China Briefing, 15 July 2021: Cross-border coal funders; Megacities’ GHG emissions; ETS to launch ‘tomorrow’

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We handpick and explain the most important climate and energy stories from China over the past seven days.

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Snapshot

Only 13% of the total finance for overseas coal-fired power plants worldwide comes from Chinese public or private funding, according to a policy brief from Boston University. The result is a far cry from previous research figures, which showed a much higher percentage of Chinese financial involvement. But experts have told Carbon Brief that the new analysis may have “downplayed” or “underestimated” the role of Chinese funding due to its scope and methodology. 

Meanwhile, a new study from China has found that cities in Europe, Australia and the US have “significantly higher” per-capita emissions than cities in developing areas. While covering the paper, various media outlets – such as MailOnline and the Hill – ran headlines saying that “just 25” cities are driving the world’s urban greenhouse gas (GHG) emissions, citing the study. A co-author of the paper, however, has told Carbon Brief that those headlines are “not accurate” because the research analysed only 167 – not all – cities in the world. 

China’s national emissions trading scheme (ETS) will start trading tomorrow following a three-week delay, according to state media, citing an announcement from the operator of the scheme’s trading platform. The national ETS, which has taken 10 years to develop, missed its original, end-of-June target for unspecified reasons. A launch ceremony has been planned for tomorrow, according to Reuters.

Key developments

New research analyses Chinese capital in overseas coal financing

WHAT: A new policy brief from Boston University’s Global Development Policy Center has found that only 13.28% of the total finance for all overseas coal-fired power plants that were in operation, under construction or being planned between 2013 and mid-2019 worldwide had public or private capital from China. The figure is significantly lower than previous research results, including one suggesting that “more than 70% of all coal plants built today are reliant on Chinese funding”. The authors said they aimed to “correct” a “misconception” that “the majority of new funding for overseas coal plants comes from public financing institutions in China”. The research does also show that China was the largest public financier for cross-border coal projects during the studied period. 

WHERE: The brief said that the “lion’s share” of total financing for overseas coal plants came from “entities outside China”. It said that the remaining 86.72% were “non-Chinese”, but the exact source countries of most of them were “unknown” due to a lack of transparent data. While covering the research, South Morning China Post said that most of the “non-Chinese” capital came from Japan, the US and the UK. However, according to the brief, investors from the three countries are actually the top three financiers of the global coal industry in general. A Reuters article said that the research found that “Asia public entities, led by China, supplied over 90% of cross-border coal power funding in 2013-2018”. But what the researchers meant was that Asian public entities accounted for 91% of the global “public” overseas coal finance during the studied years, excluding private capital that could overshadow the former. The Reuters report has since been updated, but it still fails to emphasise the difference between “public” overseas coal funding and overall overseas coal funding.

WHO: Ma Xinyue, a co-author of the policy brief, tells Carbon Brief that the research combined and compared “the best available” databases on coal-power investment and finance. She says that it estimated the relative roles of the “main actors” in international coal-power financing with “available information”, such as China and various national public financial institutions. She adds that the brief points out “the gap in data and climate-related disclosure in the commercial finance sector”.

HOW: According to multiple experts who were not involved in the research, the research’s findings may be caused by the types of coal projects and financial methods it assessed. Mathias Lund Larsen from Copenhagen Business School tells Carbon Brief that the research did not include “some categories” of financial support, such as underwriting – a process through which an individual or institution takes on financial risk for a fee. Larsen adds the research’s databases “do not include all projects” and its methodology “disqualifies many projects that should be included”. “In particular, the report’s numbers for Chinese commercial lending are underestimated,” he notes. Lauri Myllyvirta from the Centre for Research on Energy and Clean Air tells Carbon Brief that the researchers may have assumed that “everything else” they did not have “solid information” for was financed by “non-Chinese” actors. He also points out that coal plants becoming operational in 2013 could have been financed in 2005 or earlier. “So data for that period is hardly indicative of the current role of Chinese financing in enabling coal expansion in other countries,” he adds. 

WHY IT MATTERS: Speaking of the research’s importance, Ma says that China, as a major cross-border public coal financier, should “step up its overseas coal phase-out as soon as possible”. She notes that the research shows the necessity of more “inclusive efforts” to stop international coal finance and the need for attention to the role of the private sector in the West. In Larsen’s opinion, this research is “very important” and “contributes to the field” because it opposes several previous studies. But he calls for a clearer explanation of the specific methodology. Myllyvirta says if the research aims to highlight the role of non-Chinese public and private actors in financing coal power plants outside of China, then he agrees that “stronger policies, commitments and regulation” are needed.

