China Beyond 2012

At the UNFCCC’s 10^th Conference of the Parties (COP-10), which took place from December 6^th to 17^th in Buenos Aires, Argentina, several delegates made the point that since it was the last session prior to the Kyoto Protocol’s entry into force, it must also be the first session of a new chapter devoted to taking action. In the coming decades, nowhere will action be as important as that taken in China. Though it has ratified the Kyoto Protocol, China’s status as a developing nation means it is not bound to any quantitative restrictions on its greenhouse gas (GHG) emissions under the Kyoto Protocol’s commitment period, from 2008-2012. The Chinese have taken steps to reduce pollution levels, but GHG emissions are still increasing apace, and it remains unclear to what extent they would be willing to take on legislated emissions targets post-2012.

Probably the only way China will take on emissions restrictions is if it can implement clean energy technologies that will allow its economy to keep growing swiftly. However, technology transfer from the developed nations, on an unprecedented scale, is likely the only way to bring about serious cutbacks while preserving economic growth. In this respect, most of the challenge lies with the industrialized nations to agree on a framework to efficiently transfer cleaner energy technologies to the developing world.

China’s CO₂ emissions, projected to grow by 65% between 2000 and 2010 (Pan 2004), are now the second largest in the world after the US, and bigger than those of the entire European Union (O’Connor et al. 2003). Its emissions increase from 2000 to 2020 will be larger than the total global increase between 1990 and 2001 (Pan 2004). The nation is already the engine of global oil demand growth, and two-thirds of China’s energy use is currently supplied by coal, which when burned releases nearly twice as much carbon dioxide per unit of energy as natural gas. Although Chinese policymakers have set the goal of reducing coal use, other polluting sectors are on the rise, such as transportation. Rising incomes and entry to the World Trade Organization are making cars more affordable to the growing number of middle income Chinese. Car sales during the first five months of 2002, for example, were up nearly 40 percent from 2001 (Pew Center 2002). With a per capita income only about one eighth that of the US (at the purchasing power parity exchange rate) and a rate of GDP growth projected around 8 percent in the coming years, energy demand is not likely to slow down anytime soon.

Nevertheless, China has been implementing coordinated pollution mitigation strategies since the late 1980s, and the country ratified the UNFCCC in 1992. Policies promoting energy conservation and diversification have been implemented, including interest payment rebates, differential interest rates, income tax reductions, and accelerated depreciation for renewable energy investments and purchases of energy conservation equipment. These favourable incentives have had an impact on the growth rate of clean energy. Installed capacity of hydro power increased on average by 8.7% per year from 1995 to 2000, and from 1990 to 2000 13.1 gigawatts (GW) of small thermal power units were established. Twenty-six wind farms have been built and connected to the grid, with installed capacity increasing from 30 megawatts (MW) in 1994 to 375 MW in 2000. The installed capacity of nuclear power plants in operation totaled 2.1 GW in 2000, with a further 6.6 GW under construction. Altogether the utilization of renewable energy totaled 34 million tons of coal equivalents in 2000 (People’s Republic of China 2004).

Energy efficiency in China has also improved considerably. From 1980 to 2000, China’s energy intensity went down by an average annual rate of 5.3%. However, it can do better – from 1990 to 2001, the EU produced three times the GDP of China with a net increase in CO₂ of only one-eighth that of China’s.

China’s number one priority at the moment, understandably, is development, and this is likely to limit the level of pollution mitigation undertaken. However, there is one sector where development and pollution mitigation have complementary goals: residential pollution. A large proportion of households burn coal and biomass for their energy needs, leading to significant indoor pollution, and to high rates of disease, largely in the form of lung and heart conditions. The key to avoiding this source of disease burden and labour productivity loss is in transforming the domestic energy sector, from one based on the combustion of coal and biofuels in small heaters, to one that increasingly uses coal briquettes, natural gas, electricity and renewable energy (Streets 2004).

Since current and planned mitigation measures, in both the industrial and household sectors, will have a small overall impact on emissions growth, the role of technology transfer from the industrialized nations will have to increase exponentially if China is to substantially reduce emissions without compromising its development goals. China will have to be a major partner in attempts to ‘decarbonize development’ (Pan 2004) through technology transfer, a reality which led a Canadian delegate at COP-10 to state that this process will require a ‘technology revolution’ (IISD 2004b). In addition, other large developing nations, such as India and Brazil, will also have to be important partners.

Signs that the Chinese will take serious steps to promote technology transfer were evident at COP-10. Delegates from China called for mobilization of funds for technology transfer from developed countries, urged Parties to establish an international mechanism for technology innovation, and pushed for a shift from negotiations and rule-making to implementation and concrete action (IISD 2004a).

These calls for action may have something to do with China’s first official National Communication on Climate Change, which was presented at COP-10. The document states that the 1990s in China were one of the warmest decades in the 20^th century, that warming over the past 100 years has caused mountain glaciers in western China to shrink by 21%, and that future possible impacts include continued shrinking of mountain glaciers, the submersion of parts of South China due to a rise in sea levels, and a net increase in agricultural production costs. Under the scenario where CO₂ concentration in the atmosphere doubles, the single crop season area in China would be reduced by 23%, with an overall decrease for wheat, rice, and maize yield (People’s Republic of China 2004).

All of these possibilities pose serious socioeconomic risks for a country with per capita water resources about one fourth the world average, per capita arable land one-third the world average, and an urbanization level beyond 36% in 2000, with the largest cities concentrated near the country’s coastal areas.

Large scale technology transfer in China will probably only take place within a framework coming into effect after the first commitment period of the Kyoto Protocol. Negotiations for this period are set to begin this year, and they are likely to be highly contentious because the developing nations will not be willing to compromise their development goals. Some post-2012 global climate regime options that were discussed in Buenos Aires, in a side-event by the Fridtjof Nansen Institute, included sectoral targets for developing countries, an expanded scope for Clean Development Mechanism (CDM) projects, and additional eligibility criteria for CDM host countries (see IISD 2004c). An expanded focus on the CDM would be welcome, because new technologies are often part of CDM projects. A future agreement whereby technology transfer is explicitly linked to the CDM could also strengthen the link between development and clean energy.

• IISD (International Institute for Sustainable Development) (2004a): “UNFCCC COP-10 highlights: Thursday, 9 December 2004”, Earth Negotiations Bulletin 12(253-254).
• IISD (International Institute for Sustainable Development) (2004b): “UNFCCC COP-10 highlights: Thursday, 9 December 2004”, Earth Negotiations Bulletin 12(259).
• IISD (International Institute for Sustainable Development) (2004c): “Options for a post-2012 global climate regime”, Earth Negotiations Bulletin on the side 15(10)
• O’connor, David, Fan Zhai, Kristin Aunan, Terje Berntsen, and Haakon Vennemo (2003): “Agricultural and human health impacts of climate policy in China: a general equilibrium analysis with special reference to Guangdong”, OECD: Paris
• Pan, Jiahua (2004): “China’s industrialization and reduction of greenhouse emissions”, China and the World Economy 12(3).
• Pew Center (2002): “Climate change mitigation in developing countries”. Washington, D.C.
• People’s Republic of China 2004: “The People’s Republic of China initial national communication on climate change”. Beijing, October 2004.
• Streets, David G. (2004): “Black smoke in China and its climate effects”. Paper prepared for the Asian Economic Panel Meeting, Columbia University, October 7-8, 2004.