Could self-interest green China’s economy?

Having overtaken the US as the world’s biggest CO2 emitter in 2006, last year China also became the world’s leading investor in renewables. Much of the future of climate change depends on the relative gradients of these two growth patterns: if renewables investments ramp up fast enough and carbon-neutral technologies become viable on a mass scale, there is a good chance of flattening and eventually reversing the upwards curb of China’s greenhouse gas emissions.

However, the scale of that challenge is immense. Even if Beijing succeeds in meeting its Copenhagen target to reduce emissions per unit of GDP by 40-45 per cent from 2005 to 2020, carbon usage is still going to be dragged up by economic growth that is currently running at 11.9 per cent a year.

More importantly, as US president Barack Obama acknowledged in an interview with the Australian Broadcasting Corporation this week, “we can’t, we can’t allow China to wait” before taking action:

If you talk to Chinese leaders I think they will acknowledge immediately that if over a billion Chinese citizens have the same living patterns as Australians and Americans do right now then all of us are in for a very miserable time, the planet just can’t sustain it.

That seems an obvious point, but in truth the Chinese leadership are normally far more circumspect about airing such concerns in front of a domestic audience. If China’s economic history since the Deng era is about anything, it is precisely about promising Chinese people the same living patterns as Australians and Americans as their consolation prize for the lack of democratic change. Labelling this vision as unsustainable is as risky a move for Beijing’s political class as it is for their Washington counterparts to point out the yawning gap between long-term government spending and revenues.

However, a recent article by Xie Zhenhua, China’s lead negotiator at Copenhagen and a vice-chairman of the National Development and Reform Commission which oversees China’s economic policymaking, indicates that fears around climate change as a threat to the country’s development are rising:

“The scale of economic destruction would be equivalent to that of the two world wars and the Great Depression combined” if global temperatures rise by 3 degrees (5.4 Fahrenheit) to 4 degrees Celsius, Xie said. “Human beings and the Earth cannot afford such disasters.”

This argument moves the debate on from “climate change is bad, but development is our first priority” towards “development is our first priority, and climate change may threaten that”. That in turn suggests that the concerns of Mr Xie at least are starting to focus on risks that are longer-term than the next quarterly GDP report. The realpolitik behind this is elegantly laid out by Brad DeLong:

Global warming is not a huge deal for the North Atlantic economies for a century. [...] We move a few miles north, relocate economic activity to get out of the paths of hurricanes and droughts, turn down our heaters, turn up our air conditioners, and live our lives. [...]

But China and India will soon have, along with their neighbors, three billion farming peasants in the great river valleys of Asia. [...] The peasant-farming populations are not rich enough to simply adapt.

So we need to beg the rulers of China and India to understand their long-term interest: [...] Their own personal survival—unless they want mobs descending on their homes when they are in retirement, dragging them and their descendants out into the street, and carrying their heads on pikes—depends on rapidly controlling global warming.

Some insight into this issue is provided by Elizabeth Economy, a senior fellow at the Council on Foreign Relations, in a prepared testimony last week before the House US-China Economic & Security Review Commission.

She argues that the disconnect between booming energy investment and feeble climate change leadership is perfectly consistent with Beijing’s perceptions of its own interests:

Beijing is moving relatively slowly on the diplomatic front to assume greater responsibilities for addressing its contribution to global warming but is likely to move rapidly on the economic front to assert itself as a provider of clean energy technologies globally.

In other words, there is hard currency to be earned from investing in emerging technology, whereas diplomatic responsibility ties one’s hands in all sorts of inconvenient ways.

China’s attitude to climate negotiations, she says, reflects its changing role in world affairs generally. It is rapidly moving away from most other developing countries due to its economic growth, but many of those countries want China to advocate for their interests.

Chinese leadership is uncertain as to whether it should seek to retain its position as a large, successful developing country or assert its role as a global power, with all the rights and responsibilities that entails.

While its relationship with other big emerging economies (particularly the ‘BASIC’ countries — India, Brazil, and South Africa) and with poorer G-77 countries could have a positive effect for emissions reduction, she warns of a risk if China and the other BASIC countries try to have it both ways:

The potential exists for these countries to reframe the climate negotiations as a debate between the developing and developed world, and to use this alliance to bring greater pressure to bear on the advanced industrialized countries to do more on behalf of the developing world – while they themselves continue to use their developing country status and alliance as a protective shield against further pressure.

This is the dynamic we saw emerging before Copenhagen, and since then, too — and it is a potent way of kicking any serious efforts to tackle climate change into the long grass. Let’s hope that Brad DeLong’s long-term version of Chinese political self-interest trumps this shorter-term one.

Related links:

Will China’s environmental problems affect its growth? - FT Energy Source

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