Political Economy of China’s Climate Policy (Research Series on the Chinese Dream and China’s Development Path) 9811687889, 9789811687884

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Research Series on the Chinese Dream and China’s Development Path

Jiahua Pan

Political Economy of China’s Climate Policy

Research Series on the Chinese Dream and China’s Development Path Series Editors Yang Li, Chinese Academy of Social Sciences, Beijing, China Peilin Li, Chinese Academy of Social Sciences, Beijing, China

Drawing on a large body of empirical studies done over the last two decades, this Series provides its readers with in-depth analyses of the past and present and forecasts for the future course of China’s development. It contains the latest research results made by members of the Chinese Academy of Social Sciences. This series is an invaluable companion to every researcher who is trying to gain a deeper understanding of the development model, path and experience unique to China. Thanks to the adoption of Socialism with Chinese characteristics, and the implementation of comprehensive reform and opening-up, China has made tremendous achievements in areas such as political reform, economic development, and social construction, and is making great strides towards the realization of the Chinese dream of national rejuvenation. In addition to presenting a detailed account of many of these achievements, the authors also discuss what lessons other countries can learn from China’s experience. Project Director Shouguang Xie, President, Social Sciences Academic Press Academic Advisors Fang Cai, Peiyong Gao, Lin Li, Qiang Li, Huaide Ma, Jiahua Pan, Changhong Pei, Ye Qi, Lei Wang, Ming Wang, Yuyan Zhang, Yongnian Zheng, Hong Zhou

More information about this series at https://link.springer.com/bookseries/13571

Jiahua Pan

Political Economy of China’s Climate Policy

Jiahua Pan Institute of Urban and Environmental Studies Chinese Academy of Social Sciences Chaoyang, Beijing, China

ISSN 2363-6866 ISSN 2363-6874 (electronic) Research Series on the Chinese Dream and China’s Development Path ISBN 978-981-16-8788-4 ISBN 978-981-16-8789-1 (eBook) https://doi.org/10.1007/978-981-16-8789-1 Jointly published with Social Sciences Academic Press The print edition is not for sale in China (Mainland). Customers from China (Mainland) please order the print book from: Social Sciences Academic Press © Social Sciences Academic Press 2022 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Series Preface

Since China’s reform and opening began in 1978, the country has come a long way on the path of Socialism with Chinese characteristics, under the leadership of the Communist Party of China. Over 30 years of reform, efforts and sustained spectacular economic growth have turned China into the world’s second-largest economy and wrought many profound changes in Chinese society. These historically significant developments have been garnering increasing attention from scholars, governments, and the general public alike around the world since the 1990s, when the newest wave of China studies began to gather steam. Some of the hottest topics have included the so-called China miracle, Chinese phenomenon, Chinese experience, Chinese path, and the Chinese model. Homegrown researchers have soon followed suit. Already hugely productive, this vibrant field is putting out a large number of books each year, with Social Sciences Academic Press alone having published hundreds of titles on a wide range of subjects. Because most of these books have been written and published in Chinese, however, readership has been limited outside China—even among many who study China—for whom English is still the lingua franca. This language barrier has been an impediment to efforts by academia, business communities, and policy-makers in other countries to form a thorough understanding of contemporary China, of what is distinct about China’s past and present may mean not only for her future but also for the future of the world. The need to remove such an impediment is both real and urgent, and the Research Series on the Chinese Dream and China’s Development Path is my answer to the call. This series features some of the most notable achievements from the last 20 years by scholars in China in a variety of research topics related to reform and opening. They include both theoretical explorations and empirical studies and cover economy, society, politics, law, culture, and ecology, the six areas in which reform and opening policies have had the deepest impact and farthest-reaching consequences for the country. Authors for the series have also tried to articulate their visions of the “Chinese Dream” and how the country can realize it in these fields and beyond. All of the editors and authors for the Research Series on the Chinese Dream and China’s Development Path are both longtime students of reform and opening and v

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Series Preface

recognized authorities in their respective academic fields. Their credentials and expertise lend credibility to these books, each of which having been subject to a rigorous peer-review process for inclusion in the series. As part of the Reform and Development Program under the State Administration of Press, Publication, Radio, Film, and Television of the People’s Republic of China, the series is published by Springer, a Germany-based academic publisher of international repute, and distributed overseas. I am confident that it will help fill a lacuna in studies of China in the era of reform and opening. Shouguang Xie

Contents

Part I 1

2

3

Carbon Emissions and Human Rights

Welfare Dimensions of Climate Change Mitigation . . . . . . . . . . . . . . . Jiahua Pan 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Cost Effectiveness and Distributional Equity . . . . . . . . . . . . . . . . . 1.3 Welfare Analysis of Climate Change Mitigation . . . . . . . . . . . . . . 1.4 Nonclimate Policies for Climate Change Mitigation . . . . . . . . . . . 1.5 The Need to Include Welfare Impacts for a Low Carbon Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Conceptual Framework and Empirical Data for the Analysis of Human Development—With Global Demand for Carbon Emissions as an Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan 2.1 The Connotation of Human Development . . . . . . . . . . . . . . . . . . . . 2.2 The Developmental Philosophy of Neoclassical Economics . . . . . 2.3 The Developmental Outlook of Post-welfarism . . . . . . . . . . . . . . . 2.4 Differences and Resource Needs for Human Development . . . . . 2.5 Carbon Emission Needs of Developing Countries . . . . . . . . . . . . . 2.6 Conclusions and Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Emissions Rights and Their Transferability: Equity Concerns Over Climate Change Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 International Equity Considerations: Focuses on Economic Implications Across Nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Intra-national Equity Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Emissions Rights and Their Transferability . . . . . . . . . . . . . . . . . .

3 3 3 4 6 7 8

9 9 11 13 15 19 25 27 27 28 30 33

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3.5

Relevance of Allocation and Transferability of Emissions Rights in Climate Policy Making and International Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

China’s Balance of Emissions Embodied in Trade: Approaches to Measurement and Allocating International Responsibility . . . . . . Jiahua Pan, Jonathan Phillips, and Ying Chen 4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Accounting for Greenhouse-Gas Emissions . . . . . . . . . . . . . . . . . . 4.3 China’s Emissions Embodied in Trade . . . . . . . . . . . . . . . . . . . . . . . 4.4 Allocating Responsibility for Emissions . . . . . . . . . . . . . . . . . . . . . 4.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II 5

36 39 40 43 43 45 50 58 64 65

Equity and Carbon Budget

The Concept and Theoretical Implications of Carbon Emission Rights Based on Individual Equity . . . . . . . . . . . . . . . . . . . . . Jiahua Pan and Yan Zheng 5.1 Theoretical Background and Basic Concepts . . . . . . . . . . . . . . . . . 5.1.1 Human Development and Carbon Emission Needs . . . . . 5.1.2 Definition of Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.3 Interpretation of Key Concepts . . . . . . . . . . . . . . . . . . . . . . 5.2 Analysis of the Carbon Emissions Per Capita of Major Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Carbon Emissions Kuznets Curve . . . . . . . . . . . . . . . . . . . 5.2.2 Comparative Analysis of the Carbon Emissions Per Capita and Economic Development of Major Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Analysis of the Cumulative Carbon Emissions Per Capita of Different Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Theoretical Implications of the Cumulative Carbon Emissions Per Capita . . . . . . . . . . . . . . . . . . . . . . . 5.3.2 Comparison of Historical Cumulative Emissions and Historical Cumulative Emissions Per Capita of Major Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.3 Cumulative Emissions and Cumulative Emissions Per Capita of Major Countries in the Future . . . . . . . . . . 5.3.4 Comparison Between the National Cumulative Emissions Rate and Cumulative Emissions Per Capita Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Conclusions and Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71 72 72 73 75 78 79

