Barbara Finamore's Blog: Greening China tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144 2010-05-16T15:56:07Z Movable Type Enterprise 1.52 China on the Path towards Putting a Price on Carbon tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144.6154 2010-05-16T15:50:31Z 2010-05-16T15:56:07Z China is now one step closer to putting in place a carbon tax. According to several reports, the Energy Research Institute (ERI) of the powerful National Development and Reform Commission (NDRC) and the Ministry of Finance (MOF) announced on Tuesday... Barbara Finamore China is now one step closer to putting in place a carbon tax. According to several reports, the Energy Research Institute (ERI) of the powerful National Development and Reform Commission (NDRC) and the Ministry of Finance (MOF) announced on Tuesday that they have completed their study on the feasibility and necessity of establishing a carbon tax in China. In their report, ERI and MOF suggest that China should institute a carbon tax as early as 2012. This is a significant development given ERI and MOF’s influential role in setting Chinese policy. (Chinese only) 

The idea of a carbon tax has been raised for many years within China’s policymaking circles. The tax would put a price on the carbon pollution emitted in China that causes climate change, and would be one more tool in China’s arsenal to help the world’s most populous country transition towards a low-carbon economy. China has taken a number of aggressive measures already to reduce the growth of its carbon emissions (see here and here), but putting a price on carbon through a carbon tax would be one of the first market-based mechanisms used by China to achieve this goal. While some commentators have been skeptical that China would voluntarily take measures to put a price on carbon, this skepticism is starting to turn into optimism with the release of the joint ERI and MOF announcement, which stated that a carbon tax is likely to be rolled out during the 12th Five Year period (2011-2016). 

The report, entitled “China’s Carbon Tax System Framework Design,” has already been completed and NDRC has been communicating with the National People’s Congress about implementation. One NDRC official is quoted as saying, “We hope that a carbon tax will start to be levied during the 12th  Five Year Period.”  (Chinese only) 

According to reports, the taxes collected would be used to finance emissions reductions and environmentally-friendly industries and companies. In this China Daily article, Jiang Kejun, a senior researcher at ERI, is quoted as saying, “We can possibly surpass the United States between 2020 to 2025 in terms of research and development investment. If this comes true, we can start to dream of becoming a low-carbon technology leader in the world.” As I’ve blogged about before, during China’s annual legislative session, carbon taxes were discussed, and one member of the CPPCC (Chinese People’s Political Consultative Conference) specifically cited US climate legislation as one reason why China should consider implementing a carbon tax. 

Many questions remain about how the tax might be implemented, including questions about the tax rate and what activities would be subject to the tax. Some reports suggest that the tax could be set around 10 RMB per ton of carbon and could increase to 40 RMB per ton by 2020 (see here). Jiang Kejun emphasized that a gradually increasing tax rate is important to send a signal to industries. “We want to inform companies that they need to seize the opportunities of a low-carbon economy,” Jiang said, “which is an inexorable trend worldwide, as quickly as they can" (see here). 

There is still a long way to go before a carbon tax becomes a reality in China, but this week’s announcement from ERI and MOF signifies that one of the necessary, internal battles appears to have been won. The prospect of China putting a price on carbon is more likely now than it has ever been before, and we expect discussions to continue to gain momentum as the 11th Five Year period comes to a close at the end of this year.  

 

]]> China Removes Import Duties on Wind and Hydro Equipment tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144.6020 2010-05-05T15:09:44Z 2010-05-15T11:46:43Z Barbara Finamore Every day that climate change and clean energy legislation is stalled in the Senate, the US loses out on opportunities to benefit from the clean energy economy.  A new Chinese trade policy has just been announced that will give a boost to international companies that sell wind power components to China's rapidly growing wind market. But this policy is likely to provide the biggest benefits to European countries, such as Germany, Denmark, and Finland, and not the US because there are still relatively few US producers in the wind component industry compared to Europe.

The new policy (in Chinese only), just introduced by China’s Ministry of Finance, removes import duties previously applied to a range of products, including imported components for building wind turbines (excluding the completed turbines) and hydropower. To be eligible for the duty-free treatment, the buyer must be an advanced Chinese wind turbine producer that meets certain technological and size requirements.  Previously, Chinese wind and hydro companies that purchased imported components were required to pay an additional import duty, which ranged from 3 to 30 percent. This import duty meant that American and European wind and hydro component makers faced a disadvantage when competing for the Chinese market.  By stripping wind and hydro components of this tariff, China’s new policy essentially expands the market for foreign wind and hydro component makers to sell more products to China.

The new policy is a reminder that the United States has a lot to gain from becoming a leader in clean energy.  Unfortunately, the United States is not well-positioned to profit from this opportunity because the world’s leading wind component companies are in countries that have already made clean energy a national priority. Finland, Sweden, Denmark, and Germany all have strong policies to promote wind energy installation, creating thousands of clean energy jobs in the process. (Germany’s wind industry employs more than 169,000 people in the country.)  And one of the biggest beneficiaries of China’s new policy will be Moventas, one the world’s largest wind turbine gear companies, which hails from the small country of Finland.

Here is what Justin Wu, a China wind energy analyst at Bloomberg New Energy Finance, had to say about this new policy and why the US is losing out:

"European companies are better positioned to benefit from this policy, because they supply more to the Chinese market than their US counterparts.”

“This is a function of the more advanced nature of the European wind industry versus the US which has faced more policy uncertainty over the past decade in developing the supply side of its wind industry. As a result, the US also imports heavily from Europe and only a small handful of US companies currently export wind components to China or other countries."  

What is exceedingly clear is that policy uncertainty in the US regarding clean energy and carbon pollution is causing American businesses to lag behind. In the process, US businesses are losing tremendous opportunities to lead the clean energy market.

One of the objectives of this new policy is to promote the development of China’s most advanced wind turbine manufacturers, since only those turbine manufacturers that can produce 1.5 MW or larger turbines and that sell more than 300 MW per year are entitled to benefit from the duty-free provision. Separately, China has also recently been considering steps to consolidate its wind industry (Chinese), issuing draft regulations for comment that would require wind turbine producers to have the capability to produce 2.5 MW turbines or larger. The removal of these import duties is yet another policy that will support the advancement of China’s wind turbine industry.

At any rate, the new policy shows how seriously China is thinking about its clean tech industry. As companies across the globe develop and manufacture clean energy components, subcomponents, and entire systems and trade them across borders, the clean technology economy will become an increasingly globalized one, in which countries benefit from each other’s technological advances.

But to profit from the clean energy economy, the United States will need to unleash the potential of its own clean energy industry.  And it will be very difficult for American businesses to compete with German and Finnish companies without a clear signal and appropriate incentives to invest in clean energy even at home.

One notable exception is American Superconductor, a company based in Massachusetts, which sells advanced electrical control systems for wind turbines in China. Since 2007, American Superconductor has been partnering with a Chinese company, Sinovel, to develop new 3 MW and 5 MW wind turbines. Because it supplies valuable wind components to China, American Superconductor is one U.S. company that will likely benefit from China’s new import policy.

The United States needs more companies like American Superconductor that can take advantage of the Chinese market by offering cutting-edge technologies to fight climate change. China’s new import duty policy should remind us that the best way to help American businesses seize clean energy opportunities abroad is by passing climate change and energy legislation at home and making clear that the U.S. is serious about growing its clean energy industry and competing in the global race for clean energy. 

]]> A Clear-Eyed Look at China’s Climate Target tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144.5848 2010-04-19T18:52:32Z 2010-04-29T15:19:03Z Here is a post by NRDC China Fellow, David Cohen-Tanugi, who is in our Washington, DC office: In the lead-up to Copenhagen, and again in its submission to the UNFCCC in January, China announced a target to lower its carbon... Barbara Finamore Here is a post by NRDC China Fellow, David Cohen-Tanugi, who is in our Washington, DC office:

In the lead-up to Copenhagen, and again in its submission to the UNFCCC in January, China announced a target to lower its carbon intensity, the amount of carbon dioxide emitted per unit of GDP, by 40-45% by 2020 compared to a 2005 baseline. Now, while U.S. legislators deliberate the details of a much-needed climate and energy bill, Chinese leaders have already entered into in-depth discussions on their national plans, policies, investments and enforcement mechanisms for achieving this target.

Just last week, a senior Chinese climate statesman, He Jiankun, made news when he and other energy experts recommended that China should set a target for reducing its carbon intensity by 18% in the upcoming Twelfth Five-Year Plan (2011-2015) (link here, Chinese only).   By including this carbon intensity target  into the next  Five-Year Plan, it will become legally binding once approved by the National People’s Congress early next year.  Progress in achieving the target will also become an indicator in the job performance rating of every provincial governor and major enterprise owner. 

In order to provide more context to the recent policy proposals in China, this blog post takes a closer look at the details of China’s carbon intensity target and answers some of the crucial questions about how it can achieve its target.

Will China need to take real carbon-reducing actions in order to meet its target?

Yes. China will only be able to limit the growth of its emissions in accordance with its target by increasing investments, creating new policies and proactively continuing existing ones.  The graphic below illustrates how China’s Copenhagen target will require significant efforts, while leaving room for even more ambitious reductions:

Here is a short list of the main policies and actions that China will likely take in order to achieve its carbon intensity target.

  • Reducing energy intensity: China will make further reductions in the total primary energy consumed per unit of GDP, which is determined by the energy efficiency of China’s power generation, industry, buildings, vehicles and equipment, and the relative share of energy intensive industry, light industry and services in its economic structure. China’s current Eleventh Five Year Plan (2006-10) calls for a 20% reduction in energy intensity, and there has been discussion among Chinese policy experts of setting a further energy intensity reduction goal of 16% for the next five years (link here, Chinese only). Even then, China will still have much work to do after 2015, which could be more or less difficult depending on how China’s economy evolves.
  • Increasing the share of non-fossil energy: Carbon emissions are also reduced by giving a larger role to non-fossil energy sources, such as hydro, wind, solar, biomass and nuclear energy, which have near-zero CO2 emissions. China has pledged to increase the share of non-fossil energy in its primary energy consumption to around 15% by 2020, and has been making rapid progress towards achieving this goal. This is already being done through massive financial investment in renewable energy as well as a combination of policy mechanisms that encourage renewable energy deployment, such as, feed-in tariffs for different renewable technologies, and subsidies.  China has also recently amended its Renewable Energy Law to require the grid to purchase a set percentage of renewable power each year as well as creating a streamlined mechanism to fund these incentive programs.
  • Improving the fossil fuel mix: China’s carbon emissions are also strongly determined by the relative share of coal, oil and natural gas in its fuel mix. Although few specific details are available about how China plans to improve its fuel mix, it will likely need to increase its use of natural gas instead of coal, since natural gas emits about half as much CO2 per unit of energy as coal. 
  • Reducing emissions from industrial processes such as cement-making or steel production, which emit carbon dioxide not only from burning fossil fuels but also from chemical reactions. These emissions from chemical reactions currently account for approximately 10% of China’s total emissions (excluding land use change), and they will now be covered by China’s targets for the first time. We will continue to track the topic of industrial emissions closely as further details are.
  • Developing statistics, monitoring and evaluation systems and regulations to measure and incentivize progress. These mechanisms are an extension of the systems already in place to measure the progress of provincial governments and enterprises in meeting their energy intensity reduction goals.[1]

Is China’s carbon intensity target good enough?

