Assessing Drivers and Progress in China’s Climate Policies
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I'm Bonnie Glaser, Managing Director of the Indo-Pacific Program at the German Marshall Fund of the United States. Welcome to the China Global Podcast. China is the world's largest energy consumer and carbon emitter, accounting for one-third of global CO2 emissions. One of its biggest sources of emissions is coal, which continues to play a central role in China's economy.

At the same time, however, China is the world's leading supplier of renewable energy, largely due to significant government investments in green technologies, including solar manufacturing, batteries, and minerals. In September 2020, China's leader Xi Jinping announced the goal of achieving peak CO2 emissions before 2030 and carbon neutrality before 2060.

This ambitious pledge, if realized, will be an important step in global efforts to limit global warming. In the past few years, the increasingly competitive and fraught relationship between the United States and China has spilled into the climate domain, threatening the potential for both countries to work together to address climate change. And that's the topic of a recent commentary co-authored by Margaret Pearson and Michael Davidson.

The paper is called Where Are the U.S. and China Addressing Climate Change? And it can be found on the Brookings Institution website.

And in this episode of China Global, we're going to talk to one of those authors. Michael Davidson is my guest. He's an assistant professor at the School of Global Policy and Strategy at the Mechanical and Aerospace Engineering Department of the Jacobs School of Engineering at UC San Diego. Welcome to the China Global podcast, Michael. Thanks for having me.

So let's start by talking about China's approach to addressing climate change. Where does climate change fit on Xi Jinping's priorities? I assume you've read quite a bit about what Xi Jinping has said on the topic. So how does he view climate change and what does he say about it? Yeah, it's...

I guess I would say that China was largely passive and more reactive on climate change in the lead up to around Copenhagen in 2009, which is a very famous climate summit where China faced a lot of criticism. And after that, they refocused internally. This was before Xi Jinping took office.

And this led to a greater alignment with the United States. So Xi Jinping and President Obama famously had a number of joint sessions and concluding with joint bilateral announcements and careful negotiation of the Paris Agreement in 2015. So what we saw was a shift of China towards adopting and Xi Jinping towards adopting more aggressive climate action

And following the US withdrawal from Paris in 2017, China took on even more roles. And as you mentioned, Xi Jinping's commitment in 2020, that was a unilateral commitment made by China without negotiating with other partners. So we saw this really evolution of China and Xi Jinping wanting to take on a more leadership role for climate change. I think in terms of the list of priorities, it's also important to recognize that

the political economy of reform and target setting in China since China had adopted many administrative and command and control policies to achieve some of these climate

objectives. So we saw the need for the center to highlight what's important in terms of targets and forcing local compliance. And the international climate commitments that Xi Jinping has made have been very essential for that. So I think it's quite clear with both the 2030 commitment, but really more the long-term 2060 commitment, which

essentially lit a fire under every bureaucrat in China to do something on carbon neutrality, that Xi Jinping places climate change as a fairly high priority. What have been the major considerations behind China's climate policies and efforts?

Was the ambition to dominate clean energy technologies at the top of the list? I remember being in China years ago, and I'm sure you recall as well how terrible the air was, especially in Beijing, but certainly in other cities that I visited before.

Was that a major driver of China really stepping up on climate? Or was it really the desire, as I said, to just become a leader in some of these clean energy technologies? Yeah, so climate change is really being added to a list of other energy policy priorities of the China central state. So energy security,

affordability, industrial structure reorganization, air pollution, and climate change. And reducing greenhouse gas emissions really aligns with some of those other policy objectives. And so air pollution notably aligns very well with long-term climate goals by moving away from fossil fuels, though there can be some short-term misalignments.

Clean energy technology development around this period, if you're looking at, say, the time the Paris Agreement was inked or really a few years earlier when the sort of the foundational pieces were being put in place, was on a very long list of strategic technologies that China wanted to develop.

And also, I think it's really important to know that the story of clean energy manufacturing boom in China is really a local story with local governments seeking growth opportunities, entrepreneurs coming home, relatively unfettered global flows of capital, tech and talent.

This is really in contrast to maybe what folks generally think of as the China central state approach to energy and technology, which is a very top-down approach. And that holds in traditional fossil fuels like coal and ultra supercritical coal, but in clean energy, this really hasn't been the case. So I think it's quite clear to many folks that there was no obvious path to China's current dominance in clean tech manufacturing when they

started inking these goals with the United States. Certainly looking at China's domestic gas car industry, no one would have thought that China's EV industry would become the global leaders at that time.

