China’s Response to ClimateChangeA L E X L O *

Australian National University, Canberra

Author’s Viewpoint

China has become the biggest CO2 emitter. The expandingeconomy generated 6028 Mt CO2 in 2007, contributing one-fifth of the world total and surpassing the U.S. for the firsttime (1). China’s per capita CO2 emissions level rose by 80%,from 2.54 tonnes in 1998 to 4.57 tonnes in 2007. The figureis lower than that of the Annex I industralized economies(11.21 tonnes in 2007). Carbon intensity (CO2/GDP) is caughtat 2.52 kg CO2/US$ in 2007. It follows a decreasing trend butremains high relative to the world average of 0.73 kg CO2/US$.

China ratified the United Nations Framework Conventionon Climate Change (UNFCCC) and the Kyoto Protocol in1992 and 2002, respectively. As a developing country it issubject to no emission limits under the Protocol. Theinsistence on voluntary commitments stands strong, but theofficial position regarding climate change has become moreactive following the ratification. Prior to the CopenhagenSummit in 2009, the Chinese Premier announced an ag-gressive target of cutting carbon intensity by 40-45% by 2020from 2005 levels. The central government has promised arange of command-and-control policy measures. The official

agenda has not formally included carbon pricing through aneco-tax or an emissions trading scheme.

The latest national position is outlined in three officialdocuments. The National Climate Change Program launchedin 2007 and the white paper China’s Policies and Actions forAddressing Climate Change released in 2008 are essentiallyan energy policy blueprint. The policy objectives are couchedprimarily in terms of national economic interest. The ethicsimplied is that China would share the moral responsibilityequally with developed countries only when its economicand social needs are adequately satisfied, a principle mutuallyagreed upon under the international accords. Technologicaltransition in industrial and agricultural production processesis emphasized. Claimed mitigation achievements includereforestation and population control. As indicated in thepolicy papers these initiatives have been in place since the1980s, prior to ratification of the UNFCCC and Kyoto accords.They were not initially designed for the purpose of greenhousegases mitigation.

The white paper China’s Policies and Actions for Ad-dressing Climate Change - The Progress Report 2009 detailsthe massive efforts to reduce the energy intensity of theeconomy. The report concedes the vast difficulty in meetingthe challenging target of reducing energy consumption perunit of GDP by 20% by 2010, in view of the recordedperformance of 10.1% for 2006-2008 and only 3.35% for thefirst half of 2009. Interestingly, the conceding statementsappear in the Chinese version (p 3) but not the English one(p 7) which is prepared for western readers. Institutionalarrangements being put in place remain top-down, lackingopportunities for political engagement with the public. Theonly social initiative involves publicity campaigns, whichserve educational purposes rather than creating social capitalessential to long-term success. Nevertheless, the reportreveals great potential for renewable energy generation. Chinaexcels in the scale of renewable energy industry. The leadingsupplier of renewable energy has benefited developedcountries by providing abundant lower-cost mitigationopportunities.

Formal carriage of the climate issue goes to an economicplanning agency. The 2008 paper affirms the determiningrole of the National Development and Reform Commission(NDRC) in implementing the climate policies and coordi-nating international negotiation. All of the three officialdocuments make no reference to the Ministry of Environ-mental Protection, the national environmental agency, or itspredecessor. There is a clear asymmetry between theeconomic and environmental agencies in terms of formalrepresentation in climate policy formulation. It is then unclearas to how the policymakers could balance the stated principleof ecological sustainability against economic interest.

Chinese climate policies have three characteristics. Thefirst concerns the absolute, overriding importance of eco-nomic growth. The inevitability of continual emissions growthis literally recognized in the official documents. The policyquestion is how to cut emissions given the required economicprosperity. Second, the policy change is not driven by moralobligation. The policies are embedded in the discourse onalex.lo@anu.edu.au.

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national energy security rather than global climate com-mitment (2). The third is the administrative rationalism. Theclimate policy discourse is dominated by state leaders andexperts, whereas the public is not expected to play an activecitizen role.

