If James Carville was giving the Chinese government public relations advice, he might say something like, “It’s the pollution, stupid.” But this wouldn’t be anything the Chinese government doesn’t already know. When eight-year-olds start getting lung cancer that can be attributed to air pollution, you’ve got a problem. When smog forces schools, roads, and airports to shut down because visibility is less than 50 yards, you’ve got a problem. When a study finds that severe pollution is slashing an average of five-and-a-half years from the life expectancy in northern China, you’ve got a problem.
Such a visible problem, literally, can lead to myopic responses in a frantic effort to make it appear that the problem is being confronted. For instance, last month the Chinese central government announced it will start publishing a list of its 10 worst — and best — cities for air pollution each month. But underneath all the haze, the seeds of a real transition are taking root. In July, the government said it would spend $275 billion through 2018 to reduce pollution levels around Beijing. Last month Shanghai released its Clean Air Action Plan in an effort to rapidly and substantially improve the air quality in China’s most populous city of nearly 24 million residents.
The Chinese government is not stupid and neither are China’s 1.35 billion residents — they can all see that pollution is a real problem. Earlier this month, Chinese communist party leaders convened a major plenary meeting to discuss economic reform, with over 200 party members gathering at the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC) in Beijing, or third plenum. Plenums are significant because every member of the party must be present and this year, energy and environmental issues were on the agenda. Third plenary sessions have been met with high anticipation ever since the 11th Third Plenary Session in 1978 led to the structural reforms ushered in by Deng Xiaoping and the ensuing three decades of rapid growth that have turned China into the export-driven, world power it is today.
The economy has slowed, and China is confronting the cumulative consequences of its three-decade focus on economic expansion with little attention paid to mounting ecological and social costs.
But that sustained economic boom also led to a bust for the environment. R. Edward Grumbine, a senior international scientist in the Key Lab of Biodiversity and Biogeography at Kunming Institute of Botany, wrote in Yale360 that as the 18th Plenum ended, China’s new President, Xi Jinping, and Prime Minister Li Keqiang find their country at a critical crossroads.
“The economy has slowed, and China is confronting the cumulative consequences of its three-decade focus on economic expansion with little attention paid to mounting ecological and social costs,” Grumbine wrote.
Grumbine thinks that the plenum may one day be seen as the turning point marking China’s shift away from unbridled economic growth to a more balanced form of development.
“One thing is certain: China’s leadership is now feeling intensifying public pressure to do something about the environment. A growing number of China’s 1.35 billion people — especially those in the rapidly expanding middle class — are fed up with government inaction on environmental issues,” Grumbine wrote.
Key Environmental Issues
Take water for instance. Half of China’s rivers — about 28,000 — have vanished since 1990. China also has about 1,730 cubic meters of fresh water per person, just above the 1,700 cubic meter-level the UN deems “stressed.” In the north, where half of China’s people, most of its coal, and only 20 percent of its water are located, the situation is even more dire. About 300 million rural residents do not have access to safe drinking water, and 57 percent of urban groundwater, a primary source of drinking water, is also polluted.
Coal industries and power stations use as much as 17 percent of China’s water, and by 2020 the government plans to boost coal-fired power by twice the total generating capacity of India. According to British Petroleum (BP), China will account for 25 percent of global growth in energy demand through 2030. China’s 2012 energy mix was comprised of 68 percent coal, 18 percent oil and five percent natural gas.
In the past, China has been able to get away with ignoring environmental concerns to achieve economic gain. But going forward, even as energy demand grows along with the growing middle-class, it’s becoming increasingly clear that a more holistic approach will be necessary. Not only because of public opinion, but because of real environmental constraints, such as the water needed to produce coal-fired power. And that’s before even considering the impact of climate change, in which higher temperatures, sea-level rise, and more intense natural disasters make everything that much worse. China is also the world’s biggest greenhouse gas emitter — putting it again at the fulcrum of economic and environmental concerns, in this case not only domestically, but internationally, as well.
According to the International Energy Agency’s recently released World Energy Outlook report, current projections show that energy-related carbon dioxide emissions will rise 20 percent by 2035. Setting the world on a trajectory consistent with a long-term average temperature increase of 3.4 degrees Celsius, far above the internationally agreed-upon 2 degrees Celsius target. China has vowed to reduce its carbon emissions per capita of GDP, known as emissions intensity, by 40–45 percent by 2020 compared with 2005 levels. The U.S. and China make up more than 40 percent of global CO2 emissions.
A lot of consumers are saying, ‘Who cares if I have a great job? Who cares if I can buy a Louis Vuitton bag, if the air and water are killing my family?’
Recently on Marketplace Morning Report, Shaun Rein, Managing Director of the China Market Research Group, spelled out in simple terms why pollution is currently the biggest problem to the Chinese economy.
“The biggest fear or frustration in life today is the pollution levels in China. A lot of consumers are saying, ‘Who cares if I have a great job? Who cares if I can buy a Louis Vuitton bag, if the air and water are killing my family?’” Rein said. “Pollution is the biggest problem that’s facing China’s government today, and they really need to do a better crackdown on it, otherwise they’re going to face serious social instability going forward.”
