Climate change: China’s coal addiction clashes with Xi’s bold promise

Cranes and diggers busily prepare land beneath the red and white-striped chimneys of the Mengtai Group coal-fired power plant at the northern city limits of Ordos, in northern China’s Inner Mongolia. 

Privately owned Mengtai will soon add another two smoke stacks to the sprawling complex in an expansion that is the group’s biggest investment in its 20-year history. The new unit will burn coal to provide heating to nearby neighbourhoods as part of a regional policy unveiled in March that will add 5 gigawatts of coal power to western Inner Mongolia this year.

The resource-rich region, a swath of grassland, desert and forest that spans most of China’s northern border with Mongolia, is trapped between China’s heavy industrial past and the bold low-carbon future vision of the nation’s leaders.

Mengtai’s proposal for a new plant was agreed by the local energy bureau in May, one of 17 units recently given the go-ahead by authorities in Inner Mongolia — six have won approval this year alone as part of efforts by local governments to stimulate their pandemic-hit economies. The region has the most pending facilities of any province in China, according to data from the Global Energy Monitor, a non-governmental organisation that tracks global fossil fuel projects.

So at a time when the world is shifting away from coal — and Beijing has indicated that it will eventually do the same — China still accounts for the vast majority of newly commissioned projects globally.

“Coal is just so important in China from an energy supply and security point of view, and local governments don’t believe it is possible to get rid of coal immediately,” says Yang Yingxia, a senior fellow at the Boston University Institute for Sustainable Energy. “I don’t think the Chinese government has a crystal clear sense of how to get to carbon neutrality by 2060.”

China’s future relationship with coal is critical. It will have an outsized impact on global efforts to meet climate change targets but will also weigh heavily on President Xi Jinping’s announcement in September of a goal to be “carbon neutral” by 2060. To achieve that target would mean a reduction in carbon dioxide emissions to near zero with any remaining output dealt with by capture and storage technologies.

Heralded as a shot in the arm for global efforts to tackle climate change, the move pre-empted the next round of UN climate talks set for November 2021 and has left nations scrambling to catch up. Japan and South Korea followed with pledges to reach net-zero by 2050.

Yet, sceptics point to China’s continued investments in fossil fuels and unwillingness to introduce a moratorium on coal as evidence of its lack of credentials to be a global leader on climate change. 

China has embraced clean technologies in recent years. It leads the world in annual electric vehicle sales and installations of wind turbines and solar panels, although uptake has slowed as the state has curbed previously generous subsidies.

But in industrial hubs, sustainable energy sectors remain dwarfed by polluting competitors. Since the turn of the century, municipal authorities in Ordos — a city of almost 2m people best known for high-end cashmere and coal — have embarked on wave after wave of infrastructure projects designed to revamp the local economy and wean it off coal. But many efforts have stalled. A decade-old “low-carbon valley” and cloud computing industrial park visited by the Financial Times showed little sign of having attracted business.

In contrast, a network of open-air coal mines in the countryside surrounding the city teemed with activity. Roadside signs, reminding passers-by to “protect the environment as you protect your eyes”, are coated in coal dust kicked up by a constant stream of trucks carrying piles of the black rock.

The lack of immediate obvious alternatives to bolster local growth means that residents in neighbourhoods surrounding the plant, located in Ordos’s older district of Dongsheng, mostly welcomed the Mengtai project. 

“The best way Dongsheng can go green is by using coal environmentally and efficiently,” says one Mengtai engineer, who spoke on condition of anonymity. “This is our current advantage. New energy and high-tech industries are developing but it’s been a bit slow. We need to use the resources we have.”

Yet, this continued reliance on fossil fuels and heavy industry in China’s economy — industrial production has driven the country’s post-pandemic economic rebound — has cast a shadow over Mr Xi’s grand pledge. Widely hailed in the west by climate scientists and politicians alike, the announcement has given hope to the possibility of the world’s largest emitter actively joining efforts to save climate negotiations stalled by coronavirus and the US withdrawal from the Paris climate accord. 

Rachel Cleetus, policy director for the climate and energy programme at the Union of Concerned Scientists in Washington, says China’s move should help the emergence of a global high-level coalition that can genuinely deliver on climate change. But she cautions that the “Achilles heels for both China and Japan is what they are going to do around coal.”

‘Hollow political overtures’

Some sceptics say that China issued the pledge in part to secure a positive role for itself in global diplomacy — to take the moral high ground on climate change as the US became more isolationist under President Donald Trump, while also currying favour with Europe. Others say that it was a distraction away from criticism over Beijing’s role in the coronavirus pandemic.

The move put Washington on the back foot. After the announcement, the US state department issued a “fact sheet” listing China’s environmental abuses. A senior official in the Trump administration dismisses China’s climate commitments as “hollow political overtures” and told the Financial Times that China had a record of “deceitful environmental practices where its words do not match reality”.

China responded to US accusations with its own, labelling Washington a “consensus-breaker” that had brought about “major retrogression” in environmental policy.

The possibility of climate change becoming yet another point of friction between the world’s two largest economies threatens to destabilise a process observers say will need Beijing’s buy-in to avoid an even more rapidly heating planet. China has accounted for about two-thirds of the growth in global carbon dioxide emissions in the past two decades. US emissions peaked in 2007.

Mr Trump’s Democratic rival in Tuesday’s presidential election, Joe Biden, has made clear that climate change would be one of his administration’s highest priorities. He has committed to rejoin the Paris agreement if he wins the election and to use climate policy as one of the cornerstones of efforts to revive the role of the US in global diplomacy.

