The Third Annual General Meeting of the 4th Phase of the China Council for International Cooperation on Environment and Development (CCICED) took place on 1113 November 2009 in Beijing with the theme of "Energy, Environment and Development".
The CCICED members warmly recognize the 60th anniversary of the People's Republic of China. This 60year period represents a historical shift for new China, especially over the past 30 years of reform and opening—from poverty towards being welloff, from backwardness to prosperity, and from a closed society to integration into globalization. We note in particular and congratulate China on its major transformation towards humancentred and sustainable development strategies based on scientific development and harmonious approaches. We strongly encourage China to continue promoting its strategic transformation of environment and development, in order to achieve and sustain green prosperity as the basis of China's future development. While there still is a long way to go in exploring a new path for environmental protection with its own Chinesecharacteristics, the results will strengthen China's admirable progress towards elimination of poverty, its commitment to build an environmentfriendly society, and, indeed, towards defining in real terms the nature of ecological civilization. In the process China can contribute to solving global environmental concerns, including climate change.
CCICED appreciates the Chinese Government's efforts to address impacts arising from the global financial crisis. We applaud China for its continued progress in difficult times towards meeting 11th Five-Year Plan energy conservation and pollution reduction targets, and for highlighting green growth as a new approach. CCICED members recognize that now is the key time to design an environment and development strategy for the 12th Five-Year Plan. It is a critical testing period for China's sustained energysaving and emission reduction efforts, and an important time to incorporate green economy including low carbon economy into the national development plan. Otherwise, China will be at risk of losing achievements of the 11th Five-Year Plan and of losing new growth opportunities.
We see a future in which it is necessary to address multiple crises involving the economy, energy, environment and climate change, and possibly other matters. Historical and practical experience has shown that the impacts of global financial crisis may be temporary. But the climate, energy and environmental crisis will present a significant and growing threat to the sustainable development of humankind and the globe's biodiversity and ecosystems—requiring global cooperation and common effort. The Council appreciates the new measures and targets put forward by the Government of China to address climate change; recognizes the gradually enhanced leadership of China's government in global affairs; and will pay close attention to the outcome of climate change negotiations in Copenhagen.
During the 2009 AGM, CCICED examined the findings and recommendations of five Task Forces covering key energy and environment issues including: low carbon economy, sustainable use of coal, urban energy efficiency, rural energy and environment, and economic instruments for energy efficiency and the environment. Based on these studies and further inputs at the AGM, seven policy recommendations are presented to the State Council. More detailed information on many of the recommendations is available in the individual Task Force reports.
1. Develop a green economy and speed up green transformation of economic development.
The current times provide a historic transformative opportunity to build a more satisfactory economy and environment relationship. Green growth and green economy are new global initiatives in the process of responding to the financial crisis and important components of the G20 consensus for economic recovery. Within China green growth should lead to a prosperous future economy consistent with the needs of the resourcesaving and environmentfriendly society called for by the Government of China. This new pattern of growth has implications for China's new emphasis on stimulating domestic consumption and for China's emphasis on higher valueadded exports in future trade relationships. Furthermore, green growth is likely to be a more effective means to address multiple crises of the future including those involving energy, environment and climate change, and an important step towards the aspiration of an ecological civilization. Therefore, CCICED recommends:
From the perspectives of scientific development, ecological civilization and strategic consideration for longterm global competitiveness, China should consider green economy as an important approach to promote transformation of its economic development mode, and should develop a national strategy for green economic development as soon as possible. While striving for a Low Carbon Economy that will address many energy and environment concerns, China should also take actions in the following six areas to promote a green economy:
(1) Strengthen the promotion of Circular Economy to increase resource efficiency. Circular Economy practices support green economy development by creating new wealth and resources through improved recycling and efficiency improvement, via the "Reduce, Reuse and Recycle" principles. China has many successful pilot demonstrations and substantial commercial experiences. Yet most sectors and rural areas are far from being ecoefficient in either use of energy or environmental resources when judged by international benchmarks. China should fully implement its Circular Economy Promotion Law that became effective this year, establish and improve relevant policy and regulations, and promote circular economy in all sectors.
(2) Increase R&D investment for advanced green technology, develop green industries and foster new green growth opportunities. China should substantially increase its investment in R&D and industries for energysaving, renewable energy, clean energy, environmental industries, urban public transport, building energy, ecosystem protection and restoration, environmental infrastructure and waste recycling, and make green growth a key part of China's industrial and economic development strategies.
(3) Strengthen industrial restructuring to promote ecoreform of traditional industries. A key element of energysaving and emission reduction tasks of China's 11th FYP is to phase out backward production capacity with high resource and energy consumption and high pollution emissions. So far, some industries, e.g., iron and steel, have already achieved this objective ahead of time schedule. Investment from the national stimulus package for tertiary industry and infrastructure in central and western regions has been significantly increased. However, there is still a large proportion of backward production capacity and overcapacity in China's industrial base, hence substantial risk and pressure for rebound of overproduction that could result in greater environmental deterioration. China should seize this historic time of economic stimulus as an opportunity to incorporate environmental considerations into its transformation of traditional industries and industrial restructuring. This could be done through stringent environmental admission standards and permits to operate, pollution emission standards and management instruments, and by speeding up green transformation of all major industrial sectors. In particular, in its adjustment and revitalization plans for key industries China should further increase requirements for environmental protection, resource and energy efficiency; strengthen the phaseout of environmentinefficient production capacity; and strengthen the green transformation of industrial structure.
(4) Develop rural green economy through environmental improvement of mainstream farming methods; introducing ecological and organic farming, lowcarbon farming; and by improved management of ecosystem services. The unbalanced development between urban and rural areas includes not only income and development level disparity, but also differences in environmental quality, climate change adaptation capacity, as well as quality of life. In the development of green economy strategy and practice, China should pursue integrated rural and urban green development and avoid deepening rural and urban differences. Green economy development in rural areas should integrate low carbon pursuit into traditional ecological farming and organic farming, strengthen the management of land utilization, ecosystem services and biodiversity conservation, promote rural economic development and create jobs while reducing pollution discharge and greenhouse gas emissions.
(5) Advocate sustainable consumption and lowcarbon lifestyle, enhance the role of the public and NGOs in green economic development. Recognizing the significant role of citizens and their consumption patterns in promoting green economy, it is important to raise public awareness for individual consumers and households, commercial enterprises, and industries–through resourcesaving, low carbon, and environmental protection messages and action. Messages should emphasize modest levels of individual and household consumption that take into account embedded energy, high efficiency and low carbon; and certification regarding sustainability, low carbon criteria, and environmentallysound production for both goods and services. China should promote green procurement by government agencies at all levels, strengthen its legal basis, disclose relevant information, and encourage the role of NGOs in the communication and technical aspects of green consumption, and in green economy development. China should continue its 2008 "Green Olympics" experience. The 2010 Shanghai Expo, with its "Better City Better Life" theme and with more than 70 million visitors expected, offers an unprecedented opportunity to promote a low carbon lifestyle and build low carbon cities.
(6) Strengthen international cooperation and promote green economic development. Green development represents an emerging international consensus and followup sustainable development action concerning multiple crises including effects of this past year's financial tsunami and the challenges of climate change. It requires globallycoordinated efforts, with close cooperation between different countries and more joint efforts. The development of green economy needs to be built upon fair, equitable, orderly and free global trade practices, taking steps to avoid antitrade protectionism, and expanding the number and value of environment and climatefriendly technology transfer arrangements. With enhanced overall capacity and increased sustainable development practical experience, China should play an increasingly important role in promoting global green development and in dealing with environmental challenges.
2. Develop Low Carbon Economy with consideration of both international and national contexts.
Low Carbon Economy (LCE) is now seen by international society to be a fundamental approach and important trend for addressing climate change. LCE also can become an important driver for China to align its economic development mode with energy and environment considerations. The essence of low carbon economy is to adjust energy structure in production and consumption, decrease the use of fossil fuel, develop renewable energy, increase energy efficiency, lower carbon emissions, and decouple economic growth from emissions of greenhouse gases (GHG) and other pollutants. Ultimately LCE must be designed to secure the realization of various key development objectives such as longterm sustainable economic growth, new employment opportunities, technological innovation and many other objectives. LCE needs to take into account impacts on, and provide benefits to vulnerable groups within society. Advocating and developing a Low Carbon Economy will be useful for China's overall efforts to control and reduce GHG emissions, to foster industrial and energy structural adjustment, and to pursue a new path for industrialization with low energy consumption, low GHG emissions and low pollution. Therefore, CCICED recommends:
Based on both the international and national contexts, China should develop a national Low Carbon Economic Development Plan as soon as possible including strategic objectives, specific tasks and measures. Low carbon pilot demonstrations should be initiated within key industrial sectors and within selected urban and rural locations. Low Carbon Economy lifestyles and opportunities should be promoted widely to China's citizens.
(1) Identify the strategic objectives of Low Carbon Economy. LCE in China should start with promotion of energy saving and energy efficiency, optimization of energy structure, development of low carbon energy and increase of carbon productivity. According to the overall objective of significant reductions of carbon intensity by 2020 over the 2005 baseline, China should establish a clear quantified target for low carbon economic development and strive for at least an annual 4%5% reduction of carbon emission per GDP. The national target will need to be disaggregated on the basis of regional and sectoral characteristics.
