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Xie Zhenhua Attends China-EU High-level Forum on Green Cooperation

On November 16, 2020, the Chinese Mission to the EU, the China Chamber of Commerce to the EU and the European Business Summit co-organized the China-EU High-level Forum on Green Cooperation. Mr. Xie Zhenhua, Special Advisor on Climate Change Affairs of Ministry of Ecology and Environment of China, attended the Forum via video link. He had an in-depth exchange of views with Ms. Shada Islam, a well-known European scholar, centering on China's green development during the 14th Five-Year-Plan period, China-EU green cooperation and global climate governance. The transcript is as follows:

Shada Islam: Hello, everyone! Welcome to our first European Business Summit conversation on the green economic recovery. More precisely, we will be looking at how China and the EU can become green engines of growth for the global inclusive economic recovery. I am Shada Islam. I work for the New Horizons Project. I am here in Brussels. This is divided into two parts. The first conversation is with Mr. Xie Zhenhua, who is currently Special Advisor for China's Ministry of Ecology and Environment and working with Tsinghua University. As China's special representative for climate change affairs and head of the Chinese negotiation delegation to the UN conferences since 2007, Mr. Xie is known worldwide as China's Mr. Climate. I am so delighted that Mr. Xie could find time in his busy schedule to join us in this conversation. I will have about 40 minutes of discussion with Mr. Xie. Everyone is welcome to ask questions through the dialogue platform. After that, we will have an exciting panel with 7 panelists of different points of view, talking about how they view the China-EU green cooperation in the coming decades. We will also have Mr. Raffaele Mauro Petriccione, Director-general for Climate Action at the European Commission, joining that panel.

Without further ado, let me turn to Mr. Xie. Thank you so much for joining us in Beijing. We have heard Chinese President Xi Jinping making a very ambitious declaration at the United Nations General Assembly about how China's carbon dioxide emissions are going to peak before 2030 and how China will achieve carbon neutrality before 2060. The world has welcomed China's commitments. Given you experience, how would you explain to us how this ambitious vision is going to be translated into reality? What will be the key ideas and policies in store for us?

Xie Zhenhua: Hello, everyone! Currently the world is fighting the COVID-19 and promoting high-quality economic recovery. It is highly relevant for us to gather here today for the European Business Summit, discussing such major issues as climate change and sustainable development. I would like to give a brief answer to the question just raised by Ms. Shada Islam.

President Xi Jinping announced at the General Debate of the 75th UN General Assembly that China will scale up its Intended Nationally Determined Contributions (NDC) by adopting more vigorous policies and measures, and that China aims to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060. This is a concrete step taken by the Chinese government to implement the Paris Agreement, update the NDC and set out a development strategy to realize low greenhouse gas emissions by the middle of this century. This step reflects the commitment of the Chinese government to addressing climate change proactively, and it is a token of shouldering responsibility for the future of mankind.

To turn the vision into reality, China must make arduous efforts. I said "arduous" because China is still a developing country faced with daunting challenges ahead. This is indeed an ambitious vision. The EU saw its CO2 emissions peak in 1990, and aims to reduce emissions by 55% by 2030 from the level of 1990, and to achieve carbon neutrality by 2050. The United States had CO2 emissions peak around 2005. Recently, President-elect Joe Biden indicated that the US aims for carbon neutrality by 2050. In other words, it is expected to take 45 years for the U.S. to move from carbon peak to carbon neutrality. In the case of Europe, it is 70 years. For China, it will be about 30 years. Fairly speaking, China's efforts are intensive and its ambition is big. This is indeed a very difficult process. We will turn difficulties and challenges into opportunities and drivers of transformation, speeding up changes in our mode of production, way of life and consumption patterns, and accelerating technological innovation. This is what we basically plan to do.

Surely, the vision is not without foundation. It is based on practice and well-informed studies. So far, China has fulfilled the 2020 climate action goals ahead of schedule. By the end of last year, China's carbon intensity dropped by 48.1%. The share of non-fossil energy increased from 7.4% to 15.3%. The forest stock volume reached 17 billion cubic meters, surpassing the goal of 13.7 billion cubic meters.

