China seeks to achieve climate goals with new framework

China has announced new guidelines to accelerate the country's energy transition and achieve its decarbonisation goals.

Under the guidelines, China expects the scale of its energy conservation and environmental protection industry to reach about 15 trillion yuan ($2.1 trillion) by 2030, according to a statement by the Central Committee of the Communist Party of China (CPC) and the State Council.

The country aims to accelerate progress in carbon emission reduction, resource utilisation and green development by 2030. It targets installed capacity of pumped-storage hydropower to exceed 120mn kW by then, and the carbon emission intensity of commercial transport for each unit of turnover to drop by about 9.5pc compared with 2020.

China targets to establish a green, low-carbon circular economy by 2035, with carbon emissions declining after reaching their peak. China aims to hit peak CO2 emissions by 2030 and net zero emissions by 2060.

China's installed renewable capacity reached 1.653bn kW as of the end of June, accounting for 53.8pc of total installed capacity, according to the National Development and Reform Commission (NDRC). The country achieved almost double its target for non-fossil power generation additions last year at 300GW, compared with a goal of 160GW, according to state-linked China Renewable Energy Engineering Institute. In the new framework, the target for non-fossil fuels in the country's primary energy consumption remains at 25pc by 2030, unchanged from its 2021 nationally determined contribution (NDC), and up from 15.3pc in 2019.

China's 2021 NDC also states that it will lower its CO2 emissions per unit of GDP by over 65pc from the 2005 level, and that it will bring its total installed capacity of wind and solar power to over 1.2bn kW. The country is expected to submit its 2035 climate targets to the UN early next year, including updates to its pre-existing 2030 targets.

The framework targets five main areas. It aims to optimise land space planning for green and low-carbon developments and seeks to accelerate the low-carbon transformation of the industrial sector. This includes the steel, non-ferrous metals and petrochemical industries. It also targets to advance the low-carbon transformation of the energy sector and develop non-fossil fuel energy and promotes the green transformation of the transportation sector. Lastly it aims to advance the green transformation of urban and rural construction, including agricultural developments.

Challenges ahead

China's green transformation faces significant challenges despite progress, the NDRC said. The country's energy and industrial sectors remain heavily dependent on coal, straining environmental goals, the commission said.

Under the latest framework, the country still aims to promote the clean and efficient use of coal and reasonably control the growth of coal consumption during the 14th five-year plan period, but to gradually reduce it in the subsequent five years. The National Energy Administration (NEA), China's energy regulator, expects the percentage of thermal generation capacity to fall to 45pc by the end of 2024, from 47.6pc by the end of 2023.

China in July announced plans to explore co-firing renewable ammonia and biomass at its coal-fired plants, as well as carbon capture, utilisation and storage. These measures will be applied to a number of projects by 2025.

The government also plans to develop a fiscal and taxation policy to promote low-carbon developments under the new guidelines, and aims to implement relevant tax incentives, as well as improve the green tax system. It also aims to bolster financial instruments such as green equity financing, green financial leasing, as well as central budgetary investment to provide support for key projects.

The new guidelines did not provide any details on methane cuts. The country has yet to set firm methane-reduction targets although it agreed in November to set goals to cover all greenhouse gases.

China, dubbed by the Paris-based IEA as the "clean energy powerhouse," is projected to spend $675bn on clean energy this year alone. Its renewable energy power generation deployment has progressed rapidly, but it remains unclear if this will prompt Beijing to raise its decarbonisation ambitions.

By Prethika Nair