China Chat 03: Two Sessions, Greener Growth, 14th Five-year Plan (Video)
What are the highlights from this important occasion? How will China meet its carbon reduction targets and realize greener growth? What should we expect for the coming years?
Join us at our third subscriber-only webinar – China Chat, where we will discuss key trends that will define the Chinese economy, ways to achieve greener growth and other priorities in the new five-year plan.
• What are the key takeaways from the Two Sessions this year and the new five-year plan?
• What are the priorities for macro policies this year? How will China find a balance between policy “normalization”, deleveraging and risk management?
• What are the proposed measures to foster innovation and self-reliant supply chains?
• How will China achieve “emissions peak by 2030 and carbon neutrality by 2060”?
• How will green finance and ESG investing develop over the next five years?
Director, the Institute of Public & Environmental Affairs (IPE)
Director, China ESG30 Forum; Researcher, Caixin Insight
Deputy General Manager, Caixin Global; International Director, Caixin Insight
Key points by Ma Jun, Director, the Institute of Public & Environmental Affairs (IPE)
1. Interpreting environmental targets in the 14th five-year plan
• The targets on reducing carbon intensity and energy intensity are more or less the same as the past five-year plans.
• With a lot of uncertainties in the global economy, China is cautious on setting economic and related climate targets. The government prefers to “under-promise” and “over-deliver”.
• Since 2018, due to economic slow-down, trade war and the pandemic, local stimulus measures have cause coal consumption to rebound in some regions. Challenges for achieving the peak target are rising.
• But the carbon peak and neutrality commitments made by President Xi last year is quite unexpected to observers at home and abroad. A new dynamic, or a very different path of growth, is being created.
2. 2021’s top priorities in carbon reduction
• The government wants to find a good balance between maintaining growth and reducing carbon emissions. It’s not seen as zero-sum games.
• As a result, China will accelerate the investment on renewable energy, the electrification of industry and transportation, and digitalization of the power supply and the utilities.
• The market needs to play a role. Mechanisms like carbon trading, green supply chains, and green finance, are all extremely important.
3. Balancing environmental and economic goals
• It is important to create an accountability system to break down the targets into provincial, municipal and even county levels, as well as for major industries and enterprises. Holding every stakeholder accountable is key to a green recovery.
• Following the last financial crisis, much was invested into energy and pollution intensive industries, and China is still suffering from repurcussions. Now some local regions are repeating this trend in this round of economy recovery, causing the environment to deteriorate.
• The cost of high carbon is rising internationally as the whole world is moving towards low carbon. The EU’s border tax on high-carbon imports could seriously impact China’s export-oriented industries and cause stranded assets.
4. Planning for new nuclear reactors and prospects of Sino-foreign cooperation
• China believes that nuclear power is an indispensable part of carbon neutrality scheme. In 2011, China halted its ambitious plan for a thorough review after the Fukushima accident.
• The 14th five-year plan only stipulated new nuclear reactors along coastal regions, with none inland, which the responsible.
• China is open to international cooperation, but at this stage, high level of mutual trust is needed.
5. Any international comparisons concerning the change in energy structure, renewable energy, water, wind, and the reduction of CO2 emission?
• In terms of energy structure, the world’s factory is powered by coal. China is one of the few countries still having a high percentage of coal power, which makes China’s carbon intensity high. China’s emission per capita is even higher than the EU’s.
• The most important first step for China is to try to peak coal consumption, which many other countries like the US, the EU have gone through the process. But they also started getting rid of coal totally.
• On the other hand, China's renewable energy sector is the world's largest and the fastest growing, not only in hydro power, but also in more “real” renewable energy, solar and wind. The percentage of renewable energy is still only less than 15%, and China aims to achieve 25% by 2030.
6. What have changed after Xi’s commitments?
• A whole dynamic has changed. Before commitments were made, the prospect of climate action is quite gloomy. The Trump administration withdrew from the Paris Agreement and China witnessed a rebound of fossil energy consumption.
• After the commitments were made, carbon emission reduction was regarded as new political priority. Stance, policies and statements are quickly made by ministries and agencies, provinces and cities. And it was followed by state-owned enterprises, with sectors covering power, oil and steel.
• Even private companies rushed to make their own statements, like Ant Group and Huawei. To achieve their carbon neutrality or drive their suppliers to do so, Chinese firms started following good practices by global brands like Apple.
• On green finance, the happy surprise after President Xi’s commitments is that many financial institutions, including some largest state-owned banks like China Postal, have begun to integrate environmental and emission credit into their due diligence.
7. Any obstacles in the way for further development of green finance?
• The assessment should be more data-driven. Financial institutions would not be able to fairly and objectively evaluate credit and risks related. IPE monitored 8 million companies and compiled 3 million emission data every day and therefore became member of China’s green finance committee. IPE was also approached by financial institutions.
• MRV is another obstacle (Measure, Reporting and Verification of emissions accounting). The carbon footprint has not been well calculated, since Chinese emitters either neglect or lack the capacity. IPE developed a carbon accounting platform based on big data, in order to help them set targets and find the best track trajectory to go low carbon.
• Incentives are needed to be generated from all aspects, from government, law, policy, and also from the market.
8. How to balance between keeping technologically competitive and accountable for behaviors like carbon footprint?
• On the environment side, skillsets are there to control emission and to manage polluting upstream suppliers. But this won't enhance financial returns and competitiveness, unless more of this knowledge is shared among competitors.
• IPE, as an environmental group, have hosted roundtables and is happy to see giants like Apple, Microsoft, Dell, Huawei and Samsung sit on the same table having in-depth exchange of how to make their supply chains greener.
• But when it comes to IT, big data, AI, and 5G, all these have been so much charged with geopolitical tensions.
• We hope that we can develop digital solutions, and have the chance now to transform the global manufacturing, sourcing and investment, and eventually, consumption. I hope we can seize the opportunity together.
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