You may have come across several commentators who dismiss China’s target as nothing more than business as usual (for example here, here and here).  China, the claim goes, was going to reduce its carbon intensity by 40-45% anyway. But we disagree with these commentators and argue that China’s target actually represents quite a significant commitment for several reasons:

(1)   Over the last five years, China has taken significant actions to address climate change, actions which have already lowered its CO2 emissions growth below business as usual;

(2)  China will need to do even more from now on to reach its new  carbon intensity target of 40-45%; and

(3)  ‘Reference Scenarios’ are not the same thing as business as usual.

More explanations are warranted on each of these points, all of which suggest that China may actually be on the right track. After all, only five years ago the U.S. Energy Information Administration predicted that for each 1 percent increase in China’s GDP, its emissions would increase by 0.7 percent until 2020. Because China’s GDP has turned out to grow so phenomenally fast, at this rate the country’s carbon intensity would have reduced by only 22% by 2020. The fact that we are now looking at the 40-45% range is a sign that the picture in China has changed significantly from just five years ago.

(1)   China has already taken significant action to address climate change in the last five years: Before China launched a series of new policies in 2005, its carbon emissions had been steadily increasing by roughly 16 percent per year – but two years later these proactive policies had already helped drop that number down to 6 percent, according to data from the International Energy Agency.

How exactly did China achieve this progress? China’s government took significant measures to improve energy efficiency in the Eleventh Five Year Plan, including replacing inefficient coal-fired power plants and outdated heavy manufacturing capacity with more efficient alternatives,[2] rating the job performance of provincial and enterprise leaders on how well they reduce energy intensity; establishing a program to improve the efficiency of the top 1,000 energy-consuming enterprises; and dramatically increasing energy generation from low-carbon sources.[3]  The chart below from Lawrence Berkeley National Laboratory gives a more precise breakdown of how China has been achieving these energy improvements.

So far these efforts have resulted in substantial reductions in energy intensity nationwide due to the substantial financial investment and policy measures China has already put in put in place, although China is now undertaking a major push in order to achieve the target by the end of this year. But China’s central government has faced and continues to face growing resistance from provincial and local officials who regard these efficiency measures as obstacles to GDP growth and local development plans (as William Chandler at the Carnegie Endowment for International Peace and Prof. Wang Yanjia note here).

Figure 2: How China has carried out its energy intensity reductions since 2006 (source: Lawrence Berkeley National Laboratory, China Energy Group

Figure 2: How China has carried out its energy intensity reductions since 2006. (Source: Lawrence Berkeley National Laboratory, China Energy Group)

(2) China will need to do even more to reach its new carbon intensity target of 40-45% from now on: Even if we assume that China can succeed in reducing its energy intensity by 20% from 2006-10 and in continuing its deployment of non-fossil energy until the end of the year, it will still be only halfway to its 2020 target.  Considerably more efforts will be needed.

NRDC looked at this question in some detail, and our analysis suggests that if China’s existing efforts were not continued beyond 2010, the country’s carbon intensity would only decrease by 36% by 2020. Indeed, we analyzed the hypothetical situation in which China would only carry out its existing national goals – to reduce energy intensity by 20% from 2006-2010 and to meet a 15%  non-fossil energy target – but where China would not set forth any new policies and measures from 2010-2020  to reduce emissions and energy consumption beyond these existing goals. On the one hand, we found that in this scenario China’s carbon intensity would still continue to decrease, since new industrial production would be more energy-efficient and since energy-hungry heavy industries would gradually give way to more light industry and services. But on the other hand, we also found that this spontaneous improvement would only lead to a 36% reduction in carbon intensity by 2020. In other words, without additional actions China’s carbon intensity would fall significantly short of its 40-45% target.

(3)  ‘Reference Scenarios’ are not the same thing as Business as Usual: Some commentators have claimed that China’s target is no better than business as usual, generally by relying on the Reference Case forecasts of energy organizations such as the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA).  But contrary to conventional wisdom, these Reference Cases are not intended to describe China’s “business as usual” trajectory and it would be erroneous to regard them as such.

The Reference Scenarios in the IEA and EIA forecasts are designed to examine the situation in which a nation continues all of its existing policies with respect to climate change. In contrast, “business as usual” refers to a scenario in which a country carries on with its economic development without taking any measures to address climate change.   For a country like China that has already taken significant actions to reduce the growth of its energy demand and emissions, the difference between continuing existing policies and business as usual (i.e. doing nothing to address climate change) is considerable.

Indeed, China’s existing policies for energy intensity and non-fossil energy sources represent a sharp deviation from previous energy trends and they have already required substantial resources, investment and policy intervention. To claim that these measures represent business as usual is to misunderstand the purpose of Reference Case forecasts and to penalize China for taking early action.

Even accepting that China’s target is a significant new commitment, two looming questions remain: Will this target be enough to save the planet? And can China do better?

Will China’s target be enough to save the planet?

The good news is that China’s target is almost in line with its share of the reduction needed to keep atmospheric concentrations of greenhouse gases below 450 ppm. The upper bound of China’s target is close to what is called for in the International Energy Agency’s ‘450 ppm Scenario’ in its World Energy Outlook 2009, which analyzes a situation in which each country does its share to stabilize atmospheric GHG levels at 450 ppm of CO2-equivalent.

Under the IEA’s 450 ppm scenario, China would reduce its carbon intensity by 47 percent from 2005 levels by 2020. In other words, a 47 percent reduction in carbon intensity would be a good first step from China in the global effort to prevent temperatures from rising by more than 2 degrees Celsius over pre-industrial levels. This is fairly close to the upper end of China’s target range of 40-45 percent.

None of this is to suggest that China alone can save the planet. China’s emissions are still rapidly rising and will likely continue to rise until 2020 at the very earliest. All told, the climate pledges by countries in the Copenhagen Accord do not add up to the reductions needed to stay below 450 ppm. Moreover, even 450 ppm may not be enough. The more we learn about our atmosphere, the more we realize that global warming may be amplified by methane locked in the permafrost layer and by oceans absorbing less carbon dioxide than we previously believed, and that even stronger global efforts may therefore be needed to avert catastrophic climate change.  This is precisely why the world needs every country to step up to the challenge.

Can China do more?

The short answer is yes, China can do more – and there is hope that the country will do more.  There are several reasons to believe that China’s performance may potentially exceed the official 40-45% target:

  • Our analysis indicates that with its current level of effort, China could attain 47% or more. How would it reach this goal? Assuming GDP growth stays close to 8-9% per year, this would require reducing energy intensity by 15% and 12% in the next two five-year periods. It would also require China to reduce its reliance on coal to 62% in 2020 and increase its share of non-fossil energy to 15% and natural gas to 5%, which is in line with the IEA’s 450 ppm scenario.
  • This goal is not out of reach: Chinese leaders are considering new domestic targets that are even more ambitious than this. Last month, several Chinese policy experts made recommendations for a 16% energy intensity reduction target in the next Five-Year Plan followed by an additional 14% reduction thereafter. Combined, such targets would decrease China’s carbon intensity by about 48%, which is even deeper than the recent 40-45% pledge. The political discussions are still ongoing, but these encouraging recommendations are a sign that China may well set out policies that could potentially overshoot its Copenhagen pledge.
  • It’s also important to keep in mind that China’s target was set cautiously low partly to prepare for the possibility of lower economic growth. Indeed, if economic growth is lower than expected China will actually have a harder time achieving its carbon intensity target. Chinese industries will not be able to invest as much in newer, more efficient equipment and they will enjoy less capital turnover, which will make it more difficult for China to achieve its carbon intensity pledge. For instance, if China’s economic growth turns out to be only 7.3% per year instead of 8.8%, the country will need to keep CO2 emissions below 8.2 billion tons by 2020 instead of 9.7 billion tons in order to reach the top of its target. It should be noted that in fact, most economists agree that China’s economy will continue to grow quickly in the next decades. This is another reason why China may be able to outperform its target.

In Conclusion

China’s target of reducing carbon intensity by 40 to 45 percent from 2005 levels by 2020 represents a serious new commitment that extends its existing significant efforts to improve energy efficiency and develop a more sustainable energy structure.

While it leaves room for even more ambitious action, this target demonstrates China’s engagement and reinforces its role as a key player in addressing climate change through energy efficiency, structural changes and the deployment of alternative energies and cleaner fossil fuels.

 

[1] See State Council Office announcement (in Chinese), 11/26/09, available at: http://www.gov.cn/ldhd/2009-11/26/content_1474016.htm, and “China announces targets on carbon emission cuts“, Xinhua, 11/26/09, available at http://english.gov.cn/2009-11/26/content_1474008.htm.

[2] National Development and Reform Commission, China’s Policies and Actions for Addressing Climate Change – The Progress Report 2009, November 2009.

[3] See Deborah Seligsohn et al., “China, the United States, and the Climate Change Challenge,” WRI Policy Brief (October 2009) and Lynn Price et al., “The Challenge of Reducing Energy Consumption of the Top-1000 Largest Industrial Enterprises in China,” Proceedings of the European Council for an Energy Efficient Economy, 2009 Summer Study.

]]> Progress in Improving Transparency in Environmental Protection and Climate Change in China tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144.5794 2010-04-12T14:53:14Z 2010-04-23T15:58:43Z On April 1st I was invited to testify on the subject of transparency in environmental protection and climate change in China at a roundtable discussion for the Congressional Executive Commission on China. The purpose of the hearing was to provide... Barbara Finamore On April 1st I was invited to testify on the subject of transparency in environmental protection and climate change in China at a roundtable discussion for the Congressional Executive Commission on China. The purpose of the hearing was to provide an honest assessment of the current state of transparency in environmental protection, energy and climate change in China. 

I was joined on the panel by David Gordon of Pacific Environment, Deborah Seligsohn of the World Resources Institute, and Michael Wara of Stanford University. We discussed the progress that China has made on this front in recent years, as well as the remaining gaps that sometimes prevent scientists, the Chinese public, NGOs, CDM project investors, and the international community from accessing information on environmental protection, energy, and climate change.

