key: cord-1006046-0pd9tpg8 authors: Gosens, Jorrit; Jotzo, Frank title: China’s post-COVID-19 stimulus: No Green New Deal in sight date: 2020-08-06 journal: Environ Innov Soc Transit DOI: 10.1016/j.eist.2020.07.004 sha: f474c023c830b2781f761f3dbe7183faff33028f doc_id: 1006046 cord_uid: 0pd9tpg8 Much hope has been placed on China’s decisions regarding low-carbon stimulus following COVID-19. Analysis of China’s recent Government Work Report suggests that while a repeat of recovery measures focused on high-emissions infrastructure following the 2008 global recession is not in the cards, a Chinese Green New Deal is not in sight either. Much investment is flowing to fossil fuel industries, whilst support policies for renewable energy industries are absent from Beijing’s recovery program. These signs of environmental ambition taking a back seat are worrisome given that Beijing is currently designing its 14th Five-Year Plan. the service sector could accelerate economic growth, decoupled from emissions. The Politburo Standing Committee, China's most powerful political body, recently signalled that 'New Infrastructure Construction' would be the way to promote growth. The concept covers digital transformation, such as 5G networks, data centres, Artificial Intelligence, and the Industrial Internet of Things, as well as low-carbon energy use, such as high-speed rail and light rail transit, UHV transmission lines that primarily transport renewable energy to China's coastal provinces, and charging infrastructure for electric vehicles (CCID, 2020; Worland, 2020) . But China's recent 'Government Work Report', roughly the equivalent of the US State of the Union, provides no indication of a large-scale economic stimulus for low-emissions infrastructure. The stimulus funding announced in the Work Report includes RMB 1 trillion (ca. €125 billion), made available by raising the central government's budget deficit from 2.8 % to roughly 3.6 % of GDP. Another 1 trillion is made available through issuance of specific pandemic bonds (Table 1) . These two trillion RMB will be transferred to local governments, to be used to support households and small businesses with employment protection and tax relief measures, rather than investment for construction of infrastructure projects, and may thus have little effect on emissions (National People's Congress, 2020). The Government Work Report also announced a RMB 1.6 trillion increase to the quota for special bonds issued by local governments. These bonds are used predominantly to investment in infrastructure projects like roads and railways, water conservancy projects, or industrial parks (Xinhua News Agency, 2020). The central government budget for such construction projects is unchanged from last year, apart from a RMB 100 billion increase to the central government's contribution to railway construction (Table 1) . Separate stimulus measures have encouraged a RMB 1.3 trillion increase in bank lending in the first three months of 2020 (Hua and Yao, 2020) . Roughly half of such loans were used to support infrastructure projects in the GFC stimulus package (World Bank, 2010) . Total officially announced stimulus, at about RMB 5 trillion, is modest in size compared to the package of 2009. That package would be worth RMB 5.3 trillion in today's money, but was spent on an economy half the current size (Fig. 2) . The current package is also less strongly oriented on construction projects that boost use of cement and steel and thus spur emissions. The provincial bonds, railway funds, and an assumed half of the bank loans, add up to about RMB 2.25 trillion, whilst about RMB 4.4 trillion (in today's value), or about 85 % of the 2009 package was for construction projects (Fig. 2) . Despite the earlier buzz around 'New Infrastructure', Beijing has so far not committed to directing the stimulus funds to specific project types, as it did in the post-2008 stimulus package. Provincial governments will expect a greater say on expenditure as the infrastructure spending comes almost entirely out of their budget; the post-2008 package was sponsored half and half from central and provincial budgets (Li et al., 2014; World Bank, 2010) . The Government Work Report refers to New Infrastructure projects, but mentions traditional transport infrastructure and urban re-development in the same breath. The only specific earmarking of funds is the increase to the railway construction fund. With such minimal guidance from Beijing, provincial governments may simply resort to trusted levers of traditional construction projects. Recent reports of a US$ 1.4 trillion (or 10 trillion RMB) push for 'New infrastructure' are highly exaggerated: this refers to an exploratory analysis by a thinktank of the Ministry of Industry and Information Technology, which identified potential areas of investment; no government funding has been committed to this roadmap (Bloomberg News, 2020; CCID, 2020). Beijing could have chosen to follow the EU's and Germany's example, and direct its COVID-stimulus towards sustainable mobility, hydrogen industries, and renewables. These are all sectors that China also seeks to compete in. A small incentive was indeed established for electric and other clean energy vehicles, which have had purchase tax exemptions extended by two years as a response to the COVID crisis, although only as part of a measure that sought to prop up vehicle demand more generically (NDRC, 2020a). Until recently, Beijing has promoted hydrogen utilization with a limited number of local pilot projects for fuel cell vehicles and refuelling infrastructure. Rather than seizing the momentum to launch a national hydrogen strategy including use in industry and transport, and with accompanying support policies as the EU and Germany have, such a strategy remains in draft stages for now (Energy Iceberg, 2020a). China's solar PV sector has seen rapidly falling rates of installation in recent years, due to continuous reductions in subsidy levels (Fig. 3) . The COVID crisis has exacerbated financial difficulties for PV developers, but Beijing still followed through with its annual reductions of PV feed-in tariffs. It even slashed its subsidies for household-scale PV, which could benefit small private installers, by more than half (NDRC, 2020b). Many provincial governments are currently also halting any further wind power construction, as onshore wind projects connected to the grid after the end of this year will not receive subsidies from central government funds, even if they had previously been approved to receive these (Energy Iceberg, 2020b; NDRC, 2019). Beijing has been reducing these subsidies because its renewable energy fund is heavily overdrawn, by some RMB 200 billion by the end of 2019. A new rule stipulates that existing projects, eligible to receive subsidies from this