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china briefing
CHINA POLICY
7 September 2023 15:00

China Briefing 7 September: Coal ‘spree’; Geopolitical ‘cooperation’; Interview with China policy experts

Carbon Brief Staff

Carbon Brief Staff

07.09.2023 | 3:00pm
China PolicyChina Briefing 7 September: Coal ‘spree’; Geopolitical ‘cooperation’; Interview with China policy experts

Welcome to Carbon Brief’s China Briefing.

Carbon Brief handpicks and explains the most important climate and energy stories from China over the past fortnight.

Snapshot 

ENERGY DEMAND: New reports found that China’s use of coal and renewable energy increased in 2022.  It also estimated that electricity consumption would grow by 14-19% by 2025, reaching 9,800-10,200 terawatt hours (TWh).

COAL ‘SPREE’: China has approved 52 gigawatts (GW) of new coal power in the first half of 2023, despite pledging to “strictly control new coal-fired power projects”.

INTERNATIONAL COOPERATION: Just before UK foreign secretary James Cleverly visited China in a push for cooperation in areas such as climate change, Chinese climate envoy Xie Zhenhua said he had talked with the US and EU about accelerating “green” innovation. 

SPOTLIGHT: In this issue, Carbon Brief interviews experts from the Brookings Institute’s John L Thornton China Center on China’s climate policy and prospects for international cooperation.

NEW SCIENCE: Peer-reviewed studies examine the effect of science and technology innovation on “carbon productivity”, China’s policy framework for its transition to carbon neutrality and the effect of perceptions of climate policies on the policies’ sustainability.

Key developments

New energy and electricity reports call for deeper market reform

ENERGY DATA: China’s Electric Power Planning & Engineering Institute (EPPEI) issued two new reports on China’s energy and electricity sectors. The institute said both energy consumption and the “low-carbon transformation” of China’s energy systems will continue to grow, energy news outlet IN-EN.com reported. EPPEI, which sits under energy regulator the National Energy Administration, stated that non-fossil supplies rose from 16.7% to 17.5% of energy consumption in China between 2021 and 2022, while coal’s share rose from 55.9% to 56.2%. It also found that China’s energy intensity and carbon intensity – the usage per unit of GDP – dropped 0.1% and 0.8%, respectively, added the outlet. 

DEMAND FORECAST: Meanwhile, according to IN-EN.com’s report, EPPEI found that in 2022 China’s overall electricity consumption grew 3.6% to 8,600 terawatt hours (TWh) and is estimated to reach 9,800-10,200TWh in 2025, up 14-19%. EPPEI said that non-conventional energy sources “need to be improved” given the variable nature of some types of renewable energy. (China is now the “top builder of offshore wind power”, due to slowing installation rates in Europe, reported the Daily Telegraph.) The institute also highlighted the importance of developing a unified national power market, said the outlet. 

INTERPROVINCIAL TRADING: In late August, the NEA issued a new series of policies for China’s power market, including agreeing to establish a technical committee for setting up unified electricity standards. As part of its efforts to unify regional power markets, the State Grid has adopted new clearer trading guidelines and proposed the aggregation of different market entities’ energy demand to facilitate their participation in trading, reported Chinese financial news outlet Caixin. “If companies [with low energy demand]…want to buy green power, it would be better for them to…negotiate as a unit,” one analyst told the outlet. The guidelines also suggest that users and producers in different provinces trade directly through a centralised bidding mechanism, Caixin added.

Coal power continues to expand in China 

COAL ‘SPREE’: A new report by Global Energy Monitor and the Centre for Research on Energy and Clean Air found that 52 gigawatts (GW) of new coal power was permitted in the first half of 2023. Construction began on 37GW, according to the report, of which 10GW had only been permitted this year. The research also found that some of the new constructions were “previously shelved”, but were revived with a “permitting spree that started in summer 2022”. Meanwhile, China’s biggest coal company, China Shenhua Energy, announced it is reviewing previously postponed and suspended fossil fuel projects as well as renovating and expanding existing plants, with expectations to put the new projects into operation by 2025, Bloomberg reported.

MISSING GOALS? Most of the new coal projects are located in provinces that “have no shortage of generating capacity”, the joint report noted. Co-author Lauri Myllyvirta told Carbon Brief that the fact that China is “failing” to follow its commitment “to ‘strictly control new coal-fired power projects’ is an alarming sign of China’s overall [decarbonisation] progress”. Co-author Flora Champenois said: “If China keeps its fast pace in developing wind and solar power and sticks to its stated coal power development plan…China’s ‘dual carbon’ goals would not be delayed.” The expansion of renewables and coal capacity, combined with China’s targets, could lead to coal project cancellations or “massive early retirement”, the report noted.

