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China's climate push could spawn new global players, even if Beijing falls short on its pledge
BEIJING — China says it wants to be carbon neutral by 2060 — and those stated ambitions are spawning companies that could one day become global leaders in their fields.
Two years ago, Chinese President Xi Jinping formally announced the world's second largest economy would strive for peak carbon emissions in 2030, and carbon neutrality in 2060.
To be carbon neutral means the amount of carbon dioxide emitted by the whole country will be offset in other ways. It also means there shouldn't?/won't? be any increase in greenhouse emissions in China after 2030.
While the country struggles to wean itself off coal, analysts said Beijing's top-level emphasis on climate has fueled a policy push to try to support businesses focused on renewable energy and reducing carbon emissions.
"China's already a leader in so many parts of the decarbonization effort," said Norman Waite, energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA).
"They're either leading or right in the pack with everybody else in the efforts to decarbonize. It's not a one- or two-company effort. This is a bunch of companies who are pressing forward," he said.
Overseas expansion
Emerging leader in offshore wind?
'New infrastructure investment'
National security is another factor driving China's focus on developing energy sources.
Ro pointed out that there are still 38 years to go in China's carbon neutral roadmap, and it's still not entirely clear how investors can measure potential share price returns based solely on climate-related measures right now.
Not an easy road ahead
China ended up adding coal production capacity this year, helping the country stave off similar power shortages, despite extreme dry and hot weather in parts of the country, said Cory Combs, associate director at research and consulting firm Trivium China, in a September report published by Asia Society Policy Institute.
Even if the carbon directives come from the top leadership, Combs said there's still tension between short-term and longer-term economic interests that will likely last through the coming decade.
Reducing that tension will help China reduce carbon emissions, he said. "But China's leaders also recognize that, in the long term, China's development will not be economically sustainable – and hence politically and socially sustainable – until it is also environmentally so."
China's state-run media has promoted environmental improvements across the country. And after years of some of the worst air pollution in the world, conditions in Beijing have improved so much in the last year that locals can frequently see far-off mountains and stars from the center of the city.