1 00:00:02,920 --> 00:00:04,440 Speaker 1: Hello Acua hi Asco. 2 00:00:04,920 --> 00:00:07,480 Speaker 2: So we're about to take a short Christmas break on 3 00:00:07,720 --> 00:00:10,399 Speaker 2: zero and most of today's episode is going to be 4 00:00:10,440 --> 00:00:12,840 Speaker 2: a replay of one of our favorite episodes of the 5 00:00:12,880 --> 00:00:16,759 Speaker 2: past year. It's an interview with Larry mullerverta co founder 6 00:00:16,800 --> 00:00:19,480 Speaker 2: of the Center for Research on Energy and Clean Air, 7 00:00:20,120 --> 00:00:23,079 Speaker 2: and that interview is all about trying to answer the 8 00:00:23,160 --> 00:00:25,200 Speaker 2: question that everyone in the climate world really wants to 9 00:00:25,239 --> 00:00:29,440 Speaker 2: know the answer to which is have China's emissions finally peaked? 10 00:00:29,880 --> 00:00:32,400 Speaker 2: But before we dive into the main conversation with Larry, 11 00:00:32,760 --> 00:00:35,600 Speaker 2: a lot has been moving in this space, so we 12 00:00:35,640 --> 00:00:37,640 Speaker 2: thought we wanted to do a quick update on the topic. 13 00:00:37,720 --> 00:00:40,680 Speaker 2: So actually in the episode, Larry talks about China's emissions 14 00:00:40,680 --> 00:00:44,080 Speaker 2: flat nining or following a slight downward trend, but you 15 00:00:44,159 --> 00:00:47,599 Speaker 2: both acknowledge in the interview that there's some uncessainity there 16 00:00:47,640 --> 00:00:52,040 Speaker 2: about whether they are indeed plateaued or potentially falling. Almost 17 00:00:52,080 --> 00:00:55,240 Speaker 2: six months on from that episode being recorded, has the 18 00:00:55,280 --> 00:00:56,200 Speaker 2: trend continued. 19 00:00:56,840 --> 00:00:59,920 Speaker 3: Peaks are very hard to go in advance after your 20 00:01:00,080 --> 00:01:02,840 Speaker 3: really only know maybe a couple of years after the 21 00:01:02,880 --> 00:01:07,120 Speaker 3: peak has happened, that indeed something peaked, but because China is, 22 00:01:07,319 --> 00:01:10,640 Speaker 3: you know, thirty percent of global emissions. You really want 23 00:01:10,680 --> 00:01:13,000 Speaker 3: to know whether China's emissions are peaking. And this is 24 00:01:13,040 --> 00:01:15,759 Speaker 3: why we get you know, Lowry and other researchers working 25 00:01:15,840 --> 00:01:18,919 Speaker 3: on this problem. In the last six months, We've learned 26 00:01:18,959 --> 00:01:21,840 Speaker 3: a couple of things. Louri himself came out with a study, 27 00:01:21,959 --> 00:01:25,400 Speaker 3: and he continues to think that China's emissions have peaked 28 00:01:25,600 --> 00:01:29,679 Speaker 3: or are on a slightly downward turn, primarily because of 29 00:01:29,760 --> 00:01:33,919 Speaker 3: its immense clean energy build out. It continues to install 30 00:01:34,000 --> 00:01:37,200 Speaker 3: record amounts of solar and wind and batteries and deploy 31 00:01:37,319 --> 00:01:41,399 Speaker 3: huge amounts of electric cars. All that is contributing towards 32 00:01:41,480 --> 00:01:45,600 Speaker 3: that trend, Lowry says. But a separate study from the 33 00:01:45,600 --> 00:01:50,880 Speaker 3: Global Carbon Project also found something similar. So they estimate 34 00:01:50,960 --> 00:01:55,280 Speaker 3: emissions from all countries and all economic sectors. Again, they 35 00:01:55,320 --> 00:01:58,160 Speaker 3: know their uncertainties involved, and we'll only really know the 36 00:01:58,200 --> 00:02:02,440 Speaker 3: real figures three years on. So they give an uncertainty 37 00:02:02,480 --> 00:02:05,240 Speaker 3: figure for China that emissions might have fallen by as 38 00:02:05,320 --> 00:02:08,560 Speaker 3: much as point nine percent, or may have risen by 39 00:02:08,600 --> 00:02:11,320 Speaker 3: two percent, and they land in the midpoint as an 40 00:02:11,360 --> 00:02:13,760 Speaker 3: increase of about zero point four percent is what they 41 00:02:13,800 --> 00:02:17,280 Speaker 3: think is likely. That is still a plantain compared to 42 00:02:17,400 --> 00:02:21,840 Speaker 3: China's emissions increased strength over the past four decades. So 43 00:02:22,800 --> 00:02:24,880 Speaker 3: both these studies are saying that we are going in 44 00:02:24,919 --> 00:02:27,600 Speaker 3: a direction that you know is generally good for the planet. 45 00:02:27,840 --> 00:02:29,519 Speaker 2: So the other thing that's happened over the last six 46 00:02:29,560 --> 00:02:32,760 Speaker 2: months is COP thirty, which you were at in blem 47 00:02:32,800 --> 00:02:36,520 Speaker 2: in Brazil in November. And you know, what China does 48 00:02:36,520 --> 00:02:38,480 Speaker 2: on the world stage is also really important, and there 49 00:02:38,600 --> 00:02:40,920 Speaker 2: was a lot of expectation in the lead up to 50 00:02:41,240 --> 00:02:44,480 Speaker 2: COP thirty that China would perhaps fill in the void 51 00:02:44,600 --> 00:02:46,320 Speaker 2: that's been left by the US pulling out of the 52 00:02:46,320 --> 00:02:50,280 Speaker 2: Powers Agreement and start to take the lead on the 53 00:02:50,280 --> 00:02:53,440 Speaker 2: world stage kind of as a multilateral issue around climate. 54 00:02:53,880 --> 00:02:56,160 Speaker 2: It is, after all, the largest producer of green tech, 55 00:02:56,240 --> 00:02:58,799 Speaker 2: and it's in China's interest to see that adopted around 56 00:02:58,800 --> 00:03:02,400 Speaker 2: the world. So we see that happen. Did China become 57 00:03:02,480 --> 00:03:05,920 Speaker 2: the kind of big pressure of global climate treaties in 58 00:03:05,960 --> 00:03:07,799 Speaker 2: the COP thirty forum. 59 00:03:07,280 --> 00:03:09,240 Speaker 3: Not so much, And I think there's a good reason 60 00:03:09,240 --> 00:03:13,480 Speaker 3: for that. So China has for the last many decades 61 00:03:13,560 --> 00:03:20,399 Speaker 3: of these diplomacy conversations kind of remained the reluctant candidate 62 00:03:20,520 --> 00:03:23,519 Speaker 3: because it knew it needed to increase emissions, and now 63 00:03:23,560 --> 00:03:26,640 Speaker 3: that it is the world's largest emitter, it also knows 64 00:03:26,680 --> 00:03:30,119 Speaker 3: that the harder targets it sets, the harder it will 65 00:03:30,160 --> 00:03:33,280 Speaker 3: have to go to meet them. Because China takes pride 66 00:03:33,600 --> 00:03:39,720 Speaker 3: in underpromising over delivering. And we thought maybe given how 67 00:03:39,800 --> 00:03:43,320 Speaker 3: much space President Donald Trump in the US providing China 68 00:03:43,360 --> 00:03:45,760 Speaker 3: to take on this climate leadership, that they would really 69 00:03:45,760 --> 00:03:49,000 Speaker 3: step in. But nope, not on the diplomacy stage. That 70 00:03:49,120 --> 00:03:51,560 Speaker 3: is not to say that they are not stepping up 71 00:03:51,640 --> 00:03:53,120 Speaker 3: on the technology space. 