China Environmental Law

Here’s a little game we can play while we wait for “sign up” day on January 31, 2010.  What do you think China will submit for inclusion on Appendix II of the Copenhagen Accords?

The Accord provides ¹ any Annex I party who so chooses can list on Appendix I its “Quantified economy-wide emissions targets for 2020″ including the relevant “base year.”  Non-Annex 1 Parties, which still includes China, who choose to participate may list on Appendix II their “nationally appropriate mitigation actions” (NAMAs).  Earlier drafts of Appendix II included a column marked “Action/Target,” but “target” was dropped in the final version.

“Quantified economy-wide emissions targets” and NAMAs are, of course, well established concepts under the UNFCCC and perfectly illustrate the gaping divide between what is required of developed and what is required of developing countries. ²  China’s announced target of a 40-45% reduction in its carbon intensity per unit of GDP by 2020 (over the 2005 level) is more in the nature of a quantified economy-wide emissions targets than a NAMA.  A Chinese NAMA would be something along the lines of “we will close X MW of small, inefficient coal-fired electric generation capacity by 2015.”

There is always the possibility that China won’t list anything, but I think that is highly unlikely.  My own guess is that they will list their carbon intensity goal, but I wouldn’t place a lot of money on that bet.  If they do, I think that will be a good sign that China is starting to acknowledge some erosion in the sharp developed/developing country divide of the existing international climate change framework.  If China only lists a series of actions (without any quantified carbon reduction targets or impacts), then they are signaling that they are going to fight tooth and nail to persevere the existing binary distinction.

There is a BASIC meeting scheduled for the third week in January when I suspect this issue will be hashed out among this new climate bloc consisting of Brazil, South Africa, India and China.  In the meantime, what do you think will happen?

I’m working on more thoughtful reactions to the Copenhagen Accord for both the China Economic Review and Harvard Asia Quarterly.  When those are published I’ll let you know.

China amended its Renewable Energy Law (Chinese version) on December 26, 2009.  Chinese spokespersons have emphasized the fact that the amendments require the state grid companies to purchase all power produced by renewable energy sources, but they (and the news agencies that have run with the story) fail to point out that the prior version of the law required the same thing.  In fact, the actual amendments to the law are extremely minor.

The changes include somewhat more national oversight of the preparation of sub-national renewable energy development and utilization plans, and a more explicit recitation of what should be considered in the preparation of such plans (Articles 8 & 9).

As relates to the purchase of renewable power by the grids, an argument could be made that the amendments actually weaken, or at least complicate, this obligation.  The law as originally enacted included this simple and clear requirement at Article 14:

Grid enterprises shall enter into grid connection agreement with renewable power generation enterprises that have legally obtained administrative license or for which filing has been made, and buy the grid-connected power produced with renewable energy within the coverage of their power grid, and provide grid-connection service for the generation of power with renewable energy.

Article 14 has been amended to require the promulgation of an annual regulation that will govern grid purchases of renewable power

The department of the State Council in charge of energy affairs shall, jointly with the state power regulatory organ and the financial department of the State Council, determine the percentage of the quantity of electricity generated from renewable energies in the total quantity of electricity generated during the planned period, and formulate the specific regulations on the priority power dispatching and purchase of the full amount of electricity generated from renewable energies by power-grid enterprises, in accordance with the national programs for the development and utilization of renewable energies. The foregoing regulations shall be implemented under the supervision by the department of the State Council in charge of energy affairs, jointly with the national power regulatory organ, within the year concerned.

This process seems somewhat cumbersome, but let’s see how it works in practice.

One notable addition of the new amendments (also in Article 14) is that they specifically require grid companies to “expand the scope of distribution of power generated from renewable energies, develop and apply such technologies as smart power grids and energy storage, improve their management of power grid operation, enhance their capabilities for taking up electricity generated from renewable energies, and provide grid connection services for electricity generated from renewable energies”

Perhaps the most significant change is in the penalty section.  In the original law, electric grid companies, natural gas and heat pipeline companies, and gas-selling enterprises that fail to purchase or accommodate renewable sources of power or fuel are liable for compensation.  The “energy authorities of the State Council” or local people’s government at the provincial level shall order them to correct the situation within a stipulated period of time; if they refuse to correct the situation, a fine of up to double the amount of economic loss shall be imposed against them (Articles 29 to 31).  The original law limited the maximum fine to no more than the actual amount of the economic loss.