China's practice has proved that addressing climate change will not hinder economic growth. During the same period of time, China's GDP increased by 4 folds while carbon intensity down by 48%, equivalent to reducing carbon dioxide emissions by more than 5.6 billion tons. The share of coal in primary energy dropped from 72.4% to 57.7%. High-emissions coal-fired power plants are being phased out. In the past decade, we have eliminated more than 100 million kilowatts of installed capacity. Newly-built coal power plants are up to the ultra-low emissions standard of gas power plants. Starting from the 14th Five-Year-Plan period, we will take more measures to restrict or even ban the further development of coal power plants. In addition, China's annual investment in renewable energy has exceeded US$100 billion for five consecutive years, ranking first in the world. China's installed renewable energy capacity accounts for 30% of the world's total, with the increment taking up 44%. With the costs considerably lowered, renewable energy plants are almost as effective as traditional power plants. China owns more than half of the new energy vehicles in the world. We have made intensive efforts and achieved remarkable results, laying sound groundwork for such vigorous and ambitious visions.

Shada Islam: You said that it is an ambitious vision and that hard work lies ahead. There needs to be innovation and changes in behavior. You also said that coal plants are phased out, and that renewable is now a big priority. But in countries along the "Belt and Road", like those in Asia, Africa or Latin America, coal plants are still being built. China is still investing in fossil fuel plants there. You are known as an honest and frank negotiator. Is that going to change?

Xie Zhenhua: Recently many people asked me this question. Last year I visited Thailand where I communicated with colleagues from the United Nations Economic and Social Commission for Asia and the Pacific. I said that renewable energy technology is becoming more mature and the cost is gradually coming down while coal plants emit a lot of carbon dioxide. Why do some countries still construct coal plants? They told me that everything must proceed from reality. Some countries are short of energy, and they need coal plants as energy sources. Development of renewable energy may cause security threats to the grid. Therefore, we must look at the actual circumstances.

Coal plants have indeed caused greenhouse gas emissions including carbon dioxide. Such a situation should be reversed. China released the green bond catalogue this year, making it clear that no financing support shall be offered to projects involving coal. In addition, six ministries of the government, including the National Development and Reform Commission and the Ministry of Ecology and Environment, recently published guidelines on promoting investment and financing to address climate change, which shall restrict and prohibit coal projects, and encourage enterprises and financial institutions to channel financial and technological resources into low-carbon and green projects. In fact, financial institutions evaluate coal-induced CO2 emissions as a risk. If we continue to engage in coal power projects, there might be investment risks. So I think this problem will be gradually resolved in China's 14th Five-Year-Plan Period and afterwards.

Shada Islam: Thank you very much. First, China no longer supports projects related to coal, including those covered by the "Belt and Road" Initiative. Second, China promotes green investment and financing in renewable energy. Just a quick question, by "no longer support", you mean what has been done so far will continue to be completed and as of now, there will not be support for new coal plants. Am I right?

Xie Zhenhua: I just said that projects already built are meant to meet actual needs. As a state leader once said to me, the "very bread" the country needs most is energy to support economic development. But we hope to see no more new coal plants. The existing ones are being gradually transformed and phased out. The new ones should use renewable energy as much as possible. In this way, we can balance the local economic development and efforts to tackle climate change.

Shada Islam: We now have a quite different landscape in the global climate change negotiation. Joe Biden has been elected as President of the United States. President Donald Trump took America out of the Paris Agreement. You had in the past very close relations with your US counterpart. Are you looking forward to the United States coming back to the discussions in a more active and constructive way? Do you think Europe and China can work together with America in the run-up to the talks in Glasgow next year?

