[Narrator] Next on "Energy Switch," we'll wrap up our discussion on China.

- Overall, like one country pledged to reach carbon neutrality by 2060.

United States says like net zero by 2050.

If both countries can achieve it, I think the big picture is pretty promising.

[Scott] Yeah.

- There are a lot of developing countries that are extremely vulnerable to climate change that are very unhappy with the amount of Chinese emissions, and so in order for China to maintain this leadership role in that among developing countries, it needs to take a proactive stance in addressing this.

I actually think that's more important probably than the relationship with the United States in this area.

[Narrator] Coming up, China's energy and climate policies, part two.

[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."

In part one of this episode, we talked about China's position as the world's leading energy producer and consumer, especially in the areas of coal and solar panels.

Now we'll talk about China's oil consumption.

Relatedly, it's electric vehicle production, batteries and the metals needed to make them, climate policy and priorities, and US-China relations.

Joining me again are 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.

David Sandalow founded and directs the US-China program at Columbia University Center on Global Energy Policy, and was formally an assistant secretary at the Department of Energy.

In this episode, part two of China's energy and climate policies.

Let's talk about oil a little bit.

China is not blessed with great oil.

The latest numbers I've seen, it consumes almost five times more oil than it produces.

No wonder it wants electric vehicles.

[Wei] Yeah.

[Scott] How does China go about securing that supply?

- I think China has three strategies.

Diplomatic engagement is the first.

Chinese government has made sure that diplomatic relations with oil exporting countries is been at the top of the priority list for a long time.

The second is investment in these countries, and you see infrastructure investment in a range of countries that have, by the way, not just oil resources but other types of natural resources.

And then a third on oil in particular is long-term purchase contracts.

So all of those combined I think to contribute to Chinese energy security in the oil area.

- Yeah, similar thoughts on that?

- Yeah, I would like to emphasize particularly the second one 'cause I do see the change in strategy, especially recently to go beyond just oil when developing those diplomatic relationships, especially with the Middle East countries.

So if you're looking at the deals these days, it's not only about the oil, it's also about the infrastructure investment, technology transfer, and I think that is a very strategic move of the government so that there will be a strong to broaden and deepening this relationship between the countries.

- China's done a brilliant job, Belt and Roads and other initiatives of giving infrastructure in return for critical minerals and other kinds of things we've already talked about.

How has that happened, and can it continue?

- You know, there was a time when there was huge investment along the Belt and Road Initiative, but I feel that in recent years China started to take a more strategic and more cautious view at all those investment.

Of course we need to see what will happen after Covid, but there was a lot of concerns about the credibility and how people can actually get the money back in the long run from those investments, and that's also why I think that the infrastructure resource might not be the way moving forward either.

- Right, Africa particularly.

You're starting to see some pushback?

- I think there has been a lot of pushback.

So like more recently if just talking about this infrastructure for resources, there has been a lot of pushback from the DRC, the Democratic Republic of Congo, to revisit the deal they signed with China a while back.

If you're thinking about mining, for example, there's a lot of concerns about local pollution, there is contamination of soil, contamination of water, and some of the processes will also emit air pollution, and there's also consideration about the labor and et cetera.

I think an important part of it is transparency because a lot of those deals, it wasn't too transparent who is going to get what, and now, as this partnership went on, people started to revisit it and see like, what exactly we're getting out of this.

- Right, let's think about that though.

So a lot of these things are for building panels or turbines, but mostly for batteries.

The battery, electric vehicles.

So what's China doing broadly in the electric vehicle space, Wei?

- China is the largest producer and also largest market for electric vehicles, and I think last year China added roughly six million electric cars and also plugin-- - Six million?

- Yeah, that's a huge number.

- That's a big number.

- And I think if you're looking at the big picture, the target for the government is that by 2030, roughly 40% of new car sales should be electric cars.

Right now we are at roughly like, a little bit less than 20%.