These amendments provide a great way to test the bona fides of the numerous consultants and commentators in this space.  Anyone who touts these amendments as establishing a new requirement that the grid companies purchase renewable power should be avoided in the future.

I will have a longer post on the Copenhagen Accord when the dust settles. It is pretty clear from the Chinese press reports that China doesn’t know what to make of the Accord or how to spin it yet. One thing is abundantly clear, however, unlike US commentators who have praised the Accord for moving beyond the binary developed/developing nation distinctions, China resolutely contends that these distinctions remain and the principle of “common, but differentiated” continues in full force and effect.

The accord upheld the principle of “common but differentiated responsibilities” set by the UN Framework Convention on Climate Change and the Kyoto Protocol, made arrangements for developed countries’ compulsory emissions cuts and developing countries’ voluntary mitigation actions, and included wide consensus on the key issues of long-term global emissions reduction objectives, funding and technology support, and transparency.

The language of the Accord certainly supports the Chinese reading, although some, albeit minor, lessening of the “differentiation” between the responsibilities of developed and the larger emitters among the “developing” countries is also in evidence.

One other thing is certain, China and the US still have a significant way to go to develop a level of trust that will allow them to discuss and negotiate these issues rationally. The events of last Friday bear more resemblance to a Keystone Kop feature than a functioning, working relationship between two superpowers on one of the most important issues of our age.

I’m going to avoid posting daily comments about what’s going on in Copenhagen, since I assume most readers know how to stay informed about the events.  You could have slept through the first three days, however, and not missed anything of substance.  My role is to bring your attention to the underreported stories that add color to the drab northern European winter days.

Today, therefore, I’m going to take a break from my cynical ploys to avoid U.S. action on climate change, lazy scholarship and reflexive “China bashing,” to feature a story that may help you appreciate how unwieldy such a large global convention can be from a logistics point of view.  It turns out that China’s chief negotiator, Xie Zhenhua was denied entry to the negotiation site, the Bella Exhibition Center, on three separate occasions.  It is unclear if this happened over the course of three days, which the Chinese version suggests, or involved three tries on the same day, which the Danish press reports.  In any event, what we have here is a situation where the chief negotiator for the country that currently emits more greenhouse gases than any other country into the atmosphere was denied entry into the negotiations.

That is what I call tight security!  The entrance control personnel at the Bella Center are apparently turning away everyone who does not have their picture on their conference issued ID badge.  Chinese sources say that all of the Chinese staff have their pictures on their badges, but the badge of the head of the delegation does not.  Who is responsible for this glitch is unclear.

Su Wei, deputy head of the Chinese delegation, reacted rather strongly with 事不过三 (which essentially means “you’ve screwed me over three times,” the implication is our relationship is over or I’m done playing nice), and reported “The first day of the General Assembly I was unhappy, the second day I was very unhappy, and today I am extremely unhappy.”

Here a photograph of Xie Zhenhua.  Please let this man into the negotiating sessions!

Now we know that China takes the Copenhagen round of climate change negotiations seriously.  It has developed one of those catchy (if often hard to translate) phrases with numbers to capture its core negotiating principles: “one target, two main channels, three principles, four consensus.” (一个目标，两个主渠道，三个原则，四个共识).

Oriental Outlook Weekly published an interview with Cao Rongxiang climate change researcher at the CPC Central Committee.  He is the author of the forthcoming book, “Climate change and the failure of democracy,” and he provides a primer on China’s core negotiating principles and the major issues it anticipates at Copenhagen.

The 10 items of the core negotiating principles are:

A. one target

A global temperature rise below 2 degrees Celsius, or atmospheric carbon dioxide concentration of less than 450ppm.

B. two main channels

The 1992 United Nations Framework Convention on Climate Change and the 1997 Kyoto Protocol.

