Climate Special 13: Clean Competition (I)

As we continue our series on climate cooperation, we hear from climate economist Zou Ji. Today we’ll share with you his insights on how China and the US must reach consensus on the opportunities presented by low-carbon development and what healthy competition can accomplish in tackling the climate crisis.

Transcript

Clean Competition (I)

As we continue our series on climate cooperation, we hear from climate economist Zou Ji. Today we’ll share with you his insights on how China and the US must reach consensus on the opportunities presented by low-carbon development and what healthy competition can accomplish in tackling the climate crisis.

In his interview with NewsChina, the internationally renowned climate and environmental economist, Professor Zou Ji said, “When I studied at Tsinghua University over 40 years ago, we could skate on the campus lake every winter by November 15, when Beijing switches on its public heating system. But in the past two years, I’ve noticed that by the same date, the lakes in the city remain unfrozen. This is how I have personally experienced climate change over four decades.” 

Zou draws from his decades of research into climate change and hands-on experience in international climate negotiations. After earning his master’s in technical economics from Tsinghua University in Beijing, Zou became a visiting scholar at Harvard University and the London School of Economics and Political Science, using econometrics to analyze the relationship between atmospheric pollution, energy consumption and economic development. Since then, Zou has been heavily involved in international climate negotiations and cooperation, both as a scholar and as the head of global environmental organizations. He currently teaches at the Renmin University of China in Beijing and is CEO and president of Energy Foundation China, a nonprofit grantmaking organization focused on climate change, energy transition and sustainable development, that has been active in China since the 1990s.

In NewsChina’s exclusive interview, Zou shares insights on China-US climate governance, the global green transition and the prospect of fostering healthy competition in clean energy sectors. What follows is our translated transcript of the interview. 

Leading off the interview, NewsChina asked: Has the green transition become a global consensus and an irreversible trend? If so, what factors have contributed to this shift?

Zou Ji replied: Global warming and its resulting climate issues since the Industrial Revolution that started in the 18th century are well-documented and indisputable. The consequences of climate change affect every country and region, disrupting water resources and snowfall, causing floods and droughts, as well as impacting agricultural yields, biodiversity, coastal zones, public health and infrastructure. 

There is now a broad consensus that climate change has brought a crisis, an issue the entire world has to work together to address. The international community has reached a consensus on climate governance and established binding agreements to guide it. In 1994, The United Nations Framework Convention on Climate Change (UNFCCC) came into force, signed by over 160 countries and regions, marking the beginning of global multilateral climate governance. Since then, the Conference of the Parties (COP) has been held annually, with its 30th session set to take place in Belém, Brazil in late 2025.

Another reason behind this irreversible trend is the ongoing technological revolution, particularly in energy. Throughout history, several technological revolutions have been closely linked to advances in energy. This time, it is renewable energy, primarily wind and solar power.

Over the past decade, the adoption of renewable energy has spread widely, reducing the costs of electricity generation [by 80-90 percent], much lower than fossil fuels like coal, gasoline and gas. Although renewable energy still faces challenges such as intermittency and instability, and the lack of flexible resources in power systems greatly limits its application, rapid advancements in energy storage technology are addressing the problem. In the summer of 2024, Suzhou, [Jiangsu Province] and the Yangtze River Delta experienced their longest-ever heat wave. But thanks to energy storage systems, Suzhou avoided power rationing this year, unlike in the past.

What’s the economic significance of this technological revolution? China has invested trillions of dollars into renewable energy, with production lines already in place. These investments need to yield returns. The same is true in Europe, the US and other countries. This has created a powerful economic force driving the momentum forward. With vast sums already poured into research, development and production in the new energy sector, the race to profitability in this market has already begun.

Therefore, ignoring or delaying action on the climate crisis would lead to global disaster. With the binding international agreements and global consensus, international efforts on tackling climate change will not reverse. Technological revolution and economic investment mean the green transition is irreversible.

NC followed up with: You have repeatedly emphasized that the green transition is an opportunity for countries at different stages of development. Why do you see it this way?

ZJ said: Currently, as the global economy faces challenges such as insufficient demand, investment, consumption and trade, the ongoing technological revolution presents a new growth opportunity. For example, China’s per capita GDP has grown from just a few hundred dollars at the beginning of the reform and opening-up period [in the late 70s] to US$13,000 today. The demand driving economic growth also needs to change. Traditional drivers may sustain an annual growth rate of 5 percent, but the question is: how can China double its per capita GDP to US$26,000 and then to US$30,000? Green and low-carbon development offers great potential to expand demand, making it an area worth exploring. 

In the 1990s, real estate was seen as the huge opportunity for the next two decades, and it turned out to be true. Developers made huge investments, stimulating rapid development in related industries such as building materials, steel and cement. However, after 20 years, space for growth in these industries has significantly shrunk. The economy needs new engines – an energy transition driven by low-carbon oriented development. While this transition comes with challenges, it is gathering strong momentum. For example, in 2023, Chinese exports of the “new three” [new energy vehicles, photovoltaic products and lithium batteries] reached 1.06 trillion yuan (US$145b). 