And there's also, you know, one other set of imperatives, which is not to be forgotten, which is that China is now facing increasing amounts of weather extremes, climate impacts, and these have been intensifying in recent years. We've had droughts, floods, heat waves. And so generally...

China's position in the clean energy manufacturing, based on its susceptibility to climate change and based on its own really robust development of clean energy, it's very advantageous now for China, for the world to adopt more stringent climate goals. So China, of course, promised to shift away from coal.

Yet, I think we did see some decline in its coal use. There was a pledge not to be selling some of these coal projects in their Belt Road projects. But in recent years, coal use at home has really been on the rise in China. So why is Beijing doubled down on its coal use? And does that in any way signal that it's going to backpedal on its climate pledge?

Yeah, and I can remember in 2015 and 16 when many people had said China had reached peaked coal, the current round of

New investments in coal infrastructure was really driven by the severe power outages that China faced in 2021, which affected 20 provinces, industrial loads, manufacturing, as well as even residential household demand in some provinces. So this caused a lot of debate around the role of energy security and how to achieve energy security and climate change goals at the same time.

I think it's important for everyone to recognize that no country is going to sacrifice power reliability in order to achieve climate change goals and to reduce emissions. But it's also clear that there are, from modeling results, from our own modeling results, as well as many anecdotes,

that a lack of coal capacity was not the cause of those power outages. It was really more institutional, the way that markets were designed, fossil fuel price volatility driven by China's own domestic goals for the coal sector, as well as more rigid interprovincial contracting systems for electricity. Sorry, I can get a little walkie on this. But the point is that

the lack of coal capacity was not the major reason for this. But unfortunately, the result, the policy response to this has been to recenter coal. And so this has become very prominent in speeches by Xi Jinping and others, this 先立后破, which is to build the new energy industry first before taking down the old industry. So the idea being that

They're going to keep all the coal infrastructure in place. They'll make sure the system is still has coal as a backbone until all the clean energy is in place.

This is still an active area of robust debate, but I think the tender of it dramatically shifted following the power outages in 2021. We also had some more limited ones in 2022. And each year now, the focus on making sure that there is no power outages or very limited load shedding is at the top of minds of every local government official.

I'm sure you talk to many experts in China on climate and about Chinese policies. And you're talking to us today from Shanghai. So can you share maybe, is there much debate among Chinese scholars about China's path?

to its goal of having the peak emissions before 2030 and achieving carbon neutrality before 2060. Obviously, most countries, including the United States, who have made these climate commitments said that they would achieve carbon neutrality before 2050. So I'm curious how Chinese scholars think about China's commitments and its policies.

China is on track to meet several of the 2030 targets. That's peaking carbon emissions, as well as there was a renewable energy capacity target that it already met. There's really no debate there.

There are two other targets or two other sets of targets that China committed to to meet in 2030. One was a non-fossil energy share target, 25%, and then carbon intensity and energy intensity reductions economy-wide.

Those, I think, talking with Chinese experts are a little more challenging and uncertain, particularly due to COVID rebound and also some poor hydro years, which led to more coal use and the coal expansion that we talked about. So I think there's a little bit more divergence of opinions on those sub-targets for 2030. If we look out to 2060,

And because of, again, the high importance that Xi Jinping has placed on the 2060 target, and we can see this reflected all throughout the bureaucracy in China and the state-owned enterprise system, which Xi Jinping is hoping to strengthen and use as a lever to achieve these and other goals, that carbon neutrality is here to stay, that target, is

I think, you know, standing from the outside, it's achieving carbon neutrality for an economy as large as China is by definition ambitious because no one has ever done it.

Now we can debate which year is the most feasible, and it's quite possible that given China's recent explosion of growth in clean energy that it could achieve that target earlier. But setting any target for economy as large as this is by definition ambitious. So we had a modeling study that came out earlier this year that looked at what it would take to achieve this by 2060 in terms of its renewable energy build out. And essentially it would need to maintain

a 200 to 300 gigawatt a year build out rate of wind and solar towards the end of that period. And just to put that number in context, the United States last year installed 40 gigawatts combined wind and solar, which was still a banner year. China has installed at that rate last year and is on track this year, but it's been very challenging and it's certainly not a given that it can maintain that pace for 40 years.