80 83 84

85 86

88 89 91

Contents

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7

Carbon Budget Proposal: An Institutional Framework for an Equitable and Sustainable World Climate Regime . . . . . . . . . . Jiahua Pan and Ying Chen 6.1 Basic Idea of the Carbon Budget and Equity Implications . . . . . . 6.2 Overall Carbon Budget and the Initial Allocation . . . . . . . . . . . . . 6.3 Carbon Budget Adjustment and Transfer Payment . . . . . . . . . . . . 6.3.1 Adjustment to the Initial Carbon Budget Based on Natural Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Transfer Payments of the Carbon Budget Based on Actual Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Does the Carbon Budget Proposal Have Preferences for Specific Countries? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Design of Related International Mechanisms . . . . . . . . . . . . . . . . . 6.5.1 Market Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.2 Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.3 Compliance Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Conclusions and Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carbon Budget Management on the Road to New-Type Urbanization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan 7.1 Carbon Budget for Protecting the Global Climate . . . . . . . . . . . . . 7.2 Carbon Constraints for the Quality of Urbanization . . . . . . . . . . . . 7.3 Low-Carbon Opportunities from the Development of Urbanization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Strategic Management of the Carbon Budget in New-Type Urbanization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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93 94 97 102 103 105 109 112 113 113 115 116 117 119 119 120 121 122

Part III Economic Analysis of Low-Carbon Transformation 8

Low Carbon Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan and Ying Zhang 8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 China’s Emissions Pathways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.1 Overall Trend of Emissions in Aggregate . . . . . . . . . . . . . 8.2.2 Changes in China’s Per capita Emissions . . . . . . . . . . . . . 8.2.3 China’s Cumulative Emissions . . . . . . . . . . . . . . . . . . . . . . 8.2.4 Future Trend of Emissions . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Major Drivers for Emission Increases . . . . . . . . . . . . . . . . . . . . . . . 8.3.1 Increase in Size of the Economy . . . . . . . . . . . . . . . . . . . . 8.3.2 Economic Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.3 Energy Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.4 Urbanization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.5 Prospects for Medium and Long Term Future . . . . . . . . .

127 127 128 128 130 130 131 132 132 132 133 133 135

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8.4

China’s Determination to Pursue a Low Carbon Development Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.1 China’s Strategic Need for Addressing Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.2 Major Initiatives Promoting Low Carbon Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.3 Efforts Made to Emission Reductions and Energy Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.4 The Need to Accelerate Low Carbon Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Challenges and Opportunities in the Process of Low Carbon Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5.1 Global Energy Consumption and Emission Pattern . . . . . 8.5.2 Overcoming the Barriers to Low-Carbon Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5.3 Policy Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Conclusions and Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

From Industrial Civilization to Ecological Civilization . . . . . . . . . . . . Jiahua Pan 9.1 Human Rights and Development: The Developmental Agenda Expanding the North–South Divide . . . . . . . . . . . . . . . . . . 9.2 The Struggle Over Environmental and Developmental Issues on the United Nations’ Agendas . . . . . . . . . . . . . . . . . . . . . . 9.3 From the Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs) . . . . . . . . . . . . . . . . . . . 9.4 Transformation Development in the New Millennium Goals . . . . 9.5 The Goal System for Transformation Development . . . . . . . . . . . . 9.6 Orientation Towards Ecological Civilization in the “Post-2015 Agenda” Report . . . . . . . . . . . . . . . . . . . . . . . . . .

10 Research on the Regional Variation of Carbon Productivity in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan and Lifeng Zhang 10.1 Estimation and Analysis of Regional Carbon Emissions . . . . . . . . 10.1.1 Method for Calculating Carbon Emissions . . . . . . . . . . . . 10.1.2 Estimation and Difference Analysis of Regional Carbon Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Estimation and Difference Analysis of Regional Carbon Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.1 Estimation of Regional Carbon Productivity . . . . . . . . . . 10.2.2 Difference Analysis of Regional Carbon Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 Conclusions and Countermeasures . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

136 136 136 137 138 140 140 141 142 143 144 147

147 148 149 151 151 153 157 158 158 159 161 161 162 173 176

Contents

11 Clarification of the Concept of a Low-Carbon Economy and the Analysis of Its Core Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan, Guiyang Zhuang, Yan Zheng, Shouxian Zhu, and Qianyi Xie 11.1 Concept and Connotation of a Low-Carbon Economy . . . . . . . . . 11.2 Core Elements of a Low-Carbon Economy . . . . . . . . . . . . . . . . . . . 11.2.1 Resource Endowment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2.2 Technical Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2.3 Consumption Mode . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2.4 The Stage of Economic Development . . . . . . . . . . . . . . . . 11.3 Removal of Misunderstandings About a Low-Carbon Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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179 184 185 187 189 190 192 197 197

Part IV Economics of Adaptation to Climate Change 12 Adapting to the Carrying Capacity, Ensuring Ecological Safety . . . . Jiahua Pan 12.1 Changing the Manner of Consumption, Reducing the Ecological Footprint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 Conforming to Nature, Preserving the Productivity of the Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3 Respecting Nature, Adapting to the Carrying Capacity of the Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4 Protecting Nature, Increasing the Level of Ecological Safety . . . . Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Scientific Planning as the Key to New-Type Ecologically Friendly Urbanization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan 13.1 The Pattern of Urbanization Driven by Industrialization—An Imbalance of Gravitational Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 Identifying the Development Boundary—Adapting to the Carrying Capacity of Resources in the Environment . . . . . . 13.3 Balanced Allocation of Public Resources—The Efficiency Basis for Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Climate Capacity: The Measurement for Adaptation to Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan, Yan Zheng, Jianwu Wang, and Xinlu Xie 14.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 The Concept of Climate Capacity and Its Implications . . . . . . . . . 14.2.1 The Concept of Climate Capacity . . . . . . . . . . . . . . . . . . . 14.2.2 Implications of Climate Capacity . . . . . . . . . . . . . . . . . . .

