How can China reduce its coal consumption?

In the fight to limit global warming, no country matters more than China – a massive coal-dependent country, which is responsible for 30% of global carbon-dioxide emissions. Fortunately, it is moving to improve its environmental record. But is it doing enough?

If China could pursue only one goal, it should be cutting its reliance on coal energy. The country is home to one-sixth of the world’s people, yet it accounts for almost one-half of global coal consumption. If China does not reduce that share and cut its greenhouse-gas emissions, keeping global warming in check will prove impossible.

The good news is that coal use in China seems to have fallen slightly last year – a trend that is expected to continue. The Institute for Energy Economics and Financial Analysis estimates that the share of coal-generated electricity in China will decline from 72.5% in 2014 to 60% in 2020. While last year’s drop in coal use may have been a technical blip, Chinese coal consumption is expected to peak very soon – probably next year.

That means that CO2 emissions – the largest component of the greenhouse-gas emissions that cause global warming – will begin falling, too, enabling China to fulfill its pledge, made last November as part of a landmark climate agreement with the United States, that emissions would peak around 2030. In fact, if China’s leaders act boldly, the peak could be reached even sooner, in the early 2020s.

As China’s coal use begins to fall, its renewables sector is growing rapidly. Last year, China spent a massive $90 billion on renewable energy – far more than the $52 billion invested by the second-largest spender, the US. China now has the world’s largest installed base of wind power, and its solar power capacity is second only to Germany’s. From humble beginnings at the turn of the century, Chinese wind and solar companies have grown into some of the world’s largest and most efficient.

The government’s efforts to promote renewables are driven partly by growing pressure from middle-class Chinese, who are increasingly frustrated with pollution levels. Indeed, the environment is a hot topic in China today, exemplified by the response to the documentary film “Under the Dome,” which takes a critical look at air pollution and the role of the country’s coal and petrochemical companies. More than 300 million Chinese saw the film after its late-February release, which was timed to coincide with the annual meeting of China’s National People’s Congress in early March.

The 103-minute production, by the prominent journalist Chai Jing, highlights the health risks posed by the thick smog shrouding China’s most productive cities. The film begins with the story of Chai’s own newborn daughter being diagnosed with a benign tumor. Though Chai never directly links her daughter’s tumor to air pollution, “Under the Dome” delivers a compelling message.

The public reaction was overwhelming. The film even drew support from the incoming environment minister, Chen Jining, who compared it to Rachel Carson’s influential book Silent Spring. Despite – or perhaps because of – this response, “Under the Dome” and related commentary have been removed from China’s media.

But, though the government may not want not to draw attention to its pollution problem, it certainly is trying to address it. Its investments have already helped to lower global prices of renewables. Researchers at Harvard University and Tsinghua University say that wind power could, in theory, produce all of China’s electricity for the price of coal by 2030.

Still, China should be acting even more aggressively. The authorities should focus not only on producing renewable energy, but also on improving the energy efficiency of existing systems. As it stands, China’s economy is about three times as energy-intensive as America’s (a country that is not particularly energy-efficient itself).

As renewable energy becomes increasingly cost-competitive with fossil fuels and energy consumption becomes more efficient, China will become better able to reduce emissions without undermining economic growth. According to a recent study by the Tsinghua/MIT China Energy & Climate Project, a combination of carbon taxes – especially on coal – and continued support for renewable power would enable China to reach its carbon-emissions peak in the early to mid-2020s.

Such an outcome would bolster global emission-reduction efforts considerably. In fact, new data from the International Energy Agency show that, in 2014, global CO2 emissions did not rise, suggesting that efforts to mitigate climate change may already be having a more significant effect than previously thought. This is particularly notable because the recent pause in emissions growth, unlike the other three that have occurred in the last 40 years, occurred amid economic expansion at a respectable annual rate of 3%.

As greenhouse-gas emissions become decoupled from economic growth, the world’s chances of successfully mitigating climate change become much higher. As IEA Chief Economist (and future Executive Director) Fatih Birol put it, this development “provides much-needed momentum to negotiators preparing to forge a global climate deal in Paris in December.”

China still has a long way to go. But its recent progress in reducing emissions shows that, with the right combination of government policies, corporate initiatives, and public pressure, even the largest and most polluted countries can clean up their economies and help fight global warming.

This article is published in collaboration with Project Syndicate. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Mark L. Clifford, Executive Director of the Asia Business Council, is the author, most recently, of The Greening of Asia: The Business Case for Solving Asia’s Environmental Emergency.