What Is China’s Climate Agenda?

With the world’s attention turned to Glasgow and the 26th Conference of the Parties (COP26) for the United Nations Framework Convention on Climate Change (UNFCCC), the biggest variable in the equation of whether and when the world gets to carbon neutrality seems to be China. Beijing, at least on paper, has made greening its economy a central part of its economic development plans. Beijing recently issued two policy documents: the Working Guidance For Carbon Dioxide Peaking And Carbon Neutrality In Full And Faithful Implementation Of The New Development Philosophy and the Action Plan For Carbon Dioxide Peaking Before 2030, also known as the 1+N framework. In addition, China recently submitted its updated nationally determined contribution (NDC) goals to the UNFCCC, ahead of this week’s meeting. Many observers understandably question whether China’s commitments are both credible and bold. The purpose of this piece is to provide a foundational understanding of China’s approach and its recent policy steps.

Q1: What is COP26 and why does it matter for China’s climate commitments?

A1: COP26 includes the governments that have signed on to the UNFCCC, which entered into force in 1994. The UNFCCC itself is the result of the famous Earth Summit held in 1992 in Rio de Janeiro. Some of the most consequential COP meetings were held in Kyoto (1997), Copenhagen (2009), and Paris (2015).

While often criticized as a weak institution that has been ineffective in catalyzing international climate action, the UNFCCC is the main multilateral mechanism for cooperation and coordination on climate change. The NDC climate targets that countries set for themselves are a result of the Paris Agreement reached during the COP21 meeting. While NDCs are essentially goodwill promises that cannot be enforced, countries accounting for over 70 percent of the world’s GDP had made commitments to reach carbon neutrality by the end of 2020.

China’s negotiating position within the COP meetings has shifted markedly in recent years. It has moved from refusing responsibility as a developing nation to positioning itself as a champion for climate action, a step it made just as the United States withdrew from the Paris Agreement. China’s increased ambition is welcome since as the largest global emitter, its commitments are key to achieving progress on climate mitigation. Unfortunately, to prevent the world from warming more than 1.5°C, which scientists predict will have catastrophic effects, more bold action by China is required in the near term.

Q2: What are China’s climate commitments, and what is the significance of the various documents that have been released recently?

A2: China’s path to climate action remains rocky. After effectively eschewing responsibility for decades, in 2015 China first announced climate goals that included peaking emissions (see Table 1). The country’s climate ambition was raised significantly in 2020, when President Xi Jinping announced new climate commitments at the UN General Assembly and China announced proposed new NDC targets.

The most significant development with the new commitments announced in 2020 was that China for the first time committed to reaching carbon neutrality, as opposed to just peaking emissions. What disappointed some observers was that the date set for this goal was 2060, a decade later than most developed economies. Moreover, the commitment lacked specifics over just how the country planned to achieve neutrality and at what level it planned to peak emissions. On October 28, China submitted the same targets that it had announced in 2020 as its new NDCs, not raising its ambition in any significant way.

The decision behind the September 2020 announcement appears to have come from the very top, and over the past year, the bureaucracy at all levels has been developing plans to implement the new goals and gear up the country to peak emissions. The so-called 1+N framework is to be the result of this process and is meant to provide a coherent structure to the country’s climate efforts. The “1” is the recently released Working Guidance For Carbon Dioxide Peaking And Carbon Neutrality In Full And Faithful Implementation Of The New Development Philosophy, which will provide the guiding principles and overarching direction. The “N” refers to the multiple operational documents, of which the Action Plan For Carbon Dioxide Peaking Before 2030 is the first. Several more plans are expected to come out in the next weeks and months providing more details on how decarbonization will be tackled at the sectoral level. In fact, on November 1, 2021, President Xi Jinping’s speech at the World Leader’s Summit held at the opening of COP26 provided no new targets and indicated that upcoming sector-specific plans would provide more details on the country’s timeline.

Q3: Is China serious about meeting its commitments?

A3: The evidence suggests that the Chinese government intends to meet the goals it has set for itself on climate change. These goals, however, do not necessarily include maintaining global temperatures below 1.5°C. This would require more rapid cuts in emissions in the next 5 to 10 years than what is currently expected based on its commitments.

The Chinese government has led an unprecedented effort to mobilize the bureaucracy and companies to establish emissions-accounting systems and develop plans to reduce emissions over the past year. The carbon-peaking plan that was just released included specific targets by sector and will be followed by even more detailed regulation, for example. This is important because many companies and local governments will need to build capacity and expertise in a short period of time to actually make real emissions reduction possible. This type of planning is needed to succeed at the implementation stage.

However, the government has made clear that it intends to pursue a gradualist approach to reforms and to curbing coal usage. The power shortages over the past few months have likely only strengthened concerns over energy security. The government has clearly indicated that it will allow some increase in absolute coal consumption until 2025 and pursue a reduction in coal consumption only after then. Coal will continue to be used for power generation even as non-fossil fuel energy sources and natural gas infrastructure expand. Because electricity demand in China continues to grow rapidly, an expansion in real coal use could happen even as the share of coal in the overall energy mix declines.

Q4: Who is likely to suffer and benefit from China’s transition as currently planned?

A4: The biggest loser in any country’s energy transition is the fossil fuel industry, and specifically coal. Given the size of China’s coal industry in terms of employment and in the economies of certain regions this is a particularly sensitive area. The 1+N framework also targets specifically energy-intensive heavy industries like steel and cement.

The singling out of such sectors is particularly significant because the steel and cement industries are estimated together to account for 30 percent of the country’s emissions. These will also be facing higher production costs after the government liberalized energy prices for energy-intensive industries on October 12, 2021. The heavy industry is likely also going to come under pressure as the government prioritizes high value-added manufacturing, economic and energy efficiency, and the service sector.

However, those firms that can adjust more rapidly and take advantage of cheap electricity produced with renewable energy such as solar could emerge stronger than ever, especially since the process may curb overcapacity and the demand for sustainably produced materials is growing.

Just like in the case of coal, job losses are likely going to be felt more significantly in regions that are less economically diversified and have fewer resources to address the economic transition. This also explains why the government has encouraged some regions to decarbonize more quickly than others.

Ilaria Mazzocco is a fellow with the Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies in Washington, D.C.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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5Mazzocco
Senior Fellow, Trustee Chair in Chinese Business and Economics