China’s carbon dioxide (CO2) emissions fell by 3% in March 2024, ending a 14-month surge that began when the economy reopened after the nation’s “zero-Covid” controls were lifted in December 2022.
The new analysis for Carbon Brief, based on official figures and commercial data, reinforces the view that China’s emissions could have peaked in 2023.
The drivers of the CO2 drop in March 2024 were expanding solar and wind generation, which covered 90% of the growth in electricity demand, as well as declining construction activity.
Oil demand growth also ground to a halt, indicating that the post-Covid rebound may have run its course.
A 2023 peak in China’s CO2 emissions is possible if the buildout of clean energy sources is kept at the record levels seen last year.
However, there are divergent views across the industry and government on the outlook for clean energy growth. How this gap gets resolved is the key determinant of when China’s emissions will peak – if they have not done so already.
Other key findings from the analysis include:
- Wind and solar growth pushed fossil fuels’ share of electricity generation in China down to 63.6% in March 2024, from 67.4% a year earlier, despite strong growth in demand.
- The ongoing contraction of real-estate construction activity in China saw steel production fall by 8% and cement output by 22% in March 2024.
- Electric vehicles (EVs) now make up around one-in-10 vehicles on China’s roads, knocking around 3.5 percentage points off the growth in petrol demand.
- Some 45% of last year’s record solar additions were smaller-scale “distributed” systems, creating an illusory “missing data problem”.
Why did emissions fall in March?
Looking at the first quarter of 2024 as a whole, China’s CO2 emissions increased significantly, based on preliminary data on energy consumption from the National Bureau of Statistics.
January and February of this year still saw large increases from the low base of 2023, when the economy was still subdued by the recent ending of zero-Covid restrictions.
As a result, CO2 emissions during the quarter increased by 3.8% year-on-year, with coal consumption growing 3%, oil 4% and gas 11% compared with the same period in 2023.
The turnaround happened in March, when CO2 emissions fell by 2%, due to a 1% fall in coal use, flat oil demand and a 22% drop in cement production. The reduction in CO2 emissions came despite a 14% rise in gas consumption, as the fuel is a minor part of China’s mix.
As seen in the figure below, China’s CO2 emissions had started increasing in February 2023, after Covid-19 controls were lifted in December 2022.
The year-on-year comparison to January-February 2023 is, therefore, still affected by the low base caused by the last year of zero-Covid, making March the first month to give a clear indication of the emissions trends after the rebound.
The main driver of China’s emissions growth in recent years has been the power sector (see below).
Conversely, the main reason the emissions trend turned into a reduction in March was that power-sector emissions growth slowed down sharply. Emissions from the sector only increased by 1% year-on-year, due to strong growth in solar and wind power generation.
While power-sector emissions stabilised, the largest source of reductions in emissions in March was the continued decline in demand for steel and cement from the construction sector, as illustrated in the figure below.
Steel production fell by 8% and, as a result, there was also a fall in production of the main fuel used by steel mills – coking coal. Cement production fell dramatically, by 22% year-on-year.
These trends seem set to continue, as real-estate investment continued to contract – for the third year – as a result of a government clampdown on excess leverage and financial risk in the sector, and sizable supply resulting from booming construction in the past.
The contraction in construction volumes has not resulted in as large a drop in China’s demand for steel and other energy-intensive metals as might be expected.
The reason is rapid growth and investment in manufacturing, which uses metals for the construction of facilities and the production of industrial machinery.
It is unlikely that this manufacturing growth can continue, as global markets for different goods and commodities become saturated. The government’s economic policy now emphasises “new productive forces”, in the latest attempt to shift economic growth away from traditional heavy industry. The term refers to high-end manufacturing and R&D, which are, for the most part, less energy intensive than China’s traditional industrial sectors.
Looking at other sectors in March 2024, oil demand for transport was unchanged on a year earlier – following months of strong increases – suggesting that the post-Covid rebound could be petering out.
The production of jet fuel (+35%) and petrol (+7%) still increased, indicating growth in demand from passenger transport, but diesel production stagnated (+1%) and total crude oil refining volumes also only increased 1%.
The rise in the share of electric vehicles (EVs) is making a meaningful dent in oil demand, with the share of electric vehicles out of all vehicles on the road increasing to 10.5%, from 7.0% a year ago, as estimated on the basis of cumulative sales over the past 10 years. This indicates that EV adoption lowered petrol demand growth by 3.5 percentage points.
