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China is easing climate change efforts as economic officials limit its reach



China’s top economic planners have stopped attempts by environmental officials to reduce carbon emissions, as driving growth takes precedence over achieving climate goals so far, according to people familiar with the matter.

Officials at China’s main economic planning agency, the National Development and Reform Commission, have limited the initial scope of a national carbon trading system to be launched later this month following pilot projects in eight Chinese cities.

The Economic Planning Office has also taken the lead in negotiating a detailed roadmap for fulfilling leader Xi Jinping’s promises to peak carbon emissions before 2030 and net zero emissions by 2060, people said.

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The environment ministry has stepped up over the past decade, and in recent months it appears to have been more empowered to exercise more influence, but recent events show that the economic agency that sets China̵

7;s energy and emissions targets still has more influence.

The dynamics of competing environmental and economic priorities are hardly unique to China. U.S. lawmakers have blocked attempts to push a national market to limit and trade in carbon emissions due to concerns about the impact on business and the economy, even though California and the states in the northeast have adopted their own systems.

China’s actions are closely monitored as the world’s largest carbon emitter. Mr Xi said China would peak in its carbon footprint before 2030, but did not explain how the country would achieve that goal.

US climate envoy John Kerry called on his counterpart Xie Zhenhua to take more ambitious climate action in the near future, but did not specify what China is urging it to do. Leaders of the Group of Seven are expected to discuss putting pressure on China to cut funding for coal projects abroad when they meet this weekend in the UK.

The appearance of Chinese President Xi Jinping at the US-led climate summit was seen on an open-air screen in Beijing on April 23.


Photo:

greg baker / Agence France-Presse / Getty Images

Following Mr Xi’s promise in September, one of his senior lieutenants, Deputy Prime Minister Han Zheng, called on environmental officials in October to speed up the launch of a national carbon market and formulate a carbon roadmap, signaling to Chinese political observers that make him responsible for drawing up plans to achieve the goals.

But in March, when China’s cabinet listed the bodies in charge of drafting the roadmap, the economic planning agency was listed first – not environmental officials. Last month, Beijing also set up a group of high-level party members to cover bureaucracies, provide guidance and monitor the roadmap. Three of the five members of his leadership were senior economic personnel.

Separately, when the environment ministry published the original rules for the emissions trading system in December, they were more limited than originally proposed.

The scheme, for example, will involve only about 2,200 companies in the energy sector, which is responsible for about 30% of China’s total emissions, instead of the 6,000 companies in eight sectors that were in the original proposal.

Although there are tensions between the United States and China over trade and technology, climate change is an area where the couple can work together. WSJ’s Gerald F. Sabe explains why this can also lead to competition for global leadership. Photo illustration: Ksenia Shaikhutdinova

Instead of the absolute emission limit proposed by environmental officials, Chinese companies will start with relative quotas, using benchmarks based on the results of previous years, which will give them more room to move.

Behind the scenes, economic planners have weakened the scheme, fearing the potential impact on growth, according to people familiar with the matter.

The National Development and Reform Commission and the Ministry of Ecology and Environment did not respond to requests for comment.

The Chinese carbon scheme is expected to expand to more industries and adopt stricter restrictions in the future, although the timing and scope have not yet been determined, according to insiders. China will not be the first to take a step-by-step approach to the carbon market.

The European Union has long struggled to turn its carbon trading scheme, launched in 2005, into effective emission control. The market has been oversaturated with carbon allowances for many years, keeping carbon permit prices low and leaving little incentive for businesses to reduce their emissions. Only in the last two years have prices risen enough to influence most investment decisions.

Chinese climate envoy Xie Zhenhua, left, spoke practically at the summit in April. Mr Xie was previously Deputy Minister of Economic Planning in Beijing.


Photo:

Roman Philip / EPA / Shutterstock

Of course, the economic planning agency, far from being a monolithic body, includes many employees who want more aggressive climate action. Mr Xie, who helped negotiate Beijing’s accession to the Paris Climate Agreement, was deputy minister of the Economic Planning Service for years before moving to the environment ministry.

But instead of prioritizing limiting fossil fuel consumption now, Economic Planning officials want to take advantage of the momentum of global recovery after a pandemic, even if it means increased emissions in the short term, according to people familiar with the matter.

On May 31, at the behest of economic planners, China’s Tangshan Steel Center ordered the easing of emission limits for its steelmakers – repealing a March directive that came after environmental ministry inspectors found the companies were violating environmental regulations and instructing companies. to reduce emissions by 30% to 50%.

Some Chinese provinces have resisted Beijing’s reduced emissions, warning of power shortages. For example, in the coastal province of Guangdong, plants have been asked to limit energy use and suspend activities for hours or in some days, reducing production and income.

“The debate within the Chinese government is led in part by officials who want to ensure that climate goals are achieved in a way that manages the short-term impact on local economies,” said Hugh Slater, a senior consultant in Beijing for ICF consulting firm. worked with Chinese climate policy organizations.

Write to Sha Hua at sha.hua@wsj.com and Keith Jai at keith.zhai@wsj.com

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