(2) Develop and implement operational policy mechanisms. In order to achieve the objectives of low carbon economic development, China should focus on the reform and improvement of the following policies and approaches, based on market mechanisms, technical innovation, and institutionbuilding: 1) implement continued reform of energy pricing; 2) increase investment oriented towards a low carbon economy; 3) consider introduction of a carbon tax when the time is right; 4) study and establish a voluntary carbon emission trading system to promote low carbon finance, technology transfer, and low carbon economy development through market mechanisms; 5) promote low carbon technology innovation and application within China's industrial base and pay special attention to the training of professionals; 6) incorporate low carbon development into urban and rural planning, and into planning for all major transportation systems including road, rail, air and sea shipping; 7) initiate LCE pilot efforts; and 8) improve the energy statistical system by introducing carbon emission statistics.
(3) Optimize energy structure and develop low carbon energy sources. China should pay close attention to development of strategic objectives for intensive, clean and highefficient use of coal. Depending on costs of carbon capture and storage, as well as emission reduction, the proportion of coal in total energy consumption can be gradually lowered from the current 70% to 55%, 50% and less than 33% in 2020, 2030, and 2050 respectively. China also should vigorously develop low carbon energy sources, especially wind and nuclear power, and promote the commercialization of solar photovoltaic power generation, in order to achieve a fullscale, industrialized and commercialized low carbon energy mix by 2020. China should actively promote the building of nuclear power plants, which play an important role in controlling greenhouse gases emission and fighting global warming. Since safety is the ultimate condition of nuclear development, China should substantially enhance the capacity building of nuclear power plant safety supervision, thus ensuring safe, consistent, and healthy development of nuclear power plants.
(4) Establish an industrial system featuring low carbon emissions. In order to achieve this outcome, the following priorities should be considered: speed up industrial restructuring and upgrading; increase comprehensive utilization of resources and promote lower energy consumption and emissions; promote application of advanced mature technologies and develop advanced low carbon technology to increase energy efficiency; build up a support system for low carbon technology innovation, and improve the legal framework and other enabling mechanisms.
(5) Analyze the possible impacts on China's trade and economy of a climate change "border adjustment tax" and consider how implementation of low carbon economy initiatives might ease this threat.
3. Implement a national strategy for sustainable use of coal.
With an energy supply and consumption structure dominated by coal, plus rapid increase of energy demand, it is not surprising that China's environment has suffered severe air pollution and ecological damage, and presented great challenges to GHG emissions reduction. Currently, China has already promulgated national plans to speed up energy structural adjustment and to increase the proportion of renewable energy in total energy production and consumption. However, in the next 20 to 30 years, coal will still be a dominant energy source taking a leading role in the energy mix for China. The safety, efficiency and cleanness of coal exploitation and utilization are major issues for China to address in an urgent and comprehensive fashion. It is possible to speak of sustainable utilization of coal if these issues are solved satisfactorily. Therefore, CCICED recommends:
While ensuring national energy security and environmental protection, China should develop and implement a strategy for safe, highlyefficient and clean national coal exploitation and utilization in order to provide a longterm, stable energy foundation for green economic development.
(1) Further emphasize the strategic role of coal in the national mid to longterm energy strategy, and speed up the development of a new national coal strategy focused on sustainable use of coal. The development and revision of a new national coal strategy should plan for the safe, highlyefficient and clean utilization of coal based on the full life cycle of coal mining, transportation, final use, emissions and waste processing considerations; enhance the control and reduction of GHG emissions; control of the total coal consumption according to environmental and other criteria, and strengthen the supervision by central government.
(2) Improve governance of the Chinese coal value chain. The Chinese government should strengthen responsibilities and mandate of relevant agencies, improve coordination mechanisms to improve sustainability of the Chinese coal industry by: 1) coordinating the actions and policies of the various government agencies dealing with China's coal value chain; and 2) integrating the planning, investment and operation of the production, transportation and utilization phases of the coal industry within the overarching framework of a national energy policy that incorporates energy supply security, economic, environmental and social objectives. A critical aspect of this governance function is the emphasis on an integrated energy system policy that facilitates and provides incentives for the optimal development of mine sites, power plants, transmission lines and "smart" electrical grids and energy delivery systems, railways, coal ports, and facilities for CO2 capture and storage.
(3) Promote green mining. A combination of technical, legal and economic policy instruments should be used to promote green mining, to minimize ecological and biodiversity damage, and to restore affected environmental conditions. There are 6 main areas to be covered: 1) concurrent mining and reclamation, particularly in the areas rich in both coal resources and food production; 2) minimization of minedland subsidence and improvement of management; 3) water resource conservation and aquifer protection; 4) environmentally sound mining waste utilization and treatment; 5) improved risk management and ecosystem protection; and 6) safe mine closure and site restoration. China should broadly implement a payment system for coal mining rights, and fully collect the onetime charge for this right; speed up the reform of coal mine resource tax policy; changing from a specific tax to a compound tax, or move to a totally ad valorem tax levy, and increase the levy limit; establish an ecological compensation system for coal mining, and implement a damage restoration deposit system for environmental management.
The "one ballot veto" rule should be strictly applied in cases where proposed coal projects would not comply with environmental laws and regulations—meaning that projects are not able to circumvent the permitting process. The implementation of strategic environmental assessment needs to be strengthened in all coal mining areas but especially in ecologically vulnerable coal producing regions such as Shanxi, Shaanxi, Inner Mongolia and Ningxia.
(4) Develop a sound strategy for coalfired power generation, with intensive, highlyefficient and clean use of coal. China should control growth rates of coal use to stay within environmentally sound and safe limits, and gradually reduce the proportion of coal in total energy consumption. Efforts should be accelerated for the development and adoption of advanced coalfired power generation technology (e.g., ultrasupercritical and IGCC) to reduce coal consumption in power generation and to increase conversion efficiency to the highest international standards; promote technology and management for combined power, heat and cooling systems to increase the comprehensive utilization of coal resources in urban areas; optimize generator capacity structure to minimize efficiency loss during operation; promote price linkage of coal and electricity to regulate future power and coal supply/demand at the national level.
(5) Improve and enforce standards associated with processing and use of coal. Additional attention to environmental management is required along the entire coal value chain. Key areas for improvement of standards include: coal mine closure and landsubsidence management and land and water contamination, proper recovery and use of fly ash and gangue, and other valuable byproducts; coal washing in relation to thermal coal specifications; extension of existing emissions standards in power plants to include mercury, and volatile organic compounds (VOCs). As well there is a need to establish local carrying capacity assessments that may lead to restrictions on coal mining or use based on water conditions, and to set out regional caps on air pollutants.
(6) In heavily polluting situations, and based on the requirement of total emission control, establish pilot efforts for regional controls on total coal consumption, and strengthen pollution supervision for coalfired power plants. China should develop coal consumption assessment standards based on regional environmental capacity, and implement total allowable coal consumption adjustment based on the requirement of total emission control in areas with significant air pollution, such as the Yangtze River Delta, Pearl River Delta and BeijingTianjinHebei region; implement simultaneous control of multiple pollutants, based on establishing systematic and scientific air quality standards and emission standards; develop a national clean air action plan, focusing on main issues in the next 2030 years such as urban air quality, combined air pollution, regional air pollution and GHG emissions, etc.; strengthen enforcement of desulphurization in coalfired power plants, and promote application of denitrification technology and improve emission standards; further reform and improve the pollution fee system and environmental subsidies for the price of electrical power; implement a user pay system based on emission indicators, and initiate an emissions trading pilot scheme for the power sector.
(7) Encourage technical innovation and promote technologies related to the sustainable use of coal. Actively promote technologies related to green mining and clean coal technologies. Develop CO2 capture, utilization and storage (CCUS) technology suitable to China's situation and needs. Strengthen international cooperation for joint development of technologies and for transfer of technologies; and develop demonstration technology suitable to China's situation of widespread coal availability and use.
4. Take more innovative approaches to address the key energy and environment issues in urban development.
Urbanization in China is occurring at a far more rapid pace as well as in total numbers of people, by comparison to any other country in history. The rising total demand for energy use by urban dwellers will shift the balance, currently dominated by industrial use. From future sustainable development perspectives, it is impossible for China to follow the urbanization process of those developed countries which feature high energy consumption and high pollution. The huge population migration of people from rural to urban areas plus limited resources, energy and environmental capacity will become bottlenecks to future urban and rural development in China unless per capita demand is kept to relatively modest levels. Therefore, in the next 10 to 20 years, the energy, environmental and climate change challenges related to urbanization will be major concerns in China's social and economic development. The current urbanization process in China has demonstrated that very rapid energy consumption increase and consequent environmental quality damage can reduce the quality of urban life. New innovative ideas and policies are needed to convert the present energyintensive, pollutionintensive and carbonintensive development path to sustainable development. Thus, CCICED recommends:
China should thoroughly assess its urbanization policies of the past 30 years, and identify an overall strategy for a new road of urbanization based on lower energy growth and carbon emissions, and on overall higher environmental and social quality of life. The new urbanization road should focus on improvements to the key areas of rapid energy consumption increase such as urban buildings and construction, transport and livelihood energy demands, urban consumer behavior and lifestyle, urban climate change awareness, and strengthened policies to facilitate sustainable urban development throughout China.
