Tag: Climate Change and Disaster Risk Management
These Policies Will Put the PRC on the Path to a Green Economic Recovery
To rebuild greener and address climate challenges, the PRC should “green” its investments, financing tools and fiscal spending while at the same time developing a robust monitoring and evaluation framework.
Thanks to strict virus containment measures and an array of supportive monetary and fiscal policies, the PRC rebounded quickly from the shock of the pandemic. The country’s fiscal and monetary stimulus policies to mitigate the adverse impact of COVID-19 on the economy have amounted to $2.3 trillion, or 16.1% of gross domestic product (GDP) by the end of August 2021. The economy is now forecast to grow 8.1% in 2021 and 5.5% in 2022.
The government’s policy priorities must move from rescue to the recovery mode, from short-term stabilization measures to long-term economic recovery. In addition to rescue measures, the government announced recovery measures amounting to around $407 billion. However, the “green” share of the recovery spending – that which is likely to reduce greenhouse gas emissions, reduce air pollution and/or strengthen natural capital – only reached 12%, which was comparatively low compared to those of countries such as Canada (75%), Germany (47%), and France (38%).
The PRC already has ambitious long-term targets on environment and climate, such as peaking carbon emissions before 2030 and reaching carbon neutrality before 2060. Ensuring these targets are met requires policies that address climate challenges to ensure a green recovery from the COVID-19 shock.
At the same time, Organisation for Economic Co-operation and Development research shows that well-designed green stimulus measures can bring critical economic and environmental benefits. Also, thanks to falling technology costs, which enable more choices of green investments, green measures would support the economy and employment more strongly than in recovery from the 2008 Global Financial Crisis.
The PRC already has ambitious long-term targets on environment and climate.
Rebuilding greener requires the following policy actions:
Align public investment with long-term environmental goals.
To boost public infrastructure development and to support economic recovery, the quota for new local government special bonds reached CNY3.75 trillion in 2020 and CNY3.65 trillion in 2021. This significant financial support to public infrastructure highlights the opportunity to allocate public resources toward sectors supporting the environment, such as renewable energy, biodiversity, and water management.
Leverage green finance.
The PRC would need annual investment in energy transformation equivalent to 2%–2.5% of GDP from 2020 to 2050 to achieve a long-term low carbon transition pathway (2-degree transition pathway), according to a report by Tsinghua University’s Institute of Climate Change and Sustainable Development.
By the end of 2020, the sizes of outstanding green loans and green bonds were the world’s largest and second largest, respectively. Despite this rapid expansion of the green finance sector, a large financing gap remains. Thus, more capital needs to be mobilized to fund green infrastructure, which requires more private participation and broader funding base in addition to a well-designed and implemented public policy such as tax incentives, grants, legislation, and regulation.
Budget green.
The environmental impacts of the government’s budget choices are important to consider when designing policies. While public debt needs to be consolidated, public expenditure on social protection and green projects should be prioritized. The government can increase fiscal revenue by taxing emissions and polluting activities. International experience shows that green budgeting commonly involves tagging budget measures according to their climate and environment impacts. For example, 30% of the budget in France was allocated to green recovery measures in September 2020 based on this framework.
Monitor and evaluate the policies.
The government needs to identify and monitor the environmental impacts of its policies to ensure their alignment with climate and sustainability goals. Currently, such assessment is not fully in place yet, and there are only few databases to track and assess the environmental impact of government policies. Defining clear criteria and indicators for different policy areas and disclosing related results would be a good starting point.
The PRC has a historic opportunity to craft a “green” recovery from the pandemic if the right policies are put into place.
Author
Wen Qi
Associate Economics Officer, PRC Resident Mission, ADB
This blog is reproduced from Asian Development Blog.
Unveiling the Sandstorms in the PRC
Early this year, the worst sandstorm in a decade hit Beijing, the PRC’s capital. How did this happen? What can ADB do to help tackle hazardous sandstorms? RKSI spoke to an expert who “loves desert lands”. Watch it on Bilibili.
Climate Risk Country Profile: The PRC
中国的健康和老年友好型城市
Momentum Builder
By scaling up carbon capture, use and storage, China can play a leading role in achieving the global ambition of climate neutrality
China’s commitment to achieve carbon neutrality before 2060 has been acclaimed as one of the most important climate actions in the world. Scholars at Cambridge Econometrics estimate that China’s commitment alone could cut global warming by 0.25 C－which would be a very significant contribution to the Paris Agreement’s goal of limiting global warming to well below 2 C, and preferably to 1.5 C above pre-industrial levels.
