Beveridge & Diamond
 

China’s International and Domestic Climate Change Policies: An Overview Leading up to Paris

Authors: Karl Bourdeau and Kristin Gladd
Beveridge & Diamond, P.C., August 21, 2015

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In June, China submitted its climate policy pledges to the United Nations Framework Convention on Climate Change (“UNFCCC” or “Convention”) for the December 2015 Paris Climate Conference (“COP 21” or the “2015 Paris Conference”).  These pledges, known as Intended Nationally Determined Contributions (“INDCs”), are the vehicle through which the Parties submit their intended commitments for the post-2020 period.  Significantly, the 2015 Paris Conference may well generate the first binding international climate commitments for China.  This article provides an overview of China’s stance coming into the Paris talks as well as its domestic climate change policies, which together represent China’s efforts to enact a comprehensive national climate change policy.

A.  The 2015 Paris Conference: China’s First Binding International Climate Commitments?

As discussed below, China has participated in a variety of international negotiations and partnerships addressing climate change.  However, none of these has created binding commitments for China.  The 2015 Paris Conference—and China’s INDC pledge—represent the first time China may agree to binding international obligations for reducing its greenhouse gas (“GHG”) emissions.

1.  China’s Historical Position in International Climate Agreements

China is a party to both the UNFCCC[i] and the Kyoto Protocol to the UNFCCC (“Kyoto Protocol” or “Protocol”), which established mandatory emission reduction targets for industrialized countries (Annex I parties to the UNFCCC or Annex B parties to the Kyoto Protocol).[ii]  Because China was not, however, an Annex I party, it had no mandatory emission reduction commitments under the Kyoto Protocol.  And while China signed the 2012 Doha Amendment, which may extend the  Protocol commitment period to 2020, the Doha extension itself has not been accepted by enough countries to become effective.[iii]

Separately, China has formed several bilateral and multilateral climate change relationships outside of the United Nations framework.  The most institutionalized partnership is between China and the European Union, which started with a Joint Declaration in 2005[iv] and continues with annual summits and ministry-level cooperation on issues including domestic mitigation policies, carbon markets, low-carbon cities, greenhouse gas emissions from the aviation and maritime industries, and hydrofluorocarbons.[v]  China was also a party to the regional Asia-Pacific Partnership on Clean Development and Climate, which promoted clean energy technologies until the partnership’s conclusion in 2011.[vi]  More recently, China entered into Joint Statements with the United States and India announcing its political commitment to address climate challenges with these two countries.[vii]  Notably, all of these initiatives stemmed from the participants’ political willingness to work together and did not create any mandatory commitments for China.

2.  Commitments Coming Into the Paris Talks

The primary goal for COP 21, which will take place from November 30 to December 11, 2015 is a new, post-Kyoto binding legal framework beginning in 2020.  The 2015 Paris Conference reflects a new international approach, in which countries announce their intended policy commitments prior to the meeting.  The UNFCCC will then synthesize these submissions, forming the negotiating platform.

Since Kyoto, China’s increasing greenhouse gas emissions have made it a critical player with respect to climate change.  In 2007, China became the largest carbon dioxide emitter globally[viii] and currently accounts for a quarter of the world’s GHG emissions.[ix]  China’s role in the Paris talks is therefore critical to the effectiveness of any new framework.  According to its INDC submission, by 2030 China will peak its carbon emissions, lower per unit gross domestic product (“GDP”) carbon intensity by 60% to 65% from the 2005 level, elevate its non-fossil fuel consumption to 20% of the nation’s primary energy portfolio, and increase by 4.5 billion cubic meters its forest stock volume (which functions as a carbon sink) from the 2005 level.[x]

B.  China’s Domestic Climate Policies

While China’s national climate change law, the Law on Addressing Climate Change, is still in the drafting process, [xi] China has a variety of existing climate policies that are discussed below.

1.  Climate Change Policies in China’s Five-Year Plans

China’s current Five-year Plan (“FYP”), the Twelfth Five-year Plan Outline (2011-2015), states that the Chinese government should “insist on both climate change mitigation and adaptation, adequately utilize technological progress, perfect infrastructure and policy framework, and increase the capability of addressing climate change.”[xii]  In light of these goals, China’s central government, especially the State Council and its National Development and Reform Commission (“NDRC”), drafted several documents to design specific climate policy initiatives.

