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COP 27: China Faces Climate Challenges



November 17, 2022 - China and the US have decided to resume climate talks, seen as crucial to managing climate change, after they collapsed following tensions over Taiwan last August. But China's climate challenges are growing, with the US and global leaders increasing pressure for it to cough up its fair share of climate reparation, on top of already high costs associated with meeting its own climate goals.

UN chief Antonio Guterres has called for a "climate solidarity pact" between developed and emerging economies at the Cop 27 UN climate conference in Sharm el-Sheikh, Egypt over 6-18 November, with increasing calls for China to play its part. The inclusion of loss and damage in this year's summit was a milestone. The concept advocates rich countries, which have failed to deliver on $100bn promised annually for climate mitigation and adaptation, pay for the effects of climate change that cannot be avoided by mitigation, adaption or other measures.

But developing countries are at odds on the issue, with differing views from the world's two biggest emitters China and the US threatening to derail their broader climate goals.

It is unclear if China will pay into any loss and damage fund given its struggling economy, even though the US thinks it should. But the US is softening its resistance to pay developing countries.

But China may struggle to meet its own climate goals. US climate envoy John Kerry has accused China of not doing enough to curb carbon dioxide (CO2) and other greenhouse gas emissions, even though it has deployed renewables and electric vehicles at a fast pace.

To reach net zero emissions by 2060, China needs a staggering $14 trillion-17 trillion in additional investments for green infrastructure and technology in the power and transport sectors alone, with $2.1 trillion needed in the next decade to meet its nationally determined contribution (NDC) targets, according to a report by the World Bank last month.

"Given the immense price tag, public investments won't be sufficient to meet these needs, so China needs policy and regulatory reforms to spur the private sector and fully tap the potential for investment and innovation," it said. China's renewable targets will also need to be 1,700GW by 2030 compared with 1,200GW in its current NDC, it said.

Despite emitting more than a third of global CO2 emissions last year, China is designated as a developing country by the World Trade Organisation.

China emits over 10bn t/yr of CO2 but only has carbon capture, utilisation and storage (CCUS) to cut just 3mn t/yr of CO2, according to figures from the ministry of ecology and environment. Its CO2 emissions reached 11.9bn t last year, according to the IEA. To meet its climate pledges China needs 20mn-408mn t of CCUS capacity by 2030, 600mn t-1.45bn t by 2050 and 1bn-1.82bn t by 2060, according to a report co-authored by the ministry last year. The IEA estimates global CCUS costs to be anywhere from $15/t to as much as 120/t, depending on the CO2 source.

Carbon Commitment

But despite this China's climate envoy Xie Zhenhua has reiterated the country's commitment to carbon neutrality, stressing this target is before rather than in 2060. China has announced a new methane plan to tackle methane leaks in oil and gas, agriculture and waste, although it omitted mentioning the coal mining sector where emissions of an estimated 24mn t/yr is the single largest source of methane emissions from fossil fuels globally.

The US is part of the Global Methane Pledge, China is not. Washington has pledged new funding but China has not, despite growing concerns on rising methane emissions.

As China and the US resume climate talks, they may move forward together on future pledges to curb methane emissions. But for now the two countries are taking separate steps to tackling climate change, which could potentially pit themselves against each other on who should be financially responsible for climate loss and damage.