At the United Nations General Assembly in September 2020, President Xi Jinping announced that China, the world's largest emitter of carbon dioxide by far, "aims to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060". While the pledge is a significant contribution to global efforts to tackle climate change, it came as a surprise given that China has heavily relied on coal to drive its economic growth. All eyes are now focused on how and whether China will fulfill its promises. In a cross interview, Eric Chaney and François Godement, respectively Economic Advisor and Senior Advisor for Asia to Institut Montaigne, put China's climate pledge into perspective. The following is the first part of their exchange.
Is China on the way to reaching Xi Jinping's 30/60 targets? What do you think of the present trajectory on energy shares and emissions?
Xi Jinping set these twin goals - peak CO2 emissions by 2030, carbon neutrality by 2060 - at the United Nations in September 2020. There was nothing really new about the first commitment, already pledged at the Paris COP in 2015 (back then, the deadline was "around" 2030…). But the 2060 target is new and even if this is ten years later than other major economies, it’s still a very ambitious goal for China. At the Paris Climate Ambition Summit in December 2020, Xi mentioned new commitments for 2030: reducing CO2 emissions by 65% from 2005, increasing the share of non-fossil fuels to approximately 25%, and bringing total installed capacity of wind and solar power to more than 1.2 billion kilowatts.
These numbers raise all sorts of questions. But perhaps, the biggest issue is that China’s energy trajectory since the COP 21 contradicts its goals, and the new Five-Year Plan (2021-2025) so far shows intent, but only few hard numbers.
Both the government and the experts are aware of this contradiction. So much so that Xi himself and the Politburo have come out with strong messages on energy and emission control in recent months, while experts push for much more radical measures to change the current path. China faces the difficulties of every energy transition (improving alternative energies and their flexibility, economic cost and competitivity…) plus several of its own: a higher starting point due to its coal and fossil fuels addiction, huge energy and manufacturing lobbies, a per capita level of CO2 emissions that is far above that of countries with a similar per capita GDP.
It also faces a statistical fog that top Chinese economists point out themselves: nobody knows what the CO2 emission levels were in 2005, and for SMEs and households they are still hardly known today. In fact, different Chinese units use very different GDP previsions, and the 14th Five-Year Plan has no official figures even for the next five years: Xi’s pledges rest on ambiguous ground. Actual energy trends will depend a lot on the level and mix of economic growth. As they currently stand, electricity prices vary widely and are distorted by many subsidies - in fact they are used more as support to the economy than as a nudge for any transition.
Where do we stand now?
On King Coal, total consumption in 2020 rose back to its 2013 record level of 4.2 billion tons. Its share of total energy output also went back up from 52% to 58%, with some estimates being much higher because the actual availability of a coal plant is five times higher than that of wind or solar energy installations. In fact, the rise of coal consumption began one year after the Paris Conference. A related development is that energy consumption per share of GDP is improving much more slowly since the same date. Furthermore, the 2020-2021 revival of the economy after the intense, but short Covid-19 pandemic, is worsening the trend. This is fueled by support for basic state industries - steel, cement, aluminum, as well as the infrastructure and residential construction boom. The two-year trend for January-April 2021 indicates all these figures grew above the average +10% GDP trend: thermal power by 12%, coal by 13%, steel by 17% and cement by 11%. The growth in energy use briefly slowed down under 2% per year in 2015-2016 - it has gone back to 3% in the next three years, and will likely rise above that in 2020 and 2021. It follows that energy use per unit of GDP is decreasing more slowly than planned. Globally, China’s CO2 emissions have risen by 8% in 2013-2020.