China opens a new coal burning power plant every week. It has overtaken the USA as the single largest emitter of the green house carbon dioxide. William Chandler of the Energy Transition Research Institute has gone on record saying:
“The most important thing in the world for meeting carbon goals is what China does in its overall energy policy in the next 10 years.”
Just prior to the failed 2009 Climate Change Summit China promised to decrease its carbon emissions to at least 40% of 2005 levels, and at the same time switching 15% of energy generation to non-fossil fuels within the next 20 years.
Experts point out that China is behind schedule in this endeavor. Part of the problem at the 2009 Copenhagen summit was that China refused to have independent monitoring of its energy policy.
However, a new development has left America looking like the bad guys and China like the newly reformed eco-kid on the block. Authorities are going to roll out a pilot carbon emissions trading scheme by 2013 in Beijing, Shanghai, Tianjin, Chongqing, Shenzhen, Hubei and Guangdong. These 7 cities represent a combined population of 250 million people.
The pilot scheme if successful will lead to a nationwide carbon trading scheme by 2015. The scheme will be based on the already existing European model. Recently Quebec in Canada, New Zealand, South Korea, Australia and California have all passed legislation to start carbon trading.
It is an audacious move that will see a wider Asia-Pacific carbon trading area that will be worth billions of dollars. The lure of such a big market will force the ever recalcitrant American central government to begin carbon trading. When the world’s number one and number two biggest carbon emitters start to properly count carbon emissions and trade in the right to pollute we will have a much better framework for dealing with the ever more pressing problem of global warming.
Despite the inherent deficiencies of a Chinese economy that is heavily carbon based that is also quickly consuming the world’s natural resources it is one that can be manipulated from the totalitarian strength of its government. The question will be how open and transparent will China’s carbon trading scheme be? Will companies be apt to fiddle the figures to reduce the extra costs of buying carbon quotas from other companies? The money involved in buying carbon will be huge and where huge money is corruption soon follows.
Another point to make is that the issue of moving to alternative sources of energy is connected to carbon emissions. It takes a large input of electricity to extract silicon from silica. This silicon is needed to make photovoltaic panels. China is the leading manufacturer of photovoltaic panels and the energy needed to makes these panels comes mostly from burning coal.
Despite life being based on carbon, it is tempting to see carbon as the enemy. In our efforts to fight global warming we are using more carbon to make solar panels, wind turbines etc. It can only be hoped that making a carbon based economy unattractive through policing and trading emission quotas has the desired effect. This hoped outcome is not an economy based on financial services. We have already seen the disaster in America and Europe that such a vision can produce. Of course we should not blame China in isolation -they are after all performing the role of being the factory for the world’s consumer goods.