Air Date: Week of October 29, 2021

Shuozhou coal power plant. (Photo: Kleineolive, Wikimedia Commons)

Roughly 20 Chinese provinces are enduring rolling electricity blackouts amid a coal and natural gas shortage. Isabel Hilton, founder and senior advisor of the China Dialogue group, joins Host Steve Curwood to discuss the current energy crunch, how it intersects with China’s long-term climate commitments, and the prospects for China’s influence at the UN climate talks.

Transcript

CURWOOD: It’s Living on Earth, I’m Steve Curwood.

Roughly 20 Chinese provinces have recently been enduring rolling electric blackouts, and government has asked factories to operate fewer days to avoid peak power usage. In a number of places authorities have curtailed the use of elevators and traffic lights and water pumps have gone intermittent. A trade war with Australia has cut off imports of its high-grade coal to China, and military planning by the US clearly geared for a possible confrontation has Chinese leaders concerned about energy security, especially shipments of gas and oil. China does have domestic coal, and so as a result, China plans to build more coal-fired power plants. All this has an impact on China’s position at the COP26 Climate Summit in Glasgow, where all nations are being asked to up their individualized commitments to reduce climate changing emissions. Isabel Hilton is a former journalist for the BBC and the Guardian and founder and senior advisor of the China Dialogue group. She joins us on the line now from London. Isabel welcome to Living on Earth!

HILTON: Steve, it's a great pleasure to be here. Thank you for having me.

CURWOOD: Our pleasure. So the Conference of the Parties number 26, COP 26 is coming up. How do you think the energy crunch in China now is affecting their views on what they can do with this meeting?

HILTON: Well, I think I think there were two ways to look at China and climate change. One is the long term China strategy, which I'm very happy to go back to. And the second is the short term management of the situation and the expectations of COP. And of course, the big influence on the short term management has been continuing energy crisis in China, energy shortages that have affected people's everyday lives, they've affected transport, they've affected factory production. And that's something with winter approaching that clearly, the government needs to pay attention to. And that is something that has led to the opening of new coal mines or old coal mines that have been shut down. So there is a bit of a pause and reflect moment going on in China. And that will affect how they present themselves at COP.

CURWOOD: So back in 2015, just before then, the United States and China had gotten together to work out what would become the bones of the Paris Climate Agreement. This time, it seems like the United States and China well, doesn't seem to be a whole lot of dialogue on what to do at the Conference of the Parties. What's going on, in your view?

HILTON: Well, we've got a long running strategic confrontation going on between the United States and China. And you know, we it's a very long time, it seems to me politically from that moment of handshake between Xi Jinping and Barack Obama. And that was a really critical moment that pretty much allowed the Paris agreement to come into being because when the United States and China are in confrontation,
 as they were in Copenhagen, when there was the first attempt to bring in a new global agreement, it ended in tears, you know, nothing got done, everybody was very bruised. And it took quite a long time, and quite a different approach to bring the Paris agreement into being that different approach was to say to all the signatories, this is not a top down agreement, it's a bottom up agreement you bring to the table, what you can bring the nationally determined contributions, we will add them up and in five years time, we will ask you to make them more ambitious. And that's where we are. That's what COP 26 is about. So we're not negotiating a new deal in Glasgow, but we are trying to ensure that the deal that was negotiated in Paris functions that it works that it does what it's meant to do, which is to keep the ambition of keeping global average temperature rises below 1.5 °C. Keeping that possible.

CURWOOD: So now it's time for countries to bring their Nationally Determined Commitments to the table out of Paris. How does the situation between the United States and China affect what each of these nations is now willing to commit to your thing?

