Leading on climate action is a RMB116 trillion opportunity for China
Published: 23 August 2021
A new report from the Deloitte Economics Institute shows China must act now to avoid losing RMB180 trillion in economic potential over the next 50 years due to unmitigated climate change. China’s turning point: How climate action can drive our economic future, also reveals how it could instead gain RMB116 trillion in economic value over the same period by limiting global temperature rises and realizing its potential to "export decarbonization" to the world.
Climate change is a fundamental threat to human survival and an urgent challenge that requires concerted efforts across the globe. With the aim to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060, as pledged by President Xi Jinping at the United Nations General Assembly, China has made the "dual carbon" target a national strategy, envisioning a carbon neutral future in the 14th Five-Year Plan. China's local governments and enterprises have ramped up efforts in exploration of implementation roadmap and specific action plans.
"No one is immune to the impacts of climate change, but China has a window of opportunity to lead the way and show how acting on climate change is not a narrative of cost, but an extraordinary, new and technology-led growth engine for its economy. Being a responsible professional services organization, Deloitte aims to contribute to our country. We take the lead and act first to fulfil climate commitments by launching the WorldClimate initiative and advocating green operation. We also create positive social impact to engage partners within the industry ecosystem to take action. Meanwhile, achieving the "dual carbon" target is a systemic change, presenting new development opportunities for us to tap into. We have a narrow window of time—the next 10 years—to alter the trajectory of climate change and drive economic transformation and growth," says Patrick Tsang, CEO of Deloitte China.
With no action taken on climate change, average global temperatures could rise by 3°C or more by the end of this century. This will make it harder for people to live and work as sea levels rise, crop yields fall, infrastructure is damaged, and other challenges emerge, threatening the progress and prosperity China has enjoyed in recent decades.
Deloitte’s research also shows that if governments, businesses, and communities act boldly and rapidly in the next decade to address climate change, average global temperature rises can be limited to around 1.5°C by 2050—which will minimize the impact of climate change on China and the world. At the same time, China can achieve substantial economic growth by supplying the technologies, services, and financing the world will need to limit temperature increases.
"Within the lifetime of children born today—just 50 years—we can turn a RMB180 trillion loss to the economy into a RMB116 trillion gain. This would equate to a gain of nearly RMB11 trillion in 2070 alone, or adding three times the current economy of Shanghai to China," says Sitao Xu, chief economist, Deloitte China. "We must transform the world’s economies towards new, low-emission pathways, and China is well positioned to play a globally leading role in this process."
"China’s world-leading producers of advantaged technologies are already exporting decarbonisation to the rest of the world. This report shows this represents just a fraction of the opportunity," adds Allan Xie, Climate and Sustainability leader, Deloitte China. "By making the right choices now, China can chart a prosperous path toward its carbon neutral future—a path that will also accelerate progress across the world through the deployment of key technologies, processes, and know-how."
Deloitte’s report sets out four key stages for China’s climate transition. These start with government and businesses making bold decisions to act on climate change now and develop or expand related strategies. These decisions would see the economy start to decarbonize between now and 2025, with immediate gains in the new energy, construction, and services sectors.
From 2025 to 2040, China and the world will need to complete large and coordinated shifts to reduce carbon emissions by tackling how energy is produced and consumed.
The next phase, 2040 to 2055, is the turning point, when the world avoids locking in temperature increases of 3°C or more. By this period, high-emission industries will be almost completely decarbonized. China’s strong foundations and early mover status will have given it a clear edge in clean energy export markets.
After 2055, China’s economy will have been radically transformed and be producing near-zero emissions. There will have been rapid gains in economic dividends from global decarbonization, and global temperature rises will have been limited to 1.5°C by the end of the century.