72 00:03:53,440 --> 00:03:55,960 Speaker 2: Well, that's something I wanted to ask you about. You know, 73 00:03:56,000 --> 00:03:59,240 Speaker 2: we've had all these incredible stories coming out of China 74 00:03:59,280 --> 00:04:02,880 Speaker 2: over the past year, and you know a lot of 75 00:04:02,880 --> 00:04:05,200 Speaker 2: that looks set to continue in twenty twenty six. So 76 00:04:05,680 --> 00:04:08,320 Speaker 2: what trends do you think we might see continue, What 77 00:04:08,360 --> 00:04:11,080 Speaker 2: trends do you think we might see emerge from China 78 00:04:11,120 --> 00:04:13,080 Speaker 2: twenty twenty six, and what stories are you on the 79 00:04:13,160 --> 00:04:14,800 Speaker 2: hunt for next year when it comes to China and 80 00:04:14,840 --> 00:04:18,320 Speaker 2: its involvement in both the tech and climate politics space. 81 00:04:18,600 --> 00:04:20,760 Speaker 3: So, China is not just the world's largest emitter, it 82 00:04:20,800 --> 00:04:24,320 Speaker 3: is the world's second largest economy, and almost anything it 83 00:04:24,360 --> 00:04:27,640 Speaker 3: does is now really closely observed. What we've seen over 84 00:04:27,640 --> 00:04:31,200 Speaker 3: the past few months is that China's investment figures are 85 00:04:31,240 --> 00:04:34,840 Speaker 3: declining in hard assets. You know, a lot of China's 86 00:04:34,839 --> 00:04:38,800 Speaker 3: growth was built on property development, on infrastructure development, and 87 00:04:38,800 --> 00:04:42,880 Speaker 3: that's starting to fall, which is a troubling sign for 88 00:04:42,960 --> 00:04:46,480 Speaker 3: an economy that is still high low middle income needs 89 00:04:46,480 --> 00:04:50,679 Speaker 3: to grow. And what we have seen is that China 90 00:04:50,680 --> 00:04:54,720 Speaker 3: has been replacing that kind of investment with more investments 91 00:04:54,760 --> 00:04:58,839 Speaker 3: in high tech industries, so yes, artificial intelligence for sure, 92 00:04:59,000 --> 00:05:03,680 Speaker 3: chips making, but also really its core advantages now in 93 00:05:03,800 --> 00:05:07,400 Speaker 3: green technologies, in solar, in wind, in batteries, in electric cars, 94 00:05:08,120 --> 00:05:12,720 Speaker 3: and we expect, given that the infrastructure spend is going down, 95 00:05:13,040 --> 00:05:16,760 Speaker 3: China will likely double down on its green technologies in 96 00:05:16,800 --> 00:05:20,760 Speaker 3: the next year. And here at Bloomergreen will be observing 97 00:05:21,000 --> 00:05:24,920 Speaker 3: how exactly because the US is now given China this 98 00:05:25,080 --> 00:05:27,640 Speaker 3: open space. You know, the US really doesn't want to 99 00:05:27,640 --> 00:05:30,240 Speaker 3: build very much of its own renewable energy, at least 100 00:05:30,279 --> 00:05:33,080 Speaker 3: at a government level, doesn't want to provide any incentives 101 00:05:33,080 --> 00:05:37,320 Speaker 3: for green industries to be born in the US. That 102 00:05:37,400 --> 00:05:40,839 Speaker 3: really just leaves China this open space to try and 103 00:05:41,040 --> 00:05:45,400 Speaker 3: not just deploy that domestically in China, but also all 104 00:05:45,440 --> 00:05:49,040 Speaker 3: around the world where people are hungry for it. There 105 00:05:49,200 --> 00:05:52,160 Speaker 3: is a rise in electricity demand in the West and 106 00:05:52,200 --> 00:05:55,120 Speaker 3: in developing countries, and the quickest way to meet it 107 00:05:55,160 --> 00:05:57,880 Speaker 3: is through green technologies. And we know that China will 108 00:05:57,920 --> 00:06:01,080 Speaker 3: definitely deploy green technologies in other parts of the world. 109 00:06:01,279 --> 00:06:03,680 Speaker 3: But how exactly is it going to do that and 110 00:06:03,760 --> 00:06:07,640 Speaker 3: will it take advantage of America's absence. That's what we're 111 00:06:07,640 --> 00:06:09,159 Speaker 3: going to be watching for in twenty twenty six. 112 00:06:09,600 --> 00:06:11,919 Speaker 2: Well, thank you very much, a chat and a merry Christmas, 113 00:06:11,920 --> 00:06:13,040 Speaker 2: and a happy New Year to you. 114 00:06:13,160 --> 00:06:15,640 Speaker 3: Happy Christmas to you too, and a happy new year. 115 00:06:16,240 --> 00:06:20,240 Speaker 3: And now here's my conversation with Loarry Millerwertha, recorded in 116 00:06:20,320 --> 00:06:23,159 Speaker 3: July twenty twenty five. We have linked to both the 117 00:06:23,200 --> 00:06:25,800 Speaker 3: studies that we talked about in the show notes, and 118 00:06:26,040 --> 00:06:28,640 Speaker 3: just to note that Lowry's analysis as of July is 119 00:06:28,680 --> 00:06:32,719 Speaker 3: still fully relevant to understanding how China got here. Hope 120 00:06:32,760 --> 00:06:34,880 Speaker 3: you find it insightful and we'll see you in the 121 00:06:34,920 --> 00:06:44,920 Speaker 3: new year. Lowry, welcome to the show. 122 00:06:45,080 --> 00:06:45,400 Speaker 1: Thank you. 123 00:06:46,120 --> 00:06:49,400 Speaker 3: Let's start with the big picture and situate the listener 124 00:06:49,520 --> 00:06:54,840 Speaker 3: on where China is. Obviously, it's a big manufacturing powerhouse. 125 00:06:54,920 --> 00:06:57,560 Speaker 3: For the last three decades, the submissions have been growing 126 00:06:57,800 --> 00:07:01,520 Speaker 3: really quickly. It is now a word second largest economy. 127 00:07:01,800 --> 00:07:04,200 Speaker 3: But what are its climate targets? 128 00:07:04,480 --> 00:07:09,880 Speaker 1: So China's been pledging climate targets since the Copenhagen Climate Conference, 129 00:07:10,120 --> 00:07:13,360 Speaker 1: which was more than fifteen years ago now. So the 130 00:07:13,400 --> 00:07:18,080 Speaker 1: first quantitive targets that they pledged were for twenty twenty, 131 00:07:18,760 --> 00:07:23,440 Speaker 1: and then another set of targets was set for twenty thirty. 132 00:07:23,760 --> 00:07:27,680 Speaker 1: That's the current target year for China. The targets were 133 00:07:27,680 --> 00:07:32,400 Speaker 1: announced in twenty twenty one. The headline target that China 134 00:07:32,440 --> 00:07:37,280 Speaker 1: has been setting is carbon intensity so CO two emissions 135 00:07:37,280 --> 00:07:41,000 Speaker 1: from the energy sector per unit of GDP, which when 136 00:07:41,000 --> 00:07:43,800 Speaker 1: your GDP is growing fast, is of course a flattering 137 00:07:44,200 --> 00:07:47,920 Speaker 1: way of setting targets because even if your emissions are 138 00:07:47,960 --> 00:07:50,320 Speaker 1: going up let's say five percent in a given year, 139 00:07:50,360 --> 00:07:53,240 Speaker 1: if you clock ten percent GDP growth, then you can 140 00:07:53,280 --> 00:07:57,000 Speaker 1: say that you got a reduction in your carbon intensity. 141 00:07:57,200 --> 00:08:01,600 Speaker 1: So the target for twenty thirty is to reduce CO 142 00:08:01,840 --> 00:08:05,520 Speaker 1: two intensity by more than sixty five percent from the 143 00:08:05,920 --> 00:08:08,800 Speaker 1: two thousand and five levels, so over a period of 144 00:08:08,880 --> 00:08:11,720 Speaker 1: twenty five years. To make that a bit more tangible. 