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Environment

China’s Carbon Commitment

May 27, 2021
  • Zhang Monan

    Senior Fellow, China Center for International Economic Exchanges

Understandably, it is a challenge for China to fulfill its commitment to carbon neutrality, as it is the top manufacturing power and the largest emitter in the world. 

As we speak now, more than 127 countries and regions have announced commitments to carbon neutrality, among which 22 have officially defined their goals in national level legislation or in agreements or policy announcements. These include the European Union, United Kingdom and Sweden in Europe, and Japan, the Republic of Korea and Singapore in Asia.

China pledged to reach peak carbon dioxide emissions by 2030 and achieve carbon neutrality (net-zero emissions) by 2060, meaning that carbon dioxide emissions and removals (absorption) will balance out to zero. China and the U.S. are both large economies with global influence, and their emissions are of crucial importance for the world. Apart from the nationally determined contributions, China has proposed the “3060” target, and U.S. President Joe Biden proposed the “3550” target. It is widely expected that the energy revolution and competition driven by the carbon neutrality goals will gain further traction over the course of the 21st century.

As the world’s biggest CO2 emitter, China will play a pivotal role in the global commitment to net-zero-emissions as it fulfills its own carbon peaking and carbon neutrality goals. But it faces an uphill battle. In terms of total emissions, the world generated 36.4 billion tons of CO2 in 2019, with 10.2 billion tons of that coming from China — 27.9 percent of the global aggregate. China’s energy intensity was 1.5 times the global average and triple that of the EU. Its carbon emission intensity per unit of GDP was triple the global average and six times greater than that of the EU.

Meanwhile, the United States and Europe have developed economically beyond the carbon intensive stage, while China — which is in the midst of economic transition and carbon peaking — is heavily reliant on energy consumption. Its industrial system will be exposed during the process. In terms of time span, Europe and the U.S. see the transition taking place over 50 to 70 years, while for China it is just 30 years. Carbon neutrality in 2060 means a steep curve ahead for the reduction of emissions in China. It simply costs more and requires greater effort for China than for Europe and the U.S.  

Carbon peaking and carbon neutrality call for sweeping and profound social and economic changes. Commitments must be backed by timetables and road maps for full implementation. The Chinese government has set a binding target for carbon emissions per unit of GDP in the 14th Five Year Plan, during which period energy consumption per unit of GDP and carbon emission will drop by 13.5 percent and 18 percent respectively, while nonfossil fuel will increase to 20 percent as a share of the total energy mix.

Central government departments, local governments and key industries are signing up for the carbon peaking and carbon neutrality tasks with concrete measures. Departments, such as the National Development and Reform Commission, the Ministry of Ecology and Environment, the National Energy Administration, the Ministry of Industry and Information Technology and the People’s Bank of China have released documents on clean energy development, developing carbon emission trading markets, dialing down crude steel production, reducing total emissions and intensity and setting up a green financing policy framework, all in an effort to flesh out the action plan for reaching the carbon peak and carbon neutrality. At the local level, many have set their own goals towards carbon peaking, among them Beijing and Tianjin and the provinces of Shanxi, Shandong and Hainan. A rough calculation shows that more than 80 cities have developed their own plans.

China must be alert to the stark reality and embrace the shift to lower emissions. On one hand, its energy mix is heavy on fossil fuel, with coal accounting for 56.9 percent, oil 19.3 percent and natural gas 8.1 percent,which translates into a combined share of 83.7 percent.

Sweeping decarbonization of the industrial sector is crucial, but it is widely believed that it is most difficult to decarbonize industries such as steel, cement, construction materials, chemicals, nonferrous metals and other coal-heavy sectors.

Considering that these industrial sectors are key to creating added value, it is important that government departments ensure the trajectory of the industrial decarbonization, and relevant policymaking should penetrate the industrial chains of all sectors in pursuing carbon peaking and carbon neutrality.     

On the other hand, it is no easy task to balance carbon reduction goals with economic development. Climate change economic models show that carbon-constraint in the wake of carbon peaking and carbon neutrality will create a drag across different economic sectors.

Relatively aggressive measures will entail economic costs in the form of lower growth rates. In particular, areas with a high concentration of energy-intensive industries — in particular those that are fast-growing and emission heavy — will be hardest hit, such as Shandong, Jiangsu, Hebei and Shanxi provinces and the Inner Mongolia Autonomous Region. Hence, the central government will have to ensure sound decision-making regarding the aggregate target, intensity and speed for the local governments, and step up its efforts to build energy rights trading and carbon emission trading markets to promote carbon quota trading across different sectors and industries and offer more incentives and autonomy to local governments and market players. 

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