China’s climate pledges and EU-China cooperation on green transformation – What’s new and what more can and will be done?

“As the world’s largest emitter of carbon, China’s commitment to become carbon neutral by 2060 is a significant step toward addressing climate change. It would be revolutionary if China is able to match its ambitions with...

“As the world’s largest emitter of carbon, China’s commitment to become carbon neutral by 2060 is a significant step toward addressing climate change. It would be revolutionary if China is able to match its ambitions with actions…”——Henry M. Paulson, Jr.

Enhanced 2030 climate ambitions of both the EU and China as well as China’s commitment to achieve carbon neutrality announced in the past weeks were somewhat surprising – but encouraging and historical. They are indeed (long-awaited) lights in the on-going Covid-19 gloom and have injected new and positive energy to the climate policy debate in China as well as for EU-China dialogue on mutual understanding, joint efforts, now and in the future.    

EU (17 September): An EU-wide, economy-wide greenhouse gas emissions reduction target by 2030 compared to 1990 of at least 55% including emissions and removals.  

EU Commission  

China (22 September): China aims to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060.

President Xi Jinping

We feel both inspired and privileged to be able to closely follow the intense discussions among top-level policy experts (in the fields of climate and beyond) from the Chinese side as well as the fruitful EU-China exchanges since the announcements were made. At the same time, we do see that Sweden’s policy experience and cooperation with China are highly relevant in these contexts. With this blog, we will share our observations and reflections from these policy exchanges as well as highlight how Sweden-China cooperation on green transformation could contribute with deeper changes and greater impact.     

About 2030 and 2060 pledges – how ambitious and how challenging are they? 

The simple and straight answer is – very ambitious and very challenging, particularly when it comes to achieving CO2 neutrality before 2060. Another widely raised question is why China sets the goal for “CO2 neutrality”, not “Climate neutrality” (as EU’s ambition)? By looking at the scenario analysis for achieving the 2-degree and 1.5-degree targets, aligned with the Paris-agreement below, we see the challenging tasks as well as get some clarity on CO2 neutrality vs. climate neutrality.[1]

Source: Research on China’s Long-term Low-carbon Development Strategy and Pathway, Presentation by Prof. HE Jiankun, (ICCSD), Tsinghua University, October 12, 2020
Source: Research on China’s Long-term Low-carbon Development Strategy and Pathway, Presentation by Prof. HE Jiankun, (ICCSD), Tsinghua University, October 12, 2020

China’s commitment to carbon neutrality could, according to calculations from Climate Action Tracker, lower the projections on global temperature rise from previous estimates by around 0.2-0.3°C. This puts the goal of limited global temperature rise to 1.5°C within a possible scope. Nevertheless, the challenge for achieving these new reduction targets is not only about the speed and the scale – but also the structural and technological barriers and uncertainties. For instance:  

  • The period 2020 -2030 (14th – 15th Five-Yea-Plan period) will be critical for preparing the ground for an accelerated post-2030 emission reduction. At the same time, the Chinese economy is expected to grow by 5% – 4.5% yearly under this period.  
  • When it comes to energy production, China need to reach both peak coal and peak oil and the emissions from natural gas need to be off-set by renewables – as soon as possible. 
  • Process emissions reductions in industries will be a focus soon, but the development and demonstration are still in an early phase (even in Europe).
  • While recognizing the necessity of CCS (Carbon Capture and Storage) and BECCS (Bio Energy CCS), both technical and economic viability of industry-scale application remain highly uncertain.  

Beyond these challenges associated with carbon emission reduction, one of highest uncertainties is non-CO2 emission reductions. Research has shown that China’s largest mitigation potential in this area comes from the industrial processes of producing fluorinated gas (F-gas) refrigerants and methane from the agricultural and coal mining sectors.

As some Chinese experts indicated, non-CO2 emission reductions are included in China’s climate action plan. But the key issue might not be technical, but cost-effectiveness, particularly when non-CO2 emission reduction level is beyond 50%.   

About the motivation and driving forces – Why is China setting these goals now? 

At the heart of the historical decision to set these targets is a different and a more strategic and long-term view on climate actions. More specifically, it is no longer only about “de-carbonization”, or “cost-benefit-analysis” of actions vs. inactions. China’s climate strategy aims to be a strategic, urgent and transformative development strategy. It is not a stand-alone strategy but aims to synchronize and integrate with China’s development goals and roadmaps in the coming decades (See Figure below).

Source: Office of Science and Innovation Beijing. October 2020.

Let us bring this “synchronizing” process into the economic reality and environmental challenges, i.e. the pressure-side:

  • Faced by an aging population and needs for sustained productivity growth, China needs to accelerate its structural adjustment and upgrading – with new growth drivers and new growth opportunities.
  • “End-of-pipe” approach for environmental protection is no longer enough to win the 3 battles for blue sky, clean water and land. A beautiful and healthy China needs to be realized with an enhanced approach.
  • Efficiency gains can only be part of the solutions for resource constraints and more interactions between resource efficiency and climate resilience need to be part of new solutions.     