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201 203 205 207 208 209

209 211 213 217 217 218 218 220

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14.2.3 Climate Capacity and Population Carrying Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2.4 The Threshold Value of Climate Capacity and Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2.5 Characteristics of Climate Capacity . . . . . . . . . . . . . . . . . 14.2.6 Measures to Increase Climate Capacity and Guiding Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3 Case Studies on Climate Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3.1 Constraints of Climate Capacity and Ningxia’s Relocation Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3.2 Climate Risks of Coastal Cities . . . . . . . . . . . . . . . . . . . . . 14.4 Implications for Policy Making on Climate Capacity . . . . . . . . . . 14.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 From Climate Change Vulnerability to Adaptation Planning: A Perspective of Welfare Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yan Zheng, Jiahua Pan, Xinlu Xie, Yamin Zhou, and Changyi Liu 15.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 Construction of a Framework for the Analysis of the Social Welfare Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.1 Economic Welfare and Its Risk Assessment . . . . . . . . . . . 15.2.2 China’s Social Welfare Function Against the Background of Climate Change . . . . . . . . . . . . . . . . . . 15.3 Comprehensive Assessment of Climate Change Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3.1 Indicator Design and Data Collection . . . . . . . . . . . . . . . . 15.3.2 Assessment Results and Analysis . . . . . . . . . . . . . . . . . . . 15.4 Regionalization of Adaptation Based on Climate Change Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.5 The Assessment of China’s Economic Welfare Risk and Its Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.5.1 Estimation of Economic Loss and Welfare Risk . . . . . . . 15.5.2 Adaptation Planning Design for Reducing Welfare Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.6 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part V

222 223 224 225 226 226 228 229 231 232 235 235 239 239 241 243 245 246 248 251 251 255 257 257

International Climate Regime Building

16 Climate Regime Building in a Changing World and China’s Role in Global Climate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 Jiahua Pan and Mou Wang 16.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 16.2 Transition in Negotiating Mandate from Bali Roadmap to Durban Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263

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16.3 New Pattern of Major Powers of Negotiations . . . . . . . . . . . . . . . . 16.4 Key Divergences Over Building Future International Climate Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 New Situations of China’s Participation in Building International Climate Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 China’s Role in the Participation of International Climate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Meeting Human Development Goals with Low Emissions: An Alternative to Emissions Caps for Post-Kyoto from a Developing Country Perspective . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan 17.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2 Re-consideration of Emissions Target as a Goal . . . . . . . . . . . . . . . 17.2.1 Kyoto Targets: From Berlin Mandate to Marrakech . . . . 17.2.2 Emissions Target as a Goal of Priority? . . . . . . . . . . . . . . 17.2.3 Dual Nature of Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 Emissions for Human Development . . . . . . . . . . . . . . . . . . . . . . . . . 17.3.1 Final Consumption of Carbon Emissions . . . . . . . . . . . . . 17.3.2 Development with Low Emissions . . . . . . . . . . . . . . . . . . 17.4 Commitments to Low Emissions for Human Development . . . . . 17.4.1 Voluntary Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4.2 Conditional Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 17.4.3 Obligatory Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5 Reporting and Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5.1 Quantification of Emissions Targets . . . . . . . . . . . . . . . . . 17.5.2 Verification of Emissions Reductions . . . . . . . . . . . . . . . . 17.5.3 Incentives and Disincentives for Implementation . . . . . . 17.6 Evaluation of Environmental Effectiveness . . . . . . . . . . . . . . . . . . . 17.6.1 Environmental Integrity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6.2 Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6.3 Comparison with the Kyoto Protocol to the United Nations Convention on Climate Change . . . . . . . . . . . . . . 17.7 Discussion and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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18 Road to Paris: What Has Changed and What Remains Unchanged in the System of International Responsibility . . . . . . . . . . 289 Jiahua Pan, Qingchen Chao, Mou Wang, Yongxiang Zhang, Zhe Liu, Xiaodan Wu, Xiaochen Guo, and Fan Bai 18.1 A Changing World Pattern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 18.1.1 Developing Countries Have Enjoyed More Shares in the Global Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289

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18.1.2 The Proportion of Emissions from Developed Countries Was Smaller Than that of Emissions from Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . 18.1.3 Changes in the System of International Governance . . . . 18.1.4 The Diversity of International Organizations Paying Attention to Climate Change . . . . . . . . . . . . . . . . . 18.2 The System of Responsibility Has Not However, Changed Fundamentally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2.1 Developed Countries Still Have the Main Share of Historical Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2.2 Huge Differences Still Exist in the Amount of Per Capita Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2.3 The International Economic Pattern Led by Developed Countries Remains Unchanged . . . . . . . . . 18.2.4 No Change Has Occurred in the Situation Where Developed Countries Control Technologies and Set Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2.5 Poverty Reduction and Development Remain the Top Priorities for Developing Countries . . . . . . . . . . . 18.3 Cooperative Building of an Equitable and Efficient International Cooperation Mechanism . . . . . . . . . . . . . . . . . . . . . . . 18.3.1 The Convention Should Be Taken as the Main Channel for International Climate Governance . . . . . . . . 18.3.2 Developed Countries Should Continue to Assume the Main Responsibilities for Addressing Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3.3 Developing Countries Should Intensify Their Actions of Mitigation and Adaptation to Address Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3.4 An Equitable and Efficient Funding Mechanism Should Be Built More Quickly . . . . . . . . . . . . . . . . . . . . . . 18.3.5 The Promotion and Popularization of Technologies Should Be Deepened to Prevent the Lock-In Effect . . . . 18.3.6 Support for the Capacity Building of Developing Countries Should Be Increased . . . . . . . . . . . . . . . . . . . . . 18.3.7 An Open and Cooperative International Trade System Should Be Built . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3.8 Global Economic Growth and Climate Governance Should Be Pushed Forward in a Cooperative Way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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19 Post-Paris Process: A Transformational Breakthrough Is Still Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiahua Pan 19.1 The Paris Climate Agreement: Starting a New Process . . . . . . . . . 19.2 How Fast It Could Advance: Constraining Factors Still Exist . . . 19.3 Enhanced Actions: A Transformative Breakthrough Is Urgently Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Part I

Carbon Emissions and Human Rights

Chapter 1

Welfare Dimensions of Climate Change Mitigation Jiahua Pan

1.1 Introduction Economic assessment of climate change mitigation indicates that there exists substantial potential for greenhouse gas (GHG) emission reductions at reasonably low cost. However, the experiences with GHG emission reductions under the Kyoto Protocol provide only limited substantiation to such a conclusion. There is perhaps a need to further examine the welfare implications of mitigation actions for a better understanding of the gap between the assessed potential and the actual GHG reductions.

1.2 Cost Effectiveness and Distributional Equity Two authoritative and influential assessments of climate change actions support earlier and stronger mitigation actions to avoid abrupt climate disruptions. One is the Stern Review on the Economics of Climate Change launched in October 2006 (Stern, 2007), and the other is the Fourth Assessment Report (AR4) on climate change mitigation by the IPCC (Intergovernmental Panel on Climate Change) Working Group III, approved in May 2007 (IPCC, 2007). Both reports, however, have triggered debates about the existence of large potentials of GHG reductions at low cost in aggregate at the global level. Under assumptions over climate change risks, sciences and ethics, the Stern Review estimates that the overall costs and risks of unmitigated climate change will be equivalent to losing between 5 and 20% of global gross domestic product (GDP) each year. In contrast, the costs of reducing GHG emissions can be limited to approximately 1% of global GDP each year. Meeting a stabilization target below 550 ppm CO2 equivalent (CO2 e) would require emissions to be at least 25% below current levels by 2050 and ultimately more than 80% below. © Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_1

