 7.3% year-on-year in the first 11 months of the year, with prices up 39.5%; coal imports have risen 10.6% at a 39.7% cost increase; and natural gas imports are up 21.8%, at a 20.7% cost increase, according to the Customs Administration.