145 00:08:12,080 --> 00:08:15,680 Speaker 1: When the target was set in twenty twenty one, it 146 00:08:16,080 --> 00:08:20,560 Speaker 1: looked like it would allow pretty much businesses usual COO 147 00:08:20,560 --> 00:08:24,040 Speaker 1: two emissions growth of one to two percent per year 148 00:08:24,360 --> 00:08:27,800 Speaker 1: until twenty thirty. What happened though, is that during the 149 00:08:27,920 --> 00:08:34,360 Speaker 1: zero COVID period, China's economic strategy shifted towards emphasizing manufacturing 150 00:08:34,480 --> 00:08:38,600 Speaker 1: very heavily, which caused the spiking emissions. And now that 151 00:08:38,640 --> 00:08:41,880 Speaker 1: twenty thirty target is in fact very meaningful, if not 152 00:08:42,000 --> 00:08:46,160 Speaker 1: challenging one. So from the current level, emissions will have 153 00:08:46,240 --> 00:08:50,800 Speaker 1: to fall in absolute terms out to twenty thirty in 154 00:08:50,880 --> 00:08:52,000 Speaker 1: order to meet that target. 155 00:08:52,400 --> 00:08:54,960 Speaker 3: And then it does have an absolute target too, which 156 00:08:55,000 --> 00:08:58,000 Speaker 3: is to try and peak carbon emissions by twenty thirty. 157 00:08:58,120 --> 00:09:02,800 Speaker 3: So if it does both things, then China may be 158 00:09:02,920 --> 00:09:05,480 Speaker 3: on track, but right now it is quite off track 159 00:09:05,920 --> 00:09:10,680 Speaker 3: now in terms of where things are. Specifically over the 160 00:09:10,720 --> 00:09:14,599 Speaker 3: past year, You've done an analysis looking at china CO 161 00:09:14,760 --> 00:09:19,960 Speaker 3: two emissions and they've been down by a significant percentage, 162 00:09:20,320 --> 00:09:25,239 Speaker 3: and that tends to only happen during times of financial crisis. 163 00:09:25,360 --> 00:09:27,840 Speaker 3: Is China in a financial crisis and is that why 164 00:09:27,880 --> 00:09:29,960 Speaker 3: the emissions are down? Just talk us through what have 165 00:09:30,040 --> 00:09:31,079 Speaker 3: you seen over the past year? 166 00:09:31,600 --> 00:09:35,400 Speaker 1: For sure, So as I said, China's emissions went up 167 00:09:35,480 --> 00:09:39,040 Speaker 1: rapidly during the zero COVID years, so from twenty twenty 168 00:09:39,080 --> 00:09:42,120 Speaker 1: out to twenty twenty three. But at the same time, 169 00:09:42,559 --> 00:09:47,000 Speaker 1: China's clean energy industries boomed because of the emphasis of manufacturing, 170 00:09:47,080 --> 00:09:52,120 Speaker 1: because of government drive together kinds of projects and investment moving, 171 00:09:52,600 --> 00:09:55,480 Speaker 1: because of a shift of investment from real estate to 172 00:09:56,000 --> 00:09:59,360 Speaker 1: the clean energy industries, and so because of all of that, 173 00:10:00,920 --> 00:10:05,400 Speaker 1: clean energy additions have reached a level that no one 174 00:10:05,880 --> 00:10:09,520 Speaker 1: really expected. The past twelve months were the first time 175 00:10:10,559 --> 00:10:14,480 Speaker 1: that all of the growth in electricity demand was covered 176 00:10:14,720 --> 00:10:20,160 Speaker 1: by clean energy, while electricity demand grew above average rates. 177 00:10:20,480 --> 00:10:22,960 Speaker 1: So this is the first time that power sector emissions 178 00:10:22,960 --> 00:10:26,720 Speaker 1: and total emissions have gone down without the cause being 179 00:10:27,320 --> 00:10:30,960 Speaker 1: the global financial crisis, zero COVID, something else that would 180 00:10:31,040 --> 00:10:34,600 Speaker 1: lead to a drop or a slowdown in electricity demand. 181 00:10:35,120 --> 00:10:39,880 Speaker 1: There of course, economic headwinds in China related to the 182 00:10:39,920 --> 00:10:43,320 Speaker 1: trade war, related to the long tail of the economic 183 00:10:43,360 --> 00:10:46,320 Speaker 1: impacts from zero COVID, and so on. But the key 184 00:10:46,360 --> 00:10:49,920 Speaker 1: point is that over the past twelve months, electricity demand 185 00:10:50,000 --> 00:10:54,320 Speaker 1: growth was still above average, so whatever was happening in 186 00:10:54,360 --> 00:10:57,720 Speaker 1: some sectors of the economy didn't result in a slowdown 187 00:10:57,760 --> 00:10:59,920 Speaker 1: in edage demand or electricity demand. 188 00:11:00,400 --> 00:11:02,280 Speaker 3: How much have emissions fallen by? 189 00:11:02,800 --> 00:11:06,280 Speaker 1: Yeah, so transmissions over the past twelve months are down 190 00:11:06,480 --> 00:11:10,040 Speaker 1: by about one percent. So it's significant enough, especially compared 191 00:11:10,120 --> 00:11:12,920 Speaker 1: with the repid road of several percent per year in 192 00:11:12,960 --> 00:11:16,360 Speaker 1: the past few years, to mark change in the trend. 193 00:11:16,400 --> 00:11:19,760 Speaker 1: But it also means that if there is a surprise 194 00:11:20,080 --> 00:11:23,200 Speaker 1: like severe drought and heat wave over the summer, that 195 00:11:23,240 --> 00:11:26,480 Speaker 1: could still cause a spike that would cause emissions to 196 00:11:26,480 --> 00:11:27,520 Speaker 1: top the previous peak. 197 00:11:28,040 --> 00:11:30,760 Speaker 3: How certain are we that this peak might be the 198 00:11:30,840 --> 00:11:35,040 Speaker 3: peak and we might not just see a rise next year. 199 00:11:35,679 --> 00:11:38,560 Speaker 1: I think it's quite certain that the key trends driving 200 00:11:38,679 --> 00:11:43,520 Speaker 1: this structur rule reduction emissions will continue this year for 201 00:11:43,640 --> 00:11:48,720 Speaker 1: the next few years. There are two key uncertainties. The 202 00:11:48,760 --> 00:11:52,920 Speaker 1: first one is will the clean energy growth continue? So 203 00:11:53,040 --> 00:11:56,040 Speaker 1: trying to change the price is paid to a new 204 00:11:56,520 --> 00:12:02,559 Speaker 1: renewable power projects earlier this year. The changes kicking in 205 00:12:02,559 --> 00:12:06,640 Speaker 1: in the summer of this year, and so the industry 206 00:12:06,640 --> 00:12:09,800 Speaker 1: has been quite optimistic that they can keep the development going, 207 00:12:10,120 --> 00:12:13,559 Speaker 1: but it does create uncertainty. So that's one thing that 208 00:12:14,120 --> 00:12:16,280 Speaker 1: we need to be mindful of. The other one is 209 00:12:16,360 --> 00:12:20,800 Speaker 1: what happens with energy demand growth, and so the expectation 210 00:12:21,520 --> 00:12:24,560 Speaker 1: would be that if China's aim of weathering the current 211 00:12:24,679 --> 00:12:28,960 Speaker 1: trade tensions and so on by stimulating consumption is successful 212 00:12:29,120 --> 00:12:31,840 Speaker 1: and so on, then energy de mind growth would be 213 00:12:32,040 --> 00:12:35,480 Speaker 1: at or even below the historical trends. But of course, 214 00:12:35,480 --> 00:12:39,280 Speaker 1: if there is another decision, the resort to construction stimuls 215 00:12:39,360 --> 00:12:42,440 Speaker 1: for example, then we could see faster