Opinion | As China moves towards net zero emissions, is the world ready for the economic impact?

Name: Two sessions: How China's environmental policies are giving a boost to green industries
Uploaded: 2021-07-18T17:00:07.000Z
Duration: 3 min 26 s
Description: Two sessions: How China's environmental policies are giving a boost to green industries

Fossil fuel markets worldwide could start to feel the impact of China’s net zero commitment in the next few years

Whether countries stand to reap benefits from a zero-carbon China, however, depends on their export profile and their readiness to decarbonise domestically

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Karin Costa Vazquez

Published: 1:00am, 19 Jul 2021Updated: 1:00am, 19 Jul 2021

Xi Jinping’s pledge last year for China to hit peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060 was received with a mix of euphoria and scepticism outside China. As China accounts for 28 per cent of global emissions, its commitment to carbon neutrality is a much-anticipated step towards net zero emissions worldwide.

The acceleration in the construction of coal-fired power plants in the past year and the lack of a robust road map towards China’s decarbonisation in the most recent 14th five-year plan, however, raise questions about whether China will be able to meet its commitment. Then again, China has a history of under-committing and over-delivering on its five-year plans; what the world has not yet asked is, what happens if China becomes carbon neutral within the next four decades?

A study I conducted of how China’s decarbonisation will redefine trade, investment and external relations, recently published in the Torino World Affairs Institute’s report “Drivers of Global Change”, indicates that fossil fuel markets worldwide could start to feel the impact of China’s net zero commitment in the next few years.

In 2019, 51.7 per cent of the world’s coal consumption originated in China. Coal also accounted for 57.6 per cent of China’s total primary energy consumption, of which 7.8 per cent was imported. In the same year, China was among the world’s top importers of coal briquettes, with a share of 14.8 per cent, behind only India and Japan. A sharp contraction in China’s demand for coal within the next decade could reduce coal imports to the same degree.

Oil, gas and other fossil fuel markets could suffer a similar impact. In 2019, 14.5 per cent of the world’s oil consumption originated in China. Oil accounted for 19.7 per cent of China’s energy consumption, of which 66.2 per cent was imported. In the same year, China was the world’s top importer of crude and refined oil, with a share of 13.5 per cent of imports. As oil and gas consumption in China is likely to plateau in the next decade before it begins to drop sharply, the impact on world markets will be longer-term, though.

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Two sessions: How China's environmental policies are giving a boost to green industries

China’s carbon neutrality goal could also accelerate the world’s energy transition. In 2019, 12.5 per cent of the world’s nuclear energy consumption originated in China, with nuclear energy accounting for 2.2 per cent of China’s energy mix. China was also the world’s third largest importer of non-irradiated fuel elements for nuclear reactors, with a share of 9.86 per cent, after Ukraine and France.

Opinion | As China moves towards net zero emissions, is the world ready for the economic impact?

Fossil fuel markets worldwide could start to feel the impact of China’s net zero commitment in the next few years Whether countries stand to reap benefits from a zero-carbon China, however, depends on their export profile and their readiness to decarbonise domestically

Fossil fuel markets worldwide could start to feel the impact of China’s net zero commitment in the next few years

Whether countries stand to reap benefits from a zero-carbon China, however, depends on their export profile and their readiness to decarbonise domestically