China Dialogue – Informed Comment Thoughts on the Middle East, History and Religion Sun, 02 Jan 2022 05:10:25 +0000 en-US hourly 1 China’s Year in Climate Action: Challenges for World’s Leader in Renewable Energy Sun, 02 Jan 2022 05:10:25 +0000 By Ma Tianjie | –

Chinese policymakers have been rapidly developing new climate policies even as major events have threatened to derail them.

( China Dialogue) – It’s been a dizzying period for watchers of China’s climate and environmental scene. President Xi Jinping’s carbon neutrality pledge at the United Nations in September 2020 set in motion a massive build-up of national policy, legislation and regulation on decarbonisation, with unprecedented speed. Barely two months later, Xi announced a set of more ambitious 2030 targets at the Climate Ambition Summit. And then, in March 2021, China’s top legislators approved the 14th Five Year Plan (FYP) with a whole host of climate and energy targets for 2025.

The policymaking did not stop there. Just as some observers were commenting on the slightly underwhelming near-term FYP targets, a top leadership meeting in mid-March called for the building of a power system “centred around renewables,” raising hopes that the FYP is a floor for China’s ambition and not a ceiling.

By July, it was clear the government was making a more elaborate policy framework for achieving the “dual carbon” goals of peaking and neutrality. Xie Zhenhua, China’s special envoy for climate, revealed at a conference that policymakers were busy creating a “1+N” policy framework to guide the decarbonisation journey for the next four decades. (The “1” stands for a top-level Guiding Opinion, which was issued in October, while the “N” refers to a set of more than 30 sector-specific decarbonisation plans.)

But July 2021 is now remembered more for the devastating flood that inundated much of Henan province in central China. In the 24 hours between 20 and 21 July, a whopping 622.7 mm of rain fell in the provincial capital of Zhengzhou, nearly equalling total rainfall for a regular year in this relatively arid place. Across the province, hundreds of people died or went missing in the flood.

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While the relationship between extreme weather events and climate change did get a more serious discussion in mainstream Chinese media, especially after the immediate shock of the disaster had receded a little, a part of the Chinese internet was visibly giddy. For the writer of a viral post on WeChat, increased rainfall in central and northern China was a wonderful sign of a return to a glorious past, when warmer, wetter weather aided the rise of the Tang Dynasty.

Climate change is a good thing for China, the writer told his excited followers, water nourishes the land and brings prosperity. The post spread so far that China Environment News, the official outlet of the Ministry of Ecology and Environment, felt the need to publish an extensive rebuttal emphasising that rapidly changing meteorological conditions are far from a blessing for northern China. “Climate change’s disruption of the water cycle is exacerbating droughts in parts of Ningxia, Shanxi and Gansu, while sending violent rainfall elsewhere,” it warned. “For the northwest’s sensitive and vulnerable environment, higher temperature and more humidity are hardly good news.”

The exchange provides a snapshot of the state of confusion in Chinese society about climate change, where tension always exists between a “climate-enlightened” leadership and a climate-agnostic public that usually just goes along with the former’s policy initiatives without asking too many questions. But with emission-slashing actions getting more serious in 2021, Chinese society was forced to confront some of the real impacts of climate and energy policies that would test its buy-in to the decarbonisation agenda.

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As floods were devastating large parts of Henan, the Chinese energy market was showing alarming signs of a cramp. Electricity usage rose significantly thanks to a strong recovery in manufacturing and export, but the supply of coal (still a main source of electric power despite its dwindling role) was not catching up, sending the price of coal skyrocketing to the highest level in a decade. All kinds of downstream users, from coal-fired power plants to steel mills, felt the pinch. At the end of July, the Party leadership issued an unusual opinion to try and stabilise the energy market and rein in what it saw as “decarbonisation frenzy.” Some experts interpreted that phrase to mean moves by local governments that prematurely dismantled the old coal-based energy infrastructure when the new, renewable-based one was not ready to take over.

It was the first sign of a serious policy recalibration since the 2020 carbon neutrality pledge. And its exact message took some deciphering. For energy regulators, it meant a green light to ease some of the controls put on coal production. Previously closed mines were ordered back into operation, with the hope that additional supply would stabilise prices. On the other hand, the central government doubled down on its campaign against polluting projects with high energy intensity, claiming there is legitimate work to do to tame those wasteful electricity users.

But a crisis had already been set in motion. By September, severe power shortages hit multiple provinces and led to outright blackouts in major urban centres in the northeast.

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Compared to the more fanciful back-to-Tang-dynasty brand of climate denialism, concerns about energy security and economic well-being remain a much more serious challenge for climate policy to grapple with. As the power shortage occupied the headlines, some commentators tried to pin the blame on China’s long-standing “dual controls” policy – of capping total energy consumption and setting energy intensity targets – to achieve carbon reduction goals. They claimed that a tightening of the controls was forcing local governments to turn off electricity supplies in order to meet quotas. However, further analyses showed the power cuts to energy-intensive industries were the result rather than the cause of a tightening power supply situation, highlighting the rigidity and irresponsiveness of China’s power market. Still, the controversy inevitably put China’s carbon policy in a tough spot.

And it could not have happened at a more delicate time. The overarching climate policy framework – “1+N”­– that Xie Zhenhua previewed in July was originally expected to be released at about this time, to set the tone for a season of intensive climate diplomacy ahead of the UN’s COP26 climate talks in Glasgow at the beginning of November. International pressure on China to further raise the ambition of its climate targets, which included bringing forward its effort to peak carbon to before 2030, was already heating up in September. At the beginning of the month, John Kerry, US special presidential envoy for climate, visited China for a second time in the year to meet with Xie Zhenhua and senior Chinese leaders to discuss new climate commitments. He was followed by Alok Sharma, the UK’s president of COP26, days later.

Few Chinese domestic policy issues are as entangled with international diplomacy as climate policy. This entanglement has only deepened in the past few years as Chinese policymakers realised that projecting an international leadership role on protecting a key global “public good”, namely the climate system, may also boost “performance legitimacy” at home. The carbon neutrality goal was unveiled at the UN General Assembly, the 2030 targets were announced at the UK-organised Climate Ambition Summit. John Kerry’s April visit to Shanghai probably paved the way for President Xi’s appearance at the US-organised Leaders’ Summit for Climate, where he announced a peaking date for coal consumption. And as Glasgow approached, people were wondering whether COP26 may be another international forum for domestic policy creation.

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Indeed, at the end of September, the UN became the venue for China to unveil yet another big new policy: its exit from building coal power plants overseas, reportedly a key item on Kerry and Sharma’s “wish list” when they visited China. The announcement was received very positively internationally, but no new domestic targets were put forward. In fact, when China finally published its much anticipated “1+N” policy framework in October, it mostly contained pre-existing goals and targets.

By then, Chinese policymakers were more concerned with consolidating existing policies than piling on new ones. They have argued on multiple occasions that achieving the already promised pace of emissions control is a Herculean undertaking. The international politics ahead of COP26 were not entirely conducive to more collaborative raising of climate ambition. And for the first time in China’s climate policy discourse, the 1+N document contained a call for “international struggle” on the climate issue. Though it did also call for “international cooperation”, inclusion of “struggle” reflected a hardening world view. The sentiment found its way into China’s cyberspace, where a heightened mistrust of Western advocacy for climate action revived popularity in the theory that the climate message is but a veiled attempt to thwart Chinese prosperity.

In a way, it is an achievement that China’s climate ambition has stood firm against concerns about energy security and the nationalist insistence on not giving way to Western demands. Not a single target announced over the past year was watered down in the 1+N document; they were formalised and promulgated as top-level policy. The fine balance Chinese policymakers had to keep manifested itself vividly at COP26 when China did not sign the US-led Global Methane Pledge, which contains a commitment to a 30% emissions cut in ten years, but instead committed to take actions on the potent greenhouse gas in a surprise Joint Declaration with the US near the end of the conference. “With the Global Methane Pledge, the US is trying to unfairly divert responsibility to developing countries when it has failed miserably on cutting methane over the past few years,” researchers from the official climate think tank NCSC wrote at the beginning of the COP. China is serious about addressing this pollutant, as the later joint declaration shows, but it has to do so on its own terms and following its own pace.

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In spring this year, when China Dialogue interviewed Wang Yi, a senior lawmaker and climate advisor, he argued that rather than fixating on squeezing more from near-term emissions cuts, China should place greater emphasis on its preparations for an epic 40-year journey that will entail fundamental reforms to its economic system. Other Chinese experts concur: getting near-term results is important, but the right system should be in place first to shape the emissions trajectory for years to come. And that should be the priority. At COP26, Wang Yi was still frustrated that the message hadn’t got through. “To reach our targets, we have outlined a change to our entire system, not just in the energy sector but across society and the economy”, he told the Guardian’s Jonathan Watts. “Nobody knows this.”

