China's energy dominance gets boost from Trump's return to White House

By David Fickling

 

The return to power of President-elect Donald Trump is rightly seen as a disaster for efforts to rein in climate change. 

He’s promised to eviscerate the Biden administration’s clean energy subsidies, tear up regulations on vehicle and power plant emissions, and unleash more fossil fuel production. “We have more liquid gold, oil and gas,” he said in a victory speech early Wednesday, “than any country in the world.”

 

At the same time, the most consequential effects of a second Trump administration may well be seen not in the US, but in China.  

 

That’s simply a matter of scale. China is responsible for nearly a third of the world’s carbon footprint, about 2.5 times the US figure. As a result, a 20 per cent reduction in its greenhouse pollution would have the same effect as cutting US emissions in half.

 

That’s not nearly as implausible as it might sound. Greenhouse pollution in the European Union fell 20 per cent in the decade through 2023. If the current pace of renewable build-out is maintained and electricity consumption growth slows from current extreme levels to rates typical of other fast-growing, high-income economies, China would have little difficulty hitting that target. The question is whether it wants to do so. 

 

Beijing would bristle at the notion that its climate policy is going to be made in the White House, least of all a Trump White House. And yet the shape of politics in Washington, and the way China’s leadership decides to respond to that new reality, are likely to have a crucial impact over the coming 12 months. 

 

There are two paths that could be taken. On one hand, tearing up climate policies in the US could be treated as an opportunity to do the same in China. With a slowing economy and a renewed round of stimulus on the cards, policymakers might reckon an unambitious agenda gives them most leeway to do whatever it takes to keep growth on track.

 

A previous apparent peak in pollution a decade ago was reversed around the time of the first Trump administration, as the looming trade war encouraged Beijing to juice the domestic economy through a boom in carbon-intensive real estate and infrastructure building. 

 

On the other hand, President Xi Jinping could lean into the ways in which his country is taking over the mantle of the world’s clean energy superpower. China is more or less a high-income economy these days, making it harder to find common ground with the developing countries it would like to enlist as partners against the US-led world order.

 

Its solar, battery and electric-vehicle exports, however, give it an opportunity to provide emerging economies with the energy abundance they need to grow. A green Marshall Plan for the Global South would offer a potent source of soft power, something Beijing has singularly failed to deploy in the Xi era. Cleaner skies, waters and food would also show the government can still deliver improving living standards, even as income growth falters — a longstanding priority for Xi.

 

The coming months will be crucial in deciding which path China will take. This week, United Nations members will meet in Azerbaijan for the COP29 climate conference, likely the last opportunity for many years for Washington to have a major impact on climate diplomacy. 

 

By the end of February, China has to issue its Nationally Determined Contribution, or NDC, a plan for emissions reductions over the coming decade, part of its commitments under the 2015 Paris climate agreement. 

 

These NDCs aren’t just meaningless documents. The policies enacted thanks to previous global rounds have already reduced forecasts of global warming from as much as 4.8 degrees Celsius (8.6 degrees Fahrenheit) in 2010 to as little as 2.4C now, and governments appear to be quite good at hitting the marks they set out, according to a United Nations study last month.

 

Beyond that, China’s bureaucrats will be spending much of the coming year hammering out the shape of its 15th five-year plan, probably the closest thing a one-party state has to a change of government. Renewable energy and a peak in carbon emissions have been put high on the list of priorities, though it’s anyone’s guess whether that will translate into concrete progress.

 

It’s this ferment of policy change happening behind the scenes in Beijing that will ultimately be far more consequential than the public jostling that will take place during the coming lame duck months in Washington.

 

The risk for the US is that China can see how doubling down on its green push will enhance its wealth and global status, and diminish that of its rival.

 

Trump appears to be on the cusp of barricading the US economy behind a tariff wall and cementing its role as the world’s biggest fossil fuel producer. If China wants to build the alliances that it will need to acquire the status of a global hegemon, it has the perfect opportunity now to present itself as the clean alternative to an oil-stained and declining American empire.  Disclaimer: This is a Bloomberg Opinion piece, and these are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper