Chinas Copenhagen Commitments: A Workable Solution

China should at the very least be expected to commit to a cap on its CO2e emissions in 2030 at 7.8 Gigatons” (15% above 2005 levels) — so says guest poster Charlie McElwee.  This is based on a new McKinsey study McElwee discusses.  Needless to say, the U.S. must commit to deep reductions by 2030 — 42% below 2005 levels (a la Waxman-Markey and USCAP) is a reasonable figure.  But the notion offered by some — “Binding targets for the developing nations is [sic] out of the question” — is the road to Hell and High Water for the Chinese, Americans, and the rest of humanity.  McElwee is an international energy & environmental lawyer and Professor at Shanghai Jiao Tong University’s School of Law who writes the blog China Environmental Law.

In less than nine months the world gathers in Copenhagen to forge a post-Kyoto climate change agreement. Without a substantial commitment from China to address its CO2 emissions, whatever the rest of the world does will be swamped by China’s carbon juggernaut. Can the China carbon engine be retooled to save us from catastrophic climate change?

Yes, says a new McKinsey study “China’s green revolution.” It crunches the numbers and provides a framework for a real “green revolution” in China. The study concludes that by aggressively utilizing a suite of technologies that are or are likely to be commercially available no later than 2030, China can limit the growth of its annual carbon emissions to 15% or “just” 1 additional Gigaton over 2005 levels by 2030 (6.8 Gigatons of CO2e in 2005 vs. 7.8 Gigatons of CO2e in 2030).

The best news from the study is that the costs of the efforts needed are well within China’s means and will certainly not cripple its economy, strand millions in poverty, or leave the Chinese people “in the dark” without electricity as Yu Qingtai, China’s climate ambassador, rather melodramatically put it recently. The “abatement scenario” requires average annual incremental capital of US$46 billion (the McKinsey study uses Euros to express cost which have been converted to US dollars here) from 2011 to 2015. From 2016-2020, US$192 billion per year will be required. The true “cost” is actually considerably less since McKinsey reports that approximately one-third of the required capital will earn positive economic returns. Moreover, the collateral benefits of expending these sums such as cleaner air and water, lower health care costs, and decreased climate change adaptation expenditures, have not been quantified. The capital needs increase in the later years, but China’s economy will have grown significantly by then.

To put these figures into perspective, US$46 billion is about 8% of China’s economic stimulus package, or about 60% of what China has allocated to environmental improvement efforts in that stimulus plan. It is also roughly equal to what China spent on Olympic-related construction. The McKinsey “abatement” scenario appears technically and financially feasible.

Unless another practical scenario that achieves the same or better results is proposed quickly, China should at the very least be expected to commit to a cap on its CO2e emissions in 2030 at 7.8 Gigatons. Of course, more would be better if China truly wants to assume a global leadership position. In contrast to a Chinese commitment to simply slow the growth of its emissions, under the recently released Waxman-Markey bill, US emissions in 2030 should be 42% below 2005 levels, representing a reduction of about 3 Gigatons of CO2e. Thus, China’s commitment, in accordance with the “common, but differentiated” principle, would be significantly less stringent than that which may be adopted by the US.

What are the chances of achieving a deal on these terms with China? The likelihood of Chinese acceptance of this proposal is probably no better than 50%. There has been no public suggestion that Chinese leaders have contemplated a climate change commitment of the magnitude proposed by McKinsey. They have shown no flexibility in moving off of their “no binding commitments” stance. Even given the abatement scenario’s technical and financial feasibility, it will be a hard and slow sell internally in China. China’s “government by consensus” would require that the plan be explained and vetted by numerous stakeholders many of whom will have their own agendas and claims upon the money which will need to be allocated to carbon reduction efforts.

If the proposal is to have any chance of success, the US must, of course, lead with aggressive efforts of its own. The proposal must receive a strong push from the highest levels of the US government, and be the focus of concerted negotiations with China between now and Copenhagen, and perhaps beyond into 2010. It should be presented to China as an opportunity for both countries to reach an agreement that will set the stage for a successful outcome at Copenhagen. There are many avenues for jointly beneficial projects between China and the US in the abatement scenario, and a strong commitment from the US and NGOs to work cooperatively with China to achieve (and even outperform) the 2030 goal should be provided.

