China Briefing, 8 July 2021: Xi invited to COP26; ‘Largest’ coal-chemical project suspended; New authority for climate roadmap

§ Snapshot

UK prime minister Boris Johnson has invited China’s president Xi Jinping – as well as Russia’s president Vladimir Putin – to COP26 in Glasgow in November. The Sunday Times reported the news during the weekend, stating that the presence of either leader would be “a significant moment” for the UK. COP26 will take place in person over the first two weeks of November. Xi has not yet confirmed his attendance.

Meanwhile, the construction of a massive coal-chemical project in China has been “halted temporarily”, 21st Century Business Herald reported on Monday. The publication stated in an “exclusive” that the 1,300-hectare project by Shaanxi Coal and Chemical Industry Group is the largest of its kind under construction globally. It remains unclear why the suspension came into place, but “people close to the project” told the outlet that the project had not completed its energy consumption evaluation. 

Additionally, Bloomberg reported on Tuesday that China’s top economic planning body, the National Development and Reform Commission (NDRC), had been put in charge of devising a plan for the country to cut greenhouse gas (GHG) emissions. The newswire cited “people familiar with the matter”, adding that the move means “climate policies are gaining a more central role in the nation’s long-term development strategy”.

§ Key developments

Xi receives ‘personal invitation’ to COP26 from Johnson

WHAT: China’s president Xi Jinping has received a “personal invitation” from UK prime minister Boris Johnson to attend the COP26 in Glasgow in November, according to the Sunday Times. The newspaper said that Johnson had also invited Russia’s President Vladimir Putin. It added that “many leaders of the 196 countries plus the EU that are represented at COP” had been invited by the UK. 

WHEN: COP26 will take place from 31 October to 12 November in Glasgow, according to the summit’s official website. President Xi last visited the UK in 2015 on a four-day state visit with his wife, soprano Peng Liyuan, during which they were welcomed by the Queen. The trip signified what was described as the “golden era” of relations between China and the UK. In comparison, Johnson’s invitation to Xi takes place “in the context of increasing rhetorical positioning of a ‘systemic rivalry’ between China and the West”, according to Prof Astrid Nordin from the Lau China Institute of King’s College London. Prof Nordin tells Carbon Brief that “in what is understood to be a competition for global hearts and minds, the environment is an area where all parties want to present themselves as the better alternative, as the good guys that lead positive global change”. 

WHO: President Xi met with German chancellor Angela Merkel and French president Emmanuel Macron via video link on Monday – one day after the report of Xi’s COP26 invitation – to discuss matters including climate change, said Deutsche Welle. The German broadcaster reported that, according to France′s Elysee palace, the meeting was held to “discuss the leaders’ different positions ahead of the COP26 climate summit in Glasgow and the G20 summit in Rome later this year”. The Straits Times, based in Singapore, also cited the Elysee palace, saying that Macron and Merkel discussed with Xi “the importance of ending the financing of coal-fired power stations”.

HOW: It remains unclear how President Xi will respond to the invitation. An unidentified diplomat suggested to the Sunday Times that “if Putin goes, Xi will go”. In April, Xi accepted Joe Biden’s invitation to the “leaders climate summit” two days after Putin confirmed his attendance – and four days after China and the US pledged to cooperate on tackling climate change. Prof Nordin suggests that Xi will attend COP26 if “it makes him and China look good, benevolent and strong in the eyes of both Chinese people at home and international audiences abroad”. She states that Xi’s attendance is “more likely” to happen if “those attending have set out areas of agreement and disagreement in advance”. In reference to Xi’s meeting with Macron and Merkel, Prof Nordin notes that Xi needs to feel “confident” that “Macron and Merkel will also portray China’s role in COP26 in a good light”.

WHY IT MATTERS: Boris’s invitation to Xi is “very important” for the outcome of the COP26, according to Dr Chen Gang from the East Asian Institute of the National University of Singapore. COP26 has been described as “the most important climate summit” since the Paris Agreement was agreed at COP21 in 2015. Dr Chen tells Carbon Brief: “Chinese paramount leaders seldom attended UNFCCC COP meetings, and if Xi makes it, it will show China’s paying unprecedented attention to climate change and emission cutting”. He also expects Xi’s potential presence to “impose pressure upon other major developing countries that have yet to commit to carbon-neutral targets”. Dr Nordin says that the environment is “pointed to as an area where cooperation between China and countries like the UK is possible and needed”. She adds: “Johnson knows that his own leadership of a green agenda through COP26 will be considered a failure if China is not part of resulting efforts.”

