State of Green Business

With China in the lead, new obstacles to climate progress are emerging

Plates of Xi Jinping at the Beijing night market in 2014
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President Xi Jinping has a lot on his plate. Here, souvenirs at the Beijing night market in 2014.

With the United States backing away from the Paris climate agreement and Europe taking a back seat in international negotiations, China has become the bellwether on global climate change. But the country — responsible for almost 30 percent (PDF) of global CO2 emissions, twice those of the U.S. — is sending increasingly mixed signals about its commitments to reduce greenhouse gases.

At the latest round of climate talks earlier this month in Bonn, Germany, which aimed to create a rule book for implementing post-2020 emissions targets, delegates said they noted a new, more obdurate tone from Chinese negotiators. The Chinese negotiators were tight-lipped in public. But the head of the European Union delegation, Elina Bardram, accused China of seeking to renegotiate key aspects of the Paris Agreement. In particular, it sided with developing nations who question whether they should be held to their emissions targets if the rich nations, including the U.S., continue to withhold the funds they promised in Paris to help poor nations meet emissions promises and adapt to climate change.

This came as a surprise. Beijing has been seen as an enthusiastic advocate for action to halt climate change since Chinese President Xi Jinping and U.S. President Barack Obama reached a deal on curbing their nations’ emissions in 2014. That agreement became the cornerstone of the Paris accord a year later. But in Bonn, China lapsed into what old hands saw as old ways. Things ended so badly that United Nations climate chief Patricia Espinosa scheduled an extra week of negotiations, in Bangkok in September, to try to break the deadlock. 

Such concerns about China’s commitment to strong climate action and its renewed backing of developing nations were heightened by new research, published days after the talks ended, suggesting that China — like Europe and North America before it — is offshoring its carbon dioxide emissions to countries with more lax international targets.

China, the study concluded, is increasingly feeding and clothing its growing middle classes with imported products from Bangladesh, Vietnam and other countries with fast-expanding economies driven by fossil fuels. The upshot could be that China’s promises to stabilize its own CO2 emissions will be achieved by super-charging emissions generated in other countries in order to feed the consumption patterns of its 1.4 billion inhabitants.

Researchers involved in the study, some based in China, concluded that this could "seriously undermine" global efforts to halt climate change.

For some, China remains a hero. It is deploying low-carbon energy technology on a huge scale. Last year, more than half of the soaring global investment in solar generation was in China. The nearly $87 billion added 53 gigawatts to the country’s solar capacity, up from 30 gigawatts (GW) added in 2016.

According to Bloomberg New Energy Finance, a research organization, this explosive growth resulted from a mixture of state action and Chinese companies building their own solar farms to power their businesses and manufacturing plants.

China is also pulling back on dirty fuel, coal in particular. After a decade-long surge — during which the stories of China building two new coal-fired power plants a week were entirely true — the country’s coal burning peaked in 2013.

While new coal plants are still being built to replace old ones, Beijing does not want more coal capacity overall. In January 2017 alone, the government cancelled planned coal plants with a combined capacity of 130 GW (PDF). They would have added 23 billion tons of CO2 to the atmosphere during their lifetime. 

Analysts calculate that Chinese coal consumption could decline by as much as 50 percent by 2030, as older coal plants close and largely are not replaced. After that, it may collapse altogether, as energy prices reach a tipping point beyond which it is cheaper to shut existing coal plants early and replace them with new solar.

Peak coal already may have delivered peak CO2 emissions in China, although experts remain cautious. Emissions were flat from 2013 to 2016, but in 2017 unexpectedly rose by 3.5 percent. This uptick was small compared to the 6.8 percent increase in Chinese GDP. But such is China’s dominance of global emissions these days that it was the major driver in the first global rise in emissions since 2013.

Analysts blame the Chinese emissions leap on the short-term effect of low rainfall across the country, which caused a decline in power from hydroelectric dams. Coal took up some slack. But Climate Action Tracker, a European think tank, still looks forward to falling Chinese emissions. "It is plausible that overall [Chinese] CO2 emissions peaked in 2017," it reported. If so, that would be 13 years ahead of the country’s Paris promise.

Not everyone is convinced. For one thing, Chinese emissions estimates are notoriously unreliable. Like other countries, those estimates are based on official energy statistics and assumptions about the carbon-intensity of the fuels in use. But the uncertainties behind both are large and have been increasing in China, according to Dabo Guan, a climate change economist at the University of East Anglia in the United Kingdom. In a paper in 2015, he and colleagues largely blamed continuing confusion about both the quality and quantity of coal being burned.