There are a number of other issues which will need to be resolved to obtain a deal: the amount of developed country financial aid, technology transfers, pre-2030 milestones, and post-2030 reductions. These issues will be complex, but they can not be meaningfully discussed until it is clear how much China’s carbon reduction efforts (at least in the mid-term) will cost, and what the technologies are that China will need to have transferred. A strong point of the McKinsey study is that it provides guidance on both these issues.

Subtle pressure will also be required. Some have expressed dismay at Secretary Chu’s recent comments regarding the imposition of tariffs upon countries that fail to mandate acceptable greenhouse gas emission limitations, but it was fairly obvious that the Secretary was saying tariffs were a last resort, and would not be imposed upon a country that was part of deal agreed to by the US at Copenhagen. Having made the point, it is probably best if administration officials refrain from further statements along these lines. However, US negotiators must be very candid with their Chinese counterparts about their inability to control Congress and the likelihood that any climate change legislation passed by Congress will include sanctions against countries who fail to do enough to reduce greenhouse gas emissions. The Waxman-Markey bill includes tariff-like International Reserve Allowances.

While everyone hopes there will be no need to open the tariff can of worms, their threat serves a salutary purpose now. Former Treasury Secretary Paulson would not have coaxed from the Strategic Economic Dialogue (SED) process with China even the small floatation of the RMB he managed were it not for the specter of the Schumer-Graham currency manipulation bill lurking in the background. The flip side of the tariff threat is that the administration must be prepared to put on a full-court press before Congress to convince skeptical Senators and Representatives that a deal along the lines proposed here is fair and the absolute best that can be achieved with China.

Some will argue that China can and must to more. Hu Angang, an economist and professor at the Chinese Academy of Sciences and Tsinghua University, has recently proposed that China reduce its annual emissions to 2.2 Gigatons of CO2 by 2030. Hu Angang is the very model of a global citizen, and his proposal is cogent, sincere, and heroic; it also has zero chance of success. Occasionally we are constrained by a lack of vision among those in power as surely as we are constrained by financial and technical realities.

Others (including Chinese officialdom) suggest that with the actions already under way in China no further actions are necessary. They tout the fact that China is already taking actions, such as setting aggressive energy efficiency goals and renewable energy targets, which have the effect of reducing the growth of its carbon emissions. Although China would like these efforts to be deemed sufficient, it has resisted calls to make its internal goals and targets binding in an international agreement.

Are these efforts enough? The answer is clearly no, and anyone who says they are simply hasn’t looked at the numbers. China’s own coal production projections almost defy comprehension. As previously noted by Climate Progress

… from 2007 to 2015, China will increase its coal production by an amount equal to two-thirds of the entire coal consumption of the United States – an amount that surpasses all of the coal consumed today in Europe, Eurasia, the Middle East, Africa, and Central and South America

The McKinsey study confirms the conclusions that can be drawn from these coal numbers. If China continues to grow at an annual GDP growth rate of 7.8%,

  • AND continues to meet its aggressive energy intensity reduction goals,
  • AND installs all the renewable energy called for its current medium- & long-term renewable energy plan,
  • AND achieves a 4.8% annual growth rate in carbon efficiency,

it will more than double its 2005 carbon emissions by 2030. (6.8 Gigatons of CO2e vs. 14.5 Gigatons of CO2e) (McKinsey calls this the “baseline” scenario). This conclusion comports with China’s own internal analysis.

There are still others who suggest that the US should significantly ramp up its cooperative efforts with China first and then through these efforts persuade China, within the next several years, into greater (although perhaps still non-binding) climate change action. While the cooperation is essential, it is not a substitute for achieving hard, binding numbers now when the world spotlight is on China, and the concerted action of the developed countries (and not a few developing ones) can be brought to bear to strike a deal that both depicts China in a positive light and achieves real progress.

