The two largest economies in the world, the United States (U.S.) and China, are leading the charge to fight global warming. The two countries are responsible for the most significant carbon emissions globally. Still, to understand the issues at stake, analysts believe it is necessary to build a timeline of climate change and the effort to combat it.

A significant institution at the forefront of the charge is the United Nations (U.N.), with its Annual Climate Change conference, which brings together representatives of global economies for the Conference of Parties (COP). 

Targets in Transition

Several agreements or treaties have been signed that ensure the collaborative efforts of the world's countries; these usually signify each country's promise and dedication to achieve all goals and targets outlined in these goals. The first pivotal occurrence concerning global action toward climate change was the Kyoto Protocol adopted in 1997 by more than 150 countries, essentially signing an agreement to limit and reduce greenhouse gas (GHG) emissions. Secondly, the momentous signing at COP21 occurred in Paris in 2015, where over 193 parties (192 countries plus the European Union) agreed to limit global warming to 1.5 degrees Celsius. This was termed the Paris agreement. The agreement highlighted that to limit global warming to this target; emissions need to be reduced by 45% by 2030 and reach net zero by 2050.

Various developed nations have also pledged to finance the smooth transition toward renewable energy. At a United Nations climate summit in Copenhagen over a decade ago, developed nations made a re-commitment to mobilize climate finance annually, reaching at least 100 billion dollars by 2020. However, we see that the financing had been on an upward trajectory, but still under the $100Bn mark, and as of 2019, reaching a peak of $79.6Bn, mainly consisting of funds gotten as loans or from multilateral development banks. A UN report noted that under realistic circumstances, it is unlikely that this obligation would be fulfilled, noting that a greater amount is needed to combat dangerous levels of climate change effectively.

Coping with COPs

In more recent times, the COP26 which was held in 2021, also served as a major milestone, as it finalized several emission reductions targets to be achieved by 2030, which would accelerate the phase-out of coal, severely reduce deforestation, shift focus to electric vehicles simultaneously liaising with and encouraging climate affected nations to pay more attention their ecosystems and build renewable infrastructure that would enable a smooth transition to sustainable forms of energy. The conference also had all parties pledge a new climate finance bill, noting why the previous plan failed and the nations that caused such failures.

It is pertinent to note that in more recent times, the consequences of climate change and global warming are becoming direr, particularly for developing nations, as they experience natural disasters such as cyclones due to the intensification of sea-surface heating, rising sea levels, drought, etc. As such, the funds are in higher demand as the majority depend on them to transition to renewables to combat these issues. The U.N. Intergovernmental Panel on Climate Change estimates that US$1.6 trillion–US$3.8 trillion will be required annually to avoid warming exceeding 1.5 °C. This is exacerbated by the occurrence of the pandemic and its adverse economic effects globally, and as such, the Climate Policy Initiative (CPI) has emphasized spending in areas such as public health and environmental sustainability (developed nations spent trillions last year to deal with the COVID-19 pandemic).

Moreover, these plans and the effectiveness of climate financing would not have any significant benefit if the U.S. and China were not at the forefront of the fight. The competition between the world's largest emitters to cut their emissions promises acceleration to a lower carbon future (see illustration 1 below).

Illustration 1: Evolving Economies in the Light of Net Zero Emissions

U.S. Vs. China; the Carbon Battles

The percentage of electricity generated from renewable energy and the investments made in the sector would be used to gauge efforts by each nation to lead globally in renewables. Electricity is used as a proxy because these two countries are the world's largest electricity producers, with China's electric power industry surpassing the U.S. in 2011. Investments are also considered as they show a deliberate effort to ensure the proper development of infrastructure, which would serve as a foundation for the renewable sector to gain prominence.

 In the case of the fight against climate change, we see that China has been termed the global clean energy champion of the last decade. As of 2021, they had the most significant amount of money invested in the sector, summing to US$380 billion in renewables, thus, accounting for nearly half of new global renewable energy capacity with its share of electricity generated from renewables amounting to 28% in 2021. China put severe work to earn the term; champion; in the decade since, the Chinese government has provided significant subsidies and investments that spurred advances in the renewable industry.

This was timely as the nation suffered from heightened air pollution because of the numerous coal plants in major cities, seriously dampening the air quality. These subsidies led to cleaner energy sources competing with fossil-fuel generated power allowing solar and wind energy production to take off with local manufacturing, possessing the world's largest solar plant. 

The U.S., facing political restraints and administrative red tape, has been unable to garner enough investments, reaching about $105 billion as of 2o21, and governmental policies that would enable the advancements of its renewable energy sector to exceed that of China. However, the U.S. government has provided solar and wind tax credits, which incentivized the use of these for electricity generation. The Obama administration provided the clean power plan to accelerate the U.S. transition to sustainable energy, but this was thwarted by the Trump administration. Thus, their share of electricity generation from renewables as of 2021 is 20.1%, which is lower than that of China.

In recent times, the nation has made several strides to catch up with its competitor, with the passing of an Inflation bill budgeting over $370 billion in subsidies for solar and wind energy development within the nation, which would spur the manufacturing of wind turbines and solar panels. Thus, closing the gap and seeking geopolitical leadership in the global renewable sector.

