Katherine Gorman (00:05):
You are listening to Climate Now. I’m Katherine Gorman.
James Lawler (00:08):
And I’m James Lawler. In another episode, we spoke with Dr. Eric Larson of Princeton University, and explored the pathways by which the United States could become net-zero. That is, reach net-zero emissions by 2050. But the reality is that it’s not just the United States or any single entity, you know – country, corporation – that needs to achieve net-zero. It is the whole world. And while historically the United States has contributed the most atmospheric greenhouse gases through fossil fuel emissions, today the biggest emitter by far is China. So to understand the direction that we’re going globally, in terms of reducing emissions, we have to understand what China is doing and what their future looks like from an emissions and energy transition standpoint.
Katherine Gorman (00:49):
Precisely James. And so we had the opportunity to talk with three experts about how China is designing its climate policy and what that policy actually is. We spoke with Johnny Huang Zhong. He’s been consulting for over 20 years in the clean energy technologies and sustainable investing in finance spaces for regional governments, corporations, and ministries in the US and China.
James Lawler (01:12):
We also had a conversation with professor Joanna Lewis, who’s director of the science technology and international affairs program at Georgetown University. And she has been working on international climate policy with a focus on China for two decades. We also spoke with Laura Edwards who’s program coordinator for China policy with the national security and international policy team at the Center for American Progress.
Katherine Gorman (01:33):
So for context, in September, 2020, president, Xi Jinping announced that China will be pursuing a 30-60 plan. China would reach peak emissions output before 2030 and reach net-zero emissions by 2060. But the question is, how is China going to achieve this goal? In theory, the answer to that is going to be laid out in China’s five-year plans. They’re a government roadmap outlining national economic plans that includes projections for everything, including developing a green economy. So to start, Johnny gave us a breakdown on what a Five-Year Plan actually is and how they fit into the framework of national policy development.
Johnny Huang (Huang, Zhong) (02:12):
Yeah, the full name of the Five-Year Plan is called the Outline of the Five-Year Plan for National Economic and Social Development. It’s a long name, but in short, you know, we call it the Five-Year Plan. And an important part of China’s national economic plan is to make plans for major national infrastructure projects, the distribution of productivity and the important proportions of the national economy, and to set goals and directions for the development of the national economy. So as far as you know, where the Five-Year Plan got started, it actually got started on January 1st, 1953. So almost like 70 years ago. China announced its first Five-Year Plan, and the purpose of that in Chairman Mao’s statement is that China could produce no more than tables and chairs, tea pots and rice, but we need to make tractors, cars, tanks, and airplanes. So that symbolized the situation back then that China did not have an industrial infrastructure in place and it needs one in order to give people hope and strengthen the communist party’s newly gained power to rule the country.
James Lawler (03:30):
So the Chinese communist party invented this system where every five years there’s a new Five-Year Plan. And the purpose is to provide an outline for the country on how the economy is going to run. Johnny also told us that this national Five-Year Plan outline works as the basis by which local or smaller governments structure their policies to build the complete national plan.
Johnny Huang (Huang, Zhong) (03:51):
Local governments and each ministry and the provincial and municipal level governments down even to like some township governments, they are making their own local regional plans. So all the local version of the plans combined together becomes the nation’s final Five-Year Plan. So you’re going to be able to see the Five-Year Plan by the end of next year.
Katherine Gorman (04:27):
So the most recent Five-Year Plan, the 14th Five-Year Plan was released in March of 2021. And it outlines China’s energy ambitions for the next five years. So, looking at these short-term goals, it could give us a sense of whether China is on track to reach its promise of net-zero emissions by 2060, to dig into this, we turn to Joanna and Laura who recently authored a report specifically assessing China’s energy and climate goals. When we got a chance to sit down with them, our first question was about what is actually in this 14th Five-Year Plan, as it relates to reducing greenhouse gas emissions. We asked Laura to start.
Laura Edwards (05:10):
The Five-Year Plan sort of laid out a series of targets on things like carbon intensity, energy intensity, a target for the non-fossil energy consumption by 2025, because this covers the period of up till 2025. And then we’re expecting that in consecutive 14th Five-Year Plan coming out from individual ministries, which also compliment sort of this overarching central government 14th Five-Year Plan to have also specific targets for things like hydro power, wind power, solar power. But just to walk through some of the specifics on carbon intensity they expect an 18% decrease from 2020 levels, which is actually the same as the goal that they set in the 13th Five-Year Plan. And on energy intensity, they’re looking at a 13.5% decrease from 2020, which is less ambitious than what they set in the 13th Five-Year Plan. So on those two really key goals, we’re actually seeing the first one be set at the same level and the second one, energy intensity, to be less ambitious than what they had set in the previous five-year plan.
