China’s greenhouse gas emissions are likely to peak by 2025 or sooner, a report published on Monday said, at least five years earlier than China pledged in last year’s bilateral deal with the United States.

While China’s emissions have soared in recent decades and currently account for nearly 30% of global carbon output, Beijing’s new policy approach to development and the decline in coal consumption means its GHG emissions can peak much earlier than previously expected, said the report, released by the London School of Economics and Political Science.

“In light of Chinese economic and policy trends affecting the structure of the economy and the consumption of fossil fuels — particularly coal — across power generation, industry and transport, we conclude that the peak in China’s carbon dioxide emissions from energy, and in overall GHG emissions, is unlikely to occur as late as 2030, and more likely to occur by 2025. It could well occur even earlier than that,” the report said.

“Were China’s emissions indeed to peak around 2020–2025, it would be reasonable to expect a peak emissions level for China of around 12.5–14 billion tonnes of carbon dioxide equivalent. This could hold open the possibility that global GHG emissions could be brought onto a pathway consistent with the international goal of limiting global warming to no more than 2C,” it said.

Slower economic growth – targeted at 7% per year for the rest of this decade – and the government’s ambition to shift away from heavy industry to a more services-based economy will help drive the emission reductions, the report’s authors, Nicholas Stern and Fergus Green, said.

At the same time, China’s well-publicised pollution crisis has spurred an increased focus on sustainability.

COAL TAX

But the question is whether China’s emissions will simply plateau and remain at those levels for a period of time, or if carbon output can fall rapidly after the peak, the report said.

To achieve a decline, China would need to deepen the reforms in its city planning and energy sector policies, while greening the financial system, the authors said.

One policy China should implement is a tax on coal, it said.

“A tax on the carbon content of coal alone of US$25/tCO2 would add just under US$50 to the price of a metric tonne of coal,” the report said.

“China’s current low coal price and industry uncertainty over its future direction means that now is a good time to implement such a measure. To achieve this structural adjustment in an equitable an orderly way, and ameliorate some of its distributive consequences, the tax could begin at a relatively low level and be scaled up over time.”

A coal tax would also help preparing China’s energy market and governance systems for more complex carbon pricing mechanisms, such as the planned emissions trading scheme, according to the authors.

China is expected to submit its INDC to the UN later this month, and most observers expect it to maintain its ambition of peaking its emissions by at least 2030, as well as setting a new carbon intensity target for 2030.

“China’s international commitment to peak emissions ‘around 2030’ should be seen as a conservative upper limit from a government that prefers to under-promise and over-deliver,” said the LSE report.

Its current target is to reduce carbon emissions per unit of GDP to 40-45% below 2005 levels by 2020.

However, last month it announced a new goal for its manufacturing sectors, asking factories to cut carbon intensity 40% below 2015 levels by 2025.

By Stian Reklev – stian@carbon-pulse.com