Megacities ‘responsible for’ the majority of urban GHG emissions

WHAT: A new study has found that the per-capita GHG emissions of cities in developed countries are still generally higher than that of developing countries – although Asian cities are the biggest carbon emitters by total volume. Dr Chen Shaoqing from China’s Sun Yat-sen University, a co-author of the paper, tells Carbon Brief that the study also shows that many cities do not have clear and consistent emission reduction targets to address climate change. He adds that some of them are still increasing their emissions during economic development, according to the analysis.

WHERE: By assessing sectoral GHG data of 167 “globally distributed” cities between 2005 and 2016, the researchers found that the Top 25 emitters accounted for 52% of the total GHG emissions of the sample. The paper says that the 25 cities are “mainly” in Asia, such as Handan, Shanghai and Suzhou in China and Tokyo in Japan. Russia’s Moscow is the only non-Asian city, ranking seventh. The study also shows that cities in Europe, Australia and the US had “significantly higher” per-capita emissions than cities in developing countries, according to Chen. 

HOW: While reporting about this study, some media outlets ran headlines that suggested “just 25”, “handful of” or “two dozen” cities are driving the world’s urban GHG emissions. The headline was first used in a press release issued by Frontiers in Sustainable Cities, the journal that published the study. But Chen says that the interpretation is “not accurate” because the team only studied emissions from 167 – not all – cities in the world. “It is fairer to say that GHG emission in (most) megacities in both developed and developing countries are responsible for the biggest part of the urban anthropogenic (human-caused) emissions,” Chen says. Dr Edgar Liu from the University of New South Wales agrees that media outlets “have misinterpreted” the finding because it was a sample study. Liu was not directly involved in the research, but is listed by the journal as the editor of the paper. He adds: “The limitations, as the authors acknowledged, though is also that the cities studied were not standardised so that some accounted for the whole metropolitan area (e.g. London) whereas others only the central business district (e.g. Sydney). [Therefore,] more of the bigger emitters were also the larger geographies.”

SURPRISE FINDING: Chen says he was surprised to find that some megacities in developed countries, such as Europe, Australia and the US, still had “generally higher” per-capita GHG emissions compared to their developing counterparts. This is because, at the time of study, many developed countries had already outsourced their high-carbon production chains to cities in developing countries, which would have increased export-related emissions for the latter, he explains.  

WHY IT MATTERS: Chen says that assessing the sectoral GHG emissions from major cities consistently from a global perspective could help compare the progress of emission mitigation over time and space. He notes that the move could also help evaluation of urban policies and targets for tackling climate change, and such a process could let the public and decisionmakers be aware of their priorities towards carbon emission mitigation. In terms of China’s emission-reducing efforts, Chen says that Chinese cities are facing “a big challenge” of decarbonisation under its “dual-carbon” goals while maintaining economic growth. “But a big progress has been made in many cities and some, such as Shanghai and Guangzhou, are starting to set early peaking goals around 2025,” he states.

Other news

ETS: China’s national ETS will finally start trading tomorrow, reported Chinanews.com today. The state-run website cited an announcement from the Shanghai Environment Energy Exchange (SEEE), which has developed the trading platform and will be in charge of it following its launch. The announcement said that trading will begin tomorrow, “according to the national overall arrangement”. It advised all “transaction entities” to arrange “relevant work accordingly”. A report from Caijing, a Chinese financial publication, said on Tuesday that the national ETS was due to introduce “strict inspections” against carbon data fabrication, which is believed to be part of the reasons for its delay. Zhao Yingmin, deputy head of the Ministry of Ecology and Environment, said at a press briefing yesterday that authorities had carried out various inspections into companies’ carbon data and found that they “fit the requirements in general”, according to a transcript on state-run China Net. Read Carbon Brief’s in-depth Q&A to learn more about the scheme.

NATURAL GAS: Global natural gas demand is forecast to “rebound’ by 3.6% in 2021 after dipping by 1.9% last year due to an “exceptionally mild” winter in the northern hemisphere and the impact of Covid-19, reported Jiemian News. The Shanghai-based website cited Gas 2021: Analysis and Forecast to 2024, a new report launched by the International Energy Agency (IEA) in Beijing last Thursday. Jiemian said that, according to the report, demand for natural gas is expected to “keep growing in the coming years” – unless there are major policy changes – to reach nearly 4,300bn cubic metres by 2024. Almost half of the increase is projected to be driven by China and India and emerging markets in South and Southeast Asia, the outlet added.

