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Climate Change: China’s Argument Du Jour

March 18th, 2009 · 14 Comments

China’s public pronouncements on its Copenhagen position are becoming increasingly clumsy and shrill.  I suspect that the Obama victory, the speed with which his administration has moved to engage China on climate change issues, the unified position of the US and Annex 1 countries that China needs to do more, and the crumbling of the unified front initially maintained by the “developing” countries, has caught China flat footed.

In an effort to stave off any kind of binding commitments, it has been forced to play a hastily cobbled together defense which has consisted of throwing up an array of increasingly unpersuasive and contradictory arguments in the hope that one or two may stick.

The latest such defense was advanced by Li Gao, China’s chief climate negotiator, who is in Washington to hold talks with the Obama’s administration.  In widely reported remarks, he argued that the carbon produced by China as a result of making products for export, should be credited to the importing nation and not carried on China’s books.  As we’ve noted before, this argument is not unreasonable, but is patently unworkable and inconsistent with the way in which emissions have been allocated in the past according to international agreement.  It would require a complex analysis of world trading patterns in order to be implemented, which (even if agreement were made today to change the emission accounting formula) could not possibly be completed in time for Copenhagen.

Li’s remarks met immediate skepticism, with other negotiators saying it would be a logistical nightmare to find a way to regulate carbon emissions at exports’ destination.

Asking importers to handle emissions “would mean that we would also like them to have jurisdiction and legislative powers in order to control and limit those,” top EU climate negotiator Artur Runge-Metzger said.

“I’m not sure whether my Chinese colleague would agree on that particular point,” he said.

If China were serious about its argument–that importers should bear the cost of emissions generated abroad– it should support an import tax (or impose an export tax) to place the cost of carbon emissions on importers and the ultimate consumers of the product.  But, here’s where China’s use of this “defense” becomes suspect.  Reportedly,

Li also criticized proposals by the U.S. to place carbon tariffs on goods imported from countries that do not limit the gases blamed for global warming.

“If developed countries set a barrier in the name of climate change for trade, I think it is a disaster,” Li said.

Ah I see, China’s argument has a catch: developed countries should be charged with both their domestic (non-exported) carbon production and the carbon production associated with their imports, but they should be required to enact all reduction goals on the back of their domestic industries.  Developing country exporters should be permitted to continue their exports unencumbered with carbon emissions costs.  That’s a patent non-starter, of course, and the fact that China is even proposing it highlights the clumsy feel of its current climate change negotiating posture. 

There are signs that the US and the EU (as evidenced by the above quotes from Runge-Metzger) are becoming frustrated:

China’s chief climate official, Xie Zhenhua, was also in Washington where he met with US global warming pointman Todd Stern, who praised Beijing’s “broad work” on climate change but sought greater cooperation.

China has many very persuasive arguments as to why it should not be in the same boat with developed nations; perhaps it is making these arguments privately.  It’s beginning to lose its poise in the public arena (Li during the same press opportunity took a snide swipe at Japan’s climate negotiator), however, and is not aiding its cause.  It should start to float proposals for interim limits (which may only be reductions in “business as usual” emissions as opposed to hard and fast caps), if it wants to be a responsible player in the achievement of a successful agreement or initial framework at Copenhagen.  The problem may be that there is no consensus yet within the Chinese leadership as to what these “interim limits” should look like.  If that’s the case, it should move swiftly to achieve internal agreement.  Time is running out.

Tags: Li Gao · US-China relations · Xie Zhenhua · carbon emissions · climate change

14 responses so far ↓

  • 1 Robert Earley // Mar 18, 2009 at 6:47 pm

    Charlie,

    I kinda agree that it would be a nightmare to figure out embedded carbon in exported products then charge more for them in other places.

    However, there are precedents for this happening, and I am thinking in particular of the UK’s Renewable Transport Fuel Obligation, which offers a methodology and reporting mechanism for biofuel suppliers to report on the carbon intensity of their fuels.

    For imported biofuels or for biofuels bought off the spot market, naturally, it is difficult to find so much information about the production of that fuel. So, the UK was kind enough to research and provide default carbon intensity data, depending on how much real, certified information you can provide. For example, if you have “ethanol,” then it’s a relatively high default carbon intensity. If it is “ethanol from Brazil,” then it is a lower carbon intensity based on reasonable average data from Brazil. If it is “sugarcane feedstock ethanol from Brazil,” it is yet a lower default value. If you can produce all the data yourself through a certified “Chain of Custody,” then good for you.

    Trade in biofuels will increasingly need this kind of system, and the UK and EU are hoping that chain of custody systems can be set up internationally to deal with these carbon reporting systems. They cite ship vetting as an example of a policy that eventually got most ships, even those registered in Panama or wherever, inspected for resilience against oil spills or something.

    There is no link to carbon price yet, but that is part of the plan, depending on what the EU Renewable Energy Directive deals out in the next short while.

    I’m not saying it would be easy to accomplish for products, but I think it would be possible in some way, given a long-term and strategic push from all sides.

  • 2 Glen Peters // Mar 18, 2009 at 11:36 pm

    This is an interesting issue. Whether it is a “logistical nightmare” is a different question. I think people tend to focus too much on the method of calculation and not on the core issue. The core issue is that a considerable amount of the emissions that the west “consumes” are unregulated. A big step in the right direction is for the west to acknowledge this. Then we can discuss how policy might deal with it.

