Pathways to Carbon Neutrality in China

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00:08 Uh,

00:09 I'm really very pleased that we at the World Bank

00:11 were able to partner with Tsinghua University and the LSC

00:15 in bringing together,

00:16 uh,

00:16 what is really a,

00:17 a very distinguished,

00:18 uh,

00:19 panel,

00:19 um,

00:20 of leading and,

00:21 and,

00:21 uh,

00:22 uh,

00:22 Chinese and,

00:23 and,

00:23 and,

00:24 uh,

00:24 international experts.

00:26 This conversation,

00:27 uh,

00:28 in the wake of,

00:29 uh,

00:29 COP 27 and our own,

00:32 uh,

00:32 The launch of the China Country Climate and Development Report,

00:36 um,

00:36 uh,

00:36 is,

00:37 uh,

00:37 is,

00:38 is very timely.

00:39 China has very,

00:40 um,

00:41 high ambitions for both

00:43 its climate action,

00:44 but also to continue to develop.

00:46 Uh,

00:47 and while,

00:48 um,

00:48 aiming to become a high-income country by 2035,

00:54 China has also pledged to peak.

00:56 Uh,

00:56 GHG emissions by 2030 and achieve carbon neutrality by 2060.

01:02 Um,

01:02 with these long-term,

01:04 uh,

01:05 policy goals set,

01:06 now,

01:06 the question is really how will,

01:08 how will China,

01:09 uh,

01:10 achieve them?

01:11 What investments,

01:12 what policy and institutional changes are,

01:15 are needed?

01:16 And that's what,

01:17 uh,

01:17 I hope much of the conversation today will be about.

01:20 The first issue is we soon realized the

01:23 carbon neutrality is not only the technology issues,

01:26 not only the energy issues,

01:27 not only involving

01:29 sort of,

01:30 you know,

01:30 auto cars and the power,

01:33 but really fundamentally changing

01:35 everything.

01:36 Uh,

01:36 it's really a.

01:37 Paradigm shift

01:38 to the first issues of forming the policy frame framework,

01:42 policy guideline that

01:43 provide a clear

01:45 objective,

01:46 to signal

01:47 the transparency to the market,

01:49 so the private sector market move into that direction as,

01:53 as important.

01:54 The second issue is

01:56 government should mobile public resource to do the early-stage investments

02:01 into the renewable energy,

02:03 into the climate-related infrastructure,

02:06 which is very important.

02:08 The international experience says the earlier the better,

02:12 the bigger the better,

02:13 because you do today,

02:15 you support the growth today,

02:16 and you then you win the future benefits.

02:20 So government should

02:21 act now and act strongly.

02:25 So this is a story of fundamental change

02:27 driven by

02:28 investment,

02:29 innovation and systemic

02:31 change.

02:32 Much of our economics,

02:33 we should remember,

02:34 has often been about uh comparing an equilibrium with one policy,

02:39 comparing that and comparing that with the status quo,

02:43 and saying if the new policy improves things in terms of a better new equilibrium,

02:48 then we go for the new policy.

02:50 This is much deeper.

02:51 Analysis of policy than that,

02:54 this is about systemic change,

02:56 it is about dynamic processes,

02:58 it is about managing dislocation,

03:00 and above all getting the investment and innovation going.

03:04 Let me emphasize

03:05 that China's role in our international institutions

03:08 will be of fundamental importance.

03:11 China helped shape policy around the world.

03:14 China is an international player of immense importance.

03:18 We will need to expand

03:19 our multilateral development banking system

03:22 very rapidly.

03:23 To help to contribute

03:25 to the conditions for investment

03:27 and the finance

03:28 for investment,

03:29 in so doing,

03:30 through of course it's involvement with the Asia Infrastructure Investment Bank,

03:34 the New Development Bank,

03:35 the Asia Development Bank,

03:36 and I think of special importance,

03:38 the World Bank,

03:39 China will help influence our international institutions.

03:44 Let me emphasize that

03:46 the kind of

03:48 carbon price that will be needed

03:51 will almost surely be

03:53 much higher

03:54 than that

03:56 currently employed in most countries around the world.

04:01 Among the most innovative parts of any economy are small businesses.

04:06 And therefore

04:08 Greater decentralization.

04:10 That has been the case in recent years,

04:13 uh,

04:14 is going to be one of the main mechanisms

04:16 for China,

04:18 uh,

04:18 to make

04:19 the green transition.

04:21 Let me say how important

04:23 the global agenda is.

04:26 Uh,

04:27 Achieving the green transition

04:30 in the banks countries in China

04:32 will not suffice.

04:33 It has to be a global

04:35 agenda.

04:36 And that's where strong actions,

04:40 part of China,

04:41 encouraging the World Bank and the IMF

04:44 to take

04:45 their role

04:46 in coordinating globally.

04:49 Uh,

04:49 the reduction in carbon

04:51 will be absolutely

04:52 essential.

04:54 So how to resolve the conflict between

04:56 growth and the abatement or emission reduction?

04:59 The fundamental way out or the most important element,

05:03 and is a green technology innovation.

05:06 Innovative green technologies,

05:08 it can reduce emissions directly.

05:11 They have a higher efficiency in reducing emissions,

05:15 such as the PV development,

05:16 energy storage,

05:17 and green hydrogen in China,

05:19 they have pretty high energy efficiency.