energy demand growth 216 00:12:42,480 --> 00:12:44,800 Speaker 1: and that could also upset the pig. 217 00:12:45,160 --> 00:12:48,720 Speaker 3: Before we get into the details of how exactly China 218 00:12:48,760 --> 00:12:52,040 Speaker 3: came to this point, let's just talk about how reliable 219 00:12:52,720 --> 00:12:55,720 Speaker 3: these numbers are. You know, how do you know whether 220 00:12:55,760 --> 00:13:01,000 Speaker 3: we can trust China's carbon accounting is renewables figures, it's 221 00:13:01,080 --> 00:13:04,679 Speaker 3: coal deployment, and what are the big holes that are 222 00:13:04,720 --> 00:13:05,960 Speaker 3: still there in the data? 223 00:13:06,120 --> 00:13:08,360 Speaker 1: Right? So I would really point to do things in 224 00:13:08,440 --> 00:13:11,280 Speaker 1: terms of how to think about china statistical data. So 225 00:13:11,320 --> 00:13:14,520 Speaker 1: one of them is that there are always uncertainties for 226 00:13:14,600 --> 00:13:18,200 Speaker 1: a big country with a complex, rapidly changing economy, and 227 00:13:18,720 --> 00:13:21,440 Speaker 1: simply in terms of the quality of the statistics, china 228 00:13:21,480 --> 00:13:25,880 Speaker 1: statistics are much better than many other emerging economies. The 229 00:13:25,920 --> 00:13:32,520 Speaker 1: other thing is intentional statistical manipulation, which does happen in China, 230 00:13:32,559 --> 00:13:35,840 Speaker 1: and it does happen in China more than just about 231 00:13:36,240 --> 00:13:39,600 Speaker 1: or let's say, most other countries, simply because China set 232 00:13:39,720 --> 00:13:44,440 Speaker 1: so many quantitative targets. So whenever there's a quantitative target 233 00:13:44,520 --> 00:13:47,840 Speaker 1: to do something, the statistical statistics tend to show that 234 00:13:47,880 --> 00:13:51,480 Speaker 1: it happened, whether or not it did. So the quality 235 00:13:51,520 --> 00:13:54,239 Speaker 1: of the statistics has been improving. This kind of statistical 236 00:13:54,280 --> 00:13:58,200 Speaker 1: manipulation has gotten harder to do and less blatant than 237 00:13:58,240 --> 00:14:00,920 Speaker 1: it used to be, but it's something that one always 238 00:14:01,000 --> 00:14:04,640 Speaker 1: has to be mindful of. So the way I evaluate 239 00:14:05,160 --> 00:14:09,280 Speaker 1: the robustness of different statistics is looking at okay, So 240 00:14:09,440 --> 00:14:14,080 Speaker 1: have these statistics shown trends that the government wouldn't want 241 00:14:14,160 --> 00:14:19,560 Speaker 1: to display? Electricity statistics are famed for doing that, so 242 00:14:20,640 --> 00:14:25,160 Speaker 1: they're one of the indicators that we know that China's 243 00:14:25,160 --> 00:14:29,400 Speaker 1: policy makers themselves have used when economic numbers have looked 244 00:14:29,680 --> 00:14:33,480 Speaker 1: too good to be true, and so they've shown slowdowns 245 00:14:33,520 --> 00:14:35,680 Speaker 1: when the government wouldn't like there to be a slowdown, 246 00:14:36,080 --> 00:14:39,080 Speaker 1: or they've shown rapid growth when the government wouldn't like 247 00:14:39,160 --> 00:14:41,520 Speaker 1: there to be rapid growth. That said, over the past 248 00:14:41,520 --> 00:14:43,920 Speaker 1: twelve months, there has been very little with any pressure 249 00:14:44,080 --> 00:14:49,520 Speaker 1: on China's provinces or enterprises to actually show that emissions 250 00:14:49,560 --> 00:14:52,160 Speaker 1: are going down. So there isn't much of a reason 251 00:14:52,200 --> 00:14:54,680 Speaker 1: to think that there would be that kind of distortions. 252 00:14:55,120 --> 00:14:58,360 Speaker 3: Right now, let's look at what is causing the decline 253 00:14:58,360 --> 00:15:02,320 Speaker 3: and emissions. You talked about the large amount of solar 254 00:15:02,360 --> 00:15:05,720 Speaker 3: and wind power and battery capacity that China is installing. 255 00:15:06,480 --> 00:15:09,480 Speaker 3: How much venerables is it? In numbers? 256 00:15:10,200 --> 00:15:13,800 Speaker 1: The numbers are pretty hard to get your head around. 257 00:15:13,840 --> 00:15:17,080 Speaker 1: So we're talking more than three hundred gigawatts of wind 258 00:15:17,120 --> 00:15:20,040 Speaker 1: and solar per year. The US has less than two 259 00:15:20,120 --> 00:15:24,640 Speaker 1: hundred gigawatts of solar installed in total, so China's additions 260 00:15:24,640 --> 00:15:27,520 Speaker 1: in one year exceeded that. And last year was a 261 00:15:27,560 --> 00:15:30,200 Speaker 1: record year for solar in the US as well, with 262 00:15:30,320 --> 00:15:33,000 Speaker 1: fifty k CO setteds so turned it almost five times. 263 00:15:33,320 --> 00:15:36,040 Speaker 1: In terms of power generation, the amount of solar and 264 00:15:36,080 --> 00:15:40,680 Speaker 1: wind added in twenty twenty four was enough to generate 265 00:15:40,840 --> 00:15:45,200 Speaker 1: the entire electricity consumption of the UK, and so most importantly, 266 00:15:45,240 --> 00:15:49,760 Speaker 1: we're talking about five percent of China's own electricity demand 267 00:15:50,000 --> 00:15:53,800 Speaker 1: added in clean power generation per year, which is the 268 00:15:54,000 --> 00:15:59,200 Speaker 1: average historical growth rate of electricity demand. So that crossover 269 00:15:59,320 --> 00:16:03,880 Speaker 1: where past editions start to actually cover electricity demand growth 270 00:16:04,040 --> 00:16:08,320 Speaker 1: is what makes a turnaround in emissions possible. And in 271 00:16:08,400 --> 00:16:13,440 Speaker 1: terms of evs, they're approaching fifty percent of all passenger 272 00:16:13,520 --> 00:16:20,440 Speaker 1: vehicles sold, also gaining share rapidly in heavier commercial vehicles, 273 00:16:20,680 --> 00:16:24,640 Speaker 1: where the next breakthrough is expected. The same is happening 274 00:16:24,680 --> 00:16:30,120 Speaker 1: now for electricity storage. So there's almost two hundred gigawats 275 00:16:30,200 --> 00:16:34,960 Speaker 1: of pumped hydro storage in operation and under construction, and 276 00:16:35,240 --> 00:16:38,800 Speaker 1: just last year about thirty gig awards of battery storage 277 00:16:39,720 --> 00:16:43,120 Speaker 1: was added in China. So to put things into scale, 278 00:16:43,320 --> 00:16:47,040 Speaker 1: China speak, demand is just over one thousand gig awards. 279 00:16:47,080 --> 00:16:50,880 Speaker 1: So when we start to talk about a few percent 280 00:16:50,920 --> 00:16:54,520 Speaker 1: of that in battery storage added per year, then that 281 00:16:54,640 --> 00:16:58,880 Speaker 1: starts to definitely make a dent in how much GUS 282 00:16:59,000 --> 00:17:02,120 Speaker 1: or coal fired power you need to cover those peak demands. 283 00:17:02,760 --> 00:17:05,560 Speaker 3: So is this just a power sector story then that 284 00:17:06,119 --> 00:17:11,560 Speaker 3: emissions are falling because electricity consumption is getting cleaner with 285 00:17:11,760 --> 00:17:14,760 Speaker 3: all the solar and wind and energy storage that is 286 00:17:14,800 --> 00:17:15,760 Speaker 3: coming online. 