China’s Climate Commitments Face Major Challenges

In recent years, the relationship between China and the United States has been characterized by rising geopolitical tensions over Taiwan, the South China Sea, human rights, and a host of trade disputes. Cooperation and coordination between the two countries may seem like a pipe dream. Yet there is one issue where the interests of both clearly overlap: climate change. A global temperature increase of 3°C will damage the economies and social fabric of both the United States and China—an outcome that both countries want to avoid. 

At the twenty-sixth Conference of the Parties (COP 26), President Joe Biden was critical of China and President Xi Jinping for not assuming a leadership position on reducing carbon emissions. Indeed, Xi did not travel to Glasgow, Scotland, but then again, he has not left China in nearly two years. It is also true that China, in response to recent energy supply shortages, has increased both its coal production and consumption to keep its economy open and its people warm this winter. However, China’s progress toward decarbonization is impressive, particularly in its rate of renewable energy construction and electric vehicle adoption.  

In October 2021, China’s State Council issued a road map with five principles and ten measures, including carbon emission targets for 2025, 2030, and 2060, and pledged to install 1,200 GW of wind and solar by 2030. If achieved, this renewable energy capacity would be greater than the total current electricity generating capacity in the United States. Almost every province in China has a working task force developing policies and programs to implement the State Council’s road map. But simply deploying renewables will not be sufficient. A host of other energy technologies will be required, and China is making early investments in multiple strategies, from energy storage and biofuels to energy efficiency and nuclear power.   

However, as we explore in our recent book, Foundations for a Low-Carbon Energy System, China also faces major challenges in reaching its climate aspirations. China remains committed to managing its energy sector through a few large state companies, funded by a few large state banks, overseen by a few large state agencies. While it has supported a few market-based pilots in the electricity sector, these are very limited. Under Deng Xiaoping’s leadership, China became a market economy while retaining features of central planning. Energy is an exception. It is dominated by a few monopolistic state companies, which are more responsive to the political establishment in Beijing than the marketplace. It remains to be seen if this system can make the necessary reforms to meet China’s targets, or if China will have to restructure its electricity system.