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China Briefing: ‘Longest sustained’ emissions drop; Xie’s Europe trip; Road transport emissions

China Briefing
Welcome to Carbon Brief’s China digest. 
We handpick and explain the most important climate and energy stories from China.
China Briefing returns on 16 June.

China’s carbon dioxide (CO2) emissions have fallen for “three straight quarters”, the “longest sustained” emissions decline the country has seen in “at least a decade”, according to a new Carbon Brief guest post. The drop in the first three months of 2022 – an estimated 1.4% – was driven by the “continued” real-estate slowdown and “strong” increases in clean energy, the analysis said. The end of the period also saw the impact of “harsh” Covid policies, it added.
It has been a busy week and a half for Xie Zhenhua, China’s special envoy for climate change affairs. Xie was in Davos for the World Economic Forum between 22-24 May, during which he met with various officials. He held talks with his US counterpart, John Kerry, in Berlin last Thursday before going to Stockholm for the Ministerial on Climate Action (MoCA) meeting, which China co-hosted.
A flurry of climate-related reports have been published by thinktanks and institutions over the past two weeks. Among them, Global Energy Monitor (GEM) analysed China’s “coal mine boom” in a briefing; while the International Energy Agency (IEA) teamed up with Tsinghua University to release an assessment of China’s emissions trading scheme (ETS).
Elsewhere, the World Resources Institute (WRI) China has published a report, proposing strategies for China’s road transport sector under China’s carbon neutrality goal. Xue Lulu – one of the report’s authors – has analysed for Carbon Brief why mitigating emissions from road transport is “critical” for the country. Lastly, China published its 14th five-year plan for renewable energy today. The next edition of China Briefing will cover the plan in detail.
Key developments
Climate envoy Xie on diplomacy tour in Europe
WHAT: China’s climate envoy Xie Zhenhua embarked on a climate diplomacy tour to Europe on 22 May. He took part in the World Economic Forum in Davos, where he announced that China would “plant 70bn trees in the next 10 years”. (See China’s National Forestry and Grassland Administration’s explanation of how the country plans to do so.) He also held talks with officials from various countries, including the US, EU, Germany, Switzerland, Egypt and Malawi, an official Chinese release said. According to a separate release, Xie met with his US counterpart, John Kerry, in Berlin last Thursday. They “exchanged opinions extensively” over the establishment of a China-US climate change working group, it noted. Xie then travelled to Stockholm to attend the MoCA annual meeting, co-chaired by Huang Runqiu, China’s minister of ecology and environment. Huang joined the meeting via video link. Xie called on “all parties” to turn their climate targets into “concrete actions” at MoCA, according to a readout.
WHEN: Xie’s trip to Europe came six months after he attended COP26 in Scotland. Xie and Kerry’s meetings also took place half a year after China and the US – the world’s two largest carbon emitters – released their joint declaration on climate change cooperation during the Glasgow summit. The joint declaration stated a number of things the two nations “intend to” do, including cooperating to enhance the measurement of methane emissions, convening a meeting in the first half of 2022 and setting up a working group on enhancing climate action. 
WHO: According to China’s Ministry of Ecology and Environment (MEE), apart from Kerry, Xie also met various “dignitaries” and heads of international organisations. They included: Frans Timmermans, executive vice-president of the European Commission; Robert Habeck, the vice chancellor of Germany; Simonetta Sommaruga, Swiss federal councillor; Lazarus McCarthy Chakwera, president of Malawi; Sameh Shoukry, president-designate for COP27; Patricia Espinosa, executive secretary of the secretariat of the United Nations Framework Convention on Climate Change (UNFCCC); and Dr Fatih Birol, executive director of the International Energy Agency (IEA), among others.
WHERE: At the Safeguarding Our Planet and People event in Davos on 24 May, Xie and Kerry both expressed hopes for the two sides to cooperate on climate change matters. This was the first time the pair had been seen together in public since COP26. However, they had held nearly 40 meetings – or one for “every eight to nine days” – since early 2021, Xie said at Davos. In their talks in Berlin, Xie and Kerry “reviewed” the two nations’ Glasgow joint declaration and “exchanged opinions extensively” over the establishment of a China-US climate change working group, according to the Chinese release. The US side has not issued a readout. 
MEETING: Li Shuo – senior global policy advisor at Greenpeace East Asia – told Carbon Brief that Xie and Kerry’s meeting in Berlin was not the meeting mandated by the Glasgow joint declaration. “But its purpose was indeed to prepare for the bilateral working group and the methane meeting, including to hash out the modalities of these meetings,” he noted. Byford Tsang – senior policy advisor at E3G – told Carbon Brief that, given the “muted communication efforts” from both sides after the Berlin meeting, it is “more likely” that the meeting is “about the processes to get to the milestones set in the declaration rather than about the milestones themselves”.
WORKING GROUP: Commenting on why China has issued a release for the Berlin talks but the US has not, Li said “one may argue that the Chinese side is more interested in publicising the meeting, so that they could make the point that the G2 are still collaborating”. He also said that it remained to be seen when and how the China-US bilateral working group would happen and what outcome it might generate. “That’s the immediate next step,” he noted, adding: “I would also pay attention to potential opportunities over the next few weeks for the two countries to interact on the climate issue at the top level.”
