For China, the Shift to Climate-Friendly Energy Depends on International Collaboration

For China, the Shift to Climate-Friendly Energy Depends on International Collaboration

By Jeffrey Logan, Joanna Lewis, and Michael B. Cummings

Originally published in the January/February 2007 issue of Boston Review

According to the latest International Energy Agency forecast, China may become the world’s largest emitter of greenhouse gases as early as 2009. While it will be many decades before China surpasses the United States in cumulative emissions, annual emissions from China are clearly rising rapidly, with potentially dangerous global implications.

Scientists in China have declared the urgency of the climate-change problem, and the highest levels of government now acknowledge that it is a serious issue. Zhang Guobao, the vice-chairman of the National Development and Reform Commission (which oversees economic and energy policy), recently remarked, “Because we’re a coal-dominant country, we have to take responsibility for lowering greenhouse emissions.” However, these sentiments have yet to be reflected in either domestic climate policy or international-level commitments. China has taken a wait-and-see approach in the international climate change negotiations, unwilling to discuss making a commitment to reduce emissions until the developed world demonstrates its own commitment to do so.

But while China waits and sees, it is also constructing hundreds of pulverized-coal-fired power plants that are likely to lock in a trajectory of high greenhouse-gas emissions for 50 years or more. Coal will likely remain the fuel of choice for many decades in China, despite the severe economic, social, and environmental dislocations it creates, making future efforts to stabilize atmospheric concentrations of carbon dioxide significantly more difficult.

In the absence of an explicit national-level climate-change mitigation strategy, China’s energy strategy—driven by its economic-development goals—by default becomes its climate policy. The 2003 comprehensive National Energy Strategy Policy calls for maintaining growth in energy use at half the rate of GDP growth—essentially a doubling of energy use between 2000 and 2020 while GDP quadruples. Yet even to maintain this relatively impressive intensity of GDP and energy growth through 2020, the Chinese energy sector is poised to continue its breathtaking expansion.

Although the National Energy Strategy Policy calls for reducing the overall contribution of coal to the energy mix (down to less than 60 percent), overall coal capacity is slated to increase rapidly. Also planned are dramatic expansions of nuclear power, small- and large-scale hydropower, and increased renewable energy utilization (including large growth targets for wind-power and solar-energy technologies). Nuclear capacity is to expand more than four times by 2020, large-scale hydro is to more than double (requiring the building of a dam the size of the Three Gorges Project every two years), and non-hydro renewables are to grow by more than 100 times. However, targets and predictions related to Chinese economic and energy growth are notoriously uncertain, and the feasibility of these projections have been questioned, including the implications of expanding the use of nuclear power and large dams. Also uncertain is China’s ability to reduce its reliance on coal, particularly since China’s increases in coal capacity in the last two years were the largest ever. In the event that nuclear or renewable energy goals are not met, coal may end up filling the void—leading to an even greater increase in China’s greenhouse-gas emissions than currently projected.

The decentralized nature of the institutions and actors of China’s energy sector poses additional challenges to effective greenhouse-gas mitigation. Development of China’s energy sector is carried out largely at the local and regional level, where central-government mandates are not always reflected in local decisions. Moreover, the central government has little control over the construction of new power plants: regional power shortages have spurred a wave of new plant construction, often completed without central-government approval.

All these factors combined call into question the Chinese central government’s ability to move down a different, more climate-friendly path without meaningful international engagement and assistance. It is therefore critically important for the international community to increase bilateral and multilateral collaboration with China to address shared energy and environmental concerns before it commits to half a century of carbon-intensive infrastructure. Five areas are particularly well-suited for further engagement and offer strong opportunities to expand global benefits:

Energy efficiency. Efforts to improve energy efficiency are the most effective and affordable measures China can take to meet development goals while reducing greenhouse-gas emissions. Continuing its tradition of relatively impressive energy-efficiency policies, China recently approved new fuel-economy standards for its rapidly growing passenger-vehicle fleet that are more stringent than those in Australia, Canada, and the United States. Moreover, the government has set an extraordinarily ambitious target of cutting energy intensity by one fifth by 2010.

International partners can help China to build on these important efforts, in particular by promoting the business, financial, and regulatory skills needed for energy-efficiency projects and standards, and to reform policies that impede market-driven projects. Developing incentives for accelerated technology transfer, particularly for the private sector, are also crucial. Many of these efforts are already underway, and Chinese government officials are open to proposals that can help them meet their targets. Foreign partners need to be open and flexible so that their efforts can have maximum impact.

