Tuesday, February 4, 2020

China and the EU: Two More Reasons Why 2020 Will Be a Make or Break Year

The decisions made this year may well determine the fate of life on Earth. Our actions have become especially important in the wake of our failure to reign-in emissions and address collapsing ecosystems.  In a previous post I outlined four reasons why 2020 will be a make or break year for environmental action.  Events in China and the EU provide two additional reasons.

This year will also see a major shift away from dirty energy. Investors, insurers and banks are abandoning fossil fuels. Major lending institutions have stopped financing coal, oil and gas at the start of 2020 and the Guardian become the first major news organization to refuse ads from fossil fuel companies.

China will also reevaluate its energy mix this year. The world's most populace country will draft its next five year plan (FYP) this year.  FYPs are the country’s top-level policy blueprint and they have been called, "one of the most important documents on the planet" for global sustainability. The first FYP was launched in 1953 and the next is the 14th, it will cover the period from 2021–25. This one will be especially critical as China is the world's second largest economy and largest consumer of coal. Decisions made by the country will contribute to or detract from our prospects of managing the crises we face.

In a chinadialogue article, Tom Baxter and Yao Zhe reviewed ideas being discussed for the 14th FYP.
They report that there are discussions underway related to putting a cap on Chinese carbon emissions. Although China has pledged to peak carbon emissions before 2030, the country has been reluctant to promise an absolute cap on emissions.

Although China’s carbon emissions are still increasing, they are expected to plateau this year. In 2018, coal dipped under 60 percent of China's primary energy mix for the first time and there is reason to believe that coal consumption will come under increased scrutiny in 2020. Wang Yi, a member of the Standing Committee of the National People’s Congress and a key climate and sustainability advisor to the government, suggested replacing the energy consumption cap with a carbon emissions cap in the 14th FYP at this year’s National People’s Congress sessions.

"By doing so, we can effectively limit coal consumption without setting any constraints for the development of zero-carbon energy sources," Yi said. "At the beginning, the target may not seem the most ambitious quantitatively, but it means the start of a new process to reduce carbon emissions in absolute terms." The 14th FYP will provide specific targets for the installation of coal power capacity and Zeng Ming, director of the North China Power University’s Energy Interconnectivity Centre indicates he expects a lot of coal power plants to be retired.

China exceeded the renewable energy targets contained in the 13th FYP and installed solar capacity reached approximately 180 GW in 2018. In 2019 China revised its renewable energy target upwards, committing to 35 percent clean energy by 2030. The 14th FYP is expected to include expanded clean energy capacity (mostly hydropower and nuclear) to meet its non-fossil target of 20 percent of the energy mix by 2030.

Nonetheless, China is still heavily dependent on coal with 1,000 gigawatts of existing capacity. Under the 13th FYP, China’s coal power capacity has been capped at 1,100 gigawatts (GW). In March 2019 the China Electricity Council suggested that coal-power capacity should expand to 1,300 GW by 2030. This includes 121 gigawatts of coal plants currently under construction (this is more than is being built in the rest of the world combined). However, we need to differentiate between coal capacity and the amount of coal actually being burned as many of these plants are idle.

The final plan will be approved by China’s top legislature in early 2021. According to Global Energy Monitor China will need to slash its coal power capacity by 40 percent in the next decade to meet its climate goal in the Paris agreement.  

Global climate action could also get a boost from Europe. This year the EU is planning to impose taxes on imports from countries who are not doing enough to address climate change.  This so called carbon border tax or "mechanism" as the EU calls it, is the first wave in what may become a global effort to ensure that all nations do their part to manage the climate crisis. The new European Commission led by president Ursula von der Leyen has made it abundantly clear that taxing carbon imports is a top priority as part of her green deal programme. "There is no point in only reducing greenhouse gas emissions at home, if we increase the import of CO2 from abroad," Ms von der Leyen told the Financial Times. "It is not only a climate issue; it is also an issue of fairness towards our businesses and our workers. We will protect them from unfair competition." These taxes could be applied to goods coming from places with lax environmental standards like China, Russia, India and the U.S.

Although the hope is that this will encourage exporters to the EU to participate in its carbon trading scheme, the Trump administration has made statements that suggest the situation could easily escalate into another trade war. The Trump administration, which has decimated environmental safeguards, has promised to retaliate against EU taxes.

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