Understanding China’s Green Recovery

Source: CGTN

China's carbon peaking and carbon neutrality targets have become hotly debated topics at home and abroad. Now, the "14th Five-Year Plan" is attracting special attention as the first Five-Year Plan after the introduction of the carbon-neutral target. In December, pushing forward peak carbon and carbon neutrality appeared as one of 2021’s eight key tasks in the Central Economic Work Conference. For a long time to come, energy-saving, carbon reduction, and low-carbon transformation will be important components of the “high-quality” economic development that China is striving for. Now that the important step of announcing a carbon neutrality goal has been taken, what actions will have to take place on the ground? The major projects that China’s provinces assign to themselves can tell us a lot about how high-level policy pronouncements are driving real actions throughout China.  The provincial major projects lists are a window into how national-level policies are being implemented on the ground. This article gauges the green and low-carbon quality of the provincial major projects lists of 2020 and identifies opportunities to fill gaps in the upcoming 14th Five-Year Plan period.

More than a year since the outbreak of the COVID-19, the global economy is still suffering from a severe recession caused by the pandemic and related prevention and control measures. International institutions, scholars, and governments at all levels have put forward views on how to achieve a green recovery. Mainstream scholars and research institutions believe that economic stimulus and green development can be a win-win, and an appropriate response can turn this crisis into an opportunity.

The degree to which China's economic recovery has been green has also received a lot of attention at home and abroad. Unlike some countries, China has not put forward a separate plan for economic recovery after the pandemic but instead incorporated economic recovery into its routine government work. President Xi Jinping’s announcement of carbon peaking and carbon neutralization goals at the United Nations General Assembly last September signaled that China's action against climate change would not be weakened by the pandemic. The question then became how China would harmonize carbon peaking and carbon neutrality with economic recovery.

The 14th FYP has special significance as the first FYP after the new carbon peaking and neutrality goals were announced. It faces the challenge of laying the foundation for early carbon peaking and carbon neutralization by ensuring that short- and medium-term actions are compatible with long-term goals.

To understand local economic development and its degree of greening or decarbonization, we collected the major projects lists of 28 provinces and placed the projects into three categories:

• New infrastracture - infrastructure projects linked to the digital transformation such as data centers, IoT, or smart transportation),

• “Light green” projects - green bond-supported projects from the 2020 version of the “Draft for Comments”  

• “Dark green” projects - projects that fall under the European Union Sustainable Finance Taxonomy -  

As of June 2020, the 28 provinces have published major project lists involving 24,504 projects, of which 41% are "new infrastructure" projects, 15% are "light green” projects, and 11% are "dark green” projects. The EU’s Taxonomy has roughly three project categories: the first category consists of natural projects that meet the classification (such as aluminum recycling, energy storage, solar power generation, wind energy, marine energy, electric passenger cars or commercial vehicles, etc.); the second category are projects that fall under specific implementation standards (such as new buildings); the third category are projects that are judged by specific thresholds (for example, hybrid passenger cars or commercial vehicles, cement manufacturing and aluminum manufacturing that should meet certain energy efficiency level requirements, etc.). In the list of major projects, 4% of projects meet the EU sustainable finance standards; the remaining 7% can only be judged according to specific project information. Among the "new infrastructure" projects, “light green” projects account for 14%, and “dark green” account for 12%.

Breakdown of the projects in the different categories

Looking at the average number of projects nationwide, the number of "new infrastructure" projects accounts for 48%, the number of "deep green" projects accounts for 14%, and the number of "light green" projects accounts for 18%. The following three charts show the proportions of the various projects in the 28 provinces respectively, with the red line being the national average.

(Click on the image to watch in full size)

Among the 24,504 projects, there are 53 coal-fired power projects. Shaanxi has the largest number, with 10 projects (4 under construction and 6 newly built). Among them, the Huaneng Yan'an Power Plant has been suspended for 12 years, and other areas have projects that have been suspended or delayed due to safety or environmental issues. These projects appear again in the list of major projects, which raises concerns that economic development is a higher priority than safety or environmental compliance, and that the dependence on fossil energy will only increase due to the pandemic-related exigencies. Shanxi Province's “adequacy warnings” for 2022 and 2023 are all red (meaning the risk of coal power overcapacity is high), yet there are still three power plants under construction. Gansu's capacity adequacy in 2021-2023 also gave off a red warning, but at present there is one coal-fired power plant still under construction.

In the list of major projects, 10 provinces also published the project budgets. These follow a similar pattern. The proportion of "dark green" projects will be slightly lower than that of "light green" projects. If the threshold and industry standards in EU standards are considered, the proportion of "dark green" projects is even lower, and the proportion of "new infrastructure" projects in budget and number is close.

Proportions of projects with budget and total number of projects

A rough classification of the green and low-carbon projects in the major projects lists shows that a total of 3,548 projects in 17 categories belong to these categories. The top five fields consist of: public transportation infrastructure, water resources conservation and utilization (related to climate change adaptation), environmental protection and energy-saving equipment manufacturing, ecological restoration, and renewable energy power generation. As for "new infrastructure", charging piles for electric vehicles and renovation of old residential areas do not occupy a prominent position in the list of major projects.

(Click on the image to watch in full size)

The 2020 provincial major projects lists were released before the announcement of the carbon peaking and carbon neutrality targets, thus these targets are not yet reflected in these lists. The new lists will allow us to gauge the additionality brought by the 2030 and 2060 goals to the 14th FYP. We suggest that in the first year of the 14th FYP, the planning should take into account both the long-term and the present, avoid carbon lock-in in new investment projects, or at least follow the principle of harmlessness to ensure that actions against climate change are not hampered. More attention should be paid to renewable energy, electric vehicle infrastructure, and renovation of old residential areas, areas that not only can improve the quality of cities but also contribute to economic development and climate goals. Zero-carbon pilot demonstrations in industry, transportation, construction, and other fields are also an indispensable part of carbon neutrality. Local governments should choose major projects according to local conditions, but the number of low-carbon options on the menu is large.

This article is drawn from the iGDP research report titled "Post-epidemic Economic Recovery and Green Development" . The full report will be published at a future date.

About the authors

Li Ang is Research Director and Senior Analyst at iGDP and Deputy Director at the Climate and Energy Research Center of Beijing Institute of Finance and Sustainability. She is mainly responsible for research on urban low-carbon development and green finance. She has played a leadership role in the projects “Policies and Practice in China’s Low-Carbon Pilot Cities”, ”Low-Carbon City Development: A Guidebook for Strategic Planning and Actions”, and “Green Finance Case Studies in Low-carbon Cities”. Ms. Li has more than 10 years’ experience in sustainable development. Prior to joining iGDP, she worked for Greenpeace, WWF and GIZ, overseeing renewable energy policy as well as other climate and energy projects. Ms. Li holds a MSC in Energy Policy from University of Exeter, where she was a Chevening Scholar, and a BA in Environmental Science from Beijing University of Technology.

Liu Xueye is analyst at iGDP/researcher at Climate and Energy Research Center of Beijing Institute of Finance and Sustainability. She worked for the C40 City Climate Leadership Group from 2016-2019, helped launch and promote C40’s Chinese Mobility Management network, and led relevant research. Before joining C40, she was a Planner at the China Urban Construction Design & Research Institute Co. Ltd, where she led and implemented 20 projects varying from compiling national standards for Chinese national parks to designing national park pilot projects. Ms. Liu holds a Master of Ecology at Beijing Normal University.

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