Concerning mitigation of harms from climate change, in 2011 the State Council promulgated the Working Plan for Greenhouse Gases Emission Control in the Twelfth Five-year Plan Period (“Working Plan”), which sought to achieve a 17% decrease in carbon intensity from the 2010 level by 2015.[xiii]  The Working Plan instructed the government to adopt industrial and environmental policy tools to control and offset GHG emissions, localize policymaking in low-carbon development, establish a GHG emissions measurement and auditing system, create a carbon emission trading regime, promote low-carbon actions, continue international cooperation, strengthen technology and talent supports, and incorporate climate policy into the administrative framework.  By 2013, China had reportedly already achieved a 28.5% decrease in carbon intensity from the 2005 level.[xiv]

Regarding adaptation, in 2013 the NDRC and several other departments published a National Strategy for Climate Change Adaptation (“Strategy”).[xv]  The Strategy formulates key tasks in seven topical areas: infrastructure, agriculture, water resources, coastal areas and waters, forestry and ecological systems, human health, and tourism and other industries.  The Strategy also divides China into three zones and adopts different climate policy strategies for these zones.  For example, for urban zones, the focus is on constructing and maintaining physical and informational infrastructure.  For the eight agricultural zones, the focus is on safeguarding a sufficient supply of agricultural products.  And for “ecological security” (i.e., ecologically sensitive) zones, the primary policy priorities are to restore vegetation and monitor and reduce risks from natural disasters. 

The Working Plan and the Strategy constitute China’s climate policy in the current Five-year Plan, which runs through the end of 2015.  For 2016 and beyond, China will follow the Thirteenth Five-year Plan.  Policy targets for the coming five years may echo the National Plan to Address Climate Change (“2014-2020 Plan”) that the NDRC issued in late 2014.[xvi]  The primary goal of the 2014-2020 Plan is to decrease carbon intensity by 40%-45% from the 2005 level by 2020.[xvii]  More specifically, that Plan instructs the government to draft a national climate change law and revise other relevant statutes, as discussed in more detail below.  The 2014-2020 Plan also prescribes low-carbon standards for industries, a carbon emission trading scheme (also discussed below), and a low-carbon product certification system.[xviii]

2.  Other Domestic Climate Policies

i.  Carbon Emissions Trading Program

In addition to the Working Plan and National Strategy, China also has a limited carbon emission trading program. In 2011, the NDRC issued a notice to start localized carbon emission trading in seven provinces and municipalities, and required the local authorities in these regions to design implementation plans and administrative methods for this purpose.[xix]  The seven exchanges promulgated rules and have begun trading in the past two years.  Although the regimes generally look similar, several exchanges have carbon finance rules that distinguish them from one another.[xx]

In response to these exchanges, in 2014 the NDRC promulgated a rule, the Interim Administrative Methods for Carbon Emission Rights, as the first step in establishing a national carbon emission trading market.[xxi]  The rule covers seven GHGs and will apply to the mandatory emission allowances that will be allocated to trading parties after the government establishes a carbon emissions cap to meet the national emissions reduction target.  The voluntary Chinese Certified Emission Reduction (“CCER”) credits, which are generated by private parties and existed prior to the seven exchanges, will also be accounted for in the trading system.[xxii]

NDRC has announced that the seven exchanges will end in 2016, and from 2016-2019 China will establish a national market.  The ultimate goal is to have a national carbon emissions trading program in place after 2019 as the primary market-based tool to reduce China’s GHG emissions.[xxiii]

ii.  Climate Policies in Other Existing Laws

In addition to its climate-specific initiatives, some of China’s existing energy and environmental statutes contain provisions that address climate change.  For example, the following laws contain provisions that promote measures such as energy conservation and efficient use, development of non-fossil fuel alternatives, and emission controls and offsets:

  • The Energy Conservation Law has several liability provisions addressing the violation of energy-intensive product bans, mandatory energy efficiency or conservation standards, and disclosure requirements on information related to energy use.[xxiv]
  • The Circular Economy Promotion Law imposes liability on power grid enterprises if they refuse to procure electricity generated via certain reusable byproducts from power generation and mining activities.[xxv]
  • The Renewable Energy Law requires the government to periodically set targets for the minimum share of renewable energy in the national power generation portfolio. Power grids must purchase renewable energy that satisfies certain technical standards, and, along with petroleum enterprises, must incorporate renewable energy into their energy transmission and marketing distribution systems.[xxvi]
  • The Clean Production Promotion Law requires local government authorities to give the public notice when a facility violates the energy consumption control standards and authorizes the governmental authorities to impose fines.[xxvii]
  • The Water and Soil Conservation Law includes penalties for farming, mining, logging, disposal, and development activities that cause soil erosion and vegetation destruction or that do not incorporate conservation or restoration measures.[xxviii]   

Conclusion

Given that it is now the world’s largest GHG emitter, China’s participation in the Paris talks will be critical to the outcome.  China’s INDC pledge reflects a serious commitment and indicates that, for the first time, China may be willing to enter into a binding obligation to reduce its GHG emissions under an international framework.  Domestically, China has made meaningful progress in addressing climate change through a number of initiatives and polices, as discussed above.  These domestic efforts, when combined with its participation in the Paris talks, indicate that China has some measure of political will to address climate change using a variety of mechanisms.

