Third-quarter figures show -0.5%. Compared to the previous nine months, the turnaround is clear. CREA analyst: this could lead to an early peak in Chinese emissions.

Government efforts to tame the housing bust, skyrocketing coal prices and electricity rationing. These are the factors that led China’s CO2 emissions to fall in the third quarter of 2021, for the first time since the post-Covid rebound began.

The drop is just 0.5%, but is quite significant when compared to the previous period. Not so much with the equivalent quarter of 2020, when the recovery in Beijing had not yet really got going. It is the comparison with the last few months of last year (+5.6%) and the first few months of 2021 (even +14.2%) that signals a very clear turnaround. “The production of steel and cement, in particular, is in sharp decline,” explains Lauri Myllyvirta, an analyst at the Centre for Research on Energy and Clean Air (CREA) in Helsinki who analysed official CO2 emission data for domestic production, import and export of fossil fuels and cement, as well as trade data on changes in stored fuel stocks. “Construction is one of the main drivers of China’s emissions and in particular emissions growth, due to the massive demand for steel, cement and other construction materials,” he adds.

Steel and cement which, according to Reuters estimates, held back production in Q3 by 16% and 11% respectively. Behind these figures are a number of factors, most notably Beijing’s crackdown on construction, but also the energy crunch and rising fuel prices. “The decline in CO2 emissions could mark a turning point and an early peak in China’s total emissions, years ahead of its target to peak before 2030,” Myllyvirta adds. Myllyvirta warns that the situation is not stable, because all it takes is a new government stimulus for construction to push the emissions curve up again. So far, however, there is no sign of this in October and early November.


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