Some observers claim the target is ‘not much different from the efficiency improvements that they would probably be achieving anyway’, but this is unlikely to be so. Bringing emissions intensity down by those rates will require substantial policy efforts by China, as shown here and here.

The fact that, despite a number of policies in place to curb energy use, China is struggling to meet its current target to reduce energy intensity of the economy by 20 per cent from 2005-2010, is another indication of the ambition inherent in the 2020 target. And the amount of carbon emitted per unit of total energy supply has kept increasing, according to IEA estimates for the years to 2007.

It is often thought that China has a detailed policy blueprint ready to meet its 2020 target. But a different scenario is that the target was determined at a high political level, perhaps with technical analysis to back it up, but without a detailed roadmap for policy. The challenge then is to work out the policy settings – and the clock is ticking.

A crucial question is what role carbon pricing, probably by way of a carbon tax, might play. It would generally be the most cost-effective instrument to dampen carbon emissions growth, as it can be applied comprehensively and create uniform incentives to cut energy use and switch to low-carbon alternatives, and the carbon tax revenue can be used to assist households and industry where need be, and to raise revenue if governments desire. But recent experience in the United States and Australia shows just how politically difficult carbon pricing is, and how political pressures and public perceptions can work in favour of less efficient regulatory policies.

China, despite its very different political system, might well face similar pressures. It would be a new concept to levy a tax predominantly to discourage consumption and implement it in a largely revenue-neutral fashion. By contrast, there is a strong tradition of specific interventions, such as the administrative closure of specific types of plants or levies on specific products and processes. Such measures can be quite effective, but they tend to be patchy and will cause higher, possibly much higher costs to achieve the same aggregate outcome in terms of carbon emissions reductions.

The regional dimension of energy and climate policy could also become important. There is an anticipation that the 2020 target (and possibly a 2015 interim target) will be disaggregated and differentiated between China’s 33 provinces, administrative regions and municipalities. If so, then some important and possibly sensitive decisions will have to be made about which region is expected to do how much. Views about what is the right target differentiation between provinces could diverge greatly, on the basis of differing technical and economic opportunities to curb emissions, and highly disparate levels of development across China. Even decisions about which policy instruments to use could potentially be devolved to the Province level.

Finally, the question of transparency of commitments and actions, which was a major stumbling block in the Copenhagen talks, is unlikely to go away. It is unrealistic to expect China to sign up to an international system of ‘monitoring, reporting and verification’ of emissions if this is seen by China as intrusive in its domestic affairs. But by the same token, the international community needs to be able to have trust in China’s accounting. The current apparent lack of clarity about data on progress towards the 2010 energy intensity target illustrates that there is some distance to travel yet on transparency. For the world to have trust in China’s future reporting on how it is tracking toward its 2020 target, robust data will be needed on both carbon emissions and GDP.

Frank Jotzo is an environmental economist, Senior Lecturer at the ANU Crawford School, and deputy director of the ANU Climate Change Institute.