- Sure, now we know at least currently China gets a lot of electricity from coal.

So charging the EVs with coal fired power is not a necessarily perfect solution for climate only.

- Yeah.

- But certainly for Chinese EV market, and again with the oil limits, that makes good sense.

- The way I see it is that China is not doing one thing at a time, right?

China is not only like scaling up electric vehicle, they're also decarbonizing the power sector.

So to me this is pretty much a transient problem that as China do both, I think it's going to gradually go away in the long term.

[Scott] Sure, running those things in parallel.

- Exactly.

- You know, there've been a number of studies on this topic looking at the impact of coal fired power with electric vehicles, and the conclusion is that if you plug an electric vehicle directly into a coal plant, the pollution that the greenhouse gases that are emitted are roughly comparable to driving the same car on oil, and that's because an electric motor is so much more efficient than an internal combustion engine.

I guess the point underscores you're not doing any damage from a climate change standpoint by putting electric vehicles on the road even in a country with coal fired power.

But then as you transition to cleaner power, you've got a big win.

So in order to achieve something like a 2060 carbon neutrality goal, having electric vehicles is really important.

- Yeah, yeah, yeah, there's gosh, just so many things are gonna start to come to light as we scale.

But talk about that impact, that EV impact, when China, six million, I think we have seven or 18 or 19 total EVs in the world today.

So that's almost a third of them that they made.

- It's almost half, almost half of the electric vehicles in the world are in China today.

- Are in China?

- Yeah.

- So how does that impact the global market for EVs?

- China's in many ways the center of the global market for EVs today.

I mean, it absolutely- - Followed closely by the EU.

- Well, yes, but by the way, the growth in the past year has been amazing, but I mean, there's a much higher percentage of EVs in Norway, which has only been the leader on this.

- Right.

- But it's a tiny country obviously.

[Scott] The size of Houston.

- But China is driving a lot of the market here, and by the way, Chinese investment in public charging infrastructure far surpasses anywhere else.

So, and it's very interesting to see the different types of vehicles that have gone electric in China.

I think that that's happening in U.S. and Europe as well, but China's probably a step ahead in that sort.

- Right, right, so it kind of brings us back to this challenge of minerals and rare earth elements.

So let's just start with what are they?

You know, what are critical minerals?

What are rare earth elements and why are they so important?

- Yeah, so as we transition from fossil fuel to low carbon technologies, we will also transition from a fuel heavy economy to a mineral heavy economy.

Just because those low carbon technologies use more minerals.

If you're thinking about power transmission grid, we need copper.

If you're thinking about, for example, batteries in EV, we need like nickel, lithium, cobalt.

If you're thinking about for example, wind turbines, we need rare earth elements.

So the importance of mineral will only go up.

It is true that if there are only a handful of countries like China, DRC for example, are the major suppliers, then we're going to see much more short term price fluctuations and supply shortages.

But I do think that if you looking at the big picture, I'm not that worried about this like whole shortage thing for two main reasons.

One is that these minerals are not really rare, even though rare earth element, this name is a little bit misleading.

If you're really looking around the world, we do have enough reserves and it's also more geographically diverse comparing with fossil fuel.

The key thing here is really about the timing 'cause we need like sometime decades to really get that reserve into the production mode.

So can we get those resources onboard quickly enough so that we don't worry about this supply shortage created by China and DRC?

The second reason is because if you're thinking about fossil fuel, like we are constantly facing this risk of the fossil fuel price fluctuations, and this is because we constantly need this fuel input, right?

As long as you have a gasoline based car, as long as you have a gas furnace, then those price fluctuations, supply shortages will impact us and we're going to suffer.

It's a different story for critical minerals 'cause we need them only when we build them, right?

We need critical minerals when we build the PV, build the solar panel or when we manufacture the EV.

But once they are there, then those price fluctuations for critical minerals will no longer be relevant.

