China Climate Compass #3: Climate Strategist on China’s Rise as Global Climate Leader
Dr. Chai Qimin from National Center for Climate Change Strategy and International Cooperation outlines COP29’s key outcomes -- finance mechanism -- and highlights China's bid for climate leadership.
Climate denier Donald Trump's pledge to withdraw the U.S. from the Paris Agreement on his first day in office apparently signals that the world’s largest historical emitter may largely sideline itself from global climate action for years, again.
This vacuum positions Beijing—whether by design or default—to assume greater leadership in international climate governance. Just recall the 2016 playbook: When Trump first moved to withdraw from the pact eight years ago, the Guardian reported "China emerges as global climate leader in wake of Trump's triumph":
For China, multiple factors came together between Copenhagen and Paris: China’s growth was slowing and its leaders understood, from the examples of South Korea and Japan, that their economy needed to be more efficient in its use of energy and resources, and that it needed to upgrade its capacity to produce advanced, higher value technologies, preferably with China owning the patents, if it was to avoid stagnation.
By the time the 13th Five Year Plan was published in 2015, it was clear that China’s leadership had identified low-carbon technologies as the technologies of the future, and, since these were new technological frontiers, there was an opportunity for China to establish its dominance as an innovator as well as a manufacturer and exporter.
Last month, Wang Shi—founder of one of the world’s largest residential developer and low-carbon transition advocate—echoed this view, as reported in our newsletter:
Here's my take on the situation: During Trump's first term, China unexpectedly emerged as a climate leader when the U.S. withdrew from international agreements. At UN climate conferences, China essentially became the de facto standard-bearer by default. When the Biden administration sought to reclaim leadership, China pragmatically yielded the spotlight. Now, even if Trump returns to office, he'd hesitate to repeat abrupt withdrawals - knowing full well that another U.S. retreat would force China back into the leadership role whether Beijing wants it or not.
Today’s Feature: Dr. Chai Qimin’s Speech at the 4th Carbon Neutrality Industry Conference
Today’s piece features a speech by Chai Qimin 柴麒敏 at the 4th Carbon Neutrality Industry Conference in Bo’ao (第四届碳中和博鳌大会), organized by China Energy Conservation Association and China Quality Certification Center, held on December 6-7, 2024.
The conference, themed “Carbon Neutrality Paradigm Transformation: Refinement, Transformation, Alignment” (“碳中和范式变革:精进·转型·接轨”), invited academicians, industry leaders, and corporate representatives from the field of carbon neutrality. It focused on hot topics within the carbon sector, with a particular emphasis on the outcomes of COP29 and related dynamics both in China and beyond.
About Dr. Chai Qimin
Dr. Chai Qimin bridges academia and policymaking as the Director of the Strategy and Planning Research Department at the National Center for Climate Change Strategy and International Cooperation (NCSC), under China’s Ecology and Environment Ministry, where he drives critical climate policy development, including China’s carbon neutrality roadmap, National Determined Contributions, and UN climate negotiation strategies. Previously, Dr. Chai contributed over a decade of research at Tsinghua University (2005 onward), where he spearheaded energy-environment-economy modeling for China’s Integrated Assessment Model for Global Change.
Key Takeaways from Dr. Chai’s Speech
Dr. Chai outlined COP29’s key outcomes, stressing that finance remains central to climate negotiations. He noted that current funding levels fall far short of addressing the global climate crisis and emphasized the need for greater private sector and market involvement to mobilize resources for developing countries’ climate actions.
Building on this, Dr. Chai highlighted China’s growing leadership in renewable energy and technological innovation, underscoring its dominant role in the global clean energy supply chain. He called for China to take a more active role in shaping international carbon markets and climate negotiations, ensuring fair and effective global climate governance while strengthening its influence in these critical discussions.
Below is my translation of the speech.
COP29 与碳中和进程:新变革、新共识与新挑战
COP29 and the Carbon Neutrality Progress: New Transformations, New Consensus, and New Challenges
Good morning, everyone. I’m honored to be here at the Carbon Neutrality Industry Conference in Boao to share some updates. Earlier, Director General Li Junfeng 李俊峰 and Wang Naixiang 王乃祥, Chairman of China Beijing Green Exchange, delivered outstanding presentations, and I’d like to offer an international perspective on the latest progress in this field. The title of my speech is "COP29 and the carbon neutrality progress." I would like to highlight some recent developments that are particularly relevant for those of you involved in China's carbon markets and carbon finance supporting services.