287 00:17:16,119 --> 00:17:20,000 Speaker 1: The other big thing that's happening in China besides clean 288 00:17:20,040 --> 00:17:24,440 Speaker 1: electricity generation is electrification, and that's happening. Of course, we 289 00:17:24,560 --> 00:17:28,560 Speaker 1: already talked about transportation, but it's also happening in industry. 290 00:17:28,600 --> 00:17:32,280 Speaker 1: It's also happening in buildings, so that means that for 291 00:17:32,359 --> 00:17:35,399 Speaker 1: quite a while already all of the growth in emissions 292 00:17:35,400 --> 00:17:39,960 Speaker 1: has been coming from the electricity sector because you get 293 00:17:40,840 --> 00:17:44,880 Speaker 1: growth energy demanding the other sectors, but they're shifting to electricity, 294 00:17:45,359 --> 00:17:48,119 Speaker 1: so the use of direct use of fossil fuels in 295 00:17:48,160 --> 00:17:51,959 Speaker 1: the other sectors has been falling. The third thing that 296 00:17:52,000 --> 00:17:57,520 Speaker 1: has been happening is a dramatic slowdown in the construction sector. 297 00:17:58,640 --> 00:18:03,639 Speaker 1: So construct especially real estate and construction and infrastructure, have 298 00:18:03,840 --> 00:18:08,359 Speaker 1: been a massive source of GDP growth and emissions growth 299 00:18:08,760 --> 00:18:12,359 Speaker 1: for China over the past couple of decades because those 300 00:18:12,400 --> 00:18:16,600 Speaker 1: are very energy and carbon intensive sectors, so all of 301 00:18:16,640 --> 00:18:20,640 Speaker 1: the cement and steel consumed by those sectors has been 302 00:18:20,640 --> 00:18:25,880 Speaker 1: a major driver of emissions. Cement production has come down 303 00:18:25,920 --> 00:18:29,000 Speaker 1: by more than twenty percent of its peak in twenty 304 00:18:29,080 --> 00:18:32,600 Speaker 1: twenty one, so that has been a major part of 305 00:18:32,680 --> 00:18:36,960 Speaker 1: this story in emissions starting to come down. Simply, the 306 00:18:37,040 --> 00:18:40,879 Speaker 1: process emissions from cement made up almost ten percent of 307 00:18:40,960 --> 00:18:44,639 Speaker 1: China's zero two emissions at its peak. And for the 308 00:18:44,680 --> 00:18:48,440 Speaker 1: steel sector, the trends are slightly more confusing because manufacturing 309 00:18:48,480 --> 00:18:51,399 Speaker 1: has started to use more steel. But steel consumption for 310 00:18:51,600 --> 00:18:56,200 Speaker 1: construction has come down dramatically, and overall steel consumption looks 311 00:18:56,240 --> 00:18:59,280 Speaker 1: like it's splittored or starting to come down, and there's 312 00:18:59,320 --> 00:19:02,920 Speaker 1: a huge but you need to shift to more steel recycling, 313 00:19:03,440 --> 00:19:07,920 Speaker 1: which would reduce the energy demand for steel making significantly, 314 00:19:07,960 --> 00:19:10,360 Speaker 1: even if total production stays flat. 315 00:19:10,640 --> 00:19:12,960 Speaker 3: And so that is an interesting story because we typically 316 00:19:13,040 --> 00:19:16,840 Speaker 3: hear of the renewable story in China, of the electric 317 00:19:16,920 --> 00:19:21,000 Speaker 3: car story in China, but just put the steel sector 318 00:19:21,119 --> 00:19:26,080 Speaker 3: in context here and what this move towards recycling steel, 319 00:19:26,080 --> 00:19:28,879 Speaker 3: which is mostly driven by electricity, and this electricity is 320 00:19:28,880 --> 00:19:33,920 Speaker 3: becoming cleaner, could do too, not just peaking which might 321 00:19:34,000 --> 00:19:38,160 Speaker 3: have happened, but the decline that has to happen afterwards, 322 00:19:38,400 --> 00:19:41,560 Speaker 3: because China has to meet not just as twenty thirty goals, 323 00:19:41,560 --> 00:19:43,639 Speaker 3: but it has the goal to reach carbon neutrality by 324 00:19:43,680 --> 00:19:46,879 Speaker 3: twenty sixty, so it must start to decline pretty quickly. 325 00:19:47,280 --> 00:19:49,879 Speaker 1: Right, So, first of all, the steel sector in China 326 00:19:49,920 --> 00:19:52,320 Speaker 1: is of course massive. China makes more than half of 327 00:19:52,320 --> 00:19:57,600 Speaker 1: the world's steel, and energy use for the steel making 328 00:19:58,119 --> 00:20:00,879 Speaker 1: is the largest source of emissions if you include the 329 00:20:00,880 --> 00:20:04,560 Speaker 1: electricity use. Even without the electricity use, it's almost a 330 00:20:04,560 --> 00:20:08,439 Speaker 1: fifth of China's emissions, and so the opportunity here is 331 00:20:08,440 --> 00:20:12,120 Speaker 1: that as long as China's steel demand was growing rapidly, 332 00:20:12,640 --> 00:20:16,080 Speaker 1: the only way to meet that demand was to produce 333 00:20:16,080 --> 00:20:19,560 Speaker 1: a lot of primary steel. Because if your demand is 334 00:20:19,600 --> 00:20:23,120 Speaker 1: going up five percent ten percent per year, then whatever 335 00:20:23,640 --> 00:20:26,399 Speaker 1: vehicles and buildings and so on that are coming to 336 00:20:26,440 --> 00:20:29,239 Speaker 1: the end of their life so built decades ago, are 337 00:20:29,240 --> 00:20:33,280 Speaker 1: a tiny fraction of your current demand. But once demand 338 00:20:33,400 --> 00:20:38,320 Speaker 1: plateaus and a lot more buildings and vehicles and so 339 00:20:38,400 --> 00:20:40,359 Speaker 1: on start to come to the end of their life, 340 00:20:40,800 --> 00:20:46,040 Speaker 1: the amount of scrap steel available for recycling or potentially 341 00:20:46,080 --> 00:20:49,119 Speaker 1: available for recycling starts to go up fast as a 342 00:20:49,119 --> 00:20:53,719 Speaker 1: percentage of your steel demand. That shift hasn't really happened 343 00:20:53,760 --> 00:20:57,160 Speaker 1: in China yet. The share of electric arc steel making, 344 00:20:57,280 --> 00:21:00,159 Speaker 1: so the kind of steel making that uses scrap as 345 00:21:00,200 --> 00:21:04,760 Speaker 1: the primary input, has stagnated and is in fact missing 346 00:21:04,800 --> 00:21:07,400 Speaker 1: the target for this year. And that's because it's too 347 00:21:07,480 --> 00:21:10,680 Speaker 1: cheap or or too cost competitive in China to make 348 00:21:11,280 --> 00:21:14,880 Speaker 1: steel out of iron ore and cocin coal. But that's 349 00:21:15,040 --> 00:21:18,480 Speaker 1: something that I expect to be fixed because, as I said, 350 00:21:18,480 --> 00:21:21,199 Speaker 1: the target for this year is being missed and it 351 00:21:21,280 --> 00:21:23,760 Speaker 1: clearly needs a further push. 352 00:21:24,040 --> 00:21:26,800 Speaker 3: There's also just the electrification story of China, which has 353 00:21:26,800 --> 00:21:32,359 Speaker 3: been remarkable. So over this century, China has almost tripled 354 00:21:32,359 --> 00:21:37,640 Speaker 3: the share of energy that it consumes coming from electricity, 355 00:21:37,680 --> 00:21:40,920 Speaker 3: so from about ten percent to nearly thirty percent now. 356 00:21:41,480 --> 00:21:45,439 Speaker 3: And in that same period, Western economies have largely remained 357 00:21:45,520 --> 00:21:49,520 Speaker 3: flat at about eighteen to twenty percent of their energy 358 00:21:49,560 --> 00:21:54,840 Speaker 3: coming from electricity. With the trajectory that you have outlined 359 00:21:54,960 --> 00:21:58,960 Speaker 3: in terms of deployment of wind and solar, but also 360 00:21:59,080 --> 00:22:01,880 Speaker 3: some coal, and we should talk about that, and all 361 00:22:02,000 --> 00:22:06,960 Speaker 3: this electrification of transport even now industry that might happen 362 00:22:07,040 --> 00:22:10,920 Speaker 3: with steel. Are we starting to see China becoming an 363 00:22:11,000 --> 00:22:11,840 Speaker 3: electro state. 