So for that reason, I feel that the geopolitics for critical minerals will be very different comparing fossil fuel, and even for countries like China, I don't think they will ever gain that geopolitical power as the same way some of the other oil countries have been having.

[Scott] That's interesting.

- I think Wei's point is really critical.

The last point she just made.

And the transition from a fossil fuel based economy to a clean energy economy is that energy security benefit.

In part because we're moving from reliance on a fuel to essentially reliance on a capital asset.

And yes, if there was a problem with the flow of minerals to build more of those capital assets, there would be some disruptions, but economies wouldn't shut down as quickly or anywhere near as quickly as they would if the oil stops flowing and the natural gas stops flowing.

- If China controls 80% of the processing of that stuff, how is it that that's not a security issue?

- It a hundred percent is a security issue, but it's not the same type of security issue as oil imports being cut off.

If Bolivia stopped sending us lithium or if China stopped sending us europium, we would have trouble making batteries for a while, or, you know, other products but the lights would still go on and we could still drive the cars, and that's a big difference.

- Yeah, just to be clear, I think I don't wanna understate those short term challenges because they're real, and I think in the next five years or so, there is unlikely we're going to shift away from like, China or DRC for those supplies.

Exactly because, you know, discovery of mine and do making sure that we get the production takes a lot of time.

But I think the point I was trying to make is that to me the shock of the mineral prices will be more like one time because, you know, it is those like manufacturing that is going to happen at that time.

Those will be the sectors that are going to be affected.

But it won't affect all the PV panels, or the wind turbines, or the EVs we have already been having there.

So it's going to be a smaller subset of the industry that are going to be affected comparing with oil.

- But they wear out, and we have to put the turbines, and the panels, and the batteries in landfill and make 'em again.

- I think this is why like, recycle is going to be an important part of this issue, right?

Because I think it's about, you know, after 25 years when we reach the end time for solar panel and wind turbines, what should we do?

If that time- [Scott] Yeah, it's happening.

- Yeah, exactly.

If at that time we need to like, just dump them and rebuild everything, then we need to worry about the contamination associated with the waste, and at the same time, we face this like supply issue again.

- The Chinese government is, from what I understand, starting to pay attention to this, and there is some effort right now to plan for recycling in the years ahead.

I think it's a reasonably early stage like as it is in many other countries.

But it's something that's starting to get attention.

- Is it just too expensive?

- Yeah, absolutely.

[Scott] Just cheaper to make 'em new?

- Yeah, and in general, recycling should start at the design stage.

You know, it should start with end use products in mind, and really most solar panels today have not been designed with easy retrieval of some of the materials.

- Right.

- Yeah.

It's not going to be a natural market from the very beginning for the recycling stage, and this is where like, there's an important role for the government to play either through regulations.

Whereas through subsidy so that there will be a niche market being created for the recycling technologies, and hopefully later on they can just run on their own.

- So let's talk about China and climate.

Is China serious, you know, about climate?

- I think they are.

I think in China, so I can say that when in 2020 when President Xi Jinping announced to go to reach carbon neutrality in 2060, I was shocked 'cause I felt that it was pretty much like my wildest dream came true because I think that goal is very ambitious and very difficult to achieve.

And in China, when you have the president or the central government say something, they really mean it.

They're very serious about those commitment they make.

- And how do they do it?

- Yeah, I agree by the way.

I think the Chinese government is serious about this.

It doesn't mean that it's always the highest priority.

Emphatically it's not always the highest priority, but it is a genuine goal that there's a variety of policies that help promote.

- Yeah, it's interesting.

I mean, a lot of promises were made in Paris, and not many are on track for it, but at least the promises were made.

But you said, David, and I think actions would say so that energy security over climate security, most global leaders when pressed go toward the energy security.

[David] Yeah.

[Scott] Are we ever not in crisis?

- We're in a climate crisis,.

- Are we ever not in- - We're seeing that in pretty dramatic ways just in the past year, by the way, including in China.