First, let’s remember that, apart from 2020 when the pandemic interrupted, there has been a UN Climate Change Conference every year since 1994*. This year, the COP29 took place in Baku, Azerbaijan. Many people expected it to be a relatively quiet year for climate talks, with no major new issues on the agenda. However, it turned out to be surprisingly productive and may well mark a milestone for the future of carbon markets.
*Note: Actually it was 1995.
Vice Premier Ding Xuexiang, as President Xi’s special representative, attended the COP29 and delivered an important address, outlining China’s further plan for promoting carbon neutrality. Now, let’s step back and see what these annual COP are really about. In simple terms, the goal is to tackle climate change, which is very different from typical environmental challenges. For instance, if smog appears in north China, local emissions cuts for coal, steel, or transportation could be enough. That smog wouldn’t normally drift to south China, or even overseas.
In contrast, climate change is a global challenge. Emissions from one country affect greenhouse gas levels worldwide. Likewise, tackling this challenge requires more than a single nation or a handful of them. Therefore, the international community has worked for over 30 years to establish a global mechanism for climate cooperation.
Put simply, these talks always come down to two key questions: How do we cut emissions, and who pays for it? We need to decide which countries should reduce emissions, by how much, and what methods to use. Reducing emissions also calls for substantial resources—especially funding—to spur technological innovation and transform industries.
Then, of course, there’s the question of money: Who contributes, how much, and in what way? Each year, these issues become the focus of discussions. With nearly 200 member countries in UN, reaching a consensus is incredibly challenging. After all, it’s tough enough for a small group of friends to agree on what to have for a late-night snack—imagine 193 nations trying to settle on a single plan.
Therefore, nearly every year these climate conferences tend to run overtime because it’s so difficult to reach consensus on complicated issues. Early on, there were two major blocs: developed countries, which bear historical responsibility for greenhouse gas emissions, and developing countries, which have been negatively affected by climate change triggered by developed countries. Thus, developing countries called for funding, technology, and capacity-building from wealthier nations.
However, since the 1990s, the global situation has shifted significantly. Back then, industrialized nations produced around 70–80% of total emissions, and developing countries contributed only about 30%. Today, the ratio has reversed, mainly because emissions from large developing countries have increased rapidly since the 2000s. China, for example, now accounts for around 30% of annual global emissions—making it the current largest emitter each year—while the United States remains the biggest emitter historically.
This dynamic reveals how major players like China, the United States, and the European countries negotiate on climate issues. Although end-of-year COPs often get the most attention, there are multiple working group meetings leading up to them. For example, this June, the UNFCCC Secretariat in Bonn holds various sessions—plenary, subgroup, and topic-specific meetings—to prepare for the main event.
In practice, the bigger the meeting, the harder it becomes to sort out complex points because so many perspectives are at play. We’ve also seen a trend toward smaller meetings where countries with shared views work on details before bringing them to larger forums. Many of us—myself included—have taken part in these UN climate negotiations as part of China’s delegation, which has offered valuable insights into how these talks evolve.
COP29 yielded several important outcomes. First, participants agreed on a new collective climate finance target—a point many speakers have noted. The long-term global emission goals remain: to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels, peak emissions as soon as possible, and then rapidly reduce them to achieve carbon neutrality by the latter half of this century. Once these long-term goals were reaffirmed, the main concern turned to funding—how to allocate resources in ways that truly support the needed policies and actions.
Back in 2009, developed countries initially pledged a "fast-start finance" of USD 30 billion each year between 2010-2012, followed by a longer-term commitment of USD 100 billion each year by 2020. However, experts now estimate that around USD 9 trillion to USD 10 trillion is needed each year to tackle climate change—making the existing USD 100 billion pledge clearly insufficient. Consequently, COP29 focused on increasing funding beyond that USD 100 billion, with developed nations taking the lead in raising those resources. In the end, negotiators set three specific goals to address this shortfall.