Gas demand rebounded sharply, increasing 14% year-on-year, after a drop caused by high gas prices. Growth in gas consumption came predominantly from industry and households.
Power-sector gas consumption increased 8%, as the utilisation of gas-fired power plants recovered, but this only contributed a small fraction of the overall growth.
The share of gas in China’s energy mix fell from 2021 to 2023, after more than two decades of continuous increases, and has only now started to resume growth.
One recent driver of emissions increases continued: coal consumption in the chemical industry increased 14%, extending the double-digit growth seen in 2022 and 2023.
While there is not yet enough data to estimate CO2 emissions in April, industrial data for the month indicates that the trends seen in March continued.
Thermal power output – mostly from coal – grew at a slow rate of 1.3%, with most demand growth being covered by solar. Steel, cement and coke output fell by 8%, 9% and 7%, respectively, reflecting continued decline in construction volumes. Oil refining volumes fell 3%.
Domestic coal mining output fell 3% while imports increased 11%, meaning total supply fell 5%.
Gas demand saw further strong growth, with imports increasing 15% and domestic production 3%. Among energy-intensive industries, the chemical and non-ferrous metal industries continued rapid output growth.
Solar and wind covering demand growth
The stabilising emissions in the power sector are notable because electricity demand growth continued at a high rate of 7.4% – and hydropower utilisation stayed below the long-term average, affected by a prolonged drought.
Electricity demand growth has been exceptionally fast during the past few years, driven predominantly by industrial power use. In March, industrial demand growth slowed down, but a rebound in the service sector sustained overall growth.
Half of demand growth came from industry, with non-ferrous metals, chemicals, machinery and electronics the largest growth areas. One third came from services, with wholesale and retail trading the largest growth driver, and one sixth from households.
Household power demand has also seen a surge in the past couple of years, driven by a wave of air conditioning unit purchases triggered by the historic heatwave in 2022, especially in lower-income households that lacked air conditioning before.
Despite rapid growth in electricity demand, the rate of growth for large-scale power generation slowed to 3%, due to rising distributed solar power generation.
(Distributed solar refers to smaller-scale installations, often on the rooftops of homes and businesses, in contrast to the large, centralised solar farms.)
Overall, the record addition of solar and wind capacity in 2023 enabled these sources to deliver 22% of power generation and almost 90% of year-on-year growth in March, as shown in the figure below. The share of non-fossil power generation rose to 36.2%, from 32.6% last year.
The growing contribution of distributed solar power to generation has been somewhat hidden by the way that China’s monthly electricity data is reported. The National Bureau of Statistics only reports monthly power generation from very large-scale solar and windfarms. It has also made systematic upward revisions of previous year’s data, suggesting it had not captured output from new firms entering the market in real time.
As 45% of last year’s record solar additions were distributed generation, the exclusion of small solar installations is affecting these numbers a lot more than it used to.
This has caused a lot of confusion in China and overseas, especially as the reported electricity consumption became much larger than generation – an apparent impossibility. Bloomberg even called this a “missing data problem”.
The widening gap between electricity consumption and large-scale power generation makes it clear, however, that distributed solar is increasingly contributing to meeting electricity demand.
Unlike the monthly figures, there is no “missing” data in China’s annual reporting, as the yearly statistics include all power plants regardless of size. In 2023, for example, the annual statistics reported twice as much solar and 10% more wind power generation than the monthly statistics.
Indeed, calculating generation from reported installed capacity and utilisation hours of the capacity on a monthly basis reproduces the annual numbers closely. This makes it clear that the expansion of small-scale solar is contributing substantially to meeting electricity demand, even if the statistics bureau’s monthly data does not cover the power generation.
Clean energy boom continues
The fall in emissions in March was enabled by last year’s massive solar and wind power additions, with almost 300 gigawatts (GW) of new capacity connected to the grid. This boom accelerated in the first three months of 2024, with a 40% increase compared with the year before.
Solar power installations stood at 46GW, up 36% on year, and wind power installations at 16GW, increasing 50% year-on-year.
The first months of the year tend to be slower in terms of installations – and there are also gaps in reporting that mean that quite a bit of new capacity is only reported at the end of the year.
The strong year-on-year growth indicates that concerns about grid access for new projects have not affected the pace of capacity additions yet. Even if growth rates are tempered for the rest of the year, the numbers to date indicate that last year’s record pace could be maintained in 2024.
Solar panel production grew another 20% in January-March from last year’s already significant numbers, signalling strong demand from China and overseas.