So I think it's quite clear that once they build all that renewables, one other point is that that's going to create a lot of other socioeconomic and political challenges for China that we have to be really aware of. Land use is going to become increasingly scarce, and those that study China know how sensitive China is around land use, particularly agricultural self-sufficiency. That's

going to create many, many conflicts out towards as we get closer to carbon neutrality, as well as what to do with all of these large number of coal plants that they're going to have to retrofit and retire. So many socioeconomic challenges that are going to have to be met

on the pathway to neutrality. Most of the policies in China, certainly many of the things that I cover have become heavily securitized. And you talked about earlier energy security issues.

So maybe you can elaborate a bit on how that's linked to climate change, how China thinks about addressing climate change. Is there a possibility going forward that security, which really includes stability, you just referred to land use, which could be a source potentially going forward if there's more competition of instability. Is there a possibility that

the securitization of the issue slows down China's progress? Is this something that you think people might think about or are already thinking about in China? Yeah, I think it's a really good question. And I think it can really go in two directions. So clean energy deployment in the aggregate is going to increase energy security.

Because energy security in the traditional sense was seen as having an uninterrupted availability of energy supplies so that there's no shortage of demand. This is traditionally sort of imports of fossil fuels. Clean energy reduces that entirely. You're no longer dependent on continual material inputs to produce energy.

Now, you do have to build the things and install them, but once you do that, very minimal inputs to keep them going. So on the aggregate, clean energy improves energy security.

Now, it does create more challenges for power system reliability because of the variability of renewable energy. And so that's really the challenge that China's facing now, and really every country that has high penetrations of renewables is facing because of the changes to the way they manage the grid, increases in transmission infrastructure and all of that. So they're thinking about, they're addressing it. This is actually a point of shared responsibility

challenge and actually a degree of shared dialogue and cooperation between the United States because we both face these particular challenges. But there are other aspects of securitization that do present some significant challenges, both

in China, as well as other countries responding to China. And certainly the increasing lens through which clean energy technology is seen as a security issue, as technology and self-sufficiency are seen as core to economic objectives, that this can result in

reduced flows and sharing of new technologies. It can also result in reduced sharing and production of data they're seeing as more security and sensitive. And the inability for multiple countries around the world to all learn from each other's experiences, which would

by extension, help to reduce the cost and increase the availability of renewables. So we've written one paper on this related to the solar supply chain where we were able to calculate what the benefits of globalized supply chains

in solar have been to U.S. consumers as a result of China's deployment and increasing globalized supply chains. And it's on the order of $10 to $20 billion over the decade following 2008. China similarly benefits quite a bit because it's learning by doing and sending many

of those products overseas and scaling up its own manufacturing capacity. So there's a lot to lose if the securitization goes too far. Now, that's not to say that there aren't legitimate concerns here. We have looked at this from the perspective of several key technologies in a paper in Science a few years ago, where we were dissecting what are the sort of explicit national security risks that are noted

related to critical infrastructure or dual user, et cetera, and really find that they're mostly pretty muted for the clean energy technologies that we examined, which were solar, wind, batteries, green steel, and carbon capture and sequestration. We did look at EVs. That's a new, very emerging hot topic right now in Washington and other places and in China.

But in the other technologies, those risks were quite manageable based on our assessment and in terms of available policy recourses. I want to shift to talking about China's cooperation with the rest of the world on climate and particularly the US. But maybe before I get to the specifics of where we're at now in the US-China relationship and how that is contributing to global efforts.

Could you just sort of maybe summarize a bit, evaluate how China has worked with the rest of the world? Is it mostly that Beijing is focused on its own efforts or has there been a trend toward more cooperation with the COP process and of course with the United States, but not exclusively with the United States?

Yeah, so I think in terms of the international negotiation, China is very active, a very active contributor, negotiator, a tough negotiator, and works with a large range of partners to...

to make its objectives realized within that negotiation process. As I said, in the lead up to Paris, the US and China were working very closely to make sure that that agreement was adopted. After the US withdrew from Paris, of course, that went away, and which US rejoined Paris were in a different

We're a different regime and realm now. The US and China specifically have signed two statements since the Biden administration came in that focus on US-China cooperation. Those are the Glasgow Statement, the Sunnyland Statements.

