WEF Report: China’s 2060 Carbon Neutrality Goal to Cost $20.7T
The World Economic Forum and Oliver Wyman, an American management consulting firm, jointly released a report on July 21 entitled “China’s Climate Challenge: Financing the Transition to Net Zero.”
The report claims that the estimated total green financing required in China from 2020 to 2060 to achieve its carbon neutrality target is about 140 trillion yuan ($20.7 trillion) in the power, steel, transportation, construction and real estate sectors. This corresponds to a funding requirement of more than 3.5 trillion yuan per year. Given the reports findings, China will face a funding gap of more than 1.1 trillion yuan per year under current financing policies.
Green transformation goals in China also face challenges such as data quality, a mismatch between financial supply and demand, insufficient policy support, and a lack of cooperation along the ecological chain.
The report focuses on technological breakthroughs and financing needs in three high-carbon emission industries – transportation, construction, real estate and steel – to achieve net-zero transformation.
For example, from 2020 to 2060, China’s steel industry faces a funding gap of about three to four trillion yuan in steelmaking process optimization, accounting for half of the overall steel industry’s green financing gap. Extensive application of compact steel equipment, the use of scrap as raw material, and the use of electric furnaces with shorter processes and lower emissions could reportedly help reduce the steel industry’s carbon emissions by about 8-10% by 2060. This technological application would make a very significant contribution to the country’s net-zero target, based on the fact that the steel industry accounts for 13% of China’s CO2 emissions, according to the International Energy Agency.
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Kai Keller, who leads the World Economic Forum’s work on the Future of Financial Services in China, said at a press conference: “We expect China to give full play to its scale advantages, promote the next round of green revolution on a global scale, and establish a leading position in the global economy and supply chain. Therefore, China needs to increase policy support, carry out green financial innovation and deepen cross-industry cooperation.”