Climate action at the double

A safe, stable energy system that secures an adequate supply of clean energy is a fundamental requirement for the low-carbon transformation of China's energy system.

Realizing China's carbon neutrality goal depends on both the development of clean energy and the increasing demand for it. China leads the world in total installed wind and solar capacity, as well as in annual installations of wind and solar energy. However, these two sources together currently generate only around 9 percent of its total power.

Fulfilling the carbon neutrality task before 2060 will therefore necessitate reducing both fossil fuel consumption and the demand for fossil fuel energy from economic growth－a double decoupling.

Realizing the carbon neutrality goal therefore requires not only adjustments in China's energy structure, but also in all aspects of society and the economy.

To start with, since it will be hard to reduce China's energy demand in the short term, the development of clean energy must be accelerated. That means the volatility in the supply of wind and solar energy needs to be addressed.

Digital and intelligent technologies can be applied to improve the efficiency of the energy system. Since wind and solar power will become major energy sources, the country will be using a more and more unstable power system to cope with more and more unstable climate conditions. To guarantee the large-scale integration of solar and wind power into the power grid, digital and intelligent technologies must be applied to ensure the production, transaction and consumption of energy are stable and more efficient.

At the same time, China needs to encourage the low-carbon and green transformation of consumer behavior by increasing consumer willingness to adopt products that are both produced with and produce less carbon emissions. This would boost the low-carbon economy, promote the low-carbon transformation of high energy-consuming enterprises, and attract more market entities to participate in the low carbon economy.

Thus policies aimed at industrial structural adjustment should also focus on the low-carbon and green transformation of consumer behavior. At present, energy conservation and emissions reduction policies are mainly focused on the production and supply sides, and are mostly administrative measures, rather than market-based measures. As a result, the energy rebound effect could to a certain extent offset the progress in energy conservation and emissions reduction brought about by low-carbon technologies.

China needs to quicken the pace of industrial structural adjustments and industrial upgrading. High energy-consuming and heavily polluting enterprises should be phased out through necessary administrative regulatory measures and market-based measures, such as the national carbon trading market, the development of modern services and the acceleration of advanced manufacturing.

At the same time, since compulsory administrative measures on the production and supply side will increase the cost of production and prices in the upstream segment of the manufacturing sector, possibly resulting in sluggish demand from the downstream segment and weaker investment in the manufacturing sector, hurting the broader economy, China should attach greater significance to the low-carbon transformation of the demand and consumption sides.

By increasing consumer willingness to adopt products with less carbon emissions and advocating a green and low-carbon lifestyle, China could create new growth points in the low-carbon economy, promote businesses to carry out low-carbon upgrading, attract more market entities, and inject fresh momentum into the market, while at the same time raising people's awareness of the importance of green and low-carbon growth as well as the country's climate objectives.

On the one hand, by encouraging consumption featuring energy conservation and environmental protection and creating a more favorable environment for green consumption, the government would increase the public's carbon literacy. On the other hand, China could encourage low-carbon consumption by giving out "low-carbon coupons" and "green commuting coupons" and creating low-carbon consumption accounts for residents.

In the same vein, policies should be introduced to propel the development of the circular economy, which, by focusing on more efficient utilization of resources, would produce relatively higher economic output with lower environmental and resource costs.

Nonetheless, industrial structural adjustment must also be expedited to hasten the decoupling of economic growth from increased energy use. China's high energy-consuming industries have resulted in surging energy consumption and emissions, particularly in the steel, cement and nonferrous metal industries, which consumed 21.4 percent of the country's power in 2020.

The government can include these industries in the carbon trading market to phase out outdated capacity and establish market entrance threshold and technical standards through market-based means. This would vigorously curb newly increased capacity, optimize existing capacity and carry forward energy conservation and low-carbon improvements within those industries. Concurrently, policy support should be provided to accelerate the development of modern services, the high-tech industry and advanced manufacturing.

Government policies should focus on supporting emerging industries, market-based measures such as the national carbon trading, power market and electricity pricing reforms, accompanied by proper administrative regulative measures to gradually decouple economic growth from energy use.

To sum up, the production-focused emissions reduction policy should be altered to focus more on the demand side, with more market-based measures to motivate consumers to take part in the nation's quest for carbon neutrality, so that the supply side and demand side can join forces to steadily promote carbon neutrality and sustain high-quality growth.

The author is a researcher with Tan Kah Kee Innovation Laboratory and dean of the China Institute for Energy Policy Studies at Xiamen University. The views do not necessarily reflect those of China Daily.