Assessing China’s Energy and Climate Goals
The global climate crisis is accelerating at a devastating rate—producing catastrophic floods, deadly heat waves, and disastrous wildfires. With a recent Intergovernmental Panel on Climate Change report unequivocally linking such extreme weather events with human-induced climate change, the message is clear: The global community must act now to keep global temperature rise below 1.5 degrees Celsius. As the world’s largest emitter, it is no surprise that China’s energy trajectory is in the spotlight, particularly in the lead-up to COP26. In 2019, China’s greenhouse gas emissions exceeded those of all Organization for Economic Cooperation and Development (OECD) countries and the European Union combined. In the push for post-pandemic economic recovery in 2021, China’s emissions surged, growing by 9 percent in the first quarter alone compared with pre-pandemic levels. While that pace is slowing somewhat, China’s emissions are still rising, with the Chinese government planning to allow emissions to keep growing for the next decade. Having a clear-eyed view of where China stands with its climate and energy policies is now more important than ever. Here are four things U.S. observers need to know about China’s actions and approach to climate.
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1. China is meeting its climate targets, but they are insufficiently ambitious
A frequent misperception is that China reneges on its climate commitments. However, for the past decade, China has met or exceeded its key climate and renewable energy goals and its nationally defined contribution under the U.N. Framework Convention on Climate Change. The problem is not that China is reneging on its promises, but rather that it has not promised to do enough.
According to the Climate Action Tracker, the Chinese government’s climate pledges are nowhere near the ambitious action the world needs to keep temperature rise below 1.5 degrees Celsius—or even below 4 degrees Celsius. In its 14th Five Year Plan (2021–2025), most of the Chinese government’s climate and renewable energy targets were a marginal improvement compared with its previous five-year plan and lacked any promises to significantly transition away from fossil fuels. The Chinese government kept its peak emissions target at 2030, and it has only pledged to achieve carbon neutrality by 2060—a full decade after the United States, the European Union, and many other economies. At the same time, top Chinese officials continue to refer to coal and other fossil fuels as the cornerstone of China’s energy security strategy. In a recent factory inspection, Chinese President Xi Jinping emphasized coal as China’s main energy source. China currently consumes more coal and is building more coal-fired power plants than the rest of the world combined. The message is clear: The Chinese government will meet its own modest climate targets, but it will rely on coal for the foreseeable future. Most importantly, it will decarbonize the Chinese economy at its own pace, indicating economic development still outweighs the country’s climate change mitigation goals.
2. Although China has the largest renewable fleet in the world, it uses renewables less aggressively than other countries
China has deployed more renewable energy in absolute gigawatts (GW) than any other country. As of 2020, China had more than 900 GW of wind, solar, and hydropower—more than triple the installed capacity of the United States.
However, China’s consumption of clean energy as a percentage of its total—the metric that matters most from a climate perspective—lags behind other countries. Currently, China’s nonfossil fuel consumption is approximately 16 percent of its total consumption, while coal accounts for nearly 57 percent. In the United States, renewable energy surpassed coal in 2019, and nonfossil fuel sources accounted for 21 percent of total consumption in 2020. The European Union also reached nearly 20 percent nonfossil fuel consumption in 2019.
President Xi pledged China’s nonfossil fuel energy consumption would reach 25 percent of total consumption by 2030. To meet that goal, China must be far more aggressive with its renewable deployment than it has been so far. President Xi set a conservative target of reaching 1,200 GW of installed solar and wind power by 2030, but the country will need to at least double its rate of annual renewable energy growth for the next decade to reach 25 percent nonfossil fuel energy usage. This undertaking would be equivalent to installing Germany’s entire wind and solar fleet each year.
3. China emits more carbon per unit of GDP and almost as much per capita as developed economies
There are several ways to measure a country’s carbon emissions, which can help analysts better understand the economic structure of carbon emissions and could have implications for future trade regimes. One way is to calculate emissions per capita. A second is to measure the amount of carbon emissions generated per unit of gross domestic product (GDP), also known as carbon intensity.
The Chinese government has previously argued that its emissions per capita were much lower than those of developed countries; indeed, China’s massive population and late development meant that the country’s per capita emissions were once much lower than those of the United States and other developed countries. However, China’s per capita emissions have nearly tripled over the past 20 years, and the country is closing the gap with OECD nations. In 2019, China’s emissions clocked in at 10.1 tons per capita compared with 10.5 tons per capita for OECD countries, although the United States continues to have much higher emissions per capita at 17.6 tons.
That said, China’s carbon intensity has historically been much higher than that of both the United States and OECD countries, and it remains so as of at least 2018. According to Climate Watch, in 2018, China emitted 695 tons of carbon per $1 million dollars of GDP, compared with the United States’ 230 tons and the OECD’s 214 tons—almost three times as much carbon per unit of GDP. While China has made some progress on lowering its carbon intensity—more than halving it since 2008—it still emits significantly more carbon per dollar of GDP than the United States.
Carbon intensity may become increasingly important as the United States and European Union discuss carbon border adjustment mechanisms (CBAMs) to curb carbon leakage from high-emitting countries. Average carbon intensity of industries in exporting countries such as China could be used as a basis of calculating fees for a future U.S. CBAM. While the numbers above show China’s average economic carbon intensity, many individual Chinese industries—including aluminum and steel—also have significantly higher carbon intensity than their U.S. counterparts or other exporters.
4. China’s atypical national emissions trading scheme does not set a fixed cap on carbon emissions
After years of planning and numerous delays, the Chinese government’s national emissions trading scheme (ETS) launched in July 2021. China’s ETS will initially only cover the electricity sector and include around 2,200 power plants. This scheme is not a typical cap-and-trade system because it lacks a fixed cap on carbon emissions—a key mechanism for driving up the carbon price and decreasing emissions.
Instead, China’s ETS has a flexible limit on emissions, with each power plant receiving allowances that fluctuate depending on its electricity output and efficiency—measured as emissions per unit of output—compared with a benchmark for its class, and with more efficient plants receiving more allowances. If a plant exceeds its emissions allowances, it is only required to purchase up to 20 percent above its original allocation, meaning emissions beyond that are essentially cost-free. Without a fixed cap on carbon and with an effective ceiling on emissions costs, there is little to no deterrent to prevent the construction of new, technologically advanced coal plants that can easily meet the efficiency benchmarks but that continue to pollute nonetheless. As a result, China’s ETS may shift electricity output to more efficient plants within its energy system, but it won’t necessarily drive down emissions, since these new efficient plants are subject to more lax emissions restrictions.
Humanity is fast approaching the point of no return when it comes to stabilizing the global climate and mitigating the effects of climate change on millions of lives. In the run-up to COP26, all eyes will be on high emitters to increase ambition to drastically reduce their carbon footprints. Having a realistic picture of where China stands with its climate and energy approach will help government officials, media, and climate activists better understand China’s positions on climate change and inform productive negotiations.
Laura Edwards is a program associate for China policy with the National Security and International Policy team at the Center for American Progress.
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China Policy Analyst