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.
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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:
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.
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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.
]]>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.
]]>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:
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.
]]>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!
]]>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:
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.
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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.
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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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Our meeting came on the heels of a historic agreement between First Solar and China's northern province of Inner Mongolia to build the world's largest solar power plant that will eventually have 2 GW of installed capacity (nearly the capacity of the Hoover Dam) and span an area of about 25 square miles (roughly the size of Manhattan). By increasing the scale of production, First Solar can lower the overall cost of manufacturing its modules, which the company hopes will eventually make its PV cells comparable in price to dirty fossil fuels. First Solar has been able to lower the average manufacturing cost of a PV cell from 98 cents per watt in December 2008 to 87 cents per watt at the moment, and First Solar hopes it can reduce this further to 52 cents per watt by 2014.
Despite its recent foray into the Chinese market, First Solar is at its core an America company powered by American workers and by American ingenuity. First Solar was started by Harold McMaster, an Ohio glass-maker who specialized in making tempered glass for the booming industries of the 1950's: automobiles and television sets. By the mid 1980's, McMaster realized the vast untapped potential of solar power and decided to take what he already knew about glass making and use it to create what would become the world's leading thin-film solar technology. McMaster started his solar company at the University of Toledo in Ohio, and Ohio is still home to First Solar's R&D headquarters and manufacturing facility, located in Perrysburg, 8 miles south of Toledo.
As First Solar has grown to become the world's largest manufacturer of cadmium telluride thin-film PV cells, the factory in Perrysburg has continued to expand and currently employs more than 700 people. First Solar also has manufacturing facilities in Germany and Malaysia, but by increasing the scale of its existing Ohio manufacturing facility, First Solar has been able to manufacture PV cells in Ohio at a rate comparable to its lowest-cost facility in Malaysia. Ohio Governor, Ted Strickland said at the announcement of the Ohio facility's expansion, "In making this significant investment and expansion in Toledo, First Solar is helping us to send a message to the world that Ohio is reinventing itself as the leader in the advanced energy industry."
And First Solar is not the only solar company investing in Ohio. There are currently 115 solar firms in Ohio, employing over 6,000 people in research and manufacturing, according to the "Growing Ohio's Green Economy" report. There is an entire infrastructure that already exists in Ohio to build auto equipment, and now Ohio is taking advantage of this underutilized infrastructure to build a solar industry that will create thousands of new jobs. ABC News' Charlie Gibson recently reported on how Ohio is turning around its economy by shifting its focus from automobiles to solar energy, making it the next Silicon Valley for solar (watch the video here).
Ohio, of course, is not the only state that will benefit from a clean energy economy. Indiana and Missouri also have enormous potential to become national leaders in clean energy development.
So why did First Solar choose China as the site of the world's largest solar power plant instead of a location in the US? In short, there is still not enough market certainty in the US for a solar plant of this scale to be feasible due to the stop-and-go support that renewable energy has received in the US. But in order for First Solar and other renewable energy companies to increase the scale of production to eventually out-price fossil fuels there needs to be market demand and market certainty. In contrast, a solar market has thrived in Germany because of policies like feed-in tariffs that have ensured a stable market for solar projects there. And now China has taken similar measures and is poised to become the world's next largest solar market.
Until the US institutes similar policies that encourage the development of a stable market for solar energy, companies like First Solar will continue to turn to countries like China and Germany to provide most of the demand for their products, and the US will keep missing opportunities to expand its green economy. On the flip side, if the US can pass the Clean Energy Jobs and American Power Act that is currently before the Senate, then American companies like First Solar will finally have a stable market for their solar cells in the US, where Harold McMaster developed First Solar's thin-film technology decades ago.
Establishing a stable market in the US for First Solar's PV cells accomplishes two important objectives. First, by increasing market demand for solar cells, companies like First Solar can scale-up, produce solar cells more efficiently and eventually out-price fossil fuels. Although First Solar is continually reducing its costs, it solar cells still can't compete with the cheap price of coal and oil. As the executives from First Solar told me, they see their primary competitor at the moment as fossil fuels, not Chinese solar producers, since they are all working together in the race to make solar energy cheaper than the fossil fuels that cause climate change. Secondly, an increase in US demand for solar PV cells will lead to the creation of more green jobs in places like Perrysburg, Ohio and across the US in order to meet the growing demand for solar cells. China has realized the potential that solar and other clean energy has to create jobs and this is one of the reasons they have welcomed First Solar's project in Inner Mongolia.
