Insights Library

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The uneven development among “Global South” countries has added complexity to reach a unified stance

Chen Ying, Senior Research Fellow at Chinese Academy of Social Sciences

The development disparities within the ‘Global South’ are widening. While a few emerging markets are thriving, many others are grappling with slow or stagnant growth, and some face economic decline, often exacerbated by regional conflicts. As the common responsibilities shared by South and North countries become less differentiated regarding emission reduction, the bloc’s interests on some key issues become more divergent. 

For example, concerning financial matters, developed countries’ $100 billion commitment in aid to developing nations remains unfulfilled, and cooperation standards become more demanding with additional conditions. Consequently, some developing countries look toward China, which has provided up to 1,2 billion yuan under the framework of South-South climate cooperation since 2011, for international assistance, but sometimes with unrealistic expectations. Concerns regarding loss and damage from climate change have also gained significant attention from alliances including small island nations, least developed countries, and African nations. But there are technical challenges, such as quantifying loss and damage. If these challenges keep generalizing, they may put countries like China, which both contribute significantly to emissions and are vulnerable to severe climate impacts, in a dilemma.   

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Boosted by coal power capacity pricing mechanism, the thermal power industry may be revalued 

Song Yingying, Chief Analyst, China Merchants Securities co. Ltd.   

The implementation of the coal power capacity pricing mechanism marks a crucial step that will further stabilize industry’s anticipation and boost enthusiasm for power generation. With the rapid expansion of renewable energy, there is an urgent need for coal-fired power to play a supportive and regulatory role in order to ensure the security and stability of the electricity supply. Under the current single electricity pricing mechanism, coal power enterprises struggle to fully recoup their costs. Additionally, due to high coal prices in recent years, thermal power companies in general have experienced great losses, resulting in unstable industry expectations and a decline in the incentive to generate electricity. The introduction of the coal power capacity pricing mechanism comes at an opportune moment, offering an opportunity for power generation enterprises to recover a portion or all of their fixed costs, thereby stabilizing coal power profitability. In this way, the value of the thermal power industry is expected to be re-estimated.  

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With effective implementation of new policy scenario, methane emission will have a substantial decrease in China 

Chen Meian, Hu Min, Institute for Global Decarbonization Progress (iGDP) 

Ninety percent of China’s methane emissions from the energy sector originate from coal mining, whereas the number is lower than 30% in Europe and the U.S. The main emission of this kind is from oil and gas extraction. In China’s agriculture, methane emissions mainly arise from animal intestinal fermentation and rice cultivation. Notably, rice cultivation emissions exceed levels in the Europe and the U.S., while animal fermentation emissions are lower. Considering its unique circumstances, China’s newly published “Methane Emission Control Action Plan” (“Plan”) aims to strike a balance between methane emission control and the security of energy, food, industry and production. 

If China were to implement key tasks under a new policy scenario, it would see a substantial decrease in methane emissions by 2035 – approximately 260 million tons of CO2e compared to 2022. Compared with a baseline scenario (no new policies), new policy measures would yield a cumulative reduction of about 2.3 billion tons of CO2e from 2022 to 2035. The “Plan” outlines varying types of emission reduction potential across different industries and measures, with the energy sector contributing 66% of the reduction, the agricultural sector 28%, and the waste sector 6%. 

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In the wind power industry, market priority now goes to cost-effective turbines over their entire life cycle 

Chen Qiuhua, Vice President of Goldwind Science & Technology Co.,Ltd. 

At present, cost reduction is a paramount concern in the wind power industry. But customers are not just looking for the cheapest turbines, they give higher priority to the most cost-effective turbines in terms of electricity generation throughout the entire life cycle. To ensure the optimal levelized cost of electricity, we need to make the turbines more affordable and increase power generation efficiency over the whole life cycle. 

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CCER restart boosts market potential with enhanced regulations

Hu Yucheng, Partner at Fresh Capital   

From a long-term perspective, restarting the China Certified Emission Reductions (CCER) scheme is a positive development. CCER represents a significant incremental market: it raises emission costs of high-emission enterprises on one side, while providing additional income for new energy and low-carbon assets on the other, thus creating a positive cash flow. 

As the CCER market becomes more standardized, it leaves no room for previous speculative projects. For example, forest carbon sinks are expected to be one of the main CCER projects. The types of forestry resources and their property rights will have clear requirements in the new methodology. However, not all forestry resources can effectively function as carbon sinks, and there have been irregularities in the market previously. Such speculative projects will not be recognized by the CCER scheme. 

