China and Japan Should Stop Promoting CoalSource: Bloomberg
Few nations can spare a thought for anything right now except battling the Covid-19 pandemic and mitigating its economic fallout. But it’s essential that their rescue efforts don’t add to an even bigger global danger: climate change. The governments of China and Japan, especially, need to keep this in mind.
By continuing to fund new coal projects at home and abroad, Asia’s two largest economies threaten to doom any chance of slowing global warming below 1.5 degrees Celsius.
Chinese authorities, looking to revive their battered economy and increase energy security, approved more new coal capacity in the first six months of this year than in 2018 and 2019 combined. An additional 40 gigawatts of new coal plants have been proposed, almost as much as South Africa’s entire fleet. Meanwhile, China continues to finance a quarter of coal-fired capacity under construction around the world.
Japan, the next-biggest financial provider, recently pledged to support only the most efficient coal-burning technologies at home and overseas. Such plants are and will continue to be highly polluting. And, though coal opponents such as Environment Minister Shinjiro Koizumi say this is a sharp change in policy, more powerful ministries are thought to still favor new projects. From now on, countries getting help will have to present long-term plans for lower emissions, but what difference that will make, if any, is unclear.
Policy-makers in Beijing and Tokyo might argue that this is no time for idealism. The Chinese economy shrunk 1.6% in the first half of this year and the International Monetary Fund projects Japan’s output will fall 5.8% in 2020. Officials in Beijing have been striving to promote cleaner forms of energy, but local authorities see new coal plants as an easy source of stimulus, jobs and demand for domestic coal. Japan argues it can’t afford to eliminate coal because of fierce resistance to restarting nuclear plants after the Fukushima disaster.
Both countries are being shortsighted. Given the rapidly falling cost of renewables, new coal projects no longer make sense financially. Already, more than half of China’s existing coal plants are estimated to operate at a loss. Some of the countries receiving financing from China and Japan can ill afford the coal projects they have on the books, let alone the losses that new plants could impose in future. And that’s leaving aside the economic costs of unabated climate change. Both China and Japan are acutely vulnerable to those risks.
The Covid-19 crisis offers a chance to reverse course. Given low fuel prices and reduced demand, governments around the world have a window to cut fossil-fuel subsidies, freeing up money for pandemic aid. Rather than offering other countries debt relief on financially unsustainable coal projects, China could cancel them outright and offer help with solar and wind technology — in which it’s a world leader — instead.
Neither country should think it has the luxury of time. The next global climate summit has been postponed until November 2021. Around then, Beijing is expected to set a new domestic target for coal-fired capacity. If China and Japan want other nations to commit to more ambitious goals for reducing emissions, they need to demonstrate their own seriousness now. Both aspire to play greater roles in global governance. They shouldn’t discount the damage continued support for coal will do to their credibility and influence.
Those considerations ought to be compelling by themselves, but here’s another for good measure. Former vice president Joe Biden has pledged, if elected in November, to impose carbon tariffs on nations that don’t meet their climate obligations. Global carbon pricing might be on the way. A source of energy that’s already unduly costly is only going to get more expensive in future.