Beveridge & Diamond advises Chinese companies on the environmental considerations of doing business in the U.S. and, with a network of qualified Chinese law firms, provides assistance to multi-national companies with environmental needs in China.  For more information on our China Practice, please contact Karl Bourdeau.

The authors graciously acknowledge the assistance of Shengzhi Wang, a summer associate with the Firm, in the preparation of this Alert.


[i] United Nations Framework Convention on Climate Change, art. 2, (last visited July 21, 2015).

[ii] See Kyoto Protocol, Article 3, Section 1 (Annex I commitment); Annex B, (last visited July 3, 2015).

[iii] The Doha Amendment requires the acceptance of three-quarters of the Parties to the Protocol (144 parties) to be effective.  By July 2015, only 35 countries had accepted the Amendment.  See Doha Amendment to the Kyoto Protocol, United Nations Treaty Collection (last visited July 3, 2015).

[iv] EU and China Partnership on Climate Change, Eur. Comm’n (Sept. 2, 2005) (last visited July 3, 2015) (Joint Declaration at pp. 3-4).

[v] See Eur. Comm’n, supra note 4.  The European Union and China have been using these tools for almost a decade.

[vi] Asia-Pac. P’ship on Clean Dev. & Climate (last visited July 3, 2015).

[vii] China and the United States signed a Joint Announcement in November 2014 to strive for “a protocol, another legal instrument or an agreed outcome with legal force [for Paris].”  U.S.-China Joint Announcement on Climate Change, White House (Nov. 11, 2014), (last visited July 3, 2015).  China and India signed a Joint Statement in May 2015.  See Joint Statement on Climate Change between India and China during Prime Minister's Visit to China, Press Info. Bureau, Gov’t. of India (May 15, 2015) (last visited July 3, 2015).

[viii] John Vidal & David Adam, China overtakes US as world's biggest CO2 emitter, Guardian (June 19, 2007) (last visited July 3, 2015).

[ix] Julien Ponthus, China to cap rising emissions by 2030 in boostto Paris U.N. deal, Reuters (June 30, 2015) (last visited July 3, 2015).

[x] China Nat’l Dev. & Reform Comm’n, Enhanced Actions on Climate Change: China’s Intended Nationally Determined Contributions (强化应对气候变化行动——中国国家自主贡献) (last visited July 3, 2015).

[xi] Dept. of Climate Change (应对气候变化司), Communication Seminar regarding the First Draft of the Law on Addressing Climate Change was Convened in Chengdu (《应对气候变化法(初稿)》交流研讨会在成都召开), Nat’l Dev. & Reform Comm’n (May 25, 2015) (last visited July 4, 2015).

[xii] Zhonghua Renmin Gongheguo Guomin Jingji he Shehui Fazhan Di Shier Ge Wunian Guihua Gangyao (中华人民共和国国民经济和社会发展第十二个五年规划纲要) [The Outline of the 12th Five-Year Plan for National Economic and Social Development of the People's Republic of China] (promulgated by Standing Comm. Nat’l People’s Cong., Mar. 16, 2011) pt. 6, ch. 21 (last visited July 4, 2015).

[xiii] Shierwu Kongzhi Wenshi Qiti Paifang Gongzuo Fang’an (“十二五”控制温室气体排放工作方案) [Working Plan for Greenhouse Gases Emission Control in the Twelfth Five-year Plan Period] (promulgated by St. Council, Dec. 1, 2011) sec. I.2. (last visited July 4, 2015).

[xiv] Guojia Yingdui Qihou Bianhua Guihua (2014-2020 Nian) (国家应对气候变化规划 (2014-2020年)) [National Plan to Address Climate Change for 2014-2020] (promulgated by Nat’l Development & Reform Comm’n, Sept. 19, 2014) sec. I.2 (last visited July 4, 2015) [hereinafter “2014-2020 Climate Change Plan”].

[xv] Guojia Shiying Qihou Bianhua Zhanlüe (国家适应气候变化战略) [National Strategy for Climate Change Adaptation] (promulgated by Nat’l Dev. & Reform Comm’n et al., Nov. 18, 2013),  (last visited July 4, 2015).

[xvi] 2014-2020 Climate Change Plan, supra note xiv.

[xvii] Id. sec. II.2.

