China is increasing its ambition in addressing climate change, and it has a strong national interest in sustaining its actions. That’s according to a recent panel of experts convened by WRI’s ChinaFAQs project and the Environmental and Energy Study Institute.
The panel discussion, held on Capitol Hill before an audience of policymakers, NGOs, businesses, researchers and reporters, brought together university, government, and private sector experts to discuss China’s actions on climate and clean energy and U.S.-China cooperation.
A prominent theme was that China’s new climate targets are ambitious—requiring a substantial increase in effort beyond business-as-usual—but also achievable. China recently formalized its climate pledges first made in November in a joint announcement with the United States, committing to peak its carbon emissions around 2030 (making best efforts to peak earlier) and increase its non-fossil share of energy to around 20 percent by 2030. It also aims to reduce carbon emissions per unit of GDP by 60 to 65 percent, and increase forest stock by around 4.5 billion cubic meters, from 2005 levels by 2030.
Achieving these targets “will require substantial new policies, economic reform, and investments in clean technology,” said David Vance Wagner, China counsellor at the U.S. State Department Office of the Special Envoy for Climate Change.
Joanna Lewis, associate professor of science, technology and international affairs at Georgetown University, cited several studies in concurring that China’s targets “are a deviation from business-as-usual.” A U.S. Energy Information Administration study projects China’s emissions will peak around 2040 or later in its business-as-usual scenario. In 2011, Lawrence Berkeley National Laboratory found that China could peak in 2030 with “very stringent coal policies” and economic restructuring, said Lewis. Further, MIT-Tsinghua’s Accelerated Effort scenario shows China’s carbon emissions peaking around 2030 following a 2020 coal peak.
Wagner described China’s targets as “ambitious and achievable,” while Lewis emphasized that China tends to put forward targets it has a reasonable chance of meeting. As discussed by the panel, in recent years China has begun to put in place the building blocks for achieving its pledges through limits on coal with recent declines in coal consumption, rebalancing the economy, and ramping up non-fossil energy. According to Wang Tao, resident scholar at the Carnegie-Tsinghua Center for Global Policy, non-fossil sources already provide over a quarter of China’s electricity, the same level as the European Union and roughly twice that of the United States.
Incentives for Sustained Action
The experts also agreed that China’s action is motivated by strong national interests. The public’s pressure to abate air pollution “is a driver of action, but so is the desire for energy security … to avoid [climate change-related] impacts on agriculture and coastal populations, and to attain the economic benefits of a shift to low-carbon energy,” said WRI Senior Foreign Policy Counsel Paul Joffe.
Moreover, Wang said China can no longer rely on its old heavy industry-driven development model. As demand for industrial products wanes and growth slows, heavy industries like steel and cement are facing overcapacity, while coal plants’ working hours are declining and many are operating at deficits. In response, China is working to “change the driver [of its economy] from investment to consumption” and encourage the development of higher-value-added manufacturing. China has subsidized research and development and promoted industries such as renewables, high-speed rail and electric vehicles.
The panelists agreed that even with less international pressure, China would still follow through. “It’s certainly true that the Chinese government is watching very carefully what happens in Washington,” said Lewis. Nonetheless, China’s targets will be written into its domestic plans and policies, and are not conditional on action or aid from other countries.
Lewis emphasized that meeting the targets will require effort. With the rapid build-out of wind and solar capacity, China faces the challenge of integrating increased amounts of renewable energy into the grid. “The government is making … strides to address” such challenges, and Lewis asserted that as they are resolved, “you may see much more aggressive [non-fossil] targets.” While China will have to deal with the transition for local economies where coal has been important, reducing reliance on coal is “something that the government’s extremely committed to.”
Wang added that the government is working to transition from its familiar but inflexible command-and-control approach to implementing policies (e.g. top-down target allocation) to “a combination of… market-based instruments as well as command-and-control.” For instance, China has seven city- and provincial-level carbon trading pilot projects and is planning to phase in a national-level emissions trading system beginning in 2016 or early 2017.
Opportunity for U.S. Businesses
For Clay Nesler, vice president for global energy and sustainability at Milwaukee-based building energy efficiency and battery company Johnson Controls, U.S.-China cooperation on building energy efficiency offers “a big business opportunity” in both countries.
One such initiative, Johnson Controls’ new Asia-Pacific headquarters, will combine “integrated controls, solar PV, battery storage, advanced systems for air filtration” and other technologies to use half the energy of a typical Western building. “We’re not involved for philanthropy,” said Nesler, “we’re involved because it’s in our best commercial interest.”
Another area of cooperation is energy performance contracting (EPC), where services to improve energy efficiency can be paid for over time with the savings from reduced energy costs. Eighty-five percent of U.S. EPCs are in the public sector, while 85 percent in China are in the industrial and private sectors. Nesler said that finding business models in the United States that could apply to China, and vice versa, could double the energy service company market in the United States and more than double the market in China.
Wagner believes U.S.-China cooperation is having a global impact, crediting language from the U.S.-China joint announcement with “breaking an impasse in [the international] negotiations” in Lima last December. With climate negotiations reaching a key milestone in Paris in December, China recently also issued statements on climate with India, Brazil, and the E.U. These statements establish trust and a sense of common purpose, which Wagner asserts is “breathing momentum into the negotiations in the sense that this is really possible.”