Is China Taking Action? China’s Climate Goals: What Companies Should Know
In the 2021 Climate Change Conference in Glasgow, one figure stayed suspiciously absent: China’s leader Xi Jinping who has not left the country since the outbreak of the pandemic, has only provided a written statement. Yet surprisingly, the US and China have released a joint declaration to strengthen their efforts and cooperation in tackling climate change. How likely, however, is its implementation and a stronger orientation towards climate friendly policies and measurements in China? Will companies notice the effects? In this article we will have a closer look at the Joint Declaration and China’s updated Nationally Determined Contributions (NDC) to the Paris Agreement, as well as the climate targets introduced in the new five-year plan.
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NDC Targets and the Joint Glasgow Declaration
The question on how to combine economic growth with environmental protection is gaining importance and attention in China. Right before the start of COP 26, China stated its plans to reach a peak of carbon emissions by 2030 and aiming at carbon neutrality by 2060 in and update of its NDC Targets.
In the Joint Glasgow Declaration, the US and China focus on strengthening the Paris Agreement’s targets of limiting the global rise of temperature to 1.5 °C. The two pillars of the agreement are measurements for the reduction of CO2 and methane. In the course of COP 26, they also agreed on the ban of illegal deforestation imports and highlighted the importance to increase the share of low-cost renewable energy. In accordance with the latter, China pledged to stop building new coal power plants abroad. However, increasing the percentage of clean energy sources provides a major challenge to China, since it is largely dependent on coal for its energy sources. With the economy’s increasing demand for energy, and issues such as extensive power cuts in the last year, there are even plans to build new coal power plants within China.
Climate Targets in the 14th five-year Plan
In comparison to previous targets of quantitative economic growth, the new five-year plan concentrates on qualitative growth and innovation. Within this focus, China’s climate goals also find their place, yet in a careful and modest form, reflecting the difficulty China faces in the crucial transition from coal. Within the next five years, China plans to cut energy intensity by 13.5% and carbon intensity by 18%. The switch to cleaner energy sources is addressed with a target of having non-fossil fuels account for 20% of energy use by 2025. There is no target on limiting energy consumption or CO2 emission caps. The climate targets of the new five-year plan are comparatively low with only small improvement to previous ones, which on the other hand provides the “advantage” to be (over-)achievable. Yet for the larger target of peaking carbon emissions by 2030, a separate action plan was released, which focuses on the transition to cleaner energy and control of fossil fuel – especially coal – consumption and growth.
What Companies should consider
While the issue of environment protection is gaining attention in China, the primary focus on economic growth and development and its requirements outweighs, as it is even highlighted in China’s NDC:
“With the continuation of industrialization and urbanization, energy demand will keep rising while it is unlikely to fundamentally change the coal-dominated energy mix in the short term.”
Nonetheless, while China is trying to address the issue of increasing energy demand in the short-term, it will also continue to invest in low-carbon technologies and increase measurements and laws to cut coal consumption in accordance with its planned decarbonization. It is likely that for the long-term climate targets, China will gradually shift towards cleaner energy sources. With the simultaneous increase in energy demand and tackling of decarbonization targets, the issue of energy supply might affect companies’ costs. Therefore, it is important to keep an eye on further developments and policy decisions in China.
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