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Similar conclusions are also found in the IPCC AR4 on climate change mitigation. If global mean temperature increases are to be limited to 2–2.4 °C above the preindustrial level, this would require CO2 emissions to peak before 2015 and to be 50–85% lower than the 2000 level by 2050. The cost of stabilizing GHG concentrations in the range of 445–535 ppm is projected to have an impact on global GDP of less than 3% between now and 2030, and the reduction of average annual growth rates would be less than 0.12%. For concentrations in the range of 535–590 ppm, the reduction in GDP is 0.2–2.5%. Why is the world not ready for an agreement on immediate and strong reductions? Olmstead and Stavins (2007) suggest that there is a conflict between environmental effectiveness and distributional equity. Nordhaus (2007) is highly critical of the choice of near-zero rate of discount applied in the Stern Review. The negotiators of the IPCC lowered the confidence level1 with regard to the estimate of mitigation costs for GHG concentration levels below 550 ppm. As the numbers given in the two reports are in aggregates, welfare impacts on different countries or social groups are not detailed for comparison. This may in part explain why there is a huge gap between the assessed economic potential and the market outcome. For the rich part of the world, per capita emissions are high, and the cost for substantial emission reduction can be high. For the poor part, per capita emissions are low, and market costs for emissions reduction can be low as well. However, there is an expectation among the poor that to deliver future welfare improvements, emissions will have to grow (Hannesson, 2007). Through rising emissions, therefore, this may have a negative impact on immediate welfare for the rich and future welfare for the poor. This would suggest a strong case for looking at the welfare aspects of climate change mitigation.

1.3 Welfare Analysis of Climate Change Mitigation Both the Stern Review and the IPCC assessment indicate that a cost is associated with GHG reductions. In other words, the growth of GHG emissions, if climate change impacts were not considered, would contribute to human welfare improvements along with industrialization and economic development, as shown in the past. GHG emissions in 2004 were 70% higher than those in 1970. Emissions by countries with economies in transition (former Soviet Union and eastern European states) are in general lower than their Kyoto targets, while many other Annex I countries appear to have difficulty in meeting their targets. Similar to most developing countries, the United States and Australia have shown a strong increase in GHG emissions (IEA—International Energy Agency, 2006).

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The “high evidence” statement over mitigation cost in SPM paragraph 6 was changed into “medium evidence”, with consent of the lead authors, at the IPCC 9th Session WG-III held in Bangkok, 30 April–4 May 2007.

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If GHG emissions contribute to economic growth and thereby enhance social welfare, a further increase in emissions may be expected in many countries. According to the IPCC assessment, global GHG emissions would continue to grow over the next few decades by a range of 9.7–36.7 Gt CO2e (25–90%)2 between 2000 and 2030 under scenarios with current climate change mitigation policies and related sustainable development practices. CO2 emissions between 2000 and 2030 from energy use are projected to grow 45–110% over that period. However, the distribution of these increases is uneven. Between two-thirds and three-quarters of this increase in energy-related CO2 emissions is projected to come from non-Annex I regions (i.e., developing countries). This might be an indication that, at the margin, the welfare contribution from GHG emissions in the developing world would be larger than that in developed regions. As the welfare level in rich countries is already high, additional emissions would generate less welfare satisfaction than that in poor countries. In a similar manner, there must be welfare implications associated with climate mitigation. The current analysis in the literature acknowledges the principle of “common but differentiated responsibilities” (Article 3 of the UN Framework Convention on Climate Change) between developed and developing nations. However, such analyses focus on the differences in national circumstances with respect to mitigative and adaptive capacities, such as financial, technological and institutional capabilities. As a result, the Stern Review advocates that developed countries must have deeper cuts in their emissions and that developing countries may be allowed to increase their emissions up to 25% compared to their current level. However, the IPCC (2007) takes a different approach by looking at the potential of low-cost reductions. Roughly, the current ratio of emissions by developed and developing countries is 70:30.3 The IPCC assessment suggests that the ratio of low-cost emission reduction between developed and developing countries would be 30:70, the reverse of the emissions share (see Figure SPM-6 in Summary for Policy Makers; IPCC, 2007). The IPCC report further concludes that, under most of the considered regime designs for low and medium stabilization levels, developing country emissions need to deviate from what we believe today would be their baseline emissions as soon as possible, even if developed countries make substantial reductions. From the perspectives of environmental and cost effectiveness, earlier and larger GHG reductions serve the purpose of lowering the cost in global aggregates for stabilization. If the perspective is shifted to welfare considerations, the IPCC conclusions may need further examination. If a rich person earns 1 million $US per year, a 1000 $US increase in income would add a negligible welfare gain. On the other hand, 1000 $US would mean a substantial welfare improvement if the person’s income is Gt = giga tons, 109 t. This number includes five other greenhouse gases (CH4 , N2 O, HFCs, SF6 , PFCs, measured in global warming potential equivalent to CO2 ) included in the Kyoto Protocol (Annex A), in addition to CO2 . These are results from SRES baselines (IPCC, 2000), but post SRES baseline scenarios are assessed in the IPCC (2007) as comparable. 3 This share is based on historical accumulation of emissions. Currently, the ratio is: 53:47 in 2004 for Annex I versus on-Annex I parties to the UNFCCC. See IEA (2006). 2

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only 5000 $US. Similarly, a reduction in absolute terms of the same amount (1000 US) would result in a considerable difference in welfare losses between these two persons. In the rich part of the world with average income at 30,000 $/c, mitigation cost can be high, say 100 $/t CO2 , while in the developing part with average income at 3000 $US/c, the cost may be only half, say 50 $US/t CO2 . The richer one spends 1/300 of his income to reduce 1 t CO2, while the poor would spend 1/60 of his income for a similar amount of reduction. Evidently, at the margin, welfare cost in developing countries for each ton of CO2 reduction could be much higher. If we look at the welfare contribution by emissions, the reverse might be true, i.e., higher marginal utility for each ton of carbon in the developing world than in the developed world. In Annex I (industrialized) countries, per capita emissions were 11.3 t CO2 in 2004 compared to 2.3 in non-Annex I (developing) countries (IEA (International Energy Agency), 2006). One ton of CO2 reduction would lead to much higher relative welfare losses in the non-Annex I countries than in the Annex I countries, although economic cost can be the opposite. Such welfare understanding does not necessarily approve unlimited emissions. If an additional ton of emissions leads to climate disasters, welfare loss is incurred to both the poor and the rich, and the poor can suffer more than the rich. That is why there is a responsibility for everybody.

1.4 Nonclimate Policies for Climate Change Mitigation While the Stern Review does not investigate the potential of nonclimate policies, the IPCC WG-III AR4 makes a positive linkage between nonclimate policies aimed at sustainable development and climate change mitigation (see IPCC, 2007, Chap. 12). In many cases, nonclimate policies can have effective impacts on emission reductions but with less welfare losses. If we look at carbon emissions from a development perspective, we may find that carbon is not the ultimate cause of concern. The ultimate reason for the increase in emissions is due to action by humans. The number of people matters. The style of living matters, too. While population control may be controversial in light of ethical and cultural traditions, early peak of the population can be essential for the early stabilization and reduction of emissions. One reason for the US refusal to take the same targets as Europeans is demographic differences.4 If ODA (overseas development aid) is directed at family planning in the developing world rather than at low carbon and costly technologies, the impact on emission reductions might be more pronounced. While the level of carbon emissions has to be substantially reduced in the rich part of the world, consumers in poor countries must re-define their quality 4

At the European Climate Forum in March 2007 in Brussels, the US chief negotiator on climate change, Harlan Watson in his presentation emphasizes the difference between the US and the EU with respect to population growth. By 2050, population in the US would be 60% higher than the current level while that in the EU would be some 8% lower.

