COP26 and sustainable growth in China

5 December 2021

By Abby Sze and Oliver Lai

The COP26 conference was held in Glasgow on 31 October 2021. The four main goals are to “secure global net-zero by mid-century and keep 1.5C degrees within reach; adapt to protect communities and natural habitats; mobilise finance; work together to deliver.” Attending countries signed the “Glasgow Climate Pact”, which aims to cut down emissions by 2030 and to limit the world’s temperature from rising beyond a further 1.5C.

Given our interest in China’s developments, we would like to focus the rest of this article on their commitment to sustainable growth. China, as the world’s largest carbon dioxide emitter by volume, accounts for over a quarter of global greenhouse gas emissions. As such, the nation has made commitments to combating climate change prior to COP26: two of the most significant ones were goals to reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060. However, researchers suggest that the world’s largest carbon emitter must do much more to actually limit warming to 1.5C. This includes:

• Reducing its carbon emissions by 90%;

• Reducing its energy consumption by 39%; and

• Decreasing coal demand to near-zero by 2050

To meet its climate goals, China has already integrated climate policies into its national development strategy and the current trend after COP26 shows that it will continue to do so. For example, China has vowed to boost the use of renewable energy and to reduce “CO2 intensity” by 18% from 2021 to 2025 in the 14th Five-Year Plan. In fact, China is already the world leader in generating electricity from renewable energy sources, leveraging its geographical advantages to rely more on hydroelectric power rather than coal power stations. It is therefore expected that the expansion of renewable energy capacity will continue through the construction of water dams, wind farms as well as other renewable energy technology.

However, some have expressed scepticism towards China’s commitment to its climate goals due to the social and political uncertainties currently present in the country. Domestically, the threat of social unrest, unemployment and economic stagnation in regions that produce coal make it challenging for the government to transit to greener energy. Earlier in September 2021, China experienced widespread power outages that affected more than two-thirds of the population.  Since most manufacturers are still heavily dependent on relatively cheaper electricity generated from coal, the incident impacted a lot of industries and disrupted global supply chains, highlighting the country’s heavy dependence on coal power. This raises an important question - can China even afford to phase out coal? While it is still too early to tell, it is certainly reasonable to be concerned about the practicality and sustainability of China’s long-term commitments to green energy.

China’s pledge to advance climate action is also evident in its active development of the Greater Bay Area (GBA). The region has in recent years dominated China’s legislative agenda, and the 14th Five Year Plan continues that trend by developing the GBA as a centre for technological innovation. For instance, China is pushing for green energy vehicles to be popularised in GBA cities like Shenzhen and Guangzhou by providing policy incentives to car owners. This has led to promising results: William Li (NIO founder and CEO) predicts that by 2023, over 90% of vehicles sold in China will be either electric or hybrid-powered. Such trends will significantly reduce the amount of carbon emitted by motor vehicles – one of the top sources of CO2 emissions in the country.

Apart from internal efforts on the Chinese side, US-China relations are a further factor in determining whether climate change can be mitigated. The world’s two biggest emitters - together accounting for 40% of global greenhouse gas emissions - released a Joint Declaration at COP26 promising to work together to enhance climate action. However, since the two countries are currently in dispute on political, economic and even cultural fronts, it is unclear whether these conflicts would spill over to jeopardise their cooperation on combating climate change.

Ultimately, we view COP26 as a necessary starting point to kickstart global efforts against climate change. While there are still many uncertainties surrounding the effectiveness and sustainability of these efforts, especially against a backdrop of rising global tensions, our view is that China will continue to make strides towards reducing its climate impact in a bid to cement its status as a responsible world leader.