[Scott] Coming up on "Energy Switch," a very important episode on China.

- Natural transitions in the Chinese economy, including the switch from manufacturing over to service sector and other factors, will make it relatively easy for China to peak its emissions by 2030, I think, so there's actually been some criticism in the international community that it's not an ambitious enough goal, that they should be doing more.

- If China want to reach carbon neutrality by 2060, then the emission trajectory need to be, like, this.

[Scott] Yes, it's hard.

- So it's a complete reversal in terms of the emission trajectory, and I do think that, you know, getting there, that's where the key challenge is.

[Scott] Next on "Energy Switch," part 1 of China's energy and climate policy.

[Narrator] Funding for "Energy Switch" was provided in part by the University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

And by EarthX, an international nonprofit working towards a more sustainable future.

See more at earthx.org.

[upbeat music] - I'm Scott Tinker, and I'm an energy scientist.

I work in the field, lead research, speak around the world, write articles, and make films about energy.

This show brings together leading experts on vital topics in energy and climate.

They may have different perspectives, but my goal is to learn, and illuminate, and bring diverging views together towards solutions.

Welcome to the "Energy Switch."

China is the largest energy producer and, by far, the largest consumer of coal, the largest producer of solar panels, the largest installer of solar and wind, the largest current builder of nuclear power plants, has the largest hydropower dams, and emits nearly a third of global CO2.

In nearly every way, China is the biggest in energy and climate.

We'll talk about all this with David Sandalow, founded and directs the US-China program at Columbia University Center on Global Energy Policy and was formerly an assistant secretary at the Department of Energy.

Wei Peng is an assistant professor of international affairs and civil engineering at Penn State's School of International Affairs.

She got her PhD at Princeton with postdoc studies at Harvard.

On this episode of "Energy Switch," China's Energy and Climate Policies, Part 1.

Look, let's just jump right in.

Thanks for being here.

Why should the rest of the world care about what China does in energy and climate?

- China is the world's largest energy producer, largest energy consumer, and largest greenhouse gas emitter.

What China does shapes global markets for energy, and it shapes the future of our planet.

Last year, 30% of greenhouse gas emissions came from China.

There's no solution to the climate change problem without China.

- Okay, similar things?

- I think David just said one side of the story, which is China is the important part of the problem, right?

Thirty percent of emissions coming from China, but on the other side, there are other people seeing China as a potential climate savior as well because China is a global leader also in clean energy, like wind, solar, electric vehicle, so to me, this, like, complex picture of China make this country both interesting but also important for us to understand.

- Right.

If you could say it simply, what would China's energy policy be?

- It's hard to distinguish what is energy policy and what is climate policy because in order to tackle the climate issue, we really need to tackle what this, like, energy space will look like in the future.

Overall, China aims to peak carbon emission by 2030, aims to reach carbon neutrality by 2060.

That means a lot of different energy technologies need to change from where we are today.

So, to me, I think there are two important features of energy policy for China.

One is a very strong focus on this, like, top-down governance structure, so basically, there's this big plan from the central government, and then there will be, like, plans at the provincial government level.

That's one feature, and the other important feature is a strong focus on the industrial policy.

China really focused on how can we use the government support as a way to really, like, promote clean energy transition.

- Yeah.

How do you see that?

How do you see China's energy policy?

- I think China's energy policy is shaped by three goals: economic growth, energy security, and environmental sustainability.

In that way, I think China's similar to almost every other country on the planet.

You know, it's interesting.

In China, there are no known climate deniers.

It's a difference between China and the United States.

The Chinese government embraces these climate goals, but it's not always the top priority.

Energy security, economic growth, are sometimes higher priorities.

Sometimes they interact in complicated ways.

- You mentioned central government, provincial and on down.

How does that work?

- Yeah, it's very complicated.

Since the country was founded, the way the planning has been made is that every five years, we have a five-year plan, so right now, we are at the 14th five-year plan, and this usually come from the top level, the NDRC, the National Development Reform Commission, and that covers everything from economic growth to energy to environment, everything, and then, relevant ministries and relevant state-owned enterprises, they're going to make their own state five-year plan, and so does a lot of those provincial government.