Delay is a recipe for disaster. Some of the countries the US needs to support its negotiation efforts with China will lose interest, and far from presenting a more congenial environment, if the US has led and China has refused to follow, the post-Copenhagen period will be marked by recriminations, a loss of funding for cooperation with China, and possibly legally-mandated sanctions.

If China doesn’t agree to the cap proposed here (or something similar), then all bets are (and should be) off. Therefore, it is absolutely essential that a deal be struck with China at Copenhagen (or before the expiration of any internationally agreed upon extension).

China has a unique opportunity to send a clear sign that it is prepared to assume a leadership position in the world commensurate with its rising economic and political clout. More importantly, it can demonstrate that it intends to use its power not only to serve its own interests but to serve the interests of all of us. Wouldn’t that make a nice debut for China upon the world stage?

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7 Responses to Chinas Copenhagen Commitments: A Workable Solution

  1. Tim R. says:

    I largely agree with the authors points, but there are two problems with the post. The lesser problem first, I disagree with the idea of soft-pedaling the threat of climate tariffs. China, and all countries need to understand that there are two paths post-Copenhagen. A country can be a part of the deal or a country can remain outside the framework and see its imports forever taxed an amount equal to the economic gain it achieves from dirty energy. It is very important that the whole world understands the big stick lurking in the background. That is how business interests otherwise opposed to a Copenhagen deal will become advocates for participation before December. The Republicans in the U.S. Senate and the Chamber of Commerce and their ilk need to understand that the U.S. might be subject to such climate tariffs if we don’t ratify a Copenhagen Protocol.

    But there is a larger problem with the post. At this point in the debate, it is simply irresponsible to refrain from casting emissions data using per capita numbers. Nearly every U.S. citizen that follows the news now believes that China is the world’s biggest climate polluter. Of course they want strong binding commitments on the Chinese. What Americans blissfully ignore, including the author here on Climate Progress, is that Americans are responsible for about five times more climate emissions per person than the Chinese (about 20 times more than the Indians.)

    Even after the 2030 targets outlined above are met, U.S. citizens will still be allowed roughly twice the emissions that a Chinese citizen will. How does the Chinese leadership sell that to its population? Unless people in this country understand the fundamental imbalance we begin with, it will be difficult to understand Chinese reluctance to enshrine that imbalance in a binding international treaty.

    Please Climate Progress, subject yourself to the same kind of strict standards you hold out for journalists everywhere and maintain the intellectual honesty of always reporting per capita emissions when comparing international emissions.

  2. Sasparilla says:

    The Chinese positions that we’ve seen so far are quite worrisome – as there wasn’t alot of discussion that the Chinese just might not go for curbing greenhouse gas emissions due to political issues. I can only hope that the Chinese are open to something like McKinsey lays out (despite what we’ve seen from them so far), the alternative if they don’t, is unbearable to even think about.

    As Tim R. mentions above, fairness of per person emissions, in the sense that the Western world setup our CO2 levels during their industrialization – matters when negotiating with countries going through their industrialization now. Something close to contract and convergence will be the model we’ll probably end up needing to follow (to get the developing world to buy in) and that won’t be an easy sell in our sound bite political system here in the US.

  3. Charlie says:

    @Tim R I had the per capita data in the first draft of this post which Joe reviewed. In my subsequent redraft, I took out the paragraph where it was discussed simply to shorten the post and on the assumption that most readers of this blog were well aware of the per capita differences. It is one reason the differences between what is expected from China and what is expected from the US are so great. I would be happy to do another post devoted solely to the strengths and weaknesses of China’s per capita emissions argument.

    In any event, I certainly didn’t mean to hide the ball, but perhaps I am too close to the China issue to appreciate what is common knowledge among other climate change cognoscenti. Had I been writing for the popular press, I certainly would have included the per capita numbers. I don’t think Joe was aware of my removal of the per capita paragraph, so whatever “blame” there is here is solely mine.

