Two great awakenings marking our time will determine the nature of our future. And although they emerged independently, they happened more or less in sync. The first is the realization that all of the carbon dioxide our fossil-fuel driven economy is spewing into the air has thrown a blanket around our planet that is changing our climate into something different from the one that we evolved to live in. The second awakening is China. Leaders in China have vowed to bring their people out of poverty by developing into an economic superpower, fueled by its enormous coal reserves. Needless to say, they have been successful, achieving an average 9.23 percent annual GDP growth rate since 1989.
In doing so, China burned almost as much coal last year as the rest of the world: 3.8 billion tons versus 4.3 billion. China represents 82 percent of the increase in coal demand since 2000. Burning all that coal has had an enormous impact on global CO2 emissions.
It has also taken its toll locally. Air quality throughout China’s cities is downright dangerous. With government policy focused on rapid growth, there are few regulations on emissions. If that doesn’t change, emissions could be 70 percent worse by 2025. The cost of environmental degradation in China amounted to 3.5 percent of its GDP in 2010, three times what it was in 2004.
These conditions, rather than climate impact, are likely what led the Chinese to agree to participate in a high-level collaborative effort with Rocky Mountain Institute (RMI), to find ways to reduce energy consumption while speeding the deployment of renewables.
RMI has a comprehensive portfolio of deep energy efficiency measures described in their book Reinventing Fire. The book describes how the U.S. economy could cut carbon emissions by 82 percent by 2050, while saving $5 trillion and growing by 158 percent in the process.
I spoke with Clay Stranger at RMI, manager of the Reinventing Fire: China project.
RP: You must wake up every morning thinking you have a real opportunity to make a difference.
CS: We do. The strength of the project lies in the partnership. We at RMI are not experts on China. But we are experts in pushing the limits of people’s thinking when it comes to efficiency. The Energy Foundation is quite influential in the policy-making space. Lawrence Berkley Labs (LBL), who is a potential partner, has 30 years experience in China. Energy Research Institute (ERI) who is the primary research partner, reports directly to China’s National Development and Reform Commission. They are the Chinese government’s energy think-tank.
RP: How is the timing?
CS: The timing feels right. There is increasing public awareness and pressure around air quality and pollution. They are beginning to encounter significant growth barriers due to resource constraints. The government is planning to move 300 million people from rural areas to urban areas by 2030. When you consider the resource implications of that, energy efficiency becomes a premium consideration. This is also the right time in the planning cycle, because they are in the initial stages of drafting the thirteenth five-year plan. It’s the right moment for decisive action and change by Chinese policy makers, who need a comprehensive treatment of economics, covering all four energy-using sectors: electricity, buildings, industry, and transportation.
RP: Has anything like this been done before?
CS: There have been studies done around each of those, but they have focused on technical feasibility, looking at the supply side and their impacts on growth targets.
RP: So how will your approach differ?
CS: We will start with a base case and then explore the system impacts of options such as efficiency, distributed renewables, and integrated design in the industrial sector. It will end with the question of what policy actions will facilitate, support, and enable this type of future. And, it will go across all four sectors.
RP: So how did this get started?
CS: It almost met in the middle of the Pacific. RMI was looking for a way to learn more about what was happening in China and for an opportunity to share some of our intellectual capital. They were too. So in February 2012, we convened a summit to explore opportunities for shared learning in the area of energy. After lots of discussion, and several trips back and forth, it became clear that ERI was the most influential and most relevant partner to work with.
RP: Do you feel that the Chinese are aware of how the world is watching what they are doing, regarding GHG emissions?
CS: I think they are excited by the opportunity to be global leaders on emissions and climate change. The whole team is keenly aware of the cumulative effects of the emissions of both countries. The two countries, taken together, account for 38 percent of global energy use and 43 percent of carbon emissions. So given that we are the biggest culprits, it’s appropriate that we work together to address the problem.
RP: I think of RMI as being a leader in technology, considering Hypercar, and some of the work you’ve done with buildings. But I was surprised to see how much you do at the policy level. It seems like you go wherever you need, to put pressure on the system at the points from which change will most likely occur.
CS: This is a partial departure of our usual paradigm of focusing on market forces and business-led transitions, but the emphasis will still be on value, much as it always has. If our Chinese partners see the value in what we are recommending, then they will likely incorporate those recommendations into policy. Plus, we intend to be convening sector-based workshops with both Chinese and American experts. We might have, for example, a cement industry workshop, one of the most energy-intensive players in the industrial arena. That would be an opportunity for everyone from private enterprise to state-owned enterprise to share best practices and push thinking.
RP: What will your role be?
CS: RMI will be taking a lead role on modeling the transportation sector, smart growth, air-rail shipping, and freight infrastructure.
RP: Do you think they will be prepared to abandon a coal plant after spending the money to build it?
CS: The question of stranded assets will be looked at. We certainly will be looking at the transition from coal-fired electricity which, as of 2012, makes up 80 percent of their primary energy. But we will need to look at this from an economic perspective. At what point does it become economically viable to strand those assets, first with efficiency and then with renewables? We think there is a sweet spot where that can become affordable.
RP: So what do you see as your biggest opportunities?
CS: Smart growth is clearly still a big opportunity, considering the amount of construction planned. Given the massive move into cities, where half of all new buildings built in the next 20 years will be built in China. That’s the equivalent of several dozen Manhattans. Then there’s the industrial sector, which uses 70 percent of all primary energy. Energy intensive heavy industry that started in 2002 (e.g. iron, steel, aluminum) combine to use three-fifths more energy than the entire household sector. These will benefit from the application of integrative design which we use to drive towards zero waste. There will be new-build in distributed renewable infrastructure, new-build in residential and commercial. We expect to see many opportunity in all four sectors.