14th Five-Year Plan outline sets framework for the next five years of China’s energy transition, detailed sectoral and provincial plans will follow

Mar 17, 2021

On March 5, 2021, China’s government published the main outlines of the 14th Five-Year Plan (FYP, 2021-2025). For the energy sector, it includes a target to improve energy intensity of GDP by 13.5% and carbon intensity by 18%. The plan also calls for non-fossil energy to provide 20% of primary energy consumption, compared to the 15% target for 2020. Moreover, the plan includes a target for nuclear power capacity of 70 GW in 2025, a 20 GW increase from the currently installed capacity. A “dual control target” of energy intensity and carbon intensity per unit of GDP, present in the 13th FYP, has not been included this time. Sectoral targets for wind, solar, and other clean energy sources will come out in separate sectoral plans and other policies later in 2021.

In the area of climate protection, additional measures are planned. Among them is an increase in forest coverage rate from 23.2% to 24.1%, as well as building major ecological shields and developing a national park-based protected area system. Additionally, 5 million hectare of erosion protection areas along the Yangtse River are planned and 300.000 hectare of grasslands are to be restored until 2025. Other areas of action include an increase in green urbanization, electrification of public transport, building of green corridors and the establishment of low-carbon cities. The new plan envisages a growing urbanization rate from 60,6% in 2020 to 65% in 2025. Important measures in the field of sustainable urban development will be, amongst others, the ecological restoration of urban areas and further development of adaptive and resilient cities. As such, 31 urban regions will be transformed into sponge cities in order to achieve increased climate resilience. China will continue to improve the quality of the environment, and generally eliminate heavy air pollution and black, malodorous water bodies in cities. For urban planning, an implementation of solutions from the area of circular economy will be in focus. Regarding older communities, retrofitting instead of demolition and rebuilding will be favored.

Important for climate protection is also the target of increased expenditures for research and development by 7% annually over the next five years.

The next step is a transformation of the national 14th FYP into provincial and sectoral action plans. Experts expect detailed plans for climate measures and carbon emission targets in sector-specific plans of the National Development and Reform Commission and the National Energy Agency. The Ministry of Ecology and Environment will develop an action plan for carbon peaking. Provincial governments will develop their own peaking roadmaps by April 2021. These are likely to contain additional information on energy mix, energy consumption, a carbon cap, and other relevant climate topics.

At the same time as the outline of the 14th FYP was published, the National Development and Reform Commission (NDRC), which is in charge of developing FYPs, also published its “2021 Draft Plan for National Economic and Social Development”, which supported the continuous development of renewables and storage, but also reiterated the unchanged fundamental role of coal for supply security.

Some observers expressed their disappointment over the proposed targets. Due to the announcement of the targets to peak emissions before 2030 and achieve carbon neutrality before 2060, there had been expectations that China would introduce more far-ranging measures such as absolute emission caps, or a faster transition to renewable energy. Thus, so the criticism goes, the targets were not ambitious enough and did not provide strong enough guidance to initiate the far-ranging transition that the 2030/2060 targets imply. Some analysts also pointed out that the new targets largely represent a linear continuation of the trajectories set by previous targets and do not represent a significant increase in ambition. However, several Chinese experts have emphasized that many of the targets that some pundits are missing, including a coal consumption cap and an emission cap in some form, are likely to be specified in the sectoral plans later in 2021 or early in 2022.

Dr YANG Fuqiang from the Institute of Clean Energy at Peking University underlines the “superior” political priority of achieving an emissions peak and carbon neutrality. Therefore, he believes that a “coal cap” for 2021-2025 will eventually be announced in the forthcoming FYP on energy development and coal development. Moreover, he believes that even without such a cap the outline’s targets would have a restricting effect on coal consumption and that the coal share in the energy mix is likely to decrease to below 50% by 2025, based on the expected development of other fuels.

Ms HU Min from the think tank innovative Green Development Programme (iGDP) pointed out that China previously overperformed on most targets of CO2 intensity and installed capacity of renewables. Therefore, China’s future climate and energy transition trajectory cannot simply be calculated from these targets, nor can its climate and energy efforts be dismissed as insufficient to achieve the 2060 targets merely based on them.

The outline currently does not set a carbon emission cap, but states that China will “implement a system based primarily on carbon-intensity controls, with the carbon cap as a supplement”. According to an analysis by LIU Hongqiao, LIU Jianqiang and YOU Xiaoying, that suggests that while a cap is not determined in the outline, it may be released later in the 14th FYP period. They give two reasons why the outline does not already include an emission cap. The first is that detailed research into how China can achieve carbon neutrality is still scarce and thus it is currently still difficult to acquire the necessary data to set a thoroughly informed cap. The second reason is that a top-down approach may lead to a cap that does not ideally reflect the circumstances in provinces and regions and thus can lead to implementation difficulties, a challenge that had previously been observed with some other targets. Hence, it is assumed that China might choose a bottom-up approach to determine a cap where the central government and provinces work together to approximate a realistic cap. Such an approach would require more time.

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