EV production grew 29% while total vehicle production resumed its fall, so the share of EVs continued its rapid climb, reaching 31% in the first quarter compared with 26% the year before.
As the economics of solar and wind projects are strong, the main constraint on capacity additions will be grid access. Numerous provincial grid operators already began to limit additions of new wind and solar last year, as they were concerned that they would not be able to fully integrate the additional generation.
This highlights the shortcomings in China’s grid operation, because such challenges are arising when the share of wind and solar power in China’s power generation is still modest, at 15%, compared with 27% in the EU and 40% in Germany, Spain and Greece.
Action is being taken. The NDRC has begun to relax requirements for the grid access of solar and wind generators. This will increase the uncertainty for investors in wind and solar projects, but makes it easier for grid operators to integrate more capacity and will, therefore, support growth in capacity and generation.
The NDRC also issued a policy on developing electricity storage, pledging that, by 2027, the power system would be able to integrate new solar and wind capacity while keeping the share of their output that is wasted due to grid issues to a low level.
While solar and wind are beginning to cover most or all of power demand growth, investment in coal power is continuing. Additions of thermal power capacity slowed down slightly year-on-year in the first quarter, but provinces’ “key project lists” for 2024 include over 200GW of thermal power projects, which are mainly coal-fired.
Future ambition a major question mark
The fall in China’s emissions in March could mark the turnaround after blistering growth since 2020. As explained in analysis for Carbon Brief published last autumn, the current growth rate of clean energy has the potential to peak the country’s emissions.
Whether the clean energy growth will continue is, therefore, the key question for the future path of China’s emissions. However, views about the pace of future wind and solar developments diverge widely.
The China Photovoltaic Industry Association (CPIA) forecasts average annual capacity additions of 225GW from 2024 to 2030 in its “conservative” scenario, a slight increase from the 217GW installed in 2023. Its “optimistic” scenario would see this accelerate to 280GW per year. Under the CPIA’s projections, China’s total installed solar capacity reaches 2200-2600GW in 2030, up from 660GW today.
According to the wind power industry, China needs to install more than 50GW of new wind power capacity annually from 2021-2025 and more than 60GW annually from 2026 onwards, in order to reach the 2060 carbon neutrality target. This is a fairly modest trajectory, since capacity additions in 2023 were already 76GW.
On the other hand, the head of the National Energy Administration (NEA) Zhang Jianhua wrote in a recent article that clean-energy capacity additions should be kept above 100GW per year, less than half of the level achieved in 2023, implying that he views the recent acceleration as an anomaly and not something to be maintained.
Similarly, the NEA’s 2024 workplan targets 170GW of non-fossil power capacity added, as implied by the targets for total generating capacity and the share of non-fossil energy capacity. (Despite the 160GW target in the 2023 workplan, additions reached nearly 300GW.)
These alternative visions of wind and solar expansion are shown in the figure below. The dark blue line shows Zhang’s expectation that annual capacity additions would return to levels seen during 2020-2022, while the light blue and red lines show the renewable industry forecasts of growth broadly being maintained at 2023 levels – or steadily increasing.
The difference between the CPIA and NEA levels of ambition amounts to 1,400-1,800GW of solar and wind power capacity by 2030. If the resulting clean power generation were to replace coal in 2030, the difference in CO2 emissions would amount to 10-15% of China’s current emissions. By 2035, with a continuing trend in wind and solar growth, the CO2 saving would reach 20-25% of current emissions.
In his article, Zhang points to a number of challenges that could justify the lower level of clean-energy capacity additions that he is proposing, including the lack of a robust pricing mechanism for electricity storage, the need for better coordination of policies on the energy transition, as well as managing the land and marine area requirements for large new energy projects.
Still, dialling back the additions of solar and wind, as well as the associated battery storage, would be a cold shower to China’s economy, as these clean energy sectors have become a key source of economic growth.
Moreover, massive recent investments in manufacturing capacity in these sectors will only be utilised and pay off with continued growth in the demand for clean energy equipment.
The lower level of ambition of the government is also reflected in official targets for this year. The environmental ministry recently set a target to reduce carbon intensity – the level of emissions per unit of GDP – by 3.9% in 2024.
This target, if met, is an increase over the past three years when carbon intensity improved by only 1.5% per year on average. Yet, given that the target for GDP growth is “around 5%”, the carbon intensity target allows emissions to increase by more than 1%.
After rapid emission increases in 2021 to 2023, China is already severely off track for its 2025 and 2030 carbon intensity targets – and the annual targets for 2024 fail to close this gap.