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of life by rejecting luxury and wasteful ways of living along with their increase in income. One cannot imagine the Chinese and the Indians having the same rate of car ownership as their American or European counterparts. Harmony with nature can certainly keep and create green fields, which sequester carbon. Keeping the sky blue and water clear requires us to use clean fuels. Therefore, nonclimate policies can be even more effective than direct climate actions, particularly in poor countries. For example, social and energy policies in developing countries such as population control, energy security and re-forestation can be much more effective for reducing demand for carbon emissions than a narrow focus on low carbon technology and low carbon consumption. They also strengthen adaptive capacities. The most important feature of non-climate policies for mitigation lies in that they contribute welfare gains to society in addition to emission reductions. Effective measures have to be examined from a welfare perspective for them to be sustainable. For the developed world, the population has been stabilized, and or even on the decline, carbon policies can encourage the development and deployment of low carbon technologies and shift from wasteful to necessity emissions. For the developing world, nonclimate policies can be less costly and more effective. The primary drivers of future increases in emissions in the developing world are population increases, economic growth and technological progress. Population growth is in absolute conflict with climate change mitigation, while both economic and technological development can be made compatible. We have to be clear that there is no room for everybody on earth to enjoy the same level of emissions as the rich in both the developed and developing world. Luxurious and wasteful emissions that do not add much to social welfare have to be discouraged wherever they occur. Welfare analysis suggests that the use of nonclimate policies complements carbon policies well. A target on emissions can be highly effective as a result of, for example, the replacement of high carbon content fuels by low and zero carbon energy sources, carbon sequestration through land use change and forestry and carbon capture and storage. However, these measures do not seem to be adequate and functioning well. Additional efforts have to be included. While we may deepen our carbon policies in the developed world, nonclimate policies in both developed and developing countries can be introduced and strengthened to reinforce emission reductions.

1.5 The Need to Include Welfare Impacts for a Low Carbon Future Economic analysis is important in that it provides an understanding of how and where the low-cost mitigation potential lies. However, such a potential is often evaluated from the production side. However, in the end, the consumer must be kept responsible for GHG emissions, as there would be no goods and services if there were no effective demand. Technological improvement will provide the key, and its demonstration

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by the rich can accelerate their deployment in the developing world. However, technologies have their own limits. First, there is a lock-in effect that prevents technologies from immediate replacement. Additionally, there is uncertainty in technological development with respect to cost and deployment. The most important thing is the effect offset by consumer behavior. For instance, a 20% automobile fuel efficiency increase saves no energy if the car owner drives 20% more miles. Therefore, a cap can be more reasonable and effective if it is set on the consumption side based on welfare assessment. That is, a carbon budget is regulated for an individual who will assess the utility of carbon embedded in goods and services within his/her budget. This carbon budget would effectively avoid luxury and wasteful emissions, as the individual would evaluate welfare impacts from excessive emissions. In summary, both increases and decreases in carbon emissions have welfare implications, and an equitable and sustainable climate regime requires an understanding of both sets of welfare impacts. For a low carbon future, welfare gain from additional emissions must equal the welfare losses of emission reductions at the margin.

References Hannesson, R. (2007). Letter: The Other Problems with the Stern Report. The Economists’ Voice, 4(3), Article 4. Available at http://www.bepress.com/ev/vol4/iss3/art4. IEA (International Energy Agency). (2006). CO2 emissions from fossil fuel combustion (2006th ed.). International Energy Agency. IPCC (Intergovernmental Panel on Climate Change). (2000). Special report on emissions scenarios (SRES). Cambridge University Press. IPCC. (2007). Climate change 2007: Mitigation of climate change. Cambridge University Press. Available at http://www.ipcc.ch/. Olmstead, S. M., & Stavins, R. N. (2007). A meaningful second commitment period for the Kyoto protocol. The Economists’ Voice, 4(3), Article 1. Available at http://www.bepress.com/ev/vol4/ iss3/art1. Nordhaus, W. (2007). Critical assumptions in the stern review on climate change. Science, 317, 201–202. Stern, N. (2007). The economics of climate change. Cambridge University Press.

Chapter 2

A Conceptual Framework and Empirical Data for the Analysis of Human Development—With Global Demand for Carbon Emissions as an Example Jiahua Pan

2.1 The Connotation of Human Development In English, the words “developing” and “developed” share the same linguistic root but denote different states. The former means that there is a certain potential for or a certain distance from becoming mature or reaching the expected relatively high or high level during growth, while the latter mostly refers to the state of becoming mature or being at the relatively high or high level, coming to or being close to completion.1 In Chinese, “development” is defined as a philosophical concept and entails “a process of movement and change in which things grow from small to large, from simple to complicated, from low level to high level, from old ones to new ones”,2 and “developed” means that things “have fully developed”.3 In English, “development” contains growth and refers to a process in which the structure and functions of an individual and/or a group change from simple ones to complicated ones in the life history of a biological organism, while maturity or full growth is marked by the level at which there is the capability for continuing to multiply. Undoubtedly, such a growth process is one basic aspect of human development. There is no foundation for the development of human society without growth, maturity or multiplication of human individuals. Moreover, such a growth connotation of development is restricted to not only the process of growth and evolution of a life organism but also to various economic and social aspects of human society, such as a mature community, a developed industry and agriculture, a well-developed legal system. Furthermore, an area to be developed where economic development or growth is at a relatively low level or its development is encouraged is called an underdeveloped area or a developmental

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Oxford Dictionary of English. Oxford: Oxford University Press, 1992. Ci Hai (Chinese Encyclopedic Dictionary, compact edition), Shanghai Lexicographical Publishing House, 1980, p. 490. 3 Modern Chinese Dictionary, The Commercial Press, 1994, p. 292. 2

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area. As shown, development is an abstract concept from a philosophical perspective and a practical term that depicts orderly biological, social and developmental growth. Human development4 involves the life, social, political, economic and cultural aspects of individuals, communities, countries and all of humanity, which are called human dimensions in some studies.5 These human dimensions also touch upon a developmental issue in a broad sense, involving the most basic life development and quality of life from the biological perspective, community culture and economic capability, and the political and economic rights and interests of countries. The case where a community and country are developing or underdeveloped mostly means that the quality of life and the economic and political rights and interests are at relatively low levels, while a mature or a developed economy suggests that the quality of life and the economic rights and interests are at relatively high levels.6 In terms of a developmental concept and human needs, the connotation of human development can be understood from the perspectives of “rights” and “limits”. Developmental rights or developmental rights and interests are mainly embodied in the direction of human development and the realizability of the potential for human development. Human development is unidirectional—it proceeds from a low level to a high level, from simple to complicated, from less ideal to almost perfect. This is a gradual process of structural changes and encompasses different developmental stages. Fluctuations or disturbances may occur in this process of development; however, the general trend of human development is clear. Historically, many countries or territories, even the whole world, were plagued by wars, pandemics, floods and other disasters, when human development temporarily stagnated and even receded; however, this did not prevent overall human development. At present, some traditional agricultural societies7 in the state of simple subsistence maintenance are still at relatively low levels and are backward, but this does not indicate that they have no rights or potential to reach a relatively high level and become developed. Individuals, communities or countries may realize a relatively high level of human development, while such realization is a basic right and interest involving human development. The “limits” for human development mainly have the following several meanings. First, they are biological “limits”, including the upper limit and the lower limit. On the one hand, subject to a certain technical and economic level, there is an upper limit 4