So that's why I say that there is a very clear top-down structure in the planning process, but in reality, when you're looking at how the goals are being set and also how they're getting implemented, they're not always the case that the provincial government will just do whatever goal set by the central government 'cause their local reality they need to worry about, and that's also when things get trickier and a little bit complicated to see.

- You said when the country was founded.

What did you mean by that?

[Wei] Oh, 1949.

- Oh, okay, when the country was... 'Cause China's been around for a couple- - Yeah, yeah.

- Thousands and years.

- Yeah, yeah, absolutely, yeah.

- So the modern.

- The modern China.

- Okay, since 1949.

Do you see that the same way, the policy getting set, and... - I do, and one interesting contrast between China and the United States is the experience with long-term planning.

You know, when we pass a one-year appropriations bill in Washington D.C., it's such a big accomplishment, it gets headlines.

In China, they're on their 14th five-year plan.

Now, look, that's partly driven by the fact that it's one party in power, and that party's not gonna change, and that affects the planning of horizon, but it's very significant in terms of the energy transition and energy planning because a lot of what we're talking about in the energy transition are changes that will take place over decades.

- Right.

Are we gonna meet them?

I mean, can we plateau emissions by 2030 in China?

We're still building coal plants.

- In fact, I think it's not going to be hard for the Chinese to do that.

Natural transitions in the Chinese economy, including the switch from manufacturing over to service sector, changes in demographics and other factors will make it relatively easy for China to peak its emissions by 2030, I think.

In fact, there's some projections that it will peak earlier.

So there's actually been some criticism in the international community that it's not an ambitious enough goal, that they should be doing more.

- The population has peaked in China, and China, unlike the U.S., at least so far, doesn't have immigration, a lot of people coming in.

Does that help with those goals?

- It's part of it, yes.

- Yeah, so the demand is kind of plateauing from the number of per capita, at least, if you will.

That kind of leads us into the manufacturing side of things.

China, they supply the world with everything, and big trade partner.

How does this affect development of energy in China?

- So I do see the growth manufacturing, especially in the past two decades.

It really has a lot to do, like, what growth model China has been pursuing.

If you're looking at early 2000 when China first joined the World Trade Organization, we definitely see, like, a lot of emphasis on export.

As a result, around 2008 or so, we see, like, 20% also domestic emissions were actually for exported goods, and that was the time when the Chinese government started to really emphasize that, hey, we need to really encourage this domestic consumption and investments.

So since then, we see a lot of, like, domestic infrastructure expansion, like, airports, high-speed trains, and we also see a lot of emphasis about, like, encouraging more service internship within the country, so as a result, if you're looking at the picture today, we're talking about roughly, like, eight percent or so of the domestic emissions now go for exported goods.

- I would've thought it would be higher than that.

- Yeah, see, I think this is because the picture has changed so much in the past decade.

- That's interesting.

- In just one decade, so looking the future, I actually don't think this, like, eight percent number would change a lot exactly because with those days when China have cheap labor has gone, so I do think that there will be more emphasis about, like, how can we decarbonize our domestic industrial sectors, and also, how can we switch to service in such more in the future as we now talk about, like, the future climate goals?

[Scott] Interesting.

- You know, I think the Chinese manufacturing sector is one of the decarbonization challenges that we're gonna be facing in the next several decades is quite significant because Chinese steel, Chinese cement, Chinese chemical sector produce a very large percentage of global emissions, and these are very hard-to-abate sectors.

In steel, we need to move to, you know, electric arc furnaces.

We need to move to, you know, various solutions that will decarbonize steel sector.

Probably carbon capture and storage is gonna play a role.

We need to move to hydrogen for generating heat in a number of these sectors, and by the way, it's gotta be clean hydrogen.

- These are huge things to talk about transitioning.

- No question, and by the way, this starts to get into trade issues and interesting trade disputes because the European Union has decided that it's gonna launch some carbon border adjustment mechanism that will affect, that will evaluate the carbon intensity of imports, including from China, so that will affect some Chinese industry in this way, although a very large percentage of Chinese steel and cement, in particular, is consumed domestically.