Instead, it is exactly the required annual average that would have been needed every year to meet the 14th five-year plan target of 18%. As such, it avoids the existing shortfall from getting wider, but does nothing to make up for slow progress to date. The NDRC set a less ambitious target of reducing “fossil energy intensity” by 2.5% in 2024, which allows emissions to increase by more than 2%.
Zhang Jianhua also argued that clean energy should cover 70% of energy consumption growth in 2026-30, a target that is consistent with a slowdown in clean energy additions.
This would mean that 30% of energy consumption growth would still be covered by increasing the use of fossil fuels – and, therefore, CO2 emissions would also continue to increase.
Continued emissions growth would imply a major risk of missing China’s 2030 carbon intensity commitment – which is part of its international climate pledge under the Paris Agreement – as there is no space for energy-sector CO2 emissions to increase from 2023 to 2030 under the commitment, assuming average GDP growth of 5% or less.
China’s pledge, therefore, depends on clean energy growth continuing to significantly exceed the central government’s targets – or those targets being ratcheted up.
About the data
Data for the analysis was compiled from the National Bureau of Statistics of China, National Energy Administration of China, China Electricity Council and China Customs official data releases, and from WIND Information, an industry data provider.
Power sector coal consumption was estimated based on power generation from coal and the average heat rate of coal-fired power plants during each month, to avoid the issue with official coal consumption numbers affecting recent data. Power generation from coal was calculated from total thermal power generation and the reported capacity and utilisation hours of power plants firing coal, gas and biomass, to obtain the fuel mix of thermal power generation.
When data was available from multiple sources, different sources were cross-referenced and official sources used when possible, adjusting total consumption to match the consumption growth and changes in the energy mix reported by the National Bureau of Statistics.
The data for the first quarter of 2024 was scaled to match the reported year-on-year growth rates for the whole quarter in preliminary official data from the National Bureau of Statistics. The conclusion that emissions fell in March holds both with and without this adjustment.
CO2 emissions estimates are based on National Bureau of Statistics default calorific values of fuels and emissions factors from China’s latest national greenhouse gas emissions inventory, for the year 2018. Cement CO2 emissions factor is based on annual estimates up to 2023.
For oil consumption, apparent consumption is calculated from refinery throughput, with net exports of oil products subtracted.
The post Analysis: Monthly drop hints that China’s CO2 emissions may have peaked in 2023 appeared first on Carbon Brief.
Analysis: Monthly drop hints that China’s CO2 emissions may have peaked in 2023
Carbon credit developers, corporate buyers and some leading conservation NGOs are challenging new proposed rules to stop UN carbon credits being wiped out by fire, drought or logging, in what critics have called a “coordinated lobbying campaign” to weaken the nascent market’s push for greater integrity.
According to documents seen by Climate Home News – including a briefing given to government officials – companies, NGOs and the UN Environment Programme (UNEP) have contested the scientific basis for the move, arguing that stronger protection for carbon reductions could hike project costs and restrict the supply of credits to the market.
The climate benefit of credits that claim to reduce or avoid greenhouse gas emissions by storing carbon is undone if that carbon is released back into the atmosphere – something known as reversal risk. To protect against such losses and preserve the credibility of the credits’ carbon-offsetting claims, projects are generally required to set aside a reserve of credits that cannot be sold, as a form of insurance.
How these “buffer pools” are calculated has long been a source of contention, especially in forest conservation projects, which many experts say have historically underestimated the risk of carbon losses.
In July, the technical UN panel tasked with drafting rules for the Article 6.4 mechanism, which underpins the credits that countries and companies can use to meet their climate goals, proposed a new system. It would require project developers to size these insurance pools of credits based on local risk values derived from new research published by a group of independent scientists.
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Its supporters have hailed it as a more rigorous approach than current practice in the voluntary carbon market, which largely relies on expert guesswork and, in some cases, gives significant leeway for project developers to come up with their own data.
“The decision on the reversal risk assessment tool will be crucial,” said Federica Dossi, an expert at Brussels-based advocacy group Carbon Market Watch. “It would bring a new paradigm for calculating the number of units forwarded to the buffer pool based on empirical data.”
The technical panel is due to discuss the reversal risk tool and its application to a specific set of projects at a five-day meeting in Bonn this week. It is then expected to forward new recommendations to the mechanism’s regulator, the Supervisory Body, for a decision on whether to approve them at a meeting in early October.
The rules are set to be applied initially only to clean cookstove projects, one of the market’s most popular and heavily criticised credit types. They could then be extended to other activities, including programmes to protect forests.