METHANE: The US-China Glasgow joint declaration has “put accelerated action on methane” into the spotlight, Tsang noted. “A key benchmark for success of the yet-to-be-established working group would be new measures to rein in methane in both countries, including the launch of an ambitious National Action Plan on methane in China,” he stated. The success of the working group would also be “judged on the scope of the issues” it is set to cover, which could include sub-national cooperation, deforestation and circular economy, Tsang added.
CHINA MEDIA: The Global Times – a Chinese state-run newspaper – said that, according to experts, Xie and Kerry’s meeting at Davos underlined “room for cooperation” on climate change amid “bilateral tensions” between China and the US. But the experts also warned that “the US’s inconsistency in global climate cooperation and tendency to politicise the issue call for vigilance”, the publication wrote. Kerry told Shanghai-based Jiemian News that his meeting with Xie at Davos had been “very good” and “very constructive” and that they were “working to finish the finishing touches on the working group”. The South China Morning Post reported that the US “could offer its knowhow on improving energy efficiency and capturing methane leakage during oil and gas production” to China, but “some technical issues needed to be resolved”. It interviewed Yang Fuqiang, a researcher with Peking University’s Institute of Energy. Independent financial outlet Caixin reported that “China aims to hit its carbon-reduction goals ahead of schedule”, citing Xie’s speech at Davos. 
GLOBAL MEDIA: The Associated Press reported that the US and China “were close to agreeing on the structure of the group and how decisions would be made”, according to its interview with Kerry. The New York Times featured Xie’s Davos remarks that “concrete action has been taken” by China, adding that – according to Xie – “nations must now make good on the promises they had already made”. Politico said that “Beijing’s official delegation” to Davos “was headed by the most apolitical figure imaginable: the veteran climate envoy Xie Zhenhua”. Bloomberg described Xie as being “among the handful of Chinese officials who were allowed to leave the country’s strict Covid lockdown”. Time wrote that “environmentalists have raised concerns that reforestation may be used as a fig leaf to obfuscate rising emissions”, referring to Xie’s 70bn tree-planting pledge. According to Yahoo, Kerry said that methane is “front and centre” in US-China climate talks.
Reports analyse China’s ETS and coal mine ‘boom’
WHAT: Two reports released over the past two weeks have assessed two key areas for China’s efforts to tackle climate change: the country’s coal mines and national ETS. The first report, published by GEM, said that China’s new coal production “surge” in response to power shortages “may have” emitted 2.5m tonnes (Mt) of methane –  a potent greenhouse gas (GHG) with an estimated warming potential of around 30 times that of CO2 over a 100-year timescale. The second report was jointly released by the IEA and the Institute of Energy, Environment and Economy of Tsinghua University in Beijing. It found that an “enhanced” national ETS could lead China’s electricity sector towards “an emissions trajectory that is in line with China’s carbon neutrality target”.
COAL: GEM’s analysis said that China’s “coal mine boom jeopardises” the country’s “short-term” climate targets. It noted that China’s emissions of 2.5Mt methane happened “within a matter of months” due to its strategy to “shore-up coal supply” to tackle “an acute domestic ‘energy crisis’” late last year. It noted that China’s new coal production “surge” boosted its annual mining capacity by 464Mt, with actual output up by “at least” 270Mt. China produced 4,070Mt of coal in 2021– reported to be a “record high” for the country –  which “almost certainly” contributed to higher methane emissions, GEM said in the briefing. 
NEW MINES: 169 new coal mine projects are “already under development” in China, among which 82% are “already under construction”, the briefing said. It added that their combined capacity is expected to reach 559m tonnes per annum (Mtpa). The report also said that China’s “proposed” coal mines could lead to an additional of 6Mt methane emissions each year unless there is “relentless adoption of mitigation practices” for these operations – potentially bumping up global coal mine methane emissions by “more than” 10%.
‘BIG RISK’: According to the US-China Glasgow joint declaration, China – which emits 73% of the world’s coal mine methane, according to GEM – “intends to develop a comprehensive and ambitious National Action Plan on methane” before COP27 this November. Ryan Driskell Tate, research analyst at GEM and a co-author of the report, told Carbon Brief: “China, like all coal producers, could reduce coal mine methane emissions by implementing the technologies and solutions already available – whether it’s flaring during mining or flooding after it is over.” Tate pointed out that, although China “already has some of these procedures in place at some mines”, to meet the scale of the challenge, Chinese coal producers “need a systematic adoption of these technologies across the sector, so that methane is managed over the entire life of every coal mine”. 
ETS: The IEA-Tsinghua report found that the CO2 emissions of China’s electricity sector would peak “before 2030” and decrease “by 20%” below 2020 levels by 2035 under the country’s current renewable energy policy in the electricity sector, as well as its existing intensity-based national ETS. (Carbon Brief has analysed how China’s national ETS works.) It also found that a selection of three ETS design “enhancements” modelled by the report could all “accelerate” the sector’s “alignment” with a carbon neutrality trajectory. Besides, the report said that a “cap-and-trade” ETS could achieve around 800Mt additional CO2 emissions reduction “at no additional cost” by 2035, compared to the current policy mix. Furthermore, it found that maintaining the current ETS system – with intensity-based benchmarks and free allocations – leads to low interaction between the renewable energy policy and the national ETS as they act on different electricity production sources.
