WHAT ABOUT CHINA?

Climate Influence Starts at Home

Over the summer break, some friends who subscribe to The Instigator challenged me with the following question: 

“What about China? Even if business leaders in the US follow your advice and pursue the ambitious corporate strategies to address climate change that you recommend, will it even matter? China keeps building coal plants. Unless that stops, the situation is hopeless.”

Let me preface my response by saying I generally find this question bothersome. I can’t help but hear it as an excuse to justify doing very little about climate in the United States.

Nevertheless, China’s carbon trajectory does present the biggest climate challenge. And addressing it successfully has important implications for climate strategies everywhere.   

My friends are right in another way too (and we don't talk about this enough) —  progress in addressing the climate challenge has been terrible to date. We’ve been talking about dealing with the climate threat for 30-plus years, but global emissions just keep going up.

First, let’s look at the need. 

The Big Picture: Yes, What China Does Will Be Critical 

China’s climate impact is huge. 

China is by far the world’s biggest emitter of greenhouse gasses (GHGs).  

Total global emissions (including land use and forests) reached 52 gigatons of CO2 equivalent in 2019.  

China’s contribution was some 14 billion tons — 27% of the global total.  

That means China’s total emissions were more than 2X that of the second highest emitter. (Guess who? Yep, the US with 11% of the total.)  And China’s emissions were more than 3X third-place India, which was responsible for 6.6%.   

Another way to look at it: China’s emissions exceed those of all OECD countries combined.

But China’s population is huge.  

True. So let's consider per capita emissions. Again, bad news. 

China’s emissions have grown so fast that, on a per capita basis, the country now stands as the second-highest ranking emitter at 10.5 tons/capita.  It will likely overtake the OECD average this year.  

Lest any American readers get smug, the US remains the highest per capita emitter in the world by far at 17.6 tons/capita.

And of course, China would point to the fact that the US had a head start in its economic development and therefore emissions. While the US is responsible for some 405 billion tons of carbon since the Industrial Revolution, China is responsible for approximately half that amount, at 210 tons.  

Regardless of the blame game, like it or not, we’re all in this together. We can’t meet our climate goals unless all of the major emitting countries get serious about finally reducing emissions sharply. So it’s concerning that China’s continue to grow — up 25% over the past decade. And its climate pledges are no more reassuring.  

China is not in a rush. 

The country’s leaders have said that development remains a priority such that emissions will continue to rise. They are pledging to reach peak emissions by 2030 and to achieve carbon neutrality by 2060 — 10 years later than the net-zero commitment of most countries, including the United States. 

Most climate scientists conclude if China sticks with that trajectory, the world has no chance of achieving the “1.5 degree scenario” — maintaining global warming to 1.5 degrees above pre-industrial levels — thought necessary to stave off the harshest effects of climate change.

The biggest worry right now is China’s coal activities. After lifting a previous ban on new coal plants in 2018, the country has ramped up new capacity and now operates about half of the world’s coal capacity. Of course we in the US and Europe bear some responsibility even here — after all we are importing carbon intensive goods produced in China.

What Can Westerners Do to Influence China’s Emissions Trajectory?

I made more than a dozen trips to China during my decade-plus term as CEO of the Nature Conservancy. During each visit I would meet with senior government officials who had oversight responsibilities in the areas of climate, the environment, natural capital, and the economy. Most of these officials had advanced degrees in science or engineering and were fully up-to-date on climate science. 

There was never so much as a hint of climate denialism. They were all fully aware how vulnerable their country is to the impacts of climate change. They seemed genuinely interested in advice and ideas from international environmental organizations. But they made clear that they were determined to find solutions that  balance economic growth with rapid environmental progress.  

So what might work here? Let’s look at the options. 

  1. Diplomacy? Not unless we take action at home first.

There’s not much evidence that the US or any other country can persuade China to do anything other than what they determine to be in their best interest. 

Former Secretary of State John Kerry, now serving as the first United States Special Presidential Envoy for Climate, has engaged in diplomatic efforts to influence China on its climate commitments. But his position would be stronger if both the pending bi-partisan infrastructure bill and the reconciliation bill in the US Congress passed. They are both climate bills in many respects.  

In climate diplomacy, actions at home speak louder than words abroad. All climate-concerned US citizens, in my view, should be supporting these two bills. Further, if both bills pass, the US position at the upcoming UN Climate Change Conference in Glasgow will be stronger (and if not, the converse will be true and opportunity for US leadership opportunities will diminish). But even in that more favorable scenario, it doesn't seem likely that diplomacy will lead to meaningful near-term breakthroughs. 

What other diplomatic leverage do we have? If the US and other major countries were to implement ambitious climate policies —notably, pricing carbon at high levels — they’d be able to require their international trading partners like China to match them or face climate tariffs. But, again, this requires ambitious — and politically difficult — action at home first.  

  1. Activism? Not unless we get more pragmatic. 

Western-based activist organizations like Extinction Rebellion and 350.Org successfully build awareness of the climate crisis, create a badly needed sense of urgency and highlight the injustice of climate outcomes (including intergenerational ones). They also put a lot of pressure on policymakers and business leaders for decisive action and highlight the changes necessary to our carbon-intensive lifestyles. That's all good.  

But in my view they vilify private sector actors too broadly. They also downplay the economic consequences of their proposals, the difficult matter of who should bear the significant costs of their proposals, and the huge benefits (especially to the less well off) of economic growth.  