James Lawler (06:26):
I’m sorry, just to clarify, make sure I’m understanding properly when you say set at the same level, what you’re saying is set at the same percent reduction, right? Not, the same level of carbon intensity?
Laura Edwards (06:42):
Yes. The same expected percentage decrease, when we were really hoping to see something more ambitious in this 14th five-year plan. So particularly given, you know, you asked about signals from high-level officials, you know, Xi Jinping had set out last year, a target for China to achieve carbon neutrality by 2060, and then also set out a series of complimentary goals to update China’s Nationally Determined Contribution (NDC) by 2030, although that has not yet been formalized in an updated NDC. So these goals are making sort of modest and incremental changes, but given that there are not strict caps on carbon emissions, there’s just a carbon intensity goal, there’s no absolute energy consumption cap in the Five-Year Plan, which is a notable omission since that was included previously, there’s no halt on building new coal plants or a cap on total power capacity which was also included in previous Five-Year Plans. We’re really looking at these as sort of less ambitious than what we would have hoped to see and for the next five years. So it’s really, you know, what is not in this 14th Five-Year Plan is just as important as what’s in the 14th five-year plan.
James Lawler (08:07):
Can you comment on why that might be, that is why this Five-Year Plan is less ambitious than the last?
Laura Edwards (08:13):
Sure. Yeah. China is the largest greenhouse gas producer in the world by far. It’s more than the US, EU and India combined. So as we point out in the report, the world really needs the Chinese government to take ambitious and urgent action on climate change and urgent action to reduce emissions and decarbonize. But unfortunately we’re seeing emissions in China grow at their fastest rate in a decade, particularly as the country comes out of the pandemic with their economic recovery, really focusing on heavy industry and having a surge in energy use. You know, previously we had thought that Chinese coal consumption had peaked. Many experts had agreed on that. And that was sort of what we were hoping, but unfortunately we’ve seen coal consumption reach its highest in 2020. So even though we would hope that China can play an increasing leadership role in the climate response, we’re sort of seeing all of that trend upwards. I don’t know Joanna, if you have other thoughts.
Joanna Lewis (09:13):
China still relies on coal for the vast majority of its electricity use, its total energy production. There are these very concerning trends in the past year with 2020 coal consumption reaching a new record high after years of slowing growth. And at the same time, you know, when you sort of look at coal versus renewables, I mean, China dominates the world in the deployment of clean energy technologies. And when you look at new power plants being built in China, so not the kind of existing fleet, but what’s being built you know, on an incremental basis each year there, you know, China is building far more wind and solar plants than any other type of technologies. In 2020, you know, China installed over 70 gigawatts of new wind turbines, 50 gigawatts almost of solar, you know, compared with under 40 gigawatts of new coal and under 15 gigawatts of new hydro-power and gas and nuclear, even smaller.
Katherine Gorman (10:06):
If they’re building all of this renewable infrastructure, then why is there still this dependence on coal? Why isn’t China leaning more into the new clean energy plants that they’re building?
Joanna Lewis (10:17):
You know, politically, it’s just still an uphill battle to convince large, powerful state-owned enterprises that renewables are the future. And, you know, China’s making huge investments in research and development, and it’s amazing what they’ve accomplished in a short time, but the political economy of China’s coal sector, the jobs, you know, the kind of concern about being able to just rely on these, these new industries to keep people employed, to maintain political stability, economic growth, you know, I think it’s just still something that the leadership is trying to get comfortable with. What’s really a challenge about decarbonization for China sort of again, compared to the United States, is that industry is still a huge segment of their economy, right? I mean, it’s still 66% of total energy consumption in China. They are still manufacturing, a huge amount of the world’s cement, iron and steel. And so that’s a really different challenge, you know, to decarbonizing the residential sector, commercial sector, or even the transportation sector, which are still much smaller shares of emissions in China, although of course, growing rapidly.\
James Lawler (11:27):
So we are really hearing all of the challenges that China’s facing to build a renewable energy sector. Are the goals laid out in the 14th Five-Year Plan even achievable, that is maybe you can comment on how likely it is for a particular goal in a Five-Year Plan to be achieved in general. What the dynamics are, you know, by which such a goal actually becomes reality.
