China is making progress toward controlling greenhouse gas emissions, according to new research by the Word Resources Institute (WRI).

“In the last five years, Chinese leaders have embarked on policies to increase energy efficiency, using targets, quotas and a few taxes,” said Deborah Seligsohn and lead author of China, the United States, and the Climate Challenge. “While these policies may not provide the environmental certainty of a cap-and-trade system, our analysis shows they can control emissions and may be more suited to the current state of development of China’s financial markets and regulatory structure.”

China’s approach is founded on two main targets: reducing national energy intensity by 20 percent by the end of 2010 and to increasing renewable energy’s share of the national energy mix to 15 percent by 2020.

WRI’s analysis finds that China is on track to meet these two ambitious goals by enacting a broad range of measures. Chinese leaders have recognized that reducing energy intensity-the amount of energy used per unit of GDP-and expanding its energy portfolio improves energy security and air quality, as well as limiting greenhouse gas emissions.

“In 1979, China’s reform and opening policy began with a saying by Deng Xiaoping, ‘It doesn’t matter whether the cat is white or black as long as it eats mice.’ That also holds true for world efforts to control dangerous climate gases,” said Seligsohn. "Countries will use different approaches suitable to their particular circumstances.”

One key program, for instance, requires 1,000 of China’s largest state-owned enterprises to implement comprehensive reductions in energy intensity, and monitors their progress. This “Top 1,000 Enterprises Program” met its goals in the first year and exceeded its targets in 2007.

Another policy is to shut down small-scale inefficient facilities. In 2007, China closed 1,000 cement plants with a combined capacity of 50 million tons, 14.4 GW worth of small power plants, and plants producing 35 million metric tons of steel.In the electricity sector, China has steadily improved the efficiency of its power plants, and the government now requires all new coal-fired power plants to be state-of-the-art commercially available technology.

WRI’s analysis shows that the average efficiency of coal-fired plants is now higher in China than in the United States. China is also on pace to meet very ambitious renewable-energy goals. Installation of new wind power capacity since 2006 has consistently exceeded targets. By 2010, China will have at least 10GW of installed wind power capacity, rising to an expected 150 GW in 2020 - five times the current U.S. level. China’s solar reliance is also growing rapidly: ten percent of Chinese homes have solar water heaters and the number is growing at 20 percent per year.

“WRI’s research shows that China is making substantial progress in controlling its emissions of climate gases, and in monitoring emissions by major companies,” said Seligsohn. “The challenge for U.S.-China collaboration in climate change mitigation is for each country to understand the other’s approaches, and to find creative solutions when those approaches don’t align.”

The report suggests the U.S. could selectively issue free carbon allocations to protect some firms from overseas competitors that enjoy a lower carbon price. Carefully targeted measures can address differences in carbon policies without threatening global trade.