A broader trend that we're facing right here is the decoupling of the Chinese economy from the West.

We've seen big political tensions between the United States and China, which I think will probably get worse before they get better, unfortunately, and a lot of the clean energy technologies in the world have been made in China, exported to the rest of the world.

A lot of development of clean energy technologies have happened in China.

That type of globalization's gonna be much harder, I think, in the decades ahead with the political tensions that we're seeing with China and the West.

- Let's get to those in a second, and in the really important details, I think.

Let's just talk about coal.

China is the, today, the leading producer and consumer of coal.

Why does this matter?

- Yeah, simply put, it's just because we have a lot of coal and also, coal is cheap, and I do wanna put China into context because if you're thinking about United States, there is coal, there is oil, there is gas.

There's actually different options you can choose from between different fossil fuels, but for China, China is rich in coal, but poor in oil and low in gas, so I think that resource endowment played a very important role in why this country is turning to coal.

- Absolutely.

- And right now, like, coal accounts for more than 50% of the total energy consumption in China, and a lot of, like, policies and a lot of, like, the current system is built around coal, and that really made a lot of transition difficult, to a large extent.

- Scott, if I could jump in, another statistic here.

More than half of the coal consumed in the world last year was from China, and about 20% of global greenhouse gas emissions come from coal consumption in China.

If you care about climate change, Chinese coal consumption is the most important place.

- It's a big deal.

- Yeah, I do think if you ask the question whether or not China will continue to grow coal, if our time horizon is the near term, my hunch is that they will.

If we wanna put a longer term time horizon, I do not think China will ever turn back to coal as the major source of energy.

- You say turn back to coal.

I mean, coal is their major energy source currently.

- So if you're looking at the coal consumption in China before 2013, it was a very clear story of steady increase, and then, in 2013, something really important happened, which was China declared war against air pollution, and that was also the first time when the country introduced this idea of capping coal consumption, and since then, since 2013 or so, until, like, 2018-ish, we actually see the, so people were even thinking, you know, around that time the coal consumption in China might already peaked, but I have to say, I think during that period, I think it's less about, like, the climate goal that is driving the coal consumption.

It's more about the air pollution concern, but a lot of different things happened after 2018, right?

First of all, there was this economic slowdown, and then we have Covid, so if you're looking at the carbon emissions and also the coal consumption after 2018, you actually going to see some, a slight increase over time.

When there is a crisis, it's very easy to turn to coal because it's convenient, it's easy, it's cheap as the solution for the near term, but I do not think this, by any means, it means that China is going to turn back to coal as a major source.

What is much more difficult is to really reaching carbon neutrality because that requires really, really, a completely shift from the way we use energy today.

If you're looking at how the carbon emissions has changed in the past few decades, it's pretty much like this, right?

Like, fivefold increase in the past four decades.

If China want to reach carbon neutrality by 2060, then the emission trajectory need to be like this.

[Scott] Yeah, this is hard.

- So it's a complete reversal in terms of the emission trajectory, and I do think that, you know, that's where the key challenge is.

- Yeah, more thoughts on coal.

- First, Chinese policy is very interesting at this point.

The current five-year plan says that China will strictly control coal during this period.

Strictly control.

That's kind of ambiguous, but it suggests that it's going to be limited.

There's also a statement that in the next five-year plan, coal consumption will start to go down.

Now, number of foreign experts, including myself, have asked, "If that's the case, then why are you building more coal plants?"

They say that they're gonna use coal plants to balance renewables in the decades ahead.

In the United States, we have lots of cheap natural gas, and we basically balance our renewables natural gas.

China does not have that, and so what they say is their plan is to run these coal plants at 10 or 20% capacity and use it when the sun's not shining, the wind's not blowing.

I think there's reason to be concerned that if those assets are there, that they will be easy to use, and they will not be used at just the 20% level.

- Right, yeah-- - If I can just quickly add to that, the current capacity factor of coal-fired power plants in China is already much lower than United States.

We're talking about lower than 50% or so, whereas here, we're talking about, like, 60% or more, so I think-- - Capacity factor, for our listeners, is the percentage that some facility is used.

