Tough challenges for China (2)

Despite the economic outlook, China should not abandon its commitments to save energy and reduce emissions, argues Pan Jiahua, in the second half of a two-part article.

The toughest targets in China’s eleventh Five-Year Plan relate to energy-saving and emissions-reduction. Rapid economic growth in 2006 and 2007 meant leaps in energy consumption and a rise in pollution levels, but then the financial crisis hit China in the second half of 2008. By the fourth quarter, the declining economy had relieved some of the pressure to reach energy-saving and emissions-reduction targets.

The Five-Year Plan, released in 2006, contains quantifiable and binding targets for energy-saving and emissions-reduction: by 2010, energy consumption per unit of GDP (energy intensity) should have fallen by 20% on 2005 levels; absolute levels of SO2 and Chemical Oxygen Demand (COD) should have been reduced by 10%. These are tough targets, and there is an ongoing debate as to whether they were set too high.

However, the financial crisis means that energy consumption in China has been hit. Pollution has fallen, much as it did during the Asian Financial Crisis of 1997. According to the China Electricity Council, the demand for electricity dropped in September 2008: electricity generation fell by 3.4%. That trend continued, with a 4% fall in October. Excluding holiday periods, this was the first drop of its kind since 1999.

The financial crisis also caused China’s energy intensity to fall 4.59% in 2008, while COD and sulphur dioxide emissions fell 4.42% and 5.95% respectively, exceeding annual goals. In the past three years, energy intensity has fallen 10.08%, COD and sulphur dioxide emissions by 6.61% and 8.95% respectively.

The financial crisis has done China a favour, but it will pass – unlike the long-term challenges. In fact, the need to reduce greenhouse-gas emissions will only increase.

China’s current targets will now be reached easily, but longer-term aims will not be achieved so readily. Energy-saving and emissions-reduction are not the same as greenhouse-gas curbs. Energy-saving does reduce pollution, but atmospheric pollutants such as sulphur dioxide and particulate matter can be removed using technical fixes – with scrubbers, for example. Greenhouse gases can be captured and stored, but the methods for doing so are not yet commercially viable. Moreover, conventional pollutants, such as sulphur dioxide, do not increase much once per capita GDP reaches around US$10,000, but greenhouse-gas emissions are on the increase in countries with a per capita GDP of US$30,000.

Source: Pan Jiahua and Zheng Yan (2009)
X Axis: Per capita carbon dioxide emissions
Y Axis: Per capita GDP (US$ intl2000)
Right-hand key: Canada, France, Germany, Italy, United Kingdom, United States, Japan, Australia, Korea, Indonesia, Mexico, South Africa, India, China.

Figure 2 illustrates the relationship between income levels and greenhouse-gas emissions in 14 major economies between 1960 and 2004. Several features can be identified: first, income and emissions are related. Emissions increase sharply when per capita GDP is below US$10,000, but they start to slow over the US$15,000 level. Some nations, such as France and Germany, have seen their greenhouse-gas emissions fall despite increases in income. Greenhouse-gas emissions generally still increase with income, however. Second, countries with similar levels of income can have very different levels of emissions. North American countries and Australia have similar levels of income to European nations and Japan, but twice their greenhouse-gas emissions. On the surface, this appears to be because of differing availability of resources, but it is actually because of differing policy orientations. Europe and Japan emphasise public transport and energy efficiency and levy energy and climate taxes; the cost of fuel in Europe is around twice that of the United States. This shows that different methods of production and lifestyles can have a major impact on emissions. Third, developing nations, such as China and India, still have low incomes and low emissions per capita. Per capita emissions in South Africa, South Korea and Mexico are approaching European levels, despite their lower incomes. Therefore, if developing nations do not move towards low-carbon development, large quantities of greenhouse-gases will be emitted and pose a threat to the global climate. Similarly, developed nations need to reduce emissions and help the developing world to make low-carbon development choices.

Emissions in developed nations are slowing or even falling, while those in developing nations are growing, as incomes increase. So, what does the future hold? The International Energy Agency has calculated actual emissions for major countries from 1990 to 2006, and made predictions for 2030. Emissions in the developed economies have remained almost unchanged, with negative growth in Russia and other transitional economies. But there have been major increases in developing economies – around two-fold over the 16-year period. In China’s case, emissions have increased around 150%. If compulsory emissions reductions are not enforced by 2030, developed nations would maintain emissions at a stable level; emissions would fall in some countries, such as Japan. In contrast, emissions in developing nations will double, with India’s emissions possibly increasing threefold. By 2030, developing nations would account for the majority of emissions, with China potentially matching the combined emissions of the European Union and the United States.

In the long term, the financial crisis will not relieve the pressure on China to reduce emissions. China’s energy comes mainly from coal. Nuclear energy requires major investment and takes time to come onstream. Wind and solar power are not yet commercially competitive. Cleaning up China’s power will be a long and arduous task. Improvements in energy efficiency can mean maintaining the same output for a reduced energy input, but income increases will improve the quality of life, and private vehicles will become more common. These improvements, along with expanding populations, are a major source of increasing emissions for any developing nation. Developed nations have less room to improve quality of life, and they have stable or shrinking populations. In developed countries, cleaner and more efficient energy use will result in absolute falls in emissions, since they have seen stable or slightly falling emissions even without emissions reduction measures.

The economic crisis has taken some of the pressure off China, but only for a short while. China needs to deal with the current crisis, but also to make long-term plans for economic recovery and ongoing development – choosing a low-carbon path with improved energy efficiency and a better energy infrastructure, developing clean energy and preventing greenhouse-gas emissions from becoming a barrier to China’s economic growth.

Pan Jiahua is executive director of the Centre for Urban Development and Environment at the Chinese Academy of Social Sciences

Homepage photo by LHOON