China Environmental Law

The U.S.-China Economic & Security Review Commission held hearings on August 13, 2008 regarding China’s Energy Policies and Their Environmental Impacts. If you were designing a topic with this blog in mind, you couldn’t have done any better than this.  Filming commitments (more later) kept me from participating at the hearing itself, but I will be happy to report on it. 

For those of you unfamiliar with the U.S.-China Economic & Security Review Commission it was created by the US Congress on October 30, 2000 to “monitor, investigate, and submit to congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China, and to provide recommendations, where appropriate, to Congress for legislative and administrative action.”

There were 11 presenters at the August 13, 2008, and their written testimony is available at the link above.  I have not had time to review all of the presentations, but if they are as good as that provided by Dr. Erica Downs, China Energy Fellow at The Brookings Institution, who presented on China’s Energy Policies and Their Environmental Impacts , then they are worth reading.

Dr. Downs has succinctly (no more than 4 pages) summarized the current state of China’s energy policymaking structure, and the implications of that structure for both China and the US.  Perhaps the reasons I’m so smitten with the testimony is that it reaches the same conclusions we here at CELB have reached and preached for some time.  For instance:

“China suffers from a disconnect between the increasingly prominent position of energy issues on its domestic and foreign policy agendas and the capacity of the country’s institutions to manage the energy sector.”

“The NEA’s [National Energy Administration, originally referred to in the initial press releases as a Bureau] lack of authority over energy prices makes its task of mitigating the current electricity shortages, which are partly rooted in price controls, especially challenging. . . . The failure of electricity price increases to keep pace with soaring coal prices has contributed to the national power shortage because some electricity producers can’t afford coal while others are unwilling to operate at a loss.”

“The mere specter of a MOE [Ministry of Energy] strikes fear in the heart of the NDRC because it would deprive the NDRC of a substantial portion of its portfolio and important tools of macroeconomic control. The NDRC’s aversion is shared by the energy firms who are reluctant to have another political master and afraid that a MOE would limit their direct access to China’s leadership. Such opposition helps explain why the government was unable to forge a consensus in favor of more robust changes to China’s energy policymaking apparatus.”

“In sum, China’s new energy administration is unlikely to substantially improve energy governance. The organizational changes are tantamount to rearranging deck chairs on the Titanic. . . . Consequently, we can expect to see a continuation of business as usual: conflicts of interest will impede decision-making; the energy companies will remain important drivers of projects and policies; state-set energy prices will continue to contribute to periodic domestic energy supply shortfalls; and the NEA, with no authority to adjust energy prices, probably will resort to “second best” administrative measures to try to eradicate those shortages.”

I couldn’t have said it better!

I’ll continue to review the testimony at this hearing and report back with glowing reviews if any other presenters share the opinions of CELB.  Those that do not will be ignored or savaged depending on my mood.