(1) Revise the current urban energy statistics system and establish a dedicated urban energy consumption statistics system with emphasis on energy consumption, especially the potential of energy saving from daily life activities as the key focus of urban energy saving. Urban energy consumption should be evaluated mostly based on actual rather than theoretical building energy consumption and daily commuting energy consumption.
(2) Reduce the scale and rate of urban construction and improve building qualities. In the future, per capita floor space (home, public building and commercial building combined) should not exceed 40 m2. Given the current rate of development, this target will be met in about 510 years, instead of the original 2530 year plan. It is recommended that the governments at various levels should tighten up the approval of new projects and establish strict control of total allowable construction volumes. In addition, it is also recommended that a property tax system should be implemented soon to manage irrational demand within the housing market. It also is important to establish sound demolition and management decrees for existing buildings.
(3) Explore a new road for urbanization by designating low carbon cities. Cities need a more compact mode for urban development. This should be incorporated into urban planning throughout the country. China should properly increase density of population within its cities, develop city groups, city belt or city functional groups on the basis on megacities or central cities, and optimize distribution of specialized functions; identify urbanization strategy focusing on large cities; speed up development and implementation of national city/township system plans and land use plans; conduct pilot projects on low carbon and low pollution cities with lower energy consumption.
(4) Develop energy efficiency policy for urban construction, promote energysaving technology and standards, and construct "low energy and carbon buildings". China should gradually establish building energy efficiency standards for different regions and different types of buildings and, on this basis evaluate the energy consumption of buildings, decide on subsidies, support for individual technologies, and renovation for existing high energy consumption buildings; encourage developers and consumers to develop and purchase "low energy" and "low carbon buildings" through fiscal policy incentives; initiate low energy and carbon building pilot efforts; strengthen urban energy consumption supervision and audits; adopt certification for energysaving products; improve efficiency of urban heat supply; and encourage utilization of new energy sources.
(5) Deepen reform of district heating networks in northern China and significantly reduce heating energy consumption. Dispatch adjustment, increased insulation and combined heating and power (CHP) plants are some of the best solutions for efficient urban building heating in northern China. They offer the potential of 30 to 50 percent energy savings. To encourage CHP development, the current district heating system must be reformed and district heating companies should have management of the secondary network for delivery to consumers, while the primary network is under control of the CHP plant. Pricing would be established by elimination of the connection fees in favour of charges by the secondary network management, which would have to demonstrate good services.
(6) Make mass transportation and nonmotorized transportation (NMT) a national strategic priority. A number of steps are recommended: intensify development of urban public transport, and increase share of public transport and control of unlimited growth of private cars; speed up rail transport and intercity highspeed railway (cities with more than 2 million population should be encouraged to develop urban rail transport); promote vehicle fuel efficiency through mandatory fuel efficiency standards, and develop low carbon vehicles such as hybrid vehicle, electric vehicles; plan, construct and improve bicycle and walking pathways; develop enabling legislation and improve funding mechanisms, including a dedicated public transportation fund, to guarantee public transportation as a matter of the highest priority.
5. Strengthen policies for energy and environment in rural development including greater attention to climate change adaptation.
China's large, scattered rural population—and varying natural conditions and level of economic development—make energy issues even more complicated in the countryside than in urban areas. Since the reform and openingup, China's rural economy has been developing rapidly, and that development has brought significant challenges in energy use and climate change. First, total rural energy use has rapidly increased from 560 million tons of coal equivalent (MTCE) in 1995 to 730 MTCE in 2007 with an annual increase of 2.3%. In 2007, commercially produced energy only accounted for 23.2%; total rural household energy consumption was 350 MTCE. Straw and firewood accounted for the majority of noncommercially produced energy at 60% and 35%. In 2007, rural per capital energy consumption was 1.7 times that of urban levels but household energy consumption was only 40% of the urban levels. Second, environmental problems are getting more serious than before: from 1980 to 2004, total SO2 emissions and CO2 emissions from coal consumption increased about 4 times, and biomass and wood became a major source of indoor pollution. Finally, rural communities and resource users are very vulnerable to climate change impacts. In the meantime, from land use and forest perspectives, rural areas also hold the largest potential of carbon sequestration. Thus, CCICED recommends:
The Chinese Government should integrate rural energy and environmental issues into the strategic task of Building the New Countryside, strengthen management and adopt comprehensive strategies, develop clean and renewable energy sources in the rural areas and establish a comprehensive rural renewable energy service system and develop lowcarbon and highly efficient agriculture; and pay attention to the policy measures on climate change adaptation for rural areas.
