With the 2021 United Nations Climate Change Conference (COP26) set to take place in Glasgow next month, many eyes will be on China – the world’s largest greenhouse gas (GHG) emitter – as observers seek new clues to its clean energy policy direction.
The focus on China, which pumps out 28% of global carbon-dioxide emissions, is well-founded for a number of reasons, experts say. For one, Beijing made one of the biggest pledges on the climate-change front in 2020 when Chinese president Xi Jinping told the UN General Assembly that China will cap emissions before 2030 and become carbon neutral by 2060.
That pledge, along with its tremendous amount of investment in recent years in technology such as solar, wind and geothermal energy, contrasts sharply with the country’s continued appetite for coal. That demand has been highlighted this year by a shortage that resulted in a price spike and drove many power plant operators to voluntarily suspend operations and caused frequent blackouts in various parts of the country. Because China’s electricity prices are fixed, high coal prices would mean that utilities would be selling power at a loss.
“The blackouts started in the northeast in September and then spread to Beijing and Shanghai, and now we are hearing some cases even further south in Guangdong,” said Yves Tiberghien, professor of political science at the University of British Columbia and author of The East Asian Covid-19 Paradox, which was recently published by Cambridge University Press. “This is a big deal. We haven’t seen this in 20 years or so, since the 1990s.”
Besides the fixed price of electricity cutting into utilities’ bottom lines, Tiberghien said flooding in coal-producing northeastern China this year has further limited supply and driven prices higher.
The most important factor, he said, may be that the pandemic has created an “erratic pattern of power consumption” in China as consumers stay home more and use electricity at unusual hours, catching power providers off-guard with sudden spikes in demand.
“All this shows that China is experiencing a big clash between their targets on climate – which they are pursuing in a very direct way – and the gyrations of COVID and the realities of a marketplace, and that’s what’s creating these blackouts. All these factors are colliding … and the transition to a lower-emission economy before we have all the technology is painful. You are forced to have flexibility in the pathways.”
Sharon Zhengyang Sun, trade policy economist with the Canada West Foundation and distinguished fellow at the Asia Pacific Foundation of Canada, said there may be at least 10 Chinese provinces struggling to meet Beijing’s energy targets.
“The bigger implication here is that the electricity crunch really shows the bigger problem of China as an increasingly hungry energy hog,” said Sun during a recent Canada West Foundation webinar. “And this is going to be a long-term problem.”
She added that it does not mean China will not hit its goals on peak emissions or carbon neutrality, but in the short term it will continue to rely on coal, even if more emphasis is placed on renewables.
“If we were to think about wind and solar power, China’s manufacturing processes for solar panels require certain amount of electricity, and much of that comes from coal,” Sun said. “So it’s really difficult situation in terms of finding substitutes … and we should be still seeing continuous high coal prices.”
Edmund Downie, former non-resident fellow at Columbia University’s Center on Global Energy Policy, said high coal prices and the subsequent rolling blackouts may benefit China’s direction on climate change policy in the long run.
But it will require Beijing’s leadership to take a longer-term perspective on the current power shortage, he said.
“To me, it demonstrates how Chinese leaders’ interpretation of events will be in terms of where China goes. If the interpretation is basically, ‘We don’t have enough coal, and we need more to keep the lights on,’ that will encourage a slower process for peaking China’s emissions, and every year matters in this decarbonization process. But it can go in another direction if they say, ‘This is what happens when you rely on coal.’ It could mean they push to get more renewables online or [go] nuclear or hydrogen – to achieve power on demand without fossil fuels. And the answer of where they will go is not clear yet.”
But regardless of which direction Beijing takes, Downie emphasized that the focus on China’s actions at COP26 as well as other major summits like the G20 is warranted because of the country’s outsized impact not just on global emissions, but also on crucial factors such as manufacturing methods and standards – as well as support for other developing countries’ needs to shift towards sustainable energy without sacrificing economic development.
“There is no fighting climate change without an engaged China,” he said. “And that’s in both the percentage-of-emission sense and the supply-chain sense. China is a big reason the price of solar is where it is these days; a lot of the lower costs come from Chinese manufacturing’s cost reductions that they were able to achieve. … Things that help China decarbonize will help other countries decarbonize.”
For Tiberghien, there are already positive signs on that front. He noted that besides the 2030 and 2060 pledges, Xi has other high-profile goals that indicate climate change is one of his top priorities as China’s leader. Among those is a pledge to the UN last month to stop financing coal-fired power plants outside China – which leaves the world without a major financier of coal power generation now that two other major players, Japan and South Korea, are also pulling out of the game.
Despite China’s domestic thirst for coal, these steps outside of its borders appear to indicate a serious approach to reducing emissions internationally, Tiberghien said. And that approach – which already has a history of at least 12 years – intensified in recent years because Beijing has identified an economic incentive to seriously commit to fighting climate change.
“One interesting thing people often miss is that China has already made several sets of commitments officially, the first of which was 2009 in Copenhagen,” he said. “It was the first time China made a commitment, and they promised by 2020 that they would reduce the energy-intensity per unit of GDP by 40% relative to 2005. They also promised to increase the share of non-carbon energy sources from 5% to 15% during that same period. Now we are in 2021, we can see that they’ve hit both targets. So the track record is good.
“At the same time, Copenhagen in 2009 was very painful for China because it was isolated and criticized by the U.S. and others. Climate was an area they then identified where they could work with the rest of the world – specifically the U.S. and the EU … and there’s also the strategic investor side of their considerations. They’ve come to understand two sectors will define the future of the global economy: digital and green technology. So China is thinking ahead; this is a chance to lead that economy. As a latecomer, you have a chance to become a leader; they view this as a chance to put them at the front.” •