The Harvard Alumni Association and the Harvard Clubs of Asia Global Series: China / Asia, Harvard and the World Pudong Shangri-La, Shanghai, March 28~30, 2008 China’s Policies on Climate Change: a Perspective of Development Ji ZOU Renmin University of China Outline • Development strategies: goals, path, and constraints • Demand: investment, consumption, and net export • Energy use and GHG emissions • Response measures • Obstacles and challenges • Conclusion Development Strategy: Goals 1 • GDP: Re-doubling the amount of GDP per capita in 2000 by 2020 (with 7.2% annual growth rate in average) • Industrialization: lowering share of agriculture, raising share of manufacture and service with higher technological competitiveness and valueadded • Urbanization: higher share of urban population (from 45% in 2005 to 60% in 2020 and 75% in 2050) to and adequate urban infrastructure (tap water, sanitary system, energy, transport, housing, other public facilities, etc) Development Strategy: Goals 2 • Full employment – a socioeconomic matter: surplus labor forces, weak social security system, and increasing income gap • Economic stabilization: inflation, increasing cost of labor, energy and environment • Trade – export or domestic market-oriented? Environmental and energy conditions of accessing to market; flows-in/out of goods, resources, capitals, and technologies for whom? Development strategy: path • Contribution of factor input growth and efficiency improvement to the gross-growth rate G G f input G f efficiency • Kaya Equation: emission energy GDP Emission * * * Pop energy GDP Pop It’s a matter of development paths: Conventional v.s. Innovative (SD) GHG Emission Conventional path Limits of GHGs emission How to make this shift? Innovative SD path Inputs: 1. Install low carbon technologies 2. Human resources 3. Policies and measures 4. Financial resources GDP per capita 0 6 Development Strategy: Constraints • Accumulative capital in early stage of development: from farmers/agriculture and the environment/natural resources via low price of labors and primary products • Huge amount of surplus labors (~130 million) and lack of qualified human resources • Growth pattern: the growth relies on high rate of investment (up to ~40%) and low efficiency of factor input G G f input G f efficiency Energy Use and GHG Emission in China China’s Energy Use (Mtoe) Total energy consumption Coal Oil Natural gas Hydroelectricity+Nuclear 2000 2001 2002 2003 2004 2005 2006 966.7 1000.0 1057.8 1228.7 1423.5 1566.7 1697.8 656.7 223.6 21.5 54.12 697.6 227.9 24.1 66.74 733.6 247.4 25.7 70.86 871.9 271.7 29.9 74.01 1012.1 318.9 35.0 91.43 1119.8 327.8 41.2 101.86 1212.3 349.8 50.0 106.59 Source:BP Statistical Review of World Energy June 2007 Alternative Projections of China’s Primary Energy Demand in Future IEA, 2007 2015 4073 Mtce 2030 5456 Mtce 2020 3000 Mtce 2030 3857 Mtce DRC, 2004 2020 3280 Mtce Wang, 2007 2020 3974 Mtce 2030 6028 Mtce ERI, 2007 Energy intensive Demand: Investment, consumption, and net export • Industry used about 71% of the total energy in 2005 and 2006; • Such six sectors as (1) ferrous and (2) nonferrous metal, (3) raw chemical materials and chemical products, (4) nonmetallic and (5) metallic mineral products, and (6) petroleum refining, coking, and nuclear fuel, account for 72% of the industrial energy use, more than 50% of the total. • A large gap exists in energy efficiency in these sectors between China and international standard. Estimation of China’s Recent GHG Emission (Mt-CO2) • IEA:5101 in 2005 • WRI:5204.8 in 2004 • CDIAC :5010 in 2004 • China:5600 in 2004 Alternative Projections of China’s GHG Emissions in Future IEA 2007 2015 8,631 Mt-CO2 2,354 Mt-c 2030 11,447 Mt-CO2 3,122 Mt-c 2020 6,563 Mt-CO2 1,790 Mt-c 2030 8,617 Mt-CO2 2,350 Mt-c DRC 2004 2020 7,231 Mt-CO2 1,972 Mt-c Wang, 2007 2020 8,177 Mt-CO2 2,230 Mt-c 