China affects us all – not even the Nordics are immune to their power, influence and economic & social development. The following paper is the fourth of a series of five interesting new articles about China’s latest 5-year plan that were written and originally published by four independent experts – Dr. Nannan Lundin, Linnea Yang, Jessica Zhang and Matilde Eng, all of whom work at the Swedish Embassy in Beijing. There are five parts to this series are the Big Picture, Innovation China, Digital China, Carbon Neutral China and TheWay Forward.
Among the new elements in the 14th Five Year Plan (FYP), the newest is China’s ambition of carbon peaking and carbon neutrality and how it is on the way to become a driver for economic and structural transformation, i.e. far beyond only CO2 emissions reduction. Reduction in energy consumption per GDP unit by 13,5% and reduction of CO2 emission per GDP unit by 18% in 2025 are two binding targets in the14th FYP.
In our “graphic interpretation” of Promoting Green Development and Human Being’s Living in Harmony with Nature (Part XI) from the 14th FYP, we see that the first steps of the transformation towards a Carbon-Neutral China will be taken. At the same time, the regulatory, institutional, technological and market-readiness for such a ground-breaking and cross-cutting transformation are necessary but also demanding.
Comments by both domestic and international experts highlight the lack of a specific cap on CO2 emissions, even though both intensity and cap controls were included in the 14th FYP. Also, how the consumption of coal will be controlled, and preferably reduced, needs further specification. While the “ambition level” is often seen from such a quantitative perspective, the underlying structural and market potential for the enhanced ambition must also be explored. In this context, how China’s national emission trading system (ETS) will roll out and how China’s unique strengths in mobilising greenfinance through a combined top-down and bottom-up approach will be critical. Interestingly, we do see that the business sector as well as the financial sector in China are already following and engaging in the carbon-peaking and carbon-neutrality policy signals. At the same time, some regional and local earlier peak champions are showing a strong willingness to be engaged in a “climate transformation race”.