China Briefing, 14 October 2021: Instructions to tackle power shortages; COP15 opens; Carbon-neutrality standards

§ Snapshot

China’s leadership has given instructions to the energy sector in the wake of widespread power shortages. These orders came from two high-level meetings – both chaired by the Chinese premier Li Keqiang – and a notice released by the state macroeconomic planner. Yesterday, Carbon Brief published an article analysing these directives.

Meanwhile, on Tuesday, China’s president Xi Jinping gave a virtual keynote speech at COP15, a UN biodiversity conference taking place in the country. Among other things, President Xi repeated China’s pledge to release a series of sectoral roadmaps and a national policy system to help it fulfil its climate pledges. Carbon Brief’s Cropped newsletter focused on the summit this week.

Furthermore, China plans to “set up standards” on emissions peaking and carbon neutrality. According to a government outline, the country intends to “formulate greenhouse gas emission standards for key industries and products and improve the standard labelling system for low-carbon products,” reported state media. 

§ Key developments

China takes series of steps to tackle power shortages

WHAT: Last week, China’s premier Li chaired two high-level meetings, which issued orders to tackle widespread power shortages. The first meeting took place on Friday and was held by the State Council, China’s highest organ of state administration. It gave six instructions, including ensuring coal and electricity supplies this winter, increasing coal production capacity and revising the electricity pricing mechanism. One day later, the National Energy Committee (NEC) – which is regarded as the country’s “most senior body for coordinating energy policy” – called the second meeting. It directed the country to bolster its capabilities of ensuring energy security and increase its “energy self-sufficiency”, among other things. CCTV, the state broadcaster, reported on both meetings (here and here). Read Carbon Brief’s analysis to understand the significance of the instructions.

WHEN: On Tuesday, the National Development and Reform Commission (NDRC), the state macroeconomic planner, released a notice to follow up on the State Council’s orders. A key message is that coal-fired power prices – which are largely state-controlled – will be allowed to fluctuate by up to 20% from baseline levels, compared to the 10% upward limit and 15% downward limit previously. The move addresses one of the driving forces of the power shortages: coal power companies had been producing less electricity because they had to buy coal at high prices but sold their power at lower, largely state-determined prices. 

WHERE: At least 20 out of the country’s 30-plus provincial-level regions have experienced blackouts and electricity rationing over the space of a month or so, according to Jiemian News, a Shanghai-based outlet. In the three provinces in north-eastern China – namely Liaoning, Jilin and Heilongjiang – the electricity shortages have not only affected factories, but also people’s homes, sparking heated debate on Chinese social media platforms. 

HOW: Prof Yuan Jiahai from the North China Electric Power University in Beijing told Carbon Brief that “the fundamental cause of the large-scale power shortages in China currently…is the insufficient supply of coal”. He explained that in the 13th Five-Year Plan period (2016-20), China underwent a “structural reform” on the supply side of the coal industry to “dissolve excessive coal production capacity”. In comparison, on the demand side, China’s post-Covid economic rebound and soaring export orders drummed up the country’s energy consumption, putting further strain on China’s energy supply. Dr Yang Muyi, senior electricity policy analyst of Asia at Ember, an independent climate and energy thinktank, told Carbon Brief that there is a gap between the rate at which China has been managing its use of coal and developing “green replacement energy forms”, which contributed to electricity shortages. 

WHY IT MATTERS: The instructions were issued just days before the State Grid warned of even tougher situations in the coming months, reported the Paper. According to the Shanghai-based news website, Li Ming, deputy engineer-general of the State Grid, said at a press briefing yesterday that northern China could see more power shortages this winter due to rising power demand, shrinking hydropower output, and heating needs. Li projected the maximum electricity load to reach 1,000 gigawatts (GW), a “record-breaking” figure, the outlet said. Dr Shi Xunpeng from the Australia-China Relations Institute, University of Technology Sydney, told Carbon Brief that it is a good thing that the Chinese government is “adjusting its pace” for its energy transition with the recent orders. “Energy transition is a complex systematic project…and [a country] must make timely adjustments based on the changing situation,” he said. 