Jan Ivar Korsbakken, at the Center for International Climate Research in Oslo (CICERO), who helps compile the annual estimates of global CO2 emissions, agreed. "Chinese energy statistics have been plagued by many inconsistencies," he told the news site Climate Home last year. His published estimate of a 3.5 percent increase in Chinese emissions in 2017 has an error bar stretching from 0.7 percent to 5.4 percent.

Some fear that the data are subject to political manipulation in Beijing. As Guan and colleagues reported (PDF), "emissions calculated from the provincial energy statistics are generally higher than those calculated from the national energy statistics." A more likely explanation, according to Guan, is double counting by provinces.

Assuming the numbers are to be believed, China’s emissions trajectory begins to look similar to that achieved in Europe and North America in recent years, which have seen emissions peak and start to decline. As in those countries, said Guan, one reason may be the increasing tendency of China to offshore its most polluting industries.

This month, Guan, a leading authority of Chinese emissions, co-authored a paper in Nature Communications showing that China is exporting its CO2 emissions by offshoring manufacturing output that supplies the rising demands of its middle class. The study singled out Vietnam, Indonesia, Bangladesh and Cambodia — all of which are allowed by the Paris Agreement to carry on increasing their emissions until at least 2030, provided they keep below a notional "business-as-usual" trajectory.

Bangladesh, for instance, can raise its emissions as much as threefold (PDF) between 2015 and 2030. Systematic offshoring of industry from China to such countries "may seriously undermine international efforts to reduce global emissions," warned Guan and his co-authors.

The evidence is already there. Guan found that even as coal’s share of China’s energy fell between 2013 and 2015, it rose by 10 percent in other developing Asian countries. The CO2 emitted in the manufacture of textiles and apparels in Bangladesh and Vietnam for export has grown by respectively 175 and 236 percent in just seven years. At the same time, the CO2 embodied in exports of these products from China to the rest of the world has declined by around 30 percent.

China may meet its Paris targets "by hollowing out low-value, energy-intensive manufacturing and offshoring those activities to emerging markets elsewhere in Asia with less stringent climate policy measures," Guan said in a statement.

In part, this offshoring of emissions is happenstance unconnected with climate policy, the new study finds. Chinese industries are relocating to reduce costs, whether of labor, real estate or compliance with environmental regulations. But it is also partly a strategic objective. The Chinese government has changed its tax structure in recent years to encourage service industries and discourage heavy industry. Deliberately or not, this will help it meet its Paris promise to reduce the carbon intensity of its economy by 60 to 65 percent.

China is undoubtedly serious about greening its industries more generally. Whatever its international obligations, it has plenty of domestic reasons for doing so, including improving health and delivering greater efficiency. Cutting air pollution will help it reduce the current estimated five-year loss of life suffered by half a billion of its inhabitants because of urban smog. Reducing the loss of 75 percent of artificial fertilizer put onto farms — more than any other nation — will curb river pollution. Limiting rampant water waste on irrigated farms will head off the country’s worsening water crisis (PDF).

By international standards, China has huge potential to cut CO2 emissions. Currently, it emits more than twice as much CO2 for every dollar of GDP than the U.S., and at least three times more than the European Union.

All this requires shifting investment toward greener and more efficient technologies. Last year, Chinese state banks, industrialists and municipalities together raised $37 billion through issuing green bonds, which promise guaranteed returns for investments in projects with certified green credentials.

China is also investing heavily in electric automobiles. Sales this year are expected to exceed a million vehicles. That is still only 4 percent of Chinese car sales, but is as many as were sold worldwide last year.

But there are bumps in the road. Recent studies suggest that in China it is far from certain whether electric vehicles largely charged with electricity made by burning coal are responsible for more or less CO2 than gasoline-driven vehicles. Only a rapid decline in coal burning can make Chinese electric vehicles green.

Such incongruities matter not just for China, but for the world.

Back at the climate negotiations, the extra meeting hastily inserted into the diplomats’ diaries will happen just days before the U.N.’s Intergovernmental Panel on Climate Change is scheduled (PDF) to approve a special report itemizing what will be needed to meet the Paris aspirational target of limiting warming to 1.5 degrees Celsius. 

The bottom line will be that even halting emissions of greenhouse gases such as CO2 by mid-century almost certainly will result in an overshoot of the target. The report probably will suggest that our best hope is sucking CO2 out of the air using either carbon air capture technologies or a massive program of forest planting.

But if China spends the next decade cleaning up its domestic act by offshoring dirty industries, the grand promises made in Paris to curb warming below 2 degrees Celsius will count to nothing. 

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