How ambitious is China’s five-year plan on climate targets?

Guoyi Han: Nothing is standing out in the 14^th FYP, especially along the lines we hoped for. The only two compulsory targets mentioned are the per unit GDP energy and CO2 intensities, with a reduction of 13.5% and 18%, respectively, in the coming five years. I suppose many would find this disappointing.

On renewables, the plan sets the target for the share of non-fossil fuel of primary energy consumption to reach 20% by 2025 – which is consistent with the revised pledge to increase the share to around 25% by 2030, as indicated by President Xi at the Climate Ambition Summit 2020. Many analysts would agree that China certainly has the conditions and capacity to reach, if not exceed, this target.

Karl Hallding: Renewables play an important role in China. However, while the magnitude and growth of energy consumption makes it possible for China to be the biggest market for renewables, it continues to be the world’s largest consumer of coal. From a global climate perspective, it does not matter how much renewables China is adding to its energy mix if the use of coal and other fossil energy sources is not reduced.

Looking back at all the proud Chinese declarations of green development, we have not seen any real improvements in China’s use of fossil fuels. To assess China’s future developments, we must go beyond five-year plans and other generally formulated targets. The focus of our attention should be China’s investment plans, and to follow up if these plans are turned into reality.

Guoyi Han: China’s five-year plan is continuously gaining international attention. From a climate perspective, one can expect continued stress on a green, low-carbon, and high-quality development transition. This focus was outlined in the guideline and principles revealed after the 5^th Plenum of the Chinas People’s Congress held in October 2020.

One of the key anticipations from the climate policy community is whether China will set ‘double control’ targets for its energy use and carbon emissions–meaning adding absolute caps to earlier relative intensity targets. Specific targets on controlling coal use and investment would be another key point to observe.

Karl Hallding: The 2060 net zero target risks diffusing attention from the more important 2030 targets. It does not matter to most of us what Xi Jinping claims that China could achieve by 2060, if China cannot do a lot better than indicated by its current plans to 2030 and 2040.

Moreover, it is not only a matter of China emissions. China has emerged to become by far the world’s largest international investor of new coal power plants around the world in the past decade. These investments are currently locking developing countries in with coal power-based energy systems for generations to come.

Within the Mistra Geopolitics programme, we are researching the gap between how Xi Jinping portrayed Chinese outward investments along the Belt and Road Initiative as “green, healthy, intelligent and peaceful” and a reality where brown investments dwarf the green ones.

Karl Hallding: The only thing that matters is to what extent China will actively and drastically reduce its use of coal and other fossil-based energy sources – and its support of new fossil intensive investments around the world. What we’ve seen so far does not indicate any such shift, but we will certainly keep our focus on whatever plans and concrete actions that come from Beijing.

Guoyi Han: One can only see so much in the plan itself; much needs to be elaborated and understood in the wider context. For example, why we continue to see new coal-fired power plants being built in China has a lot to do with the central-regional relationships in China.

On the one hand, the central control is much less absolute than what outsiders may think. On the other hand, regional interests and protectionism remain a major obstacle for a functional and integrated reform of the national power market.

Guoyi Han: It is crucial to place the signals and targets from the plan into a wider context. China is leading the world in both the capacity and investment in renewables. It has made impressive contributions globally. But to realize the carbon neutrality goal by 2060, more than 90% of the electricity needs to come from renewables, so China still needs to accelerate its renewable transition considerably.

In the near term, one of the urgent challenges is to have a functional power market that would enable the rapid increase of renewable power penetration and curb renewable curtailments. This would not only require hardware like smart grid and transmission capabilities, but also regulatory frameworks to reform the electricity market.

Karl Hallding: Even under Xi Jinping’s authoritarian leadership, there are tensions between the central government and actors at provincial and local levels. The coal sector, for example, has a long tradition of close links to the top Chinese leadership – a relationship that the green and clean-tech sectors do not have access to.

China is not a market economy and confusing things can happen in China’s political economy. For instance, a lot of renewable energy generation capacity has been built in China, but a large share of it is not connected to the grid. Political preferences are still prioritizing electricity from coal. In addition, the Chinese grid capacity is not sufficient to distribute the renewable electricity. From a market perspective, it does not make sense to build capacity without ensuring it would be possible to generate a profit.

Karl Hallding: In the shadows of the Trump administration China managed to portray itself as the new green leader. This has little to do with realities as China is both the world’s largest CO2 emitter – still rapidly increasing its emissions – and the world’s dominant financier of new coal power.

Now, with the new Biden-led US administration pursuing policies like the EU – particularly the carbon border adjustment mechanisms – there are both opportunities for reconsiderations in Beijing and for ripple effects on developing countries. Geopolitically, China will certainly face increasing challenges to sell itself as a green leader globally, unless there is a shift from the promotion of fossil intensive infrastructure.

Guoyi Han: Previously, China was reluctant to be seen as the global leader on climate matters. Since 2015–and especially in the past four years with the withdrawal of the US from the Paris Agreement–we have, however, seen a change and willingness of China to be seen as a global leader on climate change.

The question is now whether and how China and the US will compete, cooperate or at least coordinate their climate agendas to assume such leadership.