If system building is more important than crowd-pleasing promises to cut emissions, China’s climate policy scene certainly did not stop mattering post-COP26. The last few weeks of 2021 have seen the central bank rolling out a massive relending facility to support low-carbon industries and new signals on reforming the national power market that was at the bottom of September’s power shortages. None of these made international headlines. China still has a long way to go to convince the world why, at this critical point in its decarbonisation journey, it should be given space to walk quietly for a few more steps before it talks again.

Ma Tianjie is China Dialogue managing editor in Beijing. Before joining China Dialogue, he was Greenpeace’s Program Director for Mainland China where he was a regular commentator on China’s environmental challenges contributing to a range of media organisations. He holds a master’s degree in environmental policy from American University, Washington D.C.

Via China Dialogue

Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY NC ND) licence

Half of global Coal Companies continue to develop new Assets Mon, 13 Dec 2021 05:06:29 +0000

The 2021 Global Coal Exit List reveals the sluggish pace of the coal phase-out among major coal firms

By Nora Sausmikat and Katrin Ganswindt | –

(Urgewald, an environmental NGO based in Sassenberg, Germany

The 2021 update of the Global Coal Exit List details the activities of the 1,030 biggest companies operating along the thermal coal value chain, revealing that 503 of them, or 49%, plan to develop new assets, including coal power plants, new mines or new coal transport infrastructure.

These developments continue despite the need for 78% of the world’s coal usage to be phased out by 2030, in order to have a chance of limiting global warming to 1.5C above pre-industrial levels, the high ambition goal set by the Paris Agreement.

“As long as investors, banks and insurers continue supporting the companies listed on the Global Coal Exit List, it will be impossible to phase out coal in time,” says Heffa Schuecking, director of Urgewald, the German NGO that leads the Coal Exit initiative.

Coal power expansion

Despite the increasing global urgency to phase out coal power, 503 companies on the Global Coal Exit List, which makes about half of the total, still have plans for new assets. Among those companies, 131 are Chinese, 58 are from India, 38 are from Australia and 31 each are from Indonesia and Russia.

Only 44 of the 1,030 companies on the list have announced a coal exit date, and only around 30 of them have declared dates that could be considered aligned with the Paris Agreement. Among the 44, there are two from China that have stated they will close all their coal assets by 2040.

The first among them is the Hong Kong-based power plant operator CLP, which announced plans to replace all its units with renewables after President Xi Jinping’s announcement that China will stop building new coal-fired power plant overseas. Although 2040 will be early enough for the company to close its plants in China, this is too late for its operations in Australia – where CLP owns a coal power plant – as previous Urgewald analysis suggested that OECD countries should phase out 10 years earlier than others in order to align with the Paris Agreement. The other company that will close coal assets by 2040 is HK Electric, which unfortunately plans to replace all its units with gas-fired power plants.

Gas power should not be an option

Replacing one fossil fuel with another is the wrong solution, but one seen in many countries where coal plants are being retired or new coal power projects dropped. About a third of the coal plants “retired” in the US between 2011 and 2019 were actually converted to burn gas. And countries like Bangladesh, which has scrapped a third of its planned coal plants, or the Philippines, which dropped over half of the new coal plants in its project pipeline, are now headed towards a massive build-out of liquefied natural gas (LNG) terminals and gas-fired plants.

This is extremely worrying, as fossil gas is mostly composed of methane, which has 86 times the warming power of CO2 over the first 20 years after it is released. Methane is responsible for about 30% of warming to date and methane leaks go hand-in-hand with the process of extracting, storing and burning gas. This is especially true for LNG facilities.

In the meantime, we can observe another even more worrying trend: coal gasification and liquefaction. CIHC Pak Power Company from Pakistan – which is owned by the China Communication Construction Company and Tianjin Energy – as well as China National Coal Group (ChinaCoal) are both planning coal gasification projects in Pakistan. Turning coal into another fossil fuel is not a climate friendly alternative. In fact, through the energy-intensive conversion process, additional CO2 is released and huge amounts of water are used. Even the world leader in coal liquefaction, South Africa’s Sasol, is growing cold on the process, as Stephen Cornell, the company’s CEO, told the Financial Times in 2017: “The carbon footprint is too big, the capital investment is just extremely large, and there are better options for us in terms of return on investment.” Counting on coal conversions is totally off-track from a climate-friendly energy path.

Everyone agrees that President Xi’s announcement to end finance for overseas coal projects is good news. For now, it is not clear how many of the planned new coal mines, such as in Russia and Pakistan, and how much of the proposed 60 GW involving Chinese companies or financing will be cancelled. These plans should by no means be transferred to other fossil fuels – their construction needs to be stopped and all remaining funds should support the implementation of renewable solutions.

With regards to fossil fuels, the Glasgow climate negotiations in November made one thing clear: The commitment to phase down unabated coal in the final agreement text, although weaker than the earlier draft text that called for a phase out, represented a historic move. However, instead of making plans for the future, almost all oil and gas producers are continuing business as usual by expanding capacity. An additional 190 billion barrels of oil equivalent will be added to current production in the near future, according to Urgewald’s Global Oil and Gas List. There is still much to do in the battle against coal, but the one against oil and gas has only just started.

Nora Sausmikat works at the China desk of environmental and human-rights organisation urgewald. She previously directed the China programme of the non-governmental foundation Asienhaus.

Katrin Ganswindt is a coal and divestment campaigner at environmental and human-rights organisation urgewald. Tweets @KatrinGanswindt

Via Al Jazeera English: “Bosnia’s most polluting power plant linked with cancer”

The End of Coal? In Huge News for Climate, China to Stop Building new Coal Power Projects Overseas Sun, 26 Sep 2021 04:08:40 +0000

On the anniversary of its carbon neutrality pledge, China has announced a new policy to stop building new coal-fired power plants abroad

By Shi Yi | –

( China Dialogue ) – The mounting calls for China to stop supporting coal power projects overseas have received an answer. Chinese President Xi Jinping announced through a pre-recorded video address to the United Nations General Assembly on 21 September that China “will not build new coal-fired power plants abroad” while at the same time increasing its support for developing countries to pursue green and low-carbon development.

The announcement ends speculation as to where China stands on the issue as one of the last remaining public financiers of overseas coal power projects, ahead of UN climate talks in Glasgow this November. Since 2013, China, Japan and South Korea have contributed 95% of all global public financing for coal power projects outside their own borders. China is the largest among the three, supplying US$50 billion that accounts for about 56 GW of total installed capacity.

Chinese-supported development of coal-fired power overseas has already slowed down in the past five years, thanks to the decreasing competitiveness of coal power compared to renewables and declining appetite from host countries. A report by the Centre for Research on Energy and Clean Air (CREA) shows that close to half of planned and permitted coal power projects with Chinese involvement have been either cancelled or suspended. In 2021 so far, China has not made any new coal investment overseas, except for three supply and engineering contracts that may or may not materialise.

Both Japan and South Korea have announced policies for ending public financing support for coal power projects abroad in recent months. With President Xi’s announcement, all major public financiers of the industry have indicated their intention to exit the overseas market in one way or another.

China is the first developing country to take such a position, said Kevin Gallagher, Director of the Boston University Global Development Policy Center. He now urges the private sector to follow suit.

UN Secretary-General Antonio Guterres welcomed the announcement made by President Xi. “Accelerating the global phase out of coal is the single most important step to keep the 1.5-degree goal of the Paris Agreement within reach,” he said in a statement.

Scope of pledge needs clarification

It is unclear how China will approach the overseas coal power projects that are already planned or under construction. According to data collected by the Global Development Policy Centre, in mid-2019, 13.5GW of overseas coal power capacity with Chinese involvement had already been planned and 20GW was being built. The pandemic might have disrupted some of that.

Wang Yi, a member of China’s Standing Committee of the National People’s Congress and vice president of the Chinese Academy of Sciences’ Institutes of Science and Development, told China Dialogue that the scope and coverage of the “no new coal” pledge remains to be clarified through follow-up policy documents:

“I think what is now almost certain is that Chinese policy banks and state-owned enterprises will no longer invest in new coal power overseas. But does the pledge cover all investment forms? What about projects initiated and fully financed by the host country? And will commercial deals won by private Chinese companies be affected by the pledge? These need to be clarified by follow-up policies.”

What about projects initiated and fully financed by the host country? Will commercial deals won by private Chinese companies be affected by the pledge?