    The previous comment noted the importance of considering the value chain in biofuels. The Western Climate Initiative in the US, the last time I checked, will use consumption accounting for electricity emissions in order to stop “leakage” to other states. Consumption-based approaches may also be very useful at addressing competitiveness concerns:
    http://www.onlineopinion.com.au/author.asp?id=5613

    Instead of focusing on the complex method of calculation, one should ask “how complex does the calculation need to be”? At least in the early days of a consumption-based scheme imported emissions can be estimated based on domestic emissions. This also gets around some of the potential WTO issues.

    We live in a globalized world. It is no surprise that production-based and consumption-based emissions differ between countries. What is important is if our current focus on domestic emissions means that we forget about the consequences on other countries.

    A global agreement that is totally ignorant of the fact we live in a globalized world is a little unusual to me. I think politicians need to confront and debate the issue. Depending on the mechanisms used to address the issue, perhaps the methods are not so complex!

    By the way, I was one of the authors of the previous paper you referenced on the issue.

  • 3 Elizabeth Balkan // Mar 19, 2009 at 1:03 am

    Charlie,

    Nice analysis. Thought you might like a piece I also wrote on this topic, with the upcoming G20 Summit as the focal point for gauging China’s willingness to “play well with others.”

    http://sustainablog.org/2009/03/18/chinas-g20-summit-performance-likely-to-affect-climate-treaty-outcome/

    Best,
    Elizabeth

  • 4 cmcelwee // Mar 19, 2009 at 11:25 am

    @Robert, @Glen Thanks for your extremely thoughtful posts. I am in complete agreement that assigning responsibility for the carbon emissions generated to produce a product to those who consume the product is the fairest allocation method. My only concern was that attempting to change the current (perhaps less fair) allocation model now would torpedo any chance of reaching agreement at Copenhagen. I’m glad to see that it may not be as complex to implement as I had thought, but I suspect it can not be done in nine months. I will support a change in the next round.

    China, however, is using consumption-based allocation cynically. It wants to carve out export related carbon emissions from its ledger, but protect them from any carbon tax or control requirements. Far from stopping “leakage,” its approach would open a flood gate.

    Thanks again for your comments, and for working on these allocation issues. I think I unfairly tarred the Norwegian study with China’s manipulation of its conclusions. Keep up the good work!

    @Elizabeth Thanks for the reference to your post. I have been remiss in not welcoming your solo entry into this important space. I will add you to my blogroll as soon as I get a free moment, but until then, I urge everyone to check out: http://needigest.com/.

  • 5 Elizabeth Balkan // Mar 19, 2009 at 12:32 pm

    Thanks, Charlie!

    Glad to hear you are finding the website informative.

    Best,
    Elizabeth

  • 6 Rob Earley // Mar 20, 2009 at 11:11 am

    Interesting discussion - I might also add that iCET held a conference last April on international carbon accounting where Glen Peters was a speaker — Hi Glen!

    California EPA Secretary Linda Adams was there at the time, and was pretty insistent that from a US perspective, this kind of accounting would be a non-starter, and I agree with you Charlie, that this stuff won’t be happening anytime in the next 9 months, especially given the cynical attitude you’ve mentioned. But if not in Copenhagen, then where?

    p.s. what city would be your pick for the next major climate change negotiation? Kyoto - Copenhagen - ?

  • 7 China Environmental Protection // Mar 20, 2009 at 11:34 am

    I agree with Charlie that the U.S. owes China an “I Do” on this offer of a carbon offset fee on imported goods from Middle Kingdom, if only to show seriousness about the matter and respect for the need of developing countries to gain revenue for the daunting task. It’s not a trade/ tariff war. It’s a way of balancing our need for inexpensive manufacturing resources with the new demand for responsible practices.

    Nice synthesis, McElwee!

  • 8 cmcelwee // Mar 20, 2009 at 11:40 am

    Rob, I was a little glib in suggesting the proposal be considered in the “next round.” My guess is Copenhagen will only establish a general framework at best. One of the items for future action could be a re-accounting of carbon emissions, to take effect post-2020, say. Of course, the whole issue becomes moot if we have a universal carbon tax (I can dream can’t I). As to the next negotiation locale, how about Malé, capital of the Republic of Maldives?

  • 9 cmcelwee // Mar 20, 2009 at 11:55 am

    Thanks CEP. Watch this space for more on this topic.

  • 10 Rob Earley // Mar 20, 2009 at 3:24 pm

    Malé is a great idea, as long as all those airplanes and participants don’t weigh down the island too much. Wouldn’t that be ironic. Perhaps by that time, Maldevians would have found their new country, and there would be no need to construct new accomodation for the negotiators?

  • 11 Greg // Mar 23, 2009 at 10:01 am

    After a catching Dr. Richard Sandor flatfooted at the recent Sustainability Expo in Denver, I actually enjoy reading about China throwing a monkey wrench into the whole carbon accounting thing, which will certainly mess with the carbon traders’ money making efforts.

  • 12 cmcelwee // Mar 23, 2009 at 5:09 pm

    @Greg: Pork bellies may not be as glamorous, but at least I assume they actually exist somewhere; the same can not always be said for carbon offsets. Who is policing that industry?

  • 13 Greg // Mar 24, 2009 at 5:34 am

    @ Charlie

    Porkbellies have been removed because few if any in the US eat their specific products anymore. And technically the SEC should regulate carbon trading (cough, scoff, cough) like any other commodity but I doubt it.

  • 14 cmcelwee // Mar 24, 2009 at 3:00 pm

    What no more porkbellies!? Great suggestion re: SEC regualtion of carbon trading.

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