Rhein on Energy and Climate

China has become the planet`s biggest polluter and emitter of greenhouse gases.

This is the price the country has paid for the extraordinary economic rise during the last 35 years. There has never been a parallel for such a development in human history; and there will never be one in the future.

But the times of annual GDP growth rates regularly exceeding 10 per cent per year seem to belong to the past! China starts realising that it cannot permanently sacrifice its environment and human health to an unrestrained production of goods and ever rising emissions of dust, sulphur and CO2.

Its citizens no longer accept the high levels of urban pollution and congestion, forcing both local and central governments to act.

In 2011, Beijing municipality has intervened, severely limiting the issue of new licence plates for cars; Guangzhou, the country’s third biggest mega-city with some 15 million people, has followed suit early September 2012 by auctioning new car plates with the aim of halving the number of new cars in the streets. It has also expanded its public transport subway and rapid bus transit systems.

The central government has tried to reduce energy consumption since 2006. It has fixed a 15 per cent share share for renewables, essentially wind, hydro and biomass, cent in total energy use to be attained by 2020 and aims to lower energy intensity by 45% until 2020 ,compared to 2005. Nuclear power is to provide 5 per cent of total power demand in 2020.

These targets compare favourably with those of the EU!

As of 2008, it has decreed strict rules for car emissions by transposing Euro IV standards and aligning on EU CO2 emissions standards, making its car fleet temporarily more energy-efficient than that of USA.

The most recent and potentially most dramatic change taking place, however, concerns the gradual introduction of a nation-wide cap and trade system for C02 emissions.

Indeed, the government has come to the conclusion that its past policy for curbing fossil energy consumption will not do.

In November 2011, it has therefore decided to introduce pilot schemes in seven major regions/cities.

Starting in 2013/14 these are to be extended to the the whole country or at least the most developed regions in the East as of 2015/16.

For a vast country with huge development differences and a flawed market economy this constitutes an unprecedented challenge. But the very fact that China has decided to embark on a market-based nation-wide scheme to fight C02 emissions shows that the political elite in Beijing is increasingly scared about the impact of climate change on the country and the need to radically reduce its consumption of fossil energy.

With a share of more than one third of global emissions, China being the world`s biggest C02 emitter, we can only wish it full success with the new approach. If China succeeds, this might have a hugely positive impact on other countries in the region and beyond. Indeed, California and Australia have already put in place cap and trade systems; and India and Korea have been testing schemes.

The future of climate change will essentially depend on the outcome of China’s climate policy. Hopefully, China will learn from the flawed EU experience and make sure that the price of C02 emission certificates will be high enough to fully reflect the external costs of burning coal or oil, thus offering sufficient incentives for investing in energy efficiency and alternative energies.

China’s new initiatives should therefore be on the forefront of the discussions at the Doha Climate Conference in three months.

All major participants – USA, Russia, India, Japan, Korea, Brazil, Mexico, Canada – should be invited to follow the Chinese – and EU – examples and report on their initiatives taken at the next climate conference in December 2013

This will be of particular importance to bring the USA back on track.

Brussels 10.09.2012 Eberhard Rhein


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