‘Pragmatic, sensible’ relationship needed for climate cooperation

UK-CHINA: James Cleverly, the UK foreign secretary, visited China and told officials the UK is open for Chinese investment in areas such as electric car battery manufacturing, reported the Times. In an interview with Sky News, he said that “we have to have a pragmatic, sensible working relationship with China because of the issues that affect us all around the globe”, including climate change. The Financial Times noted that Cleverly told Chinese foreign minister Wang Yi “it is important” for the leaders of the two countries to speak. However, it has been “all but ruled out” that president Xi Jinping will attend the G20 meeting this weekend in New Delhi, said the Guardian.

XIE ZHENHUA: China has also publicly signalled that further cooperation on climate change is desirable, with special climate change envoy Xie Zhenhua telling a forum that China, the US and Europe have “broad prospects for cooperation” on climate change, in comments covered by Caixin. He also confirmed that he had spoken with his US counterpart John Kerry and former EU climate chief Frans Timmermans about “how to take advantage of these complementary strengths to enhance cooperation on renewable energy”, said the outlet. Separately, Kerry said at the Africa Climate Summit that he hoped Washington and Beijing “could come together” in the fight against global warming, reported Agence France-Presse, while China’s ministry of foreign affairs called for the US to work with it to “create favourable conditions” for China-US climate cooperation, said state-run news outlet CGTN.

US-CHINA SPOILER? US secretary of commerce, Gina Raimondo, visited China just before Cleverly. She said that her visit produced “a great deal of progress,” though “there can be no trust” unless Beijing takes action in areas such as more predictable regulations, Bloomberg reported. A China Daily editorial published the day after her visit said the US must demonstrate that its policies are not “simply targeting China with the aim of curtailing its development”, if it wants a substantial improvement in bilateral relations. Fatih Birol, head of the International Energy Agency, told Agence France-Presse he hoped China and the US will “leave aside their tensions” and “come closer” on climate.

China’s rapid EV and battery buildup may reshape European market

PRODUCTION RACE: Japan-based Nikkei Asia reported that China’s share of global electric vehicles (EVs) exports ballooned eightfold over the past five years, accounting for 35% of EV exports in 2022. In Europe, China’s share of the European electric car market has more than doubled in less than two years, reported the Guardian. Politico shared comments from EU Industry Commissioner Thierry Breton that: “We also need to rethink [dependencies in] our supply chains from an environmental and social point of view”. The Financial Times found that China is rushing to produce more, with its regions “racing against each other” to build EV battery production centres in anticipation of surging future demand. Production capacity in China could reach “1,500 gigawatt hours this year – enough for 22mn EVs – more than twice demand levels”, the paper said, citing figures from research firm CRU Group. This “overcapacity” could force Chinese companies to export batteries cheaply, which would reduce the European industry’s sustainability, said the outlet. 

WORRIED MARKET: European automater BMW’s chief Oliver Zipse told the ​​Daily Telegraph that since China “started building its lithium battery production industry much earlier than rivals”, EU and the UK cannot compete with cheap Chinese electric cars, especially with the ban on selling new petrol and diesel cars in the 2030s. A comment piece by UK journalist Ben Judah in the Sunday Times argued that the “best thing to do” for security is to have lithium mines that the UK owns.

Spotlight 

China experts discuss coal, climate goals and cooperation

A new paper, “Unpacking China’s climate priorities, by the Brookings Institute’s John L Thornton China Center suggests China is taking a different strategy from the west to address climate change – prioritising measures to adapt to global warming over efforts to reduce greenhouse gas emissions – while aiming to become the “indispensable” global leader in renewable technologies, both for financial and geopolitical benefits.

Carbon Brief interviewed the authors of the paper, Mallie Prytherch, Kenneth Lieberthal and Ryan Hass, and asked their opinions on China’s climate policy, as well as coal vs renewable energy and international cooperation. The interview has been edited for clarity and length.

Carbon Brief: What do you think is the biggest change in China’s climate policy over the past decade?

Brookings Institute: The biggest change in China’s climate policy over the past decade remains Beijing’s pledge, announced by Xi Jinping at the September 2020 UNGA [United Nations General Assembly], to achieve national carbon neutrality by 2060.  

Beijing had previously committed only to reductions in carbon intensity per unit of GDP and other goals (e.g. achieving peak coal by 2030) that stopped short of specifying dates and targets for actual reductions in GHG [greenhouse gas] emissions.  

What matters most to the effort to constrain climate change is the additional GHG released globally each year. The PRC [People’s Republic of China], as of the early 2020s, already annually exceeds the combined GHG emissions of all developed countries. And its 2060 carbon-neutrality pledge does not include specifics on either peak national emissions or when emissions will stop increasing and start to trend downward. 

While the 2060 commitment is, thus, a welcome and very important change to past climate policy, the cumulative scale of China’s GHG emissions during the period between now and 2060 remains both unknown and highly consequential. [For more, see Carbon Brief’s Nine key moments that change China’s mind about climate change.]

CB: How do you interpret China’s current policies over coal and renewable energy?  

BI: China’s energy policies are influenced by a combination of factors, including economic considerations, energy security, local employment concerns and environmental goals. The country’s efforts to adapt to climate change and reduce emissions involve a complex balance between addressing immediate energy needs, maintaining employment and transitioning to cleaner energy sources over the long term.