2030 10,630 Mt-CO2 2,899 Mt-c ERI 2007 Scenarios of Primary Energy Demand in China (BAU) -RUC 700000 600000 煤炭 石油 天然气 水电 核电 生物质能 风能 太阳能 万吨标准煤 500000 400000 300000 200000 100000 0 2005 2020 2030 年 份 2050 Scenarios of Primary Energy Demand in China (with policies) - RUC 600000 500000 煤炭 石油 天然气 水电 核电 生物质能 风能 太阳能 万吨标准煤 400000 300000 200000 100000 0 2005 2020 2030 年 份 2050 Scenarios of CO2 Emission from Fossil Fuel (BAU) - RUC 4000 3500 百万吨碳 3000 2500 2000 1500 基准情景 政策情景 1000 2005 2020 2030 年 份 2050 Coefficients for both BAU and Policy Scenarios - RUC Indicators BAU With Policies Energy Use(100 Mtce) 2020:44 2030:51 2050:58 2020:39 2030:45 2050:50 Growth Rate of Energy Use % 2005-20:5.1 2020-50:0.9 2005-20:4.2 2020-50:0.8 Elasticity of Energy Use 2005-20:0.65 2020-50:0.22 2005-20:0.54 2020-50:0.20 CO2 emission (t-C) 2020:32.7 2050: 36 2020: 26.8 2050: 28.6 Response Measures Near-term (5~10 years) • Public awareness improvement: low carbon economy, new lifestyle • Development of policy implementation system • Infrastructure investment with high-efficient technologies (power, transportation, and buildings) to prevent from Lock-in Effects • Efficiency improvement in high-energy-intensive sectors • LUUCF for keeping and increasing carbon sink • Capacity building for R&D of low-carbon technologies and policy enforcement, and development of human resources Long-term (20~30 years) • Mature policy and institutional system (standards/norms, Cap-and-Trade, and environmental taxation; monitoring and verifiability, etc) • Much higher R&D investment and companies become a major driven force • Mature financial mechanism linking capital markets: Public-Private-Partnership • Commercialized ESTs in major sectors at international level Technology change will be a key • What’s technology? (a system) • What’s transfer of technology? (in place and effective) • What’s development of technology? • What’s diffusion and deployment of technology? • What conditions and infrastructure are needed? • What awareness we need to develop to address the contradiction between the protection of climate change as global public goods and IPR as private goods? How can we coordinate this? Preliminary identification of barriers of technology transfer • barriers from provider side – Political will and politician and entrepreneur’s awareness on global public goods – Technology export ban – Market forces: e.g. monopoly tendency by technology owners – Very high expectation for revenue – Inadequacy of economic incentives from public policies Preliminary identification of barriers of technology transfer • Barriers from receiver side – Awareness – Knowledge and information – human resources – Financial resources – Lack of monitoring and enforcement of technological norms and regulations – Lack of economic incentives: taxation, clarification of PR, including IPR – Divided institutional arrangement • Infrastructure Barriers – Transportation and telecommunication – Enabling legal basis and policies Risks and Challenges • Awareness and lifestyle • High pressure of population and employment call for high growth rate and lead to massive inputs of resources • Rural population and infrastructure: incremental energy use • Lock-in by low efficient technologies in infrastructure (transport, power, and buildings) • Human resources for next several decades • Managing increasing financial resources Conclusion • China’s energy use and GHG emission will continue to increase, but may be in a more sustainable manner • Awareness and policy infrastructure should go in advance of the implementation of policy instruments as a learning process • Recent focuses should be on specific sectors and technologies • International cooperation is needed, incl. an innovative, PPP-based financial mechanism to support R&D, transfer, and deployment of CSTs Thank you for your attention! zouji@ruc.edu.cn