Carbon markets are booming in China, which is the largestsource of emission credits under the Clean DevelopmentMechanism (CDM). The CDM is established under the KyotoProtocol for granting emission credits for verified reductionsin developing countries. These countries can then obtaincapital inflows from their developed counterparts who payfor the lower-cost mitigation opportunities. According to aUNEP database (http://www.cdmpipeline.org), as of May2010, China issued 49% of the CDM credits, well ahead of thesecond player, India, with 19.2%. More than 70% of its CDMprojects went to the capital-intensive wind energy andhydropower development. In 2009, total investment inChina’s registered CDM projects amounted to US$17,887million, or 72% of the global total. The country is the largestbeneficiary of funds transfer under the international accords.

Voluntary transaction activities outside of the Kyotocompliance market are gaining momentum. The TianjinClimate Exchange, a formal exchange for trading offsetcredits, was set up in 2009. As part of a state-approved regionaldevelopment plan, this initiative aims to help local entities,especially the private sector, identify offset opportunities ina market setting. Moreover, in 2009, the volume of voluntarytransactions in China not driven by any sort of emission capwas estimated to be 5.2 Mt CO2, second to India’s 13.9 Mt(3). Chinese CDM project suppliers are turning to theemerging voluntary markets where credits are not bound tothe CDM standards (3).

The Chinese private sector was previously uninterestedin taking positive climate actions. But business leaders haveincreasingly come to realize that the climate challenge couldprovide business opportunities. Recent positive engagementincludes the involvement of a Chinese business delegationin the Copenhagen Summit as an observer. It was the firsttime the Chinese private sector sought involvement in a UNclimate change summit. The delegation released the ChineseBusiness Copenhagen Declaration in December 2009. TheDeclaration begins with affirming the pressing economicneeds of the country, followed by an acceptance of climateresponsibility and action promises. The state’s 2020 carbonintensity target is supported.

The perceived prospect for turning environmental coststo profits could explain the recent positive responses. In aroundtable forum held right before the Copenhagen Summit,a senior government official in the NDRC indicated thatclimate change represents business opportunities and someenterprises have reaped significant benefits by undertakingCDM projects. Domestic investment is further encouraged

by the regulatory restriction that only Chinese-funded andChinese holding enterprises are eligible to undertake CDMprojects in the country. Favorable economic provisions andincentives are playing a pivotal role in engaging the businessand the government in the global climate project.

Chinese civil society lacks substantial political impactson climate policies. There is at present no Chinese NGOsolely dedicated to climate mitigation. Domestic green groupsare under strict control. State recognition of their actionsdepends on their conformity with official policies (2). Currentefforts are concentrated on publicity campaigns framed inthe context of demand-side energy saving. There has beensome success in building capacity and providing technicalassistance. However, pressuring political activities are rareand radical climate campaigners remain inactive. There isno powerful oppositional civil society confronting thegovernment’s limited commitments.

The individual citizens do not view climate change as themost pressing environmental problem. The Chinese Academyof Social Sciences (CASS) launched a national survey of 3000Chinese residents in December 2007. Greenhouse effect andclimate change were ranked fourth in terms of generalawareness and perceived seriousness, well behind air pol-lution and waste problems. Another national survey, con-ducted by the Horizon Research Consultancy Group in 2009with a comparable sample size, corroborated these earlierresults. Climate change was again ranked fourth among tenenvironmental problems. Only 6% of the respondentsascribed climate responsibility to the citizenry.

China is not taking a hands-off approach to climatemitigation. However, its ambition allows very little com-promise of economic interest and is couched in managerialterms. The more open market environment has benefitedcommercial mitigation efforts. Yet the market reforms haveno democratic parallels. Confrontational social forces toguard against imprudent state actions prove impotent. Alsothe weak climate citizenship may discourage voluntary effortsincluding financial contributions. In the medium term, thestate is likely to maintain the role of controller in theformulation of the national climate policies. More substantialcommitments are highly dependent on stronger internationalpressure.

Literature Cited(1) International Energy Agency. CO2 Emissions from Fuel Combus-

tion 2009 - Highlights; IEA, 2009.(2) Schroeder, M. The construction of China’s climate politics:

transnational NGOs and the spiral model of internationalrelations. Cambridge Rev. Int. Affairs 2008, 21 (4), 505–525.

(3) State of the Voluntary Carbon Markets 2009. Ecosystem Mar-ketplace and New Carbon Finance: Washington, DC, 2009;http://www.ecosystemmarketplace.com.

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