China’s emissions have not grown for two years. Two experts who closely follow China say the reasons include the strong expansion of renewable energy, flattening demand for steel and concrete, and China’s image-building efforts. Big leaps in green steel can be expected in the next decade.
China’s carbon dioxide emissions have not risen for two years, according to an analysis by the Centre for Research on Energy and Clean Air (CREA). Emissions from the two most polluting industrial sectors – cement and steel production – have even declined.
Li Shuo, head of the Asia Society Policy Institute’s China Climate Hub, believes this is not a cyclical fluctuation, because the change is driven by structural factors.
“The first reason is that economic growth has levelled off at around five per cent, when 10–15 years ago it was in the region of ten per cent. We are not going back to those figures,” he says.
The second reason is the slowdown in heavy industry: demand for steel and cement has stabilized as much of the necessary infrastructure and construction has already been completed.
“There is only a certain number of airports you can build, and the high-speed rail network already covers the whole country. There is a lot of floor space. It is very hard to see demand for steel or cement growing significantly,” Shuo says.
The third factor is the growth of renewable energy – wind and solar power have made it possible to replace coal burning.
“Together, these three trends ensure that emissions will not start to rise rapidly. The more important question is when we will begin to see emissions clearly decline, and by how much,” Shuo says.
Growth delivered with renewables
Xiaojun Wang, Executive Director of the environmental organization People of Asia for Climate Solutions (PACS), also stresses the importance of renewable energy.
He points out that since the Covid-19 pandemic, China’s economy and electricity consumption have grown and new industries have emerged. In large cities, the latest technology is visible, and New Year galas showcase ever more sophisticated robots.
“New electricity demands mostly came from new industries such as artificial intelligence and electronic vehicles. More than 95 per cent of new electricity demand has been covered by renewable energy,” he says. “That is really significant.”
He adds that over the past ten years – the last two five-year plans – China has invested seriously in energy efficiency, from buildings to industry.
“Power plants have to generate more energy while burning less coal, and the same amount of energy has to heat more homes and produce more steel.”
Green steel may arrive soon
China is piloting green steel solutions, but for now the fall in steel industry emissions is mainly due to weakening demand, according to the experts.
Wang says China is currently testing various ways to green its steel sector, which accounts for around 15 per cent of the country’s emissions. Possible technical solutions include new types of electric arc furnaces, green iron ore and hydrogen-based processes – often discussed in terms of green, grey and blue hydrogen.
Green hydrogen is produced with virtually no emissions using renewable energy sources, while grey and blue hydrogen are produced from natural gas. The difference between them is that in blue hydrogen production, the carbon dioxide is captured, while in grey hydrogen it is released into the atmosphere.
“China has the advantage of being able to make technologies very cheap, as we have seen with renewable energy,” Wang says. In his view, China’s five-year plan makes it clear that there will be major investment in hydrogen.
“Right now, China is waiting to see which technological solution matures first, and then it can be scaled up fast.”
Li Shuo also underlines China’s habit of
moving first slowly but inexorably, and then with astonishing speed.
“That is what has happened, for example, with electric cars – in Beijing it is hard to see combustion engine cars anymore. I believe green steel will follow a similar path, and we will see major tipping points in the 2030s,” Shuo says.
He believes there could be tipping points in the 2030s, because by then there will be enough renewable energy available to support green steel production.
China’s motives: stability, competitiveness and “saving face”
In both Xiaojun Wang’s and Li Shuo’s view, China is investing in low-carbon production primarily for economic reasons. Solar panels and electric cars have given China a position as a market leader, and diversifying energy production serves stability and self-sufficiency.
“The key words in the 15th five-year plan are security and stability,” Wang says.
“It seems clear to me that China wants a good reputation on the international stage – China wants to be the good guy.”
Chinese culture is rooted in a Confucian idea of saving face, and Wang says it would be devastating for China if the country failed to meet its stated target of peaking emissions by 2030 at the latest. Especially in the eyes of developing countries, China wants to show that it is possible to decouple economic growth from rising emissions.
“In China they talk about high-quality development,” Wang says.
There is also a technological motive: China wants to be a country of new innovations, not just low-cost manufacturing.
In addition, Xiaojun Wang believes China has a social motive to invest in clean energy. To preserve social peace, it is important to keep inflation under control and ensure reliable energy supply in homes and factories.
“The government cannot afford to have people complaining too much,” Wang says. “If a factory were sitting in the dark because of a power cut, you would be losing not only money but people’s faith that Beijing brings stability to the country.”
Because of this fear of losing face, Wang is convinced that China will stick to its climate targets.
“Our task as climate activists is to push China to reach its goals ahead of schedule, so that the next targets can be even more ambitious.”
Will 2026 be the year of coal or batteries?
At the moment, Xiaojun Wang says, China is in a state of panic for the second time this century. The first energy-related panic came in 2021, when Russia launched its full-scale war in Ukraine, and now China appears to have experienced a similar “panic attack” in response to United States actions in Venezuela and Iran.
There is a risk that energy self-sufficiency will increasingly be supported by coal.
“Energy demand and coal burning have grown at the start of this year, which is a bad sign,” Wang says.
Li Shuo is also watching China’s coal power closely. In his view, coal is not strictly needed for energy production; rather, China burns coal mainly to balance the strong fluctuations in renewable generation. He argues that this balancing could instead be done by storing energy in batteries. “Replacing coal with batteries may be the next step in transforming China’s energy sector,” he predicts.
How will the rest of the world respond to China?
Li Shuo is also watching with interest how the rest of the world responds to China. Pakistan, for instance, has overhauled its energy sector by buying vast numbers of Chinese solar plants, and Shuo believes many other countries will follow.
While more traditional Western countries agonize over how to respond to China’s growing role in renewables – whether to regulate it, block it or buy from it – many countries in the global South, he says, are more pragmatic and choose cheaper Chinese solar plants over more expensive European or US technologies.
“Many of these countries, which are also welcoming Chinese investment, can adopt the latest technologies and become stronger industrial powers simply because their industries are tightly linked to China,” Shuo says.
This, he believes, may push many countries in the global North further into a position where domestic politics revolves around tensions between the political right and climate policy.
According to Li Shuo, protectionism easily becomes a self-fulfilling prophecy: countries try ever harder to shield their industries, and in doing so they fall further behind China in competitiveness. That in turn fuels more political tension. “That is unlikely to help us solve climate change,” Shuo says.
Hero: Zalfa Imani, Unsplash