By Paul Homewood
I suspect this has more significance than even Bloomberg think:
President Xi Jinping said efforts to achieve China’s climate targets need to work in lockstep with the government’s other objectives, as policy makers seek to balance sometimes conflicting environmental and economic aims.
Xi said the nation’s carbon goals shouldn’t clash with other priorities, which include securing adequate supplies of food, energy and materials “to ensure the normal life of the masses,” according to comments made at a Politburo session reported by the official Xinhua news agency on Tuesday.
Xi said China needs to make sure it has enough coal, and that oil and gas output grows steadily, in his clearest comments yet that reducing emissions shouldn’t come at the cost of other economic goals. An unprecedented energy crisis in the fall has highlighted concerns that China’s reliance on fossil fuels remains as entrenched as ever.
Xi established China’s carbon targets in 2020, pledging to peak emissions by the end of the decade and deliver a carbon neutral society by 2060. They marked a step change in China’s approach to global warming and sparked a flurry of directives from across government and industry as policy makers and company executives sought to incorporate the president’s vision.
But in July last year, the Politburo seemed to change tack, urging an easing of the aggressive measures taken to reduce emissions because they were hampering efforts to stimulate slowing economic growth.
In his latest comments, Xi also called China’s mission to reduce carbon “urgent and difficult” and said that cutting emissions can’t mean cutting productivity.
Inflation Concerns
The central problem that has confronted China is that its carbon policies have constrained the supply of highly polluting commodities like coal, metals and fertilizers, pushing up prices and making Beijing’s attempts to rein in inflation a lot more difficult.
To a large degree, Xi’s intervention seems designed to set the tone for policy makers rather than signal any substantive change in direction. The government has already released five-year plans in recent weeks dealing with a swathe of industries, including materials and energy efficiency, which build on last year’s overarching policy directive that will guide China’s economic development through 2025.
Xi has long stressed the need to strengthen domestic oil and gas production. But his latest, broader, comments once again bring China’s persistent anxieties around the supply of food, energy and materials to the fore. And they highlight how the campaign to reduce emissions has at times come into direct conflict with efforts to check commodities prices, which have surged over the past year in large part because of a shortage of coal and rising power costs.
Coal is the raw material that best embodies China’s environmental and economic balancing act. It provides more than half of the nation’s energy and most of its electricity. It’s also the dirtiest fossil fuel and the biggest contributor to the country’s emissions.
Curbing coal use is the best way for China to meet its commitments to limit the rise in global temperatures. But last year it was forced to ramp up production of the fuel to record levels to stave off the worst effects of the power crisis.
Xi is clearly re-emphasizing a safety-first approach to energy generation, which will support the development of renewable power — but backed-up by coal, said Leo Wang, an analyst with BloombergNEF.
Steel Curbs
Another key commodity is steel, which accounts for about 15% of the nation’s carbon. There, China was successful in cutting outright production last year in order to curb emissions. But whether it can keep that cap in place is uncertain, given the need to stimulate the economy with renewed infrastructure spending.
BNEF for one expects a new approach this year, “with less emphasis on net capacity reduction as China looks to adopt greener steelmaking technologies,” according to a report on Tuesday.
Also of interest is the fact that China’s latest five-year plan for energy efficiency failed to reiterate its target of reducing the economy’s carbon intensity by 18%, which could suggest less emphasis on that measurement even as the nation advances its broader climate goals.
It is not clear whether Xi was genuine in his desire originally to reduce emissions, or whether he was playing the West on a piece of string.
But as I have repeatedly commented, the CCP needs to keep growing China’s economy to survive. If their leader stands in the way, he is dead meat.
Sooner or later then reality was going to catch up. The refusal of China to phase out coal at COP26 was a strong sign of the way the CCP was going, that economic realists were winning the battle with environmentalists. I suspect that Xi has seen the writing on the wall and is siding with the only winners in this battle.
Nobody would argue that China does not want to tackle genuine environmental problems, such as air pollution. Nor that they won’t embrace energy efficient technology.
But it must now be clear that carbon dioxide is well down their list of concerns.
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January 26, 2022 at 01:33PM
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