China’s emissions fall as the economy is hit by the real estate slump

China’s carbon dioxide emissions fell for the first time since the shutdown last year, in the latest sign that a slump in the real estate sector and energy shortages are hurting industrial demand in the world’s second-largest economy.

Emissions fell about 0.5 percent in the three months to the end of September, according to data published by Carbon Brief, a climate research and news service.

“the reasons [for the decline] said Lauri Myllyvirta, an analyst at the Center for Research on Energy and Clean Air, an independent research group based in Helsinki.

However, Myllyvirta also believes that the recent drop in emissions in the world’s largest polluter “could represent a tipping point and an early peak in China’s emissions” – years ahead of Beijing’s 2030 target.

The drop in emissions in the third quarter of this year followed the sharpest increases in a decade as Chinese factories, construction and heavy industries came back to life last year, riding a wave of stimulus spending.

In early 2020, Chinese industrial activity came to a halt in response to the coronavirus crisis that first appeared in Wuhan, causing emissions to drop.

China’s real estate sector, which is estimated to account for up to a third of total economic activity, has been hit by a liquidity crunch. A group of debt-laden developers — including Evergrande that has $300 billion in liabilities — are teetering on the brink of bankruptcy, prompting fears of systemic risk and economic contagion.

Beijing is easing credit controls to stem the sector’s collapse. However, there are still few indications that such moves are spurring a sustainable recovery in industries such as steel and cement. The Carbon Brief data also indicated that the downtrends will only intensify in the last quarter.

The emissions trend also reflects that China’s coal consumption has declined in recent months amid record commodity prices and supply shortages.

Severe power shortages have led to power rationing in parts of the country, including the northeastern industrial regions and high-tech manufacturing sites in the south.

“The only thing to pay attention to is whether those industries that are still seeing strong demand will ramp up production to make up for lost time once electricity rationing is eased,” Mylvirta said.

The country’s per capita emissions are about half that of the United States. But with the global plant responsible for about 30 percent of global greenhouse gases, Beijing’s plan to cut emissions is seen as crucial to winning the battle against climate change.

The statements were released as the international debate raged over China’s role in responding to climate change. President Xi Jinping has set a goal of carbon neutrality by 2060. The task is enormous as fossil fuels make up 85 percent of the country’s energy mix.

At the COP26 United Nations summit in Glasgow this month, China, along with India, was criticized for weakening efforts to end coal and fossil fuel energy subsidies. Critics, including the US government, are pushing Beijing to move faster.

Video: Is China’s economic model broken?

Climate capital

Where climate change meets business, markets and politics. Find out the Financial Times coverage here.

Curious about the Financial Times’ environmental sustainability commitments? Find out more about our science-based goals here

Source link