Wang Yi, member of China’s Standing Committee of the National People’s Congress

On Chinese social media such as WeChat groups, the new pledge has triggered heated discussions among climate experts and industry practitioners. Whether captive power plants should fall under the pledge is one of the topics debated. These are off-grid power plants built by Chinese companies specifically serving the needs of their overseas industrial parks.

Industry impacts

Chai Qimin, director of strategic planning at the National Centre for Climate Change Strategy and International Cooperation (NCSC), reflected that many Chinese-involved coal-fired power plants overseas are there to respond to a host country’s demand. Especially so in Southeast Asia, where the natural resource endowment, cost considerations and grid compatibility issues make coal power an attractive option for governments. Chai claims that with the new pledge, China actually lets go of some commercial returns from such projects to fulfil its commitment to climate action, which will definitely result in losses for its coal-related industries but will also create new opportunities for renewables.

Some industry players are already responding to the new pledge. Tsingshan Holding Group, a privately owned Chinese conglomerate in the business of steelmaking, announced shortly after Xi’s pledge through its official WeChat channel that it will no longer build any new coal power projects overseas. Tsingshan has invested heavily in countries such as Indonesia and Zimbabwe, building energy-intensive industrial parks that often rely on captive power plants. In March this year, Tsingshan contracted Shanghai Electric to build a 3X380 MW coal-fired power plant for its steel and nickel industrial park in Indonesia. The WeChat statement did not mention how the new decision will affect the fate of this project.

The impact of China’s hardening position on coal power, both domestically and internationally, are being felt across the industry. On industry WeChat platforms, industry insiders, from coal power equipment suppliers to coal power engineering companies, lamented the industry’s gloomy prospects. On the other hand, observers were also asking if overseas hydro power and nuclear power will see a “boom”.

Wang Yi argues that as China exits coal power overseas, it should also propose how it intends to strengthen its support for renewables in developing countries, offering alternative solutions for these countries to meet their energy needs. He suggests these can include energy saving, energy efficiency measures, and new development models that bundle renewable energy with poverty alleviation and agriculture projects, so that low-carbon solutions can be aligned with local development needs.

Installing solar panels in Salta province, northern Argentina, for a project led by PowerChina (Image: Martin Zabala / Alamy)

Professor Yuan Jiahai of North China Electric Power University sees the announcement as opening a window for Chinese companies to double down on their renewable energy investments in developing country markets. For Chinese companies to push for higher renewables take-up in those countries, they need to strengthen their supply chains locally to reduce costs.

Christoph Nedopil, a professor at Fudan University Fanhai International School of Finance, believes power plants already in operation deserve China’s attention too. Although the running of such projects are often under the sway of host country energy policies, he thinks China can support them to accelerate the retirement of the coal power fleet.

Fleshing out the route to carbon neutrality

One year ago, on September 22, President Xi surprised the world by announcing China’s “dual carbon” goals: peak carbon dioxide emissions by 2030 and carbon neutrality, which covers all greenhouse gases, by 2060. At the time, a lack of details around the goals made some observers sceptical about China’s commitment. This questioning was furthered when they saw China’s impressive post-pandemic economic recovery being partially powered by high-emissions infrastructure projects, including coal-fired power plants.

Later that year, China followed up with a new set of 2030 climate targets under the Paris Agreement and, in March this year, it unveiled its 2025 climate and energy targets under the 14th Five Year Plan. The updated targets make the contour of China’s pathway towards the “dual carbon” goals clearer.

Wang Yi told China Dialogue that in the past one year, China has been “constantly strengthening its climate targets through clarifying policy documents, gradually fleshing out its route to carbon peaking and carbon neutrality.”

If China wants to be a true leader, there is a need to be consistent with what it does domestically and what it does overseas

Professor Yuan Jiahai, North China Electric Power University

In April this year, at the Leaders’ Climate Summit convened by President Biden, President Xi pledged to “strictly control” domestic coal power and peak China’s domestic coal consumption by 2025, supplying yet another benchmark in China’s near-term climate policy. The announcement also signalled a rapidly shrinking space for coal development in China. According to Greenpeace, new coal power approvals by China’s provincial governments declined by 78.8% year-on-year in the first half of 2021. No major coal power projects were approved (except for combined heat and power projects) after Xi’s April announcement.

With a new leaders’ group for the “dual carbon” climate goals set up in May, headed by Vice Premier Han Zheng, climate policy development in China entered a “fast track” mode. A full set of policies that is composed of a top level guiding document and multiple sector-specific roadmaps (the so-called “1+N”policy framework) is currently in the making. According to China’s special climate envoy, Xie Zhenhua, the policy set will include items covering energy structure reforms, industrial upgrades, low-carbon buildings and green transportation, among others. Chai Qimin told China Dialogue that creating such a set of policies is not just for clarifying the routes towards carbon neutrality, it is also a form of mass mobilisation for central government departments, local governments and key industries.

Amid this major push to fine tune China’s climate policies, the country’s overseas energy footprint was probably the only area left untouched by top-level climate policy. That was until yesterday. With the new pledge on overseas coal, Yuan Jiahai believes China has demonstrated its conviction to become a leader of global climate actions. “China’s carbon neutrality pledge does not cover the carbon emissions incurred by its companies in other countries. But if China wants to be a true leader, there is a need to be consistent with what it does domestically and what it does overseas,” Yuan said.

Shi Yi is a senior researcher at China Dialogue. Before joining China Dialogue, she was an environmental journalist with The Paper, a major Chinese news website.

Via China Dialogue


Bonus Video added by Informed Comment:

BBC: “China pledges to stop building new coal energy plants abroad – BBC News”

Nature-based solutions: the ‘no-regret’ routes to carbon neutrality Tue, 07 Sep 2021 04:02:23 +0000

Nature-based solutions can bring together action on climate change and ecosystem protection, but cutting emissions must be top priority

By Zeng Nan, Jin Tong, and Zhang Xiaoquan | –

( China Dialogue) – The concept of nature-based solutions took root in China in 2019. Now it has been included in official documents from the Ministry of Ecology and Environment (MEE) and the Ministry of Natural Resources (MNR), bringing the idea greater visibility in policy. But urgent issues remain to be resolved. These include a lack of quantitative research, a narrow understanding of the concept, and the need for incentive policies. And although nature-based solutions (NbS) offer strong measures to tackle both climate change and biodiversity loss, they should not be used to mitigate climate change at the expense of big emissions cuts.

What are nature-based solutions?

NbS are actions to protect, restore and manage ecosystems in ways that also benefit humans. Such benefits might be climate change mitigation, economic development, food security, improved health or resilience to natural disasters.

The concept has been attracting international attention for a while. In a 2008 report, the World Bank said NbS could help both with mitigation and adaptation to climate change, while also protecting biodiversity and improving sustainable livelihoods. The following year, the International Union for Conservation of Nature (IUCN) said in a proposal to the COP15 climate talks that NbS should be promoted “as an integral part of broader adaptation and mitigation plans and strategies.”

Then, in 2016, the IUCN offered systematic definitions of NbS concepts and principles. It described NbS as including the conservation, restoration and sustainable management of natural and artificial ecosystems, in order to respond to various social challenges while improving human welfare and biodiversity. In the years since, the European Commission, Rainforest Alliance and Nature Conservancy have all put forward definitions of NbS more specific to the fields they work in. Generally speaking, the IUCN’s definition is broader and more widely applicable.

The year before last seems to have been a turning point. In 2019, the UN climate summit listed NbS as one of nine action areas, and China and New Zealand were to lead a new coalition on it. Following that, NbS gained more attention in China’s climate change and conservation fields – from policymakers, academics and NGOs – as valuable tools to combat climate change. In September 2020, nature-based solutions were included in guidelines on ecosystem restoration published jointly by the MEE, MNR and Ministry of Finance. The Nature Conservancy followed this up in March this year with a book on NbS in Chinese.

In western China, thanks to the restoration of the Loess Plateau, more than 2.5 million people have improved their economic outlook, according to the World Bank. Incomes have doubled, food supplies have been secured and the degraded landscape has been revitalised. (Image: momo / Flickr CC BY 2.0)

Some large multinationals have, based on their carbon neutrality and social responsibility commitments, also become NbS champions, attracted by the environmental, social and economic advantages of the approach.

Source: Natural climate solutions, Griscom et al. (2017). Light coral portions of bars represent cost-effective mitigation levels assuming global ambition to hold warming to <2C (<100 USD per tonne of CO2e per year). Dark coral portions indicate low cost (<10 USD per tonne of CO2e per year) portions of <2C levels.

NbS: the ‘no-regret’ routes to combatting climate change

The sudden popularity of NbS after the New York climate conference in 2019 created a misunderstanding that they are only about solving climate change. In fact, NbS can help meet multiple challenges. Within the climate context, NbS are often referred to as natural climate solutions. These can be achieved through the protection, restoration and sustainable development of natural and artificial ecosystems to fix carbon and prevent carbon emissions from land use.

