Energy evolution or extinction

November 16, 2021

Ms. Beate Trankmann is the Resident Representative of the United Nations Development Programme in China.

As COP 26 draws to a close, humanity stands at a critical crossroads. The path we have travelled until now cannot continue much further, for it ends in extinction for millions of species-and, ultimately, humankind. Yet, another path remains open, to a lasting future for us and our planet-if we take it in time.

"Climate change is nature's alarm bell," President Xi Jinping said. It rings especially loud for Asia, home to 80 percent of the people globally who will be worst-affected. This year, we saw massive flooding in Central China's Henan province, while Indonesia's South Kalimantan province also experienced its worst flood in decades. These were just two of the extreme climate-related events that have occurred around the world, which also include severe droughts and catastrophic wildfires across Europe and the United States.

A sustainable path is our only road to survival. It requires a steeper climb than we have ever undertaken. To avert climate catastrophe, the Paris Agreement aims to limit temperature rises to 1.5 C above preindustrial levels, which requires the world to cut annual greenhouse gas emissions by half over the next eight years. Yet, going into the COP 26, the world was not on track to meet this target. Instead, we face the prospect of a disastrous 2.7 C of warming by the end of the century. With the latest commitments made by countries over the last week, we are moving closer toward 2 C, but we must be even more ambitious. Unless we stay within 1.5 C, the consequences will still be severe.

Fossil fuels-namely coal, oil and gas-are the biggest culprits, creating three-fourths of the global greenhouse gas emissions. Yet the world spends $423 billion annually to subsidize them-an amount that could vaccinate every person on earth against COVID-19, or three times what is needed every year to end extreme poverty globally. Such investments must urgently be redirected toward people and planet, instead of undermining both. Administrator of the United Nations Development Programme Achim Steiner said, "If we cannot decouple economic growth globally from emissions, we are doomed."

China is well-positioned to enable the necessary transformation. It is a leader in renewable technologies such as solar and wind, along with green finance. China's two consecutive announcements at the UN General Assembly-to peak CO2 emissions before 2030 and achieve net zero before 2060, as well as to stop building overseas coal power plants-have reinforced its commitment to combating climate change. Given that China is currently the world's largest carbon emitter, these are game changers. However, they must be underpinned by concrete plans.

The two most important policy documents supporting these-the Guidance for Carbon Peaking and Carbon Neutrality, together with the Action Plan for Carbon Peaking before 2030-were recently released by the State Council, China's Cabinet, providing a clearer and more concrete road map for China to lower carbon emissions. In particular, they put forward specific emissions targets for key sectors including steel, energy and transport, which will be vital in achieving the goal of net zero.

This is an opportunity to accelerate action, so 1.5 C remains within reach. It requires peaking emissions ideally well before 2030 and reducing the consumption of fossil fuels, particularly coal, as early as possible. Investments should be channeled toward innovating and developing green technologies, which hold the key to limiting climate change. Such areas should be viewed as investments in our future, not costs-because the costs of inaction-to people, planet and prosperity-would be infinitely higher.

While transitioning to a green, low-carbon economy is essential, it must be done in a just way, given how it affects energy security and livelihoods. So this is also an opportunity to create better jobs to last and open up new growth areas, thereby reducing inequality. Green sectors are already among the fastest growing in China, with renewables now creating more jobs than fossil fuels. Across all sectors, just, green transitions could create 395 million jobs globally by 2030 and $10 trillion in economic value annually.

Admittedly, a just and manageable transition to a low-carbon and eventually net-zero economy in China and elsewhere requires considerable investment. To achieve net-zero emissions globally by 2050, an annual investment of $4.4 trillion in clean energy and energy efficiency is needed. However, the issue is not a shortage of capital, but rather where capital is being directed. According to the Atlantic Council think tank, $9 trillion was spent on quantitative easing in the pandemic response over the last 18 months. So, the finance we need to save our planet already exists. The solution lies in aligning it with nature, across public and private sectors, as well as financial markets.

Five actions can help to facilitate this: First, prices of renewables and fossil fuels must be reset by ending fossil fuel subsidies and taxing emissions. This would create the necessary fiscal space to buffer any unintended consequences of the low carbon transition on people's livelihoods, particularly those most vulnerable. Second, public spending must be directed toward investments that protect the climate and nature, rather than destroying it. This would also encourage private sector participation in the necessary transitions, as costs and risks would be lowered. Third, countries should mandate climate-related information disclosures, so climate change counts in every financial decision. Two of China's largest banks-the Industrial and Commercial Bank of China and the Bank of China-have already joined the Taskforce for Climate-Related Financial Disclosures and we look forward to more doing so. Fourth, climate action Key Performance Indicators for high-emission companies and investors must be set to give a clear direction toward net zero. Finally, policies must create opportunities for everyone in tomorrow's economy. This includes reskilling workers whose livelihoods may be impacted, which could be financed by nature-positive public budgets and revamped carbon pricing.

The UNDP supports countries, including China, in shifting from fossil fuels through a phased approach that is fair and equitable. We stand ready to deepen our cooperation in this vital area.

There is only one path to our shared future: the uphill road to sustainability. All countries must step forward. China has the scale, resources and opportunity to act now, as well as help others move in the right direction. We have one last, collective chance to take that crucial path now. We must seize it.

Published in China Daily