China continues to burn an enormous amount of coal and build new coal mines and thermal power plants. These actions appear to be guided by several Chinese priorities. 

First, they are intended to provide backup power when other sources fall short. Second, they help maintain employment in the coal industry, which is politically important in key provinces in China. Finally, the new thermal power plants are (like most built since about 2010) outfitted with the most efficient (super-critical) technologies for energy production. 

It’s crucial to recognise that these rationales are not mutually exclusive. 

[For renewable energy], through its massive investments, China is seeking to become the indispensable global provider of these critical clean energy solutions. After having lagged other countries in previous waves of technology development, China is determined to be at the leading edge of innovation in the clean-energy revolution. 

One of China’s major domestic advantages is its ability to mobilise resources around a priority issue. China’s “campaign-style” efforts often have greater impact at home than they do abroad. That said, if China can deliver affordable, efficient renewable energy technologies at scale to hasten the clean energy transition, the world will be a better place.

CB: Multiple politicians from the US, UK, EU and Canada have visited China recently, emphasising climate cooperation. How optimistic are you that China could work with these countries closely?

BI: Climate cooperation from a Chinese standpoint simply does not look like climate cooperation from a Western standpoint. This was on display during US climate envoy John Kerry’s recent trip to China, where he emphasised that “enhanced action by the PRC to accelerate decarbonisation, reduce methane emissions and address deforestation is essential for the world to limit warming to 1.5C”. Xi replied with his own speech during Kerry’s visit: climate resilience in China “must be determined by ourselves and never under the sway of others”. 

This does not make climate cooperation impossible; it just means we must maintain realistic expectations about where Chinese and global climate priorities might overlap. For example, this past December, China chaired the 2022 United Nations Biodiversity Conference (COP15), which produced one of the world’s most comprehensive deals on climate: the Kunming-Montreal global biodiversity framework (GBF). Hailed as the “Paris Agreement for biodiversity”, the successful ratification of the GBF allowed China to position itself as a world leader in climate initiatives. 

This also does not mean that China will only focus on adaptation. In 2021, China updated its national determined contribution (NDC) for the Paris Agreement to be more optimistic and to include additional goals, such as solar power capacity, that were not included in its original NDC in 2016. 

In essence, China is willing to engage in international climate cooperation on its own terms. Beijing will not allow any perception to emerge that it was bullied into accepting anyone else’s goals or targets. This suggests that private coordination with Beijing likely will have far greater impact than public goading in terms of encouraging China to identify its interests in terms that support broader global efforts to reduce greenhouse gas emissions.

Watch, read, listen

SOLAR GLUT: Chinese financial news network Caixin published an article on the surging capacity in China’s solar manufacturing industry, which could supply “more than twice as much solar power as the world can consume” in 2023.

EV EMISSIONS: On the Environment China podcast, Zhang Shaojun, associate professor at the Tsinghua University School of the Environment, explained his research findings that the life-cycle carbon emissions of electric vehicles in China are currently about 40% lower than internal combustion engine vehicles.

GREEN FINANCE: Ma Jun, president of the Institute of Finance and Sustainability, gave his views on the mechanisms needed to ensure that green finance effectively supports China’s energy transition in an article for the thinktank China Finance 40 Forum.  

New science 

How does science and technology innovation improve carbon productivity? – evidence at China’s province level
Environmental Science and Pollution Research

A study investigated the impact of innovation in science and technology on “carbon productivity” by collecting data from across China between 2004 to 2020, finding that such innovations play a “crucial role” in achieving the goals of carbon peaking and carbon neutrality. The authors also reported that both carbon productivity and rates of science and technology innovation are higher in southern China than in northern China.

Upgrading for 30-60 targets: China’s policy framework on carbon peaking and carbon neutrality
Korea Europe Review

A study reviewed China’s evolving climate legislation, examining the “internal logic” of China’s policymaking processes. It found that China faces challenges from the “very short time window” between its carbon peaking and carbon neutrality deadlines (2030 and 2060, respectively); bottlenecks around replacing coal with oil and gas; coordinating carbon peaking between its different provinces; and encouraging development and adoption of greentech innovations. It stated that in future: “China should gradually establish a legal framework suitable for the 30/60 [peaking and neutrality] targets, a multi-level governance system, and a mechanism for equitable sharing of carbon reduction costs among regions and industries.”

Indigenous people’s perceptions of benefits and costs of China’s second phase of the grain for green program and the influencing factors
Ecological Economics

Researchers studied perceptions of China’s “Grain for Green Program”, which aimed to reduce soil erosion and desertification by providing direct payments to farmers who convert cropland to forests or grassland. They found that perceptions of program participants about net economic, social, environmental, and overall benefits are more important for the sustainability of the program than conventional monetary measures of net economic benefits.

China Briefing is compiled by Anika Patel and edited by Wanyuan Song and Simon Evans. Please send tips and feedback to [email protected].

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