I made three key points in my testimony on the status of environmental transparency in China:

  • In recent years, China has made a number of important moves towards greater environmental transparency. China’s 2008 Open Government Information Regulations, the country’s first national regulations on freedom of information, were a landmark for a country not known for a tradition of information disclosure.  The Ministry of Environmental Protection has been one of the strongest supporters of transparency measures because it recognizes these measures as an important tool for environmental protection. The Environmental Information Disclosure Measures it issued set clear obligations for environmental protection departments and certain enterprises throughout China to disclose environmental information to the public.
  • Implementation of these measures has been uneven and there is still much work to do, especially when it comes to clarifying vague regulations and holding local officials accountable for failing to comply. Nevertheless, important progress has been made, as NRDC and the Institute of Public & Environmental Affairs found in our study assessing the first year of implementation of the environmental information disclosure measures in 113 cities across China.  Cities like Wuhan, Shanghai, Ningbo, Weihai and Beijing are meeting their information disclosure requirements in a variety of innovative ways, from websites with searchable emissions data for a given day or time period, to an online “Call Center” database with real-time videos of pollution facilities. The Supreme People’s Court has released a draft judicial interpretation (Chinese) on open information to clarify the regulations and solicited public comments on the interpretation. It remains to be seen how this will play out, but we are hopeful that the interpretation when it is ultimately released will provide a boost to information disclosure.
  • The main reason to believe that the trend towards greater transparency will continue is that transparency is viewed by many within China as an effective tool for solving serious environmental and energy challenges. Chinese citizens want to know more about the pollution in their communities. Consumers and multinational buyers are increasingly eager to know the environmental impacts of the products they purchase. And Chinese government leaders at both the central and provincial government levels need access to accurate and timely information to implement their climate, energy and pollution targets.

I also made four recommendations for how the United States can work with China to improve environmental and energy information disclosure in a number of areas of mutual interest:

  • China will need assistance as it builds up its capacity and administrative structures to handle greater environmental information disclosure. US-China exchanges on developing and refining the laws, rules and systems for environmental information disclosure can provide an invaluable boost to China’s capacity-building efforts.
  • The U.S. and China are already engaged in a number of international partnerships and collaborations on environmental protection, pollution reduction, and energy efficiency. All of these can be made more effective by improving environmental and energy information by developing greater capacity to generate, capture, and distribute such information.
  • Given the increasing demand by U.S. consumers and businesses for information on the environmental impact of the products they purchase, and given the tremendous interdependence of the U.S. and China in international trade, there is significant space for international collaboration on approaches to “greening” corporate supply chains. This benefits consumers, gives Chinese environmental enforcement authorities the support of powerful business allies, and ultimately helps to bring about a cleaner environment in China.
  • The U.S. and China are both exploring the best approaches to monitoring and inventorying their greenhouse gas emissions. Technical, non-political exchanges on approaches to improving the capacity and methodologies related to greenhouse gas emissions can serve to build trust and solve real technical challenges facing both countries in the battle to combat climate change.

Environmental transparency is at a turning point now in China. We have seen some early positive impact from greater transparency regulations, and municipalities and departments throughout China have already shown a wide variety of best practices. Nonetheless, it is the choices that will be made on the ground in China over the next few years that will make the difference between a transparency system that truly helps China achieve its environmental and climate change objectives or a system that exists mainly in the law books, but not in practice. To this aim, China’s citizens and businesses have a crucial role to play in continuing to foster transparency and open information in the country. The international community also has a key role to play - international companies must live up to their green pledges, and consumers can continue demanding cleaner products that are better for their health and that minimize the impact on the environment.

The full transcript of the hearing will be available on the CECC website in the next few weeks.

]]> China Officially Associates with the Copenhagen Accord tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144.5532 2010-03-11T14:56:25Z 2010-03-21T11:47:04Z Barbara Finamore On Tuesday, in an official letter to the UNFCCC signed by China’s climate negotiator Su Wei, China officially expressed its willingness to be associated with the Copenhagen Accord.  To be precise, the one-sentence letter confirmed that “the [UNFCCC] Secretariat can proceed to include China in the list of Parties included in the chapeau of the Copenhagen Accord” (the preamble to the Accord).

China's official decision comes on the heels of a similar decision from India.  Having these two major countries formally associate with the Accord alleviates some previous concerns about their engagement while breathing new life into the international agreement.

Long before Tuesday’s announcement, China made its intentions clear by confirming that it endorsed the outcome of the Accord (as I blogged about here) and was moving forward with actions to control its greenhouse gas emissions (as I blogged about here). Nonetheless, having China and India officially join the list of countries in the preamble is an invaluable new step. The Copenhagen Accord is currently endorsed by over 100 countries, including all of the world's largest economies and largest emitters, and covers more than 80% of the world's emissions.

On Wednesday, in front of the annual session of the National People’s Congress, China’s chief climate negotiator, Xie Zhenhua, reiterated China’s support for the Copenhagen Accord emphasizing his hopes that the next round of international negotiations in Mexico later this year will be successful. Xie also highlighted that under the requirements of the Copenhagen Accord, China has agreed to submit an inventory report every two years to the UN Secretariat of its actions to reduce its emissions.

When asked by a reporter whether the United States’ inaction on climate change was the largest barrier to reaching an international climate agreement, Xie answered that he recognizes the political obstacles that exist in the U.S. at the moment, but he hopes that the U.S. won’t as a result of its domestic political constraints end up pushing America’s responsibility onto the rest of the world. My colleague Alex Wang will be blogging about this conference in more detail shortly.

In addition to the annual session of the National People’s Congress, another top political body in China, the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) is also holding its annual meeting. During this year’s CPPCC session, Chinese leaders have made a number of significant announcements related to climate change and the environment.

On Tuesday, the Ministry of Finance (MoF) highlighted China’s substantial budget allocations for clean energy and energy efficiency over the past four years and for the coming year. China is investing heavily in clean energy and energy efficiency projects and the MoF revealed the following statistics:

  • Between 2007 and 2009, MoF spent 102 billion RMB (approx. $15 billion USD) on increasing the share of clean energy in China’s total energy portfolio.
  • China is also spending billions on innovation. Since 2008, China has allocated tens of billions of RMB through national innovation programs, such as the 863 Program (“The National High-Tech R&D Program”) and the 973 Program (“The National Basic Research Program”).
  • This year, MoF has allocated 50 billion RMB (approx. $7.3 billion USD) for energy-efficiency and emissions reductions projects (up 20 billion RMB from last year), as well as 10.9 billion RMB (approx. $1.6 billion USD) for renewable energy development (up 3 billion RMB from last year).

These numbers illustrate that China is pushing into new markets and expanding its research and development capabilities in the clean energy sector.

In addition, “low-carbon development” has been the buzzword of this year’s annual legislative session. One topic of debate at the CPPCC session is whether China should implement a carbon tax. One CPPCC member specifically cited the American Clean Energy and Security Act (ACES) passed by the House as one reason why China should consider implementing a carbon tax, since ACES contained a provision that would tax imports from countries that don’t take certain actions to reduce their emissions:

Jia also pointed out that the levying of a carbon tax can reduce risks of being hurt in international trade friction, as some developed countries have mulled levying such a tax and will also likely impose carbon tariffs on imported products from other countries that do not have quotas for emissions reductions -- like the American Clean Energy and Security Act passed by the U.S. House of Representatives last June. "But if we have already levied a carbon tax in China, the other countries would be suspected of double taxation by imposing carbon tariffs, which violates World Trade Organization agreements," he said.

The wheels are spinning worldwide as the fight to counter climate change presses on. The interconnections of this global problem are reflected in how interconnected the solutions must be. The fact that China is considering U.S. domestic policy while formulating its own response to climate change and that  China and India have signed on to the Copenhagen Accord, illustrates once again the global nature of these issues and highlights the possibility for collaboration, cooperation and competition in achieving solutions.

]]> China's Recent Steps Towards Meeting Its Climate Commitments tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144.5487 2010-03-05T21:21:37Z 2010-03-15T17:51:25Z Despite some recent U.S. press reports to the contrary, China is not sitting still when it comes to addressing climate change. A number of high-level statements and reports released in China over the last week have sent this message loud... Barbara Finamore Despite some recent U.S. press reports to the contrary, China is not sitting still when it comes to addressing climate change. A number of high-level statements and reports released in China over the last week have sent this message loud and clear.

Today marked the start of China’s annual legislative session. Various official statements released over the course of this past week indicate that low-carbon development and clean energy will be top legislative priorities in China throughout the coming year. Below are four indicators of China’s commitment to a course of action on greenhouse gas emissions and clean energy in the coming session. My colleagues and I will continue to blog on climate and environmental developments during the NPC legislative session as they arise.

1. Highlights from the First Day of the National People’s Congress Session

China’s National People’s Congress (NPC) is currently engaged in a two-week long meeting to establish the nation’s priorities. While the discussions are still ongoing, two preliminary developments are already worthy of note:

  • Premier Wen Jiabao opened the session with a “State of the Union” style address about what achievements China made in 2009 as well the direction China should be heading. (Here is the link). In his speech he noted that climate change had been a key priority in 2009 and that China will continue to take strong measures to implement its 2020 carbon intensity goal. He also noted that China had made progress in implementing its energy intensity goal and that China will actively support its rapidly developing clean energy sector.
  • The NPC is considering whether to adopt a proposal that focuses on low-carbon development as its No. 1 Resolution. The No. 1 Resolution is often considered one of the most influential documents in the legislative session.  The proposal recommends that building a low-carbon economy should be a top government priority, including greening governmental offices and their activities by using recyclable materials and energy efficient lighting and transportation (Chinese only).

2. Post-Copenhagen Roundup Conference

Last Wednesday, China convened a high-level conference in Beijing to discuss its post-Copenhagen strategy and policy in fighting climate change. Several top climate change officials spoke at the event, and a number of my colleagues from NRDC’s Beijing office were present. (A transcript of the event is available here in Chinese only).

Su Wei, the Director General of the Department of Climate Change, spoke about the progress made at Copenhagen and the path forward from China’s perspective. One of the themes he emphasized is that a global consensus emerged from Copenhagen that climate change is caused by human activity and that global political action is needed to fight it.

Here is our in-house, unofficial translation of some of his key remarks made at the conference:

Su Wei highlighted three significant achievements that came out of Copenhagen:

  • First, Copenhagen “raised people’s awareness about the problem of climate change…Copenhagen represented an unprecedented common political effort on a global scale to address climate change…. After Copenhagen, climate change is now a topic that everyone knows about and everyone is talking about.”
  • Second, “a political consensus emerged from Copenhagen on the need to control greenhouse gas emissions. It also confirmed that global economic development must be headed in the direction of low-carbon development. And it also indicates that a new round of economic competition and technological change has started. Although skepticism regarding the science of climate change continues to exist, the mainstream view is that climate change is caused by human activity. Especially during the last 200 years during the process of industrial development, the large quantity of emissions produced by developed countries without restraint is what has created the current climate change problem. On this point there is a fundamental consensus. One of the main outcomes of Copenhagen is to confirm this consensus and to confirm that each country must take strong actions to control greenhouse emissions according to the principle of ‘common but differentiated’ responsibilities- each country must make a contribution to address climate change.”
  • Third, Copenhagen “confirmed the principles and structure for the international cooperative effort to address climate change. The principle is that developed and developing counties must have “common but differentiated responsibilities” and the principle of fairness must be applied to tackling climate change…”

Su Wei also identified four key aspects of China’s policy and strategy going forward for tackling climate change:

  • First, “We must balance economic development and environmental protection… We must make addressing climate change one of the key national strategies in China’s economic and social development.
  • Second, “Addressing climate change does not only concern the Chinese people, but it affects the welfare and long-term development of all people in every country. Therefore, we must rely on practical and effective international cooperation to fight the challenge of climate change. We must uphold the UN Framework Convention and the Kyoto Protocol’s fundamental framework and uphold the principle of ‘common but differentiated responsibilities’ and the Bali Action Plan. We must also demonstrate to the world the Chinese people’s sense of responsibility and spirit of dedication.”
  • Third, “The core issue in addressing climate change must be sustainable development”.
  • Fourth, China must “actively research low-carbon technologies. In addressing climate change, technology has an extremely critical and core role… We must research low-carbon technologies, increase the scale of green investment, advocate for green consumption, promote green growth…We must strengthen energy conservation, improve energy efficiency, clean coal and renewable energy, advanced nuclear, as well as research and development in other low-carbon and no-carbon emission technologies…and implement corresponding policy measures, including economic policy, tax, pricing and finance.”

