Coronavirus: fears mount that China’s transition to a greener economy may be shelved amid recovery
- Faced with increasing economic headwinds, there is concern China’s green transition may be set back by the coronavirus
- Vaunted carbon emissions trading scheme, due for national implementation this year, likely to be delayed, observers say
The coronavirus crisis has sparked fears that China's long-term environmental goals, including its ambitious carbon trading system, could be shelved as the government scrambles to get the economy back on track.
Already, there are signs that China’s green transition may have been knocked off balance by the virus response. A sputtering emissions trading scheme (ETS) appears to have been set back as a result of initial containment measures, while environmental standards have been relaxed for some firms and climate watchers are bracing for a spike in greenhouse gas emissions.
“Many are now concerned that a new round of economic stimulus may be pumped into China’s economy and a large portion of that might go into the industrial sectors, replicating past experiences of pumping cheap credits to polluting industries, and as a result of that creating a new round of emissions increases and locking in China to a high emissions path,” said Li Shuo, senior global policy adviser at Greenpeace East Asia.
United States-based research firm Axios wrote last week that if “Beijing responds with a large property and construction-heavy stimulus package, the resulting increase in cement and steel production could increase carbon intensity.”
Similar reductions in greenhouse emissions, including nitrogen dioxide, have been recorded elsewhere, such as in Italy – the centre of the outbreak outside China – amid wide-ranging transport restrictions and business closures.
“Making up for a drop-off in consumption with an equivalent increase in spending on infrastructure and construction will mean a dramatic increase in emissions, as the latter is far more energy and pollution-intensive,” said Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air.
“That said, there is a major debate right now about whether to stick rigidly to the GDP target in spite of the crisis, and how to stimulate consumption rather than old-style construction – both of these would be major positive steps [in keeping emissions down].”
But Myllyvirta added: “What seems sorely lacking in the debate is a vision of how to make the recovery green and clean.”
While small in scale, Beijing has begun easing some environmental supervision as it tries to get its factories back up to speed.
Deadlines for firms to meet environmental standards have been extended and some companies have been exempted from on-site checks, China’s environment ministry announced earlier this month.
“The environmental supervision should be adjusted in accordance with practical needs and the social economic situation,” said Cao Liping, director of the Ecological and Environmental Enforcement bureau at the Ministry of Ecology and Environment.
Exactly what the situation means for China’s carbon emissions in the long term is not yet clear, but analysts said the national implementation of its ETS, which was planned for this year, is likely to be delayed again.
“Maybe the restrictions will last to May, or even worse June; in that case the whole project will be delayed for at least half a year,” said Qian, who is a consultant for the government on the ETS and a former Chinese delegate on climate change negotiations.
“We also need to pass legislation to make sure the ETS is really running. I think this will probably be affected … These more fundamental political decisions could be affected by the virus.”
In 2013, China launched pilot programmes for the ETS in five major cities and two provinces, including Hubei, the epicentre of the coronavirus outbreak which has been under lockdown since the end of January.
The ETS is a market-based system to reduce greenhouse gas emissions by creating a carbon intensity allowance for polluting companies where carbon credits can be bought and sold.
Those that produce more emissions than their allocated share will have to buy additional quota, while those that are below their allowance will be able to sell their allocations – incentivising companies to reduce emissions intensity.
Implementation of a national scheme, which so far covers only the power sector but would be the world’s largest once finished, has been repeatedly delayed.
While uncertainty hangs over China’s ETS, Qian said he did not think the central government would turn to an environmentally harmful stimulus package to steady the economy.
“I think we have a government that has a policy priority on environmental governance,” he said. “The consensus is, even in times of difficulty, we should not go back.”
Beijing has taken steps to green its economy in recent years, including by reining in the pace of new coal power plant developments, aware of overcapacity and smog belching electricity stations that have contributed to pollution in cities. It has also made significant investments in renewable energy as it tries to boost the share of non-fossil fuels in the country’s energy mix.
Although China's annual greenhouse gas emissions were estimated to have grown by 2.6 per cent in 2019, the figure was well below the 9.2 per cent year-on-year average observed for 2000-2009, according to Axios.
China accounts for more than a quarter of global greenhouse gas emissions, making it crucial to limiting global warming to below two degrees Celsius (35.6 degrees Fahrenheit) above pre-industrial levels, targets that were agreed to under the 2015 Paris Agreement on climate change.
Most analysts say China is on track to meet its goals under the Paris Agreement, and it has been praised for assuming global climate leadership after the United States signalled its intention to withdraw from pact later this year.
Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.