China’s annual carbon dioxide emissions will likely peak before 2025, according to a new paper published today (7 March 2016) by the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at London School of Economics and Political Science.

The authors of the paper – Fergus Green and Professor Lord Nicholas Stern – suggest that China’s international commitment to peak carbon dioxide emissions around 2030 is a highly conservative estimate by a government that takes commitment to climate change seriously and wants to guarantee it meets international agreements.

Recent data show that China’s emissions were lower in 2015 than the year before, and suggest that any increase in emissions over the next few years would likely be modest. It is even possible that China’s emissions could have peaked in 2014, a year before the target to peak emissions by 2030 was actually announced.

The paper states: “It is just possible that emissions will fall modestly from now on, implying that 2014 was the peak. If emissions do grow above 2014 levels — if, say, a number of the risks identified earlier [in the paper] manifest — that growth trajectory is likely to be relatively flat, and a peak would still be highly likely by 2025.”

The paper notes that China’s emissions could grow slightly over the next few years if oil and gas demands grow faster than expected, or if companies and local governments make unauthorised expansions in new coal-based industries.

The recent decline in emissions is attributed in large measure to a fall in energy demand resulting from China’s economic slowdown. China’s slower rate of economic growth in recent years is a consequence of the a transition away from low-cost manufacturing and exports.

The authors expect the Chinese economy to continue to shift away from energy-intensive heavy industries, such as steel and cement production, towards an expansion of the service sector and more innovative forms of manufacturing, such as robotics and renewable energy technology. High levels of investment in low-carbon energy and a decline in coal consumption have also contributed to falling emissions.

The authors explain that a continuation of the pace and nature of China’s rapid growth in GDP at the start of this century could not be sustainable, neither environmentally nor economically, and that this fact is now widely accepted among Chinese citizens and officials. They note that coal use trebled between 2000 and 2013 and that China accounted for half of the world’s annual coal consumption by the end of that period.

The paper states that “the old model of growth is unsustainable in a conventional economic sense. As demand in many parts of China’s construction and heavy industrial sectors passes saturation points, continued political-economic incentives to invest in these areas have resulted in widespread excess capacity and diminishing returns on capital, undermining their competitiveness and resulting in weak productivity growth.”

It adds: “The period 2000–2013, it is now clear, was a distinct and exceptional phase in China’s developmental history, during which the very high levels of greenhouse gases emitted were linked closely with the energy-intensive, heavy industry-based growth model pursued at that time. China is currently undergoing another major structural transformation — towards a new development model focused on achieving better quality growth that is more sustainable and inclusive — and it is also grappling with economic challenges associated with the transition.”

The authors warn that countries should pay close attention to the changing structure of China’s economy or risk missing out on the opportunities to be gained from investing in the low-carbon economy.

The paper concludes: “The more governments and businesses understand the shift in China, the more they should see risks in the high-carbon economy and opportunities in the low-/zero-carbon economy, and should adjust their investments, innovation priorities, and institutional arrangements accordingly.”

 

For more information about this media release please contact Ben Parfitt on +44 (0) 207 955 6425 or b.parfitt@lse.ac.uk or Bob Ward on +44 (0) 7811 320346 or r.e.ward@lse.ac.uk

 

NOTES FOR EDITORS

  1. Lord Stern is chair of the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy, as well as I.G. Patel Professor of Economics and Government, at the London School of Economics and Political Science. Since July 2013, Lord Stern has been President of the British Academy for the humanities and social sciences. Lord Stern was with HM Treasury between October 2003 and May 2007. He served as Second Permanent Secretary and Head of the Government Economic Service, head of the review of the economics of climate change (the results of which were published in ‘The Economics of Climate Change: The Stern Review’ in October 2006), and director of policy and research for the Commission for Africa. His previous posts included Senior Vice-President and Chief Economist at the World Bank, and Chief Economist and Special Counsellor to the President at the European Bank for Reconstruction and Development. Baron Stern of Brentford was introduced in December 2007 to the House of Lords, where he sits on the independent cross-benches. He was recommended as a non-party-political life peer by the UK House of Lords Appointments Commission in October 2007. Lord Stern is also a Fellow of the Royal Society.
  1. The ESRC Centre for Climate Change Economics and Policy (https://www.cccep.ac.uk/) is hosted by the University of Leeds and the London School of Economics and Political Science. It is funded by the UK Economic and Social Research Council (https://www.esrc.ac.uk/). The Centre’s mission is to advance public and private action on climate change through rigorous, innovative research.
  1. The Grantham Research Institute on Climate Change and the Environment (https://www.lse.ac.uk/grantham) was launched at the London School of Economics and Political Science in October 2008. It is funded by The Grantham Foundation for the Protection of the Environment (https://www.granthamfoundation.org/).
  1. The paper on ‘China’s changing economy: implications for its carbon dioxide emissions’ is due to be published online by the journal ‘Climate Policy’ on Tuesday 29 March 2016. It is also be published as a working paper by the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at London School of Economics and Political Science on Monday 7 March 2016.
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