Investors on e-mission to
China By Antoaneta Bezlova
BEIJING - China stands to benefit from the
booming global greenhouse-gas market. Foreign
investors are flocking to pay Chinese energy
companies and factories to reduce pollution
instead of spending far more to cut emissions at
home.
Initially skeptical of the
carbon-trading market, worrying that it would
allow richer nations to pay their way out of
obligations to reduce emissions under the 1997
Kyoto Protocol on climate change, China has come
to embrace the system as an
opportunity to attract
foreign investment in promoting energy efficiency
and renewable-energy projects.
China
currently accounts for 60% of carbon credits
trading under the Clean Development Mechanism
(CDM) developed under the Kyoto Protocol. Its
dominant position in the thriving market
represents a big change from a few years back,
when it had just 5% of the contracted volume.
The CDM allows polluters in one country to
earn credits by reducing greenhouse-gas emissions
in another. The reasoning behind the mechanism is
that since global warming is a worldwide
phenomenon, it does not matter where the
reductions actually occur. And because the cost of
implementing reductions in developing countries is
often lower than in industrialized economies,
polluters in the industrialized countries benefit
from credits through projects in countries such as
China.
At the first Carbon Expo Asia - a
conference on emissions trading, held in Beijing -
officials hailed the CDM as a win-win solution
between developed and developing countries that
could provide environmental investment for free.
"Developed countries get opportunities to
emit greenhouses gases at a relatively low
economic cost and achieve their emission-reduction
targets, while developing countries obtain
benefits such as funding and technology transfer,
which will boost their efforts to pursue
sustainable development," said Jiang Weixin, a
senior official of the National Development and
Reform Commission, China's top economic-planning
body.
Jiang spoke at the opening of the
Expo, an event modeled after an emissions-trading
fair in Cologne, Germany. The choice of China as a
host underscored the country's growing importance
in the global emissions trade. The vast majority
of CDM investment has been heading to China, with
India and Brazil also receiving big portions.
In the past, China has called for
industrialized countries to take more
responsibility for reducing emissions. As a
developing nation, China is exempt from curbing
its output of greenhouse gases under the Kyoto
Protocol. But as the benefits of international
mechanisms like the CDM have become apparent,
Beijing has welcomed the investment and help it
provides by streamlining its approval process and
cutting bureaucratic delays.
Since the
United States - the world's biggest emitter of
greenhouse gases - has refused to accede to the
terms of the Kyoto Protocol, most of the potential
buyers of carbon credits are from Europe and
Japan. The exemption also of rapidly developing
economies such as China and India from the
reduction targets has prompted critics to say that
the current regime leaves the world's biggest
polluters outside the strict controls.
Despite the shortcomings of the
climate-change treaty, its core mechanism - carbon
trading - has proved to be resilient, and of
particular significance to China.
Beijing
has approved 125 projects so far under the CDM,
including wind farms and hydropower generation, as
well as chemical-pollutants reduction projects.
These are expected to cut 630 million tons of
carbon dioxide, the main gas contributing to
global warming, by 2012, when the first phase of
the protocol expires.
By then, some
predict that China could be the main supplier of
emission trading units in the CDM market.
"It is possible, because China is the
biggest developing country," said Zhang Jianyu,
with the Beijing office of Environmental Defense,
a US-based group promoting emissions-credits
trading.
Three decades of breakneck
industrial development have spurred China's
economic growth, but also spewed emissions that
have polluted the global environment. China now
accounts for 14% of global carbon-dioxide
emissions. It is also the biggest emitter of
sulfur dioxide, which causes acid rain.
Emissions from China and other rapidly
growing economies in Asia are also increasing
faster than in other countries. According to a
World Bank report issued in May, China increased
its greenhouse-gas emissions by 33% between 1992
and 2002, while India's emissions grew 57% over
the same period.
Despite the newfound
enthusiasm for the CDM among Chinese officials,
its future in China remains questionable, not
least because of Beijing's own development plans.
Hit by acute power shortages in the past few
years, the country has embarked on a frenzied
campaign to build more power plants. Japan's
Institute for Energy Economics predicts that by
2007, China will have built an additional 200,000
megawatts of new power-generating capacity, about
80% of which will be coal-fired.
This
greater capacity is expected to contribute some
1.17 billion tons of new carbon-dioxide emissions
by 2010. This whopping amount would eat up a good
portion of the targeted overall emission
reductions under the Kyoto Protocol of 5.5 billion
tons of carbon dioxide over the same period.
China already relies on coal for about 70%
of its energy supply. While aware of its polluting
effects, Beijing has been slow to diversify its
energy sources or to increase energy efficiency.
Rocketing prices of crude oil and natural gas of
late have made this even more difficult.
A
new report on confronting climate change ranked
China near the bottom of its index of 56 countries
that were part of the 1992 United Nations
Convention on Climate Change. Released by the
Climate Action Network - Europe, the report ranked
the United States at 53, with only China, Malaysia
and Saudi Arabia below it. But Chinese officials
defend Beijing's record on fighting climate
change. They point to Beijing's commitment to
reduce energy consumption by 20% and pollutants by
10% in the next five years.
(Inter Press
Service and International Federation of
Environmental Journalists)
