China's path to modernising its economy Research Brief

Jun 17, 2015 - 9:30am

Governments from around the world will gather in Paris in December to finalise the international framework through which the world will facilitate carbon pollution reductions post-2020. Paris is a critical milestone for setting domestic ambition, since it is countries’ own policies, not international treaties, that reduce emissions.

In the lead up to Paris, all countries are expected to submit their post-2020 emissions reduction targets. China gave an indication of its initial target in a joint announcement with the US last September. It said that it would peak national emissions before 2030 and by the same time work to see 20 per cent of its total energy use come from non-fossil fuel sources. China is expected to formalise these targets this month (June 2015). This formal announcement may include new commitments such as emissions intensity targets for the period after 2020 and more detailed renewable energy targets. Afforestation goals may also be included. This announcement will build on previous commitments by China, for example, to cut its carbon emissions per unit of GDP by 40-45 per cent by 2020.

China is a powerful emerging economy that still has endemic poverty. It is also the world’s largest emitter of greenhouse gases, and its pollution reduction actions are hugely important signals to the world. China’s efforts are driven by genuine self-interest, with the nation seeking to improve poor air quality in major cities, enhance energy security and industrial development, and build resilience against price volatility of the global fossil fuel market.

Key points:

  • China is expected to formally announce its post-2020 emissions reduction target in mid-June. With that announcement, countries accounting for over half of global emissions will have declared their initial targets for post-2020 actions. China is the world’s largest polluter emitting 10.5 billion tonnes of carbon pollution per year.

  • China will likely meet its current 2020 targets and has indicated that it will peak total emissions before 2030. This will require additional and sustained action over the next decade. New commitments such as emissions intensity targets for the period after 2020 – more specific renewable energy targets and afforestation goals – may also be included in China’s formal submission of its target to the UN.

  • Driven by self-interest, China is modernising its economy and undergoing a major structural shift away from pollution intensive economic development. Drivers for this change include addressing local air pollution, improving energy security, global economic events, and a recognition that it must to play a fair part in global efforts to tackle climate change. Air pollution is a significant economic impact and driver of action, with health and other impacts estimated as costing China between 9.7–13.2 per cent of GDP.

  • These actions are having a significant impact on China's energy system. China is now the world’s largest investor in renewable energy with US$89.5 billion invested in 2014. There are encouraging signals that Chinese coal consumption will peak much sooner than anticipated, if it hasn’t already. Last year China committed to have 20 percent of its total energy to come from non-fossil fuel sources by 2030. To meet this commitment China will need to build a power system based on renewable energy and nuclear power the size of the current electricity system in the USA in just 15 years.
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