Chris Nielsen, executive director of the China Project at Harvard University, told Climate Progress in an email that the Chinese government has not simply ignored its environmental concerns and focused only on economic growth.
According to Nielsen, one famous indicator of China’s progress is the almost constantly improving energy efficiency of China’s economy since 1949. “This path is partly due to modernization of its energy economy, but since 2006 in particular, it has been supported by very aggressive, target-driven policies to engender improved energy efficiency, especially in industrial enterprises,” Nielsen said.
China has also built the world’s biggest installed capacity of wind power in the last decade and solar is now on a similar trajectory. Additionally, it has the largest hydropower capacity in the world and has dramatically increased imports and production of natural gas to substitute for coal in key sectors such as household use.
“These positive changes have been overwhelmed by negative changes in many respects,” Nielsen said. “By far the most important of the negative changes is a tremendous concomitant rise in the consumption of coal to fuel the economy, which by itself cancels many of these gains.”
Nielsen noted that it’s important to understand that the Chinese government is not monolithic — there are advocates for sacrificing economic growth for environmental protection and there are powerful government actors opposed to it. He thinks that the government is committed to real change on environmental issues, and that the balance is probably gradually tipping towards stronger environmental protection.
“However, a time of slowing economic growth may not be the most hopeful time for transformative changes to limit environmental damage,” Nielsen said. “Fears about unemployment may limit the political willingness to go that far. The entrenched power of state-owned enterprises, which the Third Plenary appears to have addressed only weakly, will likely continue to serve as a counterweight favoring economic growth over aggressive environmental progress. “
The “Ecological Red Line”
As part of the recent third plenum, the government released a communique that vowed to protect the country’s ecological environment, and urged the drawing of an “ecological red line.”
Dr. Xia Guang, director of the Policy Research Centre for Environment and Economy under the Ministry of Environmental Protection, wrote that “red lines” would not only refer to geological areas that were off-limits to exploitation, but also better control the use of natural resources and emissions of pollutants, including greenhouse gases.
The plenum resolution listed environmental protection for the first time among the government’s five top responsibilities — behind macroeconomic management, job creation, market supervision, and social management.
In China, what the central leadership wants is often not what local governments deliver. Economic incentives drive local government decisions even when the top-down leadership is pushing for reform.
On top of developing specific mandates and implementation procedures to help shift local government incentives, a crucial part of the ecological red line will be public oversight and awareness — otherwise, promises could end up being empty words, lip service to an eager public.
“The real number one barrier to environmental protection in China is not lack of money or technology,” Ma Jun, one of the country’s best-known environmental activists told the Christian Science Monitor last year. “It is lack of motivation. We need the public to provide that motivation. But they must be informed before they can participate in any meaningful way.”
Environmental agencies in China are hamstrung by local officials who put economic growth ahead of environmental protection.
“We have the laws and regulations, but enforcement remains very weak,” Ma continued. “Environmental agencies in China are hamstrung by local officials who put economic growth ahead of environmental protection; even the courts are beholden to local officials, and they are not open to environmental litigation.”
Some of this can be accomplished though incentives or punitive actions, such as with a carbon trading scheme. This week, in the midst of the 19th United Nations Framework Convention on Climate Change (UNFCCC), China’s top climate official made the well-timed announcement that Beijing and Shanghai will launch emissions trading markets later this month. The Chinese government has approved seven pilot carbon trading exchanges in total, with Shenzhen being the first to launch in June.
The markets will “play a very significant role” in China’s efforts to reduce its carbon emissions, Xie Zhenhua, vice director of the National Development and Reform Commission, China’s economic planning agency, said at the U.N. climate conference.
As for public oversight, China has also recently made strides in this direction with the announcement that the government will begin measuring not just PM2.5 concentrations, but also the long-term impacts of chronic air pollution on human health. This is important because, much like the government has announced plans to shame the most polluted cities by listing them every month, the public can shame the government if the data doesn’t show improvements in air quality, making it harder for the powers-that-be to hide behind a veil of smoke.
How Will China Find The Energy?
Addressing environmental concerns would be much easier if they weren’t so closely tied not only to economic growth but also energy consumption. Going into the plenum, expectations were high that President Xi, in office for just under a year, would be a reformer and usher in major changes, including how China gets its energy.
China relies on coal for nearly 70 percent of its energy production, but is currently aggressively pursuing natural gas based on increased availability and improved environmental sustainability over coal-fired power plants, especially in regard to local air pollution. General Electric stated in a white paper that China could save $820 billion in environmental costs by 2025 by doubling its current natural gas consumption at the expense of coal.
The full Third Plenary decision — a 30-page, 60-point document — was released after the conference. Melanie Hart, Senior Policy Analyst for China Energy and Climate Policy at the Center for American Progress, told Climate Progress that, “the plenum language on market prices is a win for China’s energy sector. Chinese Communist Party leaders have officially signed off on the price reforms that China’s energy bureaucrats have been tinkering with over the past year.”