And one, it's quite amazing.

In the summer of 2022, China had experienced a heat wave of extraordinary proportions.

In fact, several meteorologists said it was not only the greatest heat wave in Chinese history, it was the greatest heat wave in recorded human history meaning in the last 150 years.

And it kind of underscores the vulnerability of China to climate change.

[Scott] Right, particularly the coastal.

- Yeah, exactly.

So, you know, the east coast of China is one of the most densely populated places on the planet, and that about 150 million people live in places that are extremely vulnerable to sea level rise in China.

So storm surges and just slower level sea level rise is gonna be a real challenge for China in the decades ahead.

- Just this week, a friend of mine from Southeast Asia came up to me and said, "If the U.S. and China can't figure out how to get along, the rest of the world is stuffed."

Do you agree?

And how important is that US-China relationship?

- Tensions between the U.S. and the Chinese governments is quite high.

Makes it very difficult to cooperate on climate change now.

In the depths of the Cold War, the United States and the Soviet Union cooperated on a number of issues including public health, which is an important, you know, global issue at the time.

I absolutely think it's possible for the U.S. and China to do it, and I really hope we can.

In the past when the U.S. and China have cooperated on climate change, it sent a signal to the world that led to the I think it was an important foundation for the Paris Agreement.

And I think there are a number of ways that we could cooperate with each other, whether we're gonna do it, let's just see.

Let's be hopeful.

- Yeah, yeah.

- So I agree with the big picture, David, you painted just now, but just to add a little bit optimism here, we are talking about the global top and second carbon emitter.

So I think a lot of the tension we have right now is really around the industrial policy to some extent.

Like critical minerals, supplies, trade, et cetera.

But at the same time, I do think overall, like one country pledge to reach carbon neutrality by 2060, United States says like net zero by 2050.

If both countries can achieve it, I think the big picture is pretty promising.

- Yeah, well let's kinda let's have some wrap up thoughts here, and we've talked about these things in lots of different ways, but, you know, Wei start with you.

Does China feel its responsibility to be a leader in both energy and climate?

How does that look in the next several decades?

- Yeah, I do see strong evidence that China want to take their leadership in climate space, and I also think this is also broadly consistent with China want to achieve in its global diplomacy in general, like increasing the China's importance in the global economy and politics.

But I think the real question is like, where are the areas that this country need to take the leadership in?

I think for me it is really great that the country has been taking the lead in deploying clean technologies like wind, solar, electric vehicles, but I do think that it is also critical important for China to look at the advanced technologies, those technology that are not economically viable today but that's going to be so crucial for deep decarbonization.

Things like carbon capture, and storage, things like hydrogen or direct air capture.

I think for those kind of-- - Nuclear.

- And nuclear too, so I do think historically China has been very good at building things like making things cheap, but there are technology that is not only about diffusion, it's also about like making the technology better so it's going to benefit the world.

So I would say those like investing in those like pilot program and early R&D like, research and development into those critical technologies, I really hope that will be the area where China will be willing to take in the lead.

The other thing I think China has some advantage over the other countries, for example United States, is policy consistency, right?

So if you're thinking about this country, we worry about what will happen two years from now.

Like, are we going to still be serious about getting to net zero by 2050?

But in China, I'm fairly confident that this carbon neutrality goal by 2060 will be the overarching theme for a lot of like, energy and climate efforts in the decades to come.

And I think that policy consistency is critical not only to make sure that the investors and the companies are going to be engaged, but also in terms of like how other countries will see China's leadership and go along with China to take decarbonization in a more serious way.

- Same question, David.

- I think China's the reluctant leader on climate change.

I think from conversations I've had with government officials and others in China, they often say, "Look, you are the ones who put all this heat trapping gas in the atmosphere.

You know, although we led last year, these gases stay in the atmosphere for a century or more and almost twice as much of the gases in the atmosphere come from you than from us."