Let us also take a look at this “synchronizing” process through the lens of China’s innovation-driven development strategy, i.e. the opportunity-side, arising from the needs for multi-dimensional and structural changes:

  • The innovation-driven development strategy is no longer about individual climate technologies. Instead, it will probably depart from a “resources -environment-climate nexus” perspective. This will be a truly system-innovation process – and could generate significant system values and benefits.   
  • To achieve the synchronized transformation of the economic, industrial, production and consumption structures, innovation is no longer only about technology.  Instead, it will also be about innovations in collaborative and coordination models, regulatory practices, and governance.

So, here are the bottom lines:

  • Not only from the EU’s, but also from China’s own observations and experience, the “de-coupling”, i.e. continuous economic growth and decreased energy-intensity and even total energy demand is fully possible.  
  • As one step further beyond “de-coupling”, China’s new and ambitious climate pledges need to be and will be a strong driver for innovation development and transformational changes. For China’s growth model, for Chinese people’s way of improving life quality – and for new perspectives and values on a resilient and sustainable future, for all.  

From an EU-China comparative perspective – how different and how similar? 

As both Chinese and European experts see it, EU and China have different starting points, but have common directions and face some common challenges. EU and Chinawill probably need to adopt somehow differentiated roadmaps and approaches – given different institutional contexts as well as economic, technological, and economic conditions.     

Source: Research on China’s Long-term Low-carbon Development Strategy and Pathway, Presentation by Prof. HE Jiankun, (ICCSD), Tsinghua University, October 12, 2020
Source: Research on China’s Long-term Low-carbon Development Strategy and Pathway, Presentation by Prof. HE Jiankun, (ICCSD), Tsinghua University, October 12, 2020

From a historical viewpoint and looking forward:

  • It will take Europe and other advanced economies 50 -70 years to move from peak carbon to carbon neutrality.
  • China’s transition period from peak carbon to carbon neutrality will be 30 years. From 2030 to 2050, China will need to cut its emission at an annual average rate of 8 – 10% to achieve carbon neutrality by 2060. 

China is looking at EU’s best practices as well as lessons learned. At the same time, common and mutual understanding of key success factors as well as the need for joint efforts to address common challenges, to explore complementary strengths for accelerating transitions in China, in Europe and globally, are emerging, for instance:

  • Broad citizen- and societal engagement as well as market-based and market-driven dynamics are key stones. But we need policy signals and public investments to clarify and steer the directions towards sustainable transformation.
  • Climate finance and green finance need to play a pivotal role to prevent high-carbon lock-in investments to make investment decision consistent with climate ambitions and commitments. 
  • The social dimension of climate transformation, i.e. no just transition, no transition at all.
  • We need institutional and governance innovations to bring all sectors on board to contribute, supported by a “whole-government and whole-society approach”. 

Interestingly, EU and China have also demonstrated common interests and efforts in applying a more system-oriented approach to climate transformation, i.e. looking at both sectoral priorities as well as cross-sectoral synergies, for instance:

  • Not only large-scale production of renewable energy, but also more comprehensive and smart integration with industries, mobility services and buildings.
  • Electrification and green hydrogen for heavy transport and aviation.   

From a Chinese side, hand-in-hand with the rapid development of digital economy and technologies, there are strong interests and concrete attempts to develop application scenarios for climate actions, alongside production, supply-chain and consumption, empowered by 5G, IoT, Big Data and block chains, etc. Also given the “new-type urbanization” and “city-clusters” as new drivers for China’s future high-quality growth, there are already emerging interests at the local level to explore their own carbon-neutrality transformation potentials and future competitiveness.    

Way forward and the role of Sweden-China cooperation?

The roadmap to achieve China’s new climate pledges is still under exploration and discussion. The process moving forward to China’s 14th Five-Year Plan as well as the process of updating China’s NDC ahead of COP 26 will be critical. Nevertheless, thestrong political signals have indeed brought a clear direction as well as clarity in some central issues, which are fundamental for a deeper and accelerated transformation, such as:

  • It will not only be carbon-intensity anymore. Instead a “cap” on carbon emission will be brought into the policy process – which is the basis for the future carbon pricing mechanism in China.
  • It will not only be carbon. Instead a digitalization-empowered integrated approach to bring climate actions and circular economy together could be key components of China’s high-quality growth and transformation.   
  • It will not be only national governments and “top-down” administration of climate actions. The local governments and market actors will be playing a more active role – when they see that “carbon-neutrality” could be a new growth opportunity.
  • Between EU and China, it will be both cooperation and a “carbon-neutrality competition” – which will be the basis for leading by good examples – together.  

From the perspective of Sweden-China cooperation on environment and climate, but also on research and innovation, we already have a solid ground to move forward. China and Sweden co-led  the CCICED Special Policy Study on Green Transition and Sustainable Social Governance which has already put forward policy recommendations that will contribute to China’s green transformation in the 14th Five-Year-Plan and forward. The future Sweden-China innovation cooperation could play an inspiring role to bring mission-driven climate and energy related cooperation, not least at the city-level, as a new and key area.

We are looking forward to following the continuing discussions in China and exchanges between the EU and China. We are even more looking forward to seeing that Sweden-China cooperation will have an even greater contribution and impact!   

Nannan Lundin, Matilde Eng, Linnea Yang     

[1] For more details, see “Research on China’s Long-term Low-carbon Development Strategy and Pathway”, Presentation by Prof. HE Jiankun, Institute of Climate Change and Sustainable Development (ICCSD), Tsinghua University, October 12, 2020.