The green transition presents an opportunity for countries at all stages of development, particularly those in the Global South. Behind it is a change in mindset as to how development is approached. The new path is based on the new technology revolution. Consider major Southeast Asian countries like Indonesia and Vietnam. Their development undoubtedly requires energy, but this no longer has to mean huge emissions. Today’s globalization allows them access to affordable renewable energy from China, along with technologies such as microgrids and ultra-high voltage direct current transmission. This means they no longer need to build more coal-fired power plants. The automotive industry also has shifted its focus to electric vehicles, fundamentally changing transportation systems.

Development is a universal aspiration, and innovative thinking is crucial to achieving it. While growth requires energy, we now have access to green energy. The Global South has the opportunity to benefit from these achievements and the technological progress that human civilization has already achieved. Environmental protection and climate action are no longer obstacles to economic growth. Instead, they have become catalysts for progress.

This means we are on an entirely different growth track today. The Global South, particularly emerging economies, stands to gain more from these technologies as latecomers to industrialization. They have the opportunity to build their infrastructure without repeating the steps taken by Europe, the US or even China in the 1990s and 2000s. Instead, they can leapfrog into renewable energy technologies. Of course, each country has unique conditions, but the green transition presents this significant possibility.

Next, NC asked: How do China and the US differ in their energy structures and approaches to the green transition?

ZJ said: China has long been coal-dependent, with coal once accounting for over 80 percent of its primary energy mix. However, after years of effort, this figure has fallen to 55-56 percent, which is a remarkable achievement. China has also achieved its 2030 target of 1.2 billion kilowatts of installed solar and wind power capacity six years ahead of schedule. Today, the installed capacity of non-fossil energy has surpassed that of coal power. While coal power still generates more electricity than renewables, this ratio is gradually reversing. 

Currently, non-fossil energy sources like wind, solar, hydro, nuclear and some biomass make up about 35 percent of China’s total electricity generation. This share is continuing to expand, while coal-based electricity, which currently stands at around 60 percent, is on the decline. According to the Energy Foundation China, renewable energy is expected to account for over 85 percent of China’s electricity by 2050.

The US also relied on coal in early years, but the shale gas revolution significantly reduced its greenhouse gas emissions. The US still faces daunting challenges. While natural gas emits less carbon than coal, it still needs to be phased out. Over the next 10 or 20 years, a substantial increase in renewable energy is necessary for the US’s share of fossil fuel-based electricity generation to continue declining.

We see that the US government is making efforts. In August 2022, the US signed the Inflation Reduction Act (IRA) into law, introducing incentives such as subsidies and tax benefits to accelerate clean energy development. It supports sectors like electric vehicles, solar energy and energy storage, helping to accelerate the clean energy transition and mitigate climate change.

However, as IRA funding has been suspended, it is even more difficult to predict whether the US can meet its goal of achieving carbon pollution-free electricity by 2035 and how far its renewable energy sector can progress.

The technological solutions are already here. But factors such as implementation, financial investment, the scale and sustainability of funding, the depth of implementation and enforcement of regulatory measures are crucial in determining how far and how fast renewable energy, particularly wind and solar, can penetrate the market.

While US states like California, Texas and Washington are making efforts, how fast and how far they can go remains uncertain. For instance, the US can accelerate the spread of renewable energy in a more economical way. We can see the solar panels produced in the US cost three times as much as those made in China. While setting ambitious targets, the US is taking measures that hinder their achievement, such as increasing tariffs.

China and the US are different in many ways, such as in their regulatory frameworks. However, more significant differences lie behind the scenes. Four key factors have enabled China’s rapid green transition.

First, China has a complete manufacturing system covering the entire industrial chain, which gives it a comparative advantage in producing batteries and electric vehicles. Second, why are Chinese products so cheap? Economies of scale spread fixed costs over a large scale of production. Third, China’s infrastructure in all fields, from communication and power supply to heating and transportation, are arguably the most robust in the world. The final factor is talent. China boasts a large pool of highly skilled engineers. Chinese universities offer a wide range of engineering courses, producing large numbers of graduates each year in civil engineering, architecture, mechanical processing and electrical engineering. Many outstanding young Chinese engineers around 30 years old work with companies around China.

At the same time, the US holds an advantage in breakthrough innovation, taking new tech from concept to reality. Both China and the US have unique characteristics and strengths, which actually form the foundation for cooperation. From an economic and market perspective, after the initial breakthrough, the next step is mass production to lower costs and ensure access to markets. The US itself is a major market, and China represents another enormous one.

Well, that concludes the first half od our interview with Prof. Zou Ji, and I hope you’ll tune in next time to catch the second half. Our theme music is by the famous film score composer Roc Chen. We want to thank our writers Xu Ming and Li Jia, translator Du Guodong, and copy editor Pu Ren. And thank you for listening. We hope you enjoyed it, and if you did, please tell a friend so they too can understand, The Context!