Environmental protection was also on the list of 15 key priorities for the coming period. Energy transition (literally “energy revolution”) towards net zero remains the ultimate goal and it will require accelerating of construction of renewable energy facilities in order to reach that goal.
At the same time, however, Xi stressed prudence, gradual and well-planned progress, and “getting new before discarding the old”. In other words, energy transition must not threaten energy security.
Image: Reuters/Carlos Barria
It is a well-known fact, that China has made great leaps in its environmental management. In 2014 the president declared a “war on air pollution”, and in 2020, China announced its aim to reach peak emissions by 2030 and carbon neutrality by 2060.
For several years, the country has been the largest green investor in the world. In 2021 alone, China invested $266 billion into energy transition, which is 35% of the global total. Most of the investment went to wind and solar capacity and transport electrification. Last year, China also started operating its own national carbon trading scheme.
The Chinese climate agenda, however, has suffered a series of setbacks in 2022. High dependency on water energy led to power shortages during the summer drought. This September, the drought resulted in stoppages and, consequently, a 10% drop in aluminum production in the heavily hydro-power dependent Yunnan province known as the “aluminum hub” of China.
Perhaps more importantly, the faltering economic growth is calling for stimulus spending by the government. This usually feeds highly emitting industries such as steel or cement for infrastructure projects.
The government´s push for environmental agenda has driven a massive boom of ESG funds in the past two years. In just one year, the number of ESG funds has doubled. But, interestingly, European ESG funds hold about $130B in Chinese assets — more than twice the size of China’s own domestic ESG fund industry.