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Tuesday, January 13, 2009

Future Prospects of China’s Policy on Climate Change

January 12, 2009 09:30 AM Age: 7 hrs

China’s economic boom has made the country a dominant producer of man made greenhouse gases (GHG). Since 1978, China’s fuel combustion carbon dioxide (CO2) emission has quadrupled, reaching 5,664 Mt in 2006 and 6,110 Mt in 2007 [1]. In comparison, the United States emitted 5,826 Mt CO2 in 2006 [2]. China has already surpassed the United States as the world’s largest emitter of CO2 and shows no signs of cutting down on emissions. While it is unlikely for a developed economy such as the United States to increase its emissions annually by 5 percent, given China’s present level of economic development relative to its growth future, its current GHG emissions pale in comparison to what can be expected in the coming decades. In response to increasing international and domestic pressure on China’s uncontrollable spikes in GHG emissions, on October 29, 2008 the Chinese State Council published the country’s first White Paper on climate change entitled China's Policies and Actions for Addressing Climate Change (China Daily, October 29, 2008). The White Paper is intended to serve as the blueprint for a coordinated policy response by the Beijing authorities toward this imminent national and international challenge. Climate Change Policy in China The issue of climate change has attracted virtually no public or political attention from the Chinese in the 1960s, and only a little during the energy-policy debates of the developed world in the 1970s [3]. When Deng Xiaoping first opened the Communist country’s inward-looking, agrarian economy to the outside world in 1978, China’s GDP accounted for less than 1 percent of world total [4]. Yet due to China’s heavy reliance on carbon-intensive coal and the widespread application of inefficient technology in its industrial sector, China’s CO2 emissions already accounted for around 8 percent of the global total, ranking second only to the United States. Since then, China’s share of global CO2 emissions has increased rapidly and by 2006 composed approximately 20 percent of the world total [5]. The 7.8% spike of primary energy consumption between 2006 and 2007 finally made China the world’s largest CO2 emitter [6]. While this assessment is based on emissions factors published by the Intergovernmental Panel on Climate Change (IPCC), China’s 2007 CO2 championship would be questionable only if significantly lower-than-IPCC emissions factors for coal are used to calculate its GHG emissions inventory. Given the fact that the IPCC factors have been used by the National Development and Reform Commission [NDRC] to set baseline emissions intensities of China’s electric grids under the Clean Development Mechanism (CDM) [7], the utilization of noticeably lower-than-IPCC emissions factors to calculate China’s recent GHG emissions is a controversial practice. China began to co-ordinate its climate change policy in 1988 when it established an inter-agency group that helped to formulate its positions for forthcoming international climate negotiations. Subsequently, the National Climate Change Coordination Leading Small Group (CCCLSG) was established in 1990, which is an inter-ministerial level committee chaired by the former State Development Planning Commission (SDPC, renamed NDRC in 2003). The 15-member committee in turn set up working groups on impact assessment and a response strategy to the United Nations Framework Convention on Climate Change (UNFCCC). In 1992, China ratified the UNFCCC, the fifth country in the world to do so. China has been an active and visible participant in the international climate negotiations, usually acting in concert with the developing country group (G77/China). China’s positions have usually been in line with those of the G77 countries, but Chinese representatives have often felt a need to reiterate the Chinese views in addition to the G77/China statements [8]. In the past, China’s climate change policy was shaped by the interests and priorities of a few key players, with input from several less influential actors. Before the Chinese governmental restructuring in 1998, responsibility for climate change coordination was with the China Meteorological Administration (CMA). Together with the Chinese Academy of Sciences (CAS), the CMA is one of the lead agencies in the scientific discussion on climate change. However, with the climate change focus turning increasingly toward economic impact, the influence of the CMA has diminished. In 1998, the responsibility of coordinating national climate change efforts was transferred to the former SDPC, which signified that climate change was no longer perceived solely in scientific terms, but increasingly in political and economic perspectives [9]. The