Su Wei concluded with this remark: “Our country’s goal of controlling greenhouse emissions, is not just a promise that we are making to the international community that demonstrates our people’s sense of responsibility and spirit of dedication, but it is also about our country moving forward with a scientific view of development and we must continue unwaveringly on this path of sustainable development because its an absolute necessity.”

3. Plans to Implement Carbon Intensity Reductions

On Friday last week, China’s chief planning agency (NDRC) issued a report affirming China’s plan to push forward with its commitments to reduce its carbon intensity under the next Five Year Plan.

As I’ve previously blogged about, China has set a target of reducing its carbon emissions per unit of GDP (“carbon intensity”) by some 40-45% by 2020 based on 2005 levels. In order to meet this target, China will need to build upon the work it has already done during the 11th Five Year Plan period (2006-2010) to reduce its energy use per unit of GDP (“energy intensity”). China’s top officials are now sitting down to formulate the country’s main priorities for the 12th Five Year Plan (2011-2015), and we’ve been watching closely for China to release the details of how it plans to carry through on its climate pledges.

Based on the NDRC report released last Friday, we now have confirmation that carbon intensity targets will in fact be included in the 12th Five Year plan and that these targets will be “binding” as we expected. This is a positive development because it signifies that China’s is moving forward with its pledge to reduce its carbon intensity and it will be a top national priority as promised. My colleague, Alex Wang, has blogged about the significant role that national plans can play in driving orchestrated, nationwide action in China. In short, setting nationally “binding” targets is one of the most effective institutional tools available in China’s governance system. Based on the serious manner in which China has pursued its current targets over the last five years, I believe that China will live up to its pledges to reduce its carbon intensity.

4. Renewable Energy Program Announced

Official media reports this week announced that China is preparing to unveil a ten-year program to invest billions of dollars into China’s already booming clean energy sector (click here for Chinese). As part of its suite of pledges evolving out of Copenhagen, China committed to increasing the share of non-fossil sources of energy (such as hydro, wind, solar, biomass and nuclear) in its primary energy consumption to 15% by 2020. According to Secretary Zhang Guobao, the plan, which should be released soon, will outline the path for implementation of clean- and renewable-energy projects. Just a few weeks after the Copenhagen summit ended, China started working towards this pledge by amending its Renewable Energy Law, which now includes provisions that will ensure that renewable energy account for an increasing amount of China’s total energy consumption. Increasing its clean energy resources has been one of the key pillars of China’s strategy to address climate change, and this strategy comes with the added benefit of increased energy security as well as the creation of 1.2 million jobs in China’s renewable energy sector as of 2008.

 

China is moving forward on the implementation of its commitments, recorded as part of the Copenhagen Accord. The playing field is dramatically different than it was just two months before the December climate negotiations and will undoubtedly only continue to progress. I will continue to blog more about China’s next five year plan as more details emerge.

]]> China Renews Its Commitment to Renewable Energy tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144.5235 2010-02-01T20:56:35Z 2010-02-11T16:19:01Z Barbara Finamore Here is a post by an NRDC visiting attorney, Sara Schuman, who is in our Beijing office:

"Optical Cables Below" reads a sign outside a wind farm in Yumen, Gansu province"Optical Cables Below" reads a sign outside a wind farm in Yumen, Gansu province. Photo Credit: Doug Kanter

 

China is currently the second largest consumer of energy in the world (behind the US) and is projected to overtake the US as the largest consumer by 2015. To meet its growing energy needs, China has made impressive efforts in recent years to expand its renewable energy capacity. This effort was kick-started with the passage of the Renewable Energy Law in 2005. After four years of rapid expansion in China’s renewable energy sector, China passed amendments to the Renewable Energy Law on December 26, 2009. While it still remains to be seen what the exact impact of the amendments will be, the amendments illustrate China’s continued commitment to expanding its renewable energy supply and overcoming some of the existing barriers to achieving this objective.

The original Renewable Energy Law created an umbrella framework for regulating renewable energy in China. (Here is the text of the original law in English and Chinese). Like many laws enacted in China, the Renewable Energy Law left many of the important details to be determined later by various government agencies through regulation. Since the Renewable Energy Law went into effect on January 1, 2006, numerous regulations have been issued to fill in some of these details. Although the amendments do not alter the underlying policy goals of the original law, they do add additional detail to the existing framework to improve implementation of the law’s underlying goals.

In this blog post, I’ll focus on two significant changes:  (1) the addition of measures intended to better implement the Mandatory Connection Policy and (2) the streamlining of the renewable energy fund that provides the financial incentives for the renewable energy industry. We will release a more detailed report on the amendments in a few weeks.

1. Changes to the Mandatory Connection Policy

One of the most significant aspects of the Renewable Energy Law when it was originally passed was the introduction of the “Mandatory Connection” policy, which essentially required grid companies to connect and purchase all renewable energy generated that could be fed into the grid. After four years of experience with the Mandatory Connection policy, however, it became clear that not all grid companies were complying with their obligations to purchase all renewable power and connect it to the grid (See here in English and here Chinese in Section 3 for more detail).

While China has rapidly increased its installed capacity of renewable energy over the last five years, there are concerns that too much of this capacity is not promptly connected to the grid and that not all power being generated is being purchased as required by the law. For example, China’s installed wind capacity has doubled every year for the last four years, but according to recent reports, about 30% of China’s wind capacity is not connected to the grid and may be lying idle. China has recognized that this “bottleneck” problem is a serious issue that must be resolved in order to achieve its renewable energy potential and reduce the growth of its greenhouse gas emissions (See here in English and here in Chinese).

This “bottleneck” is due, at least in part, to the fact that oftentimes grid companies lack the necessary infrastructure to connect all of the renewable power generated and that adequate incentives are not in place to encourage them to invest in upgrading their infrastructure. According to some sources in China’s wind industry, grid companies in some cases have even required renewable energy generators to agree in their power purchase agreement to a grid curtailment provision (i.e. that only a portion of their energy generated will be purchased by the grid), which is a clear violation of the Mandatory Connection Policy. As a practical matter, however, curtailment of power generation may be necessary at certain times if the amount of power generated at a specific time is more than what the grid can securely handle. Much of the amendments are aimed at addressing this “bottleneck” problem by creating a legal framework that requires grid companies to invest in expanding and strengthening their facilities.

One useful lens through which to view the amendments is to look at how the responsibilities of the grid companies have increased and decreased under the amendments. These responsibilities have increased most notably by now requiring that grid companies meet a new type of target- a proportion of renewable power generated relative to overall power generation (Art. 14, paragraph 1).  Although the amendments do not themselves specify any amounts, they direct certain government agencies to set the amounts of these targets and enforce them.  This new requirement essentially provides for a system similar to the Renewable Portfolio Standards (RPS) that are found in various US states.  China has set several different renewable energy targets in the past, but this new target differs from previous targets in some significant ways.1

Unlike any of the previous targets, the new target created by the amendments places responsibility directly on grid companies to purchase a fixed share of their power generation from renewable energy sources, and these grid-level targets will be enforced through penalties for non-compliance (Art. 29). A Mandatory Market Share (MMS) that sets the percentage of non-hydro renewable power generation out of total power generation was introduced in 2007 in the Mid and Long Term Plan for Renewable Energy that was issued by China’s chief national economic planning agency, the National Development and Reform Commission (NDRC).  (See here in English and here in Chinese) While this 2007 target is similar to the new target provided for in the amendments, this is the first time in China that an RPS-style target has been expressly provided for in the law, creating an enforceable, legal obligation with which grid companies must comply. 

There are a number of open questions about how these targets will be implemented. Here are a few suggestions for China to consider when formulating the implementing regulations:

  • The targets should be set on an annual basis and the magnitude of the targets should increase gradually and predictably every few years. The target should continually increase in order to drive the development of additional renewable power generation. In addition, hydropower should continue to be excluded from the target (as it is under the MMS policy mentioned above).
  • The penalty regulations should be drafted in such a way that penalties for non-compliance are imposed automatically without any discretion to ensure that the target is being uniformly enforced. In addition to the penalty, the grid company should be required to make up any shortfall in the following year to alleviate any incentive that grid companies may have to pay the penalty rather than comply.
  • In addition to financial penalties, it is worth considering a performance evaluation system for grid company officials based on their performance in meeting their assigned targets. Performance evaluations of government officials, which determine whether officials will be rewarded or punished, have proven to be one of the most effective tools in ensuring that China’s centrally determined targets are met nationwide.
  • To verify that grid companies are meeting their targets, they should submit copies of all of their power purchase agreements with renewable power generators as well as file an annual report detailing all the power purchased throughout the year.  This annual report should be made public and subject to substantial penalties for false or misleading information.
  • One question is whether it would be possible to implement a trading system in which grid companies could trade renewable energy credits (REC) for the excess or shortfall in meeting the targets. A trading mechanism has the advantage of increasing efficiency, reducing administrative costs and increasing flexibility. However, an adequate legal infrastructure must be in place for such a trading scheme to work. While it is unclear if such a system would currently be effective in China, a pilot trading scheme could be developed to help lay the ground work for a national trading system that could be implemented in the mid to long-term.
  • Since renewable energy technologies vary widely in their cost, the targets should differentiate between different types of renewable energy technologies (such as solar) to encourage the development of a diverse renewable energy portfolio. This could be accomplished by setting different percentages within the overall target for different technologies or by setting minimum or maximum contributions from certain technologies. The downside of these policies is they increase the administrative complexity in enforcing the targets.

While much of the detail still remains to be worked out, the amendments on their face clearly impose a new obligation on the grid companies that did not exist under the original legal framework.

On the other hand, the amendments also decrease the grid companies’ obligations by adding a new provision that would limit the scope of the grid companies’ obligations under the Mandatory Connection Policy.  The original law required grid companies to purchase all renewable energy that was available for feed-in to the grid regardless of “quality,” but the amended law now limits grid companies’ responsibility to only those renewable energy generators that meet certain technical requirements for connection (Art. 14, paragraph 2).

The argument for such a policy is that if power generated from renewable sources (such as wind) is variable then connecting it to the grid could increase the vulnerability of the entire network and increase the cost of integration for the grid company. For example, wind integration studies in the U.S. have found that the cost of integrating wind into the grid is generally around $5/MWh for wind capacity penetration levels of up to 20%. In the U.S., the development of grid codes by the U.S. Federal Energy Regulatory Commission has helped to advance wind turbine technologies that ultimately make it easier to integrate wind projects into the grid.

