Path exploration for realizing carbon goals

BY ZHONG MAOCHU | 04-21-2022
Chinese Social Sciences Today

A fishery-solar hybrid photovoltaic project for carbon neutrality in Huaibei City, Anhui Province, Feb. 22 Photo:CFP


To tackle climate change, China promises “to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060.” Starting from the fundamental connotations of carbon peaking and carbon neutrality, this article explores the effective path to achieve carbon goals.
 
Understanding connotations
To accurately understand the connotations of carbon peaking and carbon neutrality, we should begin with sustainable development theory and the reality of addressing global climate change. One basic principle of sustainable development theory is that only when pollution emissions caused by human economic activities are controlled within the earth’s self-purification capacity can we ensure the integrity and stability of the ecosystem and its ecological functions, on which human beings depend. It is also urgent to tackle global climate change. Since industrialization, pollution emissions caused by human economic activities have exceeded the ecosystem’s self-purification capacity, resulting in great risks to the integrity and stability of the earth’s ecosystem and its ecological functions. Therefore, the impact of human activities on the ecosystem must be returned to a scale limited by the principles of sustainable development—as soon as possible.
 
In terms of CO2 emissions, the sustainable development goal is to return to carbon neutrality. Carbon peaking and carbon neutrality both seek to reduce CO2 emissions in human economic activities. The reasons are as follows: first, the ecosystem’s carbon absorption capacity cannot be effectively improved in a medium or short period of time. Second, end-of-pipe treatment of carbon emissions, by technical means, plays an extremely limited role relative to the scale of carbon emissions. According to the connotations of carbon peaking and carbon neutrality, the following understanding can be obtained.
 
First, carbon emission reduction is essential to accomplishing carbon goals. In the process of carbon peaking, regions with underdeveloped industrialization can moderately increase carbon emissions, while regions with developed industrialization should reduce carbon emissions. In the process of reaching carbon neutrality, we must continue to support carbon emission reduction.
Second, carbon emission quota constraints for economic activities need to be implemented. Carbon emission quotas should be determined according to the carbon absorption capacity of the ecosystem, and the timeline for reaching carbon goals. The “carbon emission quota” set for each entity is the fundamental influence persuading each entity to choose carbon emission reduction behavior.
 
Third, subject to the rigid constraints of the “carbon emission quota,” economic growth can only be achieved by promoting the efficient use of the “carbon emission quota” through technological progress.
 
In general, continuous reduction of CO2 emissions, carbon emission quota constraints, and carbon efficiency improvement are not only the key to correctly understanding carbon goals, but also the key to clearing an effective path towards accomplishing carbon goals.
 
Whole cycle coordination
To meet carbon goals, we must continue to promote carbon emission reduction in economic activities and implement carbon emission quotas as a rigid constraint. Meanwhile, we should also consider social welfare goals, such as the national economic system’s normal operation. Based on these priorities, we can determine whether the path for realizing carbon goals is effective by referring to the concept of “Pareto improvement.” In a Pareto improvement model, through the process of carbon emission reduction there would be no negative impact on socioeconomic production and life; if there was a negative impact, then the efficiency improvement brought by carbon emission reduction would compensate for it. Another Pareto principle is that in the process of carbon emission reduction, no cost or loss is borne by other stakeholders; if so, the efficiency improvement brought by carbon emission reduction must compensate for it.
 
When examining carbon emission reduction as we observe the society as a whole system, it is necessary to examine the whole life cycle of changes to carbon emission resulting from choosing this path.
 
To achieve both goals of carbon emission reduction and safeguarding the economy and people’s livelihoods, we must improve the carbon efficiency of several factors of production. This can be achieved by gradually replacing factors of production with lower carbon efficiency with those which have higher carbon efficiency. By cultivating eco-friendly consumer groups, and reducing consumers’ carbon emissions, we continuously increase low-carbon consumer groups. We should forge a new production capacity with high carbon efficiency. We should not only increase the proportion of renewable energy, but also improve the carbon efficiency of fossil energy. The key to this lies in technological innovation.
 
The core policy tool which promotes carbon goals is the carbon emission quota. Our evaluation basis for policy effectiveness is: carbon emission reduction through the whole life cycle, carbon efficiency improvement, and “Pareto improvement” of carbon emission reduction. An effective policy path requires “effective substitution” of various factors. To accomplish carbon goals through industrial support policies, an industrial low-carbon process that can improve the carbon efficiency level, or enhance production capacity with higher carbon efficiencies to effectively replace production capacities with low carbon efficiency, should be identified as the policy support object on the premise of meeting the needs of people’s livelihoods. Industrial policies should support the “carbon emission quota” reverse coercion mechanism in the consumption field.
 
To develop “carbon finance” and promote carbon goals, first, we know that carbon goals cannot expand various factors of the real economy, and we should recognize that financial activities related to “carbon emission reduction” cannot be large scale due to the expansion of factors in the real economy. Second, from the perspective of improving the real economy’s carbon efficiency, we should understand the real basis of expected “carbon finance” returns, and the credible basis for scaling its expansion. Third, we should understand the essence of “carbon finance” business, from the perspective of “effective substitution” of factors. Once again, this is the effective substitution of financial activities with high carbon efficiency for traditional financial activities with low carbon efficiency. When choosing carbon capture and sequestration technology, and “carbon sinks” as the means to attain carbon goals, we should not only consider this from technical levels, but also consider its economic feasibility. When choosing a reasonable path for accomplishing carbon goals, we should also study whether the carbon emission reduction path would bring other pollution emissions, or other ecological and environmental impacts, which should be comprehensively weighed.
 
Zhong Maochu is a professor from the Nankai Institute of Economics.
 
 
 
Edited by ZHAO YUAN