Unlike traditional climate solutions which involve cutting energy use and reducing emissions, NbS can have other beneficial effects, such as protecting biodiversity, conserving water sources and looking after the soil. That all improves adaptability to climate change. The mainstream view, then, is that it would be hard to overuse NbS, as it is both mitigation and adaptation in one package.

Research by the Resilience Centre at Stockholm University described NbS as a “no-regret” option, meaning that “the outcomes are fundamental for the maintenance of the economy and livelihoods in any scenario.”

Fire management is one of the actions proposed by researchers that help mitigate climate change, whilst protecting both biodiversity and the livelihoods of local communities (Image © Greenpeace / Flavio Cannalonga)

In January, the MEE published guidance on coordinating and strengthening climate action and environmental protection, saying that attention should be given to nature-based solutions during action to mitigate and adapt to climate change. The multiple benefits of NbS have made it crucial to coordinated action on the climate and biodiversity.

More quantitative research needed

In 2017, The Nature Conservancy and 15 other organisations published a paper on natural climate solutions in the Proceedings of the National Academy of Sciences of the United States of America. They reviewed 20 actions towards climate mitigation that would see forestry, farmland, grasslands and wetlands protected, restored and better managed. The paper predicted that by 2030, the actions could contribute 37% of the climate mitigation needed to limit warming to 2C. Moreover, the researchers found this would be an affordable and practical option: around one-sixth of this mitigation would cost no more than US$10 per tonne of CO2 equivalent (tCO2e) and half of it would cost less than U$100. The paper estimated that by 2030 every tCO2e released will cause US$100 of social harm – meaning around half of the NbS climate action could be termed cost-effective.

To better understand the global and national potential of NbS in mitigating climate change, Nature4Climate and the Nature Conservancy developed the Natural Climate Solutions World Atlas.

According to the atlas, the 15 NbS pathways covered have the potential to reduce China’s annual emissions by 2.223 billion tCO2e, or one-fifth of the 11.7 billion tonnes of greenhouse gases the country emitted in 2018. Of those potential reductions, 46% cost less than US$100 per tonne. The three options which have the greatest potential and cost under US$100 a tonne are: reforestation, cropland nutrient management and avoidance of forest conversion.

In September last year, China committed to peaking its carbon emissions by 2030, and reaching carbon neutrality by 2060. Carbon neutrality means all emissions are offset by negative emissions – that is, net emissions are zero. Currently, the mainstream view in Chinese climate policy is that alongside emissions cuts, carbon removal technologies, such as carbon capture, utilisation and storage, and direct air capture, will be needed to create more negative emissions, as well as NbS to fix carbon in forests, wetlands, agricultural land and coastal belts.

There is no doubt NbS have a major role to play in achieving carbon neutrality. But a lack of research material and data means research findings lack representativeness and detail. There is an urgent need for quantitative research into the potential and synergies of NbS at the national and regional level, in order to provide data for policy decisions and leverage private investment.

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Since 2019, The Nature Conservancy, Chinese Academy of Sciences, Chinese Academy of Forestry Science, and Chinese Academy of Agricultural Sciences have been working on in-depth research into three major NbS options: reforestation, natural forest management and cropland nutrient management. This research has involved modelling and meta-analysis based on observational data, and the results are expected this year. Once they come in, the potential and benefits of NbS in cropland, grasslands, wetlands and coastal zones will also be analysed.

NbS: Not just reforestation

Over 90% of the Nationally Determined Contributions (NDC) which countries submitted under the Paris Agreement include NbS, with more than half of those covering forestry. China’s own 2015 NDC included a quantified target for forest volume, and that target was raised at the Climate Ambition Summit last December.

According to the Outline of the 14th Five Year Plan, 24.1% of China will be covered in forest by 2025. Planting trees can fix huge amounts of carbon, and brings many other benefits. But this means many think NbS simply means creating forests.

While it is true that forests have a crucial role to play in mitigating climate change, there is much more to NbS. Wetland, grassland and cropland ecologies all have unique and essential ecological, social and economic functions, which cannot be replaced by forestry alone. Grasslands and wetlands should not simply be taken over to increase forest coverage – forests should only be created after a scientific planning process.

In any case, NbS aren’t just about fixing carbon. They can also cut emissions. Globally, up to 19% of emissions of the two major non-CO2 greenhouse gases, methane and nitrous oxide, comes from arable and livestock farming. There is huge potential to reduce those emissions through cropland nutrient management and improved paddy field management.

Improved rice cultivation is one of the nature-based solutions that can help reduce emissions in China (Image: Arian Zwegers / flickr, CC BY 2.0)

Currently, China’s NDC only provides quantitative targets for forestry goals. But if the country is to exploit all NbS potential and have all sectors working towards this aim, it should put figures on its goals for other areas – based, always, on scientific research.

The full and successful implementation of NbS will need effective incentive mechanisms. Wang Yi, member of the Standing Committee of the National People’s Congress, has noted that management of the forest, wetland, grassland, cropland, ocean and urban functions important for NbS is currently divided across the Ministry of Natural Resources, Ministry of Agriculture and the Ministry of Ecology and Environment. An integrated coordination mechanism is lacking. There is an urgent need for China to establish such a mechanism within its environmental governance framework, with clear responsibilities and processes, and beneficial incentives. That mechanism will drive cooperation across departments, and get more stakeholders involved in governance.

Stick to your roots

Internationally, there has been criticism that too much emphasis on NbS could divert attention away from sources of greenhouse gases and the transition to renewable energy. While NbS has a crucial role to play in achieving peak carbon and carbon neutrality, it is not a replacement for other solutions. Most urgently, we need a full energy transition in manufacturing, power generation, farming and transportation, with the gradual elimination of fossil fuels and research and innovation in clean energy tech. We must be extremely careful that the rush to carbon neutrality does not result in boosting NbS and overlooking the need to cut emissions. For example, some fossil fuel companies have in recent years committed large funds to NbS but fall short in cutting emissions in their own operations.

Critics argue that too much emphasis on NbS could divert attention from the urgent need to use clean energy to achieve carbon neutrality (Image: Eric Sonstroem / Flickr, CC BY 2.0)

As the climate crisis worsens, NbS offer a no-regret route to tackling climate change. But the decisions we make during the systematic process of change must be backed by science, by policy and by broad participation.

Dr. Zeng Nan is a Nature-based Solutions scientist at The Nature Conservancy China. She works with government think tanks, the private sector and NGOs to adopt Nature-based Solutions to climate change at the scientific, policy and project levels.

Dr. Jin Tong is the science director at The Nature Conservancy China. She has nearly 20 years of research and conservation experience, specialising in endangered species protection and the planning and management of protected areas.

Dr. Zhang Xiaoquan is chief science officer at The Nature Conservancy China and an expert in climate change and forestry carbon sequestration.

Via China Dialogue

Shanghai leads way in China’s carbon transition, but Does not have Much Time to Act Sat, 10 Jul 2021 04:01:56 +0000 By Shi Yi | –

( China Dialogue ) – Many Chinese cities and provinces are working on plans to hit peak carbon before 2030. Shanghai, China’s most developed city, is set to lead the way.

Somewhere on the eastern side of Shanghai’s Chongming Island, 300,000 solar panels lie over rows and rows of aquaculture ponds. The island’s first solar–aquaculture project started providing power to the grid late last year.

Soon after, in January, Shanghai announced it would work to achieve peak carbon during the 14th Five Year Plan period (2021–25). The district of Chongming went a step further, saying it would explore the possibility of achieving carbon neutrality. Now, more and more solar power facilities are popping up here.

Chongming, a network of rice fields, wetlands and rivers, is regarded as Shanghai’s green energy powerhouse. By the end of 2020, it had 500 megawatts of renewable energy capacity installed, exporting what isn’t used locally to the rest of Shanghai or neighbouring Jiangsu province.

But Shanghai, a megacity of 24 million people, has little space left on which to develop renewable energy, hampering the prospects for more ambitious decarbonisation of its energy sources.

As one of China’s most developed cities, Shanghai faces the same challenges the rest of the country does in achieving peak carbon and carbon neutrality: rejigging the energy mix and cutting industrial emissions. But it must also tackle emissions from transportation and buildings, issues faced in the “consumer cities” of more developed nations. As such, it is leading the way for China’s future low-carbon transition.

Shanghai, May 2019. © Juan Cole.

