China dominates the world market for most types of electric vehicles. The Chinese stock of electric cars at 4.6 million is 42% of the world’s total. For electric buses the share is even higher at 98%, for vans it’s 65%. Underpinning this is the Chinese production of lithium ion batteries – where 77% of the world’s capacity is in China. And of course China has supplies of the rare earths essential for battery production – 90% of rare earth extraction currently takes place in China.

So it is not surprising that China has an interest in carbon reduction targets and fighting man-made climate change. But it is not just the hope of dominating green technologies that has caused President Xi Jinping to announce last September that China would achieve carbon neutrality before 2060.

The latest National Assessment Report on Climate Change confirms that China is acutely vulnerable to climate change and particularly exposed to rising sea levels. More than 550 million of its inhabitants live in low lying coastal provinces. So limiting global warming and its associated dangers is in China’s self-interest. Moreover, China is currently the world’s largest carbon dioxide emitter, emitting around 30% of the world’s total though it is fair to note that emissions per person are less than half of those from the US.

Politically, China also hopes to gain from taking on a leading role in the fight against climate change. Climate diplomacy is seen as a way to improve strained relations with other global powers such as the US and the EU.

It is not just transport where Chinese technology is expected to be part of the large scale decarbonisation on the scale necessary to transform towards net zero. Energy storage including more efficient batteries, carbon capture technology and smart energy grids are just some of the areas where China is planning to gain a technological lead. By committing to a domestic political agenda that sets China on the path to net-zero, Beijing creates a domestic market of vast size, which will give businesses and investors the required planning security to invest. Moreover, China can also serve as a major supplier for other countries attempting to decarbonise their economies.

The widely reported ‘two sessions’ meetings recently have reaffirmed the latest five-year plan ambition to reduce Chinese greenhouse gas emissions per unit of GDP by 18% by 2025. Yet, the forecast for Chinese GDP growth over this period in Cebr’s latest World Economic League Table (WELT21) shows real GDP growth of 32% between 2020 and 2025. So an 18% fall in emissions per unit of GDP would still cause emissions to rise by 8%. Since we expect global emissions to rise by only 2% over this same period, the Chinese share of global emissions is still likely to be rising.

The scale of the task for moving China towards net zero should not be underestimated. China currently produces 60% of its energy from coal and a further 250GW worth of coal fired electricity plants are under development across the country. It is perhaps understandable that China does not want to slam the breaks on fossil-fuelled growth too firmly while it pursues the aim of rising living standards for its population over the next years. But this shows just how much change will be required to move from the present position to reach net zero by 2060.

For more information, please contact:Contact: Kay Daniel Neufeld kneufeld@cebr.com phone: 020 7324 2841