A Center For American Progress translation of part of the decision reads: “All prices that can be determined by the market should be turned over to the market, and the government should not engage in improper interference. Drive forward price reform in sectors such as water, petroleum, natural gas, electricity, transport, and telecom; open up and allow competition to determine prices.”
There are strong vested interests in China benefiting from sub-market, state-mandated rates for electricity, natural gas, and other energy inputs. Shifting toward a more market-based system will not be easy.
“Now the big question is implementation,” Hart said. “Price tinkering at the margins is one thing. Completely removing state controls is another. There are strong vested interests in China benefiting from sub-market, state-mandated rates for electricity, natural gas, and other energy inputs. Shifting toward a more market-based system will not be easy. It will have to be done, however, if Beijing wants to come anywhere near achieving that nation’s ambitious energy and climate goals.”
According to Hart, Chinese leaders have seen what natural gas is doing for the United States, and they want the same for their nation.
“The problem is, to really ramp up natural gas production and use in China, they can’t just throw money at the problem,” Hart said. “The only way Chinese energy companies can bring in more natural gas is to import more supplies from the international market or invest in domestic shale gas production. Both are costly business models, and neither pays off when the selling price is capped.”
Opening the energy industry to the international market will also mean good things for renewable energy sources such as solar and wind. Last week, the Chinese Bureau of Energy released a draft of proposed solar power installations for China in 2014 that said new solar installations in China are expected to reach 12 gigawatts. This is a record, and a good indicator for solar power in China and internationally. Recently China’s solar industry, which was built around cheap exports, has been ailing due to a glut of supply and accusations of market manipulation.
In the last few years, the Chinese government, under pressure to do something about pollution and struggling domestic solar companies, has put a renewed emphasis on domestic solar.
Last week, state media reported Chinese premier Li Keqiang as saying that China will open its energy conservation and environmental protection industries to foreign and private investment. Li’s remarks further enforce the evidence that China is ready to move away from the massive government subsidies that created national champions in wind in solar that have been criticized as protectionist.
China can gain huge economic advantage by continuing to dominate the market for these energy technologies. Analysts have forecast that the global market for low carbon technology will reach $1.5 to $2.7 trillion annually in 2020. A separate UNEP report projected that by 2030, there would be 8.4 million jobs in solar photovoltaic and wind energy, and 12 million in biofuels, globally.
China’s Problems Are The World’s Problems, Their Solutions Are The World’s Solutions
China’s economic and environmental policies have an outsized effect on the world. China has long been the most populous nation on the planet, and now it is an economic powerhouse and leading greenhouse gas emitter. China’s government needs to balance a population who’s growing awareness of local environmental issues is pushing up against a massive, energy-devouring push towards urbanization and improved quality-of-life. As China’s living standards approach those of the West, so do the demands of its citizens. If the 20th century was the American century, the 21st century might very well be the Chinese century.
According to Paul Joffe, Senior Foreign Policy Counsel at World Resources Institute, China has a number of self-interested reasons to confront energy and environmental issues beyond pollution control and renewable energy market share. For instance, domestic agriculture could be adversely affected by climate change. By 2030, overall crop productivity in China could decrease by five to ten percent if no action is taken. China also views climate change as an issue where it can show positive leadership, especially among developing nations.
In an interview with Climate Progress, Joffe said that China can lead the way not only in renewable energy technology, but also other areas such as fuel efficiency standards in cars and smart grid implementation.
The U.S. and China make up more than 40 percent of global CO2 emissions.
This year China and the U.S. have hashed out a number of areas where they can work together towards common diplomatic goals.
At a G-20 summit in September, presidents Barack Obama and Xi Jinping announced that they would seek to eliminate potent greenhouse gases through the 1987 Montreal Protocol. At a June summit in California, the two leaders agreed to work together to phase down the consumption and production of hydrofluorocarbons (HFCs) — substitutes for ozone-depleting chlorofluorocarbons (CFCs) and GHGs. And in July, the U.S.-China Climate Change Working Group submitted a report to the U.S.-China Strategic and Economic Dialogue (S&ED;) proposing five new action initiatives involving transportation, smart grids, carbon capture, utilization, and storage, energy efficiency, and data transparency.
As further indication of the importance of confronting domestic and international environmental issues for two biggest economies in the world, U.S. Environmental Protection Agency Administrator Gina McCarthy will be heading to China in early December to meet with officials. U.S. Vice President Joe Biden will also be traveling to China, Japan, and South Korea in the first week of December. Biden will not be focusing on environmental issues in China, but issues such as trade and human rights are expected to come up, which include environmental elements.
“The misperception that China is not acting should no longer be seen as a reason for inaction by the U.S. or any other country,” Joffe said. “This misperception is fed in part by looking only at the environmental problems China is facing, while ignoring positive developments. China faces very significant environmental challenges, but it is also taking important steps to address climate change.”