Taking the lead on peak carbon

Last September, China committed to peak carbon by 2030, and carbon neutrality by 2060. To this end, the central government is encouraging local governments to hit peak carbon early where possible, with local action plans for reaching peak carbon due at the end of the year. According to rough figures put forward in the media based on local 14th Five Year Plan documents published early this year, almost 100 cities or regions have said they will reach peak carbon early. These include Shanghai, Beijing, Tianjin and Suzhou.

Since 2010, China has launched 87 low-carbon city pilot projects. These have explored routes to low-carbon development by saving energy in industry and limiting emissions from buildings, transportation and agriculture. There have been no official announcements, but research by the Energy Foundation China indicates 23 provinces (including centrally administered municipalities such as Shanghai, Beijing and Tianjin) have reached, or are close to reaching, peak carbon. They account for 80% of national emissions. Emissions are still growing in seven provinces, including Fujian and Jiangxi in the east, and Guizhou and Xinjiang in the west.

Zou Ji, president of Energy Foundation China, said at a recent seminar that those localities already at peak carbon could be divided into two types. The first is experiencing a population decline and weak economic growth. More common is the second, where the economy is more developed, the industrial and energy structures are more advanced, and natural resources, such as sunshine and wind, are more favourable to low-carbon development.

Regions that are approaching peak carbon mostly rely on traditional drivers of growth or energy-hungry heavy industry, but do have the means to improve the industrial and energy mix in order to reach peak carbon.

Meanwhile, emissions are still growing in places with unfavourable natural resource endowments, such as abundant coal, and undeveloped economies.

The Energy Foundation China’s analysis found Shanghai’s emissions from energy activities have already peaked. That matches up with findings from Peking University’s Institute of Energy. But modelling by other academics has found that if Shanghai’s existing policies are enforced, the city’s carbon emissions will plateau between 2018 and 2024, and only then start to fall.

If energy structure and intensity targets are tightened up, that fall could be brought forward to 2022.

Shanghai, May, 2019. © Juan Cole.

Adjusting the energy structure

Shanghai aims to have renewables account for 8% of its energy mix by 2025, compared to 1.6% in 2019. One expert who took part in the drafting of Shanghai’s peak carbon action plan said the city is short of land and even if all available space for solar power is used – including all rooftops – it would still be only a tiny fraction of what is needed.

Coal still accounted for 31% of Shanghai’s energy consumption in 2020, and the energy mix needs more work if the city is to hit peak carbon. The city has published a range of documents over the last few years indicating it will end its reliance on coal, with a cap on coal consumption. Meanwhile, the city is also working to replace local coal power generation with renewable generation located elsewhere in China, and to increase the use of natural gas.

Shanghai, May, 2019. © Juan Cole.

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Shanghai already imports about half of its electricity, drawing on renewables in western China, such as hydropower, which help cut the city’s carbon emissions. The above-mentioned expert expects that achieving peak carbon and carbon neutrality will mean Shanghai relying more heavily on green power imports. When drafting their peak-carbon action plans, provinces are required to factor in emissions incurred during the generation of imported power. This is to encourage power-consuming provinces in the east, such as Shanghai, to consider their energy structure as a whole, rather than simply export their pollution.

Shanghai: lightening up

“Looking at the emissions curve, we can see that Shanghai has already started to decouple its carbon footprint from economic growth,” Zhu Dajian, director of the Institute of Sustainable Development and Management Research at Tongji University, told China Dialogue. Shanghai has long been China’s top city in terms of GDP. In 2018, its per-head GDP broke US$20,000, and service sector GDP has accounted for around 70% of the total for the last five years. These circumstances are similar to those seen when developed nations reach peak carbon.

Currently, Shanghai emits 200 million tonnes of carbon a year. Emissions from industry, transportation and buildings account for around 45%, 30% and 25% of the total respectively, according to research by the World Resources Institute. This, however, is not the pattern seen in major cities in developed nations. Zhu Dajian says cities overseas are mainly residential, with emissions coming from buildings and transportation – these are emissions arising from consumption. But Shanghai, like most of China’s cities, is still home to production.

Shanghai, May, 2019. © Juan Cole.

Shanghai used to be a centre of heavy industry, until the 1990s when a push to shift to lighter and more modern industries started. The banks of the Huangpu River, which runs from north to south through the city, are lined with old industrial buildings, now refitted as fashionable art galleries and shops. The city’s 14th Five Year Plan says it will continue to turn its urban rust belt into an attraction.

Even so, cutting industrial emissions will be a tough nut to crack. Dai Xingyi, professor at Fudan University’s Department of Environmental Science and Engineering, said the city does not want to do away with all its industry: high-end manufacturing will be retained. Over a decade ago, Beijing forced steelmaker Shougang to relocate. Shanghai, though, allowed Baogang, now Baowu Steel and China’s largest steel manufacturer, to keep operating in the city. Dirtier production lines were, however, shut down.

A number of academics told China Dialogue that Shanghai’s industrial emissions peaked as early as the 12th Five Year Plan period (2011-2015), and industrial carbon intensity in the city is lower than in many others. But that makes further decarbonisation more challenging. Shanghai will have to rely on further industrial changes and technological improvements.

Transportation and buildings: New challenges

Peak carbon will not be easy for the city. In developed nations, industrial emissions peaked, and then emissions from transport and buildings had to be tackled. In New York, emissions from buildings account for 70% of total emissions. According to Zhu Dajian, emissions from transport and buildings can be expected to contribute a larger proportion of Shanghai’s overall emissions as incomes rise in the city.

Shanghai is building five city “sub-centres” on its outskirts. In April, the municipal government ruled that buildings in those sub-centres must use green building standards, and that ultra-low energy buildings are to be encouraged. According to Dai Xingyi, the “greenness” of these new centres will also depend on their success in attracting people and commercial activities. Having the new buildings sit empty would be wasteful.

Research has shown that improving energy efficiency in existing buildings can bring big emissions savings. This is particularly the case for commercial buildings, where energy use is often tens of times that of government or residential buildings.

In 2009, Shanghai started monitoring energy use in some large public buildings. Today, over 2,000 buildings are covered by that monitoring scheme. On screens at monitoring centres, and online, building owners and the government can see real-time usage by key building infrastructure such as air-conditioning and lighting. At a seminar held in April, one official involved in the city’s efforts to save energy and cut emissions said that data is “more useful than just lecturing.” The Shanghai district of Changning ranks buildings on their energy efficiency, encouraging building managers to learn from each other. Experience has shown that even without retrofitting, these methods can produce annual reductions in energy use.

Shanghai is known in China for its efficient public transport system. It has over 1,000 kilometres of subway lines either in operation or in the works, with links to the neighbouring provinces of Jiangsu and Zhejiang planned. The city government has repeatedly said the only solution to congestion issues is to prioritise the development of public transport. In 2016, the city put forward a “15-minute city” plan, with the aim of having 99% of communities able to access the bulk of their shopping, leisure and transportation transfer points within a 15-minute walk by 2035.

By 2025 all Shanghai buses, government vehicles and city-centre goods vehicles will be electric, according to the city’s 14th Five Year Plan (Image: Alamy)

Urban planning decisions can result in locked-in carbon emissions. Zhu Dajian explained that Beijing once planned to centralise urban functions while keeping residential zones on the outskirts. That resulted in longer commute times and appalling congestion. A similar approach was taken with the early stages of the Lujiazui commercial zone in Shanghai’s Pudong district. However, the city realized that low-carbon development requires a functionally mixed urban layout, which renders more carbon reductions than technological advancements.

But Shanghai still has over four million cars on the road, the fifth-largest number of any Chinese city. Limitations on car purchases were introduced in 1994 but the city remains plagued by congestion and vehicle pollution. Those limits were relaxed last year, in response to the impact of the coronavirus, with an extra 40,000 purchases allowed. The city government also spent big on subsidising consumers to upgrade their old vehicles to newer and more efficient internal combustion models.

Shanghai’s 14th Five Year Plan and a separate five-year plan for electric vehicles provide guidance for increasing electrification of private transport. However, no timetable is given for the phasing out of internal combustion vehicles. According to those plans, in five years 50% of all private vehicle purchases will be of all-electric vehicles, while all buses, government vehicles and city-centre goods vehicles will be electric.

Zhu Hong, deputy head of the Shanghai Urban and Rural Construction and Traffic Development Academy, said during a speech that more new electric vehicle purchases will slow emissions growth, but the speed with which the existing fleet is replaced will be key for reaching peak carbon. His research has found that 74% of the city’s transportation emissions come from road vehicles, with the rest from river and rail transport, while over 60% of road vehicle emissions come from cars. He thinks the government needs to go further on purchase restrictions. Currently, there is a quota for annual car purchases but no cap on total car numbers. “There should be a cap. If we can’t cap vehicle numbers, how can we talk about a peak for vehicle emissions?”