They are notably smaller in scope than what we saw in the Obama administration for all the reasons that you mentioned, that just the tensions are becoming much more fraught and this is spilling over to the climate change domain. If we look outside of the COP process, China is very active in international climate finance to developing countries.

It's also very active in extending clean energy supply chains and all of that into developed countries as well. From the perspective of developing countries, China certainly sees a very strong role for what people are calling South-South cooperation. So we're

developing economies donate and give aid and grants or other assistance to other developing economies. And China's playing a very crucial role in this. Now, the climate change conference, which is starting just very soon now, the finance portion of it is going to be the number one topic because there is a need to negotiate a new goal, collective goal for climate finance towards developing countries.

China has given a lot of money in climate finance, but has historically not been willing to be included in that broader goal because it doesn't see itself as required to give that finance. So it was seen as a voluntary contribution as opposed to the developed economies for which it should be considered required or mandatory.

So that will certainly be playing out in the climate change negotiations. But bilaterally, China is going ahead with many forms of climate aid and also infrastructure projects that advance climate goals.

The second meeting of the U.S.-China Working Group on Enhancing Climate Action was held in early September. And at that meeting, both sides reaffirmed their intention to jointly host with the COP 29 presidency of Azerbaijan a methane and other non-CO2 greenhouse gases summit at COP 29. And they expressed their intention to continue discussion and collaborative efforts

in areas like enforcing their respective laws on banning illegal imports and promoting global forest conservation and sustainable management. That was all from the readout of the last meeting that they had in September. So it sounds a little bit to me like thin gruel. I

As you said, the U.S. and China were working more effectively in the Obama administration. I'm curious how you evaluate at this juncture U.S.-China cooperation on climate change. What more could they be doing at the COP29 meeting? And is there a possibility that if the relationship does improve somewhat going forward, and I personally think that we will have

potentially continued sort of fragile stability in the relationship, depending on, of course, on our outcome of our elections, which are coming up and may have already be over by the time we air this podcast, although we may not know the results.

But it seems to me that there might be potential for doing more. But I'm curious what you think. Yeah, there's quite a bit that could be done that's not currently being done.

I think it's important to acknowledge how difficult it is to even have collaboration on climate change given the current climate bilateral relationship. So as I mentioned, there's two sort of agreements under which U.S.-China climate collaboration are proceeding.

Methane, as you mentioned, has been a huge focus of the United States and was part of the Sunnyland Statement. So China and the US have agreed to work together on methane and other non-CO2 gases, which is not insignificant. We're talking between 10, 15% of China's overall greenhouse gas emissions, depending on how you count it. So it's not insignificant.

And there's also some other language in the cooperation agreement around renewables deployments and importantly, carbon capture and sequestration pilot projects, which are another area that has resisted the challenges from the bilateral tensions. I think so in terms of what would be at stake for cooperation,

And it's not limited just to the international climate negotiations, because what we're really interested in is seeing reductions in emissions. And the climate negotiations are one element of that. But since the Paris Agreement structure is in place, countries are making commitments. It's really up to countries to implement those commitments and reduce emissions. That's sort of the stage we're at.

So in terms of what's at stake, I'd say first is making sure that we continue to make strong commitments. So there's a new round of commitments that is coming up that will be announced and

Well, they're supposed to be delivered in early February next year and will certainly be discussed at this coming climate conference. So those would be for a 2035 target year. Those need to be very ambitious and there's a port wall for the US and China to sort of set a standard of that level of ambition.

I think it's also really important for both countries to make sure that there is sufficient availability and affordable clean energy equipment globally.

So, that's the point of making sure that these trade tensions don't spill over into multiple markets and cause increases in the costs of technologies elsewhere. We are paying much more for clean energy equipment in the United States, and yet we're still deploying it at record rates because we have a lot of money to spend on the problem.