Eventually, First Solar or one of its competitors will find a way to produce PV cells in a way that is cheaper than fossil fuels, and whichever company accomplishes this feat will become the new world leader in solar. As President Obama put it during his recent visit to MIT: "The world is now engaged in a peaceful competition to determine the technologies that will power the 21st century. From China to India, from Japan to Germany, nations everywhere are racing to develop new ways to produce and use energy. The nation that wins this competition will be the nation that leads the global economy. I am convinced of that. And I want America to be that nation. It's that simple."
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This morning's UN Summit on Climate Change was a good example of just how far we've come in the global climate discussions. Every world leader who spoke mentioned our collective responsibility to reverse climate change and the serious ramifications for the planet if we do not.
The much-anticipated comments by China's President Hu Jintao were encouraging. President Hu announced to the UN General Assembly that China will reduce its CO2 intensity by some notable margin by 2020 from 2005 levels, though he gave no specific number.
Our expectation is that this commitment will be included as an official "plan target" in the next Five-Year Plan. This has proven to be an effective strategy in China for achieving real results. Meeting plan targets has a direct impact on top Chinese officials' chances for promotions and work recognition. Including this measured target in the Plan would therefore ensure that these officials will actively work to reduce carbon intensity. The fact that President Hu made this announcement at such a high-level international forum also sends a strong signal regarding China's commitment to achieving it.
Capacity building, advocacy and education will still be important in order to strengthen China's ability to accurately measure, report and verify its CO2 emissions. NRDC has been working on capacity building for enforcement as part of our China Program's Environmental Law Project and there has been much progress in this area over the years.
The significance of the carbon intensity target China adopts will depend on: (1) its stringency, based on the percentage reduction target and timeframe for achieving it, and (2) whether it is merely a domestic commitment or a commitment that China offers as part of the deal to be negotiated in Copenhagen (i.e., nationally appropriate mitigation action). If China proposes to include its carbon intensity target in the agreement in Copenhagen, then this would add a huge amount of credibility to what China does and create stronger motivation for assistance from developed countries to aid China in going even further.
A commitment to reducing carbon intensity means a commitment to reduce CO2 emissions per unit of economic output (for example, RMB, dollars, or a ton of cement or steel). Given that China's economy in 2005 was more than twice as carbon intensive as that of the US, and more than three times as carbon intensive as the economies of Japan and the EU, a commitment to reduce by a significant percentage could be quite impressive. It also means that China has plenty of room to reduce its carbon emissions significantly while continuing to grow its economy.
China has shown that intensity targets can play an important role in mitigating its emissions. The 20% energy intensity target in its 11th Five Year Plan has led to policies and measures that have reduced its energy intensity by over 10 percent in the three years from 2006-08, representing an avoidance of several hundred million tons of CO2 emissions. A carbon intensity target would help China to focus on the policies and measures needed to improve energy efficiency and reduce the carbon-intensity of its energy supply.
Today's Summit opened with a photo taken of Earth from Voyager and a voice which quotes Carl Sagan's Pale Blue Dot questioning, "What is our legacy?" - a poignant reminder of what humans can accomplish when we reach for the stars. Years ago, Professor Ian McHarg asked, as he studied a picture of the earth from space, whether we are parasites on the planet and if after apocalyptic destruction, amoeba would come back and agree; "next time - no brains". Voyager's glimpse of our planet makes me wonder: will our political posturing interfere with our ability to act? Will it be a battle of wits in December or will our world leaders show the courage we demand of them?
]]>The agreement was reached at the end of two days of talks called the China-US Strategic and Economic Dialogue (S&ED), which brought to Washington around 150 senior Chinese officials, 24 of them at or above the ministerial level, to meet with top U.S. cabinet officials. President Obama also welcomed the Chinese delegation, stressing in his speech the importance of U.S.-China cooperation on clean energy and forging a global response to climate change.
