Following joint climate statements by the EU-China as well as the BASIC countries, China has submitted its climate pledge to the UN, the first from Asia. Now that pledges cover three-fifths of the world's emissions, we think nations (such as India) will feel even more pressure to be part of the climate majority in the run up to COP 21 in Paris.
Relative target: China has formally submitted its Intended Nationally Determined Contribution (INDC) climate change pledge and has set a new target to reduce its carbon intensity of GDP by 60-65% by 2030, from 2005 levels. This extends the previous 40-45% cut by 2020 and represents around a 2% annual decline from now to 2030 (Chart 1). It also reiterated its intention to peak emissions around 2030 or earlier, and to increase the share of non-fossil fuel in the primary energy mix to 20% by 2030 (see China-US agree emissions deal, 13 November 2014). We consider these targets as fairly ambitious and expect the pressure to build as other countries such as Korea and Japan announce their INDCs very soon. The deadline for aggregation of pledges for Paris is 1 October 2015.
National strategy: The submission contains 15 broader policies ranging from national and regional strategies, low-carbon energy and efficiency, and increasing financial and policy support. Most of these were previously announced but key measures include: the formulation of a long-term strategy for low carbon development, controlling total coal consumption, build out of nuclear and renewables capacity, for the strategic emerging industries to be 15% of GDP by 2020, and the roll-out of a national trading scheme.
Industry heavy: The emissions from key industries such as power, iron and steel and non-ferrous metals will be controlled through specific emissions standards. This is in line with the 'Made in China 2025' plan from May, which aims to cut the carbon intensity of industry specifically by 40% by 2025 from 2015 (or 4% annually). In our view, as the major energy source and the main cause of carbon and air pollution, coal will continue to be targeted as China sets out further policies in the 13th Five-Year Plan (2016-20).
