Nikkei Asia: China should now outline how it will reduce domestic carbon emissions

Article by Kevin Rudd and Thom Woodroofe.

Kevin Rudd is a former prime minister of Australia and is the global president of the Asia Society. Thom Woodroofe is a former climate diplomat and a fellow at the Asia Society Policy Institute.

Xi Jinping’s pledge to the U.N. General Assembly last week to halt China’s construction of coal-fired power plants abroad through the Belt and Road Initiative has drawn a big line in the sand.

It is a welcome development signaling that China knows the future is paved by renewables. The key question now is when China will draw a similar line in the sand at home.

China represents around 27% of global emissions, more than the developed world combined. On current trajectories, China will also be the world’s largest historical emitter of greenhouse gases by 2050, making its actions central to whether the world can keep temperatures from rising above the Paris Agreement’s 1.5 degrees Celsius limit.

The largest infrastructure initiative in history and the jewel in the crown of Xi’s foreign policy, the BRI has funneled billions of dollars toward the construction of coal-fired power plants as far away as Eastern Europe and across Africa since its launch in 2013.

In a single sentence, Xi has wiped $50 billion of planned investment that would have resulted in more than 40 new coal plants — more than the current operating fleet in Germany — in countries including Bangladesh, Indonesia, Vietnam and South Africa, and helped avoid at least 250 million tons of carbon emissions a year.

Over their operating life span, this would have been as much as a year of China’s own emissions. In other words, this is a very big deal that will have a major important impact on the global demand for coal.

Whether Xi’s pledge will impact a similar number of Chinese coal-fired plants that are already under construction or are in the final stages of planning around the world would be an important signal to the international community that Beijing is serious. So too would be whether Chinese labor in these projects is restricted, and whether Beijing’s support for coal is replaced by genuinely green alternatives, and not high-emitting options like natural gas.

Moves to restrict foreign direct investment, as well as commercial and state-owned enterprise finance in these BRI projects, would be another. That is why the Bank of China’s announcement on Friday that it will largely halt investment in coal later this year is a welcome sign. China’s other three state-owned banks should now follow suit.

Beijing’s latest move is not entirely unexpected, confirming what China had already begun to operationalize over the last year after similar moratoriums by Japan and South Korea. Added to this was pressure from many BRI recipient countries which in recent years many had begun to eschew, and in some cases reject, Beijing’s preference for adding coal-fired power capacity over renewables.

In China’s eyes, the time was right for a major policy reset on its own terms and that was not done at the behest of the Americans. Adding urgency was the fact that massive new clean energy investments around the world driven by American finance risked unseating the political and strategic footholds Beijing had secured in many of these countries.

China also had to bring more to the table ahead of next month’s 26th U.N. Climate Change Conference of the Parties, or COP26, in Glasgow in order to avoid being painted as a villain, especially now that the easy international ride China it had under Donald Trump’s reckless climate approach was over.

Still, China has much more to do. Unlike other major emitters such as the U.S., China is yet to formally update its domestic climate targets first enshrined under the 2015 Paris Agreement.

And given that Xi’s latest announcement on BRI projects does not speak at all to China’s own efforts to reduce emissions at home, the international community will be keenly awaiting the release of China’s revised nationally determined contribution required under the Paris Agreement.

Currently only pledging to peak carbon emissions before 2030, Beijing must bring forward its plan to peak domestic emissions if China is to reach carbon neutrality by 2060. According to modeling by the Asia Society and Climate Analytics, this will need to be much closer to 2025.

Given the magnitude of Chinese emissions on a global scale, bringing forward that date by a year or two will simply not be enough and would undermine the credibility of Xi’s carbon neutrality pledge. Nor will committing to any such peak without a cap on emissions in the meantime, thus ensuring that emissions do not skyrocket between now and then.

For example, an annual Chinese cap of 10 billion tons of CO2 emissions would put China on track to soon cross the symbolically significant threshold of reducing coal for the first time ever to less than half of its domestic energy mix.

With close to half of China’s emissions — and 20% of all the world’s emissions — coming from coal, this would really change the game globally. A trajectory toward carbon neutrality by 2060 will also require China to completely remove coal from its domestic energy mix by 2040.

Until China is prepared to draw a similar line in the sand on the construction of new coal-fired power plants at home and convert the coal plants already under construction abroad to renewable alternatives, Xi’s latest announcement is unlikely to be met with the international fanfare Beijing might hope.

Article published in Nikkei Asia on 27 September 2021, available here.