To help both countries transition to a low-carbon economy, the agreement calls for cooperation on capacity building and research, development and deployment of climate-friendly technology, with a focus on the following areas:
Compared to the areas of cooperation listed in the Ten Year Framework for Energy and Environment signed last June, the focus on cleaner use of coal and CCS, joint R&D on clean energy technologies (likely being coordinated through the new U.S.-China Clean Energy Research Center announced during Secretary Chu's visit to Beijing earlier this month), and combating climate change and promoting low-carbon economic growth appear to be new areas of cooperation.
The agreement also establishes a Climate Change Policy Dialogue and Cooperation as a platform for the U.S. and China to hold regular consultations to address, and hopefully resolve, key sticking points to reaching a meaningful international climate agreement. This was one of NRDC's key recommendations to policy makers and leaders in both countries in our June 2009 issue paper¸ Global Solutions to Global Warming.
Establishment of this regular dialogue will help to solidify a serious bilateral negotiation that will prove crucial to securing a strong international agreement on climate change (as my colleague Jake Schmidt has discussed here). Senior representatives from both governments have now been formally tasked with regular dialogue on climate change. We (and the rest of the world) hope that this dialogue produces meaningful actions to address global warming pollution from these two major emitting countries.
As part of the Climate Change Policy Dialogue and Cooperation, the U.S. and China agreed to promote practical solutions for promoting the transition to low-carbon economies and pragmatic cooperation on climate change between cities, universities, provinces and states of the two countries. This focus on concrete, achievable solutions will help to build mutual trust and jumpstart the implementation of any international climate agreement. It can also help identify areas where cooperation will help both countries to create new jobs and new clean energy industries (as Jin Jiaman, Executive Director of Chinese NGO Global Environmental Institute, noted in this L.A. Times piece). Private companies and non-governmental organizations also have a vital role to play in developing climate-friendly solutions that will revitalize our two economies. (To this end, NRDC recently issued a set of proposals for both countries to cooperate in three areas: building energy rating and labeling systems, CCS and energy efficiency resource standards. These are areas we believe are ripe for cooperation and in which each country has much to offer the other.)
This agreement is a welcome step forward in breaking the longstanding US-China stalemate on climate issues, although implementation will require an enormous amount of hard work on both sides. Senator Kerry, who released a report on "Broadening the Bilateral: Seizing the Opportunity for Meaningful U.S.-China Collaboration on Climate Change" in conjunction with the S&ED, has recommended that the U.S. and China collaborate by building a joint laboratory for clean energy technologies, creating green landmark projects to test technologies such as carbon capture and storage and concentrated solar power, and training a clean energy corp to help fully capture billions of dollars in energy efficiency opportunities. These kinds of initiatives would help both countries to focus on the very concrete technology development and capacity-building that will achieve real reductions in greenhouse gases in both countries.
Our experience in China shows that both sides have much to offer each other, and that cooperation can indeed yield concrete GHG reductions. According to the Jiangsu Economic & Trade Commission, our work has helped the province begin to build a large-scale industrial energy efficiency program that in its first three years saved enough energy to equal that produced by a 300 megawatt (MW) coal-fired power plant. The installed energy efficiency measures helped Jiangsu reduce 580 MW of peak load, save 2 terawatt hours (TWh) of electricity annually, and reduce CO2 emissions by 1.88 million tons each year during that time period. Jiangsu expects this program to grow rapidly as it develops the necessary capacity, with 13,376,800 tons of cumulative CO2 reductions by the end of 2010.
Yesterday's agreement on Climate Change, Clean Energy and Environment is an important first step in building a long-term cooperative relationship between both countries to tackle the challenge of climate change together. As Andrew Revkin said in his recent blog, "What's not to like? Of course, the details - as with so many agreements of this sort - lie in money and specifics related to prickly issues like trade barriers impeding the flow of technology and questions about protecting intellectual property... But too much focus on locking up innovations could impede progress on important technologies, according to Energy Secretary Steven Chu and Robert Frosch of Harvard."
Both sides have a ways to go before we can say that they are on the right path to solving global warming. But at least they have agreed to the start of that walk together.
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