On climate change, China must take the global lead

Securing a livable Earth, bending the curve on the global temperature and getting to net zero carbon emissions are the policy imperatives of our era. For history is written tomorrow, but the planet’s future is being made today. 

The widespread disastrous effects of climate change are clearly visible to all except those who are deluded and in denial. Heatwaves in the Northwest. Severe droughts in the West. Raging wildfires. Flooding in Europe and China. Fires in Siberia. We are running out of time to arrest climate change before we hit horrific tipping points of no return. 

Crucially, today stretch commitments are being made. Europe is committed to net zero greenhouse gas emissions by 2050. President Biden has likewise agreed to a 100 percent carbon free power generation by 2035, and a net zero goal by 2050. 

Yet, if we are to get from a polluting present to a sustainable and stable future in 2050, China must play the leading role. 

In 2019, China contributed 27 percent of global emissions, and it has the furthest to go to get to net zero. Succeeding in addressing climate change requires China to transform itself rapidly and dramatically. President Xi Jingping has committed to a goal of net zero emissions by 2060, but can China go from brown to green in less than four decades? 

Critics say no. The challenge is too great. The Chinese economy is too large and too dependent on carbon. I take a different view. I believe China can leap into a green industrial transformation and I see evidence it is preparing to jump. President Xi and the People’s Republic of China leadership understand the climate emergency. The government views this challenge as an opportunity to lead in the green globalization of today and tomorrow. In making the leap, China can assure fast, sustained growth and strengthen its political position as it rises and perhaps surpasses the United States. 

What must China do to convert green statements into action and facts on the ground? 

China needs to switch to renewable zero emission power generation sources, announce a halt to the more than 300 coal power plants already on the drawing board or under construction across the globe and progressively close existing coal fired capacity. China must more than double its renewable power generation by 2060. To put it another way, achieving the net zero goal requires a 16-fold increase in solar, a nine-fold increase in wind, and large increases in nuclear and hydro power. This is a huge jump, but it is achievable.

China can make the leap because technology diffusion is not a constant slope but rather an ‘S’ curve. What do I mean? In the initial phase, adoption of renewables is slow and costly, requiring incentives. However, as adoption accelerates, innovation continues, and the price of renewables falls, allowing for a greater speed of adoption. These feedback loops are pulling the renewable transition closer to us.  

Solar and wind generation costs are falling year-on-year by 13 percent and 9 percent respectively. In 2021, solar is cheaper than new coal generation within China. It is now a matter of execution, and here China has a good track record. Recall that China built 86,000 km of the world’s largest electric high-speed railway in just 30 years. China can deliver on a huge scale industrial policy when many other states cannot. China will not dither once the next five-year plan sets the key green goals — it can deliver on renewable power generation and it is quite possible for more than 60 percent of China’s generation to come from renewables by 2030.

China’s action in the electric vehicle (EV) transition shows similar reinforcing dynamics. China has imposed a mandate on automakers requiring that EVs make up 40 percent of all sales by 2030 and is subsidizing EV purchases. This mandate and incentives are driving up production, driving down costs, and accelerating adoption rates. China’s EV designers and buyers are responding. For instance, take China’s locally produced Hongguang Mini, which costs only $4,500 and is forecast to sell an astounding 1.2m units in 2022. China aims to drive the auto electrification story of tomorrow, not to be a mere passenger in it. EV battery costs will soon be below $100 per KwH, making EV’s the preferred choice over combustion engines.

Finally, China is beginning to price carbon and shift incentives. Currently China’s carbon cap and trade scheme price stands at almost $8 per ton. That price needs to rise to at least $20 and higher to continue to change behaviors and shift investment decisions. China must demonstrate its seriousness by raising prices in the scheme, progressively cutting emissions allowances and levying meaningful penalties for firms that fail to reduce emissions or purchase the required offsets. Critics worry that the scheme’s design and its impact will be insufficient. Perhaps — but I expect further adjustments as goals are established and emissions oversight to be tightened. China now has the pricing mechanisms it needs.

China can go from brown to fifty shades of green faster than critics think because a myriad of centrally planned economic levers may be more effective than market economy mechanisms alone. And China will go green because this is a key part of a bold geopolitical plan to lead and accelerate past America in the process of green transformation. 

We all should welcome this geopolitical race, because the planet will benefit from the competition, the race and a green reseeding.

Dr. Stuart P.M. Mackintosh is executive director of the Group of Thirty. His third book, “Climate Crisis Economics – The Net Zero Transition” was released in September.