Copy and paste?
More than 30 organisations aired their views in lengthy public submissions to the Article 6.4 mechanism, responding to a call from the UN secretariat for external feedback.
A Climate Home News review of those submissions found that there was significant overlap in their messages and, in several cases, sections of the text, or even entire submissions, were copied and pasted by different organisations. This points to a coordinated effort to flag concerns regarding the new rules.
In one instance, tech giant Apple, a large buyer of nature-based carbon credits, warned against relying on one scientific model and called for rules that let project developers use a variety of risk mitigation tools, rather than surrendering buffer credits, to cover the risk of carbon losses.
Apple’s submission is a lightly-edited version of a separate input presented by the Beyond Alliance, a coalition of corporate buyers and NGOs that promote market-based climate investments. In an apparent oversight in one paragraph, the Beyond Alliance’s name appears in Apple’s submission instead of the tech giant’s.
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The Beyond Alliance told Climate Home News that, after receiving input from its members, it shared its final submission, leaving them to decide if and how they wanted to use it. The coalition rejected any characterisation that its submission advocates for a weaker tool and only reflects business concerns.
The Beyond Alliance added that its members received briefings by UNEP, which Climate Home News understands has played an important role in wider efforts to influence the development of the rules underpinning the UN carbon market.
Three experts and a European Union diplomat told Climate Home News that the interventions of the UN agency overwhelmingly supported the views of those with a financial interest in carbon markets.
UNEP’s head of mitigation Gabriel Labbate rejected this accusation. He told Climate Home News that the UN agency contributes technical inputs from a “politically-neutral, science-based perspective” and its positions are grounded in an assessment of environmental integrity and are not shaped by, or aligned with, the financial interests of any market participant.
UNEP, NGOs criticise scientific basis
In mid-July, representatives from UNEP, Conservation International and The Nature Conservancy (TNC) briefed government officials from Canada, the UK, Germany, Costa Rica, Belgium, Nigeria and Peru, according to a webinar readout seen by Climate Home News.
The online event was organised by the Forest & Climate Leaders Partnership (FCLP), an initiative that brings together 41 countries plus the EU.
The speakers voiced strong criticism of the new proposed rules. A technical advisor to Conservation International, a US-based NGO that runs several large-scale carbon offsetting programmes, told participants the Article 6 panel’s approach was “based on bad science”. This, he said, is because it relies on a single model that he claimed is not appropriate to determine buffer pool contributions, according to a presentation seen by Climate Home News.
During a high-level discussion led by UNEP’s Labbate, speakers said the application of measures to manage reversal risk on cookstove projects could “impose disproportionate costs and undermine the financial viability of these activities”, according to the readout.
Cookstove programmes issue credits by calculating the greenhouse gas emissions prevented by burning less fuel – usually wood or charcoal – through the use of more efficient stoves. With the new reversal risk tool, these activities would be expected to guard against future carbon losses for the first time under the UN carbon market.
But UNEP, as well as leading NGOs and carbon credit firms, have pushed back against the requirement, arguing this type of credit represents a “flow” of avoided emissions rather than a “stock” of stored carbon that can be released. Scientists reject that distinction, noting that the wood left unburned is still standing in a forest exposed to the same risks as any other.
At the online briefing, speakers also raised concerns that the tighter approach would be replicated for nature-based carbon projects with a direct impact on the future of large-scale forest conservation credits. The Conservation International advisor called it a “bad precedent”.
Both Conservation International and TNC run carbon credit programmes that aim to protect trees from being cut down. Labbate leads the UN-REDD programme, which supports countries developing forest protection initiatives including through carbon credits, and is co-chair of the expert panel advising the Integrity Council for the Voluntary Carbon Market (ICVCM).
After the webinar, the organisers shared by email a series of “key messages” and draft submissions produced by the three organisations, which participants were invited to consider and adapt in their own inputs to the Article 6.4 consultation process.
Getting the rules ‘right’
In a statement to Climate Home News, Ghana, Paraguay and the UK – which are FCLP co-leads for its work on forest carbon credits – said members of the coalition welcomed expert views from a range of partners to help them understand the potential impact of Article 6.4 rules on the eligibility of forest carbon credits in international markets.
They added that the FCLP does not have a common position on the rules and its members are free to choose whether to attend webinars and use any of the materials circulated.
In a statement to Climate Home News, Conservation International said “getting these rules right is important to the environmental integrity of the carbon market, while ensuring all sectors have a place in it”. It added that the NGO does not dispute the validity of the scientific research underlying the proposed buffer pool, but recommends a broader approach including multiple models and datasets.