(1) Increase the role of rural energy development in the national energy strategy and national climate strategy. China should speed up the upgrading of rural electrical grids and increase efficiency of rural energy use; strengthen the development of energysaving technology and new energy technology/products suitable for various rural regions; determine how to establish national rural energy financing mechanisms to promote sustainable energy construction in rural areas; improve rural renewable energy development plans and relevant regulations; develop rural biomass energy subject to local conditions; incorporate rural biomass facility, especially large or mediumscale methane facility, into national rural infrastructure plans; and meanwhile, strengthen rural environmental improvement to reduce health risks such as those associated with burning of coal for cooking and heating in homes.
(2) Adopt integrated measures to stimulate the development of clean and renewable energy sources. Growing rural use of commercial energy sources such as coal, petroleum products, and electricity results in significant pollution and GHG emissions. Developing clean and renewable energy sources such as biogas (marsh gas) and biomass for electricity generation could help relieve gaps between energy supply and demand, curb pollution, increase farmers' income, and control GHG emissions.
First, a rural renewable energy strategy and related laws and regulations are necessary both to improve the rural environment and to tackle climate change.
Second, the government should promote renewable energy technologies to bring them into widespread rural use. The government could do so by expanding its own investment in modern biomass facilities, and by providing subsidies and tax incentives to encourage private capital to invest in R&D for rural renewable energy technology. Only with government guidance can China fulfill the goal of fully commercializing its extensive renewable energy resources. A Rural Energy Construction Fund could promote sustainable energy development, while "transfer payments" could subsidize electricity use among farmers.
Third, China should spur the rural use of biogas by integrating the construction of biogas facilities into efforts to rebuild rural infrastructure, and to set up market mechanisms in support of biogas development.
Fourth, China should expand the use of renewable energy sources to provide heat and electricity for rural buildings. Rural buildings already account for a large proportion of energy use in China, and the amount of energy they consume is rising fast. Thus, it is important to strengthen the monitoring and evaluation of energy conservation technologies, subsidies, and the promotion of energy saving materials under the rural building energy saving policies. Greater reliance on renewable technologies to heat rural buildings can help to conserve energy. To promote that goal, it is now appropriate to scale up activities such as the use of solar and shallow geothermal technologies in rural buildings as part of the modernization of the Chinese countryside.
(3) Optimize land use to increase carbon sequestration potential and support the development of high quality low carbon, low pollution agriculture; introduce a new rural carbon sequestration compensation mechanism, with provision for fiscal transfers and possibly for international financial transfer mechanisms. China should maintain and increase forest, farmland and grassland carbon sequestration, and promote these GHGreducing practices to a wider audience. The practices include afforestation, improved protection of natural ecosystems, lowtill or notill farming, improved grassland management, alternative varieties of animals and fodder, and more efficient use of fertilizer. The government should establish consulting services at all levels to ensure that farmers have access to energysaving technologies and information on low carbon farming. The government should provide subsidies, insurance, and credits to advance these goals, especially in areas with fragile ecosystems and large numbers of farmers. A program that enables farmers to obtain credits for reducing GHG emissions through changes in production practices, and that markets and trades those credits, could achieve the dual goals of removing CO2 from the atmosphere and providing new income sources to farmers and land managers. A lowemission, highefficiency, recycling agricultural industry will help China reduce both pollutants and rural GHG emissions. Many good practices are available in China now. China should rely on a comprehensive, longterm strategy based on local circumstances to develop low pollution, low carbon high quality agriculture and to protect natural ecosystems, with subsidies to encourage investment in new technology and management approaches. National voluntary carbon trading mechanisms, and payments to impoverished farmers for reducing pollutants and GHG emissions are a costeffective way to promote low pollution and low carbon practices while also contributing to the goal of alleviating poverty.
(4) Improve the capacity of farmers and rural regions to adapt to climate change. Enhancing farmers' ability to adapt to climate change is essential in order to sustain the rural economy, improve rural living standards, protect ecological services and biodiversity, and ensure food security. Towards these ends: 1) China should evaluate the speed and scale of potential disasters, with systems for monitoring regional climate change, and early warning systems; 2) authorities at all levels need to consider adaptation to climate change when creating development strategies, and bolster communitybased disaster prevention and training; 3) China will need to adjust the structure of the nation's agricultural production and consumption; 4) China should import agricultural products with high resource input values in order to ensure selfsufficient supply of other foods and to relieve pressure on domestic resources and the environment; 5) as part of its climate change strategy, China should pay greater attention to the protection of biodiversity, including preservation of genetic material in national and international gene banks.