Human development is described in many documents, such as the UNDP Human Development Report, see UNDP, 2001 Human Development Report, China Financial and Economic Publishing House, 2001, p. 260. 5 Since the mid-1980s, the international academic community has been carrying out the International Human Dimensions Programme (IHDP), involving the social, economic, cultural and political aspects of human development. 6 Some agencies of the United Nations and the World Bank mostly adopt per capita income to rank the development of countries. However, with respect to the classification of countries, some people mostly list oil-exporting countries with a relatively high per capita income and the formerSoviet-Union Eastern European countries among the developing countries. See World Bank, World Development Report, Oxford: Oxford University Press, 2001. 7 The most primary society as defined in Rostow’s Stages of Economic Growth. See Rostow, The Stages of Economic Growth: A Non-Communist Manifesto, trans. by Guo Xibao, Wang Songmao, China Social Sciences Publishing House, 2001, p. 283.

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with an absolute amount—it cannot be infinitely expanded—in nutritional requirement, physiological maturity and biological life. On the other hand, the biological subsistence of a person certainly needs to be guaranteed by a certain quantity of nutrition, medical treatment, and housing and clothing; thus, there is a lower limit value with an absolute amount, such as the poverty line established by some countries or territories. Below this limit, it is difficult for a human to subsist. Such biological “limits” are inherent limits for human development. Second, there is physical upper limit or constraint. Human development needs a material base, while the earth on which the subsistence of human life is based is limited. In fact, the “rights” in human development are not separated from the “limits” for human development. The “rights and interests” of human development and its “potential” cannot be limitless. On the one hand, different individuals, communities, countries or a group of countries are governed by a “right and interest check and balance” relationship so that the basic rights and interests of human development can be guaranteed. On the other hand, once the potential for human development is basically realized, biological physical expansion is impossible and meaningless. “Limits” also have explicit rights and interest connotations. In fact, the limit of physical quantity, which reflects the basic needs of an individual human’s development and a mature community, is also one basic right and interest of human development. The external physical constraint signifies the scarcity of resources; however, such scarcity should not constitute the cause for ignoring the basic developmental rights and interests of socially disadvantaged individuals or groups or depriving these individuals or groups of basic developmental rights and interests.

2.2 The Developmental Philosophy of Neoclassical Economics According to neoclassical economics, economic development is realized by maximizing individual utility and increasing total social utility. The Pareto efficiency in microeconomic analysis is conditional upon maximizing the improvement in the welfare of individuals without making the welfare of other members of society worse off. As illustrated by the Compensation Principle8 in neoclassical welfare economics, even if the welfare of some members of society suffers a loss, there will be a kind of social progress or development as long as the increment in the welfare improvement for a certain member or some members remains in surplus after compensating for the welfare loss inflicted on the members who are adversely affected. As total social welfare increases, even if such compensation is not made, this choice is still feasible from the perspective of welfare or development. Neither the Pareto efficiency nor the compensation principle takes into account the welfare distribution or income gap 8

Compensation Principle, also called Kaldo—Hicks compensation test. See N. Kaldo, Welfare Propositions of Economics and Interpersonal Comparisons of Utility. Economic Journal, 1939, 39:549–552; J. Hicks, The Foundation of Welfare Economics. Economic Journal, 1939, 49:696–712.

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and considers welfare improvement for socially disadvantaged groups. The Maximin Principle9 proposed by American scholar Rawls in the early 1970s calls for taking welfare improvement for the most disadvantaged individuals or groups in society as the norm for promoting social development. The developmental philosophy advocated in neoclassical economics is based on reference to the current level of welfare and seeks to increase the current level to some extent. Therefore, it accepts and recognizes the differences in human development among individuals or in society and allows further expansion of these differences. On the one hand, the positive aspect of such development is that all individuals or groups at various levels in society enjoy the right to develop; the high utility return or welfare benefit for socially advantaged individuals or groups produces a spillover effect and a demonstration effect on socially disadvantaged individuals or groups.10 However, as there is an inequity in reality and socially advantaged individuals or groups monopolize and occupy resources, the developmental rights and interests of socially disadvantaged individuals or groups may be ignored, even though socially disadvantaged individuals or groups are deprived of developmental rights and interests. Dynamically, the developmental outlook in neoclassical economics stresses the maximization of utility rather than basic or full realization of the potential for human development. Whether the basic subsistence rights and interests of the most disadvantaged individuals or groups in society are guaranteed and how great their potential for development is are not analyzed. Future development and the conditions for basically or fully realizing the potential for development are also not revealed accordingly. Even under Rawls’ principle, which places emphasis on socially disadvantaged individuals or groups, the guarantee for the interests of socially disadvantaged individuals or groups is taken as a social choice about an ethical preference, but the realization of disadvantaged groups’ potential for development is not deemed a right. The concept of “limits” for human development is almost nonexistent in the developmental philosophy of neoclassical economics. For an individual, if his/her income increases, he/she will develop to some extent; for a community or a country, if the GDP within the community or the country grows compared with the previous accounting period, progress is made in development. The monetarily measured income or total output value can be infinitely increased; thus, the utility or welfare level can also be infinitely improved. Therefore, human development can be limitless. The neoclassical economic analysis also takes into account resource constraints, but it allows resource substitution and a tradeoff among different goals. Under market competition conditions, factor substitution will certainly occur among capital, labor and natural resources, resulting in maximization of individual utility or total social 9

The principle proposed by Rawls is demonstrated under the assumed condition: veil of ignorance. If no one knows his future position, a rational choice made by him shows care for the most disadvantaged individuals or groups so that their interests are guaranteed accordingly. See John Rawls, A Theory of Justice, Oxford: Clarendon Press. 10 The spill-over effect is also called the spread effect. See G. Myrdal, Development and UnderDevelopment: A Note on the Mechanism of National and International Economic Inequality, National Bank of Egypt, 1956, p. 36.

2.2 The Developmental Philosophy of Neoclassical Economics

13

utility. When a number of goals cannot be concurrently achieved, a tradeoff may be obtained by comparing the loss of utility with that of welfare. For example, people can increase their income and bring about economic growth at the expense of health or the environment. Hence, in practice, the constraints of natural resources matter less and may even disappear. Within the analytical framework, the developmental outlook in neoclassical economics focusing on income growth and economic growth dispenses with the connotations of the “rights” and “limits” for development. The income or total output value measured merely in a monetary way not only fails to objectively give full expression to the level of development but also causes a misleading evaluation of social value with the aim of pursuing the maximization of monetary income and high consumption. Therefore, the outlook for human development that embodies the “rights” and “limits” has a great theoretical connotation and is of great practical significance.