A spokesperson for TNC said the organisation had helped clarify complex materials and their potential implications, while decisions on how to respond remained entirely with participating countries.
‘Inconvenient science’
The scientific basis for the disputed reversal risk tool rests on two pieces of research. A peer-reviewed study, published in Nature in May and led by scientists at several US universities, modelled forest carbon-loss risk across the United States and found existing buffer pools there are undersized by an average factor of six.
To extend that approach worldwide, the Article 6.4 panel also drew on a second, global analysis by the same research team, which has not yet completed peer review. That study used satellite images, weather records and computer modelling to estimate a 31-42% chance of forests worldwide losing stored carbon within 100 years, depending on the scenario.
The panel picked one of these scenarios and turned its estimates into fixed risk percentages for individual countries, and in some cases provinces, which projects in those locations would need to apply.
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Critics say the peer-reviewed portion of the research was calibrated on North American forests, and that applying the same approach to other regions relies on a global study that is still going through academic checks.
But, for William Anderegg, professor of biological sciences at the University of Utah and one of the authors of that research, it is the best science currently available. He described it as “light-years better” than assumptions underlying the voluntary carbon market, where risk numbers are not generally based on independent evidence and tend to be incredibly low.
Scientific research, including by Anderegg, has found that buffer pools in forestry projects in the voluntary carbon market are substantially smaller than they should be to adequately protect against future releases of carbon.
“There really seems to be a fairly coordinated campaign to try to weaken the strength of these [Article 6.4] tools and their scientific underpinning,” he told Climate Home News. “It’s a little dispiriting to see folks attack science that’s inconvenient.”
Regulators under pressure?
An EU diplomat told Climate Home News that experts and negotiators working on the Article 6.4 mechanism have faced intense pressure from big carbon credit developers and large parts of the nature-based solutions community.
“It is very clear that they are lobbying against strong rules, and they want to align the Paris Agreement mechanism with the standards of the voluntary carbon market,” the diplomat said. “They have influence, time and money, even more than some governments, so they can be very effective in their efforts.”
Last year, the Article 6.4 Supervisory Body, the new market’s regulator, approved rules on the permanence of credits aiming to remove carbon from the atmosphere which critics said were watered down compared to the technical panel’s recommendations. This followed feedback from carbon market firms and conservation NGOs, which submitted dozens of critical views.
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Carbon Market Watch’s Dossi said decisions that strengthen environmental integrity are targeted in particular as they tend to reduce the number of credits that can be issued.
Then, as now, those who opposed tighter rules argued that overly strict safeguards would make some projects too expensive to carry out, with a negative impact on local communities and the climate.
But proponents argue that higher-integrity programmes will drive up market prices, ultimately benefiting everyone.
“If rules ensuring better-quality credits make them somewhat more expensive than they are today, that’s an acceptable consequence, not a reason to weaken the rules, especially since these credits will be used to offset continued emissions,” said Dossi.
Efforts to pull the rule-makers in different directions are expected to intensify in the coming weeks as a decision on the new credit protection system nears.
“I really don’t know how this will turn out in the end,” one veteran carbon market expert said. “What I am sure about is that it will be quite a battle.”
The post Industry and NGOs lobby to weaken UN carbon credit rules in “coordinated” push appeared first on Climate Home News.
Industry and NGOs lobby to weaken UN carbon credit rules in “coordinated” push
A relatively ambitious deal to reduce the shipping industry’s 3% of global emissions now looks more likely after four days of closed-door talks in London, observers say.
The International Maritime Organization (IMO), which oversees the negotiations, said there had been “constructive discussions” and “genuine willingness within the group to make concrete further progress”.
Em Fenton, senior director at the NGO Opportunity Green who attended the talks last week, said they “demonstrated a strong spirit of solidarity in the face of blatant attempts to undermine the credibility, ambition and equity of a hard-fought multilateral agreement”.
After several years of debate, governments provisionally agreed in April 2025 on a “Net-Zero Framework” (NZF) – a series of emissions reduction targets for shipowners aimed at incentivising them to use cleaner fuels, backed up with financial rewards for meeting the targets and fees for missing them.
But in October 2025, after a high-profile intervention by US President Donald Trump and threats of US sanctions and visa restrictions, the US convinced a majority of voting nations to postpone the adoption of the NZF for a year.
