China aims for carbon neutrality by 2060, puts world on notice

Details on Beijing’s plans are still sparse but China’s carbon neutrality target might lead to acceleration of efforts to cut carbon emissions worldwide if politics allow it

After years of keeping cards close to its chest, China has finally put an end to the ‘will it-won’t it’ suspense over the decarbonisation of its economy. Last week, the world’s largest emitter announced plans to go carbon neutral within four decades. This essentially means that by 2060, the world’s largest coal consumer will stop emitting more carbon than it sucks out of the atmosphere. The declaration by President Xi Jinping is being seen by many as more of a political move than an economic or environmental one, considering that elections in the US, the world’s second-largest emitter, are just around the corner.

The announcement, made during a virtual meeting of the United Nations General Assembly, follows several months of efforts by UN Secretary General Antonio Guterres to raise climate ambitions among member countries. While the move places China at the top of the international climate change mitigation efforts pyramid, its success hinges on the formidable task of decarbonising its manufacturing-heavy economy and rapid expansion in carbon capture capacity. The rewards though are sizable. According to Climate Action Tracker’s assessment, achieving carbon neutrality before 2060 would shave off 0.2-0.3°C from global warming projections.

The hurdles

The first hurdle in decarbonising China’s economy would be moving the country’s energy sector away from coal. Plans laid out by Tsinghua University’s Institute of Energy, Environment and Economy (one of China’s most prominent climate institutes) days after the  announcement detail a gradual transition until 2035, followed by rapid acceleration. China’s peak emissions, now likely to be achieved closer to 2025, will stabilise over the next decade and start declining by 2035, says Zhang Xiliang, the director of the institute.

According to the plan, coal power would be completely eliminated by 2050 despite energy demand projected to more than double over the next four decades. Instead of coal, China’s energy demand growth would have to be fuelled by wind, solar and nuclear power, which would occupy over 60% of the country’s energy mix.

This would imply a sharp reversal of the coal-heavy growth the country has pursued till date. A recent study by the Centre for Research on Energy and Clean Air (CREA) in Helsinki found that China’s coal power capacity grew by about 40 gigawatts (GW) in 2019, to about 1,050 GW. Another 100 GW is under construction and another 150 GW is being planned. Even stimulus packages meant for post-COVID economic recovery have been found to be heavily skewed towards fossil fuels.

“To achieve the vision would imply massive re-arrangement of the Chinese economy. The country would need to rapidly shift from a manufacturing and industry based economy to one that emphasizes more on technology and innovation. China’s energy and transportation sectors will also need to be completely re-designed. Our addiction to coal needs to be urgently phased out,” says Li Shuo, senior energy and climate officer at Greenpeace China.

Incidentally, coal power has also been critical in ramping up manufacturing capacities of green technology such as renewable power equipment and battery storage. China already hosts the world’s largest installed capacity of renewables, but the share of non-fossil energy in the mix is still only around 15%. For China’s 2060 target, this would have to grow to 20% by 2025 – five years earlier than planned.

The transition in China’s energy systems is likely to cost around $15 trillion over the next 30 years. Earlier estimates by its Energy Transitions Commission found that solar investments will need to double per annum, while wind will require three to four times the current investment levels over the next three decades to achieve the nearly 5,000 GW of wind and solar energy needed to drive the country’s net-zero economy.

Ground realities

While this may seem like a gargantuan task, the groundwork for a redirection of the country’s GDP already seems to have been laid out. With its population stabilising, investments in construction and infrastructure development are likely to decrease beyond 2035, freeing up funds to finance the energy transition.

Similarly, a move towards recycling and reusing carbon-intensive products also seems to be afoot as the Chinese economy climbs towards its peak. The recycling industries for both waste steel and plastic have been rapidly growing year-on-year and with energy and cost savings of up to 60%, China’s plans over the next four decades would likely involve further minimising carbon-intensive industries.