I'm still concerned, particularly about the lack of availability and choice in many technologies like EVs, but we'll also have a lot of money to subsidize it. But this is not the case anymore.

in much of the rest of the world where the price point between renewables and coal is absolutely essential to their climate change ambitions. And so we need to make sure that we don't hurt the ability to have affordable and widely available clean energy technologies. There's other win-win areas like carbon capture that I mentioned where

There's not really a lot of experience and there's a huge benefit to sharing information on how we capture it cost effectively and storage and all of those. So I think these are all areas that

are not covered under the current climate agreements. You know, they're not being discussed explicitly by the envoys and their respective teams. That's not to discount the great work that the envoys are doing to discuss and have technical cooperation. I was fortunate to be a member of the Energy Transition Subworking Group as part of this process and did

I think, make some important efforts in trying to elucidate shared challenges between their two countries on these areas. But there's a lot more that needs to be discussed. And right now, this is taken up to a higher level. Certainly, the commerce officials, trade officials,

It is becoming very, very hot right now to discuss the clean energy equipment trade, clean energy trade, overcapacity, all of those questions. So it's being brought up to that level, which in some respects it needs to be because these are much broader economic problems. But I don't see a lot of visible progress in coming to a resolution to this problem, given the very difficult domestic political economies in both countries, particularly

to resolve that. So that's what I would like to see. I think we could probably start with something maybe more tangible. I think some areas for US and China to work together, specifically for the US to really benefit from China's global leadership in cleantech would be to think about how we manage foreign direct investment by Chinese firms in the United States. This is

a key lever for us to access great technology the Chinese firms have developed and accelerate us to the global frontier. Additionally, technology sharing and technology transfer and license agreements also really critical. I think these are areas where we could have some, I think, better and more robust dialogue and also better policies and clarity of policies domestically at the federal government about what is what is what

what is allowed and encouraged, and then what kinds of steps would be needed for these projects to go through. I would like to see those elements be put in place as part of a much broader discussion on climate. So finally, I just wanted to ask about the greening of the Belt and Road Initiative, which of course has been going on for many years.

But I don't think we've seen very much US-China coordination on financing the green transition in third countries. So is this an area where the US and China can do more or maybe even bring in Europe

or other countries that have the, like Japan, who have ability and interest in financing developing countries' green transition. Yeah, and as you mentioned before, China in 2021 committed to stop financing overseas coal projects, which was sort of the final, the last resort of coal overseas public financing around.

And since then, China has also been increasing its green components of its overseas finance as well as grants. There's still fossil and oil and gas. And so there's lots of more public money that we need to deal with in order to address climate change goals. But there's a lot of promising trends there.

The U.S. on the other side and Europeans are also eager to finance, invest in green energy and grids and other technical assistance in developing countries to advance climate goals. These are not very coordinated right now. So just to give one example, the U.S. and Japan...

led a, what's called a just energy transition partnership in Indonesia, which was getting together a bunch of mostly G7 funders, as well as other philanthropies and other groups to help finance Indonesia's energy transition over a sort of the medium term associated with certain targets. China was explicitly excluded from this. China, but China separately is

has gone into Indonesia and inked mini deals to MOUs to invest in grids and green energy.

Indonesia really does not want to choose sides. Indonesia would rather be able to have investment from China and from the US and from everywhere. And that's sort of the approach and the direction that their policies are going. So if we have that level of the ability for all the players to go in there and to finance, I think that that could be good. And even there might be a little competition for that, which could be healthy. It's more when...

the receiving one country's commitments is conditional on them cutting out the participation of the other that I'm really worried about. I think we don't have a lot of concrete data, of course, on the impact of that on terms of the availability of climate finance. I think

Again, there's some folks that would say that there's a positive reinforcement that could happen with competition and more availability. But I think some level of coordination could be very helpful.

a joint financing of projects. And particularly if you think about the respective advantages of US and China in terms of how they invest, but also what they provide, you know, technology, technical assistance, you know, markets, all of those things that you need to make it happen. There are some really strong complementarities. But I think

To start off with, it would be good to have coordination and at least not making it a zero-sum game in terms of who gets to invest and blocking out the other. I think that there is some willingness to discuss that, and it's probably going to be coming from host countries.

Like Indonesia is saying, we don't want to have to choose. We want to be able to accept finance from everyone in order to achieve our energy goals. We've been talking with Michael Davidson, who is an assistant professor at the School of Global Policy and Strategy in the Mechanical and Aerospace Engineering Department of the Jacobs School of Engineering at UC San Diego. Thanks so much for joining us, Michael. It's such a pleasure, Bonnie. Thank you. Thank you.