The China-US climate deal: the challenges for China

US China climate deal

Achieving a peak of 10 gigatonnes by 2030 is achievable, but it will require a combination of strong management and good luck.

The Presidents of China and the USA surprised the world at the APEC summit in Beijing by announcing a deal that would require China to ensure that its carbon dioxide emissions reached a peak by the year 2030. The US, in turn, would reduce its emissions to 26-28% below its 2005 levels by 2025. The agreement is “soft” in that it does not have to be approved by legislatures, and the parties just have to make best efforts to achieve their targets.

As far as we know, the document did not specify the desired level of China’s emissions in 2030. Informed opinion suggests that a successful outcome would see carbon dioxide emissions peak at about 10 gigatonnes by 2030, but a less optimistic scenario would postpone the peak to closer to 2040 at levels approaching 15 gigatonnes. According to the Chinese, reaching the 2030 target would involve non-fossil fuel contributing 20% of total primary energy supply, up from 10% today. This, in turn, would require the installation of an additional 800 to 1,000 gigawatts of power generation capacity from nuclear, hydro, wind and solar.

Whilst I agree that a peak of 10 gigatonnes by 2030 is achievable, it will require a combination of strong management and good luck. The key factors which will determine the degree of success fall into three categories: total energy consumption, the low-carbon energy supply, and measuring and monitoring

Total energy consumption is set to continue rising beyond 2030, but the level of demand will be closely dependent on the rate of economic growth and the structure of the economy. It is easily to be optimistic at a time when growth is slowing, but we have to recall that any subsequent economic surge in China is likely to be accompanied by a rise in the output of energy-intensive industries and in the share of coal in the energy mix. Together, these two trends would combine to accelerate sharply the rise of carbon dioxide emissions, as happened in the early 2000’s. Even today, at a time when the structure of the economy is supposed to be switching away from heavy industry, China remains the dominant supplier of steel and fertilizer to international markets, and both industries rely on coal. The sustained improvement of energy efficiency across the economy will remain a challenge, especially as the newly-affluent middle classes continue to expand in size. Finally, in the search for self-sufficiency, the government has been supporting a range of initiatives to use coal to produce synthetic natural gas, chemicals and liquid fuels. All of these processes produce significant quantities of carbon dioxide.

A second set of challenges lie in the deployment and dispatch of low-carbon energy, particularly hydro, nuclear and wind. Hydro-electricity has long played a significant role in the country’s power supply, though annual output is highly dependent on rainfall.  The government plans to boost capacity from about 300 gigawatts today to 430 gigawatts by 2020 and 570 gigawatts by 2030. The Three Gorges Dam has highlighted the human and environmental costs of these large projects and environmental considerations are already delaying the start of construction for some new dams. A further consideration is the potential negative impacts on neighbouring countries in Southeast Asia of those dams built on rivers that cross international borders.

Having taken a pause after the Fukushima accident, the government is pushing ahead with the rapid expansion of nuclear power capacity from 17 gigawatts today to 58 gigawatts by 2020 and as much 150 gigawatts by 2030. The ability to grow at this rate will be highly dependent on public attitudes to nuclear energy in general and to the siting of plants near their homes in particular. Whilst this has not proven to be a serious problem to date, another serious accident anywhere in Asia or clear evidence of poor safety practices by the Chinese nuclear industry could easily create hostility.

With an installed capacity of about 100 gigawatts, China has the largest wind power sector in the world. This is set to rise to 200 gigawatts by 2020 and 400 gigawatts by 2030. However, the rate of growth of output over the last few years has not matched that of capacity. The reasons are largely institutional and relate to poor coordination between key actors, distorted incentives, the reluctance of the grid to dispatch the power, poor siting of wind farms, and various technological deficiencies. Whilst the government has recently taken steps to address these deficiencies, it remains to be seen how quickly wind power can achieve its potential.

The third and final concern is measuring and accounting. Statistics on China’s energy production and consumption continue to have problems of reliability, especially in the case of coal. In the period 1998-2001 at least 200 million tonnes per year of coal production and consumption was unreported, amounting to about 15% of the domestic market. Whilst the situation has improved significantly over the last 15 years, inconsistencies persist between data reported at local and national levels. This will have direct consequences for the reliability of data on carbon dioxide emissions. In addition, the government will have some leeway in the methods they apply to estimate carbon dioxide emissions from different forms of energy consumption.

Last but not least, we should not forget that the deal covers only carbon dioxide, and does not include other gases such as methane, nitrous oxide and various fluorine compounds that together account for about 20% of the country’s greenhouse gas emissions. These gases arise from a range of energy, industrial, agricultural and waste management activities and require a quite different set of policies to constrain.

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