364 00:22:12,720 --> 00:22:18,080 Speaker 1: I've been a bit skeptical of that broad categorization because 365 00:22:18,119 --> 00:22:22,600 Speaker 1: there are still at least pockets of industry where electrification 366 00:22:22,720 --> 00:22:26,200 Speaker 1: trend isn't clear. But electrification is certainly a big part 367 00:22:26,240 --> 00:22:30,840 Speaker 1: of the strategy for transportation for industry. So there was 368 00:22:30,880 --> 00:22:34,760 Speaker 1: a time that shifting from coal to gas fossil gas 369 00:22:35,280 --> 00:22:38,440 Speaker 1: was a big part of the strategy, especially for addressing 370 00:22:38,560 --> 00:22:43,480 Speaker 1: air pollution, but because of energy security concerns, the emphasis 371 00:22:43,480 --> 00:22:47,000 Speaker 1: on shifting to gas has declined, and also because of 372 00:22:47,040 --> 00:22:51,920 Speaker 1: economic considerations, and so I think electrification will become even 373 00:22:51,960 --> 00:22:53,880 Speaker 1: more clearly the focus. 374 00:22:54,280 --> 00:22:58,120 Speaker 3: And so what makes you pause if all the numbers 375 00:22:58,200 --> 00:23:03,160 Speaker 3: are pointing towards trification and this is not just in 376 00:23:03,200 --> 00:23:07,399 Speaker 3: the transport sector but also in buildings and also in industry, 377 00:23:07,840 --> 00:23:10,119 Speaker 3: and the fact that even steel, which is a laguard, 378 00:23:10,200 --> 00:23:13,040 Speaker 3: might start to catch up. Why do you think the 379 00:23:13,200 --> 00:23:18,439 Speaker 3: electro state thesis is not yet one that is the 380 00:23:18,560 --> 00:23:19,919 Speaker 3: trajectory China is taking. 381 00:23:20,359 --> 00:23:24,960 Speaker 1: I think that's the trajectory for everyone. It's quite obvious. 382 00:23:25,680 --> 00:23:30,640 Speaker 1: It's just that it's not clearly stated as a policy 383 00:23:30,760 --> 00:23:34,680 Speaker 1: end point. But certainly China has to been moving much 384 00:23:34,720 --> 00:23:37,800 Speaker 1: faster than just about everyone else. 385 00:23:44,080 --> 00:23:46,399 Speaker 3: We'll be back with more of my conversation with Louriy 386 00:23:46,600 --> 00:23:50,439 Speaker 3: Mulwerta after this short break. And hey, if you're enjoying 387 00:23:50,440 --> 00:23:52,720 Speaker 3: this episode, please take a moment to rate and review 388 00:23:52,720 --> 00:23:55,960 Speaker 3: the show on Apple Podcasts and Spotify. Your feedback really 389 00:23:55,960 --> 00:23:59,960 Speaker 3: matters and helps new listeners discover the show. Thank you. 390 00:24:07,800 --> 00:24:10,560 Speaker 3: So far, we've looked at the good story, which is 391 00:24:10,960 --> 00:24:15,480 Speaker 3: renewables are helping power emissions decline and things electrifying so 392 00:24:15,560 --> 00:24:19,040 Speaker 3: that means emissions will decline in other sectors. But when 393 00:24:19,040 --> 00:24:22,680 Speaker 3: you look at the numbers, there are currently sectors where 394 00:24:22,680 --> 00:24:24,920 Speaker 3: emissions are growing. What are those. 395 00:24:25,480 --> 00:24:30,440 Speaker 1: The main sector with a clear expectation that coal consumption 396 00:24:30,560 --> 00:24:34,720 Speaker 1: emissions will go up is the chemical sector. China has 397 00:24:34,760 --> 00:24:40,800 Speaker 1: this long standing program of building a coal to chemicals industry, 398 00:24:40,960 --> 00:24:45,040 Speaker 1: which is basically petrochemicals industry using coal as the feedstock 399 00:24:45,560 --> 00:24:52,080 Speaker 1: to produce synthetic couts, synthetic liquid fuels, and chemicals industry outputs. 400 00:24:52,119 --> 00:24:55,360 Speaker 1: And this is incredibly carbon intensive. It's even more much 401 00:24:55,400 --> 00:24:58,880 Speaker 1: more intensive than making the same stuff out of crude oil. 402 00:25:00,080 --> 00:25:03,719 Speaker 1: This is an area where a massive amount of capacity 403 00:25:03,800 --> 00:25:08,920 Speaker 1: is being built to process goal into chemicals. The utilization 404 00:25:09,080 --> 00:25:12,720 Speaker 1: of that capacity has remained quite low because it's struggling 405 00:25:12,760 --> 00:25:16,600 Speaker 1: with profitability. The posymakers are quite clear that this is 406 00:25:16,680 --> 00:25:21,119 Speaker 1: an energy security play or cityp White call planning for 407 00:25:21,240 --> 00:25:25,119 Speaker 1: extreme scenarios, so basically making sure that China has the 408 00:25:25,200 --> 00:25:32,520 Speaker 1: capacity to keep its economy working if maritime transportation of 409 00:25:33,359 --> 00:25:36,240 Speaker 1: oil and gas is blocked as part of a major 410 00:25:36,760 --> 00:25:37,959 Speaker 1: conflict with the US. 411 00:25:38,520 --> 00:25:43,800 Speaker 3: Given the macroeconomic situation right now, which even before Trump 412 00:25:43,880 --> 00:25:47,080 Speaker 3: came to power, was the case where the Chinese economy 413 00:25:47,359 --> 00:25:53,200 Speaker 3: was slowing down, plus the Chinese population has started to decline. 414 00:25:54,080 --> 00:25:58,280 Speaker 3: Is there some contribution to the speaking of emissions that 415 00:25:58,400 --> 00:26:00,680 Speaker 3: is coming from these two facs. 416 00:26:01,480 --> 00:26:05,040 Speaker 1: You can always talk about the counterfactual, which is if 417 00:26:05,080 --> 00:26:09,919 Speaker 1: we were still seeing seven percent ten percent GDP growth 418 00:26:10,119 --> 00:26:14,919 Speaker 1: like two decades ago, then of course even the current 419 00:26:15,880 --> 00:26:19,959 Speaker 1: massive clean energy additions would would fall way short of 420 00:26:20,160 --> 00:26:23,520 Speaker 1: covering demand. But overall, the slowdown of the economy is 421 00:26:23,560 --> 00:26:27,520 Speaker 1: something that has been expected for a long time. So 422 00:26:27,920 --> 00:26:32,919 Speaker 1: slowing down to maybe five percent GDP growth in the 423 00:26:32,960 --> 00:26:35,520 Speaker 1: first half of this decade and towards four percent in 424 00:26:35,560 --> 00:26:39,000 Speaker 1: the second half, China does have a target or seaging 425 00:26:39,040 --> 00:26:43,480 Speaker 1: pain maybe personally has a target of doubling GDP per 426 00:26:43,480 --> 00:26:46,600 Speaker 1: capiture from twenty twenty to twenty thirty five, which means 427 00:26:47,000 --> 00:26:50,600 Speaker 1: you have to maintain over four point five percent GDP 428 00:26:50,760 --> 00:26:54,320 Speaker 1: growth for the remainder of the period. That's very clearly 429 00:26:54,440 --> 00:26:57,080 Speaker 1: the red line for the policy makers, and that's why 430 00:26:57,080 --> 00:27:01,240 Speaker 1: they stuck with an around five percent GDP target for 431 00:27:01,359 --> 00:27:03,359 Speaker 1: this year as well. 432 00:27:03,520 --> 00:27:07,440 Speaker 3: And what about China's population, given has been following by 433 00:27:07,440 --> 00:27:10,480 Speaker 3: about a million people each year for the past three years, 434 00:27:10,680 --> 00:27:12,800 Speaker 3: is that contributing to a decline in emissions. 