Joanna Lewis (11:47):
Well, the five-year plans can send, I think really important high-level signals all the way down from Beijing to the local level and a strong target can mobilize local action because these national targets get translated into local targets and local officials actually are held accountable for meeting them. We see this with energy intensity targets, carbon intensity targets. So, you know, there’s a, beyond the targets themselves though, you know, there’s a wide range of mechanisms in place to try to ensure the targets are met, you know, financial incentives, penalties, and increasingly market-based mechanisms. For example, China’s new national carbon emissions trading market, which was you know, is finally now up and running. It’s been sort of gradually phased in over the last few years and it’s a lot of these levers that, you know, are disseminated throughout the entire country and then go into meeting these national targets.
James Lawler (12:48):
It turns out these more local governments and enterprises might be the key for how China is going to meet their clean energy targets. In our discussion with Johnny, he helped clarify what takes place at the local level, in response to the national Five-Year Plan.
Johnny Huang (Huang, Zhong) (13:02):
Normally the regional five-year plans will be a little bit more than what the national plan asks them to do. So for example, the national plan for carbon emissions is that it’s going to be peaking, reaching carbon peaking by 2030, but in the case of like Shanghai, they claim, we will reach carbon peaking by 2025. So that would be, you know, instead of the 15th Five-Year Plan to have to achieve that peaking goal, they’re going to achieve that goal in the 14th Five-Year Plan. So it’s a little bit different, but each one tries to out-compete their peers, you know, for various reasons.
Katherine Gorman (13:41):
Can you explain the motivation behind this kind of competition dynamic between the different regions to achieve the goals described in the five-year plan outline more quickly? What’s the incentive for doing that?
Johnny Huang (Huang, Zhong) (13:54):
Very good question. First and foremost, for local officials to out-compete their peers, other regions sort of premises on, of course, you know for political reasons for their own, you know, ambitions or promotions. But that’s one factor. The other factor is I think, you know, the communist party does realize that in order to solidify the party’s position, it needs to do something for good, for the general public to gain more support. And the case in point would be, you know, the pandemic, how the government’s being able to put the pandemic on tight control in a relatively short time span and still able to get it under control and achieve,you know, economic growth even during the pandemic and positive economic growth, given the pandemic. So it’s the, I think the political dynamics would be 1) of course, I want to get promoted to high positions. But 2) it’s also, you know, to get favorable, you know, public opinions from the public, which promotes the political positioning in the party.
James Lawler (15:12):
Laura and Joanna’s review of China’s 14th Five-Year Plan and 30-60 climate goals, they referenced a 2020 report from Tsinghua University’s Institute of Climate Change and Sustainable Development that states energy intensity would need to be reduced by 14 to 15%, and then carbon intensity would need to decrease by about 20% during the 14th Five-Year Plan period in order to achieve the 1.5 degree scenario. That is a bit more than the 14th Five-Year Plan outline, which again has a target of 13.5% decrease in energy intensity and an 18% decrease in carbon intensity.
Laura Edwards (15:49):
Compared to the previous 13th five-year plan. Those two goals are also not really more ambitious. We’re kind of seeing the same level. So they’re both sort of key examples of how the Chinese government is setting moderate targets that will allow it to continue focusing on economic growth and kind of delay the major overhaul of its energy system that would need to happen to transition to clean energy.
James Lawler (16:20):
And I think that then leads to a question, which is how aware do you think Chinese leadership is of the problems of putting off action on emissions for another 5 to 10 years, Joanna?
Joanna Lewis (16:36):
You know, I mean, it sort of, it gets back to what we were talking about earlier with this trade-off between economic growth and responding to climate change. And, you know, so I think the leadership is certainly aware, but sort of not fully bought in to, you know, whether you can maintain this steady economic growth which the leadership really believes is just crucial to maintaining political stability in the country, which is the central goal of the Chinese communist party. So, you know, I think that climate policy is important in China. I don’t want to say that it’s not, but you know, I think that right now you see China really focused on this economic stimulus, particularly coming out of the pandemic, that’s overwhelmingly focused on shoring up polluting heavy industry, you know, despite the fact that they have these very ambitious climate goals on paper.