£13bn coal-chemical project halted amid energy crackdown

WHAT: The construction of a coal-chemical project boasting more than 120bn yuan (£13bn) in investment has been “halted temporarily” in northern China’s Shaanxi province, reported the 21st Century Business Herald. The financial outlet said that the move came amid the local government’s efforts to crack down on “dual-high” projects – those with “high” energy consumption and “high” emissions. According to the report, the plant is a “demonstration project” run by the state-controlled Shaanxi Coal and Chemical Industry Group and designed to produce “new” chemical materials through the “utilisation of coal”.

WHEN: The suspension order came into effect last Friday and relevant supervisors sealed the project’s machinery and the warehouses on Monday, according to the 21st Century Business Herald. It remains unclear whether or not work would resume, the outlet wrote. According to China’s Agriculture and Technology News, the project was expected to turn more than 20m tonnes of coal into nearly 6m tonnes of chemical products annually. The outlet said that the project’s first phase was scheduled to go into operation last month following two years of construction. It added that a second phase was slated for construction by the end of 2021 and would start operating in 2025. 

WHERE: The project is situated in Yulin in the northern part of Shaanxi province. Shaanxi describes itself as a “strong energy province” with rich fossil-fuel resources, according to a government report. The document said Shaanxi’s “coal power” ensured the country’s “energy security” and stable economic growth in 2020. It said that in Shaanxi, industrial enterprises “above the designated size” – a Chinese set phrase referring to the companies earning more than 20m yuan (£2.2m) through their main business – produced 679m tonnes of raw coal in 2020. The figure is a 6.3% year-on-year increase, making Shaanxi the second largest contributor in driving the country’s raw coal output last year.

HOW: 21st Century Business Herald said it was not immediately clear why the project had been suspended, but “people close to the project” cited the “failure to complete an energy evaluation” as the main reason. The news came after Shaanxi’s deputy governor, Liang Gui, had inspected the project’s operator, Yulin Energy and Chemical Company, at the end of May and beginning of June. Liang “elaborately enquire[d] after” the firm’s operation and carbon emissions status, as well as its energy-saving and emission-reducing efforts, reported Shaanxi Daily. Liang urged the company to bear relevant responsibilities and “effectively” reduce its energy consumption, the newspaper said. 

WHY IT MATTERS: The project was listed as a “key project” for energy development under the 13th five-year plan and its suspension could imply Shaanxi’s seriousness in realising its “dual-control” targets and controlling its carbon emissions for 2021, according to 21st Century Business Herald. “Dual-control” was a policy proposed by China’s central government in 2015 to regulate the nation’s total energy consumption and energy intensity (the energy use per unit of GDP). Wang Jun, an emissions policy analyst and commentator, tells Carbon Brief that the news indicates the “increasingly strict” implementation of the “dual-control” targets in the country under the 2060 “carbon neutrality” objective and that the rules “will only get tougher”. As a result, new projects would have to eliminate their “backward” production capacity to get permission to start, he adds.

§ Other news

EMISSIONS ROADMAP: Sources told Bloomberg that China’s central government had made a “new arrangement” to ensure the country hits its climate goals. China’s state economic planner, NDRC, will “take the lead” in devising the broad plan for cutting emissions and roadmaps for cleaning up carbon-intensive sectors, it said. The Ministry of Ecology and Environment (MEE) will oversee the carbon market, emissions reporting and international cooperation, the outlet added. The NDRC had dropped hints of its new responsibility earlier this year. It said at a press conference in April that it would research and formulate a national emission-peaking action plan and establish relevant governance frameworks “in conjunction with relevant departments”.

ETS: China’s State Council, the national administrative authority, has announced that the country will launch its national carbon emissions trading scheme (ETS) for the electricity sector at “an appropriate time” in July, reported state broadcaster CCTV. The national ETS was supposed to start trading “by the end of June”, but the target was missed and no official reason has been provided. Last week’s China Briefing has more detail. The new launch timeline was decided during an executive meeting of the State Council yesterday, CCTV stated. The authority plans to bring more sectors under the scheme as “the next step”, the report added. Carbon Brief’s in-depth Q&A explains how the national ETS might help China fight climate change.

XI’S QUOTES: China’s president Xi has pledged that China would make “extremely arduous efforts” to fulfil its “commitments” of peaking carbon emissions and achieving “carbon neutrality” during a speech at the Communist Party of China (CPC) and World Political Parties Summit on Tuesday. According to People’s Daily, the mouthpiece of the CPC, Xi said at the virtual meeting that China aimed to make an “even bigger contribution” to the global efforts to tackle climate change. The leader added that China would discuss a new governance strategy for global biodiversity with “all parties” at the UN Biodiversity Conference (COP 15), which is scheduled to take place in October in the Chinese city of Kunming.