Goal One is to rally all stakeholders—not only countries or simply developed countries, but also private enterprises and markets—to collaborate and collectively mobilize around USD 1.3 trillion annually for developing countries by 2035. This ambitious target covers a wide scope and places particular emphasis on developed countries, as agreement signatories, to take the lead. By 2035, they are expected to “provide” at least USD 300 billion annually. Notably, the term “provide” underscores the necessity of a tangible monetary contribution. This constitutes the second-tier objective: within the $1.3 trillion, $300 billion is designated as the primary responsibility of developed countries.
Goal Two encourages developing countries themselves to make voluntary contributions, for instance through South-South cooperation. It is essential to recognize that the new collective quantified goals extend beyond mere financial contributions. A variety of mechanisms has already been established to facilitate this effort. The United Nations has introduced several key financial channels, including the Green Climate Fund (GCF), the climate funding windows under the Global Environment Facility (GEF), the Fund for responding to Loss and Damage, the Special Climate Change Fund (SCCF), and the Adaptation Fund, among others. These funding sources are more accessible than they might appear. For instance, the GEF has supported numerous initiatives, with over $600 billion in cumulative project funding to date. Notably, many early renewable energy enterprises in China have benefited from these funds.
Goal Three includes newly established globalized multilateral funds, such as the Green Climate Fund (GCF) formed under the Paris Agreement. Headquartered in South Korea, the GCF has previously supported projects in cities like Qingdao, Shandong Province, where it facilitated the establishment of a multi-billion-dollar green fund to promote local green transitions, providing substantial assistance. This type of funding is accessible to local governments and businesses alike. Beyond the main funding channels, additional sources include institutions such as the Asian Development Bank (ADB), the World Bank, the International Monetary Fund (IMF), and initiatives like the China-led Asian Infrastructure Investment Bank (AIIB) and the Belt and Road Initiative. Numerous national and regional funding mechanisms are also available.
The recently announced $300 billion fund at COP29 draws from a wide variety of sources, encompassing public and private, bilateral and multilateral channels, reflecting its expansive scope. Importantly, COP29 also recognized “the voluntary intention of Parties to count all climate-related outflows from and climate-related finance mobilized by multilateral development banks towards achievement of the goal.” Contributions from institutions such as the World Bank and the ADB are included, with a significant share of the funding originating from developing countries. Indeed, the breadth of this $300 billion initiative is remarkable.
This has raised concerns from developing countries including India. A key topic that drew significant attention during COP29, particularly among those of us present, was the international carbon market mechanism under Article 6 of the Paris Agreement. On day one of COP29, the host country made a major announcement on the international carbon market. While there were procedural shortcomings, and media interpretations may have exaggerated its significance, the announcement represented a step forward in the establishment of a global carbon market. That said, it cannot yet be strictly classified as a launch, as significant gaps remain before actual trading can commence. Nonetheless, the draft resolution adopted on the first day underscored two critical standards. The first is the methodology standard, which lays the groundwork for the development of new methodologies for Chinese Certified Emission Reduction (CCER) in the future.
Another widely acknowledged aspect is the pursuit of high-quality pathways for the future. These two standards establish the essential foundation for advancing the development of the international emissions reduction trading market and the carbon finance market. With this groundwork in place, the carbon market has entered a phase of accelerated growth.
In addition to the key moments from the first day, the final day of the COP29 also warrants attention: two sets of technical details under Articles 6.2 and 6.4 of the Paris Agreement were adopted. Article 6.2, which focuses on cooperative approaches, can be broadly interpreted as paving the way for potential future linkages between different markets, such as the European and Chinese markets. It also encompasses broader methods of collaboration beyond connecting existing markets. COP29 provided further clarification and regulation of a range of technical details. These include authorization, first transfer, reporting format, inconsistencies of reported information and their consequences. These supplementary provisions effectively concluded negotiations on Article 6.2 at both national and subnational levels. Notably, some countries have already moved ahead by initiating ITM (Internationally Transferred Mitigation Outcomes) transactions under the Article 6.2.
The Secretariat is specifically called on to expedite updates to the reference manual for reviewing verification reports under Article 6.2. Regarding Article 6.4, it introduces a new development mechanism comprising a comprehensive framework of rules, models, and procedures. Notably, it closely aligns with China’s CCER market, as the two systems are largely consistent. Under Article 6.4, regulatory and supervisory bodies are established and fully empowered to oversee the development of standards, methodologies, and other aspects of sustainable development. Moreover, the groundwork for Article 6.4 transactions and related initiatives is expected to advance swiftly.
