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What the U.S.-China Agreement Means for Greenhouse Gas Emissions

The two nations announced limited steps to address climate change. But even a modest agreement could have far-reaching effects

An aerial view of the ships carrying coal with smoke stacks in background

An aerial view of the ships carrying coal transport to unload outside the coal fired power plant on November 11, 2021 in Hanchuan, Hubei province, China.

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CLIMATEWIRE | The climate deal announced by China and the United States on Tuesday shows that the world’s two largest emitters agree on the need for more renewables. But whether they can meet their climate targets will depend in large part on how they plan to address fossil fuels.

The joint statement — emerging from four days of talks between U.S. climate envoy John Kerry and his Chinese counterpart Xie Zhenhua — signals that the two sides are reengaging ahead of global climate talks in Dubai, United Arab Emirates, this month, despite continued tensions in their bilateral relationship.

The steps outlined in the agreement, while small, could mark a turning point in international climate efforts. Falling carbon emissions in the U.S. and Europe in recent years have been offset by an increase in greenhouse gases from Asian countries. A fall in Chinese emissions could supercharge global efforts to curb planet-warming pollution.

“When emissions start declining in the U.S., Europe and China together, we have the potential to see real emission declines year to year,” said Rob Jackson, a professor at Stanford University who studies global emissions. “We’ve never seen a sustained decline in emissions outside an economic downturn.”

But how far the U.S. and China are willing to go remains an open question. While both nations are rapidly installing wind and solar, they remain firmly wedded to fossil fuels. Coal remains a bedrock of China’s economy, while oil production in the U.S. is setting records and exports of liquefied natural gas are on the rise.

The U.S.-China climate statement came amid renewed debate over China’s emissions trajectory.

In an analysis published earlier this week, Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air, said the growth in renewables and structural changes in the Chinese economy could reverse the steady increase in its emissions in recent decades.

Activity in China’s real estate sector has slowed this year, dampening demand for carbon-intensive materials like steel and cement. Renewable growth meanwhile is poised to outpace the country’s voracious appetite for electricity, the analysis found. Solar installations alone are on track to hit 210 gigawatts in 2023, or roughly twice the installed solar capacity of the United States.

“I think it’s quite clear that when China's emissions peak, global emissions will follow,” Myllyvirta said.

In the agreement released Tuesday, the U.S. and China said they would work to boost renewable energy deployment and advance carbon capture projects. The two countries also announced that they would include all greenhouse gases in their next national climate plans due in 2025. That would mark a first for China, which analysts say is meaningful because China is the world's biggest emitter of methane, a gas with roughly 80 times the warming potential of carbon dioxide over a 20-year period.

The two nations backed a G20 agreement to triple renewable energy capacity globally by 2030, while speeding clean energy deployment in their own economies “so as to accelerate the substitution for coal, oil and gas generation.”

Energy experts and climate advocates have welcomed that support, saying it could help push the tripling target over the finish line at climate talks that begin Nov. 30, though they’ve warned that renewables will need to overtake — not merely substitute for — fossil fuels.

China's nod to peaking its power sector emissions in the 2020s could signal that the country intends to go beyond its current national climate target, said Nate Hultman, a former State Department official who heads the University of Maryland’s Center for Global Sustainability.

China could effectively stop building renewables today and still hit its targets, he said, adding, “this is just essentially them saying, we recognize we could do that, but we're not intending to.”

Reaching a peak

In 2020, Chinese President Xi Jinping  before 2030, the first milestone in the country’s path to halt emissions of carbon dioxide by 2060. Whether China can achieve peak emissions earlier is a matter of debate.

“I would say China’s carbon emissions reaches a plateau — whether it will fall or rise depends on if the growing renewables could meet the demand growth,” said Gang He, an assistant professor of energy and climate policy at Baruch College.

In the power sector, renewable energy growth needs to outpace electricity demand to push emissions into structural decline.

In recent years, the growth in Chinese power demand has largely been met by coal, leading to increased emissions. But China had also installed 758 GW of wind and solar capacity as of last year, up from 530 GW at the end of 2020, He wrote in an email.

The sooner China peaks its emissions the better — given the massive scale of its climate pollution, said Kelly Sims Gallagher, who leads the Center for International Environment and Resource Policy at Tufts University. “But the level at which they peak also matters because the higher China’s emissions go, the harder it will be to achieve the rapid reductions that are necessary.”

In 2021, China pledged to “strictly control” its coal-fired power during a climate summit organized by President Joe Biden. But since then, it has done the opposite, adding more than 44 GW of coal power in the last two years, or double what the U.S. has retired in that time.

China accounts for more than half of the world’s coal consumption and roughly 30 percent of global fossil fuel emissions.

“It's obviously also shown great leadership on renewable energy, but this leadership hasn't been translated into anything similar on fossil fuels,” said Leo Roberts, who leads research on fossil fuel transitions at climate think tank E3G.

Many analysts say a structural shift is underway in China. They expect new renewables to eventually lead to a decrease in coal generation. The question is when.

Chinese coal generation rises and falls in part based on the availability of hydropower resources. Hydro output was limited by extreme drought in recent years but has recovered more recently. It’s also unclear how the government will respond to the slowdown in the Chinese real estate sector. When the economy has flagged in the past, Beijing has turned to fiscal stimulus to boost construction and real estate projects, lifting demand for steel and cement.

“The transition is underway and we can probably say that it is coming close to an inflection point, but we will have to wait and see what happens in the next three to four years to see if China achieves sustained emission falls over multiple years and understand if it is driven by a fundamental shift in the economy,” said Aditya Lolla, Asia program lead at Ember, a think tank that advocates for a shift to clean energy.

The other trend to watch is the evolution of China’s economy. Beijing has long sought to shift away from a manufacturing-based economy toward one that's oriented around the service sector. But achieving that aim has sometimes been difficult, with the government injecting money into real estate and construction projects when the economy starts to falter.

Chinese leaders have targeted 5 percent economic growth. But they are unlikely to reach that threshold without a boost to industry, which would result in growing energy and fossil fuel demand, said Yan Qin, an analyst at the London Stock Exchange Group.

“My view is that China’s economy is manufacturing-centric and energy-intensive, and this characteristic is unlikely to be shifted in a couple of years, more likely a decade,” she wrote in an email.

But even if emissions do not fall in China next year, the country has already made a meaningful contribution to climate efforts, Qin said.

“The buildout of renewables etc. in China are displacing coal and have reduced China’s emissions compared to the (business as usual) pathway,” she said.

Reprinted from with permission from POLITICO, LLC. Copyright 2023. E&E News provides essential news for energy and environment professionals.

Sara Schonhardt covers climate and energy developments globally, with a focus on international climate negotiations, finance and how countries are approaching the transition to cleaner economies. Prior to joining E&E News, Sara worked as a reporter for more than a decade across much of Southeast Asia, with stints for The New York Times, Christian Science MonitorԻVoice of America. She was a staff reporter for The Wall Street Journal in Indonesia until 2017. Sara has a degree in journalism from Ohio University and a master's degree in international affairs from Columbia University.
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Benjamin Storrow is a reporter for Climatewire.
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