C. three principles

• “common but differentiated responsibilities,”
• “fair” and
• “sustainable development.”

The “sustainable development” principle addresses the developing countries’ concerns that efforts to address climate change will not interfere with their economic development and poverty eradication efforts.

D. four consensus

• developed countries must commit to quantified mid-term emission reduction obligations because of their historical emissions and current high per capita emissions;
• developing countries should undertake efforts to reduce their greenhouse gas emissions and adapt to climate change in as aggressive manner as their national conditions and funding and technology transfers from developed countries permit;
• developed countries should provide financial support to developing countries;
• effective institutional arrangements should be devised to promote technology transfers to developing countries to enhance their capacity to address climate change.

As Cao Rongxiang notes, there really isn’t a consensus surrounding these last four items (but who wants to spoil a catchy phrase), indeed, there isn’t a consensus about any of the 10 points set forth above.  Therefore, he believes the negotiations will be very intense.

He predicts the major controversies will center around five items:

1. Whether the parties proceed inside or outside the framework established by the “two main channels.”  He spends a lot of time criticizing the US for its desire to scrap some of the basic features of these prior international agreements (which are basically set forth in his three principles and four consensus).

2. Appropriate emission reduction commitments from developed countries.

3. The amount of financial assistance provided by developed countries to developing ones.

4. The transfer of technology from developed countries to developing ones.

5. Whether the focus of future actions should on adaptation or mitigation.  Cao Rongxiang states that many small developing countries need help to adapt to rising sea-levels, impacts on agricultural production, etc., while developed countries tend to focus on capacity-building, the use of new energy sources, etc. to slow down the temperature increases.

He believes thet the two most important issues for China are to hold firm on negotiating within the existing framework and to pursue technology transfers over financial assistance because lack of technology is China’s most pressing need.

There is nothing new here, but it does make for a handy review of where China stands at the outset of negotiations.

A “competition for dominance in the greentech “war” is being quietly started;” our competitor has “launched a new ‘carbon-economic revolution’” and we have been left behind at the “starting gate.”

Is Tom Friedman having another China moment?  No, these words come from a Chinese columnist in the China Youth Daily (A new era of “the old carbon seller;” a new energy strategy of playing “catch up.” 新时代的”卖碳翁” 新能源战略要”迎头赶上”).   In comparison to the West which has developed a careful industrial strategy and accumulated significant technological advantages, the columnist says that China’s foray into the greentech economy has been a little naive. He asserts that the development of a Chinese greentech sector has been misguided, fuelled by dreams of “quick profits,” leading to crazy investments, excess capacity, and a greentech “bubble.”

While there may be some truth in what the columnist says, his rhetoric makes it clear that there are factions in both China and the US that believe they can benefit from greentech war and competition metaphors.  They seem quite stale, unreflective, and insincere to me.  They also exploit deep seated, if irrational, fears on both side.  I don’t recall any articles warning that the US was falling behind Germany in the greentech war (although that would have made more sense).  On the Chinese side, the war metaphors are pushed by those who believe that Western efforts to get China to limit its carbon emissions are simply ploys to contain China’s rise and put a “noose” around its economy.

Can we please retire this rhetoric?  Both countries have their strengths and can make unique contributions to our shared goal. Let’s stop fighting a war where both sides believe they are the losers.

The Panyu waste incineration plant protest in Guangzhou last week was important for a number of reasons, but one of the most thoughtful takes on the event comes from an unlikely source, the Communist Party of China’s Guangdong Party School.

In an article entitled, “Confronting pollution: ‘expel it’ or ‘manage it’”? (I’d welcome a better translation, this is the original Chinese:面对污染”赶”还是”治”？) first published in the Nanfang Daily and reprinted at the China Energy Conservation and Environmental Protection Network, a provincial party school cadre presents a balanced, nuanced, and practical prescription for addressing situations where general societal needs impose disproportional environmental burdens on a subset of the population.