Xie Zhenhua: The US is a very important country. After President Trump took office, he announced that the US would withdraw from the Paris Agreement, which was disappointing and regrettable. In fact, the US government played a crucial role in response to climate change. It contributed much to the negotiation of the Paris Agreement, and to the conclusion, signing and entry into force of the agreement. China and the US have good cooperation in this field. I have good relations with the White House, the State Department, Department of Energy, and environment authorities. We set up the China-US climate change cooperation mechanism. First, the mechanism is to strengthen policy dialogues and carry out extensive cooperation among governments, think tanks, companies, local governments and non-governmental organizations to enhance mutual understanding and communication. Second, it is to promote pragmatic cooperation. We established the China-US climate change working group and set 7 priorities for cooperation. Such efforts contributed greatly to the joint response of China and the US to climate change and to their respective progress.

We look forward to the US returning to the Paris Agreement and continuing to play its due role. China and the EU have always maintained good cooperation in this field. I always believe that the EU and its major member states have served as an anchor for the global climate governance. During the 12 years of my involvement in climate talks, I encountered a lot of setbacks and problems. The EU and member states like France and Germany have been proactively advancing the process by taking many effective measures and demonstrating strong leadership. The same is true of China. So I think China and the EU have great potential for cooperation in responding to climate change, promoting global climate governance and achieving green, low-carbon and high-quality development, and they have a lot to offer each other.

During the China-Germany-EU leaders meeting, we launched the China-EU High-level Dialogue on Environment and Climate. We place great expectations on this new mechanism. China and the EU need to step up policy dialogue, conduct practical cooperation, and identify some priority areas. We need to not only promote our respective economic development, but also reduce greenhouse gas emissions, strengthen climate resilience and foster more market opportunities. There is a lot of potential for cooperation between China and the EU. It is hoped that China and the EU will make their cooperation more structured through this mechanism, build more platforms, further demonstrate leadership and advance the multilateral process on climate change.

Shada Islam: You just mentioned China has high hopes on the newly established China-EU High-level Dialogue on Environment and Climate. The EU has a Green Deal. I'm sure you heard of that. How do you see the areas of convergence between the Green Deal and China's green development plans? The EU and China are both partners and competitors. In which areas can they cooperate? In which fields do they compete? Please give us an honest reflection on the Green Deal. What do you like about it? What don't you like about it? Thank you.

Xie Zhenhua: I began to study EU's Green Deal early on. It is inspiring for the whole world. The EU's Green Deal is in line with China's 2030 and 2060 commitments. Both sides promote green, low-carbon and circular development and they have commonalities in the following aspects:

First, the EU's Green Deal and China's policy measures are all designed to accelerate economic transformation, technological innovation, and institutional innovation. The Green Deal has put forward requirements for various industries. China will take measures in the following prioritized fields. First, we will accelerate energy transitions, which is crucial for emissions reduction. Just now you said that everyone cares about China's energy restructuring including the coal issues. We know this is important and commit to speeding up the energy revolution. It is not a simple change. This is a revolution. We will further conserve energy, increase energy efficiency, vigorously develop renewable energy, and gradually increase the share of renewable energy in primary energy in the next five years. Second, we will gradually reduce the share of coal in primary energy. In 2019, the proportion was reduced to 57.7%, and it will be further reduced. We will introduce a control regime on total energy consumption, and reduce the share of fossil fuel consumption. We will build a smart grid for power distribution, develop new technologies for energy storage, and improve the level of electrification in various fields. We will develop CCUS (carbon capture, utilization and storage) technologies, bring down their costs, and scale up their use through pilot programs.

Second, like the Green Deal, we will promote transformation of various sectors. We must promote optimization and upgrading of the secondary industry, because emissions from such industry account for 70% of the total. Emissions from this industry are expected to peak before national emissions. We also need to promote low-carbon infrastructure construction. Currently 60% of China's new buildings meet the green building standards, and existing buildings are undergoing energy-saving renovation. There is huge potential for green development in the field of construction.

Third, we will build a green and low-carbon transportation system, vigorously develop public transport, and develop electric vehicles and new energy vehicles. The number of electric vehicles in China now accounts for more than half of the world's total. We need to further promote emission reduction in the transportation sector.

Fourth, we need to develop circular economy and improve the efficiency of resource utilization.