While setting compulsory national technical standards is a positive step, one issue with the amendments is that they do not specify who will set the standards and how they will be monitored. Although technical guidelines for wind, solar and geothermal were issued in China in 2005, compulsory national standards do not currently exist. We suggest that these technical standards be developed through an inclusive, transparent process; otherwise, this exception could end up swallowing the rule and undermining the goals of the Mandatory Connection policy.

In sum, the grid companies’ obligations have both increased and decreased in some respects as a result of the amendments and it remains to be seen how the balance will ultimately be struck.

(As an aside, there have been numerous media reports that China has increased its penalty provision for grid companies’ non-compliance in Art. 29. This assessment is incorrect and likely stems from a faulty translation of either the amendments or the original law. The amendments do not impose any additional penalties than what already existed in the original law.)

2. Streamlining the Renewable Energy Development Fund

One other very important change to the law is how grid companies are compensated when purchasing renewable energy instead of cheaper, dirtier forms of energy, such as coal.

Given that renewable power is generally more expensive than conventional fossil fuels, China has instituted feed-in tariffs for a variety of renewable energy technologies to compensate grid companies for the additional cost of purchasing renewable energy. The original law created a system in which these feed-in tariffs and additional costs associated with connecting a renewable generator to the grid would be funded by a surcharge on end-users of electricity.

Under the original law, the grid company would directly withhold the surcharge from the end-user’s regular electricity bill. This surcharge is set by the government and is periodically increased (as of Nov. 2009 the surcharge is set at RMB .004/kWh).  Now, instead of the grid companies’ collecting the surcharge directly from the end-user, the end-user will pay the surcharge into a Renewable Energy Development Fund. Once the surcharges have been pooled, the grid company will then seek compensation from the fund for the additional cost of purchasing the renewable energy, including the costs associated with integration. Although this change might seem like a mere technicality, it is actually quite significant because pooling all the surcharges into one large fund will allow the government to use this considerable amount of money (689 million USD in 2009 and an estimated 1 billion USD in 2010) not only to compensate grid companies, but also to invest in various renewable energy development projects, including R&D (Art. 24). In order for the fund to be effective at funding these types of projects, we suggest that a transparent application process be established including detailed eligibility criteria for applicants to the fund in order to ensure that fund is applying its capital efficiently towards the most qualified projects.

The other benefit of the new funds-flow process is that it will allow the surcharges collected in China’s wealthier, eastern provinces to be spent in China’s less developed western provinces, where some of China’s richest renewable energy resources are located (Art. 21). Although surcharges have been manually re-allocated under the current regulations, now, by pooling the surcharges into a central fund, it will allow China to move ahead with a unified, national renewable energy plan that balances the renewable energy potential of China’s western provinces with the needs of its economic centers in the east.

As noted above, there are a number of questions raised by the amendments and we will have to wait for the release of the implementing regulations before any conclusions about the amendment’s overall success can be made.  Nevertheless, the amendments illustrate that China is pushing ahead with its vows to clean up its energy supply and is working on overcoming some the barriers that have stood in the way of achieving this goal.

 

1 Below are of some of China’s key national renewable energy targets that were released in 2007 (prior to the enactment of the amendments) in NDRC’s Mid and Long Term Development Plan for Renewable Energy”:

  1. China “will aim” to have 10% of primary energy consumption by 2010 and 15% of primary energy consumption by 2020 come from renewable energy sources;
  2. Non-hydro renewable power generation’s share of total power generation in areas covered by large-scale power grids should reach 1% by 2010 and over 3% by 2020; and
  3. Power generators that have privately-owned installed capacity of over 5 GW are required to have 3% of their total privately-owned installed capacity come from renewable energy by 2010 and over 8% by 2020. 

The new target announced in the amendment differs from the above targets in that the new target creates a legal obligation at the grid company-level to comply with the renewable energy target or face penalties for non-compliance.

 

]]> China Records Its Climate Actions By Copenhagen Accord Deadline tag:switchboard.nrdc.org,2010:/blogs/bfinamore//144.5224 2010-02-01T14:46:00Z 2010-02-11T10:36:14Z Barbara Finamore China's Commitment

China has submitted its proposed climate mitigation actions to the UNFCCC in a letter dated January 28, ahead of the January 31, 2010 deadline in the Copenhagen Accord.  Given Premier Wen Jiabao’s hands-on role, along with President Obama and the leaders of India, Brazil and South Africa, in creating the Accord last month, it is encouraging to see China demonstrate its commitment to moving global climate negotiations forward.  

In its letter, China reaffirmed its earlier announcement of policies to: (1) reduce its carbon intensity by 40-45% by 2020 from 2005 levels, (2) increase the share of non-fossil energy in its primary energy consumption to around 15% by 2020, and (3) increase forest coverage by 40 million hectares and forest stock volume by 1.3 billion cubic meters by 2020 from 2005 levels.  China noted that these actions will be implemented in accordance with the principles and provisions of the UNFCCC.

Although China did not explicitly state its association with the Copenhagen Accord, it had previously joined the other BASIC* countries in expressing its support for the Accord and underlining its importance as representing a high-level political understanding among the participants on some of the most contentious issues of the climate change negotiations. The U.S., Japan, E.U. and Australia have all formally associated with the Accord and submited their commitments.  India has officially submitted their mitigation action, while Brazil and South Africa have confirmed that they will submit their mitigation actions by the deadline as well. Together, these countries represent over 65 percent of global emissions and include all of the major emitters. 

Let’s be clear: the aggregate reduction in carbon from these pledges is not enough to keep atmospheric carbon dioxide (CO2) concentrations below the 450 parts per million level that science tells us is necessary to have a 50 percent chance of keeping global warming to within 2 degrees Celsius and avoiding the worst impacts of climate change.  Nevertheless, this is a critical start that would have been unimaginable just a few years ago.

 China’s Carbon Intensity Target

 The centerpiece of China’s submission is its commitment to decrease its carbon intensity – the amount of carbon dioxide it emits for every unit of GDP – by 40 to 45 percent by 2020 compared to a 2005 baseline (as I’ve blogged about here). China’s leaders have made it clear that this target will be binding on a domestic level, and that China will strive to achieve this goal regardless of other countries’ emissions reductions and irrespective of external financing. 

 Our own analysis has shown that China’s carbon intensity target is a solid commitment, a conclusion also held by the International Energy Agency (IEA).  In its most recent World Energy Outlook, IEA calculated the efforts that each country would need to make to keep atmospheric CO2 concentrations below 450 ppm and global warming to no more than two degrees Celsius.  The upper range of China’s 40-45% carbon intensity reduction target is close to the 47% carbon intensity reduction target for China estimated under IEA’s 450 ppm scenario, under which China’s actions would help to avoid almost 1 billion tons of CO2 emissions by 2020, more than any other country.

 Meeting Targets

To meet its target, China cannot just do business as usual.  It will need to build upon the existing, aggressive efforts it undertook in the last four years to reduce its energy intensity by 20 percent from 2005 to 2010, including:

 China will also have to sustain its rapid deployment of clean energy to meet the goal of having around 15% of the nation's primary energy consumption come from non-fossil sources by 2020. This will require a massive amount of investment. In 2008, China invested a total of $15.6 billion in sustainable energy investment (see here). China is reportedly planning to invest between $440 billion and $660 billion in the next 10 years on alternative energy development, including nuclear, in what could be the largest such program in the world.

China will also have to build upon its aggressive reforestation efforts. At present, China’s man-made forest coverage is 54 million hectares, after a prior drive to increase forest coverage by 20.5 million hectares from 2003-08.  China’s forestry efforts, which are in addition to its carbon intensity reduction efforts, could remove over 2 billion tons of CO2 by 2020.

Chinese leaders are keenly aware of the economic and environmental damage that climate change can cause, and they also understand the benefits that becoming a world leader in renewable energy and clean technology will provide in terms of jobs and energy security. This is apparent in the manner in which China is already moving forward with its plans to reduce the growth of its emissions. 

Results Under the 11th Five Year Plan

Looking at the serious ways that China has pursued its current Five-Year Plan goals, I am optimistic that China can live up to its pledges under the Copenhagen Accord. While many challenges remain, China has already achieved considerable progress in a number of its emission reduction efforts to date:

  • The Top 1000 Program: Under the Top 1000 Enterprises program, the Chinese government negotiated energy savings targets with the top 1,000 energy-consuming enterprises and required the enterprises to conduct energy audits and establish energy savings plans to reach their targets.  An evaluation of the top 1,000 enterprises’ performance last November (Chinese only) has noted that the enterprises as a whole have invested 90 billion RMB ($13.2 billion) in improving their efficiency and have already met their collective target under the 11th Five Year Plan of reducing energy consumption by 100 million tons of coal equivalent.  Scientists from Lawrence Berkeley National Laboratory have estimated that the program will avoid about 450 million tons of CO2 emissions through 2010.
  • Closing Inefficient, Outdated Power Plants and Factories: By replacing outdated, inefficient power plants and industrial capacity, China is improving the efficiency of its electricity production and industry.  According to the latest reports, China has phased out 55.5 gigawatts of old thermal power plants from 2006-09, as well as 61 million tons of outdated iron-making capacity and similarly large quantities for steel and cement (see here). Of course, this does not mean that total emissions from Chinese power plants or industry are decreasing - in fact, China's net thermal power capacity actually increased by 49 gigawatts in 2009.  But because new plants and factories benefit from more efficient technology and processing methods, these efforts to shut down inefficient, outdated production capacity are critical for reducing the growth of China's carbon emissions.
  • Job Performance Rating System: The government also established in 2007 an evaluation system to monitor progress in meeting energy savings targets, under which provincial officials and enterprise leaders who did not meet their targets wouldn’t receive promotions or annual awards. The central government has already seen promising results for motivating provincial and local officials to meet their targets. While environmental enforcement remains a serious problem in China, this bureaucratic job evaluation system is a very powerful tool in China to ensure that targets are achieved. We can expect in the next Five-Year Plan, to be released later this year, that officials will now also be evaluated based on their performance in meeting their carbon intensity targets. 
  • Renewable Energy Development: China’s ambitious plans to develop its renewable energy resources are also integral to reaching its carbon intensity target. In 2008, China’s  renewable energy use was equivalent to 250 million tons of standard coal, avoiding 600 million tons of CO2,roughly equal to the entire annual emissions of Canada.  China’s installed wind capacity has grown exponentially in recent years, and at the end of 2009 China passed Spain to rank third in the world in installed wind capacity, behind the United States and Germany.
  • Meanwhile, China’s solar industry has also taken off. China created two solar subsidy programs in 2009 (the Golden Roof and Golden Sun programs) to boost domestic solar installation, and has become the world leader in manufacturing solar PV panels in just a few years. China also announced several utility-scale renewable energy projects last year, including the world’s largest wind farm, a 10 GW “Three Gorges of Wind Power” project in Gansu Province, and a 2 GW solar power plant in Northern China using Arizona-based First Solar's thin-film solar PV panels. While there continue to be challenges connecting renewable projects to the grid, the government is taking steps to address these issues by investing in smart grid technology and amending the Renewable Energy Law to strengthen grid connection rules.
  • China plans to invest $7.3 billion in its smart grid in 2010, just slightly more than the United States. China's 2009 green investment plan also included $1.5 billion in subsidies over the next three years to develop alternative-energy vehicles. China is investing $9 billion a month on clean energy, and investment in clean energy R&D under its 863 Program is soaring at over 20 percent per year. Renewable energy jobs in China reached 1.12 million in 2008 and are climbing by 100,000 a year.