HILTON: Well, it affects it in a number of ways. You know, after the US and China agreed to work towards Paris, they set up a whole bunch of cooperation mechanisms. So cities were talking to cities in the different countries, states were talking to provinces, they were working out collaborative ways of advancing a climate agenda. And pretty much that all stopped when President Trump took office. And remember, the United States withdrew from the Paris Agreement. So there was a pause, in which, you know, everyone looked to China who said, no, we're staying in, we will carry on doing what we're doing. So there is a steadiness of commitment in China, as far as as climate goes, you can argue about how fast or how slow they're, they're going, but at least they stay in the process. So now the United States is back. And that's great. But the geopolitical tensions mean, that those cooperations that web of that network of collaboration that we had, between the United States and China, is pretty thin. What remains, however, is a personal friendship between John Kerry and Xie Zhenhua, his Chinese counterpart, Poor Xie Zhenhua keeps trying to retire and he keeps getting brought back, because he's such an old hand at COPs, and everybody knows and trusts and likes him. And he has the ear of Xi Jinping. So this is a very good thing. So Xie Zhenhua and John Kerry have been calling each other and meeting and you know, getting done what they can get done, in spite of the very chilly atmosphere that surrounds the US China relationship. However, there's one important thing I think it's worth noting that, given that we're in an uncertain world, and if you're China, you're looking at this hostility as they see it, you know, from the United States and its allies. And you're thinking, well, if something kicks off in the region, you know, What happens to our energy supplies because most of China's energy supplies come in by ship. They're mostly oil and gas are coming in. And there's a choke point called the Malacca Straits, which is highly vulnerable. So the nightmare for an energy security planner in China is that those supplies get interrupted. And then you look at okay, what else have we got? Well, we have some pipelines that come in from Russia. And across Myanmar, Lashio pipeline bringing oil and gas, and we're building a corridor that will bring stuff in from the Gulf through Pakistan up to western China. But essentially, what we have at home, what we can rely on is coal. And so for climate reasons, we want China to stop using coal. But for security reasons, particularly in the global context, China's just hanging on to coal right now.

CURWOOD: So another way of putting this if the world felt very peaceful right now, we might be making advances more advances in terms of dealing with the climate. How fair is that to say?

HILTON: I think without question, yes. I mean, you know, you remember that Xi Jinping made an announcement, a virtual announcement at the UN General Assembly in 2020, which, for the first time set a target for China, of net zero by 2060. And that he would peak emissions by 2030. This came as a bit of a surprise to a lot of his own officials, because suddenly he made this big dramatic announcement. So they then kind of scrambled about putting the policy in place to deliver on these promises that their leader had made. So we all looked at the 14th five year plan, which was published the following March, with some interest to see how they were going to do it. And everyone was rather surprised that that pledge that 2060 pledge, only got one mentioned in the 14 five year plan. And what was mentioned far more in all the speeches around these big important political meetings that happened in China in March every year was energy security. And that's just that just flags up, the way external circumstances impact domestic thinking.

CURWOOD: Let's talk about the current shortage of electricity in China right now. I understand that factory production is getting cut, there are even some limits on daily use of of elevators, there's more coal being produced, what's happening in the different regions of China? I’m wondering also between South and North as well.

HILTON: Well, that's a wonderful kind of perfect storm, if you like in China. So you know, we've, as we know, we are emerging, we hope from a global pandemic. So globally, energy demand was way down, and prices were way down. And factory production was way down and consumption, everything was down. But it begins to revive as countries come out of their lockdowns. And, you know, people look around and start to normalize life again. And in China, which locked down rather less actually than many other countries, export demand began to rise and domestic demand began to rise. So energy demand begins to rise. But at the same time, energy supply, the supply, particularly of coal in China had dropped because on a separate program, the government was trying to create greater efficiencies and to restrict emissions. So that meant that the use of coal was already beginning to be restricted. And in addition, they were closing down some old and dangerous coal mines. And so this was part of a general program to take, you know, coal gradually out of the primary energy mix. So you know, the energy demand went up 17%. And coal production only went up about 6%.

CURWOOD: And if you want to buy it from overseas, you have to go to Australia, things don't seem to be going very well, between China and the Australians these days.

HILTON: Well, things have gone very badly with Australia so badly that the very high grade Australian coal that China used to buy had been you know, nixed by the Chinese government to punish Australia. That wasn't a huge proportion of the coal imports. But it was important because it was high grade. But then if you look around the global market, coal prices have gone through the roof. So if you're a Chinese coal fired power station, looking for coal, you are going to have to pay three times as much for Indonesian coal, as you had, you know, last year, but you couldn't move your prices. So it was a clash between, you know, the free market, which was operating and global energy prices, and the restrictions of the planned economy that operates in the Chinese grid and the Chinese electricity system. So the poor guys who are supposed to be generating the electricity, we're looking at a situation in which they were just generating massive losses. So in order to survive, they said, well, we'll still supply electricity, but not that much. So they restricted their supply in order to control their losses. And that meant that there's just not enough to go round as all this demand is surging. So, you know, people suddenly found that, you know, they live in multi story buildings and the elevators didn't work anymore. It happened very quickly, these rolling carts, factories couldn't meet their orders, you know, even traffic lights and hospitals were having supplies cut. And part of that there's another last element in this, which is I mentioned those targets for efficiency, which are part of the long term climate targets. You know, as you come to the end of a planning period, all Chinese officials who have these targets in their, you know, work plan, are desperate to meet them, because if you don't meet them, it's a black mark for your promotion. So they tend to go to rather extreme measures in order to meet the target. And we have seen, even without a supply crunch, we have seen in the past energy simply being cut, because it will get them in under the wire for the close of the planning period, and they meet their targets. No other reason, just just because that's how the planning system works.

