Industry Market Trends
Is China About to the Break the Carbon Impasse?
May 28, 2013
Reuters's Point Carbon carbon-market news service reported from Beijing on May 21 that the National Development and Reform Commission (NDRC), China's central economic planning agency, "has proposed setting an absolute cap on the country's greenhouse gas emissions from 2016." However, some observers cautioned that the Chinese central government hasn't definitely committed itself to carbon limits. Steve Levine, writing for Quartz on May 24, called reports of a Chinese carbon cap "inaccurate -- or perhaps just premature." NDRC is deploying a limited experimental program in certain cities, Levine wrote, but he said that "China hands in Beijing and the U.S. tell me it has made no firm decision on capping absolute emissions." Even if it's just a limited trial, the new effort "is a critical step toward slowing global greenhouse gas emissions," I was told in an interview by Jennie C. Stephens, associate professor of environmental science and policy at Clark University in Worcester, Mass. "Although effectiveness will depend on details of implementation, this experimental program has large potential for learning about how to change the incentive structure so that the negative implications of carbon emissions are integrated into decision-making," Stephens said. Solution to a Catch-22? If China were in fact to take unilateral action to bring its carbon emissions under control, that action could break a critical impasse in international efforts to curb carbon dioxide and reduce the risks of human-caused global warming. Stephens told me that "China's action in this area increases pressure for the United States to adopt national-level climate policy. The U.S. continues to lag behind many other industrialized countries in incentivizing changes toward lower-carbon energy systems." One of the obstacles to a binding global agreement to cap GHG emissions has been a kind of Catch-22: Developing nations, particularly China, have refused to agree to caps. The United States has argued that the developed world shouldn't have to put a drag on its economies without reciprocation from the developing world. In turn, developing countries counter that the more advanced economies of North America and Western Europe were the ones who got us into this carbon mess in the first place and should be willing to put on the brakes and allow the rest of the world to catch up economically. For example, the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC), a treaty adopted in 1997, set legally binding limitations and reductions to GHG emissions on the 190 countries that are parties to it. However, the United States refused to ratify the treaty. The U.S. Senate passed a resolution in 1997 prohibiting the nation from becoming a signatory to Kyoto or to any agreement that doesn't place corresponding limitations on developing countries. President George W. Bush expressed his administration's position in a letter to a group of Senators in 2001, writing: "I oppose the Kyoto Protocol because it exempts 80 percent of the world, including major population centers such as China and India, from compliance, and would cause serious harm to the U.S. economy." This impasse has continued to stymie international efforts to bring GHGs under control to prevent further warming. The U.S. and China are the world's largest CO2 emitters. However, in recent years, U.S. emissions have moderated, while China's continue to soar. In 2006, China became the top emitter of CO2 in the world due to its growing consumption of fossil fuels, especially coal. This has focused blame on China as a contributor to human-caused global warming. In addition, as I reported in February, China's industrialized cities have been increasingly plagued by dangerous air pollution caused by that same skyrocketing consumption of fossil fuels. Six-City Pilot to Launch in June The excitement about new developments in China arises from a report that appeared in the Chinese newspaper 21st Century Business Herald. As of this writing, neither that article nor, in fact, the newspaper itself seems to be still available online. One wonders whether the paper somehow incurred official displeasure, but in any case, I did find an older version of the report through the Internet Archive's Wayback Machine. The article is in Chinese, but basically it says that the NDRC is conducting a "low-carbon pilot" with the intention of rolling out a broader carbon-trading effort as part of China's next five-year plan set to begin in 2016. The agency believes that an effective carbon-trading program could enable China to reach its peak in carbon emissions by 2025, five years earlier than previous estimates. A May 22 report for The Guardian by Beijing writer Jonathan Kaiman says that the pilot program revealed by the NDRC will begin in June with the rollout of a carbon-trading regime in the southern China industrial city of Shenzhen and will expand later this year into six other cities. Initially, Kaiman writes, "the trading scheme will cover 638 companies responsible for 38 percent of the city's total emissions" and "will eventually expand to include transportation, manufacturing and construction companies." An East Asian Greenpeace official told Kaiman that "the pilot programmes will inform the central government on how to motivate local authorities to adopt low-carbon policies." Chinanews.com reported on May 22 that NDRC intends to start up carbon trading in Shenzhen on June 18. A municipal official told the journal that the regime will begin with 635 companies that will be limited to 100 million tons of CO2 for the period of 2013 to 2015. The journal says that by 2015 "the average carbon-intensity of these enterprises" is expected to decline by 6.68 percent annually during that period and to drop by 32 percent by 2015 compared to 2010 levels. I asked Clark University's Jennie Stephens if China is sincere about bringing GHG emissions under control. "China's evolving efforts to reduce carbon emissions are largely in response to the impacts of climate change that are already being felt in China and to the societal disruption of air pollution," she told me. "So these efforts are sincere. And the pace of change in China is faster than in the United States, so although the scale of carbon emissions and coal reliance is huge, there is also large-scale potential for a real shift." Stephens added that putting all of the blame on China as a carbon polluter is somewhat misplaced. "We often categorize China as the world's biggest carbon emitter," she reminded me, "but it is important to recognize that much of China's pollution is a direct result of manufacturing of products for the United States and many other countries outside of China." In spite of his warning that elation over this news from China is premature at best, Steve Levine of Quartz believes that the report "underscores an expectation among environmentalists and others that Beijing is moving toward doing more to avoid the most catastrophic climate forecasts." He wrote:Reports appeared in the media during the past week that China is about to implement controls over its greenhouse gas (GHG) emissions.
Beijing already has ambitious goals for sharply reducing carbon intensity by 2015. Against the backdrop of rising local unhappiness with air pollution, China's leadership has signaled the possibility of an even faster cleanup.