THREAD: yesterday the latest @macropolo project came out forecasting China’s political, economic, tech, and energy landscape in 2025.

Here's my take on some of the trends in energy and climate policy over the next five years https://macropolo.org/analysis/china-energy-forecast-2025-setting-course-for-peak-emissions/
1/10)

So, what do I expect will be will some of the important trends in the next 5 years? 1- China will indeed be headed towards peak carbon emissions (but keep in mind that this isn't necessarily enough to achieve a less than 2 C increase!) (2/10)

2- Despite challenges, the outlook for RE looks good as economics are increasingly in their favor. Plus, as subsidies are eliminated, the government will have stronger incentives to provide regulatory support to boost investment in wind+solar, which should lower soft costs (3/10)

3-as elsewhere in the world, the grid will have to adjust to new generation sources which likely means progress on power sector reforms (alongside enhanced energy efficiency measures + expanded electrification). Reforms have been slow but the pilot programs are promising.(4/10)

Plus, the introduction of spot markets and reducing barriers to inter-provincial trading would be consistent with a broader push towards market instruments, efficiency, and better governance in China.4-if China is serious about climate targets restrictions on new coal power(5/10)

plant construction/approval will have to be introduced in the next couple of years. This is contentious but it doesn’t look like there’s many alternatives if net zero by 2060 is the goal. (bonus: The ETS could become a tool to restrict coal if strengthened). (6/10)

Of course, the country may take a very different direction, as discussed in the secondary scenario: coal may continue to expand, power sector reforms may stall, and RE may never take off, delaying China’s decarbonization. This would undermine the country’s credibility (7/10)

and likely hurt relations with the EU which has been following closely China’s climate policy. I think this is an outcome that the leadership would rather avoid, providing yet another reason to back the pro-renewables policies outlined in the main scenario. (8/10)

So, in conclusion, the economics favor RE overwhelmingly (in China as elsewhere). The political environment has traditionally been favorable towards coal, but increasingly, its growth will be constrained as efficiency is prioritized in the system, a trend we’ve been seeing (9/10)

in other areas of governance in China as well. So while I don’t expect a whole-out swerve towards decarbonization in the next 5 years, we should see some important progress in that direction. (10/10)--END