China and the US step up on climate

Ambition has awakened the global energy giants, China and the United States. Both nations have recently strengthened commitments to address climate change and announced plans to strengthen collaboration.

China has the world’s largest renewable energy capacity and is moving towards a national emissions trading scheme (ETS) from 2016. The United States now has 10 states with operating emissions trading and has almost doubled renewable energy capacity in the last four years. Quickly and quietly a new direction may be unfolding.

The Climate Commission today released The Critical Decade: Global Action Building on Climate Change. This report discusses recent changes around the world focusing on developments in China and the US.

At the time of the Climate Commission’s last report on international climate change action, the United States election and the change of Chinese leadership were on the immediate horizon. In November 2012, President Barack Obama was re-elected. He quickly affirmed his commitment to tackling climate change and investing in cleaner energy sources, saying in his second inauguration speech:

The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it.

In March 2013, Chinese leaders named Li Keqiang Premier for a five-year term. The Chinese leadership has also affirmed its strong commitment to tackling climate change.

The commitment from two of the world’s largest economies delivers substantial policy certainty and continuity for the global effort to tackle climate change. This is also expected to build confidence internationally.

Across the globe momentum is building: 35 countries and 13 sub-national jurisdictions are already operating emissions trading. Since August 2012, four new emissions trading schemes have begun:

• California, the world’s 9th largest economy, commenced an emissions trading scheme on January 1 2013.

• Québec, the second largest Canadian province in terms of population and GDP, also commenced an ETS on January 1 2013.

• Croatia became the 31st country to join the European ETS.

• Kazakhstan introduced a national ETS.

China will begin the first of seven sub-national pilot schemes later this year. Together, these seven cities and provinces have a combined population of 256 million and annual greenhouse gas emissions equivalent to about twice the emissions covered under the Australian scheme. This is action to address climate change at a giant scale. Although some details of the Chinese schemes are not known, the ambition and the commitment to address climate change are impressive.

Once all 35 national schemes, 13 sub-national schemes and the 7 Chinese pilots schemes are in operation they will cover a population of about 880 million people and approximately 30% of the world’s economy.

In addition to developments in carbon pricing, the growth in renewable energy is striking. In 2012 China invested US$65.1 billion in clean energy, a 20% increase on 2011. This was the highest of any nation, well above the United States investment of US$35.6 billion. China’s investment represented 30% of the entire G-20 nations’ investment in 2012. China’s solar PV capacity increased 75% in 2012 and installed wind power capacity reached 63,000 megawatts, almost 50 times the capacity in 2005.

In the United States, the latest reporting of greenhouse gas emissions (for 2011) shows annual emissions have already declined by 7% since 2005. In addition, electricity sector emissions for 2012 were the lowest since 1996. Policy settings, the impact of the economic downturn and a progressive shift away from coal to gas have all contributed.

Only a few years ago some commentators pointed to insufficient action in China and the United States to delay action in Australia. Today the energy giants are not just on the move, but are striding into the future.

While significant achievements have occurred, it is not enough. Globally emissions are continuing to rise strongly, posing serious risks for our society. The dangerous effects of climate change are becoming reality. Heat, flood and rainfall records defined our Angry Summer of 2012-13. The world is still tracking to have a temperature increase of more than 2°C this century and many projections indicate 4°C or more. Temperature increase must be limited to 2°C to avoid the most devastating effects of climate change.

Australia’s global influence in averting these risks will depend on how effectively we implement policy solutions at home. Australia is the 15th largest emitter, larger than 180 other countries. This means that Australia has a responsibility to play its part and that Australian actions have a global influence. This decade must set the foundations to reduce emissions rapidly to nearly zero by 2050. The earlier such action is under way the less disruptive and costly it will be.

Action is accelerating. Global giants, China and the United States, are taking steps to become global leaders in climate action. However, all countries must move beyond their current commitments to reduce emissions. This is the critical decade to turn the global emissions trend downwards and to set the global foundations for our future.