UCL analysis found that, of those who expressed a view at last week’s talks, 38 were in favour of an NZF-style solution while only 17 were against. Those opposed are “consistently composed of strongly fossil fuel-aligned governments”.
An observer of the talks, who did not want to be named, said the countries opposed include the US, Russia, India, Thailand, Argentina, Ecuador and Uruguay, as well as eight oil-rich Gulf nations and shipowner-reliant Liberia and Panama. Governments that support an NZF-style deal include China, Brazil, Mexico, Türkiye, Canada, Australia, Chile, nine African nations, most European countries and small islands.
A new framework to tackle shipping emissions could be adopted if two-thirds of countries that are present and signed up to a regulation called Marpol Annex VI – endorsed by just over 100 states – vote in favour of it, as they did in April 2025.
UCL’s analysis said it was “reassuring” that governments which had taken strong positions in the media against the NZF were being more compromising in the negotiations.
Tweaks are probable
While there is majority support for the NZF, UCL said adopting it would be difficult politically. “The process from here could therefore be as much about producing what appears to be a new package, but one that broadly ends up with similar outcomes in relation to objectives,” UCL argued.
But tweaking the NZF, which resulted from years of negotiations, comes with risks, it warned. For example, changes could reduce the new system’s planned support for low-income countries, turning them against it. Fenton said compromising should not mean “abandoning the principle of justice in the maritime transition”.
UCL said the speed at which shipowners must reduce their ships’ emissions or face fees is likely to be reduced in the short-term but raised in the long-term to meet a goal of net zero emissions by mid-century.
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This was a compromise put forward by NZF-supporter Brazil. However, an analysis by the the Institute of Marine Engineering, Science and Technology (IMarEST) has found that this change would lead to more overall emissions than the original NZF trajectory.
UCL has warned it could incentivise liquefied natural gas as a shipping fuel over greener options, which include hydrogen-based methanol and ammonia.
Analysis by UCL and the Rocky Mountain Institute suggests that, while a slower start to the NZF would reduce transport costs in the short term, it would increase them later due to the costs involved in switching the industry over from more polluting fuel to cleaner fuel.
NZF won’t meet emissions goals
IMarEst’s analysis finds that even in its current form – the most ambitious deal on the table – the NZF will not be sufficient for shipping to meet its emissions reduction goals.
It says that only a Pacific proposal to place a levy on ships’ total emissions – rather than just those above a certain level – would meet the industry’s targets to reduce emissions 20% between 2008 and 2030, 70% by 2040 and then reach net zero “by or around, i.e. close to 2050”. This is highly unlikely to be adopted.
Additional talks will be held from November 23-27 and from November 30-December 3 before a potentially final round of official negotiations begins on December 4.
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At regional summit, Pacific islands ask for COP31 support for clean energy and finance
At a key leaders’ summit in Palau, Pacific island nations burdened by worsening climate change impacts and costly fossil fuel imports called for November’s COP31 climate summit to deliver finance to help the region transition to renewable energy and build more resilient communities.
Heads of government from the 18-member Pacific Islands Forum (PIF) – which includes COP31 co-president Australia – met in Palau’s capital Koror for a week-long summit, where they demanded access to climate finance, ocean action and a regional boost for renewables at COP31.
Palau’s president Surangel Whipps Jr. said during a plenary session that the Pacific must focus on delivering climate and ocean commitments. “It will require greater regional leadership, stronger regional coordination and, above all, unity of purpose,” he said.
The meeting, which ended last Friday, was marked by the absence of some leaders – among them the heads of state of the Solomon Islands, Vanuatu and Fiji, which will host a preparatory session for COP31 in October (referred to as the pre-COP31). There were also tensions over Taiwan’s participation, with China objecting to its presence as an observer.
The forum’s final declaration, published after it ended and signed by all its members, reaffirms that climate change is the “single greatest threat to the security, livelihoods and wellbeing of Pacific peoples”, and notes “the importance of a focused, high-level declaration” at the pre-COP31 to build “political momentum towards COP31”.
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Australia and Pacific islands have invited world leaders to attend the pre-COP31 gathering, which will be held in Fiji and Tuvalu from October 5 to 8. While usually a technical meeting for negotiators, the island nations aim to issue a political declaration at the gathering calling for strong outcomes in Türkiye.
Chris Bowen, Australia’s climate minister and COP31 president of negotiations, said in a speech during the Pacific forum that his country is “determined to use COP31 to progress the agenda to make it easier for countries to access the climate finance they need”.