CURWOOD: Why do you think the energy crisis won't affect the long term approach to the climate in China?

HILTON: I don't think it will. Because China's approach to climate goes back a long way. China's climate risk is huge. I mean, if you think of the where all the development takes place, or took the early development took place, it was along that East Coast, big Delta cities like Shanghai, Tianjin, and Guangzhou, huge, hugely sophisticated and important industrial sites, big population centers. And all of China's a major rivers derive from the ice and snow in the Himalaya, which is melting very fast. So clearly, China has enormous vulnerabilities. And the other factor was that the there was an environmental crisis in China, which was expressed in terrible air pollution, water pollution, soil pollution. And that was the product of 30 years of catch up industrial production, which had delivered a lot in terms of, you know, raised income levels, and much more sophisticated urbanization, and all of that was fine. But it was also exhausted, it was, you know, other other Asian Tigers had done this. So Taiwan and South Korea and Japan, they all follow the same model, you do very rapid growth, low added value, quite wasteful, but rapid production. So you get your rural population into factories, and that's your first stage of development. When you get to the point where that no longer works, you have to move up the value chain. So you start, you know, if you're Taiwan, you start making television sets or computers, or, you know, instead of t shirts and cigarette lighters, so China was at that point when it was running out of steam in the old model. And to move up the technology value chain, it looked at what the technologies of the future would be, and identified very quickly, low carbon technologies. So they invested enormously in everything to do with climate change. So wind power, solar power, nuclear power, big dams, electric vehicles, rarus, absolutely everything you need to transform your industrial economy to service climate action. And they've been doing that for nearly 15 years now. So once you've built your industrial strategy, on the need for an energy transition on the recognition that climate change is a massive threat. And you have built a strategy, which allows you to be the supplier of goods and services to a world that is trying to battle climate change. You don't change that tomorrow, you don't change that just because you're short of coal this week. You know, that is a long term plan strategy. And that's where China has bet its future.

CURWOOD: Let's circle back now then to COP 26. This UN Climate Summit, given the conditions that China is dealing with right now, what do you think they're going to put on the table? At this meeting, I gather that Xi Jinping is not going to come himself to Glasgow, Scotland.

HILTON: I think what we'll see is not so much a great revision of targets, although China does still promise a new NDC a new nationally determined contribution. There is some wiggle room, for example, the 2030 target, which is the date at which China has promised to peak its emissions. That target was on the table in Paris six years ago, it was regarded as pretty loose then and there is still room inside that target for China to bring it forward. So China quick turn up and say look, we are bringing forward our peaking date to 2028 or even 2025. That would make an enormous difference. Because the earlier we all act and we really really have to you know get things going before 2030 because after that, it becomes very difficult. So if China were to do that, it would certainly gain a lot of approval, and it would also help the negotiations. What I think China will also do is point to the announcements already made. So the 2060 target, but also the promise not to build any new coal outside China anymore. So no more coal on the Belton Road, that's a relatively easy thing to do. China will also promise to help instead of building coal, to help other countries build renewable systems. And so helping them to leapfrog that high emitting phase that has been the default assumption of any industrializing country. And that's also extremely important because there's a lot of potential out there for high emissions in countries that have yet to industrialize. And it's very important that we all assist them to do that.

CURWOOD: Isabel Hilton is founder and Senior Advisor of China dialogue.net. Thank you so much for taking the time with us today, Isabel.

HILTON: Steve. It's been a real pleasure. Thank you for having me.

 

Links

The Guardian | “China’s Plan To Build More Coal-Fired Plants Deals Blow to UK’s Cop26 Ambitions”

About Isabel Hilton

ChinaDialogue.net