By Scott Vaughan, International Chief Advisor, China Council for International Cooperation on Environment and Development (CCICED)

Last week, China released its 14th Five-Year Plan (FYP). Running some 300 pages, these plans set out the key strategic priorities, key targets, and broad policies for China from 2021 to 2025.

As the world’s most populous country, the world’s second-largest economy, the world’s largest greenhouse gas emitter, China’s 14th FYP is immensely important not only for domestic development but also for the direction of international progress on key issues like the Paris Climate Agreement.

This FYP identifies several important transitions; three are worth highlighting. First, China will continue and accelerate a structural economic shift away from an export-led growth model. Its move toward a domestic, consumption-based model is fuelled by a middle class that was estimated in 2018 at 400 million people—and is growing. A second big transition is a continued shift in China’s population from rural to urban areas, with some 65% of its population living in urban clusters by 2025. A third important feature is the elevation of science, research and development, and technological innovation, including digitization, to a matter of national strategic importance: annual research and development funding will increase by 7%, while basic science research will comprise 8% of total funding.

Mainstreaming Green Ambition: A fourth strategic priority in the 14th FYP is green development. A striking feature of the plan is the extent to which environmental priorities are integrated throughout.

In the case of the shift to a consumption-based economic model—called dual circulation—the FYP envisages green production and green lifestyles by 2035. To get there, the FYP identifies specific steps to advance green consumption—among the recommendations of CCICED’s ongoing work—including by establishing a “unified, green product standards, certification, logo system, improved energy efficiency for home appliances, efficient lighting, water savings appliances.” Throughout the FYP, different green products are identified for development, production, and distribution at scale—including electric automobiles, energy-saving buildings, green and organic foods—supported by indicators, tax policies, and green finance.

A similar mainstreaming shapes the FYP’s ambitious urbanization goals. China has been adroit in using large-scale spatial planning to identify and protect ecosystems, both in natural landscapes and in urban cluster planning, to identify a region’s carrying capacity or green attributes. The FYP identifies multiple actions to advance green urbanization, including the electrification of public transport, expanding urban green spaces, building green corridors, mandating green building materials, and other steps to “build low-carbon cities.” The FYP also calls for the “elimination” of major demolition and construction, which is a significant source in all countries of primary material extraction, energy consumption, and carbon pollution in the processing of steel, cement, and other building materials, landfill waste and other problems. Instead, it favours the renewal of older neighbourhoods. This is part of a broader focus throughout the FYP in advancing circular economy solutions.

The FYP also highlights the need to make cities more resilient to climate change, including by expanding nature-based solutions like restoring the natural flow of rivers to reduce urban flood risk. Some 31 urban areas will advance China’s sponge cities.

In its focus on technology innovation and productivity enhancements, the FYP calls for a market-oriented green technology innovation system that includes benchmarking energy and natural resource efficiency targets in key industrial sectors, such as the green transformation of iron and steel, petrochemicals, and building materials, steps towards green mining, and other actions.

Integrating green priorities goes beyond these three priorities. Agricultural reforms are prominent in the 14th FYP and include calls to promote the “green transformation” of agriculture. It also calls for the continued expansion of China’s ecosystem service payment system—called eco-compensation—to expand ecosystems and protected areas in two very large-scale water basins (the Yangtze and Yellow rivers), as well as an increase in green zones in China’s northern region.

Protecting Nature: The 14th FYP, China’s most ambitious and comprehensive strategy to protect nature, is anchored first around the expansion of a nature reserve system based on a system of national parks that prohibit non-ecological development.

The FYP calls for additional measures to protect and expand forests. The first goal is to get over 24% of China under forest cover, with several notable five-year targets that include 2 million hectares to counter soil erosion in the Yellow River region. A second goal is the completion of 1.1 million hectares of forests and 5 million hectares of soil erosion protection in the Yangtze River. The plan also calls for the addition of 700,000 hectares of forests in China’s northern region and 300,000 hectares of new grassland restoration, and the creation of a 90,000-hectare area of protected forests in China’s southern region. Finally, it includes the impressive goals of the creation of 110,000 hectares of forests, 20,000 hectares of wetlands, and the protection of 400 km along China’s coastline.

Marine and coastal protection is highlighted beyond coastal and wetland protection, including through introducing stricter controls on land-based pollution —including plastics pollution—and enhancing action to prevent and respond to oil spills and other emergencies.

Climate and Energy: The most scrutinized aspect of the FYP will be climate mitigation. China’s two big carbon mitigation targets—peaking greenhouse gas (GHG) emissions by 2030 and reaching carbon neutrality by 2060—were announced last September. The 14th FYP’s target of reducing the carbon intensity per unit of GDP by 18% repeats the same target of the 13th FYP. Early commentators have voiced disappointment at the lack of details or new announcements.

However, the FYP does set out several important commitments, such as mandating a national standard for energy efficiency that covers products and equipment, setting national renewable energy at 20% of total use, and clarifying that mitigation efforts prioritize non-C02 GHG emissions, notably methane and hydrofluorocarbons (HFCs). The former matters because energy efficiency is estimated to deliver up to 40% of energy-related GHG emission reductions over the next two decades; the latter matters because cutting methane and HFCs now has an enormous and immediate impact on slowing global warming trends.

The FYP also hints at pending ambition in two areas:

• China’s national emissions trading system, launched in February 2021 with initial coverage of the power generation sector, may align with the national pollution emission system, which will include all fixed sources of pollution emissions by 2025 and will be further developed with other market-based trading systems, such as pollution emission rights, energy use rights, and water use rights.
• The FYP recognizes those entities deemed leaders in peaking carbon emissions, which points to work on an accelerated peaking timetable before 2030.

These and other details are pending: the FYP anticipates the adoption of “stronger policies and measures” in the work ahead. To support implementation, there is a welcome emphasis on an effective, centralized ecological and environmental inspection system and regulatory enforcement. In this, China continues to support environmental public interest litigation.

The biggest question in the FYP is how China will reconcile this drive toward carbon neutrality with the expansion of coal, as well as oil and gas. The FYP contains numerous references to coal, most pointedly in its supply security section, which calls for strengthened coal reserve capacity building as well as the expansion of oil, gas, shale gas, and coal-bed methane in specific regions. Most of the recent growth in coal has taken place within China, and the FYP makes it clear that this expansion will continue, albeit with more ambitious measures to cut harmful air pollutants like PM_2.5, NO_x, and S0_x.

By embedding China’s commitment to carbon neutrality, the 14th FYP sets the pathway ahead. Decisions on when interim reductions will occur and how China will advance its de-carbonization roadmap in ways that ensure energy affordability and accessibility are likely to evolve in the months ahead.

By Scott Vaughan, International Chief Advisor, China Council for International Cooperation on Environment and Development (CCICED)