ADVICE: The authors also made some policy recommendations based on their study. They advised Chinese policymakers to consider “gradually introducing” allowance auctioning in the current 14th five-year plan period (2021-2025) and “transitioning” to a cap-and-trade system with a “stringent” cap later in this decade. They also advised Chinese policymakers to “swiftly” extend the national ETS to other sectors to expand the “possible options” for emissions reductions and reduce the cost of decarbonisation. Lastly, Chinese policymakers should consider each of the study’s enhancement options against their policy objectives, communicate future regulatory developments “well in advance” and tailor policy coordination accordingly, the authors said.
DELAY: The report came after Chinese financial outlet Caijing had reported that the expansion of China’s national ETS would be postponed over “problems” regarding the quality of carbon emissions data. Authors of the IEA-Tsinghua report told Carbon Brief that ensuring “proper” measurement, reporting and verification (MRV) of covered entities is “key” to an ETS and “essential to strengthening trust” in the market. They noted that it is a “positive signal that problems are being detected and handled within the first year” of the operation of the national ETS. They said: “Our current expectation is that the renewed emphasis on MRV might mean that the expansion of the ETS to other sectors would happen from the 2023 compliance period.” Bloomberg reported on Tuesday that China is “now looking at bringing in aluminium, cement, petrochemical and steel companies” into its national ETS from 2024, according to “a person with knowledge of the matter who asked not to be named as the information isn’t public”.
Why mitigating road transport emissions is ‘critical’ for China 
(This analysis is written by Xue Lulu, project manager of the sustainable cities programme at thinktank WRI China. Xue is a co-author of a new report, “Decarbonising China’s Road Transport Sector: Strategies toward Carbon Neutrality”, published by WRI China on 25 May. Read the report in English or Chinese.)
In China, the GHG emissions of the transport sector amounted to 828m tonnes of CO2 equivalent in 2014, representing 6.7% of the country’s GHG emissions, excluding land use, land-use change and forestry (LULUCF). 
However, if the sectoral emissions continue their upward growth trend, the 6.7% share will increase. 
Within the transport sector, mitigating road transport emissions is critical to achieving China’s 2060 carbon-neutrality target. In 2014, GHG emissions from road transport represented 84.1% of China’s transport-related GHG emissions.
In contrast to the modest expected increases in travel demand in Organisation for Economic Co-operation and Development (OECD) countries over the next 30 years, China is expected to have strong growth in transport services demand during this period. In fact, the country has already experienced drastic growth in passenger and freight demand. 
Over the past 15 years, the number of passenger cars in China increased 12 times from 19m in 2005 to 239m in 2020. The volume of freight in 2018 – measured in domestic freight tonne-kilometres – increased more than three times from 2005. 
It is projected that by 2050, China will have the highest volume of road freight in the world. It is also projected that China and India, combined, will experience the most rapid growth in car ownership by 2050, to a level six times greater than in 2015 – standing in contrast to the expected growth of 16% in OECD countries.
There are several opportunities for addressing these issues through the integration of approaches, including rapid diffusion of “new energy” vehicles (NEVs), transport structural changes (through two measures – mode shift and vehicle occupancy improvements), vehicle fuel efficiency improvement, upstream power and hydrogen sectors’ decarbonisation, compact urban planning, the adoption of low-carbon fuels and even carbon pricing.
China’s climate pledge under the Paris Agreement (nationally determined contribution, NDC) underscores three approaches to decarbonise the road-transport sector – namely, rapid diffusion of NEVs, transport structural changes and vehicle energy efficiency improvement. 
The adoption of low-carbon biofuels would not be feasible in China due to food security concerns, while carbon pricing would take years to be introduced. 
Although China’s targets are ambitious for vehicle fuel efficiency improvement measures, there is room for the country to increase the ambition for NEVs’ adoption and structural changes in its “Action Plan for Carbon Dioxide Peaking before 2030” (abbreviated as “action plan”). 
For example, the action plan set a mandatory target that clean-energy vehicles represent 40% of annual vehicle sales in 2030. Not only is the 40% mark for clean-energy vehicles conservative for long-term decarbonisation, it also includes natural gas vehicles that have limited GHG emission reduction potentials due to methane escaping from the vehicles.
Furthermore, according to our research, to decarbonise China’s road transport sector would require 39-83tn yuan (about $6-12tn) in low-carbon investments, cumulatively, from 2020 to 2060. The bulk of the investment demand is expected to be from now till 2035, before declining steadily over time. 
Even so, our research finds that an economical decarbonisation pathway exists: by managing vehicle fleet sizes and usage, the low-carbon investments on installed capacities for power and hydrogen generation and transmission, as well as investments in vehicle acquisition and charging (and refuelling) infrastructure expansion, can be minimised.
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