435 00:27:13,119 --> 00:27:16,399 Speaker 1: Where that definitely comes in is the real estate and 436 00:27:16,440 --> 00:27:20,920 Speaker 1: infrastructure sector. So if you had a lot of population 437 00:27:21,000 --> 00:27:25,280 Speaker 1: growth contributing to needing more real estate and more infrastructure 438 00:27:25,280 --> 00:27:26,800 Speaker 1: and so on, then of course that would be a 439 00:27:26,840 --> 00:27:28,040 Speaker 1: different situation. 440 00:27:28,720 --> 00:27:30,720 Speaker 3: And then if you look at the trade war that 441 00:27:31,280 --> 00:27:34,160 Speaker 3: is ongoing right now, there is something that we can 442 00:27:34,240 --> 00:27:38,360 Speaker 3: learn from the past, where in the first Trump administration, 443 00:27:39,160 --> 00:27:42,840 Speaker 3: China responded to the tariffs that were deployed by the 444 00:27:42,960 --> 00:27:49,320 Speaker 3: US by increasing its manufacturing capacity to try and offset 445 00:27:49,560 --> 00:27:53,280 Speaker 3: the decline that it would have in exports to the 446 00:27:53,400 --> 00:27:57,840 Speaker 3: US by sending those exports to other countries. Do you 447 00:27:57,920 --> 00:28:01,960 Speaker 3: expect China to have a similar trajectory given this time 448 00:28:02,000 --> 00:28:04,040 Speaker 3: around the turps are even higher. 449 00:28:04,400 --> 00:28:06,400 Speaker 1: A big part of the response during the first Trump 450 00:28:06,440 --> 00:28:11,080 Speaker 1: administration was, in fact domestic stiamulus to the construction sector, 451 00:28:11,840 --> 00:28:16,720 Speaker 1: very much unannounced and only really visible after the fact. 452 00:28:16,920 --> 00:28:20,280 Speaker 1: This time, what Chinese policy makers are saying is that 453 00:28:20,320 --> 00:28:27,800 Speaker 1: they want to stimulate consumption so household spending power, instead 454 00:28:27,800 --> 00:28:30,920 Speaker 1: of relying on these kind of stimulus, which has been 455 00:28:31,440 --> 00:28:37,280 Speaker 1: dubbed low quality by the sig administration. And this also 456 00:28:37,440 --> 00:28:43,040 Speaker 1: very much aligns with CI's overall economic guidelines of common prosperity, 457 00:28:43,520 --> 00:28:47,600 Speaker 1: aiming for a large middle class, and so on. So 458 00:28:47,960 --> 00:28:51,800 Speaker 1: there is a happy development here that could take place 459 00:28:51,800 --> 00:28:56,080 Speaker 1: where this in fact pushes long China's own ambitions for 460 00:28:56,440 --> 00:28:59,560 Speaker 1: changing the structure of the economy. If you're used to 461 00:28:59,600 --> 00:29:04,240 Speaker 1: the environmentalist messaging of consumption is the root of all evil, 462 00:29:04,280 --> 00:29:07,400 Speaker 1: it might sound a terrible idea to increase consumption, but 463 00:29:07,520 --> 00:29:10,560 Speaker 1: the point here for emissions is that household consumption is 464 00:29:10,600 --> 00:29:15,160 Speaker 1: in fact much less carbon intensive than the construction and 465 00:29:16,200 --> 00:29:19,720 Speaker 1: manufacturing industries which have been driving growth in the past. 466 00:29:19,720 --> 00:29:22,840 Speaker 1: So if more of the spending power in the economy 467 00:29:22,920 --> 00:29:25,920 Speaker 1: was directed to households, they would spend much more of 468 00:29:25,920 --> 00:29:31,480 Speaker 1: that on services like healthcare or a range of other services. 469 00:29:31,720 --> 00:29:35,840 Speaker 1: And even the manufacturing that caters to households is much 470 00:29:35,920 --> 00:29:40,000 Speaker 1: less energy intensive than the manufacturing that caters to the 471 00:29:40,040 --> 00:29:41,520 Speaker 1: construction sector, for example. 472 00:29:42,080 --> 00:29:46,920 Speaker 3: And what about China's climate diplomacy Given the past decade, 473 00:29:47,240 --> 00:29:51,360 Speaker 3: we've seen the US flip every time there's been a 474 00:29:51,440 --> 00:29:55,200 Speaker 3: change in the president, but there have been moments where 475 00:29:55,560 --> 00:29:59,280 Speaker 3: US and China have cooperated. But now that the US 476 00:29:59,360 --> 00:30:03,640 Speaker 3: is firmly the Trumpet administration not going to be part 477 00:30:03,680 --> 00:30:08,320 Speaker 3: of climate diplomacy and maybe even play the role of spoiler. 478 00:30:09,000 --> 00:30:11,560 Speaker 3: How is China responding to this moment. 479 00:30:12,400 --> 00:30:15,000 Speaker 1: I think two things have changed. If you think to 480 00:30:15,600 --> 00:30:22,400 Speaker 1: Obama's announcement in twenty fourteen, where the two leaders announced 481 00:30:22,400 --> 00:30:26,040 Speaker 1: their new climate targets together, so one of them is 482 00:30:26,640 --> 00:30:31,600 Speaker 1: the entire political dynamic in both countries. It's very hard 483 00:30:31,640 --> 00:30:33,960 Speaker 1: to see that there would be any kind of political 484 00:30:34,080 --> 00:30:38,640 Speaker 1: upside for seeing in the current atmosphere from announcing something 485 00:30:38,720 --> 00:30:42,360 Speaker 1: like this together with a US president, because that would 486 00:30:42,400 --> 00:30:46,320 Speaker 1: be just seen as caving and being weak. So China 487 00:30:46,320 --> 00:30:49,959 Speaker 1: has been very clear that their ambition is unchanging, is 488 00:30:50,000 --> 00:30:53,400 Speaker 1: not influenced by pressure from others. And the other thing 489 00:30:53,480 --> 00:30:58,080 Speaker 1: that has really changed is that clean energy industry, including exports, 490 00:30:58,080 --> 00:31:02,640 Speaker 1: has become such a key driver of China's economy that 491 00:31:02,720 --> 00:31:06,000 Speaker 1: China has a much stronger self interest now in also 492 00:31:06,400 --> 00:31:11,000 Speaker 1: keeping a global and transition going. So just in the 493 00:31:11,040 --> 00:31:14,200 Speaker 1: past few years, China has made a massive investment in 494 00:31:14,600 --> 00:31:19,480 Speaker 1: manufacturing capacity for solar, for batteries for evs and so on, 495 00:31:19,960 --> 00:31:23,720 Speaker 1: and if the global transition styled, that