To translate the carbon neutrality vision into reality, the world needs to deploy clean energy technologies on a massive scale, starting with solar photovoltaic. Between 2010 and 2020, the global capacity of solar PV increased about 18-fold from 40 gigawatts to 707 GW. During the same period, China’s solar PV capacity increased from 1 GW to 254 GW－growing at a phenomenal annual rate of 74 percent on average. By the end of 2020, solar PV in China accounted for 36 percent of the world total, followed by the United States (10 percent), Japan (9 percent), Germany (7 percent) and India (6 percent). China is also the major exporter of solar panels, having supplied more than 70 percent of demand in international markets.
The open recipe for such a great success for solar PV includes three main ingredients: international cooperation, enabling policies by governments and economies of scale.
In 2000, solar PV was still very costly at about $5 per watt. However, that year, Germany adopted its Renewable Energy Act and began providing attractive feed-in tariffs－essentially subsidies－to the developers of solar PV, which quickly helped Germany become the world’s largest solar market. As many countries followed suit by introducing similar incentive policies for solar energy, Chinese companies, mostly private entrepreneurs, developed full supply chains for solar PV to meet the growing demand in Europe, North America and Asia, including China’s own market.
China’s solar PV capacity overtook that of Germany in 2015, and since then China has maintained its position as the world’s leading solar nation. As solar PV has been deployed at such scale worldwide, the average cost of solar power has declined by more than 80 percent over the last decade. Solar power has become the cheapest form of energy in modern history and is now being deployed all over the world including in the least developed countries in Asia, Africa, and South America.
Beyond solar energy, China is also the world leader in wind power (38 percent of the world total), hydropower (28 percent), bioenergy (15 percent) in 2020, and sales of electric vehicles in China reached 1.3 million that year, representing 41 percent of the global EV market.
While all these clean technologies are an indispensable part of the low carbon transition, on their own they will not be sufficient to achieve carbon neutrality. The modeling work of Tsinghua University shows that, before 2060 when China is supposed to achieve carbon neutrality, fossil fuels would still account for about 19 percent of the primary energy consumption mix. This means that some advanced engineering must be developed to capture the carbon dioxide molecules produced from the burning of fossil fuels, use the captured CO2 if possible, and then store it permanently underground.
Such technology, known as “carbon capture, utilization and storage”, or CCUS, is an important option for reducing CO2 emissions in the energy sector and will be essential to achieving carbon neutrality. According to the International Energy Agency, for the whole world to achieve carbon neutrality by 2070, CCUS technologies alone will need to make up approximately 19 percent of global CO2 reductions, with other clean energy technologies making up the rest.
Despite the indispensable role of CCUS in achieving carbon neutrality, its deployment worldwide has been slow－so far there are only around 20 CCUS facilities in operation around the world. One of the main reasons for this is the high cost of CCUS technology, currently around $100 per metric ton of CO2. The situation of CCUS today is similar to solar PV 20 years ago, so the world needs to apply the same successful recipe for solar PV of cooperation, policies, and scale to the development of CCUS.
The good news is that momentum is building behind CCUS. Plans for more than 30 new CCUS facilities have been announced in recent years, and despite the COVID-19 pandemic, governments and industry have committed more than $4.5 billion to CCUS in 2020. In particular, the global energy industry is counting on China to once again play a crucial role in the development of CCUS as it did for solar PV. They have good reasons for this, as China has solid R&D capacity, a complete industry supply chain, very active entrepreneurship and strong policy commitments from the government to develop CCUS.
China also has a huge domestic market for the deployment of CCUS that will help bring down the cost to a more affordable level in the next decade. In terms of incentive schemes, unlike solar PV that benefited from public subsidies in the beginning of its development, CCUS deployment will primarily be driven by market forces such as carbon pricing. In January 2021, China launched its national carbon trading market, covering 2,225 thermal power plants which account for about 30 percent of China’s CO2 emissions. The carbon price will be a strong market signal for investors in low carbon technologies, as every single dollar increase in carbon price would mean a dollar cost reduction in favor of the competitiveness of CCUS technologies.