FOOD SYSTEM: The “black soil” region of north-eastern China – which is considered the most important food-producing base in the country – has suffered “various degrees” of degradation because of “long-term” over-development and climate change, according to China Radio International. The state-run radio station said that researchers from the Chinese Academy of Sciences (CAS) published the finding – alongside suggestions on how to “repair” the traditionally fertile soil – in a new white paper. Li Xiujun, a CAS researcher, told the outlet that multiple indicators of the land, such as its surface water production rate and carbon storage capacity, showed it had “degraded significantly” in the past 30 years.

CARBON EMISSIONS: A “carbon-neutrality smart city” platform was unveiled in China on Monday to help cities and districts reduce their carbon emissions, reported China Radio International. The station said that the “government-level” software has two “core functions”: monitoring carbon emissions levels and managing the government affairs related to emission reduction. “If one enterprise in one district has irregular carbon emissions during a certain period of a day, the system will sound the alarm,” Dr Wang Wen from the Renmin University of China explained, according to the report.

ENERGY STORAGE: China’s energy regulator, the National Energy Administration (MEA), is formulating a series of new rules and regulations to guide the development of the power storage industry, reported Caixin. Xu Ziming, a senior official of the NEA, gave the update at an industry summit in Beijing on Sunday, the financial outlet said. Xu stated that the NEA would start drafting at least four policy documents and “continuing promoting pilot demonstrations” to ensure the “standardised workflows” and “talent cultivation” of the industry, according to Securities Times, a publication supervised by state-run People’s Daily. 

WIND POWER: The “world’s first typhoon-resistant floating wind turbine” was installed off the coast of Guangdong province in southern China on Tuesday, reported People’s Daily. The project has a unit capacity of 5.5 megawatts (MW) and is scheduled to go into operation at the end of 2021, a spokesperson told the publication. The report said that the project is expected to generate 16.5 megawatt hours of “clean energy” annually, saving 5,100 tonnes of standard coal equivalent (tce) and 13,800 tonnes of carbon dioxide (CO2) emissions. 

CRYPTO CRACKDOWN: The eastern province of Anhui has become the latest Chinese region to order a clampdown on cryptocurrency mining, reported Hefei Online, a website affiliated with state-run Hefei Newspaper Media Group. The outlet said that the Anhui authorities pledged to shut virtual currency mining projects “built in all sorts of names”. The province could face “tough” electricity supply and power shortfalls in the next three years, according to the report, and the move was part of the local government’s efforts to curb new “dual-high” projects – those with “high” energy consumption and “high” emissions. Anhui is the sixth Chinese provincial-level region to crack down on crypto operators in recent months and more areas are expected to follow suit, reported Economic View.

Extra reading

• Why has China’s poorest province just built world’s largest wind farm? – Stephen Chen, South China Morning Post
• China’s extreme weather warnings avoid talk of climate change – Bloomberg 
• A new US-Europe rare earths supply chain is using a ‘very Chinese model’ to counter China – Mary Hui, Quartz
• From Copenhagen to Paris: China’s climate governance journey – Wu Yunong, China Dialogue

New science

China’s food loss and waste embodies increasing environmental impacts
Nature Food

A new study has found that the quantity of food loss and waste (FLW) in China is “phenomenal” and makes up about a quarter of the world’s total. The paper, published by Nature Food, also says that the consequent land, water, carbon, nitrogen and phosphorus footprints are similar to those of a “medium-sized country” – such as the United Kingdom’s in the case of carbon footprint, according to the authors. Prof Liu Gang from the University of Southern Denmark, a co-author of the paper, tells Carbon Brief that the Chinese government has put food waste reduction and climate change mitigation “very high up” in its political agenda. “Our results show that China’s increasing amount of FLW has resulted in significant embodied environmental impacts, including greenhouse gas emissions. Therefore, addressing FLW would have dual benefits for both FLW and climate targets,” he says.

Added value of CMIP6 models over CMIP5 models in simulating the climatological precipitation extremes in China
International Journal of Climatology

A new study has found that models from the sixth Coupled Model Intercomparison Project (CMIP6) reproduce extreme precipitation patterns over China more accurately than their CMIP5 predecessors. The authors simulate rainfall extremes in China over 1976-2005, testing five different rainfall indices – and finding that the CMIP6 models show “improvements” in all of them. The study found that CMIP6 models “have obviously improved in simulating total precipitation on wet days, [the number of] wet days, simple daily intensity index, and extreme precipitation amount”. However, the authors note that there is still a bias in CMIP6 models with simulating consecutive dry days.

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