(Bloomberg) — China’s top climate envoy said the world’s transition to clean energy will continue, even as the US’s second withdrawal from the Paris Agreement puts unprecedented stress on the fight against global warming.
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The Trump administration’s exit from the United Nations-led process has created the “most challenging moment” for negotiations since they started in 1990, Liu Zhenmin, China’s special envoy for climate change, said at the Boao Forum in Hainan. But the multilateral process must continue, he said.
“The global energy transition is irreversible,” Liu said during a panel discussion on Wednesday. “No one country can stop this process, because the process of global energy transition is driven by the political will of member nations, market forces and technology.”
One area where the loss of a superpower like the US will be felt acutely is in raising funds to help poorer nations prepare for a hotter world. Developed countries have promised to pony up $300 billion a year for the effort, and Liu said it was incumbent on those that remain to meet that goal even without Washington. China isn’t considered a developed country in the UN process and has resisted calls that it contribute to the fund.
During a panel on Thursday, Xie Zhenhua, China’s former top climate official, said he spoke recently to the Biden administration’s climate envoy John Kerry, who relayed that local officials in the US, including 37 state governors and about 1,000 mayors, are still committed to action on global warming despite Trump’s disavowal.
Xie and Kerry had a decades-long working relationship in the climate arena that allowed them to keep communication channels open even during the most fraught periods of US-China relations.
Plunging Costs
In China, the world’s largest emitter of greenhouse gases, plunging costs of renewable energy have sparked a boom in installations that will probably mean the nation peaks emissions before its target of 2030, said Zhu Min, a former deputy governor at the People’s Bank of China.
“The carbon peak will be achieved two to three years ahead of schedule, in 2027 or 2028, because the cost of renewable energy is only half of the cost of coal,” said Zhu, now a vice chairman at the China Centre for International Economic Exchanges.
The breakneck expansion of clean energy in China has raised questions over whether too much intermittent wind and solar power is straining the grid and needs to be slowed down. Song Hailiang, chairman of China Energy Engineering Corp., said the energy transition needs to be more systematic and integrated, as opposed to focusing on individual sectors to drive decarbonization.
Grid companies are pouring record amounts of money into strengthening their infrastructure to catch up with renewables, and pushed back against the idea they’re a chokepoint for continued additions. China absorbed about 96% of wind and solar generation last year, one of the highest rates globally, said Xin Baoan, former chairman of State Grid Corp. of China, which distributes power to more than 80% of the country.
“Our new energy consumption now has a strong power grid and a huge market for electricity demand,” said Xin, currently chairman of the Global Energy Interconnection Development and Cooperation Organization.
Carbon Market
Still, the cost of building energy storage and other infrastructure needed to help renewables match the around-the-clock performance of fossil fuels is undoubtedly slowing the energy transition, said Zhou Xiaochuan, a former PBOC governor.
Raising the cost of emitting carbon dioxide would help solve this by creating more incentive to invest in clean infrastructure, he said. China’s own national carbon market, which has had relatively low prices and anemic trading since launching in 2021, needs more stringent rules to support the energy transition, he said.
“One major problem is that the free carbon emission quota is too loose,” he said. “This has prevented the market from playing a good role.”
On the Wire
China ramped up debt issuance this quarter, a move that both signals authorities’ priority on stimulating growth and efforts to prevent a repeat of an overheated bond market.
It’s not just America and Europe that fear the competitive threat from Chinese clean technology. China itself is scared.
Tianqi Lithium Corp. warned volatility in lithium product prices and growing geopolitical risks may cloud its outlook as it swung to its first full-year loss since 2020 amid a prolonged battery-metal rout.
ENN Energy Holdings Ltd. received a take-private offer from its biggest shareholder that values the Chinese gas distributor at about HK$90.5 billion ($11.6 billion).
Aluminum Corp. of China Ltd., the country’s largest state-owned producer, posted a jump in full-year profit and said it aimed to secure more bauxite for its smelters.
This Week’s Diary
(All times Beijing unless noted.)
Thursday, March 27:
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China to release monthly medium-term lending rate
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China’s industrial profits for February, 09:30
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Clean Energy Expo China in Beijing, day 2
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Boao Forum, day 3
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Beijing Gas earnings briefing in HK, 10:00
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CSIA’s weekly solar wafer price assessment
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EARNINGS: Cnooc, Jiangxi Copper, China Natl Building
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Cnooc earnings briefing in HK, 17:00
Friday, March 28:
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Clean Energy Expo China in Beijing, day 3
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Boao Forum, day 4
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China’s weekly iron ore port stockpiles
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Shanghai exchange weekly commodities inventory, ~15:30
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EARNINGS: Baosteel, Maanshan Steel, Angang Steel, Citic Ltd., Ganfeng Lithium, Goldwind, GCL-Poly, Datang Renewable Power
Saturday, March 29
Sunday, March 30
(Updates with comments from Xie Zhenhua in fifth paragraph)
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