Executive Briefings

Why Is China Suddenly Leading the Climate Change Effort? It's a Business Decision.

China watchers and other commentators debate China's resolve and capability to fill the political vacuum left by the U.S. withdrawal from the Paris climate accord this month. Why would China be eager to take leadership on climate change? To understand this transition requires looking more closely at the interests and motivations of the Chinese leadership in the rapid growth and development of Chinese renewables.

Why Is China Suddenly Leading the Climate Change Effort? It's a Business Decision.

Unlike political leaders in Europe or former U.S. president Barack Obama, who link moral duty with climate action, China's leadership is not looking to support collective goals of reducing greenhouse gases. Rather, China will redefine global climate leadership to pursue the government’s immediate goals of national economic development, control of energy infrastructure and the global economic competitiveness of Chinese industry.

How China became a global leader in renewables

China is near the forefront of global renewables, from hydro to solar and wind. The development of Chinese renewables began more than a decade and half before China's 2015 Paris pledge to curb fossil fuels and peak CO2 emissions by 2030.

Shortly after China’s accession to the World Trade Organization (WTO) in 2001, the Chinese government introduced the Wind Power Concession to attract foreign direct investment (FDI) through installation-based fiscal incentives and government subsidies for wind farm developers, as well as state-owned utilities and grid companies.

By the mid-2000s, after introducing investment and market opportunities for foreign renewables to diversify energy sources and establish an energy infrastructure, the Chinese government re-regulated to promote indigenous capacity in advanced energy. These efforts are part of the larger story of China’s deft use of globalization and industrial policy to develop industrial sectors perceived to be strategic for national security and the national technology base.

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Unlike political leaders in Europe or former U.S. president Barack Obama, who link moral duty with climate action, China's leadership is not looking to support collective goals of reducing greenhouse gases. Rather, China will redefine global climate leadership to pursue the government’s immediate goals of national economic development, control of energy infrastructure and the global economic competitiveness of Chinese industry.

How China became a global leader in renewables

China is near the forefront of global renewables, from hydro to solar and wind. The development of Chinese renewables began more than a decade and half before China's 2015 Paris pledge to curb fossil fuels and peak CO2 emissions by 2030.

Shortly after China’s accession to the World Trade Organization (WTO) in 2001, the Chinese government introduced the Wind Power Concession to attract foreign direct investment (FDI) through installation-based fiscal incentives and government subsidies for wind farm developers, as well as state-owned utilities and grid companies.

By the mid-2000s, after introducing investment and market opportunities for foreign renewables to diversify energy sources and establish an energy infrastructure, the Chinese government re-regulated to promote indigenous capacity in advanced energy. These efforts are part of the larger story of China’s deft use of globalization and industrial policy to develop industrial sectors perceived to be strategic for national security and the national technology base.

Read Full Article

Why Is China Suddenly Leading the Climate Change Effort? It's a Business Decision.