In mid-November, while Americans were preoccupied with election returns, China sent some of its clearest signals yet that it will continue to pursue an international leadership role on issues including climate. At an international climate change summit in Marrakech, the Chinese government reasserted its commitment to reduce its greenhouse gas emissions. The government announced that its aggregate emissions will peak by 2030 or earlier, and that its emissions per dollar of economic output will decline sharply.
For 25 years I have taught my economics students that climate change represents the ultimate "free rider problem." To slow global climate change, we need to reduce aggregate global emissions. Yet each individual nation's efforts are too small to "solve" the problem, so it has only weak incentives to take costly mitigation actions, and strong incentives to "free ride" on the benefits of emission reductions by other countries.
From this perspective, President-elect Trump's pledges to "cancel" the Paris Agreement and dismantle President Obama's carbon mitigation initiatives follow standard economic logic. If the United States backs out of commitments to reduce national emissions, it still benefits from other countries' efforts.
Why, then, is China is pressing ahead with low-carbon initiatives? My research suggests several motives. Chinese leaders want to improve the quality of life in their nation's cities by reducing air pollution; win large shares of promising export markets for green technologies; and increase China's "soft power" in international relations. Taking aggressive action to cut carbon emissions helps China in all three areas.
Reducing coal's cruel impacts
Much of the staggering rise in China's carbon dioxide emissions in recent decades came from burning coal to produce electricity for the nation's industrial sector. While this growth has created millions of jobs and wealth for the nation, coal-fired power plants are major sources of greenhouse gases and conventional air pollutants that affect millions of people.
A large body of research, including joint work by U.S. and Chinese scholars, has demonstrated that air pollution in China causes thousands of premature deaths yearly. Coal also provides winter heating in China's colder cities. Recent epidemiology research has found that coal use for heating greatly increases fine particulate air pollution, which has raised morbidity and mortality rates.
Using data from around the world, economists have found that when countries develop economically they move up an "energy ladder." The richer a country grows, the more likely it is to swap out cheap polluting fuels in favor of cleaner, more expensive fuels. A natural experiment that occurred in Turkey as natural gas pipelines were built throughout the nation between 2001 and 2014 showed as people gained access to natural gas, air quality improved and mortality rates declined.
China has more coal than natural gas resources, but as its citizens grow wealthier, their willingness to pay to avoid pollution increases. This trend will encourage substitution toward cleaner fuels. As such, China's political leaders will likely prioritize policies that substitute natural gas for coal, which should reduce air pollutants and greenhouse gas emissions.