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Wait and Xi: Crisis and Opportunity in China’s Green Transition

Milena Pek considers the potential of China’s green transformation

The ongoing European energy crisis has left the continent in the throes of rising prices, supply chain disruption and fuel stockpiling. The world’s largest energy consumer has not escaped the forces that led to the crisis in Europe: resurgent energy demand post-COVID and extreme weather have also given rise to an energy shortage in China. 

Crises Unfolding

The energy crisis has brought about unprecedented challenges to the implementation, continuation, and enforcement of China’s green energy policies.  At the end of September, many people living in eastern China were surprised to receive news of scheduled blackouts due to an unforeseen energy shortfall. Factories trying to meet a recent spike in demand for Chinese products found themselves unable to operate without exceeding the strict energy consumption limits set by the Chinese Communist Party. The limits were introduced in the so-called “dual-control policy” on energy consumption and intensity, part of the CCP’s efforts to curb CO2 emissions. Meanwhile, the government hurriedly tried to confront the energy crisis by allowing energy prices to fluctuate within limits set by regulators and by ordering functioning coal mines—some of which were reopened as recent as August—to increase production.  

These short-term measures follow recent pledges made by China to close its coal factory projects abroad and achieve carbon neutrality by 2060, with peak emissions by 2030. The commitment to net zero, made by President Xi last year, was welcomed by the international community; it is widely recognised that without efforts by China, global emissions abatement to mitigate climate change will be severely hamstrung, if at all effective. The unprecedented challenge of the domestic energy crisis and the response of Chinese policymakers—which may undermine commitments China has made previously—have therefore reignited concerns, both at home and abroad.

Shall the Last be First?

The facts are stark. China is the world’s largest emitter of carbon, by far. Research by the Global Carbon Project suggests that China emitted 2777 million tonnes of carbon in 2019, nearly double that of the United States or Europe. Until recently, the United States topped the list of carbon emitters but with China’s rapid economic growth over recent decades came an inevitable rise in carbon emissions. The frenzied growth that China witnessed was in part a product of the absence of environmental protection. The CCP did little to promote sustainability, instead, the focus was on growth. That is until disastrous air quality in the northern provinces of China, especially in the nation’s capital, became an inconvenient truth. Since then, and with the onset of President Xi’s rule, the CCP has been carefully trying to balance economic growth with the aspiration of becoming an “ecological civilisation.” So much so, that one of President Xi’s fourteen principles, which were enshrined into the Chinese constitution in 2017, envisions the people of China living in harmony with nature and protecting the environment. President Xi’s principle is just one aspect of the CCP’s political rhetoric: references to the environment have surfaced in numerous party speeches and publications over the past decade. 

The CCP’s green aspirations seem to be more than just words. China is already the world’s largest producer of solar panels and hydroelectricity as well as a world leader in solar energy capacity. There is a burgeoning electric vehicle industry and dozens of nuclear power stations in operation. China is undergoing an energy transformation on a scale that few countries could hope to emulate, which has helped to establish its image as a world leader in green energy—valuable political capital to the CCP. 

Green energy production in China has not been without controversy, however. Many large-scale hydroelectricity projects have recently come under scrutiny for poor planning and lasting adverse impacts on local environments. The rapid production of solar panels and ongoing management of nuclear plants has, absurdly, generated large amounts of waste. China’s energy mix is still dominated by heavily polluting carbon-based fuel sources despite material changes. It remains, by far, the world’s most coal-hungry nation. For China’s green transformation to be considered sincere, its reliance on fossil fuels must diminish. For sustainability in the country to be viable, the issues surrounding green energy production must not be glossed over.

Precipitating Change

In fact, the transition to sustainable energy is quickly becoming a necessity for China. The country spans several climate zones and is susceptible to extreme weather events. Natural disasters are not uncommon but will likely become more frequent as climate change intensifies. Already this year, massive flooding in the central provinces of Henan and Shanxi has affected millions of Chinese citizens and caused billions of renminbi worth of losses. Zhengzhou, the capital of Henan, is part of the “sponge cities” project, which aims to mitigate damage from torrential flooding through long-term planning and investment in infrastructure. The recent floods have, perhaps, highlighted the shortcomings of projects designed to mitigate damages from climate change: the combination of high maintenance costs and increased frequency of massive natural disasters raise serious doubts about financial sustainability. The alternative is to cut emissions and undertake comprehensive energy reform and large-scale sustainability projects, all of which are costly and may increase China’s dependence on imported energy. The result is that Chinese officials face a difficult trade-off between costly mitigation and costly abatement.

Reassuringly, climate change is not taboo in China. Social awareness surrounding climate issues is on the rise: a national public opinion survey found that in 2017, over 94% of respondents believed that climate change was real. Moreover, official news outlets, such as Xinhua and People’s Daily, have begun to report on the connection between climate change and extreme weather events. Such awareness may help to generate the political impetus needed to address climate change in China.  

 A New Growth Order

Commercial interests may, however, hamper political efforts to transform China’s energy sector and the move towards sustainability. State-owned enterprises (SOEs) are predominantly found in industries characterised by high energy consumption and emissions, such as steel and cement production. Much of China’s GDP is currently dependent on infrastructure projects and land development, which require large amounts of inputs from heavily polluting domestic industries. Efforts were underway to try to shift focus from investment in infrastructure and exports to technology development and domestic consumption, but the onset of the pandemic led the government to provide substantial stimulus to infrastructure and domestic production to boost GDP. 

Once the effects of the pandemic wear off, measures to cut emissions may regather momentum. After all, state-owned enterprises have a political obligation to toe the party line, and therefore cut emissions. That said, without improvements in energy efficiency, cuts to emissions will invariably lead to lower volumes of production and a slowdown in GDP growth in the current investment-led paradigm. To make cuts to emissions feasible, China will need to rethink its approach to economic growth, which may present a tremendous challenge to the CCP’s political credibility. Yet, without such a transition, natural disasters exacerbated by climate change and accompanying social unrest may prove to be even greater threats to the party. Nonetheless, the success of large Chinese technology companies, such as Tencent and Alibaba, suggests that a transition to a more forward-looking growth model less reliant on investment in infrastructure and housing may be possible. 

Rosy Retrospection, Green Anticipation

Undoubtedly, China has made extraordinary positive steps towards a greener future. Recent events have, however, demonstrated the inherent difficulties and contradictions in turning the world’s leading polluter into a global champion of sustainability and clean energy. That said, China’s shortcomings should not be taken as a sign of outright failure. They should rather be seen as a reflection of the immensity of the task that the CCP has set for the country. Ultimately, China needs to learn from these experiences. The challenges the country has already faced in its green transition are likely precursors to larger obstacles that China will have to overcome on the path to sustainable prosperity.

Now is the time for pro-environmental pledges and rhetoric to be backed up by sincere efforts to tackle issues related to climate change. At stake is not just energy efficiency and security, but also the future of China’s political institutions. 

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