The world’s largest and growing energy market, China, announced its ambition to transform into a carbon-neutral economy by 2060. However, for a country that contributes 28% of global emissions, Chinese President Xi Jinping’s claim lacked announcement of a definite roadmap and immediate concrete steps towards the goal, analysts opined.
“Of course, big questions remain…China’s definition of ‘carbon neutrality’ is not well defined from the short announcement. Further, no roadmap was offered as to how this will be achieved. 2060 is a long time, immediate, concrete steps are yet to be announced,” Asia Pacific vice-chair, Gavin Thompson at Wood Mackenzie said.
The firm’s Asia Pacific head of markets and transitions, Prakash Sharma, said: “China currently emits over 10 billion tons of carbon and will need to make significant efforts to reach net-zero without affecting its economic development.”
According to Thompson, China’s upcoming 14th five-year plan could be a crucial document in the global energy market history. He predicts increased investment in wind, solar, electric vehicles, and battery storage technology, along with support for green hydrogen and carbon capture technology.
“It won’t, of course, be the complete roadmap. I expect clean coal will continue to receive strong support,” he said.
According to renewable industry executives, focus on green energy could increase Chinese domestic demand for solar, wind, and electric vehicle components toppling the current dynamics. It could push prices up in the world market. A similar trend was noticed in the steel industry when China focused on infrastructure development, procuring large quantities of iron and steel.
Increased demand for electric vehicles could also lead to economies of scale in batteries and provide the necessary boost to bring hydrogen fuel into the mainstream.
In a recent analysis, Wood Mackenzie predicts China’s emissions to fall nearly 60% by 2040 from 2019 level using electrification, renewables, green hydrogen, and carbon removal technologies. The firm expects China to deploy over a billion tons of carbon capture and storage capacity across its power and industrial sectors. These efforts will need to start much earlier and at a larger scale to deliver a carbon-neutral goal by 2060.
Sharma said that the impact on global energy, commodity markets, and seaborne trade would be significant. Major commodity exporters’ will reset strategies to align with China’s ambitions.
Research director Alex Whitworth at WoodMac said: “With this announcement, the world’s largest carbon emitter finally shifts from its long-term position of having limited responsibility to assuming clearer leadership in tackling climate change. President Xi also stated that China would reach peak emissions before 2030.”
Whitworth said that President Xi responded to the coronavirus pandemic and the more recalcitrant position of the Trump administration towards the 2016 Paris Agreement. He implored urgent reforms in the system of global governance towards a greener and more sustainable pathway.
President Xi called on all countries to “stop only pursuing development rather than environmental protection.
“Clearly, for China, this needs to start at home, though the signal that China intends to take a greater and more vocal leadership role in global environmental protection was clear,” said Whitworth.
“But if any country can achieve such ambitious goals, it will be China. Strong state support and coordination have proven extremely effective at reaching economic goals. If this is directed towards climate change, then China is capable of transforming its carbon emissions trajectory over the coming four decades in the same way it has transformed its economy over the past 40 years,” he said.
According to the National Energy Administration, 11.52 GW of solar capacity was installed in China during the first half of 2020. Large-scale solar installations accounted for 7.08 GW and distributed solar accounted for 4.43 GW at the end of June. Installations increased slightly compared to the first half of 2019 when China installed 11.4 GW.
Debjoy is a Senior Assistant Editor at Mercom. Debjoy brings more than two decades of experience in frontline journalism, spending most of his career working for dailies like Business Standard and The Economic Times. He has reported on a vast array of sectors, including power and renewables. A graduate in business economics, Debjoy is an amateur 3D digital artist and a photographer. More articles from Debjoy Sengupta.