Carbon neutrality is a global mission and so far more than 110 countries and regions have announced their intentions to pursue carbon neutrality. In this essential journey to a more sustainable future, China will cooperate with the international community and lead the way by making clean technologies affordable for the benefit of the whole world. And just as China helped to drive global take-up of solar PV, it now has a golden opportunity to do the same for CCUS and play a leading role in achieving global climate neutrality.
Author
Yongping Zhai
Chief of Energy Sector Group, Sustainable Development and Climate Change Department
This Op-Ed is reproduced from China Daily.
Catalyzing Climate Finance: Lessons Learned from the Shandong Green Development Fund
Expanding Green Finance, Blue Finance, and Disaster Risk Financing for Innovative Operations
James Lynch, Director General of East Asia Department (EARD) on 16 December chaired a knowledge-sharing webinar presenting findings from recent ADB supported research on innovative financing to help bolster and scale-up PRC’s green and high-quality development. Renowned economist and thought leader in green finance, Dr. Ma Jun from Tsinghua University, and insurance expert Gary Wei discussed practical approaches on green-blue financing and disaster risk financing. Emma Fan, Director of Public Mgt, Financial Sector, & Regional Coop Division(EAPF), EAOD and Jackie Surtani, Director of Infrastructure Finance Division 2, Private Sector Operations Department (PSOD) shared thoughts on potential application of these financing innovations in sovereign and nonsovereign financial sector operations. About 40 participants, including representatives from the Ministry of Finance and the National Development and Reform Commission, participated in the event. The webinar was organized through a One ADB collaborative effort by EAPF, PRCM and PSOD.
Agenda:
| Time | Program |
|---|---|
| 08:30 – 09:00 | Registration |
| Session 1 | Opening Plenary Chair: Yolanda Fernandez Lommen, Country Director of the Asian Development Bank (ADB) in the People’s Republic of China (PRC) |
| 09:00 – 09:15 | Welcome Remarks
|
| Session 2 | Expert Sharing Chair: James P. Lynch, Director General, EARD, ADB |
| 9:20 – 9:40 | Presentation 1 (via Zoom) Green and Blue Financing for High Quality Growth and Green Transformation Under the 14th Five Year Plan (20 minutes) Presenter: Dr. Ma Jun, Director, Finance and Development Research Center and the Green Finance Development Research Center, Tsinghua University This presentation will provide specific suggestions on using green and blue financing to reduce carbon emissions, lower pollution, protect the environment, and improve climate change resilience, especially for peaking carbon emissions by 2030 and achieving carbon neutrality by 2060. |
| 9:45 – 10:00 | Discussion, Questions, and Answers 15 minutes |
| 10:00 – 10:20 | Presentation 2 From Pandemic to Greater Resilience: Public Financing Strategies in Response to Extreme Disasters(20 minutes) Presenter: Dr. Gary Wei, Insurance Expert This presentation will propose specific public finance measures to improve resources and preparedness for large scale disasters, such as through parametric insurance. |
| 10:20 – 10:35 | Discussion, Questions, and Answers 15 minutes |
| 10:35 – 10:45 | Coffee Break |
| Session 3 | ADB Sharing Chair: James P. Lynch, Director General, EARD, ADB |
| 10:45 – 11:00 | Presentation 3 Innovation and Applications in Sovereign Operations: Using Innovative Financing to Enrich Sovereign Financial Sector Operations(15 minutes) Presenter: Emma Fan, Director, Public Management, Financial Sector, and Regional Cooperation Division (EAPF), EARD, ADB Drawing from the expert’s presentations, this presentation will propose measures to support green finance, blue finance, and disaster risk financing operations under the next CPS and 14th Five Year Plan. The presentation will also cover blended financing. |
| 11:00 – 11:15 | Presentation 4 Innovation and Applications in Nonsovereign Operations: Examples of Innovative Nonsovereign Operations(15 minutes) Presenter: Jackie B. Surtani, Director, Private Sector Operations Department (PSOD), ADB Drawing from the expert’s presentations, this presentation will share examples of innovative nonsovereign operations in the PRC and other ADB developing member countries. |
| 11:50 – 12:00 | Summary and Closing (including final views from DDG Zhang and DDG Han) Chair: James Lynch (10 minutes) |
Video:
PRC’s Path to Higher-Quality Green Development
As we approach the end of the 13th Five-Year Plan (FYP) (2016-2020) of the People’s Republic of China (PRC), the country can take satisfaction in many notable achievements over the past five years.
