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How close are the UK and China to reaching Net Zero?

The climate crisis is dire, but both China and the UK are doing better than you might think when it comes to meeting their Net Zero targets

by Robynne Tindall
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With their governments behind them, companies in the UK and China have been working hard to achieve the two countries’ net zero targets across fields from green finance to clean transportation and the urban energy transition – even working in partnership in some cases.

The news that the UK saw its warmest year on record in 2022 – and the prediction that this year could be even hotter – is yet another reminder of the need to enable a low-carbon future. A global response to climate change is urgently needed, especially since some recent studies have suggested that the planet could warm by 2°C by 2050 even if emissions are reduced in line with the recommendations of the Sixth Assessment Report by the UN Intergovernmental Panel on Climate Change (IPCC). This will have catastrophic consequences for the world as we know it.

It is clear that the entire global community must pull together and every nation must stretch itself to make the biggest contribution it can. That being the case, what potential is there for the UK and Chinese business communities to support and invest in each other as part of this effort?

launchpad CBBC

The two countries are in quite different positions as they each face up to the challenges ahead. KPMG’s Net Zero Readiness Index – published in October 2021 and comparing the likelihood of 32 major economies reaching Net Zero by 2050 – places the UK at number two, while China is further back at number 20. This is because the two economies are at different stages of development, with China having to accelerate its industrialisation phase and at huge scale.

The UK, which accounts for under 1% of global emissions, has already enshrined in law its commitment to achieving Net Zero by 2050. To enable this, it has further set what the government describes as “the world’s most ambitious climate change target” of cutting emissions by 78% by 2035 compared to levels in 1990. This would take the UK more than three-quarters of the way towards hitting Net Zero by 2050. The UK’s major achievement to date is the decarbonisation of its power sector and the simultaneous shift to renewables. The carbon intensity of the power sector has fallen from 481g of CO2 per kWh in 2010, to 181g of CO2 per kWh in 2020; while renewables’ share of power generation has risen from around 7% to over 40% in the same period.

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China, meanwhile, has a population about 25 times the size of the UK and accounts for around 30% of global carbon emissions. However, its carbon usage per head of population is around half that of the United States and is also considerably lower than that of some other Western economies. While its fossil fuel usage is still growing, China has pledged that this will peak in 2030 and then decline, with a Net Zero target of 2060. It is backing this up with real action – already being the world’s largest producer of renewable energy. In 2020, it had solar power capacity of 254,355 megawatts, far ahead of the US in second at 75,572, and it had triple the wind power installations of any other country too. China hopes that a quarter of its energy will be produced from non-fossil fuel sources by 2030 – and many analysts believe it may hit that target early.

It is clear that the UK and China have made considerable progress towards their net zero commitments. Below, we review some of the key progress that has been made by both countries in several areas of the fight against climate change.

China’s transition towards a zero-carbon future is critical for the global climate effort. And it is a transition which offers an immense opportunity for UK business — Andrew Seaton, CBBC Chief Executive

The urban energy transition

Climate change is forcing cities and regions around the world to face up to an inevitable energy transition. Nowhere is the need for this more evident than in what might be described as ‘Energy Cities’, whose economic fabric has for decades relied heavily upon growth in conventional thermal energy sources such as coal and oil. They are often among the most carbon-intensive regions of the world, and where the greatest savings and reductions can be made. The UK and China have several regions of this nature, and the ability to facilitate their transition to more sustainable models of economic activity is a priority for both local and central governments.

An April 2021 report by global renewable energy community REN21 found that 106 cities in the UK had set renewable energy targets or policies, and many have begun taking concrete measures. For example, in August 2021, Oxford launched its first Zero Emission Zone, which applies a variable daily charge to vehicles within the zone between the hours of 7am-7pm, depending on the emissions the vehicle produces.

In China, 25 cities had renewable energy targets or policies, covering an impressive 38% of the urban population in China. Notable policies include specific targets for hydrogen use in transport and fuel cells in Foshan, and bans on the use of fossil fuels in buildings in Handan and Taiyuan.

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The role of tech

Technology is emerging as a key enabler in the path to net zero, with the tech sector playing a critical role both in CO2 emissions and in mitigating the long-term impact of climate change. The internet of things, 5G networks, big data, AI and quantum computing all have a critical role to play in addressing the global climate emergency.

It is not only the algorithms and devices of tech giants that are crucial to achieving net zero, but also the companies themselves. The data centres needed to power cloud storage and apps like Facebook and WeChat consume 1% of global electricity demand, according to the International Energy Agency, accounting for 0.3% of all global CO2 emissions. In January 2021, Tencent announced that it would work towards achieving carbon neutrality by 2060 in line with the Chinese government, emphasising measures such as using liquid cooling technology to bring power usage effectiveness down to 1.06 (the closer to one, the higher the efficiency) at one of its data centres in Guangdong.

Electric vehicles and clean transportation

As the world moves towards cleaner transport, the pressure is on for manufacturers to come up with solutions, and this is perhaps most obvious in the automotive market. The challenges that will need to be overcome to meet ambitious government targets are numerous. These are not just limited to how to harness new energy sources affordably and practically, but also include requirements for new materials, adaptation of the supply chain, product life cycle and even new ownership models.

China is well-positioned to meet these challenges. It is already home to nearly 50% of the world’s electric passenger vehicles, driven by subsidies of around RMB 14,400 (£1,600) for buyers (although those subsidies are now being phased out). Sales of new energy vehicles from homegrown Chinese brands such as Nio, XPeng and BYD have rebounded quickly following a dip during the pandemic in 2020.

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Green finance

The UK’s finance sector has been well-positioned to grasp the multiple opportunities that China’s dynamic financial services sector has thrown open in recent years, where there has been a surge in activity around models of green finance and its use as an enabler of green growth.

This year saw China become the global leader in the issuance of green bonds as it rolled out funding to support clean and renewable infrastructure projects. In the first three months of 2021, Chinese issuers sold $15.7 billion (£11.3 billion) of bonds, almost four times higher than a year earlier, and exceeding the approximately $15 billion of bonds sold in the US.

The UK financial sector, for its part, has played a world-leading role in developing such instruments from their inception and is well-placed to work together with Chinese partners in pursuing common goals. Budget 2021 laid out ambitious commitments, including two Green Gilt issuances in 2021 totalling a minimum of £15 billion, which will be used to finance clean transportation, renewable energy, energy efficiency, pollution prevention and control, living and natural resources, and climate change adaptation.

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Nature-based solutions

The world is facing the twin threats of climate change and biodiversity loss, and one cannot be solved without addressing the other. Agriculture, forestry, and other land use account for nearly a quarter of global greenhouse gas emissions. They also support global food security and millions of jobs. As such, it’s crucial that countries include nature-based solutions in their climate plans, and for businesses to do the same.

Recent solutions have ranged from the adoption of the latest Chinese technologies in the protection of native species, sustainable cities that incorporate agriculture into their infrastructure, and climate-positive spirits distilled using green hydrogen power.

Click here to read CBBC’s report, Targeting Net Zero: The Role of UK-China Business

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