China set to lead on global climate politics

China is poised to step into the leadership void left by the Trump administration’s likely withdrawal from international climate politics, write Nicholas Procter and Benjamin Habib in Asian Currents.  The original article was published on 5th February 2017 and is available here.

Image courtesy CSIRO.

Image courtesy CSIRO.

As a presidential candidate, Donald Trump left no ambiguity about the stance his government would take on climate change.

He infamously tweeted that climate change was a hoax perpetrated by the Chinese and promised to withdraw the United States from the Paris Agreement. He promised to wind back Barack Obama’s Clean Power Plan, eviscerate the Environmental Protection Agency and during his period as president-elect oversaw a witch hunt of officials working on climate change-related issues in the national bureaucracy.

Upon taking office his administration has signed off on restarting the Keystone XL and Dakota Access oil pipelines, which were halted under the Obama administration after concerted civil society pressure. His executive branch nominations are a cartel of oil industry-friendly figures with highly questionable environmental credentials, headed by former Exxon executive Rex Tillerson as his pick for Secretary of State.

Clearly the Trump administration is going to torpedo efforts in the United States to reduce its national greenhouse gas emissions footprint. Of broader concern to international observers is the impact of Trump’s climate policies on implementation of the Paris Agreement and the negotiating process in the UN Framework Convention on Climate Change (UNFCCC).

The Trump administration’s abdication from the Paris Agreement is ceding leadership to China to shape not just the international climate change regime but also the contours of the emerging international post-carbon economy, for which the Paris Agreement is a keystone document.

China’s climate policies

China had already been working toward environmental goals in its 12th Five-Year Plan (2011–15), calling for an acceleration of non-fossil fuel energy development, and greater energy efficiency. An increase in the production of hydro, wind, solar and biomass energy led to the first drop in coal consumption in 2014. Energy intensity (consumption per unit of GDP) fell 18.2 per cent over this period and carbon intensity (emissions per unit of GDP) fell by 20 per cent, both exceeding target goals.

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The incentive for action came after a sharp increase in public protest demanding officials address the worsening environmental situation. In 2005, China had 16 of the 20 most polluted cities in the world. A rapid increase in public protest led officials in Beijing to acknowledge the now undeniable crisis that had become a serious health issue. This was the focus of the documentary, Under the dome, which was viewed 300 million times before being removed from the Chinese internet after only a week.

The 13th Five-Year Plan (2016–20) builds on the success of the 12th, laying out targets to achieve its Paris agreement pledge. The key measures are to limit energy use through greater efficiencies, to reduce coal use and build a carbon sink.

Using 2005 as a base level, China pledges to lower carbon emissions per unit of GDP by 60 to 65 per cent, to increase the share of non-fossil fuels in primary energy consumption to 20 per cent, and to increase the forest stock volume by around 4.5 billion cubic metres, all by 2030.

China exceeded targets set in its 12th Five-Year Plan and will likely do the same with its targets under the 13th. The Paris commitment to peak emissions in 2030 is a conservative estimate and is consistent with Beijing’s trend to under-promise and over-deliver. Some analysts predict emissions will peak as early as 2025, arguing early progress toward reductions have been unexpectedly promising.

China is now the world’s leading producer of renewable energy sources, containing the largest capacity solar, wind and hydro plants in the world, accounting for one-third of installed wind power, and one-fifth of installed solar. With an annual investment of over $US100 billion dollars in renewables, it plans to increase wind power capacity to 200 gigawatts by 2020, up from 130 in 2015, and solar power to 100 gigawatts up from 43. This increase in renewables led Beijing in 2016 to place an embargo on the construction of new coal-fired power plants in 13 provinces that have an energy surplus, and a further 15 provinces have had approval plants delayed until further notice.