Notably, China occupies a paradoxical position regarding the global fight because, as aforementioned, they have made the most advances in transitioning to sustainable energy. On the other hand, we see that for the last two decades a steady rise in the use of coal as a source for electricity generation, as it powers China's steel mills, cement production, and factories causing a steady rise in CO2 emissions, and an increase in emissions by +23.99% within the last decade.

The increased level of CO2 emissions is also a result of China's large population who plough the roads daily using fossil-powered cars emitting exhaust into the atmosphere. Although, analysts predict these emission levels to drop as there is increased demand for electric vehicles, making 26% of all car sales in H1 2022 compared to the 10% recorded in H1 2021. However, we see an opposite trend in the U.S. with a steady decline in carbon emissions within the last decade by 11.54%, and according to the U.S. Energy Information Administration, 22% of its electricity derived is from coal, a 47.99% decrease from the amount of 42.3% of electricity being generated from coal in 2011. (See chart 1 below). 

Chart 1: CO2 Emissions of the U.S. and China 2000-2021(GtCO2) 

Source: International Energy Agency, Proshare research 

Making Alternative Energy Matter

Next, we take a deep dive to analyze the gradual change in energy production from renewable sources for the last two decades (2000-2021). According to statistical data retrieved from B.P. statistical review on world energy, renewable energy is comprised majorly of Solar, wind and hydropower, geothermal, bioenergy, wave and tidal. The data shows a clear gap between the U.S. and China as far back as 2000, with a significant difference in the percentage of electricity production from renewables. A pivotal increase in electricity production in China between 2011 and 2012 by 19.21% was due to increased production share from hydropower and wind systems, rising from 14.60% to 17.30% and 1.57% to 2.07%, respectively. For the U.S., with a meeker production share from renewables, as aforementioned reaching a peak of production share from renewables at 20.1% (see chart 2 below).

Chart 2: Share of electricity production from renewables for the U.S. and China 2000-2021 (%)

Source:  Worldindata, Ember's Global Electricity Review, Proshare Research

A more general overview of the two nations' energy mix is reasonably needed as we see a steady and consistent decline in the use of fossil fuels as a source of electricity, serving as clear evidence of both nations' transition efforts to sustainable forms of energy. 

For China, within the last two decades, coal has remained the primary source of electricity, resulting from its abundance of coal reserves, particularly in comparison to other fossil fuels. In more recent times, we see that the country has established that within the short term, despite advances in the renewables sector, China plans to retain fossil fuel as a mainstay in its energy mix to keep its power supply stable. However, it is essential to note that China has the fourth largest reserve of coal after the U.S., Russia, and Australia, yet still has the most significant global consumption, with about 90% of the coal it produces being consumed. This over-dependence of the nation on coal for energy impacts not just China, as it also cancels efforts by other countries to limit global warming.

Regardless, the effort is still being made in the renewables sector, with renewable energy being the second largest source from which power is generated, increasing by 72%, and a notable decline in coal usage by 20% since the beginning of the decade. However, they are the world's largest coal consumers, with about 65% of their electricity generation mix. They are the world's largest emitter of carbon dioxide, accounting for more than 27% of emissions globally. In the coming times, China may build enough renewable energy to replace coal (see chart 3 below).

Chart 3: Energy Mix for China 2000-2021 (% of total) 

Source: WorldinData, Proshare Research

The U.S. presents a different case as in more recent times, the steady rise in oil and gas overtook coal as the primary power supply source in 2018. There has been a steady decline in coal usage, with a 57.74% decrease within the last two years. Increased use of renewable as a source of electricity by +134% within the previous two decades due to the provision of infrastructure within the sector and favourable policies with the commissioning of one of the world's largest-capacity farms. In recent times, the nation has made several strides to catch up with its competitor, with the passing of an Inflation bill budgeting over $370 billion in subsidies for solar and wind energy development within the nation, which would spur the manufacturing of wind turbines and solar panels. Thus, closing the gap and seeking geopolitical leadership in the global renewable sector (See chart 4 below).

Chart 4: Energy Mix for the U.S. 2000-2021 (% of total)

Source: WorldinData, Proshare Research

Where Nigeria Stands

The case of Nigeria, reflective of the economy's state, requires a serious and immediate revamp. Nigeria is not exempt from the consequences of climate change, with rising sea levels leading to increased flooding, heat levels, and desertification. However, like in many nations, there have been increased efforts by the government in collaboration with the private sector to provide financing and infrastructure to address the climate change issue. Notable efforts such as the Energy Transition Plan aims to enable Nigeria to tackle Climate change and achieve net-zero emission by 2060.

The plan has several incentives as it promises to provide about 840,000 job opportunities by 2060 and lift many Nigerians out of poverty; the World Bank and foreign firms have also committed to providing climate financing. There has also been the emergence of startups specializing in renewables, particularly in terms of infrastructure, seeking to provide solar and wind as a source of electricity. Government regulators and private operators must merge to form a singular front, as this would allow a steady advancement and widespread results within the sector

Conclusion-Closer Despite Differences

Globally, as the fight against climate change intensifies, the U.S. and China would need to provide more deliberate efforts in tackling the issue. Countries have to take the initiative and ensure more balanced energy mixes by ensuring renewables make up more prominent sources of electricity production, coupled with the reduction of harmful environmental habits such as the use of plastics, contamination of water bodies, etc. Net-zero emissions can be achieved by 2060 (see illustration 2 below)

Illustration 2: Net-zero, Shifting from Old to New