would mean that 496 00:31:23,840 --> 00:31:26,840 Speaker 1: quite a bit of that capacity would go unused and 497 00:31:26,960 --> 00:31:32,320 Speaker 1: cost financial distress. That said, this hasn't really translated into 498 00:31:33,160 --> 00:31:39,040 Speaker 1: multilateral diplomacy from China yet. So China, for example, didn't 499 00:31:39,440 --> 00:31:43,200 Speaker 1: put its weight behind the target of dripling renewables and 500 00:31:43,200 --> 00:31:47,720 Speaker 1: doubling efficiency. So this is where China still needs to 501 00:31:48,320 --> 00:31:51,640 Speaker 1: get more comfortable with taking the initiative and in fact 502 00:31:51,920 --> 00:31:55,520 Speaker 1: persuading other countries to do more. And I think here 503 00:31:56,320 --> 00:32:00,160 Speaker 1: things are really going to change. Once a China's leader 504 00:32:00,280 --> 00:32:05,120 Speaker 1: are secure in thinking that they've turned the ship on emissions, 505 00:32:05,200 --> 00:32:07,720 Speaker 1: they're going to be a lot more comfortable because they 506 00:32:07,720 --> 00:32:12,040 Speaker 1: don't have to be defensive about their emissions growth anymore. 507 00:32:12,360 --> 00:32:16,360 Speaker 3: If this is the peak, how quickly will we see 508 00:32:16,400 --> 00:32:20,200 Speaker 3: a decline or will it be a slope plateau like 509 00:32:20,240 --> 00:32:23,520 Speaker 3: it has been for coal consumption over the past decade. 510 00:32:24,280 --> 00:32:28,160 Speaker 1: There's certainly a risk of China getting stuck at pretty 511 00:32:28,240 --> 00:32:32,280 Speaker 1: much current levels of emissions in the absence of setting 512 00:32:32,880 --> 00:32:36,440 Speaker 1: ambitious emission reduction targets for twenty thirty five. I think 513 00:32:36,760 --> 00:32:41,520 Speaker 1: one key concern is that once the coal industry starts 514 00:32:41,560 --> 00:32:47,600 Speaker 1: to see their demand go down in absolute terms, especially 515 00:32:47,680 --> 00:32:50,400 Speaker 1: as they've been investing in new coal mines, new coal 516 00:32:50,480 --> 00:32:54,200 Speaker 1: fired power plants recently, that could generate a lot of pushback, 517 00:32:54,880 --> 00:32:58,400 Speaker 1: but at the same time, keeping emissions at a plateau 518 00:32:58,960 --> 00:33:03,440 Speaker 1: would mean upsetting the growth ambitions of the cleaner engine industry, 519 00:33:03,840 --> 00:33:07,240 Speaker 1: So there's going to be pushed from both sides. But 520 00:33:07,360 --> 00:33:11,040 Speaker 1: so the targets that China's going to set this year, 521 00:33:11,280 --> 00:33:14,640 Speaker 1: first in its new Paris Commitment and then in the 522 00:33:14,680 --> 00:33:17,880 Speaker 1: five year Plan that is due to be released next year, 523 00:33:18,240 --> 00:33:20,960 Speaker 1: will be key in calibrating that level of ambition. 524 00:33:21,520 --> 00:33:24,400 Speaker 3: And finally, what do people in China think about the 525 00:33:24,600 --> 00:33:28,400 Speaker 3: US right now, which is the world's largest producer of 526 00:33:28,440 --> 00:33:32,040 Speaker 3: oil and gas, has a ton of fossil fuels still 527 00:33:32,200 --> 00:33:36,040 Speaker 3: available for it to burn, but it is not really 528 00:33:36,560 --> 00:33:42,360 Speaker 3: deploying electricity technologies which are more efficient and economically cheaper. Instead, 529 00:33:42,360 --> 00:33:46,680 Speaker 3: it is doubling down on fossil fuels, especially under this administration. 530 00:33:47,280 --> 00:33:51,240 Speaker 3: Do they see the US losing out on the future 531 00:33:51,280 --> 00:33:56,000 Speaker 3: of energy, even as it might be currently the global 532 00:33:56,360 --> 00:33:57,360 Speaker 3: energy superpower. 533 00:33:57,960 --> 00:34:01,440 Speaker 1: I was, in fact in Beijing when the US election 534 00:34:01,680 --> 00:34:03,760 Speaker 1: results were coming in, and I can say that in 535 00:34:03,800 --> 00:34:06,080 Speaker 1: a room full of Chinese people, I was the only 536 00:34:06,400 --> 00:34:08,920 Speaker 1: one who was trying to check my phone under the 537 00:34:08,960 --> 00:34:13,000 Speaker 1: table for the results. So people weren't paying as much 538 00:34:13,000 --> 00:34:20,319 Speaker 1: attention as Americans might expect, and also when under the 539 00:34:20,320 --> 00:34:25,360 Speaker 1: Biden administration the US was starting to actually make an airport, 540 00:34:26,600 --> 00:34:32,120 Speaker 1: I think the reaction from Chinese experts was one of skepticism, 541 00:34:32,440 --> 00:34:35,680 Speaker 1: or at least one of wait and see, like see 542 00:34:36,160 --> 00:34:41,279 Speaker 1: whether the US can actually pull this off, because there 543 00:34:41,360 --> 00:34:43,440 Speaker 1: is a sense that the US is so far behind, 544 00:34:44,160 --> 00:34:48,160 Speaker 1: especially in terms of manufacturing, and it just doesn't have 545 00:34:48,680 --> 00:34:51,959 Speaker 1: the kind of ecosystem and the kind of uh, let's 546 00:34:51,960 --> 00:34:55,080 Speaker 1: get it done spirit that China has. So currently, I 547 00:34:55,080 --> 00:34:59,400 Speaker 1: think Chinese experts and Chinese policymakers are very comfortable and 548 00:34:59,440 --> 00:35:04,280 Speaker 1: secure in thinking that they have the lead in these 549 00:35:04,360 --> 00:35:07,760 Speaker 1: markets and technology areas, and it would actually be really 550 00:35:07,760 --> 00:35:11,799 Speaker 1: good to get some more competition. So if there was 551 00:35:11,840 --> 00:35:15,520 Speaker 1: more of a sense that others are at least making 552 00:35:15,560 --> 00:35:18,160 Speaker 1: an effort to catch up and put up some competition, 553 00:35:18,280 --> 00:35:20,200 Speaker 1: that would keep China moving faster. 554 00:35:21,120 --> 00:35:29,080 Speaker 3: Thank you, Laurie, thank you so much, and thank you 555 00:35:29,160 --> 00:35:38,840 Speaker 3: for listening to zero. Now for the sound of the week. 556 00:35:44,600 --> 00:35:48,440 Speaker 3: That was the sound of a bucket reel excavator used 557 00:35:48,480 --> 00:35:52,400 Speaker 3: for open pit coal mining, and it's essentially a shovel 558 00:35:52,760 --> 00:35:56,200 Speaker 3: as big as a skyscraper. If you liked this episode, 559 00:35:56,239 --> 00:35:58,160 Speaker 3: please take a moment to rate and review the show 560 00:35:58,160 --> 00:36:01,440 Speaker 3: on Apple Podcasts or Spotify. Share this episode with a 561 00:36:01,440 --> 00:36:05,200 Speaker 3: friend or with a China skeptic. This episode was produced 562 00:36:05,200 --> 00:36:08,240 Speaker 3: by Oscar Boyd. Noomberg's head of podcast is Saige Bauman 563 00:36:08,480 --> 00:36:11,160 Speaker 3: and head of Talk is Brendan newnham Our. Theme music 564 00:36:11,239 --> 00:36:14,920 Speaker 3: is composed by Wonderly Special Thanks to Jessica Beck eleanor 565 00:36:15,040 --> 00:36:19,880 Speaker 3: Harrison Dengate, Soamersadi, Moses Andam and Sherwan wagner I am 566 00:36:19,880 --> 00:36:21,520 Speaker 3: Akshatrati Back soon.