fund, will have the pay-outs they were originally promised cut, by the same percentage as the fund's overall shortfall (MOF, 2020) . Investment in long-lived high-carbon energy infrastructure, on the other hand, continues on a massive scale. Local authorities approved 48 GW of coal-fired power plants in just the first five months of 2020 already (Nengyuan Energy Magazine, 2020), after J. Gosens and F. Jotzo Environmental Innovation and Societal Transitions 36 (2020) 250-254 Beijing relaxed restrictions on investment in coal-fired power projects during February this year, perhaps in an early bid to counter the expected economic slowdown due to the COVID-crisis (National Energy Administration, 2020). In comparison, only 10 GW were approved over all of last year (Chen and Yang, 2020) . Total coal-fired capacity under construction now stands at 98 GW, comparable to all operational coal-fired capacity in Germany and Japan combined (Global Energy Monitor, 2020). Remarkably, for the first time ever, China's 2020 Government Work Report did not set a GDP growth target, officially because global economic and trade developments are too uncertain to allow accurate planning of domestic growth (National People's Congress, 2020). Dropping the 2020 target simultaneously implies dropping the politically weightier growth target for the entire 13th Five-Year Plan period, which ends this year. This, and the limited push for a construction-led recovery, appear to signal that Beijing does not seek economic growth at any costwhether financial or environmental. The Government Work Report would usually also set a national target for energy consumption, but this too was omitted this year. Between 2015 and 2020, energy intensitythe ratio of energy used per unit of economic outputwas to come down by 15 %. From 2015-2019 it had fallen by 13.2 % (NBS, 2020b). The 2020 target may be hard to achieve considering the likely contraction of the intrinsically low-energy-intensity services sector. The Report usually also sets numeric targets for sulphur and nitrous oxides, but now simply aims for an unspecified reduction of these emissions. China's 2020 carbon emission target is to reduce its emissions intensity by 40-45 % compared to 2005. That target will be achieved, as reductions were already about 51 % in 2019, whilst China's absolute emissions may fall during 2020 (BP, 2020; Le Quéré et al., 2020; NBS, 2020a) . The Paris Agreement, and the climate change issue generally, reach well beyond the time-span of the current crisis, however. China's environment ministry recently stated that it would meet its existing Paris targets for 2030, despite the corona crisis, but it did not elaborate on possible ratcheting up of climate ambitions, as would be expected as part of the process, and as the environmental minister had stated they would just last year (Reuters, 2020) . Beijing has not slammed its foot on the construction stimulus accelerator, but its reluctance to commit to ambitious long-term climate targets, its letting go of short-term energy consumption and pollutant emission targets, and a balance of investment that is clearly in favour of fossil rather than clean energy sources, all signal that environmental targets are currently taking a back seat to economic growth targets. The worst may have been prevented, as Beijing has not opted for a massive construction stimulus program as it did eleven years ago, but a Chinese Green New Deal at this point is clearly not on the table either. This matters, because the country consumes half the world's coal, and emits 28 per cent of global carbon emissions. Chinese developments therefore strongly influence global energy transitions. China is currently designing its 14th Five-Year Plan, which will guide economic and energy sector development through 2025. This plan needs to lock in sustainable, lower emissions development pathways to help give China and the world a better chance to achieve climate change goals. What Beijing sets out to do over its next 5-year planning period is likely to have far greater ramifications for global emissions than the immediate response to the COVID-crisis. That this plan is being designed at a moment when policy makers appear to have de-prioritized environmental targets is worrisome. The authors report no declarations of interest. Toward technology-sensitive catching-up policies: insights from renewable energy in China China's Got a New Plan to Overtake the U.S. in Tech [WWW Document White Paper on the Development of Growing China's renewables sector: a developmental state approach China Fires Up Coal Power Plant Construction China's New Fuel Cell and FCV Subsidy Policy Design [WWW Document China Suspending Renewable Development? A Good News to Battery Storage? Recovery Plan for Europe Joint Statement of the Members of the European Council Emerging From the Crisis With Full Strength [WWW Document The Green New Deal in the United States: what it is and how to pay for it Ecological civilization: interpreting the Chinese past, projecting the global future China March Loans Surge to $405 Billion As Coronavirus Stimulus Kicks in World Economic Outlook -Real GDP Growth [WWW Document Wind and Solar Energy Transition in China Temporary reduction in daily global CO 2 emissions during the COVID-19 forced confinement China's energy consumption under the global economic crisis: decomposition and sectoral analysis A tale of two crises: COVID-19 and climate The politics of technology bans: industrial policy competition and green goals for the auto industry Opinions on Promoting the Healthy Development of Non-hydro Renewable Power Generation Circular on 2023 Risk and Early Warning for Coal Power Planning and Construction Government Work Report Online Statistical Database -National Data Statistical Communiqué of the People's Republic of China on 2019 National Economic and Social Development Notice on Improving the Wind Power Feed-in Tariff Policy Notice on Measures to Stabilize and Expand the Consumption of Automobiles Notice on Matters Relevant to the 2020 Feed-in Tariff Policy for PV Power Generation NEA, 2020. 2020 Q1 PV Installations Utility and Distributed by Province 48 GW Of Coal-fired Power Projects in the First Five Months of 2020, Largely Through Investment From Local Enterprises China Says Sticking to Climate Pledges Despite Coronavirus Outbreak [WWW Document A COVID-19 recovery for climate Navigating the Clean Energy Transition in the COVID-19 Crisis As the Rest of the World Plans a Green Recovery, America Is Once Again Falling Behind [WWW Document]. TIME Mag Supporting China's Infrastructure Stimulus Under the Infra Program China Expedites Issuance of Govt Special Bonds to Fund Infrastructure Projects This research was supported by funding under the Energy Transition Hub at the Australian National University.