China’s Next Economic Transformation: Going Carbon Neutral by 2060 | WSJ

– [Narrator] China has held the mantle of the world's biggest polluter for more than a decade. It emits the most greenhouse gases and uses more coal than the
rest of the world combined. But in September, it made the biggest climate
commitment ever made by any nation. (speaking in foreign language) – [Narrator] China's pledge is expected to not only improve lifestyle and air quality for
urbanites tired of smog, it could also boost the
clean energy business and bring hundreds of
millions of electric vehicles on the road. After President Xi Jinping's announcement, stocks of Chinese renewable
energy giants soared. There are questions about whether China can really achieve its climate goal. But as Beijing pushes ahead with its plan, the growing green superpower could affect the US and
the rest of the world.

(lively music) China's green energy leap won't be cheap. Over the next 30 years, Beijing and clean energy companies will need to spend anywhere
between 5 to $20 trillion. – So we don't know
exactly how much Beijing is going to spend. Although, it's already spending a lot. We do know that Beijing's very good at stimulating the creation
of very large industries. – [Narrator] The first step is
ramping up renewable energy. And that's not impossible because China already has a lot of solar parks and wind farms, more than any other country. But China needs a lot more. 90% of the country's
energy has to be renewable or nuclear by 2050 to
achieve net-zero emissions. In past years, renewable capacity has boomed in large part
because of subsidies and these companies haven't had to compete in the global marketplace. In a strategy shift, Beijing
wants to roll back some of that direct support for companies.

– They kinda slowly dial down the support and only the companies that
are actually on quality and are able to innovate will be able to survive that. (upbeat music) – [Narrator] Having renewable
energy on tap provides a clean source of power
for its electric vehicles. China already has the most in the world and wants 300 million on the road by 2050. – [Nathaniel] China has the
resources to do these kind of top-down government pushes. They've just mandated
that a certain percentage of all government-owned fleets, like a certain amount of the buses, a certain amount of the corporate fleets or the government have to be EVs. And so that kind of
creates a baseline kind of structural-level demand. – [Narrator] But Beijing
has also cut subsidies for people in the market
to buy electric vehicles, as well as for local manufacturers.

As a result, companies like BYD and Bike have seen their sales slump, while Tesla has been able to speed ahead to become the market leader in China. But still, Beijing is
keeping foreign automakers in check by requiring them to
use Chinese-made batteries. This kind of policy has
helped China get a good grip on the supply chain for
lithium ion batteries, which accounts for more than
half of global production. But that advantage could slip. – There's a lot of lithium
out there in the world. If lithium prices start to go up, I think there'll be a
lot of capital coming from a lot of different places to develop those deposits. I think it would be quite hard for China to kind of dominate
the control of lithium. – [Narrator] Renewables
can only have an impact if China moves away from coal but it won't be easy to
switch off these plants. – There's a lot of banks that lent to those coal plants. That's potentially a financial problem. There's still a fair
amount of people working in the coal industry. So there's gonna be a
lot of vested interests in keeping coal alive in some
form or another in China.

– [Narrator] Enter carbon
capture technology, which would allow some
coal plants to stay online. The technology would remove
CO2 from the atmosphere so it can be stored or repurposed. Many of these techniques
have been around for decades but it's still incredibly expensive, costing about $43 to
capture one ton of CO2. That means for a country
of 1.4 billion people, where each person emits seven tons of carbon dioxide every year, the cost would be astronomical. So Beijing will have to
make polluters responsible for their own carbon emissions by making them pay for it. – They're also gonna have
to create an inventive to make it more expensive to produce emissions by burning coal or other forms of fossil fuels. And so a real carbon
trading program in China, that would be a huge
incentive for coal producers to invest in carbon capture technology. – [Narrator] In October, Chinese
officials announced plans to expand its emissions trading program in the next five years.

While the current pilot
schemes cover sectors like steel and cement, the nationwide one would
bring in heavy emitters, like the aviation industry. China's 2060 goal could
have ripple effects. Its large-scale investments could further drive down the costs of clean tech around the world. The same way solar panel prices
have plunged more than 80%, in part because of the
dominance of Chinese firms. But China isn't alone in thinking about this energy transition. Its relatively smaller neighbors Japan and South Korea set a 2050
deadline for carbon neutrality.

And some European players are investing heavily in renewables. While Trump has signaled that
he sees an energy transition as a threat to the oil and gas industry, Joe Biden has proposed a $2
trillion climate change plan. These competitors and countries could also grow
increasingly wary of China. – There'll be a worry
both in terms of subsidies and China producing things below cost, then also being too dependent on China for their energy supply. (lively music).

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