China Briefing 13 July 2023: Emissions cap; Heat and floods; New climate talks; Gallium and germanium restrictions; Shipping carbon levy

§ Snapshot 

CLIMATE TALKS: US climate envoy John Kerry will visit China next week. This comes after senior officials from the US, EU and International Energy Agency discussed climate change in Beijing. 

ENERGY AND CLIMATE REFORM: The Chinese central government issued policies on 11 July covering a shift from “dual control” of energy towards “dual control” of carbon – limiting the amount and intensity of emissions – as well as reform of electricity, oil and gas markets.

HEATWAVE AND FLOODS: Northern China continued to face intense heat while floods in the south disrupted more than 130,000 people’s lives. Authorities warned of “ever more frequent extreme heat events…and rising climate risks”.

GALLIUM AND GERMANIUM: Chinese companies now need “special permissions” from the government to export gallium and germanium (used in solar panels), in the latest sign of ongoing geopolitical tensions. 

SPOTLIGHT: Carbon Brief looks at China’s role at the International Maritime Organization (IMO) talks where nations agreed to cut shipping emissions to net-zero “by or around” 2050.

NEW SCIENCE: Peer-reviewed studies examine China’s food system efficiency and the potential 400m tonnes of carbon dioxide impact of “driver aggressiveness” in China. 

§ Key Developments 

China hosts talks with US, EU and IEA 

US-CHINA CLIMATE TALKS: The Chinese Ministry of Ecology and Environment released a statement confirming that US climate envoy Kerry will visit China on 16-19 July. Kerry’s visit is expected to restart “a year-long freeze” in climate negotiations, said the New York Times. Last week, US treasury secretary Janet Yellen visited Beijing and “urge[d] China to boost funding to tackle [the] climate crisis”, reported the Guardian. 

EU’S COAL CONCERNS: EU climate chief Frans Timmermans has also been in China recently. He told Chinese university students that he was “convinced” China “is willing to go in the right direction [of tackling climate change]”, but expressed concern over the expansion of China’s coal-fired plants, according to Agence-France Presse. State-run newspaper China Daily, however, quoted Timmermans saying he had a “very positive” visit to China. 

CBAM CLARIFICATION: Timmermans also discussed the EU’s “carbon border adjustment mechanism” (CBAM), reported financial media Caixin, adding the two sides agreed to have further talks later this year. (See Carbon Brief’s China Briefing on 15 June). Chinese outlet Yicai said Timmermans defended CBAM, saying its sole purpose is to prevent “carbon leakage” and that its potential impact on EU-China trade shouldn’t be “overestimated”. Xu Huaqing, a senior Chinese climate official, was quoted by the Global Times, a government-supporting newspaper, saying CBAM was “unscientific, irrational and unfair”. Zhou Chengjun, an official at the People’s Bank of China, was quoted by the South China Morning Post saying CBAM was a “new tariff barrier” that “goes against basic economic principles”.

COOPERATION WITH IEA: Similar to Timmermans’ concerns, Fatih Birol, executive director of the International Energy Agency (IEA), told Chinese policymakers to reconsider investing in large-scale coal-fired power stations during his trip in Beijing, according to Chinese financial outlet Caixin. According to an IEA newsletter, Chinese energy minister Zhang Jianhua and Birol signed a new memorandum of understanding to “further strengthen” cooperation on climate. Birol also met with his “good friend”, China’s climate envoy Xie Zhenhua, tweeting that they discussed prospects for COP28 and “my expectation [that China’s] emissions will peak well before 2030”.

New rounds of energy and climate reform announced 

NEW POLICY: The Chinese central government passed a series of new policies for energy reform on 11 July, according to state news agency Xinhua. At a meeting about the reforms, China’s president Xi Jinping “called for greater efforts to curb carbon dioxide emissions”, Bloomberg reported, citing a Xinhua transcript. Bloomberg called this “a signal the biggest polluter won’t backslide on climate targets”. At the meeting, Xi said “China’s ecological development has entered a critical period in which carbon reduction is the key strategic direction,” reported Caixin, also citing Xinhua. A day later, the Chinese state broadcaster CCTV’s prime time news programme, Xinwenlianbo, featured China’s achievements on “new energy”, saying “solar and other clean energy” supplied 30% of electricity this summer. 

CARBON ‘DUAL CONTROL’: Energy expert Liu Manping told Dianlianxinmei, an online publication of the China Electricity Council, that three documents among the reforms are directly related to China’s “dual carbon” goals: reforming the electricity system; reforming the gas and oil market; as well as shifting from “dual control” of energy to “dual control” of carbon. State broadcaster CGTN explained that the “dual control” shift is “from dual control over the amount and intensity of energy consumption to dual control over the amount and intensity of carbon emissions, encouraging and promoting the accelerated development of renewable energy”. (See Carbon Brief’s explanation on “dual control” for energy.) The full documents have not been released yet, but energy consultant Liu Jianfei wrote in another CGTN piece that the new control will require more accurate data measuring emissions, rather than energy, and will promote carbon reduction.

EXPERT OPINIONS: Yan Qin, lead analyst at data provider Refinitv, told Carbon Brief that the new policies gave a “detailed roadmap” for the long-planned energy transition. The reform on “the power sector is expected to be as monumental as the Document No 9 in 2015”, she said, adding “but still we need to see the full text”. (Document No 9 marked a key moment in China’s efforts towards electricity market reform and liberalisation.) The new policies made it clear that the construction of a new power system should focus on both energy supply and consumption, gradually reducing the proportion of “traditional energy” and promoting “safe and green” energies, energy expert Yin Ming wrote for energy media Beijixing. 

China suffers from record heat and floods                                             

NORTHERN HEAT: Last week, the record for the world’s hottest day was broken multiple times. The Global Times called it “the hottest week on Earth in at least 100,000 years”. Chinese weather forecasters issued a string of heat warnings, reported Reuters. The China Meteorological Administration published a “blue book” – a standard reference document – “warning of ever more frequent extreme heat events across the country and rising climate risks”, said the Global Times. After 10 consecutive days of temperatures above 35C, the capital Beijing issued a “red alert” and ordered employers to stop work outdoors, with temperatures due to breach 40C, the Independent reported. CNN said Beijing may face one of its hottest summers on record.

SOUTHERN FLOODS: While northern China was battling “torrid heat”, southern China  was “battered” by “torrential rains”, said Radio Free Asia. China Daily reported the “rain-triggered floods” have disrupted the lives of more than 130,000 people. At least 15 individuals were killed and thousands were evacuated in the city of Chongqing, along the Yangtze river, the South China Morning Post wrote, adding that Xi Jinping warned all seven of China’s major rivers were at risk of flooding. Deutsche Welle estimated that floods had caused 227m yuan ($31.5m) worth of economic losses in Chongqing. Economic Daily reported that the Chinese Ministry of Water Resources initiated a “level IV emergency response” for flood control.

DIFFICULT CHALLENGES: Reuters said “officials have warned repeatedly that China is especially vulnerable to the impacts of climate change due to its large population and unevenly distributed water supplies”. Although Xi Jinping urged actions to protect lives from flooding, the problems, such as flooding and extreme weather, that China is facing “are likely to intensify”, said the Guardian. 

China curbs exports of gallium and germanium

GALLIUM AND GERMANIUM: China’s Ministry of Commerce announced that, from next month, gallium and germanium exports need “special [government] permissions” to protect the “national interest”. The controls were reportedly China’s response to the latest US restrictions on semiconductors, according to BBC Chinese. Currently, more than 80% of gallium and 60% of germanium are produced in China, according to the Conversation. The US imported $3m of gallium metal and $200m of gallium arsenide (GaAs) wafers in 2022, while the EU reported that, on average, 27% of its gallium was sourced from China between 2012 and 2016. 

