What Stern said about China (part two)

No single process can keep climate change within targeted limits. But, says a UK study, carbon-storage technologies could potentially play a key role in coal-reliant China. Maryann Bird examines the report.

Addressing the challenge of stabilising greenhouse gas (GHG) stocks in the earth’s atmosphere, the Stern Review: The Economics of Climate Change argues that such stablisation cannot be achieved without global emissions-reduction action – and the earlier the action is taken, the easier it will be. However, undertaking stabilisation is a delicate and complicated process. The report notes that it is “difficult to secure emission cuts faster than about 1% per year, except in instances of [economic] recession. Even when countries have adopted significant emission-saving measures, national emissions often rose over the same period.”

“China embarked on a series of measures to reduce deforestation and increase reforestation from the 1980s, with the aim of restoring forests and the environmental benefits they entail,” Stern says. “Between 1990 and 2000, forested land increased by 18 million hectares, from 16% to 18% of total land area. Despite cuts in land use emissions of 29% per year between 1990 and 2000, total GHG emissions rose by 2.2% over the same period.”

Noting that “no single technology or process will deliver the emission reductions needed to keep climate change within the targeted limits,” the review acknowledges the attention being paid to the potential of carbon capture and storage (CCS). The CCS process involves removing and storing carbon emissions from the exhaust gases of power stations and other large emitters. CCS technologies are expected to play a crucial role in the future, and could reconcile the continued use of fossil fuels with the need for drastic reductions in emissions.

CCS could, if shown to be effective, help cut emissions from the numerous new coal-fired power stations that China plans for the coming decades — and in which power companies have been investing rapidly. Stern also noted that some countries can reduce emissions more cheaply than others – for example, where big capital investments are being made. “Countries such as India and China are expected to increase their capital infrastructure substantially over coming decades,” the report said, “with China along accounting for around 15% of total global energy investment. If they use low-emission technologies, emission savings can be ‘locked in’ for the lifetime of the asset. It is much cheaper to build a new piece of capital equipment using low-emission technology than to retro-fit dirty capital stock.”

On structural change and competitiveness, Stern also found that “countries most reliant on energy-intensive goods and services may be hardest hit” by costs. “Primary energy consumption as a percent of GDP is generally three or four times higher in the developing world … though in rapidly growing sectors and countries such as China and India, primary energy consumption per unit [of] output has fallen sharply as new efficient infrastructure is installed.”

Referring to the economics of emissions stabilisation, Stern noted the link between climate-change policies and energy policy. While the expansion of renewable-power sources can reduce the exposure of economies to fossil-fuel price fluctuations, as well as reducing import dependence, the report said, coal was a different matter.

Says Stern: “Coal is much more carbon intensive than other fossil fuels: coal combustion emits almost twice as much carbon dioxide per unit of energy as does the combustion of natural gas (the amount from crude oil combustion falls between coal and natural gas). Many major energy-using countries have abundant domestic coal supplies, and hence see coal as having an important role in enhancing energy security. China, in particular, is already the world’s largest coal producer; its consumption of coal is likely to double over the 20 years between 2000 and 2020.”

As well as using coal directly, China and other producing countries are investing in “coal-to-liquids technology, which would allow them to reduce their dependence on imported oil” and use domestic coal to meet some transport-fuel demands. However, the full lifecycle emissions of such road transport use have been estimated as almost double those from using crude oil. Extensive CCS deployment, the report emphasises, “can reconcile the use of coal with the emissions reductions necessary for stabilising greenhouse gases in the atmosphere.”

Stern also notes that climate-change policies can reduce local air pollution, with important health and quality-of-life benefits for developing countries. “[O]nly malnutrition, unsafe sex and lack of clean water and adequate sanitation are greater health threats than indoor air pollution” in such countries. In China, says Stern, a recent study showed that “for CO2 reductions up to 10-20%, air pollution and other benefits more than offset the costs of action.”

Reducing agricultural GHG emissions also could have health and local environmental benefits. “For example, in China, nitrous oxide emissions associated with overuse of fertiliser contributes to acid rain, severe eutrophication of the China Sea and damage to health through contamination of drinking water.”

In recommending the acceleration of low-carbon, high-efficiency technological innovation to tackle climate change, the report cited hydrogen for transport as an example. “Hydrogen could potentially offer complete diversification away from oil and provide very low-carbon transport,” it said, adding that “hydrogen would be best suited to road vehicles”. Indeed, Stern noted, China plans to use hydrogen buses at the 2008 Olympic Games in Beijing.