Energy security with climate benefits. China’s booming economy has required a huge expansion in imported raw material, especially oil, since 2001. Chinese national oil companies have begun to purchase oil and gas assets around the globe as a way to increase energy security. Some nations view these actions with alarm, since there are potentially destabilizing military, political, and economic implications. From a climate perspective, China’s growing interest in coal liquefaction is also alarming because making transportation fuels from coal through chemical transformation sends approximately twice as much CO2 into the atmosphere as using standard crude oil.

Better integrating China into the processes of managing the global energy system would make it a more helpful partner in managing that system. Increased participation in the IEA, G-8 and other global bodies involved in high-level energy dialogues would provide opportunities for developing shared understandings on topics affecting global energy security. Such dialogues could lead to energy-security-enhancing initiatives with climate benefits, and could lead the way toward climate-focused dialogue between the major energy consumers of the world. But any such endeavours will need to be backed by meaningful actions. China and its international partners could also discuss deeper technical collaboration on vehicle technologies, alternative fuels, and associated policies. However, any partnerships first need to focus on a dramatically improved atmosphere of trust and sincerity.

Energy security with climate benefits. China’s booming economy has required a huge expansion in imported raw material, especially oil, since 2001. Chinese national oil companies have begun to purchase oil and gas assets around the globe as a way to increase energy security. Some nations view these actions with alarm, since there are potentially destabilizing military, political, and economic implications. From a climate perspective, China’s growing interest in coal liquefaction is also alarming because making transportation fuels from coal through chemical transformation sends approximately twice as much CO2 into the atmosphere as using standard crude oil.

Better integrating China into the processes of managing the global energy system would make it a more helpful partner in managing that system. Increased participation in the IEA, G-8 and other global bodies involved in high-level energy dialogues would provide opportunities for developing shared understandings on topics affecting global energy security. Such dialogues could lead to energy-security-enhancing initiatives with climate benefits, and could lead the way toward climate-focused dialogue between the major energy consumers of the world. But any such endeavours will need to be backed by meaningful actions. China and its international partners could also discuss deeper technical collaboration on vehicle technologies, alternative fuels, and associated policies. However, any partnerships first need to focus on a dramatically improved atmosphere of trust and sincerity.

Advanced coal technologies and carbon sequestration. For the past few years, China has built, on average, one new large power plant each week. Provided that it can overcome technical, financial, regulatory, and social barriers, carbon capture and storage (CCS) may become a critical option for reducing greenhouse-gas emissions from fossil-burning plants throughout the world, but especially in coal-intensive countries such as China. While China is unlikely to invest in CCS systems for coal plants in the next decade or two due to the cost, it is looking to collaborate on advanced coal technology research including coal gasification. China is also keenly interested in enhanced oil-recovery methodologies that could use carbon dioxide in the process. CO2-enhanced oil recovery can help anchor early investments in CCS infrastructure that might otherwise have to wait for a more comprehensive climate policy.

Once more, international partnerships can help. A new U.K.-led initiative, part of the China–EU partnership on climate change, aims to accelerate experience with CCS by building a demonstration plant in the next decade. And Huaneng, China’s largest coal-based power-generation company, is one of 12 energy companies participating in the U.S. FutureGen “clean coal” project, attempting to become the world’s first integrated sequestration and hydrogen production research power plant.

China is also collaborating with international partners on coal and CCS technologies through the Asia Pacific Partnership on Clean Development and Climate, known as the AP6. Officially launched in January 2006, the AP6 brings together China, the United States, Australia, India, Japan, and the Republicof Korea in an agreement based on clean energy technology cooperation. Some have criticized the AP6 as an attempt to further weaken the Kyoto Protocol, but limited funding raises doubts about whether there is enough glue to hold the membership together. The AP6 does bring together an important grouping of nations, and therefore has the potential to lay the groundwork for future action.

Finally, China is a member of the Carbon Sequestration Leadership Forum, an international initiative of 22 countries currently collaborating with the International Energy Agency to deliver recommendations to the G-8 in 2008 on how CCS can be enhanced in the near term. The Forum is opening its meetings to new participants but doesn’t yet seem to offer much interest for developing countries such as China.

Advanced coal technologies and carbon sequestration. For the past few years, China has built, on average, one new large power plant each week. Provided that it can overcome technical, financial, regulatory, and social barriers, carbon capture and storage (CCS) may become a critical option for reducing greenhouse-gas emissions from fossil-burning plants throughout the world, but especially in coal-intensive countries such as China. While China is unlikely to invest in CCS systems for coal plants in the next decade or two due to the cost, it is looking to collaborate on advanced coal technology research including coal gasification. China is also keenly interested in enhanced oil-recovery methodologies that could use carbon dioxide in the process. CO2-enhanced oil recovery can help anchor early investments in CCS infrastructure that might otherwise have to wait for a more comprehensive climate policy.