GREEN SQUEEZE: Gallium and germanium are “key” components for products such as solar panels and electric vehicles, said CNBC. Foreign Policy reported that, although both elements can be substituted by silicon, they outperform silicon in certain technologies. An IEA report in 2021 said gallium arsenide is becoming more desired in the manufacturing of solar cells, with demand for the metal potentially rising 10-fold if more widely adopted. Another IEA report, on critical minerals and released on 11 July, said the Chinese export curbs “highlighted the significance of a lesser-known group of critical minerals, often characterised by small volumes, but high levels of supply concentration”.

PRESSURE OR STIMULATION? Wei Jianguo, China’s former vice-minister of commerce, told China Daily that the restrictions could escalate if the US increases its technology control on Beijing. Citing an industry expert, Reuters reported that the inventory of gallium outside of China can only last for six months at best. Global gallium prices rose 27% last week in response to the news, according to Bloomberg. However, Gavin Harper, research fellow at Birmingham University, wrote in the Conversation that China’s move might push Western manufacturers to diversify their global supply chain. The US Commerce Department expressed a similar view in an email to the South China Morning Post.  

OTHER SOURCES: The Centre for Strategy and International Studies said Japan and Germany both have gallium production capacity. South Korea, Russia and Ukraine also have small shares in global gallium production capacity, according to the US Geological Survey. Meanwhile, the US and Canada, Germany and Russia can be alternative germanium suppliers, according to the Conversation and Reuters.  

§ Spotlight 

China’s approach to shipping emissions

Last week, the International Maritime Organization (IMO) set new climate goals for shipping, including a target of net-zero “by or around” 2050. However, it did not agree on fuel standards or a shipping carbon levy, to help drive and pay for the transition.

China, seen as a key opponent of a levy, is a major player in the sector. Carbon Brief looks at China’s role at the talks and its efforts to tackle shipping emissions.

What was China’s role at the IMO talks?

China opposed “unrealistic” proposals for shipping to reach net-zero emissions by 2050 “at the latest”, according to a diplomatic memo seen by Carbon Brief.

It also opposed interim emissions targets for 2030 and 2040, shipping fuel carbon standards based on the full lifecycle from “well-to-wake”, and a shipping carbon levy.

Instead, it proposed the use of “flexible expressions” to frame the IMO’s ambition, such as net-zero emissions “around mid-century”, which it said was “more practical”.

And, instead of a carbon levy, it proposed an “International Maritime Sustainable Fuels and Fund” (IMSF&F), noted Chinese shipping news outlet Eworldship.

According to Chinese consultancy Xinde Haishi, China’s proposal would control emissions, but minimise administrative burdens and impacts on developing countries.

What was behind China’s position?

As the talks opened in London, foreign ministry spokesperson Wang Wenbin responded to questions on the memo at his regular press conference, saying China “highly values and actively supports IMO’s efforts to address climate change”. Wang said:

“[The] IMO should follow the principle of common but differentiated responsibilities, take into consideration different national conditions, accommodate the legitimate concerns of developing countries, and promote the formulation of a fair and practical greenhouse gas (GHG) emission reduction strategy and relevant measures for the international shipping industry.”

China’s memo, previously reported by the Financial Times and Reuters, warned that “overly ambitious” targets would harm global trade and “basic livelihood[s]”:

“An overly ambitious emission reduction target will seriously impede the sustainable development of international shipping, significantly increase the cost of the supply chain, and will adversely impede the recovery of the global economy and cause detrimental impacts to the basic livelihood of the people.”

The Global Times, a government-supporting newspaper in China, also called attention to a phrase in the IMO’s statement that “we have to pay more attention to support developing countries”.

Yasiru Ranaraja, co-founder and director of Belt & Road Initiative Sri Lanka (BRISL), tells Carbon Brief that many global-south nations face “delicate challenges” in balancing their commitment to fighting climate change with other national priorities, such as poverty alleviation, energy security and industrial growth.

Faig Abbasov, director for shipping at NGO Transport & Environment, tells Carbon Brief that wider geopolitical tensions soured the IMO talks. “Most of the conversations in the room were about the geopolitical tensions outside the room.”

Participants at the IMO meeting, speaking to Carbon Brief on condition of anonymity, say another factor was the contrast between a “by 2050” net-zero target for shipping – a so-called “hard-to-abate” sector – and China’s own goal for carbon neutrality by 2060.