While Trump commits the United States to the old economy, other G20 countries are implementing carbon pricing mechanisms that will eventually coalesce into regional and even global schemes. For its part, carbon trading will be a fundamental part of China’s emissions reduction strategy. The preparation phase for the program in 2014–16 installed pilot markets trialled across seven provinces. The exact structure is still being discussed and will be a major undertaking of construction. It will be rolled out nationwide at the end of the year and is designed to bring market-based transparency and promote low-carbon development of industry sectors.

A carbon price, of which there are various models, forces polluting industries and businesses to internalise the cost of greenhouse gas pollution into their cost of business calculations. Where implemented effectively, a carbon price will compel competent corporate leaders to reduce their business costs by becoming more efficient and reducing the carbon emissions of their operations. This is the market signal that will drive innovation in technologies and process efficiencies, which will enable businesses to reduce their exposure to the carbon price. The net result is intended to be a reduction in the carbon emissions of businesses as they become more efficient. In this environment, carbon efficiency is likely to become a leading component of economic competitiveness.

World leader?

The United States played a laggard role in the UNFCCC for much of the past two decades. Despite not having ratified the Kyoto Protocol, the US consistently argued that the price of its ratification would be the inclusion of binding targets for newly industrialised countries, including China and India, which were not given emissions reduction commitments under the Kyoto Protocol. It was not until President Barack Obama and Chinese President Xi Jinping agreed to the US–China Joint Announcement on Climate Change and Clean Energy Cooperation in November 2014 that the path was laid out for a unifying agreement that would capture all countries under one instrument, where previously only developed countries carried emissions reduction obligations.

This instrument later emerged as the Paris Agreement in November 2015. The Paris Agreement could not have been negotiated without the active support of the US and Chinese governments as the world’s two largest (gross) greenhouse gas polluters. Their ratification of the treaty was also crucial in the Paris Agreement’s timely entry into force in November 2016. However, US climate recalcitrance now that the Paris Agreement is in force is not quite as damaging as it was during the 1990s and 2000s, because the transition which the agreement embodies is now inexorably in motion.

The Paris Agreement is significant not just because it heralds a new era of global cooperation on climate change action. It also is a signpost for the direction of the international economy as it transitions away from fossil fuel energy.

A combination of the climate emergency and market behaviours are making fossil fuel energy uneconomic. There is an increasing awareness of the ‘carbon bubble,’ which refers to investments in projects related to fossil fuels that are becoming stranded assets. Energy generation is increasingly moving away from fossil fuels to a collection of alternative energy sources, many of which are either approaching or have overtaken fossil fuels for cost competitiveness.

China is a world leader in green and alternative energy technologies and is thus well placed to be the dominant player in the post-carbon international economy. By contrast, the Trump administration is betting on obsolete industries of the old economy, whose market share and importance to fuelling economic activity are steadily in decline. Many in the American business community recognise this risk. Over 540 US companies signed an open letter to President-elect Trump urging his administration to remain in the Paris Agreement and invest in low carbon technologies.

Other signatories to the Paris Agreement are unlikely to take Washington’s withdrawal from the agreement lying down. Prior to the Paris Agreement, carbon tariffs were promoted as mechanisms to prevent the ‘carbon leakage’ of emissions-intensive industries from developed countries with strong emission regulations to relatively unregulated countries.

However, in the post-Paris Agreement environment, this equation is more likely to be reversed because of the ecological imperative and the economic momentum of the post-carbon transition. Diplomats from the EU, Canada and Mexico have suggested the imposition of carbon tariffs against the US as a response to President Trump’s likely withdrawal from the Paris Agreement.

Driven by its own hubris, the Trump administration has committed the United States to a losing gambit. In abdicating the field in the UNFCCC, Trump’s United States has handed global leadership in shaping the international climate change regime to China and with it, the keys to the international economy.

Nicholas Procter is an honours student studying international relations at La Trobe University. His research interests include climate change and environmental policy in China.
Dr Benjamin Habib is a lecturer in International Relations at La Trobe University. His research explores the relationships between grassroots sustainability projects, environmental movements and international climate politics.

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