At present, more than 120 countries and regions in the world have proposed carbon neutrality goals, and carbon neutrality has become one of the most common topics of concern worldwide. Bill Gates pointed out in his new book How to Avoid Climate Disasters that wise policies can help solve the climate problem. Is there a universally significant carbon neutral path? How can our energy and industrial policies be adjusted?

 
PKU Financial Review exclusively interviewed Nathan Hultman, he pointed out that not only China, but also the U.S., Europe, and major economies around the world are already moving quickly with a major and transformative economic changes that will offer new areas of growth and opportunity in the coming decade. Those areas are in the industries of the 21st century and establishing good metrics and communications about the opportunities in these industries, and in the risks of climate change to legacy industries, has been an area of active work in recent years.
 
PKU Financial Review: China has committed to peak carbon dioxide emissions before 2030 and to achieve carbon neutrality before 2060. What is your comment on that? Is the target achievable or too aggressive? What is the biggest impact it will have on China's future energy development?
 
Nathan Hultman: China's carbon neutrality target creates some clear implications for achieving a new growth pathway for China. This new growth pathway will see an increasing share of new industries and areas for economic growth that also help improve health, create new job types, and reduce emissions rapidly over the next decade and beyond. Assessing new strategies for different economic sectors will be an important part of developing this strategy for China. As one important example, President Xi recently noted at President Biden's climate summit his goal to "strictly control" coal in China and to assess coal phasedown strategies in the context of the next Five Year Plan.
 
PKU Financial Review: Lots of economists believe in the role of carbon taxes, which controls carbon emissions by carbon price adjustment. Nordhaus even calculated the appropriate tax for each ton of carbon dioxide: 50 US dollars. However, for some countries that do not have the ability to upgrade energy technology, price adjustment alone is not enough. Feasible clean energy alternatives are also extremely crucial. Therefore, carbon taxation has not become a worldwide consensus. Now the Biden government has begun to promote carbon taxes again. What do you think of it? How will such policy develop in near future?
 
Nathan Hultman: Currently, the focus of the Biden Administration and Congress is primarily on identifying new areas for sustainable infrastructure investment, incentives for low-carbon technology, tax credits for clean energy technologies, and additional regulatory actions. Carbon taxes or cap-and-trade policies are being used in some sub-national (state) contexts; these options may be pursued in the future at the federal level, but are not currently being discussed as a central element of near-term actions.
 
PKU Financial Review: What do you think of the global agricultural development in the "carbon neutral" trend? We have already seen that extreme climates will impact traditional agricultural countries and increase the risk of planting. In order to compensate for this risk, will genetically modified foods be developed on a larger scale? Will artificial meat projects like Beyond Meat be more widely accepted? What influence it will exert on agricultural industry? Will traditional agricultural countries face systemic shock from both climate change and technology change?
 
Nathan Hultman: For the world to reach a new growth trajectory with low emissions that approach net-zero around mid-century, it's clear that the land sector will be a critical area. Many strategies could be used in lands and agriculture to transition toward practices that reduce emissions while still supporting agricultural productivity and even enrich soils. Some strategies could also be driven by individual consumers choosing different types of foods such as more vegetable-based foods. Food choices are culturally important to all of us, no matter where we are in the world, and remain sensitive in many countries so these will have to be discussed appropriately in local and national political processes.
 
PKU Financial Review: Apart from carbon taxes, many countries are also prepared to encourage and subsidize new energy sources. However, there are two different options. For example, the major difference between the Biden plan and the Wyden plan in the United States is whether tax credits are granted to only new energy sources such as wind and solar power, or granted to all energy sources as long as they are originally intended to reduce carbon emissions? How do you think the energy structure will change in the future? Will solar energy become the most important energy type?
 
Nathan Hultman: Our modeling and analysis, as well as that of other research teams looking at how to deliver on the U.S. 50-52% emissions reductions in the NDC, shows several clear trends in the energy sector. Our own assessment shows that renewable energy such as wind and solar will quickly expand in the U.S. by 2030 in order to help supply zero-carbon electricity—with solar and wind energy providing roughly 50% of our generation by 2030. At the same time, we expect coal power without carbon capture to phase out to nearly zero by 2030, and gas electricity to be constrained.
 
This analysis was recently featured in the New York Times and Wall Street Journal. Details are available here [1] [2]
 
PKU Financial Review: There is a saying that if you want to invest in ESG, it´s better to buy stocks of large technology companies. Technology giants are said to be closer to the concept of GREEN. For example, the Carbon Transition Fund issued by BlackRock is more like an ETF that holds shares of Apple, Microsoft, Amazon, Alphabet and Facebook, etc. What do you think of such mindset? Do we actually have a solid ESG investment guideline in the market? If not, how should we develop one?
 
Nathan Hultman: It is already clear is that not only China, but also the U.S., Europe, and major economies around the world are already moving quickly with a major and transformative economic changes that will offer new areas of growth and opportunity in the coming decade. Those areas are in the industries of the 21st century and establishing good metrics and communications about the opportunities in these industries, and in the risks of climate change to legacy industries, has been an area of active work in recent years. This is an area that the private sector and governments are working on together and that could see rapid progress this year in advance of the UN climate conference in November.



Nathan Hultman is Director of the Center for Global Sustainability and Associate Professor at the University of Maryland School of Public Policy.

This article is translated and published in PKU Financial Review.