(5) Enhance the statistical analysis of rural energy use. To ensure that rural energy becomes an integral part of China's energy system, authorities need to strengthen their statistical analysis of rural energy enduse by both households and producers. First, authorities need to unify the definition of rural production, to ensure that statistics reflect actual energy use of township enterprises. Second, national officials need to bolster the ability of county governments to organize and manage energy statistics. Agricultural Bureaus, Forestry Bureaus, and other industry bureaus should then calculate and report statistics on local energy consumption under the guidance and organization of local statistics bureaus. The National Statistics Bureau can collect, check, and issue the overall results, to ensure the authority and authenticity of the nation's rural energy statistics.
6. Reform and improve economic instrument policies for increasing the capacity of energy efficiency and for environmental management.
For China, reducing the total amount of energy consumption and improving energy structure is a fundamental solution to balance energy and environment, but this will be a long and challenging process. Therefore, China should consider increasing energy efficiency as a priority task. International experience has shown that increasing the price of energy is a very important way to improve energy productivity, and that energy taxes are an effective way to increase energy prices. Pricing policy provides longterm incentives for limiting energy demand, promoting technical innovation and increasing energy efficiency. Environmental taxes are a significant economic tool and longterm incentive to protect the environment. Therefore, launching environmental tax reform will not only help to meet daunting environmental challenges but also help to better cope with climate change, develop a Low Carbon Economy, and improve the quality of China's economic growth. Also, the currently implemented Green Credit policy is a useful test for encouraging pollution control and energy efficiency through economic instruments. It reflects the concept of extending the economic incentives from endofpipe treatment to source prevention, and it already has achieved obvious progress. However, there are still many inadequacies in current Green Credit policies which affect the full effectiveness of policies and need further improvement. Furthermore, China is experiencing a period of frequent environmental pollution incidents. Yet there is a lack of policy concerning insurance for environmental remediation, responsibility and compensation. Therefore, CCICED recommends:
China should consider setting a substantial increase in energy productivity as a national target; reform and improve policies of pricing, energy and environmentrelated taxation and Green Credit; and establish an insurance system for environmental damage and pollution liability.
(1) Increase energy price as a longterm incentive to improve energy productivity. China should adopt a longterm, phased strategy to raise energy price continuously but in small steps, in line with the increase of the national energy productivity increase of the previous year, while disclosing relevant pricing information far enough ahead of time so that businesses and individuals can be properly prepared. The soft signaling effect of the announcement of these increases is crucial for triggering investments and changes of behavior, because this approach awards efficiency gains immediately. Energy pricing needs to be linked carefully with environmental tax reform in order to maximize its potential for energy and environment benefits, for example in the case of a carbon tax.
(2) Implement environmental tax system reform with a focus on improving existing environmental taxes and establishing new ones. China should speed up the implementation of environmental tax system reform in order to remedy the inadequacy of the present environmental tax and fee system and to create a smooth introduction of new environmental taxes, restructure existing tax categories and improve relevant policies involving economic instruments. Wastewater, air pollutants, solid waste and CO2 should be among the first items addressed by environmental taxes. The reform and development of an environmental tax system should follow a stepbystep approach, with immediate study on standalone new environment taxes, improvement of other environmentrelated tax categories, and consideration of relevant environmental tax policies. The approach should be to "do the easy ones first, hard ones last".
(3) Improve and strengthen Green Credit policy and fully utilize the role of financial institutions in environmental protection and energysaving. China should strengthen the use of Green Credit to regulate investment and industrial behaviors, speed up the promulgation of robust policy for Green Credit to limit high energy consumption and high pollution projects; carry out market reform for energysaving and emission reduction fund management and use; establish a national guarantee mechanism for energysaving and emission reduction credits, and provide interest subsidies for key projects; direct and standardize Chinese enterprises' overseas investment through Green Credit policies; develop Green Credit policies to support medium and smallscale enterprises in their efforts for environmentally sound business development and practices; and establish an open and transparent mechanism for Green Credit implementation supervision and information disclosure.
(4) Establish and improve environmental pollution responsibility insurance regulations and policy system. China should identify in relevant laws and regulations the principle of liability for environmental damage responsibility along the lines of "the responsible party pays", and determine the content of environmental pollution responsibility insurance; develop relevant standards and guidelines, including pollution damage compensation standards, environmental risk assessment criteria, contaminated site remediation standards and guidelines, etc.; regulate the stakeholders in the market of environmental pollution responsibility insurance; carry out pilot efforts to study the need for supporting laws and regulations for pollution responsibility insurance and compensation procedures; improve supervision mechanisms for this industry and establish technical support institutions.
