Insights Library

Browse TTP’s updates on the latest insights and analysis in chronological order below. 

China’s carbon market can integrate with international markets through CCER   

Ma Jun, President of the Institute of Finance and Sustainability   

It is necessary to enhance the role of the carbon pricing mechanism, as once established, it can serve as a cost-effective and efficient tool for directing more resources toward green and low-carbon allocations. However, constructing the carbon market presents several challenges, one of which is how to maintain connectivity with the international market while aligning with global standards. 

Regarding this issue, I believe that, in the short to medium term, China’s carbon market has the potential to integrate with international markets through Chinese Certified Emission Reductions (CCER). The international community has recognized the significant potential of CCER, as it may evolve into the largest voluntary carbon market worldwide. Consequently, there is considerable global interest in participating in it.  

Nevertheless, two critical issues must be addressed: firstly, aligning China’s CCER standards with international ones. The most straightforward approach is to seek recognition from the Integrity Council for the Voluntary Carbon Market for China’s CCER market standards and methodologies, thereby making the CCER market acceptable to global investors. Secondly, mere acknowledgment of CCER’s quality is insufficient; there must be a trading channel for foreign individuals to easily acquire CCER products. Mechanisms like Stock Connect and Bond Connect could potentially serve as viable solutions.    

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Ceasing the construction of new coal-fired power plants and transitioning to emerging energy sources may be a solution to balancing development with climate change mitigation   

Yao Yang, Dean of the National School of Development, Peking University   

Currently, China’s approach does not involve the complete shutdown of all coal-fired power plants. Instead, the focus lies in advancing the implementation of green technologies, especially in photovoltaic and wind power. Several years ago, there was a discussion in China about the possibility of closing a portion of coal-fired power plants. However, it was eventually recognized that this was not a viable solution. Therefore, two years ago, we shifted our strategy to prioritize the development of photovoltaic and wind power generation, a decision that has proven to be judicious.” 

Climate change is indeed an urgent concern, but from today’s perspective, it is not yet a daily risk, but it poses a risk that may extend for decades. Thus, we still have time to address this issue. The demand for energy in developing countries is expected to rise, so looking from today into the future, ceasing the construction of new coal-fired power plants and transitioning to emerging energy sources could sufficiently address such risks.   

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Significantly impacted by climate change, China experienced extreme cold waves in December   

National Climate Centre    

In December, the country experienced a roller-coaster ride of temperatures, with a persistent early warmth followed by a sharp decline in the later period. From December 1st to 13th, the national average temperature was higher than usual, reaching the highest level in history for the same period. Yunnan and Ningxia both registered their highest historical temperatures for this timeframe. However, starting from the 14th, under a widespread cold wave, temperatures sharply declined across most regions of the country. Some national meteorological stations have recorded maximum daily temperature drops that surpassed historical extremes. 

China is a region sensitive to and significantly impacted by climate change. Despite the warming trend surpassing the global average, the intensity of extreme cold waves has not diminished, and the impact range of strong cold air or cold waves has expanded.   

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Trade protection measures increase pressure on energy transition and supply chain stability   

Wang Yichen, Journalist and Columnist in Energy, Economic Daily    

The target to increase installed renewable energy generation (agreed to in the Global Renewables and Efficiency Pledge) provides a fresh investment opportunity for the global new energy industry and injects new vitality to economic recovery. It also poses a significant challenge to supply chain security. Currently, there is a rise in trade protection measures against new energy equipment. Such actions will only increase the global cost of energy transition and intensify supply chain risks. It is essential for countries to jointly uphold supply chain stability with a more open and inclusive mindset, thereby facilitating the energy transition. At the same time, to ensure a smooth transition in the energy structure, the development of grid facilities and power supply regulation should not lag behind.   

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Climate-trade nexus is becoming an increasingly prominent climate issue   

Dr. Kevin Mo, iGDP Principal   

While trade and climate have always been linked, it has been climate that has gotten the lion’s share of attention. But that is changing. The climate-trade nexus is becoming an increasingly prominent climate issue, as demonstrated by a growing number of related associations and initiatives like the Climate Club, negotiations at the US-EU Global Arrangement on Sustainable Steel and Aluminum, and the US-EU Trade and Technology Council, which aims to leverage trade cooperation to support global climate action.  

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China will stick to its current climate goal to reach carbon peak before 2030  

Xie Zhenhua, China’s Special Representative for Climate Change Affairs  

China’s target is to achieve carbon peak before 2030, and we are currently in the process of refining the exact year through calculations. However, it can be confidently stated that there is no need to modify this goal. We will present the absolute emissions for achieving the peak. Why is this important? Because in the context of China’s strategic transition from dual control over the amount and intensity of energy consumption to dual control over the amount and intensity of carbon emissions., the absolute quantity is crucial in determining the exact year of peaking. Nevertheless, it is certain that China will peak before 2030, not in 2030. 

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The replacement of fossil fuel energy needs to take place in the process of developing the renewables   

Zou Ji, CEO & President of Energy Foundation China  

The restriction on fossil fuel usage comes with a precondition: the actual energy demand in practical development cannot decrease and may even need to increase. Therefore, the replacement of coal, oil, and gas for power generation needs to occur within the framework of renewable energy development. For countries heavily reliant on coal, the process of “phasing out” may increase pressure by augmenting demands for the intensity and speed of the transition. In intergovernmental negotiations, while keeping the current direction unchanged, a buffer zone is necessary. Achieving a 50%-70% reduction in coal-fired power generation is a feasible goal. However, an immediate reduction to zero would lead to a sharp increase in costs. This aligns with the economic principle of increasing marginal cost, where further reduction becomes progressively more challenging. Hence, there needs to be flexibility in government commitments. 

From a technological standpoint, we have not yet observed a fully fossil fuel-free energy system. In the current context, scholars and researchers can certainly design scenarios and goals for “phasing out.” However, personally, I believe that for governments, committing to the outcomes of such “phasing out” may present challenges.  

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Low-carbon transition and International cooperation are key to address climate change issues and ensure green prosperity 

Liu Zhenmin, Senior Advisor to China Special Envoy for Climate Change 

How to effectively address climate change and expedite global low-carbon transition and green prosperity through international climate cooperation? I’d like to share my perspectives from three angles:  

Firstly, economic growth, energy transition, and climate change can be collaboratively resolved through green, low-carbon, and high-quality development. Over the past decade, China, with an annual energy consumption growth rate of 3%, has underpinned economic growth exceeding 6% annually. During this period, carbon dioxide intensity has dropped by 35%. China’s practice demonstrates that environmental protection and actions against climate change can be a new growth driver rather than an impediment to development.  

Secondly, accelerating the design and construction of a new energy system is pivotal to green, low-carbon transformation. Following the technological accumulation and industrial nurturing over a decade, renewable energy has emerged as the primary driver of China’s new installed capacity and new power generation. A transition from an energy structure primarily reliant on coal, oil, and gas to one dominated by non-fossil energy within 30-40 years is entirely feasible. 

Thirdly, the principle of win-win cooperation remains essential in global climate governance, and practical bilateral and multilateral cooperation in the field of green, low-carbon technology needs to be promoted. China, the United States and the European Union can complement each other in both technological and market aspects of green industries. While objective competition in standard setting and technology development does exist, as long as it’s healthy and aimed at mutual benefit, there is still ample room for cooperation. In addition to intergovernmental policy dialogue and exchange, the involvement of non-governmental actors can make cooperation more practical and sustainable. 

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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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