If it has a capacity of X, and it's used half the time, it's a 50% capacity factor.

- Exactly, and for coal-fired power plant, in theory, you can keep it on forever, to a large extent, so I think the fact that China is right now using it only at half capacity already reflect that they're not considered coal just as the base load capacity; they also consider coal as the only possibility or the solution for China to manage large-scale integration renewable.

It's not the best solution, right?

If we have gas, then that's the much better source to manage that variable renewable, but for China, because that's the only resource endowment we have, they're turning to coal to play that role.

- Right.

It's interesting.

Coal and solar and wind are different in that one can be always on if you need it.

The other two big ones like that are natural gas, which, a large resource, and nuclear.

- Yeah.

- China's actually the world's leader in nuclear right now.

They're building more nuclear plants than anyone.

What's the plan there?

And how does that look?

- This is where that things are really exciting 'cause I do think that nuclear is going to have a important role to play.

If we wanna shut down coal, then it's much natural for nuclear to provide that base load role compared with, like, other resources, and I do think China is very successful in scaling up nuclear for few reasons.

One is that, compared with other countries, I think China has much stronger government support and also much less public opposition against nuclear, and that's really important for the success of the industry.

[Scott] And the cost.

- Of course, yeah, and that naturally leads to the second advantage I think China has, which is it has a very well-developed supply chain and also a labor force, so I think this is part of because, you know, China is almost the only country who was still, like, continuing building nuclear, so China now is fairly self-sufficient in the design and also construction and operation of the reactors, so I think those are the reasons why I'm fairly optimistic about the picture for China to scale up nuclear in the near term.

- Is that good plan?

China replacing coal with nuclear?

- You can't, I think, overemphasize the role that China's gonna play in the nuclear industry going forward, so in the past two years, 14 nuclear power plants have been connected to the grid globally.

- In two years.

- In the past two years.

Six of them have been in China.

A third of the nuclear power plants under construction in the world today are in China.

From a greenhouse gas standpoint, building a nuclear power plant instead of building a coal plant is a very good thing.

There's risks associated with nuclear power, to state the obvious, and think there's concern around the world about whether it's gonna be regulated sufficiently for safety.

We don't have a lot of visibility into some of that, particularly in the last couple of years with the pandemic, we haven't had a lot of visibility into that.

I certainly hope that it's being regulated and managed with safety in mind.

- I do wanna quickly touch on, David, what you were saying, so, for example, right after Fukushima, we did see China stop approval of the in land nuclear power plant, and that hasn't recovered even today.

Right now, we're still focusing on those coastal regions where there's, like, a better technology to manage those security risk.

- We've kind of covered the firm base load, the coal, nuclear, so it brings us to solar and wind.

China's a world leader in solar now too.

How'd this come about?

- China's been a world leader in solar for 20 years or more and also deploys more solar power than any other country in the world.

Last year, the growth was amazing.

Almost 100 gigawatts of solar panels were deployed in China, about 95, 96 gigawatts.

In the U.S., we had 10.

It was accomplished with government policies, feed-in tariffs domestically, research and development domestically, and then low labor costs played a big role in the development of the Chinese solar industry.

- Wei, did foreign subsidies help establish this solar industry for China initially?

Or how did that work?

- Back then, it was really that demand from Germany and other countries and the subsidies there that helped create that panel manufacturing capacity in China so that they can export those places elsewhere.

The need domestically to install PV has grown so much, I feel that the role of foreign subsidy is no longer that important after 2010, and I think there's also a question about which sectors within the country that's going to benefit, right?

If you're thinking about Germany, the installers and the consumers are benefiting from cheap PV panel imported from China, but if you are a Germany, like, manufacturing PV manufacturing company, then you might not be happy with the outcome because now it's really the Chinese manufacturing company who are dominating the market, so to a large extent, I really think this is a winners and losers story, and there's a lot happening within the country that need to unpack.

- Interesting.

I mean, what percentage of coal for energy in China and solar today?

Where are we, really?

- So last year, about 56% of primary energy in China was from coal, and roughly three percent from solar, solar is very much at the beginning of the growth curve.

