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China carbon emissions may have peaked already

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As Australia’s carbon emissions continue to grow, a new study has predicted that China’s will likely peak before 2025 – five years ahead of schedule and five years ahead of Australia’s 2030 target of cutting emissions by 26-28 per cent below 2005 levels.

The paper, published on Monday by the Grantham Research Institute, said recent data showed that China’s emissions were lower in 2015 than the year before, and that they may even have peaked already, in 2014 – a year before the target to peak emissions by 2030 was actually announced.

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If not, the report said the data suggested that any increase in emissions over the next few years would likely be modest.

“It is quite possible that emissions will fall modestly from now on, implying that 2014 was the peak,” the paper says. “If emissions do grow above 2014 levels — if, say, a number of the risks identified earlier [in the paper] manifest — that growth trajectory is likely to be relatively flat, and a peak would still be highly likely by 2025.”

At worst, it notes, China’s emissions could grow slightly over the next few years if oil and gas demands grow faster than expected, or if companies and local governments make unauthorised expansions in new coal-based industries.

The authors of the paper, Fergus Green and Professor Lord Nicholas Stern, described China’s international commitment to peak carbon dioxide emissions around 2030 as a highly conservative estimate by a government that takes its commitment to climate change seriously and wants to guarantee it meets international agreements.

And they warn that other countries should pay close attention to the changing structure of China’s economy, or risk missing out on the opportunities to be gained from investing in the low-carbon economy.

In Australia, a rise in emissions documented in the recently published National Greenhouse and Energy Report has been attributed to the country’s electricity generation sector becoming even more reliant on coal power.

The nation’s top 10 polluters – with AGL Energy at top spot after its multi-billion dollar purchase of large coal-fired generators in NSW – is dominated by energy companies, which are responsible for the equivalent of 22 per cent of Australia’s climate pollution.

In China meanwhile, the decline in emissions has been attributed largely to declining energy demand, as China begins a transition away from low-cost manufacturing and exports.

The report says it expects the slowing Chinese economy to continue to shift away from energy-intensive heavy industries, such as steel and cement production, towards an expansion of the service sector and more innovative forms of manufacturing, such as robotics and renewable energy technology.

High levels of investment in low-carbon energy and a decline in coal consumption have also contributed to falling emissions.5371963671_f8ae77ba5d_b

This last factor is confirmed by the latest 2015 figures from China’s National Bureau of Statistics, released this week, which show China’s solar and wind energy capacity increased by 74 per cent and 34 per cent, respectively, while coal consumption dropped by 3.7 per cent.

Indeed, China broke two new records in 2015, installing a record 32.5 per cent of wind and a record 18.3GW of solar — both of which were higher than initial estimates.

“The latest figures confirm China’s record-breaking shift toward renewable power and away from coal,” said Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA).

“Solar and wind continue to be the big winners, as illustrated by a 73.7% increase in grid-connected solar generation capacity. Declining consumption coupled with an over-abundance of domestic supply, meaning coal imports into China were particularly badly hit, dropping 30.4% yoy.”

According to the authors of the Grantham Institute report, it is now widely accepted among Chinese citizens and officials that a continuation of China’s rapid growth in GDP at the start of this century – which saw coal use trebled between 2000 and 2013 – is not sustainable.

“The old model of growth is unsustainable in a conventional economic sense,” the report says. “As demand in many parts of China’s construction and heavy industrial sectors passes saturation points, continued political-economic incentives to invest in these areas have resulted in widespread excess capacity and diminishing returns on capital, undermining their competitiveness and resulting in weak productivity growth.

“The period 2000–2013, it is now clear, was a distinct and exceptional phase in China’s developmental history, during which the very high levels of greenhouse gases emitted were linked closely with the energy-intensive, heavy industry-based growth model pursued at that time. China is currently undergoing another major structural transformation — towards a new development model focused on achieving better quality growth that is more sustainable and inclusive — and it is also grappling with economic challenges associated with the transition,” it says.

“The more governments and businesses understand the shift in China, the more they should see risks in the high-carbon economy and opportunities in the low-/zero-carbon economy, and should adjust their investments, innovation priorities, and institutional arrangements accordingly,” the report concludes.


  

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  • John Saint-Smith

    Incredible that China with 1.3 billion people and an economy ten times the size of Australia’s can achieve so much transformative change in such a short period of time. Meanwhile, Tony Abbott says “How can they say we [my government] were dysfunctional when we achieved so much?”
    Comparisons are hard to find, certainly not with the Rudd/Gillard government which really did achieve a lot in its troubled term. Come to think of it, most of the ‘dysfunction’ of the Labor Government was actually the spin put on it by the Liberals. Don’t like that? Well, what did the Libs criticise more than the ‘Debt and deficit disaster’? Now it’s ‘perfectly ok to have double the deficit and no prospect of returning to surplus in a decade!’ Pure hypocrisy!
    When are the media in this country going to start discounting the natural economic managers label that is always given to the Liberal Party no matter how pathetic they really are?

    • Barri Mundee

      If I could pick up one of your points: (its not a mainstream view but to me it makes sense).
      The debt/deficit scare is exactly that, a scare, designed to impose austerity, more privatisations etc.

      There is no inherent financial limit to the spending of a monetarily sovereign government. I am referring to the federal government ONLY here.

      Of course, such spending has consequences in the real economy, impacting inflation, interest rates, capital formation, and so on, and sustained over-spending beyond full employment and real production capacity is a certain path to hyperinflation.

      But arguably we have a gap between the productive capacity of the economy and current circumstance, as illustrated by our un and under employment of about 14%.

      There needs to be more deficit spending (an unfortunate term as deficits add spending) not less in current circumstances.