His or her points (the author is not named):

Environmental awareness has risen among the people with improving economic conditions.  At the same time there has been a rise in polluting entities to meet the demands of an improving economy.  This has created difficult “contradictions.” Who wants a waste incineration power plant, electric substation, gas stations, hospital or a variety of other polluting facilities built close to their own home, but the reality is that socio-economic development and people’s livelihoods are inseparable from these facilities.  How to resolve this contradiction is a test for the government, but also a test of the wisdom of the people.

When people hear that a potentially polluting facility will be built in their neighborhood, their first reaction is to try to “expel” it, and they will use a number of means to “sabotage” the project.  The author says this reaction is actually a great improvement from earlier years when people did not dare mount such opposition.

However, the result of this type of opposition is simply to have the facility moved from a developed to an undeveloped region, from a region where economically empowered people live to an area where more vulnerable people live, and from densely to sparsely populated areas.  The writer analogizes such an outcome to the developed world’s movement of their polluting facilities to China.  Such moves did little to improve economic conditions in China, and left China with a legacy of pollution it now must pay to clean up.

The alternative approach to moving the pollution problem elsewhere is to “manage” the problem by understanding it in a more holistic fashion.  Shifting pollution around from one region to another doesn’t decrease the total amount of pollution.  We must adopt rational production and treatment processes that reduce the amount of pollutants generated in the first instance.

The author notes some of the voices raised in protest regarding the Panyu waste incineration facility (although not the loudest) argued that this type of facility should not be built anywhere in the country and the government should place more emphasis on recycling, waste separation, and recovery.

Now, the author says, it is time to test the Government’s wisdom.  It must trust the people and work with them to address the incineration plant issue and gain their confidence.  The pollution management of any project must be open and transparent and gain the full trust of the people.  Only then will people no longer be afraid and have to resort to confrontational options.  If the Panyu waste incineration plant, as reported, will meet EU emissions standards, this fact and its consequences should be explained to the people.  Both the government and the people must genuinely and sincerely adopt a “management” approach to pollution problems.

Guangdong sounds like its got a party school worth attending!

In September President Hu Jintao announced at the United Nations that China would reduce the amount of its carbon emissions per unit of GDP by a “notable margin.”  We now have China’s definition of notable.  It means 40-45% reduction from 2005 levels by 2020 (at the high end, that’s 3% off 2005 emissions per year).  If you have a sense you have seen these numbers before, you have a wonderful memory.  They have been batted around since at least 2007, and China has hit these targets for the past couple of decades all the while churning out greater amounts of carbon emissions.  Indeed, it was estimated by the World Resources Institute in 2007 that

China’s GDP is projected to grow around 400% by 2020. So even with a 40% intensity cut, emissions in the absolute sense would increase by 250%. That growth would make China the biggest national emitter by far, and [pose] a daunting challenge for reducing GHG emissions.

While the announcement was rolled out with much fanfare and supporting cameos by the usual suspects, including Pan Jiahua, it was greeted by most observers with little enthusiasm.  I fall into this category, but there are a few things to be thankful for.

For one, it used to be that if you were asked what China was doing on climate change, it was necessary to compile laundry lists of initiatives (20% energy efficiency improvements over 2005 levels by 2010, aggressive renewable energy targets, etc.) that have the effect of reducing the growth rate of carbon emissions.  With the exception of China’s afforestation efforts, this carbon intensity target should encompass all of the other initiatives.  It will be nice to have only one metric that covers everything else and is expressed explicitly in terms of carbon.

In order to perform the measurements necessary to track achievement of this new goal, China will need to increase its capacity to measure its carbon emissions.  There are several NGO-sponsored programs already under way to help China build capacity in this sector, and the US EPA recently entered into an agreement in which it “may” help China with these efforts.  That agreement needs to be amended or supplemented post haste, to actually get a cooperation program up and running.

A carbon specific goal that will drive carbon emission measurement capacity building, so far so good; the bad news is the notable margin isn’t nearly notable enough.  As stated above, given China’s projected GDP growth rates, the amount of carbon that China will continue to emit into the atmosphere will continue to increase at a mind-boggling rate.  Since this proposal doesn’t actually result in any additional reductions of carbon over and above what China is currently doing (although there are no guarantees it would continue with the same energy intensity goals, for instance, post-2010), it is hard to see how this announcement does much for projected atmospheric carbon levels.