[xviii] The certification will identify and promote products with low carbon footprints.  The priority will be on “widely used goods with high emissions,” such as automobiles, electronic appliances, household consumption goods, and important raw materials.  Id. sec. VII. 3.

[xix] Guojia Fazhan Gaigewei Bangongting Guanyu Kaizhan Tanpaifangquan Jiaoyi Shidian Gongzuo de Tongzhi (Fagaiban Qihou [2011] 2601Hao) (国家发展改革委办公厅关于开展碳排放权交易试点工作的通知 (发改办气候 [2011] 2601号)) [NDRC Administrative Office’s Notice on Launching Pivotal Projects of Trading Carbon Emission Rights (NDRC Climate [2011] No. 2601)] (promulgated by Nat’l Dev. & Reform Comm’n Admin. Office, Oct. 29, 2011), (last visited July 4, 2015).

[xx] For example, Shenzhen and Hubei permit trading activities by foreign investors; Beijing offers swap products in its exchange; and Guangdong holds periodic allowance auctions.  See Nat’l Bus. Daily (每日经济新闻), A national uniform carbon trading market maybe launched at the end of next year; the market valued hundreds of billions of CNY will shape the new trend (全国统一碳交易市场有望明年底启动 千亿市场将成新风口), Taipanfang.com (June 30, 2015) (last visited July 4, 2015).

[xxi] Tanpaifangquan Jiaoyi Guanli Zanxing Banfa (碳排放权交易管理暂行办法) [Interim Administrative Methods for the Trading of Carbon Emission Rights] (promulgated by Nat’l Development & Reform Comm’n, Dec. 10, 2014) (last visited July 4, 2015).

[xxii] Before the seven exchanges, there were voluntary emissions reduction efforts and demands for their certification, which gave rise to CCER credits.  In 2012, the NDRC promulgated rules governing CCER addressing issues such as auditing, project management, record-keeping, and so on. Wenshi Qiti Ziyuan Jianpai Jiaoyi Guanli Zanxing Banfa (温室气体自愿减排交易管理暂行办法) [Interim Administrative Methods for Greenhouse Gases Voluntary Emission Reduction] (promulgated by Nat’l Development & Reform Comm’n, June 13, 2012), (last visited July 4, 2015) (hereinafter CCER Rule).  The seven exchanges traded CCER credits, and the NDRC’s new national regulation institutionalized such practice by including mandatory and voluntary emission reductions in the same framework.

[xxiii] Lin Huocan (林火灿), NDRC: National Carbon Market to be Launched in 2016 (发改委:全国碳交易市场将在2016年启动), People’s Daily (人民日报) (Feb. 4, 2015) (last visited July 4, 2015).

[xxiv] Jieyue Nengyuan Fa (节约能源法) [Energy Conservation Law] (promulgated by Standing Comm. Nat’l People’s Cong., Nov. 1, 1997, amended by Standing Comm. Nat’l People’s Cong., Oct. 28, 2007, effective Apr. 1, 2008) art. 69-71 (violation of rules on phased out or non-compliant products, facilities or techniques), 68, 72, 77-79 (various types of inefficient uses or waste of energy), 73-76, 82 (violation of energy labeling, falsification in measurement and review process, failure to submit reports, etc.), (last visited July 4, 2015).

[xxv] Xunhuan Jingji Cujin Fa (循环经济促进法) [Circular Economy Promotion Law] (promulgated by Standing Comm. Nat’l People’s Cong., Nov. 1, 1997, amended by Standing Comm. Nat’l People’s Cong., Aug. 29, 2008, effective Jan. 1, 2009) art. 55, (last visited July 4, 2015).

[xxvi] Kezaisheng Nengyuan Fa(可再生能源法) [Renewable Energy Law] (promulgated by Standing Comm. Nat’l People’s Cong., Feb. 28, 2005, effective Jan. 1, 2006, revised by Standing Comm. Nat’l People’s Cong., Dec. 26, 2009) art. 14, 16, (last visited July 4, 2015).

[xxvii] Qingjie Shengchan Cujin Fa (清洁生产促进法) [Clean Production Promotion Law] (promulgated by Standing Comm. Nat’l People’s Cong., June 29, 2002, revised by Standing Comm. Nat’l People’s Cong., Feb. 29, 2012, effective July 1, 2012) art. 36, (last visited July 4, 2015).

[xxviii] Shuitu Baochi Fa (水土保持法) [Water and Soil Conservation Law] (promulgated by Standing Comm. Nat’l People’s Cong., June 29, 1991, revised by Standing Comm. Nat’l People’s Cong., Dec. 25, 2010, effective Mar. 1, 2011) art. 48, 49, 52, 55, 56, (last visited July 4, 2015).

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