  4. Anonymous says:

    Sasparilla, yes, but no:

    “Fairness of per person emissions, in the sense that the Western world setup our CO2 levels during their industrialization – matters when negotiating with countries going through their industrialization now.”

    Just to be difficult, what’s so great about the western model of indusrialization nowadays? Has anyone been on the freeway in L.A. lately? If I felt free to do so, I’d ask the Beijing guys to rise above that model: why ruin such a beautiful land, and why not show the world how it can be done?

  5. Phillip Huggan says:

    It doesn’t seem like enough, capping at 2030. Even though it is candidly stated as a starting point for China that would hopefully be improved over the next two decades, it sends a signal to the 8x as many future Chinas that it is okay to be slow. The guestimate is an 80% reduction of carbon emissions in the developed world in 3-5 decades to have a chance at keeping AGW below +2C (melted Arctic probably means +2C is too much). Might be trivial if we’ve mastered cheap materials scienced or safe bioteched carbon scrubbers, and if there aren’t other non-CO2 feedbacks that have come into play. If 2049 doesn’t yield magic, there will have been 9 billion or so more developing world people who have or soon will have achieved a developed world lifestyle. Experience to date suggests a bottom billion are chronically impoverished but the rest learn how to emit carbon.

    If we are hoping to get developed world emissions down 1/5 what they are now, yet suggesting a model of growth that basically says the developing world has 45 years from intensifying industry (China did this in the 1980s and it is at least a precursor to China’s 1990s boom) until it has to cap emissions…
    The math is calculus. Each subsequent developing country has to use less carbon. This is facilitated by profitable energy efficency gains, but too slowly. For example China competes with Bangladesh for labour. Bangladesh will want the 45 years of immunity but to maintain hope of a predictable 1990 or so climate, may only have 10 years before mandated to cap emissions. In effect, just like we screwed over the developing world by (unknowingly until 1991) emitting all the early CO2, Beijing would be screwing over Lagos by emitting all the middle CO2.
    What is the Dept of Homeland Security’s contingency plan for 4 billion people losing all their Himalayan meltwater at once? The unemployment alone would “Iraq” Chinese infrastructures; they will have learned how to protest. All goods in our 2050 wired world originating from SE Asia would cease to flow.
    4 billion people will go from making $100000 a year to maybe $10000. A $360T annual loss. Much less in today’s dollars but at least not worthless like in 2008.

  6. Phillip Huggan says:

    I meant intensifying agriculture in 1980s and was specifically thinking of Africa, which hasn’t done so, following China’s 45 year blueprint. With patent sharing and microfinance and cellphones no doubt development will be faster (lower footprint) even without EE gains. My thesis is the world was shocked by China’s 2000s carbon footprint increase. Focusing on China as the problem instead of China as a prototype to solve an even bigger problem (future China carbon footprint growth rates among the future developing world), just leaves us with the same problems in 2030, presumably in a world that looks very different from space.

  7. Gita Kavarana says:

    Both the article as well some of the responses just go to show that we are never going to crack the climate change problem.

    Lets keep aside the number crunching aside for a minute and look at the core argument (the numbers are only tools to support that stand you have already taken). What the US or its like-minded countries like Japan and Australia are essentially saying is:

    “We have committed slow murder over the past so mnay years. But you can’t punish us. But you (China, India etc) are going commit murder say, 20 years from now. We can’s allow that and we have to punish you now.”

    Even as it points fingers at China, what do countries like US, UK propose to do? Do they say, no more coal? No, they want to keep their coal power plants and they come up even more gizmos like capturing carbon and storiing it somewhere deep down. Put it out of sight and hope that the problem will go away. And, if the carbon leaks say 50 years from now, the architects of this brilliant scheme won’t be around to answer for it.

    Do the US citizens say, No more cars? No they say we want to keep our cars and we will grow the fuel for it. Never mind if the land to grow the fuel will displace food crops. All the corn in the US can only meet 12% of its current petrol use.

    So, the rich want to keep the cake and eat it too. Don’t blame the Chinese cake for giving you stomachache.