The McKinsey study China’s Green Revolution estimates that if China continues to grow at an annual GDP growth rate of 7.8%,

• AND continues to meet its aggressive energy intensity reduction goals,
• AND installs all the renewable energy called for its current medium- & long-term renewable energy plan,
• AND otherwise achieves a 4.8% annual growth rate in carbon efficiency, (which is significantly higher than the annualized amount of the target China just announced),

then it will more than double its 2005 carbon emissions by 2030.  That doesn’t sound good.

In addition, China has taken pains to make it clear that this is a purely “domestic” target.  That means that China’s opening position is that it will not enshrine these goals in the context of an international climate change agreement.  You may be confused having read that China agreed with the US to “stand behind” its carbon reduction commitments.  Whatever the term “stand behind” meant, it did not mean fully measurable, reportable, and verifiable (MRV).  I don’t think China is reneging on any deals here because I don’t think there were any deals on MRV in the first place.  If these commitments are not MRV, they will not go very far in closing the gap with the US in terms of a deal at Copenhagen or beyond.

I think this is a lowball bid, but if there is to be significant improvement in the intensity improvement percentage, China is going to expect the developed countries to pay up.  All in all, good concept, disappointing initial proposal, but room for improvement; it certainly doesn’t make a Copenhagen deal any less likely.

[Reprinted in full from The Economist, Economist Debate: "This house believes that China is showing more leadership than America in the fight against climate change" Please read and vote your conscience which will no doubt be in perfect harmony with the position expressed below]

China and the United States can and should do more to lead the world on climate change. They are the first and second largest emitters of greenhouse gases today. The United States is by far the largest cumulative emitter given its early industrialisation and large economy, but China, at current growth rates, could easily assume the cumulative emissions crown before we are halfway through this century. Despite being primarily responsible for creating the problem, neither country has shown the pluck to solve it that will get them cited as models of leadership.

Fortunately, we are not asked to make the case that either country is the Churchill of climate change solutions, but simply to demonstrate that one has shown more leadership than the other. In this comparative matchup, the case is pretty clear; China has shown more leadership than the United States.

China signed the Kyoto Protocol, but as a developing country it was not bound to take any quantified actions to reduce its carbon emissions. For the next several years it hunkered down and its roaring economy powered by coal-fired thermal plants started to generate carbon emissions at an alarming rate. The rate was so alarming that China soon realised that it would no longer be able to hide behind the developing country label or count on a free pass at Copenhagen. It therefore launched a concerted effort to stake out a national position on climate change, developed and compiled a set of actions which could be deemed carbon emission mitigation efforts, and generally tried to establish its climate change good faith. At the same time, as a leader of the developing-country negotiating bloc, it continued to forcefully demand significant carbon reductions, financial assistance and technology transfers from developed countries.

China published a National Plan for Coping with Climate Change in June 2007 and a White Paper on Policies and Actions for Addressing Climate Change in October 2008. The White Paper concludes with this statement:

The whole world, without exception, faces the challenge of climate change. The solution demands the joint efforts of all countries and the entire international community. China will work unremittingly for global sustainable development with other countries and continuously make new contributions to the protection of the climate system which is the common wealth of mankind.

China had already undertaken a number of actions to promote energy security and improve industrial efficiency, such as increasing the amount of renewable energy in its generation mix and reducing the amount of energy required to produce a given unit of GDP. It repackaged these efforts and deemed them part of its climate change mitigation strategy. The latest instalment in China’s continuous efforts to make “new contributions to the protection of the climate system” was rolled out in President Hu’s speech to the UN in September in which he committed to reducing China’s carbon intensity by a “notable margin”.

China has succeeded in deflecting attention from how much carbon it has emitted and will continue to emit to how much carbon it has prevented from being emitted. There is no question that China has run a slick public relations campaign, but it’s not all smoke and mirrors. China’s efforts to improve energy security and industrial efficiency do have the effect of reducing the rate of growth of its carbon emissions.

