Strategy in China

Strategy targeted at the fight against climate change

The emergence of China, because of its size, population and economic growth, represents an important challenge on a global scale. Its impact has and will have increasing consequences on world trade, social practices, health risks, climate change… The main agenda of AFD group in China is to focus on the fight against climate change by financing projects promoting better energy management and a reduction in greenhouse gas emissions. This orientation is in keeping with the Chinese authorities priorities defined in the XI Five-Year plan, for which one the principal objectives is to achieve a 20% reduction in the economy’s energy intensity during that period. This objective is a global issue and lies at the heart of French and Chinese interests.
Aware of the country’s limitations in terms of natural resources and the constraints linked to SO2 and CO2 emissions, the Chinese government is now focusing on improving energy efficiency by accelerating the development of renewable energies, with a target of boosting production of energy from renewable sources to 18% by 2020. This demonstrates the country’s ambition to limit the release of greenhouse gas emissions. The Renewable Energies law, endorsed on February 28th 2005 and effective from January 1st 2006, sets out the government’s priorities in this area. However, it only gives a broad outline, without detailing how the objectives will be met (for example, on tax subsidies, production incentives or renewable energy consumption).
Overall, the government has shown its commitment to promote energy savings, renewable energies and nuclear power to meet growing domestic demand. It has set out a target of quadrupling its domestic energy production between 2000 and 2020, whilst projecting only a two fold rise in energy demands.
AFD’s areas of operation in China are set out in agreement with the Chinese Ministry of Finance (production of renewable or efficient electricity, sustainable urban development, low-carbon intensive rural development, energy management in the industrial and service sectors), but it was agreed with the Agency’s Chinese partners, during the first consultative mission, to target operations in such a way that they converge with energy efficiency and emissions reductions objectives as well as negative environmental impacts in the energy sector, particularly in terms of greenhouse gas emissions, giving the projects further added value.
Three main reasons lead to this approach targeting energy efficiency: 1) as a small sized donor AFD needs to concentrate its effort to achieve maximum efficiency; 2) AFD is working within the objectives set by the Chinese government to manage energy consumption, vital for the country’s long term development; 3) this approach is at the crossroads of French and Chinese interests for the conservation of the global environment (greenhouse gasses, particularly) and a reduction in world energy market tension.
It has been estimated that shortly China will be the number one producer of greenhouse gasses. In order to encourage the country to accept any constraints arising from future negotiations following on from the Kyoto protocol, it is pertinent to demonstrate that objectives targeted at reducing emissions do not necessarily have to hamper economic development. South Korea is a case in point, having considerably reduced emissions whilst experiencing comfortable economic growth. Furthermore, curbing greenhouse gas emissions implies a reduction in dependence on fossil fuels, another of the country’s objectives.
To this end, European strategy in China focuses mainly on the promotion of energy efficiency and an ambitious integration of renewable energies. Furthermore, several European countries are currently working on Clean Development Mechanism projects.