NDRC heads the delegation to climate negotiations while the lead negotiator is often from the Ministry of Foreign Affairs (MFA). They together emphasized economic development and sovereignty concerns. Moreover, they have the responsibility to ensure that China does not take on commitments that will impede economic development or have an impact on energy security. Other actors (such as the State Science and Technology Commission, now the Ministry of Science and Technology, and the then National Environmental Protection Agency, renamed the State Environmental Protection Administration in 1998) had been more positive and believed there were potential benefits for China (e.g. access to technology) [10]. Though SEPA was widely regarded as a weak administration, with its promotion as the Ministry of Environmental Protection in 2008, the MEP is expected to become more influential in the future. Future Prospects for China’s Climate Policy For the Chinese leadership, the urgency of maintaining social stability and economic development is coupled with the party's political legitimacy. Since the late 1970s, rapid socio-economic changes have created a different political environment in which the Mao Zedong-styled charisma- and revolution-based party leadership declined in political relevancy. Unlike the Mao regime, the reform-era under Deng Xiaoping's administration needed to build and consolidate its political power on the principle of economic rationality. Through the programs of economic reform and open-door policies fused with the promise of a more prosperous society in the future, Deng was able to regain the trust of the Chinese people, who were disillusioned by the party under Mao. While the CCP has been converted from a Maoist revolutionary party to a Dengist reformist party and is now attempting to transform itself into an "institutionalized ruling party," Chinese policymakers will have to increasingly justify the CCP’s political reign based on the rationality of economic principles and market reforms rather than the personal charisma of Communist leaders and the Party’s legacy [11]. Chinese policymakers are beginning to realize the need for a sustainable economic strategy, which largely explains why Beijing has over the past decade tried to factor more environmental considerations into national development plans. Yet, those efforts so far have primarily focused on localized environmental measures to control air, water, and soil pollution; in comparison, the GHG emitting issue with a global nature is considered as less pressing and thus given much lower political priority, especially at the local levels. According to this researcher’s recent book entitled Modeling China’s Energy Future: Climate Change, Air Pollution and Supply Security, while auxiliary benefits of local air pollution abatement by climate change policy instruments such as a carbon tax are significant, the co-impact on GHG emissions by air quality improvement measurements such as a sulphur tax is relatively small [12]. While Beijing has been able to successfully limit national sulphur dioxide emissions, a major precursor of China’s widespread acid rain, which only increased slightly from 23.7 Mt in 1995 to 24.68 Mt in 2007 [13], the country’s GHG emissions has more than doubled from about 3,540 MtCO2e to 7,191 MtCO2e during the same period [14]. Though there is an ongoing debate on the costs required for deep GHG abatement, Chinese policymakers and academia generally weigh GHG emissions control as significant liabilities instead of potential assets to the national economy [15]. Such perceptions were reinforced by the outgoing Bush administration’s withdrawal from the Kyoto Protocol in 2001 and most of Annex I countries’ failure to meet their Kyoto commitments. Beijing has already expressed it’s belief that any mandatory emission cap would unfairly limit the nation's economic growth. Thus, rejecting mandatory emissions caps will be the bottom line for Beijing’s climate policy in the foreseeable future. Ironically, although the U.S. government used the absence of key developing countries as an excuse to justify its withdrawal from the Kyoto Protocol, the sudden disappearance of U.S. pressure on China in 2001 actually made it possible for Beijing to maintain a “wait and see” climate policy for quite a while. Given the necessity of balancing economic growth with portraying itself as a responsible power, Beijing understands that it cannot escape the responsibility of curbing its spiking GHG emissions forever, so it has bid it’s time developing an increasingly proactive and comprehensive climate policy. For instance, according to China’s 11th Five-Year Plan (2006-2010), a 20 percent energy intensity improvement target can translate into an annual reduction of over 1.5 billion ton of CO2 by 2010, making the largely energy security—and local