Shanghai does not have much time to act. A number of experts told China Dialogue that one aspect of the “low-carbon development path with Chinese characteristics” that academics are proposing would mean more economic growth with lower emissions. Shanghai’s annual per-head carbon emissions are over 10 tonnes, still higher than major cities in developed nations. Zhu Dajian said that Shanghai’s route to a low-carbon transition will show the way for the rest of China.

Shi Yi is a senior researcher at China Dialogue. Before joining China Dialogue, she was an environmental journalist with The Paper, a major Chinese news website.

Via China Dialogue

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Why Activists have Launched a Fossil fuel non-proliferation treaty Sun, 11 Apr 2021 04:01:27 +0000

Campaigners hope to end the expansion of fossil fuels across the world and wind down existing production by getting countries to sign up to a new international accord.

By Isabella Kaminski | –

( China Dialogue ) A fossil fuel non-proliferation treaty (FFNPT) initiative was formally launched last September by a coalition of academics, lawyers and activists. It’s modelled on the landmark UN Treaty on the Non-Proliferation of Nuclear Weapons agreed in the 1960s, and is built around the same three pillars: non-proliferation, disarmament and peaceful use.

The fossil fuel treaty would prevent new exploration and production, phase out existing stockpiles, fast track the transfer of clean energy to poorer nations, enable a just transition for workers and communities, and support economic diversification in countries still dependent on fossil fuels.

International diplomatic efforts through the UNFCCC (United Nations Framework Convention on Climate Change) and on a national level have focused on the demand for fossil fuels and ignored the problem of supply.

According to the UN’s latest Production Gap report, published in December, the world will need to cut fossil fuel production by about 6% per year between 2020 and 2030 to meet the maximum 1.5C temperature rise aimed for by the Paris Agreement. But countries are instead planning an average annual increase of 2%, the report found.

The campaigners behind the FFNPT want to plug this gap.

Carroll Muffett, president of the Center for International Environmental Law and a member of the campaign’s steering committee, says corporate lobbying has stifled discussions about production at the UNFCCC.

A treaty of this kind sends a powerful signal – both a moral signal and a market signal – to actors that this is where the world is going.

Carroll Muffett, Center for International Environmental Law

“Fossil fuel producers have shaped a public narrative that says climate change is a result of seven billion individual decisions, as opposed to a relatively modest number of corporate actors and government decision-makers who have committed the world to a pathway based on fossil fuels. The ability to drive those conversations to focus on only one side of the equation has proven quite difficult to overcome.”

Muffett says the threat of nuclear war and the proliferation of landmines before the 1997 Mine Ban Treaty were both moments when the international community failed to respond decisively to a serious threat. “Demands from civil society, coupled with a small number of high ambition actors, found a way forward.”

From little acorns

Although the ultimate aim would be for national governments to sign the FFNPT, the committee is currently targeting sub-national jurisdictions. The City of Vancouver is the first public authority to endorse it, and New York and Los Angeles may soon follow.

“The power of that is it allows those states that are willing to go further, faster to do precisely that,” says Muffett. “And at the same time, the simple act of discussion around a treaty of this kind sends a powerful signal – both a moral signal and a market signal – to actors that this is where the world is going.”

In February, Carbon Tracker and Global Energy Monitor announced the creation of a global registry of fossil fuels, an important step in making the treaty a reality. The aim is to develop the most detailed database of fossil fuel reserves to date. Existing databases are either lacking detail or publicly inaccessible, and countries are under no obligation to report existing, planned and potential production.

Rob Schuwerk, executive director of Carbon Tracker North America, says the initial work will involve triangulating the data that does exist and encouraging governments to contribute more in future.

He acknowledges that problems with accessing information and language will be a barrier in countries such as China. Still, he says it is important to be as detailed as possible so the information can be used for allocating supply withdrawal through the mooted treaty. The aim is to publish an initial database around October, which will then be refined and expanded. Campaigners hope the UN could host it one day.

The registry may also highlight the different ways that countries contribute to fossil fuel proliferation, whether through direct extraction, oil and gas leasing operations, subsidies or overseas finance. “There’s a deep disconnect between the internal commitments that countries are making and what they’re doing with their overseas activities,” says Muffett.

The Makomo coal mine supplies the Hwange power station in Zimbabwe, which is currently being expanded by Chinese state-owned company Sinohydro (Image: KB Mpofu / China Dialogue)

Muffett says recognition of this makes it easier to identify what individual countries need to do to curtail supply and to do so in a fair way. “There’s a deep intersection between the call for fossil fuel non-proliferation and the need for a just transition,” he says. “The phase out of fossil fuel production should begin in those states where you know they have the least economic reliance on fossil fuels and the greatest means to make that transition.”

Not only that, but it could help prevent countries without a history of fossil fuel extraction, particularly in Africa, from “hitching their economies and their futures to commodities that we know have a very limited lifetime,” he says.

Putting production on the UNFCCC agenda

Richard Black, senior associate at the Energy &amp; Climate Intelligence Unit, finds it difficult to see how such a treaty could fit into the formal framework of the UNFCCC, and stresses that governments will not sign up independently unless they perceive that it’s in their national interest to do so. “The scenarios from the IPCC [Intergovernmental Panel on Climate Change] give countries enough leeway to argue that some continued fossil fuel use is compatible.”

Muffett says international climate diplomacy is slowly starting to recognise the issue of fossil fuel supply on the margins, but “we’re still a long way from the UNFCCC finding a way to bring that into its agenda. Is there a way to bring fossil fuels into the Paris Agreement? Absolutely. But can we wait for that to happen before moving forward on this initiative? We cannot.”

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Black points to Denmark’s recent decision to deliberately pull out from North Sea oil and gas as a crucial moment that showed it would be possible for a national government to act on supply. “Inevitably, over time, we will see other governments deciding to wind down and eliminate their fossil fuel industries because we are looking indisputably at a dwindling global market.”

This year, for the first time, big oil producers like Shell and BP acknowledged that peak oil demand has come and gone – in late 2019. This marks a turnaround from their predictions last year when they still believed that demand for fossil fuels would continue to rise over the decade, a shift largely forced by the coronavirus pandemic rather than policy.

“We’re seeing a growing recognition that oil and gas producers were already in systemic decline before the pandemic hit, and the pandemic has accelerated those forces,” says Muffett. “So I think the moment for this movement and ultimately for the treaty has come.”

Isabella Kaminski is a freelance environmental journalist. You can follow her on Twitter @Isabella_Kam

via China Dialogue

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Introducing the Fossil Fuel Non-Proliferation Treaty

China’s National Carbon Market has Just Launched: How it Could be a Climate Game Changer Thu, 04 Feb 2021 05:01:43 +0000 By Huw Slater, Wang Shu and Dimitri De Boer | –

( China Dialogue) – With the new market having opened on 1 February, experts offer a take on how it may impact China’s industries and emissions trajectory

China’s national carbon market started operating on 1 February, as mandated by a key regulatory document. Although it will take time for the pricing to be meaningful, eventually the system is likely to have a substantial impact on investment decisions.

“Measures for the Administration of National Carbon Emissions Trading” (hereafter “Measures”) appeared in January, 5 years after the 2015 joint statement on climate change between President Xi and then US president Barack Obama established a cornerstone for the carbon market to move forward. It lays out how carbon emissions “allowances” are to be allocated, how trading should be conducted and how measurement and verification should be done. It also represents the culmination of many years of speculation among industry players, environmental advocates and the international community.

As the measures were issued by the Ministry of Ecology and Environment (MEE) they carry lower legal authority than that of a State Council regulation. But a ministry-level ordinance is considered the fastest way to trigger the early operation of an ETS. It is likely to play a transitional role until higher-level legislation is developed. Last month, Vice Minister Zhao Yingmin of the MEE also announced that it will push for a Climate Change Law, which may fill this higher-level role.

Taken together with the ambitious climate targets announced by President Xi in September, the timing of the publication of this regulation suggests that 2021 will be the year that China’s carbon market finally comes of age.

A decade-long journey to a national carbon market

Beginning at the end of 2011, eight regional emissions trading systems were consecutively introduced in different parts of China (Shenzhen, Shanghai, Beijing, Guangdong, Tianjin, Hubei, Chongqing and Fujian). These provided valuable experience for the central government in developing a national carbon pricing mechanism. They have adopted caps based on carbon intensity (emissions per unit of GDP) rather than an absolute emissions cap. This approach is consistent with a number of other emissions trading systems, including in the United Kingdom (during the first phase of the EU ETS) and Alberta, Canada. It has been adopted by the Chinese government as best suited to achieve both economic growth and emissions reduction.

