23.02.2021

China’s latest carbon pledge sets ambitious course for the 21st Century

China’s recent commitment to reaching carbon neutrality by 2060 sends a powerful message, not only about what the country thinks it can achieve with its own development, but also about the leading role it intends to play in a changing world of energy transition.

The announcement in September last year was a major upgrade of the pledge in the Paris Agreement to peak carbon emissions around 2030. The new commitment implies that the trajectory of China’s carbon emissions will follow an inverse U-shaped curve, although the height of the peak is still not determined.

In the past four years, there have been concerns that China’s enthusiasm for climate action might be dwindling. These were anticipated reactions to the Trump administration’s withdrawal from the Paris Agreement, and to the slowing economic growth rate. Then the economy was further hit by the COVID-19 pandemic and harsh lockdown measures. As a consequence, during the People’s Congress meeting in spring 2020, climate change was not mentioned in the Annual Government Report at all. Therefore, China’s announcement of carbon neutrality was a pleasant surprise to the international community.

The pledge of carbon neutrality is not a distant promise but comes with plans and policy measures. Since the announcement, China has been taking steps to create more vigorous climate policies by setting explicit emission goals and targets in the 14th Five-Year Plan, which provides overarching principles and working guidelines for the comprehensive social economic development in the period of 2020-25. Additionally, the Ministry of Ecology and Environment just promulgated two guidelines on carbon emissions trading, cementing a crucial foundation to launch the national Emissions Trading Scheme (ETS) in 2021. So far, the ETS only covers the power generation sector but it is likely going to be expanded to cover (petro-) chemicals, building materials, steel, ferrous metals, papermaking, and aviation in the future. Nevertheless, it is still unclear how the local governments will embrace these new plans and policies, which is instrumental for China to realize its climate ambition.

 

Underlining the necessity of a green recovery

China’s renewed enthusiasm for climate change is largely driven by its intrinsic need to build a thriving and green economy. In particular, to deal with the short-term crisis induced by COVID-19 and the long-term challenge of economic transition, China has realized how important a green recovery will be to avoid unintended consequences. The conventional economic stimulus approach, such as the one in the 2007-09 financial crisis, led to excessive capacity of energy- and carbon-intensive industries. China has learned the hard lesson. It is not so desperate to get out of the economic crisis at the cost of climate and environment anymore.

The timing of the announcement – after the EU-China leaders’ meeting and before the US presidential election – was subtle and strategic. It is a positive response to the EU’s request to take more aggressive climate actions. Furthermore, as the EU is debating a carbon border tax, China’s tightening climate policies will help close the regulatory gap in carbon emissions, which is likely to allay potential trade frictions between the two economies. It is also thought that China wanted to send a gesture of goodwill before the presidential elections. A few months on, and even though the new administration of President Joe Biden has an ambitious agenda to tackle climate change, it is still unclear whether the Sino-US climate collaboration will be rebooted, at least in Biden’s first term.

 

Boosting global confidence in the fight against climate change

China’s move boosts the global confidence in fighting against climate change. The EU has pledged to become the first continent that will be carbon neutral by 2050. Both Japan and South Korea pledged to reach carbon neutrality by 2050 following China’s announcement.

As of 2020, more than 110 countries have joined the league. As the largest emitter in the world, China’s commitment is meaningful and instrumental for the success of limiting global temperature rise below 1.5 degrees Celsius. Moreover, with China’s lead, other major emerging economies, such as India, Indonesia, and Vietnam, will be under pressure to make similar pledges. The coordinated agenda of carbon neutrality is crucial to ensure that the carbon leakage will not undermine the global efforts in climate mitigation.

The global society has largely failed to tackle the COVID-19 pandemic with poor coordination and collaboration. The world cannot afford losing the fight with climate change since the stakes are much higher. China will be at the centre of global scrutiny not only because of the size of its own emissions but also because of the emissions associated with its outbound foreign direct investments. Hence, climate change is a great opportunity for China to fulfil its commitment of “building a community of common destiny for mankind,” which has become the core vision of China’s foreign policy stipulated in the Constitution.

China is facing mounting challenges to achieve carbon neutrality while maintaining rapid economic growth. In the two “fifteen-year visions,” China aspires to enter the rich-country club around 2035 and to become a medium-level developed country around 2050. The climate target is built upon the assumption of continuous economic growth in the next 30 years. It will be unprecedented in history if China can achieve both economic and climate goals simultaneously.

 

Junjie Zhang is Director of the Environmental Research Center at Duke Kunshan University and Associate Professor of Environmental Economics in the Nicholas School of the Environment at Duke University. He is also a co-editor of the China Economic Review and serves as a vice chair for the Chapter of Environmental Economics in the Chinese Academy of Environmental Science, an advisory board member for the Nicholas Institute for Environmental Policy Solutions, and a board member for the Professional Association for China’s Environment.

The views expressed in this article are not necessarily those of FES.

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