STEEL PRODUCTION: Furnaces in “all major” steel mills in China’s largest steel-producing city, Tangshan, have resumed operation with production capped at 70% of capacity, the state-run Global Times reported on Monday, citing an industry report. The newspaper said that the move came as the Chinese government “balances strong demand for steel from a recovering economy and its environmental commitment”. In March, the authorities of Tangshan – a city 110 miles east of Beijing – ordered many steel plants to keep their output at 50% to tackle pollution following a surprise inspection by the head of the MEE, Caixin reported previously. The 70% capacity rule is expected to last until the end of 2021.

CARBON CAPTURE: Sinopec, a state-run conglomerate, said on Monday that it would start building a carbon capture, utilisation and storage (CCUS) project in eastern China’s Shandong province, China Chemical Industry News reported. The project is scheduled to go into operation by the end of 2021 and would be able to reduce carbon dioxide (CO2) emissions by 1m tonnes annually, the website said. Reuters reported that the project would involve capturing CO2 produced from an oil refinery during a hydrogen-making process and then injecting it into 73 oil wells in an oilfield. 

RENEWABLES: The cumulative installed capacity of renewable electricity generation in China had reached 934m kilowatts by the end of 2020, accounting for 42.5% of the country’s total electricity-generating capacity, reported Beijixing Electricity Net. The energy news portal cited a report released by the National Energy Administration (NEA), China’s energy regulator. Compared to 2019, 140m kilowatts of renewable energy was installed in 2020, a 17.5% year-on-year increase, according to the NEA. A Reuters article carried by Forbes also covered the official document. It noted that renewable power sources covered 28.8% of China’s electricity consumption in 2020, up 1.3 percentage points from 2019. 

ECOLOGICAL CIVILISATION: The MEE has set up a research centre for “Xi Jinping Thought on Ecological Civilisation”, according to Xinhua, China’s state news agency. An inaugural ceremony for the institute yesterday described the ideology as the “scientific guide” and a “powerful thought weapon” for “building a socialist ecological civilisation”, the outlet said. “Ecological civilisation” refers to a civilisation form in which human beings and nature “coexist harmoniously” – a notion highly promoted by Xi. “Xi Jinping Thought on Ecological Civilisation” is part of “Xi Jinping Thought”, which is a series of key ideas and policies derived from the leader’s speeches and writings.

§ Extra reading

• Power to change: Why the US and China must work together on the climate crisis – Nick O’Malley, The Sydney Morning Herald
• Only China can end Brazil’s climate crisis – Lauri Tahtinen, Foreign Policy
• China’s Belt and Road Initiative should stop financing new coal power – Gu Bin, Financial Times
• China wary of socio-economic impact of unregulated carbon market – Ivy Yin, S&P Global Platts

§ New science

A market instrument to achieve carbon neutrality: Is China’s energy-consumption permit trading scheme effective?
Applied Energy

A new study has found that China’s energy-consumption permit trading scheme (ECPTS) “significantly” reduced energy consumption and energy intensity of those pilot provinces. The paper says that the scheme, implemented in China in 2016, brought about an average energy saving of 43m tonnes of coal equivalent (Mtce) from 2016 to 2019. Unlike an emissions trading scheme (ETS), which regulates businesses’ carbon emissions, an ECPTS manages their energy consumption. Companies are allocated a certain number of “permits” by the government, which represent their energy-using quota of the year. They can then buy or sell their “permits” according to their needs. One of the paper’s authors, Dr Shi Xunpeng from the University of Technology Sydney, tells Carbon Brief: “This study will provide confidence to the role of the ECPTS and stimulate discussion of its future applications, which may be complementary to the ETS.”

CCUS As a second-best choice for China’s carbon neutrality: an institutional analysis
Climate Policy

Large-scale deployment of carbon capture, utilisation, and storage (CCUS) is the “second-best” choice for China to realise its “carbon neutrality” goal before 2060, according to a new paper. The “best” choice is to transition energy sources from fossil fuels to renewables “in a short time”, says Dr Xu Shengqing from Jiangsu Ocean University, the paper’s co-author. Dr Xu notes that, however, the social, economic and political limitations in China “deeply impede” energy transition towards low carbon and renewable energy. Therefore, the “optimal” approach may not reach carbon neutrality under Beijing’s timeframe. “Large-scale deployment CCUS can avoid stranding assets in existing fossil energy industries, and thus it incurs less resistance from incumbents,” Dr Xu tells Carbon Brief. He adds: “With an estimated storage capacity of 3,120 GtCO2, China has great potential to deploy CCUS.”

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