05:23 So,

05:23 um,

05:24 a well-designed and well-coordinated

05:26 green transition could catalyze these shifts and unlock

05:30 new sources of economic growth,

05:32 innovation,

05:33 and of job creation.

05:34 Uh,

05:34 we see also the labor market weakening a little bit

05:37 with the added benefit of lowering China's reliance on imported fuels,

05:42 uh,

05:42 and enhancing,

05:44 uh,

05:44 China's energy security.

05:46 So,

05:47 balancing China's development and climate objectives will require these broader

05:51 structural

05:52 and market reforms to complement

05:55 climate action,

05:56 um,

05:57 from traditional

05:58 infrastructure investment to innovation,

06:01 from exports to also more domestic consumption,

06:04 from industry

06:05 to higher value services,

06:07 and from a state-led

06:09 to a more market-driven allocation.

06:11 Of resources.

06:13 Extremely important piece of work and research agenda in a

06:16 sense doesn't stop here because it's so deep as Ju Min

06:21 pointed out,

06:21 this is an utterly new paradigm shift.

06:24 It's a change in the utility function,

06:25 to put it that way.

06:27 Uh,

06:27 and a whole new model of growth,

06:29 uh,

06:30 as Nick has just said,

06:31 and as Manuela Ferraro said,

06:33 I mean,

06:33 there,

06:33 there is a key role to be played here by

06:35 the banking financial system and the World Bank in particular

06:39 for the mobilization of capital

06:41 across the globe to get to net zero.

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transcript

Uh, I'm really very pleased that we at the World Bank were able to partner with Tsinghua University and the LSC in bringing together, uh, what is really a, a very distinguished, uh, panel, um, of leading and, and, uh, uh, Chinese and, and, and, uh, international experts. This conversation, uh, in the wake of, uh, COP 27 and our own, uh, The launch of the China Country Climate and Development Report, um, uh, is, uh, is, is very timely. China has very, um, high ambitions for both its climate action, but also to continue to develop. Uh, and while, um, aiming to become a high-income country by 2035, China has also pledged to peak. Uh, GHG emissions by 2030 and achieve carbon neutrality by 2060. Um, with these long-term, uh, policy goals set, now, the question is really how will, how will China, uh, achieve them? What investments, what policy and institutional changes are, are needed? And that's what, uh, I hope much of the conversation today will be about. The first issue is we soon realized the carbon neutrality is not only the technology issues, not only the energy issues, not only involving sort of, you know, auto cars and the power, but really fundamentally changing everything. Uh, it's really a. Paradigm shift to the first issues of forming the policy frame framework, policy guideline that provide a clear objective, to signal the transparency to the market, so the private sector market move into that direction as, as important. The second issue is government should mobile public resource to do the early-stage investments into the renewable energy, into the climate-related infrastructure, which is very important. The international experience says the earlier the better, the bigger the better, because you do today, you support the growth today, and you then you win the future benefits. So government should act now and act strongly. So this is a story of fundamental change driven by investment, innovation and systemic change. Much of our economics, we should remember, has often been about uh comparing an equilibrium with one policy, comparing that and comparing that with the status quo, and saying if the new policy improves things in terms of a better new equilibrium, then we go for the new policy. This is much deeper. Analysis of policy than that, this is about systemic change, it is about dynamic processes, it is about managing dislocation, and above all getting the investment and innovation going. Let me emphasize that China's role in our international institutions will be of fundamental importance. China helped shape policy around the world. China is an international player of immense importance. We will need to expand our multilateral development banking system very rapidly. To help to contribute to the conditions for investment and the finance for investment, in so doing, through of course it's involvement with the Asia Infrastructure Investment Bank, the New Development Bank, the Asia Development Bank, and I think of special importance, the World Bank, China will help influence our international institutions. Let me emphasize that the kind of carbon price that will be needed will almost surely be much higher than that currently employed in most countries around the world. Among the most innovative parts of any economy are small businesses. And therefore Greater decentralization. That has been the case in recent years, uh, is going to be one of the main mechanisms for China, uh, to make the green transition. Let me say how important the global agenda is. Uh, Achieving the green transition in the banks countries in China will not suffice. It has to be a global agenda. And that's where strong actions, part of China, encouraging the World Bank and the IMF to take their role in coordinating globally. Uh, the reduction in carbon will be absolutely essential. So how to resolve the conflict between growth and the abatement or emission reduction? The fundamental way out or the most important element, and is a green technology innovation. Innovative green technologies, it can reduce emissions directly. They have a higher efficiency in reducing emissions, such as the PV development, energy storage, and green hydrogen in China, they have pretty high energy efficiency. So, um, a well-designed and well-coordinated green transition could catalyze these shifts and unlock new sources of economic growth, innovation, and of job creation. Uh, we see also the labor market weakening a little bit with the added benefit of lowering China's reliance on imported fuels, uh, and enhancing, uh, China's energy security. So, balancing China's development and climate objectives will require these broader structural and market reforms to complement climate action, um, from traditional infrastructure investment to innovation, from exports to also more domestic consumption, from industry to higher value services, and from a state-led to a more market-driven allocation. Of resources. Extremely important piece of work and research agenda in a sense doesn't stop here because it's so deep as Ju Min pointed out, this is an utterly new paradigm shift. It's a change in the utility function, to put it that way. Uh, and a whole new model of growth, uh, as Nick has just said, and as Manuela Ferraro said, I mean, there, there is a key role to be played here by the banking financial system and the World Bank in particular for the mobilization of capital across the globe to get to net zero.

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