Ramping Up Since Copenhagen

As President Obama noted in his State of the Union address last week, countries like China “aren’t standing still.” China has indeed taken several other noteworthy steps in the weeks following the Copenhagen meeting.

Last week, China’s Ministry of Environmental Protection issued an official document encouraging monitoring of source-level greenhouse gas (GHG) emissions in localities “where conditions permit” and setting forth plans to carry out a pilot project to monitor carbon dioxide, methane and N20 at a number of sites.   This is another step towards building the capacity to monitor GHGs in China, and comes soon after the agreement on cooperation signed between the US EPA and China’s NDRC in November of last year to collaborate on the development of a GHG inventory for China.

 In addition, just one week after Copenhagen ended, China’s legislature passed amendments to its Renewable Energy Law, which was originally enacted in 2006. Although we need to wait for implementing regulations to flesh out much of the detail, the amendments illustrate China’s continued commitment to expanding its renewable energy supply and overcoming some of the barriers that have stood in the way of achieving this goal. The amendments contain several notable changes, including: (1) creating stronger incentives for grid companies to connect and purchase renewable power through mandatory renewable power targets, (2) encouraging grid companies to invest in smart grid technology, (3) streamlining the government fund that finances renewable energy R&D and deployment and (4) strengthening central government oversight of renewable energy planning and development at the provincial level. The passage of these amendments at such a critical time illustrates that China is pushing ahead with its vows to clean up its energy supply and is able to respond quickly to new challenges as they arise.

 Finally, last week, the Chinese government formally established a National Energy Commission, at the highest level possible, headed by Premier Wen Jiabao.  The creation of the NEC is a positive development because it will allow for better coordination of energy policy, including raising energy efficiency, curbing emissions, and strengthening China’s energy security. When China releases its 12th Five Year Plan for 2011-15 later this year, it will set forth in greater detail the steps it will take to meet the climate commitments it has set out for itself. Both the creation of the National Energy Commission and the drafting of the 12th Five Year Plan are crucial steps that lay the groundwork for China to meet its targets.

 President Obama also noted in his speech last week that “the nation that leads the clean energy economy will be the nation that leads the global economy,” and countries like China are “making serious investments in clean energy because they want those jobs.” (The media has taken note of China’s efforts too, as seen in this recent New York Times article proclaiming “China Leading Global Race to Make Clean Energy.”)  Taking action on climate change is an opportunity for both the U.S. and China to develop the clean energy technologies and industries of the future that will create hundreds of thousands of clean energy jobs, strengthen their economies and increase energy security.   

Although there is still much to be done to prepare for the next U.N. climate conference in November, China, the U.S., and many other countries have shown through their support of the Copenhagen Accord and the submission of their pledges that they are ready and willing to come together to take the next steps needed to reach a global agreement on climate change and transition to a clean energy future.

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* The BASIC countries are Brazil, South Africa, India, and China.

 

]]> China Transparency Pledge Moves Copenhagen Talks Forward tag:switchboard.nrdc.org,2009:/blogs/bfinamore//144.4953 2009-12-17T18:39:50Z 2009-12-27T13:48:52Z China advanced hope for a global climate accord Thursday, saying it would enhance the information it makes available to other countries about its carbon emissions and submit that reporting to some form of international review. This opens the door to... Barbara Finamore China advanced hope for a global climate accord Thursday, saying it would enhance the information it makes available to other countries about its carbon emissions and submit that reporting to some form of international review.

This opens the door to a potential agreement that ensures transparency in a way that is not intrusive and respects China's sovereignty. It is a welcome sign of how serious the Chinese are about taking action against climate change.

The announcement was made by He Yafei, China's vice minister for foreign affairs, at a press conference at the UN climate summit.  He said China would enhance and improve national communication to improve transparency, and that it would consider international exchange, dialogue and cooperation on these issues.

Transparency has been a sticking point between U.S. negotiators and the Chinese. The apparent opening came hours after Secretary of State Hillary Clinton announced the United States would participate in a global climate fund to reach $100 billion a year by 2020. (See transcript here.)  The money would be used to help low income countries cope with the ills of climate change.

Neither Secretary Clinton nor Vice Minister He drew a direct link between the moves. Both announcements, though, reflected forward motion by the two countries. Together, China and the United States account for about 40 percent of the world’s carbon emissions. For that reason, the two countries are regarded as essential to getting a global climate change accord.

President Obama and Chinese President Hu Jintao agreed to forge a strategic partnership around climate and energy issues when they met last month in Beijing.

China's willingness to engage in a constructive way on the issue of international reporting and review reflects the spirit of the new partnership. We look forward to continued progress on this front.

]]> Clean Tech in Copenhagen: A Key Solution to Climate Change tag:switchboard.nrdc.org,2009:/blogs/bfinamore//144.4912 2009-12-15T01:50:46Z 2009-12-24T20:52:20Z Barbara Finamore Clean tech is very much on the radar screen here in Copenhagen as a key solution to climate change.  The U.S.-based Solar Energy Industries Association (SEIA) and the European Photovoltaic Industry Association (EPIA) have just released a report entitled “Seizing the Solar Solution: Combating Climate Change through Accelerated Deployment.”  The report estimates that a combination of photovoltaics (PV) and concentrated solar power could deliver 15 percent of U.S. electricity by 2020. Moreover, along with European PV, these technologies could reduce CO2 emissions by nearly 1 billion tons annually while creating some 6.3 million jobs.

Our team was present today in the U.S. Pavilion as Secretary of Energy Steven Chu launched a new $350 million, five-year Renewables and Efficiency Deployment Initiative (Climate REDI). This initiative was spearheaded by our former NRDC colleague Rick Duke, now U.S. Deputy Assistant Secretary of Energy for Climate Policy.  As shown in more detail here, the initiative will be designed to cut the cost of existing clean technologies, such as advanced energy efficient appliances, solar home systems and LED lamps, in order to make them affordable for people without access to electricity. In addition to lowering costs, the program will focus on enforcing quality assurance mechanisms for these products and coordinating international standards, labels, information programs and incentives for high-efficiency appliances in order to dramatically scale-up market penetration worldwide. The program will receive an $85 million infusion from the U.S. which is separate from the U.S. contribution to the major climate financing package that will likely be announced later this week. It is also separate from the $150 million U.S.-China Clean Energy Research Center that was announced during President Obama’s trip to China in November.

I gave a presentation this afternoon about unlocking the potential of energy efficiency in China at an exciting side event hosted by the Alliance to Save Energy entitled From Paradox to Paradigm: The Role of Energy Efficiency in Creating Low-Carbon Economies, chaired by European Parliament Members Claude Turmes (Luxembourg) and Lena Ek (Sweden), featuring remarks from the CEOs of Rockwool International and Siemens Building Automation. (Side note: Frances Beinecke was slated to give this presentation but she was stuck in the Bella Center registration line for most of the day).  I was more than willing to pinch-hit for her on this topic, since I am also the President of the China-US Energy Efficiency Alliance. The Alliance, which was the brainchild of Environmental Entrepreneurs (E2) members Peter Liu and Bob Epstein, is a nonprofit public-private partnership dedicated to combating global climate change by promoting energy efficiency as the cleanest and least expensive energy resource in China.

Frances’ presentation astutely pointed out that energy efficiency represents over one-third of the total CO2 emission reduction potential in China, and could avoid about 2.4 billion tonnes of CO2 emissions by 2030.  Most of China’s impressive success to date in slashing its energy intensity has been focused on the industrial sector, which constitutes about two-thirds of its energy demand. But the only way for China to achieve its new carbon intensity target will be to focus aggressively on unlocking the energy efficiency potential in China’s buildings.

In NRDC’s joint report with the Boston Consulting Group, From Grey to Green: How Energy Efficient Buildings Can Help Make China’s Urbanization Sustainable, we showed that reducing energy use in all of China’s buildings by 70% (which we did in our pathbreaking Agenda 21 project, the first LEED-certified green building in China), would avoid the need to build 550 new coal-fired power plants in China each year.  But even a more modest goal – cutting energy use by half in only 5 percent of existing buildings and 60 percent of new buildings by 2015 – would be equivalent to removing all the cars from the roads in Sweden, Norway and Denmark.

Copenhagen is swarming with representatives from clean tech companies and organizations eager to take advantage of the new opportunities that an international climate agreement would unlock.  For example, I attended a reception hosted by the U.S. Business Council for Sustainable Energy and spoke to a number of people interested in collaborating on clean tech projects in China, including Katherine Hamilton, President of the GridWise Alliance, and Jared Blum, President of the Polyisocyanurate Insulate Manufacturers Association. A group of 200 Chinese companies and organizations also issued a joint statement in Copenhagen supporting China’s new carbon intensity target and vowing to explore models of low carbon economic growth (see my colleague Jingjing Qian’s blog here).

Over the last several years, China has taken dramatic steps to grow its clean energy industry, in part because it recognizes that climate change and energy security pose significant threats to China’s own economic and social stability. It is using a number of smart policy tools to foster the growth of renewable energy, including targets, subsidies and feed-in tariffs (we hear that a national solar feed-in tariff of 1.15 RMB/kWh will be rolled out after Copenhagen).  As a result, China has been steadily improving its ranking on clean tech development.  According to Ernst & Young’s latest report on global renewable energy, China has moved ahead of Germany to become one of the top two most attractive locations in the world in which to invest in renewable energy projects, second only to the United States. 

Tom Friedman has skillfully chronicled the rapid growth of China’s clean tech industry and warned the US to ignore it at our peril. The best way for the US to continue its leadership role on clean tech is to enact strong climate and energy legislation. But we should also recognize that China’s efforts to promote renewable energy are serving to bring down costs worldwide and provide jobs all along the global supply chain. I discussed this with Polly Shaw, Director of External Relations at Suntech America, at last month’s US-China Green Tech Summit in Beijing.  Polly said that Suntech, a China-based company which recently opened its first solar PV manufacturing factory in Arizona, has boosted the bottom line for American polysilicon suppliers such as MEMO of Houston Texas (about 70% of the value of a panel is polysilicon), as well as American thin film production equipment manufacturer Applied Materials, not to mention producers of all the wires, cables, inverters and trackers that go into a PV panel. Seems that the solutions to climate change are becoming as global as climate change itself.