Xi reaffirms China’s climate ambition in speech at COP15

WHAT: China’s president Xi delivered a keynote speech via video link at COP15, a UN biodiversity conference, on Tuesday. Xi’s address focused on China’s efforts in nature conservation, environmental protection and tackling climate change. On the climate front, Xi announced that China would “release implementation plans for peaking carbon dioxide (CO2) emissions in key areas and sectors as well as a series of supporting measures”. He also stated that the country would “​​put in place a ‘1+N’ policy framework for carbon peak and carbon neutrality”. (The China Briefing from 5 August explained what “1+N” stands for.)

WHAT ELSE: In addition, Xi said that China would “continue to readjust its industrial structure and energy mix” and “vigorously develop renewable energy”. He promised to “make faster progress” in planning and developing “large” wind and solar power bases “in sandy areas, rocky areas and deserts”. He highlighted that “the first phase” of such renewable projects – with an installed capacity of approximately 100GW – had started construction “in a smooth fashion”. Xinhua, the state news agency, had the Chinese transcript of Xi’s speech. CGTN, the English arm of CCTV, published the English translation. 

WHERE: COP15 is taking place in Kunming, the capital of southern China’s Yunnan province. Due to the Covid-19 pandemic, the conference has been divided into two phases. The first part, which ends tomorrow, is being held online and runs from 11-15 October. The second part is scheduled to take place in person from 25 April to 8 May next year. 

KUNMING DECLARATION: A key result of the conference so far has been the Kunming Declaration, a non-binding pledge aimed to put biodiversity and habitat preservation at the heart of nations’ decision-making. More than 100 countries adopted the declaration at the end of COP15’s leaders summit on Wednesday. The accord calls for “urgent and integrated action” to reflect biodiversity considerations in all sectors of the global economy, according to Reuters. But some issues, such as financing the conservation efforts in poorer countries, “have been left to discuss later”, the newswire said. Read the full Kunming Declaration here.

WHY IT MATTERS: This phase of COP15 takes place just two weeks before COP26, a major UN climate summit scheduled to run from 31 October to 12 November in Glasgow. China’s state media hailed COP15 as “a landmark conference in the history of the Convention on Biological Diversity“. Thomson Reuters Foundation said that COP15 is “far less talked about” compared to COP26, but it is “also critically important” as the biodiversity conference is “tasked with agreeing a new deal to protect nature”. South China Morning Post reported that, with both COP15 and COP26 being held this year, “there are growing calls to link biodiversity with climate issues and find solutions to solve these crises”. Read more about COP15’s significance in yesterday’s Cropped newsletter.

§ Other news

CARBON STANDARDS: China’s central government has said that it intends to “set up and improve standards for carbon peak and carbon neutrality”. Xinhua said that the instruction was part of an outline to promote “standardised development” at the national level in the country’s pursuit of “high-quality development and modernisation”. The document was jointly issued by the Central Committee of the Communist Party of China and the State Council.

OUTLINE DETAILS: In particular, the outline orders the country to “accelerate improving the standards for carbon emission verification and accounting for different regions, industries, enterprises and products”. It directs the nation to “formulate greenhouse gas emission standards for key industries and products and improve the standard labelling system for low-carbon products”. Furthermore, it calls for standards for renewable energy, carbon sinks, as well as carbon capture, utilisation and storage. Read the full outline here. 

TRANSPORT: China’s president Xi delivered a virtual keynote address at the opening ceremony of the second United Nations Global Sustainable Transport Conference today, CCTV reported. Among other things, Xi announced that China would establish a China International Sustainable Transport Innovation and Knowledge Centre to “contribute to the development of global transport”, according to the official channel. The conference opened on Thursday in Beijing and will last until Saturday. 