The launch of Shanghai’s regional carbon market in 2013 (Image: Shen Chunchen / Alamy)

In December 2017, the National Development and Reform Commission (NDRC) released a “Development Plan” for an ETS in the power sector. The plan outlined a roadmap with three phases: foundational; simulation trading (without compliance obligations); and market operation.

In 2018, China undertook a major governmental restructure, after which responsibility for the ETS fell to the MEE. Simulation trading was originally expected to begin around 2020, with the market operation phase starting approximately one year after that. But Covid-19 delayed the process. Nevertheless, several major policies or drafts were issued in the second half of last year, leading ultimately to the publication this month of the Measures and other key regulatory documents, which will directly kick-start the 1 February launch of the market operation phase.

For context, the European Union’s ETS was first regulated in 2003 and went through a pilot phase before becoming a functional market in 2008. It experienced turbulence following the global financial crisis, and it is only in the last 12 months that the market has seen carbon prices considered substantial enough to impact on investment decisions. Emissions trading systems aren’t simple to introduce. But they can be very important drivers of change over the long term. This makes them of keen interest now that Europe and China have introduced net-zero carbon emissions targets for 2050 and 2060 respectively.

How will the system work?

In its initial stage, the national ETS system will cover China’s power sector, which roughly accounts for 30% of China’s total emissions, with over 2,000 power-generation facilities enlisted. In time, industries such as cement, steel, aluminium, chemicals and petrochemicals will be integrated.


The power sector accounts for roughly 30% of China’s total emissions.

Enterprises covered by the national ETS will be excluded from the regional pilots, to avoid double counting and double taxing, according to the Measures. Of course, those entities that have experience trading and developing compliance strategies at the regional level may have some first-mover advantage.

At the beginning, all emissions allowances are to be allocated for free. The Measures state cautiously that the auctioning of allowances will be “introduced at the appropriate time according to the situation”. This represents a change from an earlier draft that suggested the share of allowances to be auctioned would increase over time. Free allocation makes it difficult for companies to conceive of the price as representative of a true cost. This is a key factor in why the regional markets have not been very active, and consequently not led to genuine price discovery. At the same time, state-owned enterprises and financial institutions have advised government that the ratio of paid allowances is a highly sensitive factor for their profitability and credit risk respectively. This may have resulted in the more cautious approach reflected in the final version of the Measures.

Carbon financial derivative products, such as repurchase agreements and futures, will not be allowed at the beginning of the national market (only direct exchange of allowances will). This will disappoint some players who believe such products have helped to increase liquidity in the regional carbon markets, and also created additional stakeholders in the healthy development of the market. Regulators are likely to take a cautious approach to derivatives for the sake of market stability and to ensure that speculation does not get out of hand.

The biggest change in the Measures compared with the original NDRC plan is that verified company-level emissions must be disclosed to the public. This should help to increase transparency of the system, raise the level of compliance by emitters and verifiers, make important information available to financial markets, and possibly allow for prosecutors and the public to challenge non-compliance.

Even though the Measures have laid out the fundamental regulatory framework for a national ETS, there are a few key issues still waiting for further clarification, such as the rules and procedures for companies to interact with the exchange platform and registry.

What might be the impact on carbon emissions?

The 2020 China Carbon Pricing Survey was undertaken in July–August last year, shortly before Xi’s 2060 carbon neutrality pledge. It obtained expectations about the future of carbon pricing in China from 567 market participants and related experts, the largest such exercise to date.

The average price expectation in the national carbon market starts at 41 yuan (US$6.3) per tonne of CO2 (for 2020), rises to 66 yuan per tonne in 2025 and to 77 yuan by the end of the decade. The survey asked for stakeholders’ carbon price expectations to mid-century to get a sense of how carbon pricing may play a role in China’s mid- to long-term decarbonisation strategy. Average carbon price expectations for 2050 are 140 yuan per tonne, however the actual price levels remain highly uncertain, especially in the more distant future.

For context, the price in the EU ETS rose from about US$5.5 per tonne in 2017 to over US$36 by the end of 2020, around the historic high. In the United States, where carbon markets operate in both California and the northeast states, recent prices have been at around US$17 per tonne and US$7 respectively. A high-level commission on carbon prices, chaired by eminent economists Joseph Stiglitz and Nicholas Stern in 2017, on the other hand, suggested that prices of at least US$40–80 by 2020 and US$50–100 by 2030 would be required in order to achieve the goals of the Paris Agreement.

Feedback on the survey results from power sector representatives, gathered through a focus group held in September 2020, suggested that, in their view, the carbon price should not exceed 30 yuan per tonne. State-owned enterprise leadership is concerned that if the cost impact on their businesses is excessive, it will impact on their annual performance assessment. In order to promote more trading activity in the market and incentivise companies to identify and realise more cost-effective emission abatement opportunities, the power sector instead suggests that other heavily emitting sectors should be brought into the system as soon as possible.

Eighty per cent of respondents expected China to realise President Xi’s September commitment to peak China’s carbon emissions “before 2030” (previously “around 2030”), and 36% expected China’s emissions to peak by 2025 or earlier. If the ETS is allowed to fully play its role as a cap-and-trade system, it should help China to achieve this goal. Chinese regulators can draw some confidence from international experience. The EU ETS has proven successful in driving emissions reductions in a cost-effective way. Emissions from installations covered by the ETS declined by about 35% between 2005 and 2019. The more robust carbon price realised in 2019 helped to ensure a reduction in emissions of 9% in that year, with a reduction of 15% in electricity and heat production.

The hardest part of carbon pricing is often getting it started. The moment that the Chinese government decides to increase ambition with the national ETS, it can. The mechanism is now in place, and it can be ramped up if the momentum and political will provided by President Xi’s climate ambition continues. In the coming years, this could see an absolute and decreasing cap, more sectors covered, more transparent data provision and more effective cross-government coordination. This is especially so with energy and industrial regulators who will need to see the ETS not as a threat to their turf, but as a measure with significant co-benefits for their own policy objectives.

Correction: an earlier version of this article states that emissions trading systems in the United Kingdom and Canada also adopt an intensity-based approach, when it should be more specifically “United Kingdom (during the first phase of EU ETS)” and “Alberta, Canada”.

Huw Slater is research and projects manager at China Carbon Forum (CCF), a Beijing-based platform that holds events and discussions on specific topics regarding China and climate change.

Wang Shu is lead managing consultant at ICF Consulting Beijing. Having spent 10 years as director of the Climate Change Department of China’s National Development and Reform Commission, he is one of the country’s leading specialists on carbon pricing policies, the transition towards a low carbon society and the promotion of clean energy, particularly in connection with the overall design of regional and nationwide carbon markets.

Dimitri de Boer is chief representative in China of ClientEarth, a European environmental law group. He works with the Ministry of Environmental Protection, the Supreme People’s Court, and the Supreme People’s Procuratorate, to support their efforts to strengthen environmental governance and rule of law.

Via China Dialogue

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New China TV: “New carbon trading rules take effect to strengthen China’s green development”

UN Trumpets Warning: Rich Nations aren’t Acting Urgently enough to cut planet-wrecking Carbon Dioxide Emissions Sun, 03 Jan 2021 05:31:43 +0000 By Catherine Early | –

( China Dialogue ) – New net-zero pledges are welcome but need to be met with rapid action in national climate plans, according to the UN Environment Programme.

The number of countries committing to net-zero emissions goals by mid-century is a “significant and encouraging development”, the United Nations Environment Programme (UNEP) said this week. But it also stressed that these long-term goals are inconsistent with current national strategies under the Paris Agreement.

Some 126 countries covering 51% of greenhouse gas (GHG) emissions have adopted, announced or are considering net-zero goals, the UNEP noted in its latest Emissions Gap report. The annual report tracks progress towards the Paris goals, adopted at the UN’s COP21 climate change negotiations in 2015, to keep global temperature rise below 2 degrees C. [3.6 degrees F.], and to aim for 1.5C [2.7 degrees F.].

Nations aiming for net zero include China, France, the United Kingdom, Japan, South Korea, Canada, South Africa, Argentina, Mexico and the European Union. If the United States adopts a net zero by 2050 target, as suggested in the Biden-Harris climate plan, 63% of global emissions would be covered, the UNEP said.

However, these commitments need to be urgently translated into strong near-term policies and action reflected in Nationally Determined Contributions (NDCs), which outline country-level plans to reduce emissions in line with Paris Agreement targets, it said.


The estimated reduction in global warming by 2050 caused by the Covid-related fall in emissions this year.

Ambition under current NDCs is “seriously inadequate”, the UNEP said, and will result in global temperatures rising at least 3 degrees C. [5.4 degrees F.] above pre-industrial levels by 2100. Furthermore, the G20, which represents 78% of GHG emissions, is not on track to meet its NDCs.