On the topic of innovation, the report also noted a down-side: Some markets, such as the highly energy-intensive cement industry in China and other developing countries, are made up of small, local businesses “which are less likely to undertake research [in energy efficiency] since their resources and potential rewards are smaller”. Still, the report makes clear, “Policies to support deployment [of new technologies] exist throughout the world … China and India have both encouraged large-scale renewable deployment in recent years and now have respectively the largest and fifth-largest renewable energy capacity worldwide.”

Moving beyond carbon markets and technology, Stern notes that the planned eco-city of Dongtan, on Chongming island near Shanghai, “provides an important example of the potential for sustainable urban development across the rapidly urbanising transition and developing economies of the world”. The 86-square-kilometre community will feature highly energy-efficient buildings employing renewable energy sources as well as passive energy systems; recycling and composting of waste also are a factor.

Says the report: “Chinese policy-makers and planners have been impressive in scaling up best practice to help achieve their objective to reduce the ratio of energy demand to output by 20% over 5 years. In the case of Dongtan, a high-speed rail link to Shanghai is planned, while the city itself is being designed in a compact, inter-linked way, supported by mixed patterns of land use, and a network of pedestrian and cycle routes, in order to reduce the demand for private motorised transport (and associated infrastructure costs).”

Stern also cited China’s rapid expansion of appliance standards in the 1990s to include refrigerators, lamps, air conditioners and other items. “By 2010,” the report said, “energy savings are estimated to reach 33.5 TWh [terawatt hours, or one trillion watts], or about 9% of China’s residential electricity. This is equivalent to a CO2 emission reduction of 11.3 Mt [metric tons] CO2. A more recent study highlighted the potential for significant energy savings in the longer term from more stringent performance standards on three major residential end-uses: household refrigeration, air-conditioning and water heating.” China is also considering adoption of the International Energy Agency’s “1 Watt Initiative,” to reduce energy waste from appliances on standby power.

Much of what governments do in adapting to climate change “is what they should be doing anyway – that is, implementing good development practice,” the report says. Such adaptation is key to reducing developing countries’ vulnerability and increasing their capacity to adapt. Rapid growth, as in China and India, Stern asserts, “will equip these countries with the economic resources to invest in appropriate policies and tools to better manage the effects of climate change.”

To that, Stern added a significant point: “In some circumstances, there may be additional costs, which the international community will have a role in helping to finance, bearing in mind the differences in income and historical responsibility for the bulk of past emissions.”

Improving disaster preparedness and management not only save lives, the report said, but also “promotes early and cost-effective adaptation to climate-change risks”. For example, China’s $3.15 billion spending on flood control from 1960 to 2000 is estimated to have averted some $12 billion in losses.

China is among the nations and regions that have adopted strong mandatory initiatives to reduce GHG emissions. Additionally, the country is involved in dialogue with other large energy consumers on international collective action through a number of forums, including the Gleneagles Dialogue and the Asia-Pacific Partnership. At home, Stern notes, China has adopted goals on climate change and clean energy. The country’s 11th Five Year Plan contains such objectives as a 20% reduction in energy intensity of GDP from 2005 to 2010; a 10% reduction in emission of air pollutants; and sourcing 15% of its energy from renewables within the next decade. At the same time, China plans to double its economic growth. A wide range of incentives support these policies, including using sales taxes to encourage purchase of cars with smaller engines. China also applies a lower rate of value-added tax to renewable energy technologies, and has adopted EU standards for vehicle exhaust emissions.

Stern also cited China’s growing role in promoting international technology cooperation, which “enables the sharing of risks, rewards and progress … and enables co-ordination of priorities”. A number of Chinese companies, for example, export solar water heaters to other developing countries. Other international cooperation is reflected in agreements such as the Near-Zero Emissions Coal initiative, announced as part of the EU-China Partnership on Climate Change in 2005. That joint initiative — to develop a near-zero emissions coal plant in China — is expected to lead to the construction of a carbon capture and storage project.

Other collective international actions, the report says, can centre on land use, particularly regarding forests. “Rigorous enforcement of forest protection in one country without action to reduce demand for timber can displace logging to neighbouring countries,” Stern says. “Following floods associated with deforestation in the upper reaches of the Yangtze River, China banned the logging of natural forest in 1998 and has greatly increased its own forest cover. However, timber imports from the Russian Far East, southeast Asia and Africa have risen strongly since the ban has been enforced.”

China led the world in the largest annual net gain in forest area in 2000-2005, according to UN Food and Agriculture Organisation statistics. The country added forests, in area terms, at a rate equal to nearly half of global deforestation over the past five years.


Maryann Bird is a London-based journalist with a special interest in environmental and human-rights issues. A writer and editor, she was previously a staff member at Time magazine (Europe), The Independent, the International Herald Tribune and The New York Times.

Homepage photo by Ari Bronstein