China’s Carbon Neutrality Goal is Good Policy and Good Politics

Source: By Gernot Wagner, Bloomberg • Posted: Sunday, September 27, 2020

The second-biggest economy’s new 2060 target could be a game changer if concrete policies follow.

Xi Jinping speaks virtually during the United Nations General Assembly on Sept. 22. 2020.

Xi Jinping speaks virtually during the United Nations General Assembly on Sept. 22. 2020. Photographer: Tiffany Hagler-Geard/Bloomberg

Talk is cheap. Action is hard. Cue the jokes about thousands of climate diplomats flying millions of miles to generate more hot air. Add to that President Donald Trump pulling the U.S. out of the Paris Agreement, Brazil’s Jair Bolsonaro allowing rampant deforestation in the Amazon, and growing nationalist tendencies the world over, and it’s hard not to be cynical about the importance of climate diplomacy these days. (Full disclosure: my fleece jacket from the Copenhagen 2009 talks is keeping me warm as I write this, and I have enough swag from various climate talks to never have to bring an NPR tote bag to Whole Foods again.)

That makes President Xi Jinping’s declaration to the UN General Assembly this week that China plans to “achieve carbon neutrality before 2060” all the more surprising, and significant. By itself, it could lower projections of global average warming by 2100 by as much as 0.2 to 0.3°C.

China currently accounts for almost half of global coal demand and continues building coal-fired plants, but that era is quickly coming to an end – much quicker than Chinese officials themselves may have predicted only five years ago.

China’s latest commitment comes on top of a 2015 pledge to peak its emissions by 2030, a promise it only made after intense discussions between Beijing, Brussels, and especially Washington, earning President Barack Obama and his diplomatic efforts well-deserved credit at the time.

Beijing’s new target seems to have come despite current politics in Washington, not because of them. One possible interpretation is that China is banking on a Joe Biden presidency, and showing goodwill now ahead of a renewed focus on climate action  in the U.S. The U.S. rejoining the Paris Agreement would only be a small part of this focus. Biden, for example, has proposed a $2 trillion green infrastructure investment plan. All that might well be part of China’s calculus, but supercharging its low-carbon efforts makes a lot of sense regardless. Xi’s carbon neutrality pledge, thus, is both good policy and good politics.

The winds are changing fast. The Economist did not even know about Xi’s pledge when it published its cover last week, along with a briefing that rightly emphasized the “changing geopolitics of energy.” Achieving carbon neutrality by 2060 will not be easy, but global power politics are certainly in China’s favor.

While the U.S. has turned itself into the largest producer of oil and gas, China has remained an importer of fossil fuels. The Asian nation has rapidly ramped up its production of solar panels, in part aided by European demand subsidies and its own supply subsidies. That alone is smart policy, and the numbers speak for themselves. China now produces over two-thirds of the world’s solar photovoltaic panels and lithium-ion batteries, and 45% of all wind turbines. Meanwhile, solar and wind energy climbed to two-thirds of global power capacity added last year, with fossil fuels only accounting for a quarter.

Action following China’s pledge will have to accelerate this transition, but it is following existing trends, rather than working against them. Indeed, China’s CO₂ emissions could peak as early as the next five years given rapid urbanization trends, ahead of its previously pledged 2030 peak. After all, cities cut carbon.

Despite all this good news, there are some things to watch out for. For one, the big question is how the carbon neutrality pledge gets reflected in China’s upcoming five-year plan. The top-down nature of China’s policy apparatus, spearheaded by its National Development and Reform Commission, bodes well for implementing the climate targets. The next plan, spanning 2021 to 2025, will be released in March next year. It will be important to see how it reflects the 2060 carbon neutrality pledge and China’s broader climate ambitions.

Another important question is around the interaction of its carbon pledge at home with its Belt and Road Initiative abroad. China has already spent or pledged around $575 billion under the BRI, almost half on energy projects, and a good portion of that on coal in other developing countries. Coal economics are changing everywhere, so these investments, too, might come to an end. But China could still be exporting pollution for years to come, locking in dirty infrastructure for decades.

There are significant opportunities for further action, and that’s the point. Positive signals in the world of climate diplomacy are an important first step. The planet only notices actions.

Gernot Wagner writes the Risky Climate column for Bloomberg Green. He teaches at New York University and is a co-author of Climate Shock. Follow him on Twitter: @GernotWagner. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.