]]> NRDC hosts COP15 side event on climate solutions in China tag:switchboard.nrdc.org,2009:/blogs/bfinamore//144.4856 2009-12-10T00:01:11Z 2009-12-19T19:15:31Z I work in China. I am no stranger to crowds. But the number of people streaming into Copenhagen for what is already an historic event in the global undertaking to curtail climate catastrophe would put even the most cosmopolitan of... Barbara Finamore I work in China. I am no stranger to crowds. But the number of people streaming into Copenhagen for what is already an historic event in the global undertaking to curtail climate catastrophe would put even the most cosmopolitan of cities to shame – and it’s only the first week.

On Tuesday evening, NRDC hosted an official side event in the Bella Center, where the Copenhagen climate negotiations are taking place, on “China and the World: Solving climate change through practical, on-the-ground collaboration.”  Side events (see the full list here) are a way for NGOs, countries, international bodies and other groups to highlight issues related to climate change and are hotly sought-after forums; only a small number of applications were approved.  NRDC’s side event was focused on explaining China’s efforts to mitigate its emissions, including the progress that has been made as well as the challenges ahead and the most important solutions.  

COP15 participants and observers are clearly interested in learning more about these issues, because the room was packed, even though most of the audience had probably had a full day of conference activities while still recovering from their jet lag. 

NRDC was lucky to have some of the top US and Chinese experts, including our own, to address some of the key solutions to reducing China’s emissions.  The speakers were:

  • Dr. Mark Levine, Senior Scientist, Group Leader and Founder of the China Energy Group at the Lawrence Berkeley National Laboratory, presented on China’s proposal to reduce its carbon intensity by 40 to 45 percent from 2005 levels by 2020, calling the goal very significant. 
  • Dr. Lü Xuedu, Deputy Director-General of China’s National Climate Center, noted that China had established institutions and policies to address climate change and was already taking significant actions to mitigate its emissions, and revealed that the 40 to 45% target was the top of the range recommended by Chinese academic institutes. Dr. Lu is one of China’s climate negotiators and is a member of the Clean Development Mechanism Executive Board; for a number of years, he was the Chairman of that Board.
  • Robert Earley, Low Carbon Transportation Program Manager of the Innovation Center for Energy and Transportation (iCET), discussed his NGO’s work on analyzing low carbon fuel standards and fuel economy standards for China, as well as establishing China’s first energy and carbon registry. 
  • Dr. Kevin Mo, our Senior Sustainable Buildings Specialist, discussed the findings from an NRDC-Boston Consulting Group report “From Gray to Green” discussing the challenges and huge potential for green efficient buildings in China. (See his blog post on his presentation here.)
  • Jingjing Qian, Deputy Director of the China Program, explained the need for research and development of carbon capture and storage technologies and policies in China, which could also benefit the U.S.  (See the executive summary of NRDC's soon-to-be released on CCS opportunities in China here.)
  • Finally, Alex Wang, Director of NRDC’s China Environmental Law Project, described how China is establishing the institutions like official evaluation systems for provincial officials and enterprises to reduce its energy intensity and emissions. (See his blog post on his presentation here and related blog post here.)

This side event is one of the few places during this conference where a thorough discussion of how China would meet global warming pollution/carbon intensity targets took place. 

Some nice photos and coverage of our side event are also available here.

]]> My First Day in Copenhagen tag:switchboard.nrdc.org,2009:/blogs/bfinamore//144.4837 2009-12-07T23:52:06Z 2009-12-17T19:09:52Z Barbara Finamore I knew I’ve been working in China too long when I couldn’t stop comparing everything in Copenhagen to Beijing.   I couldn’t even pass for an ordinary American to the immigration officer – my passport gave me away. He took one look at all the visas and entry and exit stamps covering the pages and said to me “This sure isn’t like China, is it?” 

In many ways he is right. For example, I saw more bicycles on the streets of Copenhagen today than I’ve seen in Beijing since I lived there in the early 1990s, when there were no private cars and most people relied on bicycles as their primary form of transportation. Now Copenhagen is one of the most bicycle-friendly cities in the world, with 36% of the population commuting to work by bike for a daily total of over 1.3 million kilometers. The government wants that number to increase to 50% by 2015 and in addition to building a world-class system of interconnected bicycle routes and allowing bicycles on the metro, it imposes a 200 percent tax on new cars.  It’s a far cry from today’s Beijing, whose car population reached 3.96 million last week, and at the rate it’s going, will reach the 4 million mark in a couple of weeks. 

Yet I was struck by some unexpected similarities as well. As I walked through Copenhagen Airport this morning, I was reminded of nothing more than my regular trips through Beijing’s Capital International Airport, which was named the World’s Best Airport by Conde Nast Traveler magazine this year. It was more than just the bright atmosphere and ease of service in both airports that rang a bell. What really resonated was the fact that most of the billboards and posters that shouted at me from all directions were advertising eco-friendly, green and energy efficient products.  Now that shouldn’t come as a surprise to anyone here in Copenhagen as it prepares to welcome an estimated 25,000 negotiators, NGOs and journalists intensely interested in climate change.  But the fact that the Beijing Airport features the same theme, long after the hordes of Olympic visitors have left town, is a small but important signal – clearly pointing out which way the city is moving. 

Beijing has a long way to go before it can achieve a level of environmental quality similar to Copenhagen, whose inner harbor is so clean that it can be used for swimming.  But I have no doubt it will get there. 

When I worked at the Beijing office of the United Nations Development Programme from 1990-93, everyone’s main complaint was the stench that emanated from the fetid Liangmahe canal nearby. I had little desire to return to that area as a result, and managed to stay away for many years until I joined California EPA Secretary Linda Adams and her Special Advisor Margret Kim for a meeting at UNDP last spring.

 I could hardly believe my eyes and nose when I returned to the canal, now transformed into a sparkling stream edged by willow trees and flowers in full bloom. And as I watched, a solitary swimmer in a green bathing cap made his way upstream.  A fitting symbol for Beijing's green efforts - and hopefully for its CO2 reduction efforts as well.  Here's to Hopenhagen!

]]> China’s Carbon Intensity Target tag:switchboard.nrdc.org,2009:/blogs/bfinamore//144.4774 2009-11-28T00:14:50Z 2009-12-07T19:52:44Z Barbara Finamore China yesterday announced that Premier Wen Jiabao will attend the Copenhagen climate summit and that he will bring with him a target for China of reducing carbon intensity by 40 to 45 percent from 2005 levels by 2020.  Coming a day after the announcement across the Pacific that President Obama will attend the beginning of the summit, bringing a commitment to reduce U.S. emissions "in the range of 17%" from 2005 levels by 2020, this means that we now know what the world's two largest emitters will be bringing to the table when the world's countries gather in Copenhagen. 

The official announcement (in Chinese here) notes that on November 25, Premier Wen Jiabao and the State Council standing committee met and decided upon the 2020 target and corresponding measures to achieve it.  Of note are the following points: 

  • 1.) What exactly does the carbon intensity target cover? China will reduce its carbon intensity, the CO2 emitted per unit GDP, by 40 to 45 percent from 2005 levels by 2020. This carbon intensity target will measure only the CO2 emissions from energy consumption and industrial activity, the source of most of China's emissions, and does not take into account efforts to reduce emissions or increase sinks from land use and forestry. This makes sense given that estimating emissions from land use and forestry is less precise than measuring emissions from fuel combustion and industrial activity, both of which are also more tightly linked to GDP than land use and forestry. 
  • 2.) How will this be implemented? In order to measure the progress it is making in achieving this target, China will include the carbon intensity target in its medium and long-term social and economic development plans and develop corresponding statistics, monitoring and evaluation systems to measure progress. Thus, we can expect that the next five year plan (2010-2015) will include systems for monitoring and evaluating officials' and enterprises' performance in meeting the specific carbon intensity reduction targets allocated to them, similar to how the government implemented its target setting and official evaluation system for the twenty percent energy intensity reduction target in the current 11th Five Year Plan.  
  • 3.) Will the target be binding internationally? At the moment, the carbon intensity target is only a voluntary action and is not intended to be binding internationally. However, the carbon intensity reduction targets will be mandatory ("约束性") domestically for provinces and enterprises within China, similar to how the current energy intensity targets are mandatory, with consequences for officials of provinces and enterprises who do not meet their assigned targets.  
  • 4.) Is the 40 - 45% target significant? Although there is debate about how much of a reduction this 40 to 45 percent carbon intensity reduction target is from a "business as usual" scenario, we should keep in mind a few points. First, how we define "business as usual" matters. As part of its current 11th Five Year Plan, China took on a goal of reducing its energy intensity by 20% from 2006-10, which has led to a coordinated energy efficiency program that includes actions such as closing down smaller, inefficient power plants and outdated, inefficient iron and steel, cement and other manufacturing capacity, and improving the efficiency of the Top 1,000 energy consuming enterprises. If China succeeds in reducing its energy intensity by 20% by 2010, this would result in the avoidance of a billion tons of CO2 emissions. China should be given credit for these efforts and not penalized for taking early action.  

      Second, the International Energy Agency has noted that the commitments from China and the US are roughly in line with the actions they have estimated to be necessary to reach a concentration of 450 parts CO2 per million, what scientists have deemed is necessary to keep global temperatures from rising more than two degrees Celsius.  While we would hope that both China and the U.S. will seek to raise the level of their ambition, both proposals are substantial and require real improvements in energy efficiency and low-carbon energy to achieve.     

The other important thing to remember is the significance of the carbon intensity target for creating the proper framework and incentives for reducing emissions.  As noted above, a carbon intensity target will require each province and major enterprise to measure, report and reduce their CO2 emissions and energy consumption, year-on-year, acting as a driver for greater efficiency and renewables.  In this way, the carbon intensity target is similar to the US greenhouse gas mandatory reporting rule or the cap-and-trade system in the current climate legislation before Congress, which put in place the proper incentives and systems to transition to a low-carbon, clean energy economy.  Provinces, local governments and enterprises will need to establish and improve systems for measuring and reporting emissions, and there will be increasing pressure on these enterprises and provinces to enact measures within their development plans for making continuous improvements in energy efficiency and renewable energy.  At the national level, China will need to continue and accelerate its policies to boost energy efficiency and renewables, and it will need to build its capacity to measure and report emissions for its national greenhouse gas inventory on a yearly basis (something which EPA and China's National Development and Reform Commission have recently agreed to cooperate on). 

Just as important as the targets they have set for themselves, China and the US must continue to accelerate their efforts to develop low carbon economies based on energy efficiency, renewables, and the development of clean technologies such as smart grids and electric vehicles.  Both countries stand to benefit from the transition to a clean energy economy, by growing new clean industries and jobs, reducing their independence on dirty fossil fuels, and reducing their contribution to climate change and environmental damage.  China can achieve a substantial reduction in its carbon intensity while continuing to grow its economy and providing an improved standard of living and a better environment for its citizens. 

China's carbon intensity target is certainly a step in the right direction, and it provides the right incentives for future improvements in reducing emissions.  Following the U.S.'s own emissions reduction announcement and the recent bilateral clean energy initiatives announced during President Obama's visit, we are beginning to see the outlines for a meaningful framework agreement in Copenhagen and a foundation for both countries to demonstrate leadership in addressing climate change. 