Why was China worried about shipping costs?

One of China’s biggest concerns, according to the memo, is that emissions reduction measures would increase shipping costs. It said measures based on “aggressive targets” would “lead to a significant increase in maritime transport costs”.

Moreover, it warned that using the proceeds from a shipping levy to fund wider climate action would “make developing countries bear the climate change financing responsibility which should be borne by developed countries”.

Abbasov tells Carbon Brief that, while China’s position at the IMO talks mirrors its stance at previous climate negotiations, he found it to be “more aggressive” in building a coalition of opposition to the shipping levy, including Saudi Arabia, India and others.

(A comment for the Sydney Morning Herald by environment and climate editor Nick O’Malley says Australia and Brazil also opposed the levy to “protect seaborne trade from higher costs”.)

Is China doing anything to decarbonise shipping?

China is home to the world’s largest shipping fleet, biggest and most numerous ports and the world’s largest shipbuilding sector. As such, the IMO targets are a challenge for China, but also an opportunity.

The shipping industry is responsible for around 3% of global greenhouse gas emissions. National data is sparse, but one study puts China’s contribution at 8% of the global total.

(The Organisation for Economic Cooperation and Development is working on national figures, Robbie Andrew of Norwegian climate institute Cicero tells Carbon Brief.)

At the national level, China has several policies, such as the 14th Five-Year Plan on Green Transportation, which include targets for lowering shipping emissions.

Several local governments, such as in Shenzhen, have issued legislation on the “green and low-carbon transformation” of shipping.

China is also exploring the use of low-carbon “alternative fuels”, with state-owned China Merchants Group developing ammonia-fueled ships. The Shanghai regional emissions trading scheme covers the shipping sector. 

China accounted for half of global shipbuilding orders in 2022, says Hellenic Shipping News. It also “bag[ged]” half of orders for “dual-fuel green vessels”, SeatradeMaritime reports, quoting Li Yanqing, secretary general of China Association of the National Shipbuilding Industry, saying “green fuel for vessels is the general trend”.

Analysis from Lloyd’s List says: “Shipbuilding contracts for dry bulkers and tankers adopting new fuel technologies are expected to grow substantially from 2025 onwards.”

§ Watch, read, listen 

CLIMATE MARSHALL PLAN: Bloomberg published an opinion by columnist David Fickling who said the “heart of the [climate] problem is money” and the US and China can persuade other countries to use the IMF to aid the most needy regions.

‘GREEN MINERAL’ ABUSE: The Guardian and Energy Monitor reported China has been accused of “scores of abuses” at “green-energy” mineral projects across the world. 

HOUSEHOLD GAS PRICES: Chinese financial media Caixin had an in-depth report under the title: “China mulls scrapping fixed household gas rates as winter shortages loom.”

CHINA ‘GREEN JOBS’: China Dialogue published a report saying that “green employment” in China is expected to reach one million jobs by 2025. 

§ New Science 

Enhanced food system efficiency is the key to China’s 2060 carbon neutrality target
Nature Food

A new study on measures to help reach China’s 2060 net-zero target in the food system finds that a balance between carbon neutrality, food security and global sustainability can only be achieved through a range of actions. These include “well-blended efficiency-enhancing measures in food production and consumption systems”, the researchers find. Using modelling and scenario analysis, the researchers conclude that enhancing food system efficiency is the key to achieving carbon neutrality in China, while also maintaining global sustainability. 

Future reductions of China’s transport emissions impacted by changing driving behaviour
Nature Sustainability

Chinese drivers could save up to 400m tonnes of CO2 by driving less aggressively between now and 2050, a new study finds. The researchers created a “standardised driver aggressiveness index” based on driving data collected in China from 2013 and 2021. They then used integrated assessment models to examine how the adoption of different types of driving behaviours, including calm, neutral and aggressive, could affect vehicle emissions by 2050, with findings that “can be expanded worldwide”.

China Briefing is edited by Wanyuan Song and Simon Evans. Please send tips and feedback to [email protected].