7. Develop a green 12th Five-Year National Economy and Social Development Plan.
From the perspective of transformative economic restructuring, environment and energy, scientific development and ecological civilization, the 12th Five-Year Plan period (2011 to 2015) is very important for China, especially in setting the stage for achieving its 2020 national strategic objectives. China will still remain strong in its industrialization process during the 12th Five-Year Plan period. The weakness of traditional industrial modes will be more evident. Environmental problems in both urban and rural development will stand out. Further stimulus of domestic consumption needs to be set into a sustainable consumption mode of development. Internationally, the global economic restructuring as a result of financial crisis will have some obvious impacts on China. And the global trends towards green growth, addressing climate change, and other matters such as resource and energy prices may affect China's outlook on trade and environment. In summary, compared with 11th Five-Year Plan period, there will be significant changes of both national and international context. Therefore, CCICED recommends:
Preparations for the 12th Five-Year Plan should give attention to strengthening China's capacity for sustainable development including incorporation of green economy including Low Carbon Economy as a key element of the Plan; promotion of green growth and future prosperity based on transformative environmental protection, energy efficiency and innovation as strategic priorities; laying down a solid foundation for a quick development mode change involving a new path of industrialization and urbanization; climate change adaptation and ecosystem protection in rural areas; and adaptation to the new round of global economic restructuring featuring green economy.
(1) Continue the mandatory targets for environmental protection and energy efficiency. Based on the 11th Five-Year Plan experience, China should continue to adopt mandatory targets for energysaving and emission reduction as important tools to protect environment and increase energy efficiency; expand emission reduction to other pollutants, such as NOx and heavy metals with major impact on environment and human health, and further raise the fuel economy standards of vehicles; develop carbon intensity indicators per unit of GDP as mandatory targets to control GHG emission. Models suggest that with some effort China can achieve at least a 20% carbon emission per unit GDP during the 12th Five-Year Plan.
(2) Incorporate the green economy concept in the 12th Five-Year Plan as a means to achieve sustainable development objectives. China should consider strengthening environmental management, increasing energy efficiency and addressing global climate change and adaptation as basic tasks for 12th Five-Year Plan development and implementation; expand the scale of Circular Economy; promote pilot efforts for Low Carbon Economy and other measures for addressing climate change, including industrial development, building construction, and information and communication systems characterized by low carbon emissions; improve green investment and development of environmental industries; facilitate structural changes and environmental upgrading of traditional industries; develop green economy in the rural areas; promote lowcarbon lifestyle and sustainable consumption in urban and rural areas; and expand the scope and scale of public green procurement.
(3) Strengthen and improve energy and environmental technical innovation and supporting system, increase national investment in R&D, enhance safety supervision of nuclear power plants. China should accelerate the pace of acceptance, diffusion and commercialization of innovation technologies related to energy efficiency and to Low Carbon Economy. This requires building a stronger supporting system for energy and environment innovation. A national new energy research institution should be established with the intention of making it open to universities, business and other research organizations in order to create common platforms of energy technology, energy conservation and environmental protection. This research institution should have the ability to conduct basic research, technology development, testing, monitoring and certification; and the ability to improve research and pilot activities related to major energy and environmental needs especially for Low Carbon Economy topics. China has entered into the fast development stage of nuclear power plants. China should attach utmost importance to the capacity building of nuclear power plant safety and environmental supervision, thus safeguarding prospects for future nuclear power plant development.
(4) Place major energy, environment and green economy policies into overall fiscal and economic reform. China should improve the overall design and pilot implementation of key environmental taxes as a sound base of a fiscal system that can benefit resource and energy conservation and environmental protection in the 12th Five-Year Plan period. China should initiate the research and pilot activities that will provide the funding channel for forest, grassland, and agricultural land improvements for rural carbon sequestration. China should speed up the implementation of property taxes to regulate the rapid increase of urban buildings and to encourage an urban sustainable consumption mode.
(5) Improve information statistics on energy and environment performance. China should develop and standardize the monitoring system for energy conservation, emissions reduction, energy consumption for urban buildings and communication and GHG emissions; include better rural environment and energy information in national statistics system; improve and standardize national and local statistics, and improve supervision of statistics and information disclosure. Development of an improved basis for calculating carbon footprints is needed within various industrial sectors, communities, and for individuals and households. This is a task where government, business, communities and civil society organizations should all play a role.
(6) Improve management mechanisms of 12th Five-Year Plan and implement EIA for plans at various levels. While drafting and promulgating the 12th Five-Year Plan of social and economic development plan, China should also draft, approve and promulgate sectoral plans and ensure the concurrent implementation of both the national plan and sectoral plans to produce the best outcome. After the promulgation of the "Planning EIA Decree", in order to ensure green development, China needs to conduct EIA on major development plans, sector development plan, regional and local development plans that potentially pose a major impact on the environment.