 

]]> Obama and Hu's New Clean Energy Agreements: On the Path to a Low-Carbon Future tag:switchboard.nrdc.org,2009:/blogs/bfinamore//144.4702 2009-11-17T23:31:29Z 2009-11-27T19:31:53Z Today, during President Obama's first full day here in Beijing, he and President Hu Jintao announced a package of clean energy partnership initiatives between the United States and China that adds substance to the structure of the US-China MOU on... Barbara Finamore Today, during President Obama's first full day here in Beijing, he and President Hu Jintao announced a package of clean energy partnership initiatives between the United States and China that adds substance to the structure of the US-China MOU on climate, energy and environment announced last July. (Factsheets here) These initiatives call for cooperation on, among other things, a US-China Clean Energy Research Center, energy efficiency, renewables, electric vehicles, and carbon capture and storage, and mark a deepening of the commitment by both countries to work together to develop the technological solutions necessary to address climate change.  It's significant that both nations have elevated these cooperative efforts to the very highest levels of government. 

The initiatives announced today cover the following areas: 

•      U.S.-China Clean Energy Research Center.  The governments announced that the U.S.-China Clean Energy Research Center, initially announced last July, will now be supported by public and private funding of at least $150 million, split evenly between the two countries over five years. This is a ten-fold increase over the $15 million announced for the CERC last July and represents a serious commitment to the research center by both nations. Initial research priorities will cover building efficiency, carbon capture and storage, and clean vehicles. A welcome part of this announcement is the concurrent release by the Department of Energy of a Request for Information soliciting public input on the structure and design of U.S. portions of the Center.

•     U.S.-China Electric Vehicles Initiative.  Top leaders in both countries recognize that electric vehicles will help the U.S. and China reduce oil dependence, cut greenhouse gas emissions and promote economic growth. The introduction of EVs and plug-in hybrids makes sense in China since it is making steady progress in cleaning up its grid through major investment in renewables. A study NRDC conducted with EPRI shows that plug-in hybrids deliver significant greenhouse gas benefits when charged by a grid that gets cleaner over time. The Electric Vehicles Initiative aims to accelerate EV development through joint product and testing standards, development of a multi-year roadmap that will identify R&D needs and barriers to widespread use of EVs, city-to-city EV demonstrations and efforts to promote public awareness and engagement.

•      U.S. China Energy Efficiency Action Plan.  Under this plan, the U.S. and China will work together to improve energy efficiency in buildings, industry, and consumer appliances through developing building efficiency codes and building energy rating and labeling systems,  benchmarking industrial energy efficiency, training building inspectors and energy efficiency auditors for industrial facilities, harmonizing testing procedures and performance metrics for energy efficient consumer products, exchanging best practices in energy efficient labeling systems, and demonstrating energy efficiency and design practices. There will also be an annual U.S.-China Energy Efficiency Forum and a Mayors Sustainable Cities Program where local officials from the two countries visit each other's cities to share experiences and best practices in sustainable urban development and planning.

•      U.S. China Renewable Energy Partnership.  Under the Renewable Energy Partnership, the two countries will develop and implement policies to advance renewable energy deployment in both countries through renewable energy road-mapping, regional deployment solutions, advanced renewable energy technology research and development, and public-private engagement. An Advanced Grid Working Group will bring together U.S. and Chinese policymakers, regulators, industry leaders, and civil society to develop strategies for grid modernization.  A U.S.-China Renewable Energy Forum will be held annually to develop work around these issues. As the official factsheet notes, "given the combined market size of the U.S. and China, accelerated deployment of renewable energy in the two countries can significantly reduce the cost of these technologies globally". This important initiative highlights cooperation as the way to scale-up the market in both China and the U.S.

•      21st Century Coal.  Obama and Hu pledged to promote cooperation on "cleaner uses of coal", including large-scale carbon capture and storage (CCS) demonstration projects.  As part of the U.S.-China Clean Energy Research Center, the countries are launching a program of technical cooperation to bring teams of scientists and engineers from both countries together to develop CCS technologies.  The two governments are also actively engaging industry, academia, and civil society in advancing alternative coal and CCS solutions. Although it's a start and details remain to be seen, the agreement at this stage seems to have missed the opportunity to capitalize fully on the low-hanging fruit CCS opportunities that abound in China (Executive Summary of our CCS report), and to build much needed cooperation on the field of geologic sequestration and the related science and engineering in particular. It is also unclear whether all initiatives under the agreement have geologic sequestration factored in from the outset. CCS is not an ideal approach to cutting carbon emissions; to quote my colleague Jingjing Qian, "avoiding CO2 emissions in the first place, like improving energy use efficiency and deploying low-impact renewable energy, is a better approach. But looking at the broad picture of the global warming trend and the need to stabilize atmospheric CO2 concentrations by the middle of this century, as well as looking into the detail of China's energy and economic development prospects, I recognize that CCS is likely one effective way of making deep CO2 emission reductions under certain conditions. At least given today's level of knowledge and technological ability, CCS appears to be one practical means to slash carbon emissions".

•    Shale Gas Initiative.   U.S. and Chinese leaders today also announced the formation of a Shale Gas Resource Initiative. While increasingly efficient use of natural gas can serve an important role in meeting energy needs while transitioning to a truly clean energy economy, efficiency and renewables must still be our priorities. Natural gas, while cleaner burning than coal, is still a major source of global warming pollution.  Furthermore, the environmental impacts of producing natural gas, including air and water pollution, toxic waste, and destruction of wildlife habitat, must not be ignored. Strong regulations are needed, including protection of sensitive areas and requiring the latest environmentally-friendly production techniques, to protect communities from the potential environmental degradation.

•     U.S. China Energy Cooperation Program. Over twenty-two companies (the names have not yet been announced) are founding members of this program that will leverage private sector resources for project development work in China across a broad array of clean energy projects. The collaborative projects will involve: "renewable energy, smart grid, clean transportation, green building, clean coal, combined heat and power, and energy efficiency". I've seen the value of public-private partnerships in my work with the China-U.S. Energy Efficiency Alliance, which leverages the financial and technical resources of a coalition of state government officials, utilities, companies, NGOs and other experts to help China design and implement large-scale energy efficiency incentive programs. 

As these announcements were made, I was attending the second annual U.S.-China Green Tech Summit in Beijing, a forum which brought together U.S. and Chinese companies and academics "to share and analyze world-class projects essential to cultivating energy sustainability, combating climate change, and promoting low-carbon economic growth". In attendance were companies such as Suntech, a Chinese solar PV company, one of the largest in the world, which announced yesterday that it is setting up its U.S. headquarters and creating jobs in Phoenix, Arizona; First Solar, a US thin-film solar company which has signed a deal to build the world's largest solar power plant in China (as I blogged about here); A123 systems, a Massachusetts company that makes advanced batteries for electric vehicles and recently received a $249 million matching grant from the Department of Energy to build an advanced battery manufacturing facility in Michigan; and Applied Materials, a Silicon Valley company which is the leading manufacturer of equipment to make PV panels and which last month established a $300 million solar R&D center in Xian, China because it the anticipates a booming domestic solar market  in China. 

What became clear to me while listening to these companies discuss their products and visions was the enormous economic opportunities for companies and countries that can develop the clean technologies to address climate change. The U.S. and China have a key role to play here and can benefit from clean tech cooperation both economically and environmentally - two areas in which we need a strong boost right now Today's announcements on US-China cooperation on clean energy provide tangible, concrete steps forward in developing the technologies we need to reduce emissions and establish a low-carbon world. Many of these technologies are already under development and ready to be scaled up dramatically given the right market signals and incentives. 

In addition to the seven initiatives outlined above, the U.S. and China reiterated their commitment to "working together and with other countries in the weeks ahead for a successful outcome at Copenhagen". My colleague Jake Schmidt further discussed the importance of the joint announcement in the context of global climate negotiations in his blog.  Although there is still much work to be done before we can declare success on an international climate agreement, these initiatives and the work of these and other clean tech companies are already leading us down the path to a low-carbon future.

 

 

 

]]> Clean Energy Cooperation on the Eve of the US-China Summit tag:switchboard.nrdc.org,2009:/blogs/bfinamore//144.4694 2009-11-16T20:49:14Z 2009-11-26T16:18:18Z Barbara Finamore  In conjunction with President Obama's trip to China, I had the great privilege of speaking today at a high-level Clean Energy Roundtable in Beijing with top government officials from the U.S. and China. Over 100 experts attended, including the heads of some of the world's most successful clean energy technology companies, such as GE Energy, First Solar, Suntech, Duke Energy and BYD.  The heads of the U.S. Department of Energy (DOE), U.S. Department of Commerce (DOC), China's Ministry of Science and Technology (MoST), and China's National Energy Administration (NEA) jointly hosted the meeting.  The aim was to break through the fog that had started to settle over the climate change negotiations in order to produce tangible, clean energy initiatives before the parties convene at Copenhagen next month.

U.S. Secretary of Energy Steven Chu announced at the meeting that during President Obama's visit to China, the U.S. and China will sign cooperative agreements on energy efficiency, renewable energy, electric cars and advanced coal technologies, and DOE and NEA will officially sign an agreement creating the "US- China Energy Cooperation Program".

It's hard to describe the excitement that filled the meeting room at China's official state guesthouse, Daoyutai, where Nixon stayed in 1972 when he first opened US-China relations.  Among the many innovators in attendance were Dr. Wan Gang, China's Minister of Science and Technology.  Minister Wan specialized in developing electric vehicles technology at Tongji University, where I first met him almost ten years ago, when NRDC partnered with Tongji to promote the development and commercialization of clean vehicles. The enthusiasm for cooperation on cutting-edge technologies and the synergies it creates reminds me of the regular meetings that took place between Thomas Edison, Henry Ford and Harvey Firestone, some of the world's great innovators at the turn of the 20th Century, when the automobile was still an emerging technology in the United States. Now, a little more than 100 years later, world-class innovators from both the U.S. and China are coming together to work on 21st century low-carbon technologies that will address the most significant issues of our time.

One of the highlights of the meeting for me was when Gregory Kats of Good Energies, a leading global private investor in renewable energy and energy efficiency, talked about the untapped potential of energy efficiency, particularly in the building sector. As someone who has been working on energy efficiency issues in China for nearly fifteen years, I too have seen that improvements in energy efficiency are the fastest, cheapest and cleanest way to reduce emissions. According to Kats' new study, U.S. green buildings on average use over 30% less energy at a cost far less than previously assumed. The cost premium is equal to only 2% and would be paid back in the energy savings of the building in the first four years after construction.  

In order to win the race against climate change, we need to move fast on renewable energy and energy efficiency. The best way to do this is through public-private partnerships with key stakeholders from the business community, research institutes, academic organizations, state and provincial governments and NGOs, such as were present at today's clean energy roundtable.

The U.S. and China are on the verge of important new agreements in global innovation and are already moving forward to mobilize the people that will implement them. I hope fifty years from now, this meeting will be remembered as an important benchmark in a concerted, global movement towards clean energy that helped to reverse the tide of climate change.

 

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