(MENAFN- Asia Times) Chinese President Xi Jinping's surprise announcement at the UN General Assembly in September 2020 that the world's biggest emitter would become .
This has sparked a ratcheting up of pledges to reduce greenhouse-gas emissions and a global technology race to curb fossil fuels and boost renewable energy, as world political, corporate and financial leaders belatedly unite to deliver on the Paris Agreement.
The seismic changes to China's energy mix needed to reach peak emissions by 2030 and net zero carbon emissions by 2060 have , particularly when viewed in conjunction with the Japanese and South Korean pledges. These are Australia's three largest export destinations for thermal coal and liquefied natural gas (LNG) for power generation, as well as coking coal for steel manufacturing.
At last month's climate summit, President Joe Biden upped the ante with his commitment to reduce US emissions by 50-52% by 2030 compared with 2005 levels. Then Japan unveiled its own massively ratcheted-up target of 46% emissions reduction from 2013 levels and South Korea said it would stop all public financing of new coal-fired power plants.
Meanwhile the Biden administration's efforts to drive net-zero momentum in financial markets is gathering pace. All have signed on to start to align with the goals of the Paris Agreement. JPMorgan Chase alone committed to advance long-term climate solutions and sustainable development.
We await the formal end to US government export credit agency (ECA) support of fossil-fuel projects offshore.
The financial markets are now watching closely as China makes increasingly ambitious policy statements.
China manufactures half the world's steel, so its new draft action plan for '' ,'' which targets peak emissions by 2025 and a 30% cut in emissions by 2030, will be hugely significant for the world.
This plan poses a massive challenge for the Australian iron-ore and coking-coal industries, which account for more than half of the global export market, while opening up enormous export opportunities for direct reduced iron (DRI) and green ammonia.
China is already by far the largest installer of renewable-energy infrastructure (535 gigawatts of wind and solar as at December 2020). China has long been deploying renewable-energy capacity at breakneck pace, installing a record in 2020 – more than half the total added globally.
Four of the five largest renewable-energy investors in 2020 were Chinese (NextEra Energy is the sole global top-five non-Chinese firm).
China's 14th Five-Year Plan (FYP-14) says around 20% of energy use should come from non-fossil-fuel sources by 2025. And the share of variable renewable energy (VRE) of China's total electricity generation should increase to (40% including hydro), up from 10% in 2020. Total VRE capacity is forecast to treble to a truly staggering 1,650GW by 2030.
China's power utilities are shaking up their generation portfolios to respond to President Xi's net-zero commitment, with four of the top five generators releasing plans to peak their emissions. China Huadian, the country's third-largest thermal power generator by capacity, announced it will and add 75GW of VRE capacity (half their total) as part of its pledge to peak carbon emissions by 2025.
China is also exploring the potential to use hydrogen to store renewable energy that would otherwise be curtailed. Coal chemical major Baofeng Energy has started construction of the world's largest of 90 megawatts'' capacity, to be operational next year.
China is also leading the world on construction of ultra-high-voltage grid transmission cables, with , and another 10 approved in 2020.
The signal from Japanese Prime Minister Yoshihide Suga's 2050 net-zero emissions pledge last October and strengthening of Japan's 2030 emissions reduction target at the recent climate summit looks to be far more than just talk, given the behind-the-scenes consensus building with leading Japanese financial institutions and energy companies.
Kansai Electric Power and Marubeni Corp have to build the last proposed new 1.3GW coal-fired power plant in Japan. Energy major has announced a pivot from coal and fossil gas toward renewable energy. The giant Japanese trading house Sojitz is in thermal coal and oil projects by 2030 and coking coal projects by 2050.
China, Japan and South Korea are the world's largest providers of public finance for overseas coal power projects through their ECAs.
South Korean President Moon Jae-in promised at the climate summit to end all new financing for overseas coal projects by the three major government-owned ECAs. Biden is urging Japan to beat this and announce a total fossil-fuel ECA exit policy at the Group of Seven Summit next month.
Finance is moving swiftly to respond to the new decarbonization commitments and the push for renewable energy.
In the past nine months, the Institute for Energy Economics and Financial Analysis (IEEFA) has tracked 10 financial institutions in South Korea with new or improved coal policies, building on a raft of new coal-exit policies across Japan, Taiwan, Malaysia and the Philippines – too many to here.
We await the imminent announcement of the Asian Development Bank's fossil-fuel policy, hoping for global leadership.
South Korea is set to launch this year, building on the 4GW installed in 2020, putting the country well ahead of its target of 31GW of solar by 2030.
And a South Korean company is well on its journey leading heavy industry decarbonization in Australia. Sun Metals, a subsidiary of Korea Zinc Company, is investing in to power its zinc refinery so it can meet its target of 100% renewable energy by 2040 and commitments.
China, Japan and South Korea are Australia's biggest fossil-fuel buyers, and in business, the customer is always right. It's time for Australia to start listening to its customers and follow their lead, and invest in the massive new value-added DRI, green ammonia, rare earth and lithium export opportunities this creates.
Tim Buckley is IEEFA's director of energy finance studies, Australia/South Asia.
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