China’s COP Cop Out On Coal

CHINA HAS EMERGED from the COP26 climate summit in Glasgow relatively unscathed, given that it is the world’s top emitter of CO2.

As one of the world’s top two oil producers and exporters, Saudi Arabia took the early heat in Glasgow from activists pushing for an end to the use of fossil fuels. As attention swung to coal, the most polluting of fossil fuels and on which China remains heavily dependent for power generation, India, not China, was most prominent in watering down COP26’s final agreement.

At the last minute, the wording was changed from ‘phasing out’ the use of coal to ‘phasing down’, the same formulation that had appeared in the China-US climate dialogue agreement that the head of the Chinese delegation Xie Zhenhua and his US counterpart John Kerry had forged three days earlier.

Although Delhi put forward the revised wording to the final agreement, Beijing had been instrumental behind the scenes in getting the language changed, reportedly threatening to torpedo the final agreement if it was not. Washington lent its support by not offering any opposition.

Alok Sharma, the Conservative UK politician chairing COP26, offered an emotional apology subsequently, saying he was ashamed by the last-minute change and that China and India would have to justify themselves to the countries most vulnerable to climate change.

The glass-half-full view is that this is the first of the 26 rounds of COP meetings to make any formal commitment on coal. The half-empty view is that the compromise over phasing out its use belies the scale and urgency of the task.

Fatih Birol, executive director of the International Energy Agency, says that to reach the goal of limiting global heating to 1.5C, more than 40% of the world’s existing 8,500 coal plants would have to close by 2030 and no new ones built.

Last year, China commissioned more coal capacity than the rest of the world retired, according to a study by Global Energy Monitor. This US-based pro-green energy group that tracks fossil fuels says China commissioned 38.4 gigawatts (GW) of new coal plants in 2020, accounting for 76% of the global 50.3 GW new coal capacity and offsetting the 37.8 GW of coal capacity retired last year.

Facing disruptive energy shortages, China hit a new record for daily coal production during COP26. With the sixth plenum coinciding with the second week of COP26, it was inevitable that domestic concerns would be foremost for China’s delegation in Glasgow.

With Or Without Xi, COP26 Involves China

THE UK GOVERNMENT’S decision, as host of the COP26 climate summit in Glasgow, ‘not to provide the video link method’ and so prevent President Xi Jinping from participating directly in the event just seems petty.

The UK has insisted that only leaders attending in person could address the meeting. Xi, who has not left China since the outbreak of the Covid-19 pandemic last year, has been able to submit only a written statement.

As the world’s largest polluter today, China has to be part of whatever solutions world leaders come up with for mitigating greenhouse gas emissions. Marginalising it does not seem to help in that regard, even if Foreign Ministry Spokesperson Wang Wenbin passed on a softball opportunity to make an issue of Xi’s exclusion when questioned by state news agency Xinhua during the ministry’s routine press conference today.

Xi, too, pointedly brushed off any perceived insult. The official English translation of his statement opens thus:

There is little doubt in this Bystander’s mind that the UK would not have insisted on in-person participation without the approval of the United States.

The poor state of China-US relations could cast a long shadow over the climate summit. Beijing has not been receptive to US President Joe Biden’s attempts to carve out climate as a rare area of cooperation, although members of his Democratic Party are divided on the extent to which other US interests, such as human rights, should be traded for cooperation on climate.

Biden may also have less than fond memories of how China lobbied other developing nations at the Copenhagen edition of the COP summit that left the Obama administration, in which he was vice-president, taking far more of the blame for that meeting’s lack of progress than it deserved.

It is unclear when the decision to ‘uninvite’ Xi from Glasgow was made, whether before, after it during last weekend’s G20 leader’s meeting in Rome, which Xi did attend by video link.

However, hopes that that meeting would result in an agreement to phase out coal consumption were dashed with China, which contributes 28% of carbon emissions and consumes more coal than any other nation, among the countries resisting making binding commitments.

After the meeting, US President Joe Biden called out China, Russia (President Vladimir Putin is another Glasgow no-show) and Saudi Arabia for being uncooperative.

Last month, China confirmed to the United Nations its updated pledges to bring its emissions to a peak before 2030, cut them to net-zero by 2060, and raise its wind and solar power generation capacity to 1,200 gigawatts by 2030.

However, it has not offered any new pledges to cap energy consumption or make an earlier start on cutting back its use of coal from 2026. Xi’s statement to the G20 confirmed that the ‘1+N’ framework is the timetable China will be following.

China Lays Out Ambitious Vault To Net-Zero Carbon Economy

CHINA’S PATH TO ‘peak carbon’ by 2030 and becoming a net-zero carbon economy by 2060 is dubbed 1+N — one overarching blueprint and n number of implementing policies. On October 24, we got the ‘1’ in the form of a guidance document jointly released by the Party’s Central Committee and the State Council.

All future policy decisions on economic planning, macroeconomic adjustment and industrial policies will have to be compatible with the blueprint, which contains objectives and timelines for broad areas of the economy, including heavy industry, energy, transport, construction and finance.

The headline objective is raising non-fossil fuels share of energy consumption to at least 80% by 2060, a fivefold increase from 2020’s level, with a timeline for non-fossil fuels to hit a 20% share by 2025 and 25% by 2030. Both interim targets have been previously announced, but not the 2060 one.

Even before the current electricity shortages, coal accounted for approaching 60% of energy consumption, so scaling that back will be a dramatic change, and one being undertaken slowly.

Over the past five years, non-fossil fuels have been increasing their share of energy consumption by barely half a percentage point a year. That will need to be accelerated to triple that rate if the goal of creating a ‘green, low-carbon and circular economic system’ is to be met.

That is not only a question of increasing non-fossil fuel energy generation. It also means structural changes to industry and consumption to make the economy less energy-intensive. To have any hope of achieving its goals, Beijing will have to oversee the world’s largest reduction in carbon intensity.

As well as the coal, oil, and gas industries, chemical and petrochemical producers and steel makers can expect close attention from authorities regarding their energy efficiency.

The risks to economic growth inherent in a full-blown green transition are recognised. He Lifeng, head of the National Development and Reform Commission (NDRC), the top economic planning agency, says carbon reduction must be balanced with ensuring the security of industrial output and supply chains and, in what appears to be a nod to recent power outages, disruption to ‘people’s everyday lives’.

A leading group was established under the NDRC in May to guide and coordinate the transition. Yet, much of the implementation will depend on provincial and municipal authorities, and provinces will get some latitude over timing depending on the industrial structures.

However, local officials are on notice that their performance will be judged on their success in meeting their carbon reduction targets. Those who fall short can expect the same criticisms that came the way of officials who failed to meet economic growth targets when they were the benchmark. Officials will, no doubt, get as creative over emissions reductions accounting as they were with growth.

The guidance promises financial carrots as well as administrative sticks. Beijing is considering creating a national fund to promote the transition to a low carbon economy. That would likely support the development of carbon sinks, carbon capture and storage, and other carbon removal mechanisms.

An expansion of the national carbon trading market is all but inevitable. Supportive central banking (e.g., incorporating green credit into macroprudential assessment) and development of the green finance sector are also mentioned in the guidance.

So, too, is the encouragement of private investment in low-carbon industries. Banks and other financial institutions will be guided to provide long-term, low-cost funds for green and low-carbon projects. Policy banks will play a core role in underpinning long-term stable financing to support the green transition, which will not fail for lack of a plan.

This Bystander expects further details to emerge during the COP26 climate summit in Glasgow that starts at the end of this week.