The way forward

With little information on what pathway it plans to pursue for its carbon neutrality goal, all eyes are now on Beijing’s critical 14^th five-year plan. There is now renewed interest in the top-level policy blueprint for 2021-25, which will likely be central to future decarbonisation pathways.

Another piece of regulation that is eagerly awaited is the national energy law that is currently in the drafting stage, especially for potential implications on carbon-intensive projects included in China’s international Belt and Road Initiative (BRI). China is the largest public financer of fossil fuels according to a recent report on G20 financing, pumping $20.2 billion a year into oil and gas and $4.4 billion into coal. However, its investments in several BRI projects have come under heavy criticism as environmentalists have levelled allegations of exporting emissions on the Asian giant. 

According to a study published last year, which looked into emissions from BRI projects, fossil fuel projects funded by the initiative are likely to increase global GHG emissions and put the objectives of the Paris Agreement at risk. While the draft bill attempts to regulate the import and export of energy, it falls short of screening technologies meant for export and fails to address “carbon leakages” from the BRI’s fossil fuel projects. The new energy law is now likely to come under the scanner for the perceived lack of alignment with Beijing’s newly stated ambitions.

Could India become the largest “developing” emitter?

India is much poorer, but China’s announcement will bring the country under strategic pressure because it will make India the largest developing-country emitter sooner or later, says Thomas Spencer of TERI.

China, with its heavy industry and infrastructure has already carbonised, and now faces a de-carbonisation challenge like the developed countries are facing. For China, it is the time to clean up. But India is yet to fully urbanise and industrialise. The challenge for India is to achieve urbanisation without carbonising.

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For India, the question is can you urbanize and industrialize without 'carbonizing'. China has already 'carbonized', it now faces a similar challenge to developed countries – 'decarbonization'.

India faces the challenge of 'non-carbonization'.

— Thomas Spencer (@ThomasASpencer) September 23, 2020

India’s GDP at purchasing power parity (PPP) is 57% below that of China and energy consumption per capita is 70% below that of China. Even at PPP, China’s final energy intensity of GDP is 30% higher than India’s. 

Spencer points out that India can face the challenge of ‘non-carbonisation’, by making a transparent long-term strategy and adopting policy of sectoral peaking, as opposed to aggregate peaking.

Experts say India’s power and public transport sectors can easily get to net zero by 2050. Top power companies, including NTPC, Tata Power, Adani and JSW, are already shifting gears to renewables. Solar tariffs and renewable energy are already competitive and cheaper than coal power.

Similarly, in the public transport sector, experts say two-wheelers and three-wheelers are likely to replace their petrol engines with greener alternatives by 2030. Technological innovation in hydrogen engines in the decades beyond 2030 may help clean up transport, and ride-hailing services (such as Uber, Ola) will possibly follow suit.

But experts also point out that India, at this stage, can’t commit to net-zero emissions in carbon-heavy sectors such as trucking, aviation and cement production given its vast room to grow in terms of population, energy access and economic development. However, the announcement from China might factor into any enhancement India decides to make to its updated Nationally Determined Contributions (NDCs) it will send to the UN this year.

Moving the needle on global climate action

The politics of Beijing’s announcement might have ramifications in geographies far removed from Asia. While the EU has already ramped up its climate ambition to aim for climate neutrality by 2050, the rest of the developed world has been slow to follow. Only seven countries have submitted their updated NDCs so far and 40 have submitted long term strategies despite repeated calls to do so by UN Chief Antonio Guterres. And despite all criticism, the US is due to formally leave the Paris Agreement on November 4. 

“If the ‘factory of the world’ is willing to consider zero carbon, there is no reason other places in the world can’t do the same,” says Li Shuo.

China’s announcement now shifts the spotlight squarely on to the US where a victory for Democratic nominee Joe Biden could see the US re-enter the agreement. While this would undoubtedly add to the momentum on global climate action, a re-election for Donald Trump would almost certainly see the world miss global warming targets. China has thus re-kindled optimism amongst observers, but the opacity regarding the specifics and the many moving parts of world politics could yet be the undoing of the climate movement.