Fifth, we need to promote technological innovation. The Green Deal is similar to China's endeavor in many ways. For example, China plans to develop large-scale smart grids for energy storage, distributed generation of renewable energy, hydrogen energy, and CCUS, accelerate innovation of industrial technology and green material technology, promote advanced manufacturing, and adopt a more IT-based and intelligent approach to innovation. In the development of circular economy, we need to learn from the EU which is known for its high energy and resource efficiency. We need to go further in technological innovation.

We need to develop green finance. China and the EU already have some cooperation in this area. I believe there is still huge potential. We will build a carbon market. This is something we learn from the EU. We are your students. At present, pilot projects are being carried out in seven provinces and cities of China. They work out well. We have gained some experience. We hope to cooperate with the EU in further developing the carbon market and carbon pricing.

We will roll out economic policies, like pricing, taxation and fiscal incentives, to support the development of green and low-carbon circular economy. It is important to clearly express what we support, what we oppose, what we restrict, and what we encourage. We are ready to cooperate with the EU. This is how I look at the cooperation between China and the EU and the commonality between their policies and measures. There are many fields we can work together on.

Shada Islam: Thank you. There are indeed a number of areas where China and the EU can work together. I imagine that will be what the high-level climate dialogue will be focusing on. You just mentioned the areas that China can learn from the EU. I have a question from an online participant. That is about the impact of the recent US election on the China-EU cooperation. The EU has talked about introducing a carbon border adjustment tax, saying that of course it has to be compatible with the WTO. Would you give us a quick reaction to this proposal which is expected to come up sometime next year.

Xie Zhenhua: The US has withdrawn from the Paris Agreement. But China-US cooperation among local governments, enterprises, non-governmental organizations, universities, and think tanks has not stopped. If the US returns to the Paris Agreement, cooperation will be further strengthened. China and the EU have good cooperation, as I mentioned earlier. We are advancing the multilateral process of the Paris Agreement. We have taken many effective measures. It is fair to say we have both made contributions, and there is huge potential for further cooperation. The US return to the Paris Agreement and to the process of global climate governance will not affect China-EU cooperation. Our cooperation is comprehensive and open to all. We welcome the US back, and meanwhile we will strengthen cooperation with the EU, with Africa, with the BASIC, with like-minded developing countries, and with G77. Currently we have many cooperation projects. China is doing well in both South-South and South-North cooperation on climate change. China's cooperation with Germany, France, Italy and other countries is a model of South-North cooperation on climate change. We look forward to cooperation with everyone. Only through cooperation can we address climate change and fulfill the targets set in the Paris Agreement.

You just mentioned the carbon market. My view is clear-cut. I talked to ministers from many EU countries to set out my points. I very much support completing negotiations on the remaining issues related to the operational rulebook of the Paris Agreement at COP26, namely, the negotiations on the market mechanism as provided in Article 6. We can resolve the problem of carbon leakage through many means, such as carbon tax or carbon market. However, due to political reasons, many countries do not adopt carbon taxes. We hope that China and the EU will work together to complete negotiations on the relevant articles of the Paris Agreement, establish a science-based, unified, fair, and reasonable global carbon pricing and carbon market mechanism, and encourage companies to become more climate-friendly. We endeavor to achieve global emission targets with the lowest possible cost, maintain environmental integrity, prevent carbon leakage, and promote fair trade.

We do not agree with the carbon border adjustment mechanism. First, there is an issue of effectiveness. The Paris Agreement has made it clear that a market mechanism shall be established. At this time, the proposal of a carbon border adjustment mechanism will affect the negotiation on the remaining issues related to the market mechanism and delay the implementation of the Paris Agreement. Second, there is an issue of justifiability. The carbon border adjustment mechanism will levy taxes on the countries that have already run carbon markets or introduced carbon taxes. Third, there is an issue of legitimacy. All parties should resolve the climate change issue within the multilateral framework of the UNFCCC and the Paris Agreement rather than through additional unilateral actions. Fourth, there is an issue of technical complexity. The carbon footprint accounting and monitoring for products involved in the carbon border adjustment mechanism is extremely complicated, which will cause extra administrative burdens.

Shada Islam: Thank you very much for this important conversation.

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