2.3 The Developmental Outlook of Post-welfarism In the mid-1950s, the developmental thinking of “Structuralism”,11 which emphasized the adjustment of the socioeconomic structure in response to the actual economic and social situation in developing countries, emerged, serving as a supplement to the economic developmental thoughts of neoclassical economics12 but giving no considerations to the “rights” and “limits” for development. Discussions about “the Limits to Growth”13 in the early 1970s and afterwards featured the incorporation of the issue concerning the constraint of a limit into discussions involving human development, but they did not cover the issue of the rights and interests of human development.

11

Structural Approaches to Economic Development, including dual economic structure (W. A. Lewis, Economic Development with Unlimited Supply of Labor. In A. N. Agarwala & S. P. Singh (eds.), The Economics of Underdevelopment, Oxford University Press, 1958), the “big push” of structural transformation (P. N. Rosenstein-Rodan, Notes on the Theory of the Big Push. In H. S. Ellis (ed.), Economic Development for Latin America. St. Martin Press, 1966), the “holistic theory” of the social, political and institutional factors (G. Myrdal, Economic Theory and UnderDeveloped Regions, Methuen & Co. Ltd., 1963; G. Myrdal, Political Economy and Institutional versus Conventional Economics, In G. R. Feiwel (eds.), Samuelson and Neoclassical Economics, Boston: Kluwer Nijhoff Publishing, 1982). 12 Ma Ying, On the Institutionalist Thinking of Developmental Economics, The Journal of World Economy, 2002 (4). 13 The Club of Rome, as the representative, stressed the physical limits to growth (D. H. Meadows, D. L. Meadows, J. Randers and W. W. Behrens III, The Limits to Growth: a Report for the Club of Rome’s Project on the Predicament of Humanity. London: Earth Island Ltd., 1972); Simon, as the representative, denied the restrictions of limits for economic development (Julian L. Simon and Herman Kahn (eds.), The Resourceful Earth. New York: Basil Blackwell Publishers, 1981).

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2 A Conceptual Framework and Empirical Data for the Analysis …

In the mid-1980s, Sen considered the realization of social individuals’ potential14 as the main content of welfare evaluation, and he believed that the situation of resource occupation would certainly affect the realization of individual potential. In 1987, the World Commission on the Environment and Development further defined the satisfaction of the current and future basic needs as sustainable development.15 In 1993, Dasgupta associated basic needs with moral power in human development.16 Human development is currently characterized by differences among individuals, groups or regions, but development aims at narrowing these differences so that the developmental potential of individuals or groups can be basically or fully realized. This developmental theory of post welfarism,17 which underscores the quality of life and developmental rights and interests, does not merely focus on a single indicator—monetary income or economic growth; instead, it adopts multiple indicators to comprehensively measure human development. Dore and Mount believed that the welfare economics theory proposed by Sen was a “theory of justice”,18 and it centered on the concepts of right and potential. According to the developmental outlook of post-welfarism, each social individual enjoys developmental rights and interests, including social, economic and political rights and interests. Dasgupta divided these rights and interests into two types of needs19 : basic needs and needs for enjoyment. The former refers to the biological needs necessary for maintaining basic subsistence, covering nutrition, housing, environmental hygiene, medical treatment and health care, basic education and basic labor skills. The latter mainly means political and civil rights, mostly involving nonmaterial services relating to politics, society, laws, culture and art, such as the right to elect and the right to be elected, freedom of association and speech, personal safety and property security. The developmental outlook of post-welfarism recognizes the differences in human development but places more emphasis on narrowing the practical differences. Therefore, ethically, more weight should be given to the improvement of the living standard of the poor than that of the living standard of the rich. In other words, according to the developmental outlook of post-welfarism, if the improvement in the living standard of the poor below the poverty line is quantitatively equivalent to the decrease in the living standard of the rich, this should be deemed a social improvement. As shown, the developmental outlook of post-welfarism gives prominence not only to various rights and interests that have been realized but also to various potential rights and interests that social individuals may realize. 14

Capabilities. See A. K. Sen, Commodities and Capabilities. North-Holland, Amsterdam, 1985; A. K. Sen, Inequality Reexamined. Oxford: Clarendon Press, 1992. 15 WCED (World Commission on Environment and Development), Our Common Future. Oxford: Oxford University Press, p. 43. 16 Patha Dasgupta, An Inquiry into Well-Being and Destitution. Oxford: Clarendon Press, 1993, p. 44. 17 M. H. I. Dore and T. D. Mount, Global Environmental Economics: Equity and the Limits to Markets. Oxford: Black-Well Publishers, 1999, p. 24. 18 M. H. I. Dore and T. D. Mount, Global Environmental Economics: Equity and the Limits to Markets. Oxford: Black-Well Publishers, 1999, p. 22. 19 Partha Dasgupta, 1993, p. 40.

2.3 The Developmental Outlook of Post-welfarism

15

Obviously, the basic needs for human development are not unlimited. Nutritional requirements should be at a certain level, while excessive nutrition is harmful to the human body. A larger house is not necessarily better. The basic hygienic conditions can also be well defined. Of course, luxury or wasteful consumption is not a basic material need. Likewise, the individuals in social groups are bound by obligations in terms of nonmaterial political and civil rights and interests. Only when the “upper limit” for these rights and interests exists can a relatively objective metric be available for a mature or developed society, and only then can a direction and goal for development be identified for a developing or underdeveloped society. As the factors of human developmental rights and interests are relatively independent, a substitutional relationship or tradeoff does not necessarily exist among these factors. Income can improve health, but economic growth should not be achieved at the expense of health or life. Civil rights can be dealt with by monetary compensation, but neither involves a tradeoff. Moreover, political rights cannot be exchanged. Simply, human development is a right and an interest, for which neither substitution nor tradeoff is allowed at the marginal level. However, subject to the constraints of resources, it may be difficult for each member of society to fully realize the upper limit for human developmental rights and interests. Under such circumstances, first priority should be given to guaranteeing the basic needs and the political and economic rights and interests of socially disadvantaged groups or individuals rather than maximizing income. The developmental outlook of post-welfarism takes various aspects of human development as rights and interests and focuses on the realization of the potential for human development. Unlike the developmental theory in neoclassical economics, the developmental theory of post-welfarism connotes the concept of the “limits” for development. Such “limits” include a lower limit and an upper limit. The lower limit is essential for the basic subsistence of human beings, while the upper limit indicates that social individuals and groups can be mature or “developed” or have such a potential for development. Subject to the constraints set by limited natural resources, each member of a social group enjoys the right to use them to realize their basic potential for development.

2.4 Differences and Resource Needs for Human Development Which factors should be adopted to measure human development rights and interests since monetary income or economic growth cannot fully embody the connotation of human development? As early as 1954, experts from the United Nations suggested that in addition to per capita income, some physical indicators, including health, education, employment and housing, should also be used to evaluate the level of welfare and human development. However, such thinking was not put into practice.