“We won’t miss the opportunity to ensure COP31 is a Pacific COP. Not just because of the location of pre-COP but because of the agenda we are shaping through the Action Agenda at COP31,” he said.
The Action Agenda is a large portfolio of climate initiatives and coalitions uniting governments, businesses and civil society outside of the formal negotiations on everything from health to methane emissions.
Renewable energy investment plan
Announced a year ago, the island nations launched a $14-billion investment plan for a “100% Renewable Blue Pacific” at the forum in Palau. The plan lists strategic projects that would reduce the region’s high dependence on fossil fuel imports, whose soaring costs have become a major burden since the Iran war.
The projects include a $52-million programme managed by Australia to develop off-grid renewables in remote communities across the Pacific, as well as a $100-million blended finance fund aimed at supporting private-sector investments in wind and solar, among others.
Currently, some countries in the Pacific are spending up to a quarter of their GDP importing diesel to power electricity generation, according to a new report by the University of New South Wales in Australia. The investment plan launched at the forum aims to reduce these costs by adding 2.2 gigawatts of renewable generation and around 9 gigawatt hours of electricity storage.
To channel funds into the region, the plan also highlights the role of the recently established Pacific Resilience Facility (PRF), a regional fund that seeks to swiftly disburse funds to climate-vulnerable communities at the local level. Bowen said he would promote the facility to world leaders attending COP31 and “ask for their support”.
Call to transition away from fossil fuels
Separately, the forum endorsed the Belau Declaration which emphasises the need to keep the 1.5C Paris Agreement temperature goal alive. A UN report last week showed that overshooting this limit is now inevitable, but deep emissions cuts could still bring global temperatures back down by the end of the century.
Pacific nations expect to rally support for this declaration at the pre-COP, with Fiji’s climate minister Lynda Tabuya saying in a statement: “Palau is where we build the political mandate. Pre-COP is where we take it to the world.”
The political declaration also says that countries must accelerate the global transition away from fossil fuels “towards a renewable energy future”, and calls for greater recognition of the importance of ocean health in addressing climate change.
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As part of the forum’s outcomes in Palau, countries also noted Tuvalu’s efforts to host the second global conference on transitioning away from fossil fuels, which will gather government representatives in April next year to follow up on this year’s inaugural conference in Santa Marta, Colombia.
Speaking to journalists at the forum, Vanuatu’s climate minister Ralph Regenvanu questioned Australia’s role in talks about phasing out fossil fuels at COP31, adding that “the very least a country like Australia should be doing is stopping future expansion, and it’s not doing that”. During the PIF, the country approved the extension of a major mine that digs and exports coal for steel-making, giving it permission to keep producing until 2055.
Rising seas trigger “development emergency”
As leaders met in one of the world’s regions most threatened by sea-level rise, UN Secretary-General António Guterres released a new report warning that rising seas are now “one of the most profound threats to populations around the world in developed and developing states alike”.
Presenting the report at UN headquarters in New York, Assistant Secretary-General for Economic Development Navid Hanif said rising sea levels are not a “future risk any more” but an accelerating “development emergency” that could hinder progress in vulnerable regions like the Pacific and least developed countries.
The report warns that seas are rising “faster than at any point in recorded history”, with 2024 setting a new record of 5.9 millimetres. This has been driven by human-induced climate change mainly through a process known as thermal expansion – where rising heat causes the ocean to expand – as well as the melting of ice sheets.
Pacific islands seek backing for new regional fund ahead of COP31
The report notes that about 1.2 billion people around the world are exposed to coastal flooding, and says some low-lying islands in Vanuatu, the Solomon Islands and Fiji are already facing forced relocations. Globally, rising seas could cost more than $1 trillion every year by 2050, it adds.
“We cannot stop sea level rise this century but we can determine how much worse it becomes. About half a metre of sea level rise is already locked in in this century because of warming that has already occurred, but beyond that our choices matter enormously,” Hanif told journalists.
Bill Hare, CEO of think-tank Climate Analytics, said the report was a “wake-up call” to the leaders of high-emitting countries that their failure to cut carbon emissions is “creating major risks for the future alongside the impacts we can already observe around us”.
Guterres is set to host a high-level meeting on addressing the threat of sea level rise this month during the UN General Assembly, where countries are expected to adopt a declaration that calls for stronger action, expanded access to finance and “ongoing dialogue” to tackle the issue.
The post At regional summit, Pacific islands ask for COP31 support for clean energy and finance appeared first on Climate Home News.
At regional summit, Pacific islands ask for COP31 support for clean energy and finance
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