The discussion also emphasized the transition of registration activities from the Clean Development Mechanism (CDM) to the mechanisms under Article 6.4, detailing the conditions required for this shift. In recent years, global attention has increasingly focused on two types of carbon markets: quota-based markets, which are primarily government-driven, and voluntary carbon markets, which feature higher levels of market participation. To combat corporate greenwashing, stricter measures are being introduced. For instance, a company reducing only 15% of emissions while relying on offsets for the remaining 85% is becoming less acceptable. Furthermore, the carbon credits used for offsets must adhere to high-quality standards. In response to these challenges, the international community has introduced the Core Carbon Principles (CCP), a framework of foundational standards that are expected to evolve into formal regulatory guidelines. It is crucial to closely follow the development of these markets—not just to participate in trading but also to play an active role in shaping the rules and influencing key negotiations.
The third key focus of COP29 was the climate funding, with $700 million in donations pledged this year. However, for the third consecutive year, the overall contributions from developed countries remain strikingly limited, especially when compared to the estimated $7 trillion in annual economic losses suffered by the least developed countries due to climate change. Beyond funding negotiations, the discussions also revisited UAE consensus at COP28, which called for a tripling of global renewable energy capacity. While these talks ostensibly center on climate change, they fundamentally revolve around financial flows and industrial investments. A significant wave of new investments is anticipated in the near future.
For example, by 2030, the installed capacity of wind and solar power is projected to increase to at least 2.5 to 4 times its current level. New energy vehicles are expected to expand by at least 10 times their current scale, while electrolyte membrane production, still in its early stages, is anticipated to grow by a staggering hundredfold in the future. These developments highlight that, in the global energy sector, particularly in oil and gas markets, major players such as the United States, Saudi Arabia, Russia, and Iran continue to dominate. Meanwhile, China’s influence in these areas, including its pricing power and overall market impact, remains relatively constrained.
China spends approximately $500 billion annually on oil and natural gas imports, with an import dependency of around 73% for oil and over 42% for natural gas. However, in the green energy sector, China’s presence is undeniable. Upstream, China possesses the world’s largest reserves of critical raw materials and accounts for 70% of global mineral processing capacity. This dominance extends to power batteries, polysilicon, monocrystalline silicon, solar panels, wind turbine foundations, and downstream applications, where China leads on a global scale.
This indicates that China has stronger control and influence over these industrial chains. In recent years, emerging industries have continued to gain momentum, notably those driven by new quality productive forces. Among the most prominently featured in mainstream media are industries represented by new energy vehicles and photovoltaic products. Despite significant pressure on foreign trade in recent years, China’s “New Trio” industries (electric vehicles, lithium-ion batteries, photovoltaic products) have bucked the trend, growing by approximately 30% last year. Overall, the demand for these industries remains robust. While competition within these sectors is intense, the future outlook remains highly optimistic.
Furthermore, the green energy sector has demonstrated exceptional innovation, outpacing other industries that, despite their large scale and cost efficiency, lag in innovative capacity. Take the semiconductor and artificial intelligence industries, for example—while impactful, they still face technical limitations. In contrast, the green and low-carbon sector has gained impressive momentum. According to global patent system statistics, China accounts for 37% of the world’s authorized patents in this field. When including overseas patents filed by Chinese companies abroad, this figure rises to over 58%, meaning more than half of all related patents worldwide originate from China.
China’s dominance in green tech has sparked international unease. In just three months, 16-17 countries imposed new carbon tariffs on Chinese solar panels and renewables, highlighting their competitive edge. Looking to COP30 in Brazil, next year’s summit will shift focus from COP29’s “climate funding” theme to setting binding targets: under the Paris Agreement, all nations must submit updated 2035 goals by 2025. At COP29, Vice Premier Ding Xuexiang announced China’s plan to submit an economy-wide nationally determined contributions covering all greenhouse gases—a major expansion beyond its earlier carbon-only framework—marking a broader push for systemic decarbonization.
All eyes on COP30 in Brazil—may it drive global cooperation for a sustainable, shared future. Thank you.