While China settles in to a prominent seat at the climate change negotiating table, like other guests it casts a not so furtive glance at its watch as it waits for the United States to arrive at the venue. The opponent of this motion would have us believe that the United States’ absence is an act of leadership. But if it is hosting an alternative dinner, so far it is eating alone.

The United States has not only failed to take significant, concrete national actions to mitigate carbon emissions, it has failed to stake out a coherent public position on climate change. If I were inclined to follow the United States, where exactly would it lead me? As the other side notes, China’s efforts are cited by some to spur US actions. In contrast, no one is touting what America is doing to drive change in China (or anywhere else for that matter). Lots of good intentions have been on display over the past year in America, and a decent piece of climate legislation may be passed next year, but the United States is not leading on this issue.

The historic failure of the United States to come to grips with its energy challenges bolsters the impression that it is struggling to manage its own internal factionalism, which touches on questions of what really powers its economy. The call for the United States to increase its energy independence has resonated in American political discourse for nearly 40 years. During these 40 years, while the United States has seen its national wealth and the blood of its soldiers drained away it has failed to enact a comprehensive strategy to wean itself from foreign oil. What leadership is there to be seen in the perpetuation of this status quo?

China faces the same concerns. While it continues to attempt to secure foreign sources of oil, it has also taken concrete actions to decrease its reliance on oil. Chinese national fuel economy standards are tougher than those in the United States; national taxes encourage the purchase of cars with smaller engines; thousands of miles of subway are being constructed; and between the major population hubs, a web of high-speed rail lines is being laid. China has promulgated national goals for increasing percentages of its electric power to be generated through renewable sources, and electric vehicle R&D has received large government subsidies. All of these efforts will help China reduce its dependence on foreign oil and lower its carbon emissions.

China undoubtedly leads all other developing countries and the United States in the absolute amount of carbon emissions it has prevented from entering the atmosphere as a result of government actions and policies developed over the last several years. That it can and should do more does not invalidate the fact that it has provided more leadership on climate change than the United States. If America hasn’t been able to cure its own addiction to foreign oil over the last 40 years, why would I look to it to save the world from its carbon binge?

As I write, a protest is taking place in Guangzhou, against plans to build a waste incineration plant.  I don’t know much about the facts of the case, such as where is it in the planning process, has an Environmental Impact Assessment been performed, was the public consulted, were there hearings, etc.  But the demonstration is interesting for several reasons.

There are lots of environmental protests in China.  Most occur in rural locales; these rural protests can be violent.  They are usually motivated by people’s concern with threats to their own health or the health of their children posed by a polluting factory. They spill over when no one in power seems to care.  The protesters are left with no choice but to riot. They have reached the state of freedom where they have nothing left to lose, but their protests receive little publicity and are so issue- specific they have little chance of galvanizing action elsewhere.

The Guangzhou protest, like the PX protests in Xiamen and stroll in Chengdu, is more a NIMBY type protest.  It is organized by a relatively sophisticated middle class, and directly challenges the government’s decision making process, not some polluting plant’s operations (as in the usual rural protest.)  Moreover, this protest is getting lots of publicity.  The local press came to film the event (whether any footage is actually aired someone will have to tell me) and the event is being tweeted (this despite the fact Twitter is blocked in China) live.  I assume it is also being discussed on the domestic equivalents of Twitter.  Some people are simply passing on what they have heard from others, but some are definitely at the scene because they have submitted pictures.  Search hashtag #pylj for the stream and check out @ellachou and @mranti or check here for some translations.

It’s easy to get caught up in exciting events like this and overestimate their importance.  This protest won’t change China; it probably won’t even change Guangzhou too much, but it will change it a little.  These protests could possibly be avoided if the authorities complied with the laws that do give the people some voice in how decisions affecting the well-being of their environment are made.  It appears that those in power here simply assumed the plant would be built where they said it would be built, before it had completed all its necessary environmental reviews.  The genie is out of the bottle.  These protesters in Guangzhou are showing that local officials ignore the newly emboldened middle class at their peril.

Photo: @LEMONed