How China Aims To Beat The U.S., Europe At ‘Net Zero’ Carbon

China’s government wrapped up the annual “Two Sessions” political meetings in Beijing on Thursday and – taking a cue from the U.S. and Europe – climate change was top of mind.

What does it mean? It means China is gearing up to invest in clean power technologies (think EV batteries and solar panels) and will add more zero-carbon, zero-emissions energy to its grid. Nuclear stood front and center during Premier Li Keqiang’s 2021 Government Work Report delivered at the start of the week long meeting.

“We are going to increase nuclear and make sure it is safe,” he said.

Li’s boss, Xi Jinping, had paved the way for this in September when he said that the world’s worst polluter (though India may have them beat on any given day) is going “zero carbon” by 2060 in its energy grid.

Perhaps we will know a bit more about the new nuclear plans, and how many coal plants it plants to knock out (they’ve been ramping up coal for the last several months), once the 14th Five Year Plan is chewed over by the Chinese language press and it gets translated. But for now, China’s government just ended its Two Sessions meeting with a nod to Xi’s vision of an “ecological civilization” in China.

According to Li, Beijing will “draw up an action plan to bring carbon emissions to a peak by 2030,”  adding that China would “improve its industrial structure and energy mix” while also pushing to develop new energy sources and nuclear power.

Bloomberg reported that China intends to build more coastal nuclear power plants (no firm number given) and is shooting for 20 new gigawatts of nuclear power in four years, up from about 50 gigawatts today.

As the U.S. and Europe are not budging on new nuclear power, China is saying “we’ll lead on this and be net zero before you.”

“China can make changes much faster. If they say 35% of their energy matrix will come from coal…most likely it will happen. If they say it’s going to be replaced by nukes…it will happen,” says David Zaikin, head of Key Elements Group in London. Zaikin advises companies on mining and energy sector investments. “China will become clean energy efficient must faster because the decision-making process in the U.S. or Europe takes too long by comparison. The political and regulatory process (for nuclear) is time consuming and expensive.”

The Two Sessions ended on Thursday with the ratification of China’s 14th Five-Year Plan, a plan that will give the country its policy directives through 2025.

China is reading the Western world’s tea leaves, too. It knows that one way the West is gunning for them is to blame them for all their C02 emissions. Canada is talking about a carbon tax, for instance, though Justin Trudeau has not specifically singled China out. It goes without saying that if you’re serious about taxing polluters, China is one of the worst (emerging markets Pakistan, India and Indonesia are worse, in that order).

As Europe and the U.S. have spent much of the last decade talking about climate change and reducing fossil fuel use, China has been great for U.S. and European firms to outsource pollution.

Instead, China’s coal-breathing factories are burning their carbon right into your iPhone and auto parts.

According to a July 2017 Carbon Brief report by Zeke Hausfather titled “Mapped: The World’s Largest CO2 Importers and Exporters”, when you count the emissions embedded in product imports from China, the increase in U.S. emissions between 1990 and 2014 goes from a 9% rise to 17%. The 27% reduction in emissions the UK brags about would be just 11% if you included all the stuff it has imported from coal-fired China over that same time period.

Nuclear is one of the cleanest ways to make electricity. The biggest concern slowing the development of nuclear in the U.S. and Europe has always been fear over Three Mile Island and Fukushima-style accidents, and where to store spent reactor fuel.

But there is no doubt that nuclear is a sure-fire way for climate policy advocates to get to ‘net zero’ emissions. (Though this artificial sun in China looks terrifying…)

Between 1965 and 2018, the world spent about $2 trillion on nuclear, with the latter years being spent by the Russians and Chinese. Over the same period, some $2.3 trillion was spent on wind and solar, based on 2019 data compiled by Bloomberg New Energy Finance data for wind and solar investments, and BP data on electric power production and its sources. Over that period, though, the world received about twice as much electricity from nuclear as it did from wind and solar, according to BP.

Since 1995, the U.S., Europe and China have spent billions subsidizing wind and solar. These subsidies have increased as climate change concerns become more prevalent. But the share of energy globally that comes from these zero-emissions sources grew from 13% to just 15% by 2018. One reason is because as Europe was cranking out windmills, it was shutting the lights off at nuclear power plants. And China was cranking out greenhouse gas emissions (GHG) at a record pace, as was India.

China thinks long term, and they believe nuclear is the best long term way for them to replace coal, the source of all their ugly GHG stats. They will definitely leave India in the dust when it comes to the pollutants in the air hovering over its biggest cities.

As of January 2021, China operated 49 nuclear power reactors, which generated a total of 47,498 MW (nearly 50 GW) of energy. (India has 22 at 7 nuclear power plants. We have 94 reactors, including four power stations in New York state and two in California.)

Since 2019, China has trailed only France and the U.S. in terms of nuclear electricity generation. China’s 14th Five-Year Plan will put more nuclear in the mix and then they will surpass both over time.

Here’s what else this new Five Year Plan for China clean energy means.

It means that the U.S. and Europe will have a hard time calling China out on climate change in the not-so-distant future. If they want to strike China for this, they will have to strike fast.

China can easily flip the switch on its coal fired power plants and replace them with zero-emissions nuclear in the next five to 10 years. That’s my assumption.

China can then say that its steel production and its aluminum is as clean as it is in Japan, and South Korea. China can tell corporations that their energy is cheaper and as green if not greener than Germany and the U.S., attracting more money from the big ESG funds and firms.

A cleaner energy matrix in China also gives the big multinational green tech companies something to consider: We can make EV batteries and wind turbines and solar panels in China and burn less fossil fuels doing so. Let’s just make it there, then.

Don’t think that is not part of China’s equation here.

“I think in the next 10-15 years, China will probably be the biggest maker of nuclear power plants,” says Zaikin. “Right now, it’s Russia, but they’re not innovating. The Chinese can get the tech from the French or from the Americans that don’t want it. And they’ll take it for themselves. They could surpass Russia and be the new No. 1.”

In the meantime, China is still a GHG pumping machine.

Their greenhouse gas emissions fell approximately 3% in the first half of 2020 due to lockdowns, but China made up for it in the second half of the year with emissions climbing by around 4%. China’s CO2 emissions increased by 1.5% in 2020 over 2019, based on data from the National Bureau of Statistics in Beijing.

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