pollution-based effort one of the most significant carbon mitigation initiatives in the world [16]. While China’s energy to GDP intensity has declined by 12 percent between 2005 and 2007, the progress so far is promising [17]. In June 2007, China released its much anticipated National Climate Change Strategy, which confirms that climate change has captured the attention of Chinese policymakers (China Brief, June 27, 2007). When the Information Office of the State Council issued the country's first white paper on its energy circumstances and policy in December 2007, the paper not only defended China’s position of not accepting legally binding GHG emissions target, but for the first time placed “control of GHG emissions” as the highest environmental priority ahead of “fighting ecological destruction and environmental pollution” (China Brief, March 28, 2008). This signaled a shift in Beijing’s priorities and was subsequently followed by the issuing of China’s first white paper on climate change on October 29, 2008. During past climate negotiations, many developing nations held China in high regard as a shrewd, well-prepared negotiator. China also enjoyed considerable influence in this group and thus has no intention of breaking its partnership with G-77 in the near future. While China will continuously defend its own interests by teaming with other developing countries, Beijing’s stance on climate change also depends on developed nations. If the United States is continuously out of the game, European Union alone is unlikely to lure or coerce China into any mandatory climate commitment. In comparison, a consolidated developed world led by both the European Union and the U.S. is more likely to convey the necessity of international cooperation on climate change. Under the latter scenario, China is likely to voluntarily initiate concrete GHG abatement measurements in order to ease international pressure. China feels that it must be prepared for such a scenario and this largely explains the rationale behind Beijing’s recent endeavor of assessing impacts of climate policy instruments. If developed nations as a whole could meet their GHG reduction commitments, it is not unimaginable that China may eventually accept an intensity-based mandatory GHG reduction target. Long Term Challenges Ahead With a purchasing power parity-adjusted per capita GDP at $5,400 in 2007 (PBS, November 14, 2008), China’s long enjoyed status as a poor developing country is likely to be difficult to defend. As the world’s largest CO2 emitter, China will be held responsible for its increasing contribution to the GHG concentration in the atmosphere. Furthermore, Beijing’s impressive GHG reduction achievements in late 1990s turned out to be largely an embarrassing underreporting of coal statistics (China Brief, May 9, 2007). Finally, China’s per capita emission is near the world average, making it difficult to maintain all of Beijing’s fundamental arguments to defend its current position. To make the matter worse, different views on climate change commitments have emerged amongst developing countries. For example, low lying islands are especially susceptible to changes in sea level and storm surges and, as a result, the Alliance of Small Island States, a coalition of 43 small islands and low-lying coastal countries, is likely to differ with China with respect to climate commitments by key developing nations. In addition, China’s dominance in the CDM market is likely to stir negative feelings amongst other developing nations. While energy-economy models are one effective tool used extensively in the past to evaluate climate policies, significant barriers exist in China to prevent the buildup of sufficient domestic capacity to undertake climate policy assessments. For instance, the crucial step of a modelling analysis, the establishment of baseline forecast, is a hazardous business in China. To improve the capacity of its modelling community, the U.S. Department of Energy set a good example by regularly examining performance of forecasts in past studies. Unfortunately, a similar practice does not exist in China. Moreover, Chinese energy policymakers even used the discrepancy between existing forecasts and statistics as an excuse to attack the usefulness of energy-economy models. The prominent Energy Research Institute is an apparent victim of such mentality. The Chinese climate modelling community relies too heavily on outside funding. In the late 1990s and early 2000s, strong foreign interests in China’s energy sector made the access of international funding an easy task for most established modeling teams in China. However, after the spectacular Beijing 2008 Summer Olympics, and the Chinese Taikounaut’s first space walk, Western governments will likely cut their development funds to China, especially under the recent financial turmoil. Still , whether Beijing will step up to meet financial shortfalls of its modelling community is still an open question. Furthermore, the lack of competition for government contracts threatens the healthy development of domestic modelling capacity. Currently, the project allocation mechanism in China still favors analysts with most connections, not necessarily those with best expertise. Invisible picket lines upon certain sensitive topics in China have seriously undermined the academic integrity of some climate research projects. In October 2008, the Chinese Academy of Sciences (CAS) released a report projecting that China’s national GHG emissions may more than double within the next two decades. Ironically, one of the most important components of such a study, China’s current GHG emissions, is absent (Reuters, October 23, 2008). If the pace of global warming continues as predicted, every ton of GHG emissions, regardless of its nation of origin, will have dire consequences on environmental sustainability. Since 1995, while China’s GHG emissions intensity has been cut in half, its absolute emissions have more than doubled during the same period. Such contrast indicates that rapid economic development can undermine the effectiveness of any intensity-based climate initiative. Fortunately, one emerging technology, namely carbon capture and storage (CCS), carries great potential for reducing China’s GHG emissions while allowing the country to continuously rely on fossil fuels for economic development. However, there is no policy signs to confirm that Beijing would set aside the funding necessary for realizing such future-oriented technologies. China’s importance in the international climate politics is expected to keep rising especially given China’s recent CO2 championship. Unfortunately, China will continuously reject mandatory emissions cap on the ground of the necessity for developing its economy. Nevertheless, Beijing has realized the mounting pressure on its climate stances, and prepared itself by formulating increasingly proactive and comprehensive climate policy. If developed countries were able to meet their GHG abatement commitments, it would not be unimaginable that China may accept an intensity-based emissions target. Even so, the global effort to combat climate change is still expected to fall short as it is the absolute emissions, rather than GHG intensities, that matter most. Fortunately, advanced emissions abatement techniques such as CCS possess great potential for reducing a country’s absolute emissions. Beijing should seriously assess costs and benefits of funding the commercialization of such techniques. Finally, it is in Beijing’s best interest to remove all barriers that suppress the intellectual potential of its climate policy research community. Notes 1. The author’s estimation is based on China’s 2006 National Energy Balance Table and China’s 2007 preliminary national energy consumption data from the National Bureau of Statistics. The emissions factors used by the author are based on 2006 IPCC Guidelines for National Greenhouse Gas Inventories. 2. U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2006. 3. A. Dessler and E. Parson (2006).The Science and Politics of Global Climate Change: A Guide to the Debate. Cambridge University Press. 4. USDA Economic Research Service at www.ers.usda.gov/Data/Macroeconomics/. 5. IEA (2008). CO2 Emissions from Fuel Combustion 1971-2006. 6. NBS (2008). Statistical Communique of National Economy and Social Development in 2007. 7. NDRC (2008). Baseline Emissions Intensities of Regional Electric Grids in China. cdm.ccchina.gov.cn/WebSite/CDM/UpFile/File1829.pdf. 8. Kristian Tangen and et al. (2001). China’s Climate Change Positions: at a Turning Point? Energy & Environment. Vol. 12(2&3). 9. Gørild Heggelund (2007). China’s Climate Change Policy: Domestic and International Developments. Asian Perspective. Vol. 31(2). 10. Ibid. 11. Shiping Zheng (2003). Leadership Change, Legitimacy, and Party Transition in China. Journal of Chinese Political Science. Vol. 8(1&2). 12. JianJun Tu (2008). Modelling China’s Energy Future: Climate Change, Air Pollution and Supply Security. Vdm Verlag: Saarbrücken, Germany. 13. MEP (various years). The State of Environment in China. www.zhb.gov.cn/plan/zkgb/. 14. GHG emissions cited here cover fuel combustion emissions along with fossil fuel fugitive emissions, industrial process emissions of cement, lime, iron & steel, calcium carbide, nitric acid, and adipic acid production, and flaring activities in China between 1995 and 2007. 15. Kristian Tangen and et al. (2001). 16. Jiang Lin and et al. (2008). Taking out 1 billion tons of CO2: the Magic of China's 11th Five-Year Plan? Energy Policy. Vol. 36(3). P.954-970. 17. China Statistical Yearbook, various years and NBS (2008).

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