COP 25, China and beyond 2020 – higher ambitions and enhanced actions, together

All eyes are now turning toward the two-week long UN Climate Change Conference COP 25 (December 2 – 13, 2019) in Madrid. There is a strong and broad engagement from academia, civil society, the business sector and cities, as well as a strong involvement from youth climate change activists, voicing their concerns for the future and advocating greater actions from state leaders.

Closing the commitment gap and the role of China

The UN Environments Emission Gap Report 2019 is sending an alarming message ahead of COP25:  Without higher ambitions and enhanced actions, it may soon be impossible to achieve the 1.5°C target. If we rely only on the current climate commitments from the Paris Agreement, temperatures can be expected to rise to 3.2°C in this century. Closing the commitment gap to prevent dangerous levels of climate change is therefore one of the great challenges when moving from negotiating to implementing the Paris Agreement.

China’s key role in the global climate actions can be seen in the light of its large share (i.e. about 25%) of the global greenhouse gas emissions as well as its increasing per capita emissions as a result of improving living conditions. It is important to note that, according to the UNEP Gap Emissions Report 2019, China’s per capita emission is larger than for the EU and is almost at the same level as Japan (See Figure below).

Figure: International comparison of emissions. Source: UNEP Gap Emissions Report 2019.

China is the world’s largest emitter of greenhouse gases, and the world’s largest coal producer, accounting for almost half (47%) of global production in 2017. The Chinese government plans and projections suggest that coal production could increase to 3,900 Mt in 2020, and then drop gradually.[1]  Under the Paris Agreement, China pledged that its emissions will peak by 2030. China will decrease the carbon intensity, i.e. CO2 emissions per unit of gross domestic product, by 60% to 65% relative to 2005 levels.[2]  

China has made progress in phasing out fossil fuels and lowering its CO2 intensity. But both ambitions and actions need to be enhanced. Looking ahead, China could, despite the significant challenges, take the low-carbon and green transformation leadership – with its capacity to manufacture, to invest and to innovate in climate change mitigation (CCM) technologies, such as renewable energy, energy efficiency and transport:

  • Since joining the World Trade Organization in 2001, China has gone from producing 1% to producing 66 % of the world’s solar panels. Chinese wind turbine manufacturers now represent roughly 33% of global supply. China is also the largest supplier of and market for electric vehicles. Chinese firms are set to increase their control of the world’s supply of lithium-ion batteries from 69% to 76% in the near future.[3]
  • In 2018 the EU invested EUR 158 billion in climate change mitigation or 1,2 % of GDP, compared to China’s 3,3 %. With CCM investments amounting to EUR 322 billion in 2018, China was the world’s largest climate investor. China is at the same time, the biggest investor in renewable energy and in 2018 alone it invested as much in clean energy as the EU and the USA combined. [4]
  • While the US and the EU have been world leaders in climate-related R&D investment, China is catching up quickly. In 2018, US invested almost EUR 12 billion in clean energy R&D, while China spent about EUR 8.6 billion and the European Union EUR 7.5 billion (See Figure below).[5]
Figure: Investment in climate-related R&D 2011 – 2018 (EUR billion). Source: EIB investment report 2019/2020 – Accelerating Europe’s Transformation and BNEF.

It is important and interesting to note that both the US and EU have focused on R&D investments in smart energy technologies, including hydrogen, fuel cells, energy efficiency and digitalisation, which attracted over 60% of all climate-related R&D. Given China’s rapid development of the digital economy and digital technologies, we will see a greater focus on these areas in China’s R&D investments, which could create more innovative and disruptive solutions for deep-decarbonisation and more rapid green transformation.  

The speed, the scale and the disruptiveness of the future CCM technology development and deployment are critical for implementation of the Paris Agreement, particularly given the fact that the world is already well behind schedule of deploying the 300 GW of renewable energy capacity needed every year from 2018 to 2030 in order to meet the goals of the Paris Agreement.

China’s way forward and Sweden’s relevant experience

Looking ahead, China’s way forward, in terms of the scale, the speed and the cost- and transformational effectiveness of its climate actions, will probably depend on a few strategic aspects below. At the same time, these are areas where Sweden has significant experience:

  • Market-based mechanisms and stronger enterprise engagement:
    China’s national emissions trading scheme (ETS) is to be launched in 2020. It will regulate about 4 billion tons of CO2 emissions and become the world’s largest carbon trading system. If effective, this scheme could help China go a long way toward limiting global climate change. With a unique and long-term experience of a hybrid system of both carbon tax and emission trading scheme as well as the strong industrial engagement in Fossil-Free Sweden, the lessons from Sweden could be useful for  China’s ETS development.
  • City engagement and systemwide low-carbon transformation: Urbanization is a major driver of economic growth in China. At the same time, as elsewhere, cities produce most (85%) of China’s CO2 emissions.[6] This means that China’s cities need to play an increasingly important role in its efforts to reduce CO2 emissions. However, beyond individual and sector-focused technologies and innovations, the low-carbon and green transformation of cities require systemwide transformation. Chinese cities are already heavily engaged in the development of “smart cities”. The aligned and combined development of “smart and sustainable” in Sweden and Europe, such as Sweden’s strategic program Viable Cities as well as Sweden’s strong engagement in mission-driven innovation for Climate-Neutral and Smart Cities are interesting in this context.
  • From production-based emissions to the inclusion of consumption-based emissions:
    Given the rapid increase of China’s per capita emissions, the consumption-based emissions, not least associated with the huge volume of e-commerce and the “Double 11” shopping festival in China are becoming a serious concern. As a matter of fact, Sweden has already established high-level policy studies and dialogues on sustainable consumption with China at the high-level policy forum China Council for International Cooperation on Environment and Development (CCICED).
  • From China’s green finance to global green finance:
    China has become a leading actor in the field of green finance and green investments – not only in terms of investment volume, but also with its effort to systematically mainstream green and low-carbon dimensions in China’s financial market. Given its large market share in the global financial market as well as the ambition to be more integrated into the global financial system, China is increasingly interested in the alignment and harmonization of its own green finance standards with the global standards. As one of the forerunners in the field of green finance, Sweden can bring significant experience in this area.    

Climate change is a global challenge that requires global responses and joint efforts, including in research, innovation, deployment and scaling-up of technologies and solutions that can forge deep and rapid decarbonization. In this context, the world should not only welcome the progress and the contributions made by China. The world depends on the continued and enhanced progress and contribution of China, not least, given the significant gap between the level of current efforts and what would be required to keep global temperature increase below 2 degrees.

Nannan Lundin, Matilde Eng and Linnea Yang

[1] 2019 Production Gap Report

[2]The Chinese Government, “Enhanced actions on climate change: China’s intended nationally determined contributions” (2015)

[3] China’s key role in scaling low-carbon energy technologies. Science. 15 Nov 2019, Vol 366, Issue 6467

[4] EIB investment report 2019/2020 – Accelerating Europe’s Transformation

[5] Ibid

[6] S. Dhakal, GHG emissions from urbanization and opportunities for urban carbon mitigation. Curr. Opin. Environ. Sustain. 2, 277–283 (2010).

*Featured image source: UNEP Gap Emissions Report 2019 and COP 25 logo