China’s ambitious green goals at risk as domestic efforts lag | Business and Economics News | World Weekly

Shenzhen, China – Efforts to stimulate China’s economy since last year have failed to bring about a change in the country’s decarbonization goals, as rhetoric from the highest levels of government has failed to translate into tangible progress at the domestic level, warns a report this week from Greenpeace East Asia.

The group of environmental activists is urging Chinese authorities to deepen decarbonization efforts at the domestic level if China is to meet its stated commitments to peak greenhouse gas emissions by 2030 and reach net zero emissions by 2060.

A Greenpeace East Asia report released Monday in Beijing highlights the gap between decarbonization goals coming from China’s top leadership and the reality of an ongoing squalid recovery at the domestic level, finding that only 15 percent of municipal bonds issued since the COVID-19 outbreak are gone. for sustainable and low carbon projects.

Failure to better align central government’s low-carbon goals with local government actions through the use of green finance and banking – using tools such as green bonds, subsidies and loans – could explain the difference between a long and slow carbon plateau after 2030 or a faster decline in carbon emissions after that the point.

The Greenpeace report found that the lion’s share of COVID relief bonds — about 90 percent — went to fund either public infrastructure projects or other traditional infrastructure, leaving greener transportation, agriculture, forestry and waterway projects offshore.

“The first big lesson we can take away here is that local governments should prioritize decarbonization when spending large government payments,” Li Wenge, a policy analyst at Greenpeace East Asia, told Al Jazeera.

Smoke and exhaust billowing from a large industrial complex surrounding the Liuzhou Iron & Steel Co facility in Liuzhou, China in 2021 [File: Qilai Shen/Bloomberg]

Lacking an effective framework

Although economic recovery focused on the environment is prioritized nationally — and within a few provinces where more money is being invested in decarbonization efforts — the lack of a system for monitoring financial flows at the project level and stricter standards for data collection, Lee said, Disclosure of domestic spending in most areas undermines the deeper penetration of green finance.

“There is a need for a framework to assess the effectiveness of fiscal spending through economic, social and environmental impacts and also to channel financial resources efficiently through taxes, green bonds, green procurement and other tools to promote a green transformation at the local level,” she said.

Ilaria Mazzuko, a senior research assistant at the Paulson Institute in Chicago, told Al Jazeera: “It’s not surprising that some governments may not be taking drastic or aggressive measures to cut emissions yet, because that’s when you can still move forward with projects, and they may It’s the last chance to build some of these high-emissions projects.”

“I think they are waiting to see how committed the center is,” she said. “For some local governments, there will be a trade-off between growth and decarbonization, and it is not inconsequential that local policy makers want to understand what will be prioritized in the center.”

Wind turbines surround a coal-fired power plant on the outskirts of Yumen New Town district in Gansu Province, China in 2021 [File: Qilai Shen/Bloomberg]

Plans in progress

Experts say a major shift in spending priorities — and a better understanding by local officials of what they are, exactly — could open the funding spigot for low-carbon projects.

China’s State Council has pledged to release an action plan to peak China’s emissions before 2030 by the end of this year. The country’s Development and Planning Authority leads the process of drafting the plan.

Other important blueprints will be the 14th Five-Year Energy Plan, which will likely focus on coal, natural gas, oil and electricity consumption and what is now expected to be a stand-alone renewable energy five-year plan. Other plans from ministries such as the Ministry of Environment and Environment will follow, as well as more detailed regional plans with guidance on coal consumption and other targets based on those of the State Council.

Business plans like this have had a mixed record in the past. One of the most successful of these was the Air Pollution Master Action Plan launched in 2013 that helped reduce particulate matter and other air pollutants around major city areas such as Beijing, Shanghai and southern China’s Guangdong Province.

“This is exactly what everyone wants to see, what is emphasized, where are the resources placed,” said Mazzuko. “In terms of air pollution, there were a lot of resources, a lot of enforcement and that was clearly something the central government was interested in.”

However, how rigorous and ambitious the upcoming plans will be remains an open question.

“[With these plans] Zhang Kai, deputy director of programs at Greenpeace East Asia, said China’s central government should set clear, measurable targets for a cap on carbon emissions, energy mix and a cap on coal consumption for different provinces, and set periodic evaluation criteria.

Most of the coal-rich counties still lack green industrial chains and infrastructure to boost economic growth only through green investment in the short term, Zhang said, adding that local officials are more familiar with traditional industry, economic development and the jobs they create.

“Policymakers need a development blueprint from low-carbon development research centers and capacity building” in order to overcome those barriers, Chang said.

While carbon emissions and coal consumption are expected to be capped in order to meet the 2030 and 2060 targets, Jonathan Ha, CEO of business intelligence firm Seneca ESG, told Al Jazeera he did not expect the government to be very specific about the relevant micro levels. To those extremes, preferring to let market participants know the details themselves.

“We think it will definitely help direct more funding to green projects, but we’re not overly optimistic either,” Ha said. “Green projects in many cases require committed long-term capital and there is actually a mismatch on asset-liability issues since the majority of green finance is still loans rather than bonds.”

Photovoltaic modules stand at a solar power plant jointly owned by Longi Green Energy Technology Co and China Three Gorges Corp in 2020 [File: Qilai Shen/Bloomberg]

Deeper commitments to green finance

For several years, China’s central government – led by officials from the People’s Bank of China, the country’s central bank – has been promoting green finance as one of the main remedies to tackle carbon emissions.

Green bonds have been widely promoted, but have come under increasing scrutiny due to a lack of transparency as to whether the money raised from these bonds ultimately goes to green projects or is only liquidated in the general operating budgets of local governments and projects.

Most green municipal bonds are geared toward public infrastructure projects, according to Lee, though the latest look at municipal bonds hasn’t delved into project operation, and it couldn’t say how the financing would be used overall.

“Measuring the effectiveness of ‘green bonds’ remains a challenging task not only because we lack data and information disclosure but also because developing an assessment framework using appropriate indicators and quantitative methods is challenging,” Lee said.

Guidelines for disclosing information about green bonds have recently been released, but it will take some time to absorb and start evaluating the data.

“The issue really remains because the majority of the attention is focused on the release phase, and there are very few previous track records for investors to point to. [about outcomes]Ha said. We believe regulation and technology adoption can alleviate the problem in some way [and] Some form of mandatory periodic disclosure of the use of the funds would certainly help.”

Li said pilot projects coordinated by China’s ministries of finance and development have already shown that conservation and environmental projects using municipal bonds can also be supported by green bonds, if eligible, and if implemented on a larger scale can encourage the creation of more Green municipal bonds.

Mazuku said the next few years will be about creating the right kinds of incentives and putting in place the institutions that will guide decarbonization.

“These are tough things to put in place,” she said. I don’t expect to see rapid decarbonization over the next five years; This will be about setting the framework and then leaving some of the heavy burden to the next five-year plan or even beyond 2030.”

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