Why China could be leading the world on climate change

Author: Huw Slater, ANU

There are two schools of thought about China’s role in climate negotiations since Copenhagen. The first sees China as the principal obstacle to progress at the talks. The second considers that, as a developing country, China has done far more than its fair share. Proponents of this view point to China’s booming renewable energy sector, which is driving the cost of technology down rapidly.

A recent report suggests that the argument may be decided in favour of the latter view. It was reported that the Ministry of Finance is now actively considering the implementation of a carbon tax in China within the period of the 12th Five Year Plan, which begins next year. This follows extensive study and modelling of the implications of such a levy for China by the government affiliated Energy Research Institute.

China’s negotiating strategy at Copenhagen drew the ire not only of the major developed countries that wanted to see firm targets (even if just for themselves), but also small island states such as the Maldives, who saw China blocking these targets for little more than self interest.

There is no use ignoring the obstructionist approach that China displayed in Copenhagen, and the fact that this is unhelpful if a forum such as the UNFCCC is to be successful. At the same time, Ed Miliband is fooling himself if he thinks that the strategy marked a disturbing turning point in a rising China’s international engagement.

China’s rejection of firm targets is consistent with their position at previous negotiations, and with public statements by Chinese leaders. China is holding firm to the original principle of the UNFCCC that ‘common but differentiated responsibilities’ means developed countries need to take the lead and demonstrate a serious commitment before developing countries are asked to do the same.

It is correct, of course, that even with a significant commitment from the major developed economies, it will be impossible to avoid dangerous climate change without some firm commitment from China. China is not only the world’s largest emitter, but its emissions trajectory makes global mitigation impossible without a diversion from business-as-usual. In addition, China’s per capita emissions have now almost reached the world average, negating the argument that China has a lot of room to move with regard to future emissions.

In November, Premier Wen Jiabao announced that China was committing to a reduction in emissions intensity of its economy of 40-45 per cent by 2020 over 2005 levels. Washington immediately suggested that this was merely a negotiating position, representing a continuation of existing policies. This has been echoed, though not quite so loudly, by British and Australian government officials.

Such analysis is not only ill informed, it undermines chances of reaching agreement in the negotiations. Yes, China adopted a target for improvement of energy intensity under the 11th Five Year Plan. But recent analysis suggests this will be far from easy to achieve by the end of this year.

If this target was projected forward, and translated to an emissions intensity target, it would probably look something like what was announced by Premier Wen prior to Copenhagen. Most economic analysis that has emerged so far, however, indicates that this would also be far from easy to achieve given current policy settings. China continues to employ an energy-intensive development model that, for the last decade, has seen overall emissions soar and overtake the US as the leading emitter far earlier than had been predicted.

Indeed, government think tanks cannot explain how China will reach this target, and no clear strategy has yet been articulated in order to set the economy in the right direction.

This is where the possibility of carbon pricing provides real hope. While the initial price is suggested to be as low as 20 Yuan per tonne of carbon dioxide, it may be progressively increased over time, making inefficient coal-fired power stations less attractive and further increasing the competitiveness of wind, solar and other technologies.

China could consequently emerge as the leader on climate change. The US, and now Australia, are backing away from the first-step of pricing carbon due to domestic politics. Six months on from Copenhagen, it seems like the momentum that had been built by leaders such as Barack Obama and Kevin Rudd has all but disappeared. Let’s hope that China can help turn that around.

Huw Slater is a Research Assistant in Chinese climate change policy at the Crawford School of Economics and Government, Australian National University.