China: Technology Shift In Low-Carbon Economy Transition
Beijing, October 13, 2022 – Climate change poses a significant threat to China’s long-term prosperity while its loc-carbon transition is in need of a shift in technology and resources.
At the same time, the country is well positioned to meet its climate commitments and transition to a greener economy while meeting its development goals, according to a World Bank Group report released today.
The World Bank Group’s Country Climate and Development Report (CCDR) for China analyzes the fundamental changes in energy, industry, transport, cities, and land use that would enable China to realize its national commitments to reach peak carbon emissions before 2030 and achieve carbon neutrality by 2060.
The report highlights the urgency of action, because of China’s large emission of greenhouse gases, the heavy exposure of China’s population and economic infrastructure to climate risks, and China’s critical role in global efforts to combat climate change.
The impacts of climate change threaten China’s densely populated and economically critical low-lying coastal cities, which are home to an estimated one-fifth of China’s population and contribute a third of its GDP. China already experiences frequent coastal flooding, storm surges, costal erosion, and saltwater intrusion. Unabated climate change could lead to estimated GDP losses of between 0.5 and 2.3 percent as early as 2030, according to the report.
Transitioning to A Low Carbon Economy
Without China successfully transitioning to a low-carbon economy, achieving global climate goals will be impossible. China emits 27 percent of global carbon dioxide and a third of the world’s greenhouse gases. This transition will require a massive shift in resources, innovation, and new technologies to enhance energy efficiency and resource productivity. However, China’s advanced technological capabilities mean the pathway to carbon neutrality will open new avenues for development.
“China’s long-term growth prospects are increasingly dependent on rebalancing the economy from infrastructure investment to innovation, from exports to domestic consumption, and from state-led to market-driven allocation of resources,” says World Bank Vice President for East Asia and Pacific Manuela V. Ferro.
“This report shows that the reforms which China needs to shift to such high-quality growth would also significantly lower the cost of climate action.”
The report lists a number of advantages that would allow China to turn the climate challenge into an opportunity: increasing returns on the production and development of low-carbon technologies such as wind and electricity storage; a high domestic savings rate and a leadership position in green finance; and the ability to create high-skilled jobs in high-productivity industries. China already has an estimated 54 million “green jobs”, with over 4 million jobs in renewable energy. China has also announced that it will no longer build coal-fired power plants abroad and will step up support for other countries in developing green and low-carbon energy.
Private sector participation is crucial to China’s path to carbon neutrality. The report highlights the importance of the public and private sectors working together to address the challenge. A more predictable regulatory environment as well as better access to markets and finance would allow the private sector to play a central role in delivering market solutions, improving productivity, reducing costs, stimulating technological innovation, and filling the financial gap.
“To reach net-zero emissions by 2060, the report estimates China needs between US$14-17 trillion in additional investments for green infrastructure and technology in the power and transport sectors alone,” says IFC’s Regional Vice President for Asia and the Pacific, Ruth Horowitz.
“Given the immense price tag, public investments won’t be sufficient to meet these needs, so China needs policy and regulatory reforms to spur the private sector and fully tap the potential for investment and innovation.”