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Low-carbon rice production in China should be based on human-enhanced measures and nature-based solutions

Institute of Environment and Sustainable Development in Agriculture  

In recent years, although the rice planting area in China has fluctuated, the yield per unit of area of rice has continued to increase. At the same time, rice fields are also the main source of methane (CH4) emissions in China (187 Mt CO2e), accounting for 40.1% of the total methane emissions from agricultural activities in the country. Given that over 60% of China’s population relies on rice as their staple food, improving rice quality and ensuring an efficient supply are paramount prerequisites for the strategic shift towards low-carbon rice production.  

Faced with future challenges related to climate change, rice supply, and the imperative to reduce emissions and increase carbon sequestration, the implementation of China’s low-carbon rice production strategy requires comprehensive consideration of both human interventions and nature-based solutions. Human interventions include variety selection, optimized irrigation, fertilization, and cultivation, as well as the collaborative development of bio-fertilizer products and high-efficiency machinery. Nature-based solutions primarily involve practices such as green manure planting and the implementation of diverse crop rotation systems to enhance biodiversity within the overall crop management and intensive rice production system.   

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El Niño may bring a “warm winter” and cause other extreme climate events in China  

Zheng Fei, Associate Professor, Institute of Atmospheric Physics, Chinese Academy of Sciences 

The ongoing El Niño is still in the process of developing and is anticipated to be a powerful event, likely leading to other extreme climate events in the future. This year (2023), it is highly possible that the winter monsoon in China will be weak, resulting in elevated winter temperatures and an increased likelihood of air pollution in the northern regions. Conversely, in the southern regions, precipitation levels are expected to rise, accompanied by cooler temperatures. Furthermore, El Niño will have a more pronounced impact on its second year of formation (2024). Northern China may experience springtime drought, while the south of Yangtze River is at a significantly higher risk of extreme precipitation and flooding during the summer. This demands extra vigilance.  

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Detaching from fossil fuels and investing in renewable energy can greatly help improve people’s well being 

Pan Jiahua, deputy chair of China’s National Expert Committee on Climate Change

In the name of ensuring a stable energy supply, China still depends on fossil fuels. In 2022, we spent 3.03 trillion yuan on oil, costing 2.51% of our GDP. However, did this tremendous cost bring any employment opportunity or economic growth? Unfortunately, no, the expenditure just goes up in smoke. But if the money is invested in the production of photovoltaic modules, wind turbines, power batteries, automobiles, and heat pumps, there will be an immense potential for job creation and economic growth in these industries. 

Moreover, from a security perspective, our dependence on oil constantly raises concerns. Is it available and affordable? Can we ensure a secure supply? These endless concerns have consumed great defense, diplomatic and financial resources. However, a pure electric vehicle only consumes 12 kWh of electricity per 100 km, which costs a mere 6 yuan at standard residential electricity rates. In contrast, a fossil fuel car requires 8 liters of oil per 100 km, amounting to more than 60 yuan. From 60 to 6, this can help improve people’s well-being significantly! 

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Corporations should take responsibility to prevent pollution transfer and to strengthen climate resilience within the global supply chain

Institute of Public & Environmental Affairs (IPE)   

While China will continue playing an important role in the global supply chain, some labor-intensive industries will be relocated to Southeast Asia and South Asia. Meanwhile, the extraction of raw materials related to the new energy industry is expanding into Africa and South America, posing serious challenges to local environmental regulations and infrastructure.  

To avoid another round of pollution transfer and ecological destruction, it is essential to establish a sustainable global supply chain. The emission reduction commitments made by large enterprises and financial institutions need to be implemented in the core regions of the global supply chain. We also need to help emerging supply chain regions enhance their environmental management capabilities. By establishing regional and even global platforms for corporate environmental responsibility, we can strengthen the climate resilience of the supply chain and create a fair and competitive environment, thus building a global supply chain that is environmentally friendly, climate-friendly and eco-sustainable. 

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China’s financing cooperation with Africa shows “open possibility” to solve Africa’s debt problem

Tang Xiaoyang, Professor, Department of International Relations, Tsinghua University 

China’s financing cooperation with Africa has demonstrated an “openness to possibilities” characterized by three main features: first, it is free of political preconditions. Second, it adopts pragmatic and diverse forms of financing, considering both the business requirements and national strategy. Third, its debt assessment mechanism puts more emphasis on the actual situation and the dynamic development potential, rather than following the standard based on a single development mode set by western financial institutions. 

The difference on financing approaches between the “West” and China should not be taken as a simple competition between two political models, it actually reflects the divergence of perspectives on economic development. For African countries, comparing the two approaches may help them have a chance to think deeply about debt and adjust their policies. However, this does not mean taking sides, (…) The fundamental way out of the debt problem is still for African countries to form their own social consensus and lead all sectors and industries to make a concerted transformation. 

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