“A significant element of that will be holding the Chinese government accountable to its commitments,” says one Biden campaign official, adding that the presidential candidate would seek to pull together allies “to put pressure on Beijing to ensure it does not shirk its vital responsibility to address climate change”.

Nations hoping to work with China will have to avoid being steamrollered, say critics, into endorsing practices they do not necessarily condone. For instance, Beijing often reaches targets by fiat, an approach that can achieve striking results but can also sideline communities and have devastating effects.

A drive to reclaim grassland in Inner Mongolia has turned local nomadic communities — deemed responsible for desertification — into “ecological migrants”, who have been settled into newly built areas in cities, including Ordos. At the same time labour rights groups warn that the drive to consolidate and upgrade the coal industry risks mass lay-offs for low-skilled workers.

The net-zero pledge is likely to intensify the best and the worst of China’s approach to environmentalism, says Li Yifei, a scholar at New York University’s Shanghai campus and co-author of a recent book on China’s “coercive environmentalism”. 

“It could translate into policy [measures] that intervene into every realm of social life,” he says. “These heavily industrial areas are becoming the forgotten parts of the Chinese economy. The traditional fossil fuels sector and the most environmentally destructive centres of the economy are being thrown under the bus.”

Peak emissions

The sheer scale of the transition involved in the Xi plan is huge. The Institute of Climate Change and Sustainable Development at Tsinghua University, an influential think-tank, has calculated what China needs to do to reshape its economy to meet, by 2050, the Paris accord target of keeping global temperatures within 1.5C of pre-industrial levels.

Under the most ambitious scenario, non-fossil fuel energy sources — that accounted for 41 per cent of China’s electricity production in 2019 — will make up 90 per cent within 30 years. To hit that mark would require the development of wind and solar installations equivalent to about three times the current global capacity of wind and four times that of solar. Along with costs to electrify industry and transport, this transformation would require investment of $135tn, the report estimated. 

The research was conducted prior to Mr Xi’s announcement, but He Jiankun, an adviser to the government at Tsinghua University who led the research, believes that the recommendations for how to reach the 1.5C target align with the 2060 net-zero goal. China’s next five year plan, which is to be released in March, is also expected to include an annual carbon dioxide emission cap of 10.5bn tonnes.

“The main task of the [next] five year plan will be to ensure that emissions peak before 2030,” Mr He says. After that turning point, the institute’s research predicts a more rapid drop in emissions as renewable energy sources come online and technologies to capture carbon and improve efficiency mature.

Mr He says that new coal power plants are unlikely to mean a rise in overall consumption because of those greater efficiencies. In that scenario, new or retrofitted plants would contribute to an overall reduction by replacing low-efficiency coal burnt by individuals with high efficiency equivalents, he adds.

But by allowing continued building of fossil fuel projects, China risks carbon “lock-in” from polluting projects that will be difficult to unwind, analysts warn. The scenarios mapped out by Mr He and other leading Chinese climate researchers remain cautious and leave open a risk of delayed investments in wind and solar, according to Yan Qin, an Oslo-based analyst for Refinitiv.

“The government acknowledges the global trend towards net-zero emissions . . . but still wants to take the transition slowly. The [current] economic slowdown is the main concern,” she says. Adding that, by “allowing emissions to rise until the peak”, many scenarios leave room for negotiations with the powerful fossil fuel industry. 

Policy shifts

Adding to the uncertainty over whether China can reach its targets in 2060 — and even peak emissions before 2030 — are the policy shifts for greening the economy. Instead of pouring subsidies into establishing wind and solar manufacturers — the dominant approach for the past decade — the state is shifting towards the use of new market-driven mechanisms, such as an emissions trading scheme, green finance and electricity spot market reforms.

A flurry of new announcements followed Mr Xi’s pledge. Last week, five central government bodies released guidelines to bolster private and international investment in green bonds, to prioritise the growth in such finance. Half of all new vehicle sales by 2035 should be electric or hydrogen and a top official has reaffirmed plans to rollout carbon trading to new industries. 

Yet, none of these initiatives alone will provide the necessary heft to push rapid climate reductions, analysts say. The emissions trading scheme, for example, has yet to be expanded beyond the power sector and is based on a measure of intensity, rather than clear-cut caps on total emissions.

China’s ultimate success or failure as a driving force for averting climate disaster may happen beyond its borders. About 40 per cent of all China’s overseas power plant financing from 2000 to 2019 was in coal, while only 11 per cent goes to renewable energy, according to data compiled by Boston University.

As such, global climate negotiators are determined to seize on China’s apparent willingness to encourage stronger global efforts. Kelly Sims Gallagher, formerly a senior White House climate official who helped negotiate the 2014 climate accord between Mr Xi and President Barack Obama, says Mr Xi’s new commitment is “a very important step for China to make”, adding that Beijing had developed a record for keeping to past commitments on climate.

“Given that China is the largest emitter currently, the sooner that it can achieve that peak and begin its pathway down, the lower cumulative emissions will be [creating] more flexibility for other developing countries to determine when they must peak,” says Ms Gallagher, who now directs the Climate Policy Lab at The Fletcher School, Tufts University.

But, says Ms Gallagher, it will be harder for the two countries to co-operate than it was in 2014, even under a Biden administration. Due to America’s failure to ratify both the Kyoto protocol and its withdrawal from the Paris climate accord, “the US has lost some credibility so it needs to have some humility,” she adds. “As the two largest emitters we cannot afford for these countries to not co-operate with each other on climate.”

Source: Economy - ft.com