Nine G20 members are on track to achieve their 2030 NDC commitments, five are not, while two lack sufficient information for the UNEP to determine progress, it said.

Under the Paris Agreement, NDCs need to be strengthened every five years. This month marks the fifth anniversary of the agreement, and countries were due to discuss their new NDCs under UN negotiations at COP26. This has been delayed until November 2021 due to the Covid-19 pandemic.

At the time of writing the UNEP report in mid-November, none of the major emitters had submitted an updated NDC. However, the UK, which is hosting COP26, last week announced its target to reduce emissions by 68% by 2030 compared with 1990 levels.

The UK, together with the UN, France, Italy and Chile, is to host a virtual Climate Ambition Summit this weekend to build momentum towards COP26. Speaking at a press conference to launch the UNEP’s report, the UK’s lead climate negotiator Archie Young said the government hoped that publication of its new NDC target would galvanise action from other nations.

We missed the opportunity with the first wave of stimulus packages.

Inger Anderson, UNEP executive director

“At the summit, we expect to see a whole range of new commitments brought forward covering short- and long-term mitigation goals, as well as on finance and adaptation. We know that this alone won’t close the gap, but we hope it will be another significant step in the right direction,” he said.

UNEP Executive Director Inger Anderson said that the summit hosts wanted to see the technical detail of how commitments made by heads of state would be delivered over the coming three decades.

GHGs are still rising, reaching a new high of 59.1 gigatonnes of CO2 equivalent (GtCO2e) in 2019. Globally, they have grown an average of 1.4% a year since 2010, with a more rapid increase of 2.6% last year due to a large increase in forest fires. Travel restrictions and reduced economic and industrial activity this year due to Covid-19 are predicted to reduce emissions by up to 7%, but this will only translate to a 0.01C reduction of global warming by 2050.

The pandemic will not contribute significantly to emissions reductions by 2030 unless countries pursue an economic recovery that incorporates strong decarbonisation, the UNEP said. Indeed, if countries roll back climate policies as part of efforts to boost economies, the decrease in global emissions by 2030 is projected to be significantly smaller at around 1.5 GtCO2e, and may actually increase by around 1 GtCO2e.

RecommendedG20 stimulus plans favouring fossil fuels

If countries aim to lower emissions through recovery packages, emissions could fall by just over 25% by 2030. But to date, G20 governments have committed over US$230 billion in Covid-19 measures to sectors responsible for fossil fuel production and consumption, far more than to clean energy, which has been granted roughly US$150 billion, according to the UNEP.

“We missed the opportunity with the first wave of stimulus packages, they did not hit as much as they should on the green recovery. But the packages now being discussed in parliaments across the world must absolutely ensure that we can decarbonise our economies,” Anderson said.

The Production Gap report, produced by the UNEP with the Stockholm Environment Institute, the International Institute for Sustainable Development, the Overseas Development Institute and think-tank E3G, found that the world needs to reduce production of fossil fuels by 6% per year between 2020 and 2030 to limit global warming to 1.5C.

Countries are instead planning and projecting an average annual increase of 2%, which by 2030 would result in more than double the production consistent with the 1.5C limit, it warned.

Catherine Early is a freelance environmental journalist. You can find her on Twitter @Cat_Early76.

Via China Dialogue

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Bonus Video:

UNDP: Emissions Gap Report 2020: An Inflection Point

With US AWOL on Climate Leadership, are EU Members like Holland Turning to China? Mon, 28 Dec 2020 05:01:05 +0000 By Charlotte Nijhuis | –

( China Dialogue ) – Both countries have their work cut out to reach emissions-reduction goals, but China is already learning from Dutch expertise in offshore wind.

With half of its territory below sea level, the Netherlands is particularly vulnerable to the effects of climate change. The country is a pioneer in offshore wind, which is often seen as an obvious contender for joint Dutch–Chinese projects to advance both climate protection and Dutch business interests. For its part, China seems keen to profit from Dutch expertise.

For many Dutch people, when they think about China in relation to environmental issues, the first thing that comes to mind is Chinese cityscapes shrouded in a thick haze of air pollution. “I think many people in the Netherlands view China as a polluter. In their head they have images of big cities with a lot of smog,” said Detlef van Vuuren, a researcher at the government’s Environmental Assessment Agency. But he points out that this view is one-sided. “From my perspective, China is both an innovator – they are currently the biggest investor in renewables – as well as a polluter, since they still heavily invest in coal technology as well.”

Earlier this year, China surprised many, including the Netherlands, with its pledge to reach carbon neutrality by 2060. “The Netherlands welcomes the announcement of [President] Xi Jinping that China is tightening its climate ambitions, and looks forward to the further translation of these ambitions into concrete plans,” said Nicolette Stoel, spokesperson for the Dutch Ministry of Foreign Affairs.

Louise van Schaik, senior research fellow at international affairs think-tank Clingendael, said the announcement has opened new opportunities for cooperation between the two countries. She explained that the Netherlands looks critically at China on issues such as human rights, “but climate is seen as an exception”. “It’s almost a mantra: ‘at least the Chinese are doing well on climate!’ The question is: is it possible in international politics to work together on one topic and not others?”

This juggling act between cooperation on the one hand and protecting the Dutch economy and values on the other characterises the Dutch government’s China strategy published in 2018, which aptly includes “a new balance” in its title. Given China’s huge market, the Netherlands is eager to cooperate and trade, but it is also wary of China’s growing influence, and has concerns about security and human rights. This was made clear by Stef Blok, the Dutch minister of foreign affairs, in a letter introducing the strategy: “The government wants to cooperate with China on the basis of shared interests, while keeping an eye on ideological differences.”

Whether this is possible is not a question the Netherlands can answer alone. As the European Union’s sixth largest economy, the country often prefers to defer to Brussels when it comes to big topics such as climate change and relations with China. This is simply because “the EU is a much bigger player”, explained van Schaik of Clingendael. The same is true for issues relating to the global energy transition. “We also don’t have that much to bring to the table when it comes to renewables, because we are ourselves lagging behind quite a bit,” said van Schaik.

Installing offshore wind turbines is our strong suit.

Arjen Schutten, head of the export association Holland Home of Wind Energy

In 2019, the Netherlands finalised its national climate agreement, which included the goal of reaching the targets set during the 2015 Paris Agreement. According to the document, the country’s aim is to reduce emissions by 49% by 2030 compared to 1990. But EU leaders have recently agreed to raise the bloc’s 2030 emission-reduction target to at least 55%, so the Netherlands will likely have to up its target too. But in 2019, emissions were only down 18% compared to 1990. “We have become a lot more ambitious since the [2019] climate agreement, but our story is peanuts in comparison to the German Energiewende [energy transition], for example”, said van Schaik.

The Netherlands may have a lot to catch up on when it comes to reducing emissions, but it also has leading technological knowledge and innovations to offer. In particular, offshore wind power is often cited as a prime sector for Chinese–Dutch cooperation. “The Netherlands is very good at the installation of offshore wind turbines, that is really our strong suit,” explained Arjen Schutten, head of the export association Holland Home of Wind Energy. “There are several big Dutch companies that install turbines or provide hardware for the installation, and the Dutch research institute TNO delivers a lot of knowledge about wind energy to China,” he said.

One recent example is a project in the South China Sea about 26 kilometres from the city of Yangjiang, where Dutch company SPT Offshore is laying the foundations for a 300 megawatt windfarm.

Schutten believes the Chinese are mostly interested in innovative solutions and acquiring as much knowledge as possible. In his experience, “the Dutch companies that are successful in China are the ones that are constantly innovating, so they are always one step ahead of the Chinese.” China will take all the knowledge they can from foreign companies, he said, so they can eventually do everything themselves. “The Chinese dream is developing a prosperous state that is no longer dependent on other countries.”

In January, the Netherlands will host the Climate Adaptation Summit 2021, where leaders from 23 countries, including China, will meet to discuss strategies for adapting to the effects of climate change, such as droughts, heatwaves and sea-level rise.

“The Netherlands hopes that China will participate at the highest level to strengthen global leadership on adaptation,” said Stoel of the Ministry of Foreign Affairs.

Charlotte Nijhuis is Junior Correspondent at Clean Energy Wire, where she reports on the energy transition in Germany and beyond. Before she moved to Berlin she worked as a freelance journalist for various Dutch media. She has an MA in Journalism from the University of Amsterdam and a BA in Political Science from Amsterdam University College.

Via China Dialogue

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Bonus Video added by Informed Comment:

Netherlands Innovation Network: “A basic introduction to hydrogen in China – Where do Chinese needs and Dutch knowledge meet”