Constitutional, governance or market failures: China, climate change and energy transition

• Main Authors: GAO, Henry S., ZHOU, Weihuan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: Asian Studies; Environmental Law; Environmental Policy
• Online Access: https://ink.library.smu.edu.sg/sol_research/4558; https://ink.library.smu.edu.sg/context/sol_research/article/6516/viewcontent/Armin_book_chapter.pdf
• Institution: Singapore Management University

Jinping announced China’s plan to further scale up its Intended Nationally Determined Contributions, aiming at achieving CO2 emissions peak before 2030 and carbon neutrality before 2060.2 A central element of the plan is reducing China’s heavy reliance on coal power. As a result, China’s use of coal already saw a steady decrease between 2013 and 2018. While coal demand increased in 2019 and 2020, new coal power plants approved in 2021 declined by approximately 58% compared to 2020.3 However, the good progress in energy transition was interrupted by the power outage sprawling over 20 provinces in China in September 2021, which resulted in a U-turn in the policy. Consequently, China reversed its course of action and approved more coal power plants in the last month of 2021 than it did in the previous eleven months combined. This trend continued in 2022, with the coal power capacity approved in the first quarter of 2022 accounting for almost half of the total capacity approved in 2021. This paper explores the reasons behind China’s policy shift, drawing from insights on the policy-making process in China’s climate change mitigation and energy transition policy. In particular, the paper addresses the following questions: What are the major domestic factors driving China’s policy and the major players involved in the decision-making? What are the conflicts between national and subnational interests and approaches, and how have these conflicts been resolved? How has the bargaining between different domestic players impacted China’s approaches in trade negotiations? The paper also compares the implementation of climate policies with the implementation of trade policies in China, discusses the potential consequences of constitutional and market failures due to “competition among purposes”4 at both the domestic and international levels, and offers more general observations on ways to help developing countries overcome such competition and conflicts.