Overnight there has been a very good IEA report on how China could get to net-zero by 2060, and further news of more industries hit by power cuts because of power shortages, some of which are apparently due to tighter emissions standards. These are both important and far-reaching topics and will require some analysis to provide the kind of insight that we believe is necessary, and accordingly, we will push these to next week’s report (all input welcome). In the meantime, we have included a couple of charts that show the way up and the IEA view of the way down. The power outages are interesting as while they may cause some manufacturing cutbacks and we have seen recent news to that effect, China has overbuilt in the last couple of years relative to domestic demand growth, and with port and shipping congestion the country has surpluses of many products sitting around at very low values. The power moves may help correct some of these imbalances and we are already seeing some chemical prices bounce off recent lows because of production cutbacks. We discussed the acetic acid chain in one of our dailies last week – linked here.
- China's Li-ion CAM producers cut output on power curbs | Argus Media
- China’s Power Cuts Widen Amid Shortages and Climate Push
- China's emissions on track to peak by mid-2020s: IEA. Argus notes “China's existing policies put its CO2 emissions on track to peak by the mid-2020s, ahead of its stated target of 2030, but Beijing has the capacity to accelerate its transition to clean energy sources and reach carbon neutrality before 2060, the IEA said today.”
China has a clear pathway to build a more sustainable, secure and inclusive energy future - IEA.
Source: IEA, September 2021
The switch that China will need to make is significant and in next week’s report we will not only examine the paths implied in the exhibit below, but we will also talk about the ramifications of China being 10 years late. Will China gain some sort of competitive edge by delaying its net-zero goal beyond the rest of the World and/or will the rest of the world be in a position to penalize China for the delay – perhaps through higher tariffs.
Industrial CO2 emissions and energy consumption in China in the APS (Announced Pledges Scenario)
Source: IEA, September 2021