The FYP placed significant emphasis on the environment, and set out to reduce total emissions of major pollutants and reverse biodiversity loss and degradation. We saw the concept of Ecological Civilization become enshrined in the PRC’s constitution in 2018, which prioritizes an innovative, coordinated, green, open, and shared approach to development. Ecological Civilization brought forward a new focus on the importance of natural resource management and the need to address pollution challenges around air, water, soil and plastics, and contribute to global climate and sustainability governance.
We are seeing the concept of Ecological Civilization being translated into practice in rural areas, where agriculture, farmers and rural communities have become the core focus of multi-sectoral development efforts. More sustainable use of natural resources is accompanied by a reduction in rural poverty and inequality, and greater food security. Ecological Civilization is promoting more sustainable production and consumption, along with actions to address climate change and protect natural ecosystems. As a result, economic, social and environmental welfare in the PRC’s rural areas is improving.
The forthcoming 14th FYP (2021-2025) needs to carry this positive momentum forward, as well as the concept of Ecological Civilization. The post COVID-19 economic recovery provides the opportunity to make an even stronger commitment to environmental protection and address climate change through high-quality, green and nature-positive development approaches.
Consistent with the focus on greener, more sustainable growth, the 14th FYP is expected to emphasize climate change and outline various initiatives for the PRC to meet its nationally determined contributions (NDCs) under the Paris Agreement. The recent announcement that the PRC will become carbon neutral by 2060 is a strong step in the right direction. Under the 14th FYP, new policies and measures are expected to scale up renewable energy and low-carbon, livable cities.
The theme for 2021 Global Biodiversity 15th Conference of Parties (COP 15) is also rooted in the vision of Ecological Civilization and draws inspiration from traditional and new eco-innovations. This event will adopt a ten-year global biodiversity framework (2021-2030). COP 15 offers a great opportunity for China to ensure that ecological conservation redlining, a one-health approach (human-animal-environment), and sustainable financing mechanisms for natural capital mechanism be incorporated in the 14th Five Year Plan.
The PRC is also looking to strengthen subregional development programs such as the Yangtze River Economic Belt and Yellow River Ecological Corridor by focusing on biodiversity conservation, and using eco-compensation schemes to value ecological resources and services, and ensure this value is preserved. In the spirit of Ecological Compensation, these large-scale rural vitalization programs focus on improving livelihood opportunities for the people and communities in rural areas. This also includes support in the agriculture and tourism sectors, improving access to finance for farmers, households and small businesses as well as efforts to ensure the provision of basis services such as health and education.
The 14th FYP represents both an opportunity and a critical roadmap to achieve high-quality development while advancing renewed forms of international cooperation. Integrating ecological protection and nature-positive approaches will require concerted efforts and the design of a comprehensive set of transformative policies. Three actions will be paramount to achieve these ambitious goals.
First, climate adaptation and mitigation measures must be integral to natural resource management to enhance their impact on the ground. Strengthening linkages among sustainable agriculture and food systems, integrated natural resources and disaster risk management will be critical to enable decision making for climate-resilient investments.
Second, improve natural capital accounting and market-based mechanisms to catalyze green finance in the Yangtze and the Yellow river basins. This will only be possible if coherent policies offer scope for better allocation of funding in areas with high ecological and high conservation value and are aligned with national land-use planning.
Third, incorporate biodiversity conservation into the PRC policy framework of green finance. A crucial step in this direction will be to nurture innovative financial mechanisms for rural vitalization and ecological protection. Other actions needed include accelerating piloting and deployment of new technologies, partnering with innovative companies to improve agriculture value chains by leveraging small entrepreneurs, and enhancing financial disclosure mechanisms to mitigate biodiversity risks.
The ADB has been a partner with the PRC in supporting higher quality and greener development during the 13th FYP, and this focus will remain the cornerstone of our partnership in working together toward a more sustainable future for the PRC, and the Asia and Pacific region.
Author
James Patrick Lynch
Director General, East Asia Department, ADB
This Op-Ed is reproduced from Asian Development Bank.