Joanna Lewis (17:30):
And so I think it’s just, you know, it’s hard to see right nowyou know, we know what the models like Laura says, tell us where we need to be, and we know where we are today. And so it’s really unclear how China gets from point A to point B. If China waits until after 2030 to make the most dramatic emissions reductions, you know, to get online with the mid century carbon neutrality goals, it will require just an extremely rapid transformation that would be unprecedented. You know, no other country would have been able to decarbonize at that rate and therefore, you know, extremely costly, right? And so it’s just not necessarily the smartest strategy to kind of keep putting this off. You know, again, all the economic models tell us you want to do this sort of gradually you don’t want to necessarily shut down plants, you know, before the end of their useful lifetime, you don’t want to be investing in technologies that are just going to become these sunk costs and, you know, you’re going to waste the investment from it. So I think this is just a real active debate right now in China.
Katherine Gorman (18:34):
Joanna and Laura did note that despite this risk of creating significant sunk costs, by relying on the existing coal infrastructure now to sustain economic development for the next 5 to 10 years, on paper China seems to be committed to reaching their climate goals. We asked Johnny to give us some perspective on that and what exactly is China’s motivation for reaching net-zero by 2060 in spite of their existing emphasis on coal.
Johnny Huang (Huang, Zhong) (19:02):
It’s actually hard to imagine why China wouldn’t want to be a you know, a global climate action leader. So, although, you know, the president Xi’s pledged to achieve carbon neutrality by 2060 surprised many, but I believe this reflects China’s understanding of the importance of climate action and the opportunities that it presents. So first I think, you know, climate change is a common challenge to every country, especially for the two largest economies. So by working on climate change together, China and the US finally will have something in common, you know, during this extremely polarizing period of international relations. John Kerry took a trip to Shanghai in April to meet with his Chinese counterpart. And it seemed an example of a promising partnership. Soclimate change and accessibility are less sensitive compared to other national security matters. So China, the US the EU have already experienced the shared interest in dealing with this planetary crisis, but that’s, you know, that’s more general. But second, I think the money talks Global investors are allocating more and morecapital towards solving climate change. So China could use its climate agenda to attract meaningful and long-term foreign investors. In fact, China climbed to the number one ranking globally attracting foreign direct investment, or FDI of $163 billion in 2020 during a raging, you know, global pandemic, and knocking off the US, which attracted $134 billion, off the first spot. So that’s number two, money talks.
Katherine Gorman (20:57):
The idea that action on climate change is an opportunity to have something in common with the US, or have some positive US-China relations is a really interesting one. We heard from Laura and Joanna on ways that the US or other global leaders like Europe could build a more collaborative path forward with China on reducing emissions.
Joanna Lewis (21:14):
You know, I agree that I don’t think climate change can just be addressed in a vacuum. You know, I think that there’s a range of geopolitical issues, right? That are affecting the US-China relationship right now. And, you know, while climate change cooperation can and has been continuing even throughout the Trump administration, you know, particularly among scientists and researchers. I think that it’s really important to think about, you know, how we can use climate change to actually address a lot of these geopolitical issues. You know, whether it’s trade barriers to renewable energy technologies, you know, which affects supply chains around the world you know, the availability and environmental impacts of critical materials, you know, the role of overseas finance of coal. I mean, these are all issues that are broader than just climate change, right. But you know, they’re economic issues, they’re security issues, but are just going to be very important in order to have real engagement with China and to move the ball forward on the global response. Together I think it it’s clear that the US and China that, you know, the climate G2 as we call them, can really, they can either, you know, be instrumental to mobilizing global action or discord between the countries can slow progress.
Katherine Gorman (22:37):
It seems like as though both the risks and potential for China to become a game changer in our global path to net zero emissions is just huge.
James Lawler (22:48):
Absolutely. And it’s just an incredible example of how complex developing a sustainable energy future really is. It’s not just identifying the technology to solve the problem, but finding productive ways to integrate that with national and local economies, with global politics and international relations.
Katherine Gorman (23:05):
And I think that our conversations also really highlight the fact that this is not going to be a one size fits all approach. That you’re going to have to need to have different approaches for reaching climate goals in different countries that really work with the cultures, the economies, the governments of those regions. And a big, a huge thank you to Johnny, Joanna, and Laura for taking the time to talk with us about all of this.
James Lawler (23:32):
That’s it for this episode of Climate Now. You can head over to our website climatenow.com to sign up for our newsletter, to be the first to hear about live conversations with experts or new video releases and podcast releases. Thanks so much, and we hope you can join us for our next conversation.