So we shouldn't have to lead on this issue, but because we are emitting so much today and because we are such an important, we know we have to take some leadership role.

When President Trump withdrew from the Paris Agreement, President Xi Jinping then went on the world stage and said, "The United States needs to be a responsible stakeholder essentially in the global economy, and position China as a leader in that context."

But my perception was it was always quite reluctant.

I think one of the dynamics here, interestingly, is Chinese government sees itself as a leader among developing countries, and it's historically been the head of the G77 China group in multilateral negotiations.

There are a lot of developing countries that are extremely vulnerable to climate change, that are very unhappy with the amount of Chinese emissions.

And so in order for China to maintain its leadership role among developing countries, it needs to take a proactive stance in addressing this.

I think it's one factor for the Chinese government.

I actually think that's more important probably than the relationship with the United States in this area.

- That's an excellent point.

Well, it's a critical topic, you know, and it involves so many different things.

We talked all energy and climate, but it impacts the world in food and so many other areas, healthcare, and medicine.

So I really appreciate both of you and your wisdom, and your thought, and your experiences.

Any final thoughts?

Something we didn't touch on that you'd like to share?

- By coincidence, the United States and China have almost the same land area.

It's pretty interesting.

It varies by a couple of percent.

There are four times as many people in China, and almost all those people live in the eastern third of the country.

So the eastern third of China is, you know, roughly speaking 12 times more densely populated than, you know, what we're used to in the United States.

And that just affects a lot of things when it comes to the issues we've been talking about.

It affects the way they use energy in China and it affects their vulnerability to climate change in terms of sea level rise and a number of other issues, but I think it's a very interesting comparison.

- It is, and in fact in India, interesting India is about a third of the land area of the U.S. - Ah.

- So it is 12X.

Full stop.

[David] Wow, amazing - It's incredible.

And then when you look at, I have a map that I found somewhere that shows these spikes of population density and China and India, these big spikes in parts of Africa and the U.S. is these little bumps.

Even the east coast, bump, New York City is very small.

It really brings home the point of density of people and some of the challenges of getting, meeting those needs.

- Yeah, so I feel that by now you probably have felt that I'm optimistic on many issues, and I feel that my optimism has a lot to do with my experience growing up in China as well 'cause I grew up in southern China, a city called Changsha, and I think about 10 to 20 years ago, we got our first like international airport, and then about 10 years ago we got our first train station for high speed trains.

And then about five years ago, we got our first metro line running the city.

Now we have five, six of them.

So I think it's just because the scale of transformation that China has experienced in the past decades make me feel that a lot can happen in the next 40 years, and that's the time horizon we have for the carbon neutrality.

I'm not saying it's easy.

It really requires dedicated efforts to one particular direction, which is deep decarbonization.

- Right, it's incredible and I love that optimism.

I really appreciate the way you framed that and the way your outlook.

Scott Tinker, this is the "Energy Switch."

Thank you, guys.

- Thank you very much.

- That was just terrific.

- Thank you so much.

- Thank you very much.

[Wei] That was fun.

[Scott] We learned that China consumes at least four times more oil than it produces.

So it has invested in countries that produce oil, often trading infrastructure for oil and other natural resources such as critical minerals.

China is the world's leading producer of electric vehicles, cars, scooters, and buses, and has nearly half of the world's electric fleet.

Coal fired electricity drives those EVs, meaning they are not emission-free.

But as China's grid eventually decarbonizes, their EVs will become lower carbon too.

Their batteries require lithium and cobalt.

Wind turbines and power lines need rare earth elements and copper.

There may be supply issues with these minerals, but our guests believe with less price volatility than the oil and gas they replace.

They also feel that China is serious about its climate goals.

Although Chairman Xi has stated that his priority remains energy security.

Difficult US-China relations could hinder cooperation on energy and climate, but our guests are hopeful we can work together for mutual benefit.

♪ ♪ ♪ ♪ ♪ ♪ [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.