1Globalisation and Development Programme, Department of Social Sciences, Faculty of Humanities and Social Science, Beijing Normal UniversityHong Kong Baptist University United International College
China is one of the biggest carbon emitters in the international society and is also the most significant carbon consumer worldwide. Given that China significantly relies on coal, oil and natural gas, the decarbonisation promises made by China in Paris Agreement seem challenging. It is what motivates China to make such a commitment? This article uses the PES model to see the incentives that encourage the Chinese government to make such a promise. From the political point of view, China’s decarbonisation effort reflects President Xi’s green development goal and proactive engagement in international environmental governance. For economics, decarbonisation provides the upgrade opportunity for domestic industries and creates more economical and trade benefits through green economic transfer. In addition, decarbonisation is also could be seen as a response to the shared concern on environmental issues in Chinese society.
Paris Agreement; Decarbonisation; China; PES
3. Economic Incentives: A More Productive and Sustainable Economic Development
China’s decarbonisation commitments have strong economic incentives. On the one hand, decarbonisation can help China achieve sustainable economic growth and create new opportunities. On the other hand, the decarbonisation commitment will help China’s supply chain adapt to the new requirements of some regions or countries regarding the carbon neutrality of imported goods.
First, the commitment to carbon neutrality will help China’s economy grow more sustainably and promote technological advancement. Chinese DCGs will help China’s economy improve technologies and energy productivity. (Teng & Jotzo, 2014) China has established a carbon emissions trading mechanism that allows owners of carbon emissions to use market means to trade carbon emissions. The system encourages companies to reduce their total emissions and improve energy efficiency while leveraging the role of the market in carbon trading. In the quest for economic growth, China’s decarbonisation commitment requires Chinese companies and industry to continuously research new technologies to reduce carbon emissions while maintaining or improving existing efficiencies, enhancing total factor productivity. Studies have shown that increasing energy intensity by 1% can increase total factor productivity by 1.1%. (Ward, et al., 2012)
A study in Australia shows that the government could use the tax money from carbon trading to optimise the welfare system, helping low- and middle-income families to become richer. (Jotzo, 2012) Strengthening the social welfare system could help construct a more inclusive and sustainable social and economic development and create more social opportunities.
Secondly, as a large trading partner of many countries, China’s exports need to fulfil different environmental policies of other countries and regions in imported goods. Europe has been a pioneer in environmental topics, and they have proposed the “fit for 55” EU green transition plan. The “Carbon border adjustment mechanism” policy in the “fit for 55” plan requires a strict standard on carbon emissions from imported goods entering the EU. Some high-emitting products may be subject to high carbon taxes. Research by the Boston Consulting Group suggests that the EU carbon tax could erode profits in some industries by as much as 40%. (Figures, et al., 2021) China’s decarbonisation commitment will help stimulate local companies to reduce carbon emissions, cultivate them to adapt to global carbon emissions policies and minimise the impact on import and export development the import carbon taxes might cause.
Third, the rapid cost decline of other environmentally friendly energy technologies solutions offers an attractive alternative to fossil fuels over the past decade. Solar PV, wind and savings cell technologies have developed rapidly over the past decade, with their weighted electricity costs falling by up to 80%. (IRENA, 2019) One study suggests that if non-coal units generated 62% of China’s electricity, prices for generating electricity would fall by 11%. (He, et al., 2020)
The economic incentives for Chinese decarbonisation commitment come from promoting domestic productive and sustainable economic development and compliance with different countries’ environmental requirements for imported goods. Also, the other environmentally friendly energy solutions and lower costs provide incentives.
4. Social Incentives: Health Concerns to Carbon Emissions and Pollutions
The main social incentive for China’s decarbonisation commitment comes from people’s concern and dissatisfaction with the health problems caused by carbon emissions and pollution. Burning a ton of coal produces 2.6 tons of CO2, 10.7kg of PM2.5 and 10.2kg of SO2, which are harmful to the environment and human health. (Wang, 2020) A 2016 study found that 40% of the deadly PM2.5 particles in China’s atmosphere come from coal-burning emissions. In 2013, 155,000 deaths in China were linked to harmful gases generated by coal burning. In 2017, people died because the coal-burning number had increased to 750,000. Most of them are premature deaths. (Wong, 2016)
With the deepening of people’s understanding of the relationship between the environment and health, the public’s requirements for environmental quality are getting higher and higher. That requires reducing China’s reliance on coal and other fossil fuels, which emit large amounts of greenhouse gases and harmful substances to human health. Therefore, people’s concern about the environment and health has become a kind of expectation for environmental policy, which gives the Chinese government’s commitment to decarbonisation ample social incentive.
China is the biggest coal-burning and carbon emitter in the world. It promised to peak the carbon emissions in 2030 and realise carbon neutrality in 2060. It is an ambitious goal for China to achieve according to its high reliance on coal and other fossil fuels. This article briefly uses the political, economic, and social (PES) model to analyse the incentives behind China’s decarbonisation commitments. For the political aspect, Chinese decarbonisation has been based on the political agenda of the Xi administration since 2012. It is also an expression of China’s willingness to be a proactive actor and leader in global environmental governance with the rise of China. As for the economic view, incentives come from the domestic seeking of sustainable and inclusive development, the need to fulfil the export markets’ environmental policies, and the market and price motivation. Finally, the social concern on health problems caused by coal-burning and environmental pollution provides another incentive to implement decarbonisation.
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