- Okay, so how much of that is exported on the solar side of things?

And how much are they consuming internally?

You were starting to talk about that, Wei, but what do we?

- Most of China's solar panels are exported.

I mean, they still have a huge domestic market, but most of it's exported, and the industry grew up with exports in mind originally.

- Okay, just designed around that.

Where does China get all the resources to continue to grow its solar manufacturing facilities?

- Well, so this is a big issue.

China is the center of the processing of the minerals that are gonna drive the clean energy transition.

That is something that is gotten a lot of attention in the United States and in Europe, and I think it's gonna change in the years ahead because there is a determined effort to broaden the supply chains for those minerals.

- So when we say processing, that means those things may be mined somewhere else in the world but brought to China to turn into useful things.

[David] Exactly.

- Okay, and how did that happen?

- A very deliberate policy decision on the part of the Chinese government and a willingness to absorb risk that's not present in some western governments, and losses, so in the United States, a private company that's going to invest hundreds of millions or more dollars in the processing of some mineral has to worry about commodity price cycles and profitability over the long term.

In China, that's much less true because the government's gonna cover the downside risk.

The government may own the company.

- Just to quickly add to that, I think part of it is government support, but on the other side, this is also because the market for China is just so large.

If you are the largest producer for wind turbine, for solar PV, then the companies will also think about how you can make sure that we have a stable supply, so to me, I think this is both side.

It's not only like the government is making it easier for the companies.

It's also a very, like, natural thing for the companies to do for their own profit and interest.

- And there's been concern, the labor with the Uyghurs.

I mean, what's that story?

- That story is that in the Chinese province of Xinjiang, there have been policies towards the Uyghurs that have been labeled genocide by the Biden administration.

Independent reports that say that forced labor is widespread and a significant portion of the polysilicon that goes into solar panels, an important part of solar panels, come from Xinjiang, and so now there is a lot of concern globally in whether solar panels that come out of China are being made with forced labor or slave labor.

There is new legislation the United States on this, and as of now, about 1,000 shipments of solar panels have been held up at U.S. customs as a result of a statute that prohibits the import of any product made with slave labor.

- That's interesting.

Yeah, do you... - The only thing I wanna add is that I think this really, like, is in the broader context of shifting away from the Chinese solar PV, so I think this just add to that pressure for the other countries to move away from using those PV manufactured in China.

- Right.

You mentioned resources.

China uses coal 'cause they have the resource.

Do they have great sun and wind?

Is it enough for the country to-- - Yeah.

- China has more than enough wind and solar resources, and one interesting area to watch is offshore wind 'cause there's a lot of offshore wind potential, and that technology is really coming down in price, and China's population is overwhelmingly along the east coast there, so if you could develop, you know, abundant offshore wind, it could make a big difference, and it's pretty close to the population centers.

- And China's been building big DC lines too, which is kind of a nice way to move electricity with a lot less line loss.

- Historically, the energy resources have been in the West, and the population is in the East, and so it has these long 1,000, 2,000-mile-long high-voltage transmission, DC transmission lines that are bigger than anything in the United States.

It's quite extraordinary technology.

- Right.

Let's take a break.

- Sounds good.

- And we'll come back.

My guests believe that China will peak CO2 emissions by 2030 by gradually decarbonizing its electricity system and shifting its economy from manufacturing towards service, though other global experts are less convinced.

In their most recent five-year plan, China set a net-zero carbon goal by 2060.

However, they continue to build coal power plants and will rely on them for decades.

Their coal consumption alone makes up 20% of global CO2 emissions.

We noted that China's coal reduction plans are more about controlling local air pollution.

China is the world leader in solar panel production and installation and in building nuclear reactors.

China also dominates the critical minerals industry for solar, wind, and batteries, albeit with controversy around forced labor in mines and factories.

We'll conclude our discussion on China's energy and climate policies in part 2.

♪ ♪ ♪ ♪ ♪ ♪ [Narrator] Funding for "Energy Switch" was provided in part by the University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

And by EarthX, an international nonprofit working towards a more sustainable future.

See more at earthx.org.