“Each generation will reap what the former generation has sown.” So states a very wise and ancient Chinese proverb.
Although usually referred to in a more specifically domestic political context, never has that tried and tested saying been better utilized than in the case of current concerns over climate change. Especially as this economic giantis at last starting to approach that whole bag of issues with what would appear to be dedicated earnest – proven by recent commitments to introduce a national cap and trade scheme, to begin in 2017, widely applauded by analysts.
However, as with most cap and trade schemes, allowing firms who keep below state guidelines on carbon emissions to bank the difference and claim financial rewards is not the magic bullet in the fight against climate change but a soft option chosen in place of penalty-based controls. It is though a highly positive step forward for a nation that is the world’s largest producer of carbon emissions and one whose approach to environmental issues has thus far been lukewarm to say the least.
Historically, the west has viewed China’s environmental efforts with some suspicion: promises made in this direction were chaffed and perceived as glitzy public relations stunts. However, according to some sources, China is now five years ahead of its goals to combat climate change. Whereas the U.S. is struggling to meet its targets, it is estimated that China’s carbon emissions will peak in 2025 instead of the 2030 target previously agreed upon.
A major reason for this difference in results between the two is that China has moved beyond the political theater of empty promises and rhetoric and is actually putting some serious meat on the bones. The cap and trade program is only one such example, with major improvements to infrastructure backing up the promises at every step of the way. Notable among these is China’s attempts to improve the national grid, allowing the effective distribution of energy created from sustainable sources that has, until now, been left unused. Efforts to reduce carbon emissions from cars have also had some success, due to heavy discounts on the purchase of electric and hybrid cars and limiting numbers of automobiles in some of China’s major cities.
Many have been tempted to question both the sudden burst of environmental altruism on China’s behalf as well as the political sustainability of its intentions. Perhaps the deadly Tianjin blast and its fallout managed to shake Beijing out of its torpor. Others consider China’s motives to sit firmly in the domain of political point-scoring in an effort to win over Asian neighbors who have traditionally sought the partnership of the U.S. and European nations.
There is, though, a very real and salient reason why China would suddenly wish to take the bull by the horns on this front: namely the very immediate threat that pollution is already having upon its population. In fact, the crisis is so grave that air pollution is estimated to be responsible for 4,400 deaths every day. To put that figure into perspective, if the same death toll regularly occurred in New Zealand or the Republic of Ireland, the populations of those nations would be entirely decimated within less than three solitary years. This is a toll on life that even a nation containing 1.4 billion people has to take seriously.
However, China’s continued reliance on coal to fire the nation’s engines–one of the chief reasons its carbon emissions are so high–is nevertheless the one area where Beijing is still lagging behind.
The use of cheap coal to create energy has long been one of the greatest issues facing any efforts to address climate change, especially as there are so many alternative (yet more expensive) energy sources available to those nations that have the economic capacity to invest in them. And it’s not just households that are dependent on coal – it’s industry as well.
Take the aluminum industry – for which China is one of the world leaders and produces 56 percent of global output. Aluminum is famously a relatively environmentally sustainable product. With the twin advantages of being far lighter than steel, hence needing less energy to operate, and being inherently recyclable, it would seem to be the most environmentally-friendly metal. However, any product is only as sustainable as the energy used to manufacture it. In the case of aluminum production, energy requirements are exceptionally high.
If an alternative energy source is doing the powering – such as hydro-power, which is the favored choice in Norway, Russia, and Iceland for aluminum smelting – then all is well and good. Unfortunately though, along with Australia and India, China’s aluminum industry relies almost entirely upon energy produced by coal. And this immediately turns an environmentally friendly product into something that is just further adding to the problem. Without taking into account the effects of coal, China’s push for sustainable development would be incomplete.
What’s more, Beijing should have a self-serving interest in accelerating the pace of renewables in its energy mix. Under the newly-enacted cap and trade system, coal is no longer a cheap energy source and is bound to raise prices dramatically for the country’s own production of aluminum, which would make foreign smelters more competitive on the Chinese market. The only way Beijing can prevent its cap and trade scheme from backfiring and eroding one of its economic backbones would be to accelerate the phasing out of coal.
Within the last year, China has shown itself to be increasingly committed to dealing with climate change – from cap and trade to revamping infrastructure, to a $3.1 billion climate fund focused at bringing developing countries into the fold. In the upcoming COP21 Climate Change Conference, China has the perfect opportunity to show itself as a world leader in dealing with anthropogenic global warming. By focusing on one of its most coal intensive industries – aluminum – and by bringing the issue to the table at the talks in Paris, China could make good on its promises and emerge not as a challenger to the west, but as a likeminded partner.
Anthony Kleven is an economic risk consultant based in Singapore. The views expressed here are his own.