These shortcomings are particularly salient when we consider activist strategies in the context of China. Take, for example, the “degrowth,” position — i.e., the demand to reduce the global consumption and production that fuels modern economies. This is clearly a non-starter with China’s leaders, who have been very clear about their goals: they seek to balance economic growth with environmental progress, period. 

  1. Private sector-led problem solving? Opportunities for win-wins. 

How might the private sector accelerate China’s climate progress? By making the pathway of decarbonization the lower cost and economically friendly option.   

The Instigator regularly notes that certain private sector capabilities are very well-suited for addressing climate, namely the ability to innovate, scale, move fast, mobilize capital, and harness technology. If businesses deploy these capacities toward the development of carbon-friendly solutions and innovations, we have the potential for win-win results — continued development while addressing climate needs.

This positive process is already underway. Today China is a leader in scaling EVs, solar, and wind (all of which have benefited significantly from domestic and overseas government support). There are many additional opportunities ahead: improved forest management, industrial process decarbonization, battery storage, hydrogen trucks, safe nuclear, regenerative agriculture, plant-based and lab-based meat, nature-based and tech-based carbon removal, and so on.  

But to really scale, most of these opportunities require public policy to level the playing field between high and low carbon alternatives.

Suggested Game Plan:

  1. Private sector leaders should prioritize decarbonization. Time is not on our side. We can’t wait for ideal public policy.  

  1. Public policy is critical. Carbon pollution needs to be made much more expensive via a price on carbon and/or capped in some other fashion. Unfortunately, we don't seem to have the political will to do so now. In the meantime, tax incentives, mandates, and R&D support — all doable — should be organized to scale the best decarbonization opportunities ahead. At the same time, infrastructure should be rebuilt to facilitate low carbon economic activity. Business leaders (including those at the new big climate investment funds) -- together with environmental activists —  should visibly and energetically lobby for such programs while also trying to build a majority political coalition to support them. We should not pretend net-zero goals can be met without much more ambitious public policy than we have today.

  1. Activists should continue to raise awareness of climate, generate a sense of urgency, and campaign against all bad actors — including both public and private sector players. I think intergenerational conflicts should be highlighted. Activists should do a few other things too:  push for the big climate wins that business can make possible; advocate for the specific government programs that will drive such positive outcomes; and acknowledge that the costs of transitioning to net-zero are high.

The best way to get China (or any other country, including the US) to lower carbon emissions is to make the lower carbon pathway the more economically attractive pathway. Some positive trends are underway — especially the huge amounts of private capital now flowing to private sector initiatives. But private investment alone will not be sufficient. We need to tackle crucial public policy opportunities at home: infrastructure investment, tax incentives, mandates and -- maybe most important to get China’s attention -- carbon pricing followed by border adjustment tariffs.

*Note: we are not arguing that capitalism does not have a lot of room for improvement. Nor do we believe that there are no bad actors in the private sector. Likewise, we are strongly in favor of smart regulations that would prohibit or significantly disincentivize climate pollution. We also favor well-considered proposals to improve capitalism.  But when it comes to accelerating climate progress, we think the private sector can be a leader and that we should support such efforts.

The Index

  • I note above that President Biden and the Dems are trying to do the right thing in my view — i.e., pass climate legislation now. This will be a dynamic and heavily negotiated process right up to the last minute. But here is a good look by WaPo summarizing what’s at stake for climate progress.

  • It feels like another giant climate fund is announced every day. TPG ($5 billion), Brookfield Asset Management ($7 billion), General Atlantic ($4 billion), Generate (another $2 billion), Tom Steyer’s new “Galvanize Climate Solutions” fund (to be in “the $ billions”). All good, I say. Not that any of the kingpins behind these mega funds asked me, but my free advice to them: Get organized ASAP to push for the public climate policy we need. Capital alone won’t get the job done. We need to level the playing field (or even better — tilt it toward decarbonization).

  • Meanwhile, China — a country still led by the Communist Party the last time I checked — launched a nation-wide GHG emissions trading scheme. Yes, I know it doesn't go far enough, but they have a jump on the US with this market-based approach.

  • What about personal carbon footprints? I agree with most enviros who argue that this notion mostly distracts us from the economy-wide changes we really need (i.e., tough carbon regs). But it is a useful way to envision just how drastic the necessary changes are. See for yourself. First, consider what it would take to get you to net-zero (i.e., much more public transportation, way less flying, meat-reduced diets, less stuff in general, etc. etc.). Second, what can you do to get politically engaged to make such changes happen across society. Good take here.

One Last Thing

I always try to squeeze in a lot of catch up reading over my summer break. Two books I finally got to and wholeheartedly recommend: 

Entangled Life: How Fungi Make Our Worlds, Change our Minds and Shape Our Futures by biologist/writer Merlin Sheldrake.  

Wow! Who knew (I didn’t!) how much is going on (mostly below ground) in the fungi kingdom, how much it can provide in terms of environmental problem-solving and how critical it is that we protect this vital resource (we don’t yet come close to fully understanding) before it's too late.

The Wall: A Novel

by John Lanchester   

Harrowing, suspenseful, climate/eco-dystopian tales are not normally my thing. But this book is powerful and provocative. I suppose we could call it “Orwellian.”  

If you’ve read either, please let me know what you think.

Onward,