Giving importance to sustainability is essential to meet investor pressure, consumer demand, regulatory requirements, talent acquisition and ensure increased productivity, explains Talal Rafi, Deloitte Climate and Sustainability Consultant.
Gonzalo Muñoz and Nigel Topping: Time for China’s businesses, cities and provinces to join the race to zero emissions
China ignited new fire in the race against climate change last year, with a bold pledge to set the world’s largest emitting country on course for net zero emissions by 2060.
Now China’s businesses, investors, cities and provinces have the opportunity to step out and turn those words into action, by pushing the transformation that has already started to the pace and scale needed to avert the worst impacts of the climate crisis.
The 14th Five-Year Plan sets a baseline for beginning emissions reductions between now and 2025. But now that the private sector and local governments know where China is headed, they can jump ahead and drive bigger immediate breakthroughs needed to get there.
China has a strong track record of fostering innovation and capturing global market shares, including in solar panels and batteries. It can keep doing that, if it keeps pace with changes underway.
Chinese vehicle manufacturers, for example, will be aware that major automakers like General Motors, Volvo and Jaguar are already heading for all-electric vehicles by 2035 or sooner. Chinese companies seeking international growth and finance, instead, should note that many of the world’s largest asset owners, asset managers and banks were quick to join our UN Race to Zero alliance of businesses, investors and local governments. This means they’re committed to reaching net-zero emissions by 2050, and setting short-term targets that drive innovation over the next five to 10 years.
In forging the path to zero emissions, China’s private sector and local governments will give Beijing the confidence to create an even more enabling policy environment. And the faster Beijing moves, the farther these non-state actors can innovate and scale up transformative solutions, fuelling a spiral of ever-growing ambition.
For the national government, meanwhile, the Ministerial on Climate Action summit it is hosting on 23 March, in partnership with Canada and the European Union, sets an international stage from which to ratchet up near-term measures to reduce emissions and improve resilience alongside other major economies. This will build momentum towards the US-hosted Climate Leaders’ Summit a month later and allow China to further increase its commitment under the Paris Agreement, which requires all countries to raise their commitments ahead of November’s United Nations COP26 climate summit.
The UN Convention on Biodiversity COP15 summit China hosts in May could then steer the world towards a credible framework for reversing biodiversity loss and regenerating nature, which is crucial to mitigating climate change and adapting to the impacts we’re already experiencing.
China is the world’s largest emitter, with 26 percent of greenhouse gases, and the largest coal investor, with nearly two-thirds of newly commissioned coal power capacity in 2019. But it’s also the world’s largest investor in renewable energy capacity, with $83 billion in 2019 (compared to around $55 billion each from the US and EU), and in electric buses, with 99 percent of the global share.
If China were to set net-zero requirements for its imports as well as exports of goods and services, its impact would ricochet beyond the country – fuelling the exponential growth of solutions such as renewables, batteries, green hydrogen and electric transport.
Through its Belt and Road Initiative and close relationships with developing countries, China could in particular promote clean, healthy, resilient infrastructure in favour of coal-fired power generation. This is crucial to stemming climate change and securing a more liveable future. As UN Secretary-General António Guterres has made clear, the world must stop building new coal plants now, stop financing coal projects and begin retiring existing plants so they are phased out globally by 2040.
The cities of Wuhan, Qingdao, Nanjing, Fuzhou, Dalian and Chengdu, and companies including JD Logistics, K-Boxing and LONGi Green Energy were early joiners in the Race to Zero in 2020, whose members now cover 12 percent of global GDP.
If China were to set net-zero requirements for its imports as well as exports of goods and services, its impact would ricochet beyond the country
Other private sector commitments to net zero emissions, announced following the national 2060 goal, are promising but still vague about plans for achieving them.
The country’s largest steelmaker, China Baowu Steel, aims to peak emissions in 2023, cut them by 30 percent by 2025 and reach net zero by 2050. Technology giant Tencent has indicated it will also decarbonize by 2050, while Ant Group, a key affiliate of Alibaba Group, says it will aim for 2030. State-run oil and gas companies, meanwhile, say they will count on methane gas and carbon offsets from forests to fulfill their net zero pledges.
A powerful next step for these Chinese companies would be to join the Race to Zero, which can help them access global expertise to develop credible and effective net zero plans.
This kind of leadership is sorely needed, because it will incite others to follow and set the world on track to meeting the Paris Agreement’s goal of limiting global warming to 1.5 degrees Celsius. New pledges submitted so far would only reduce emissions by 1 percent by 2030, from 2010 levels, according to UN Climate Change. The science, however, says we need to halve emissions between 2020 and 2030, while regenerating nature, for a best chance of staying within 1.5 degrees.
We know that China can drive fast transformation for the better. The country’s pursuit of clean air, for the health of its people, has resulted in a nearly 40 percent decline in particulate air pollution since 2013 – accounting for three-quarters of global reductions, according to the University of Chicago’s Energy Policy Institute.
Similarly, Chinese businesses, investors, cities and provinces have the power to turbo-charge the global race to zero emissions and greater resilience by mid-century by putting action behind the national government’s words. Now is their time to jump in – because they are already in the race to zero, whether they are ready or not.
This article was originally published by Caijing, a Chinese business magazine.
This week’s Bonn Climate Conference provided an opportunity to take stock of real economy action and workshop how non-State actors can help address loss and damage.
Deloitte Climate and Sustainability Consultant, Talal Rafi, explains why with increasing support for environmental sustainability, green investments and climate innovation, key sectors can decarbonize and move towards a net zero.