Once more, international partnerships can help. A new U.K.-led initiative, part of the China–EU partnership on climate change, aims to accelerate experience with CCS by building a demonstration plant in the next decade. And Huaneng, China’s largest coal-based power-generation company, is one of 12 energy companies participating in the U.S. FutureGen “clean coal” project, attempting to become the world’s first integrated sequestration and hydrogen production research power plant.

China is also collaborating with international partners on coal and CCS technologies through the Asia Pacific Partnership on Clean Development and Climate, known as the AP6. Officially launched in January 2006, the AP6 brings together China, the United States, Australia, India, Japan, and the Republicof Korea in an agreement based on clean energy technology cooperation. Some have criticized the AP6 as an attempt to further weaken the Kyoto Protocol, but limited funding raises doubts about whether there is enough glue to hold the membership together. The AP6 does bring together an important grouping of nations, and therefore has the potential to lay the groundwork for future action.

Finally, China is a member of the Carbon Sequestration Leadership Forum, an international initiative of 22 countries currently collaborating with the International Energy Agency to deliver recommendations to the G-8 in 2008 on how CCS can be enhanced in the near term. The Forum is opening its meetings to new participants but doesn’t yet seem to offer much interest for developing countries such as China.

Safe and Secure Nuclear Power. China’s leaders have called for a new growth era in nuclear power, motivated in part by a recognition of its over-reliance on coal. Despite almost certain difficulties in reaching its ambitious goals for nuclear power in the coming decades, China is still likely to significantly increase its nuclear fleet. The international community should engage China and other nuclear countries in developing and enforcing an enhanced regime of international waste and proliferation safeguards to ensure that growth is done responsibly. If successful, such an enhanced international regime could help to ensure an acceptable role for nuclear power to contribute to long-term global efforts to address climate change. Until this is addressed, in actions such as the recent agreement between the U.S. and India, proliferation concerns may outweigh potential climate benefits.

Research, development, and demonstration for renewables. Motivated by the economic and environmental benefits that these technology industries provide, China is committed to developing indigenous renewable-energy technology industries and has set aggressive targets. China’s national renewable-energy law went into effect in January 2006, offering financial incentives for renewable energy development. Targets that have been announced in conjunction with the renewable-energy law and subsequent government documents include 16 percent of primary energy from renewables by 2020 (includes large hydropower—which would place the current share at about seven percent today), and 20 percent of electricity capacity by 2020, which includes 30 gigawatts of wind power, 20 gigawatts of biomass power, 300 gigawatts of hydropower capacity. Policies to promote many renewable-energy technologies in China also aim to encourage local technology-industry development; China is already producing commercial wind turbines that sell for approximately 30 percent less than similar European and North American technology, and 35 million homes in China get their hot water from solar collectors—more than the rest of the world combined. China also has a burgeoning solar photovoltaic industry.

Nevertheless, non-hydro renewable technologies will make up a relatively small fraction of the energy mix in China over the next few decades. Yet given the challenges facing the widespread deployment of CCS and nuclear power in the near term, the commercialization of renewables by the major energy-consuming countries of the world offers an important opportunity for international collaboration with China. The entry of Chinese manufacturers into these rapidly expanding global markets may drive cost reductions and increase the viability of renewable energy technology utilization worldwide. Assistance with several embryonic Chinese technologies could push these technologies into the marketplace. Combining China’s growing manufacturing prowess with the innovation experience of other industrialized countries to enable widespread commercial deployment of solar photovoltaic and utility-scale wind turbines should be a high priority of the international community. Many existing international forums, such as the UNFCCC and the WTO, are being underutilized to discuss key issues surrounding renewable-energy technology transfer, including the role governments can play in facilitating the sharing and protection of intellectual-property rights.

Providing modern energy services for 1.3 billion people in a climate-friendly manner is a daunting challenge. Fortunately, the Chinese central government is demonstrating increasing awareness of the problems posed by climate change and interest in altering China’s current energy-development trajectory. However, the central government’s ability to significantly alter this trajectory without meaningful international engagement during the critical time period of the next ten or 20 years is questionable. In particular, U.S. leadership to address energy and climate issues at home and in international forums is essential to expand cooperation with China and other large developing countries. There are ample opportunities to address linked climate-protection, energy-security, and economic-development issues—more opportunities for collaboration available than political willpower currently supports. But change can come quickly, and those prepared to engage will benefit first.

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Adapted from “Understanding the Climate Challenge in China,” in
Climate Change Science and Policy, edited by Schneider, Rosencranz, and Mastandrea, forthcoming. Original version includes citations.