Source: Image by Peggy und Marco Lachmann-Anke from Pixabay


Will China Choose a Green Recovery?

As nations struggle to rebuild economies battered by the COVID-19 pandemic, the opportunity to simultaneously advance the effort against global climate change is nowhere greater than in China.

As the first country impacted by the novel coronavirus, China suffered a significant economic contraction but narrowly avoided a recession, demonstrating the ability to emerge from the worst immediate impacts of the pandemic. Decisions due in coming months now present important opportunities to align long-term economic growth with climate change objectives.

By embracing the opportunity of green recovery in its upcoming Five-Year Plan, China can avoid long-term carbon lock-in, put itself on a path to low-carbon, high-quality growth, and build the foundation for a more ambitious nationally determined contribution (NDC) to the Paris Agreement.

As the largest CO2 emitter in the world, China’s stimulus plan could have a significant impact on other countries’ recovery efforts and ambition. During a speech delivered at Tsinghua University, UN Secretary General Antonio Guterres strongly urged China to choose the path of green recovery.

For the moment, however, the signals from Beijing are mixed. Analysis shows that stringent measures against the coronavirus temporarily reduced China’s CO2 emissions by up to 25 percent during a four-week period. However, as heavy industries began to bounce back in May, both air pollution and CO2 emissions returned to pre-pandemic levels.

There have been some encouraging signs. In May, China’s central bank published a new draft list for projects eligible for green bond financing and omitted “clean coal,” a landmark move to align with international standards for green bonds. At July’s International Energy Agency (IEA) Clean Energy Transitions Summit, China’s minister of energy announced that an additional 85 GW of solar and wind energy will be connected to the grid in 2020, boosting China’s solar and wind power capacity to about 500 GW and overachieving the interim target listed in its NDC.

Also in July, the Shanghai Municipality launched the National Green Development Fund with the Ministry of Finance and the Ministry of Ecology and Environment. A combined effort of state-owned banks and financial institutions, the fund aims to focus on green development in the Yangtze River Economic Belt, an area of 11 provinces with high energy and economic growth.

Yet at the same time, according to analysis by Greenpeace, China has pushed forward at least 48 gigawatts (GW) of coal-fired power plants in the first five months of 2020, more than the entire coal fleets added in 2019.

Steering away from coal and accelerating the growth of renewable power will be crucial tasks if China is to align its economic recovery with climate objectives. The draft proposal of China’s Energy Law sets annual renewable consumption targets for each province, connecting more renewables to the grid, and China aims to achieve grid parity for renewables next year. However, the solar and wind industries could face increasing pressure competing with coal at the provincial level.

Moving forward with China’s long-awaited national emissions trading system would provide an important tool to cost-effectively decarbonize the energy sector. Attaching a carbon price to electricity prices would reduce the short-term economic benefits of coal power plants, making them less favorable as China is developing its next Five-Year Plan and updating its NDC. Many analysts are urging that China not let the pandemic delay the start of the carbon market.

Many in the climate community had hoped that a planned EU-China summit this fall would provide a crucial opportunity to galvanize international climate ambition in a year when governments are expected to submit their new or enhanced NDCs. However, with the highly anticipated summit now postponed, finding another occasion to propose a high-level alliance between the EU and China on climate change is uncertain.

China’s economic recovery presents a “narrow window, but vast opportunity” to build back better and cleaner. While many other countries are also struggling with the balance between economic recovery and sustainable development, China could set a powerful example by demonstrating its commitment to addressing both the pandemic and the climate crisis, helping to jumpstart a global, sustainable recovery.