COP26: The UK is to “pull out all the stops” to convince critical nations, including China, to step up their climate action at COP26 in Glasgow, the Daily Telegraph reported. In an “exclusive”, the newspaper said that the Queen is expected to attend the climate summit “for a diplomatic reception”. Prince Charles and Prince William are also due to “address the conference and hold talks with key world leaders”, it added. Xi has yet to confirm his attendance at COP26. Alok Sharma, president-designate for COP26, previously said that the “ball is in China’s court” to ensure COP26’s success.

COAL IMPORTS: China’s imports of coal and natural gas “increased sharply” last month amid “a spiralling energy crisis”, the Financial Times reported. The country imported 32.9m tonnes of coal, 76% more than the same period last year, the outlet said, citing “customs data”. As for natural gas, Chinese imports clocked in at 10.6m tonnes, rising by 23% year-on-year, it added. Reuters reported that “flooding in a key coal-producing province has worsened the supply outlook”. It said that electricity shortages and rationing are expected to “continue into early next year”, according to “analysts”. 

DOWNPOURS: Continuous and severe downpours have affected the production and supply of coal in Shanxi, China’s top coal-producing region, according to Caixin. The provincial government said last Friday that rain-triggered flooding had led 60 local coal mines to halt their operation since 2 October. Citing “multiple market observers”, Caixin reported that the suspension would unlikely cause an impact on the country’s current efforts to boost coal production. It said that the affected coal mines had “relatively small production capacities”, adding that coal production and road transport were “gradually resuming”. 

XIE ZHENHUA: China’s climate envoy Xie Zhenhua said that the country “is determined to” peak its emissions and achieve carbon neutrality “on time”. Speaking at an industry forum in Ordos, Inner Mongolia, via video link on Tuesday, Xie said that China “is accelerating its low-carbon transition and innovation” before stressing that the country “means what it says and yields concrete results by its action”. He reasserted that Beijing would publish a top-level framework, carbon-peaking action plans and supporting measures for key industries “soon, in a gradual way”. China News Service, a state-run newswire, reported the story. 

AVIATION: China’s first “carbon-neutral flight” took off from Shanghai for Beijing on Tuesday, China Youth Daily reported. The carrier, China Eastern Airlines, achieved “carbon neutrality” for the flight’s whole life cycle by offsetting its CO2 emissions through various means, such as taking part in tree-planting and clean-energy-generation programmes, the newspaper said. The flight took about an hour and a half. China Eastern Airlines – one of China’s “big three” state-run carriers – said it planned to operate around 780 “carbon-neutral flights” from now until 10 December on popular routes. The news came after the International Air Transport Association (IATA) – of which China Eastern is a member – had committed to achieving net-zero carbon emissions by 2050. Read last week’s China Briefing for more.

§ Extra reading

• How China stumbled into a giant energy shortage – Chen Xuewan, Zhao Xuan, Bai Yujie, Luo Guoping and Han Wei, Caixin
• Comment: China’s global climate change challenge to the West – Kevin P Gallagher, Aljazeera
• Comment: Why hastening Asia’s shift to green energy will not be easy – Nicki Tilney, South China Morning Post
• Tracking China’s steel addiction in one city – Robin Brant, BBC News

§ New science

Combined solar power and storage as cost-competitive and grid-compatible supply for China’s future carbon-neutral electricity system
Proceedings of the National Academy of Sciences

A new study has found that China could reach price parity between coal power and solar energy with storage by the year 2030. The authors used an integrated model to evaluate technological advances and cost reductions in photovoltaic power over 2020-60. They found that by 2060, solar power paired with grid-compatible energy storage could meet more than 40% of the country’s electricity needs at a price below 2.5 US cents/kWh. According to the authors, these results suggested that solar power could become a cheaper and “more grid-compatible option” than coal-fired electricity.

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