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2 A Conceptual Framework and Empirical Data for the Analysis …

In 1979, Morris20 proposed a number of physical indicators for measuring human development and provided quantitative descriptions of human development rights and interests. In 1992, Dasgupta and Weale used five indicators,21 which were per capita income (purchasing power parity, PPP), life expectancy, infant mortality rate, adult illiteracy rate, and political and civil rights, to comprehensively evaluate the development of 48 developing countries. Given the high political sensitivity of political and civil rights, in 1990, the United Nations Development Programme (UNDP) removed the political index and adopted three indicators, income, life expectancy and educational level, indexed them,22 averaged them to obtain a comprehensive human development index, and then conducted an evaluation and comparison of the quality of life of nationals in various countries. This also means that there is a lower limit and an upper limit for the main indicators concerning human development. The UNDP (2001) calculated the “limit” values of human development indexes: life expectancy at birth (years): maximum 85, minimum 25; adult illiteracy rate (%) and total enrollment rate (%): maximum 100, minimum 0; per capita GDP (USD, purchasing power parity): maximum 40,000, minimum 100. All of the above limit values are statistical data. For education, there may be absolute differences in illiteracy and higher education among individuals. However, with respect to life expectancy and per capita income, the limit values used here are the average values of a group rather than the maximum value or minimum value of an individual. Many people in society had a life expectancy of more than 85 years; however, with regard to the average social value (UNDP, 2001), 1999 statistics showed that the longest average life expectancy occurred in Japan, where the average life expectancy reached 80.8 years (female: 84.1 years, male: 77.3 years), while the shortest average life expectancy occurred in Sierra Leone, where the average life expectancy was only 38.3 years (female: 39.6 years, male: 37.0 years). There were greater individual differences in income: many people were billionaires and impecunious. The highest average per capita income occurred in Luxembourg, a small EU country, where the average per capita income hit 42,769 USD, followed by the USA, where the average per capita income was 31,872 USD, while the lowest average per capita income occurred in Sierra Leone, where the average per capita income was 20

M. D. Morris, Measuring the Condition of the World’s Poor: the Physical Quality of Life Index. Oxford: Pergamon, 1979. 21 All of the first four indicators come from statistical data, while the fifth indicator is dealt with in the following way: a mark is given on the basis of seven grades for the political and civil rights which citizens of various countries enjoy: 1 means that they enjoy the fullest political and civil rights, while 7 means the lowest degree. Data adopted by Dasgupta and Weale (See Partha Dasgupta and M. Weale, On Measuring the Quality of Life. World Development, 1992) came from C. L. Taylor and D. A. Jodice, World Handbook of Political and Social Indicators. New Heaven: Yale University Press, 1983. 22 The income used here is calculated according to purchasing power parity. The calculation formula for various indexes: subindex = (actual value − minimum value) (maximum value − minimum value).

17

Human development index

2.4 Differences and Resource Needs for Human Development

per capita income USD (PPP)/year

Life expectancy (year)

Fig. 2.1 Relationship between the human development level (human development index, 0 ≤ HDI ≤ 1) and per capita income (USD (PPP)/year), 1998. Data Source the United Nations Development Programme (UNDP), 2001 Human Development Report, p. 260

per capita income USD (PPP)/year

Fig. 2.2 Relationship between life expectancy (year) and per capita income (USD (PPP)/year), 1998. Data source the United Nations Development Programme (UNDP), 2001 Human Development Report, p. 260

only 448 USD. The developed countries in the Organization for Economic Cooperation and Development (OECD) were almost free of illiteracy, while 85% of adults in Niger were illiterate. Figures 2.1 and 2.2 shows the relationships between per capita income and the human development index and between life expectancy and per capita income. Income is a main indicator of human development rights and interests. Income can increase infinitely with economic growth, and the per capita income gaps among countries were immense. The trend in the scatter diagram based on cross-sectional data is extremely apparent and features an exponential curve, namely, y = ceb/x ; b < 0; when x → ∞, y = c; c is the limit value of a human development right and interest indicator under current technical and economic conditions. The value at the turning point of the curve is approximately $8000/year per capita income; a development right and interest indicator rapidly increases with rising income before such a value; it slowly approaches c (HDI = 0.95; the average life expectancy is approximately 80 years) after this value. The nationals in high-income countries have approached

18

2 A Conceptual Framework and Empirical Data for the Analysis …

Afghanistan Bangladesh

(calories/day)

per capita food consumption

such a limit value, and the potential for development is close to being fully realized under the current technical and economic conditions; thus, the potential for further expansion is very limited. There is a very large space for nationals in low-income countries to fully realize their potential for development, while such a development right and interest should be respected. If quality of life is considered the result or status of current human development, physiological and subsistence needs are the input indicators for human development, including nutrition, housing, energy consumption or carbon emissions. Fig. 2.3 shows the changes in nutritional level—nutrition is a basic need—in the last 30 years of the twentieth century. For per capita food consumption, the basic needs were satisfied broadly to three varying degrees: The potential had been fully realized (per capita food consumption was 3000–3250 cal/day; it had been declining in some developed countries compared with the level in the 1960s and was close to this value); the potential was being realized (food consumption was at the stage of transition from hunger to adequate food and clothing, which mainly occurred in the developing countries such as China); there were fluctuations around the bottom line of the potential (food consumption fluctuated around the subsistence line, which mainly took place in the least developed countries plagued by political unrest). A rational institutional framework serves not only as the basic guarantee for political and civil rights and interests but also as the basic precondition for a certain level of quality of life. In less developed countries, there is generally a dual economic structure consisting of traditional agriculture and a relatively modern industry; social services such as finance, insurance, medical treatment, laws and security guarantees are very weak. The traditional agricultural sector is glutted with a massive labor force, and the marginal productivity is zero, even negative, resulting in economic and institutional inefficiency. Due to a lack of capital and technology, the educational level is low; the increase in population does not give birth to technical progress and innovations; as a result, endogenous institutional structural resistance with enormous inertia comes into being, hindering the realization of the national potential for development.

Brazil China Germany India Japan The Netherlands Switzerland The UK

Fig. 2.3 Changes in per capita food consumption, 1964–1996. Data source FAO (Food and Agriculture Organization), FAO Food Balances Sheets. Rome, 1999

2.4 Differences and Resource Needs for Human Development

19

Fig. 2.4 depicts the factors of economic and institutional structural potential. Generally, the level of human development is relatively high when the proportion of the agricultural population in the total population is lower than 20%, while the level of human development is relatively low when such a proportion exceeds 40%. The relation between per capita carbon emissions and the economic structure is relatively consistent with that between per capita electric power consumption and the economic structure, and both relations feature an exponential curve: y = ceb/x (b > 0). The turning point starts at 20%; per capita electric power consumption and carbon emissions increase at 10%. As indicated, the proportion of the agricultural population in society sheds light on the structure of the population; more importantly, it determines the economic structure and plays the leading role in the institutional framework. If there is an adjustment of such a structure, it is difficult to fully realize the individuals’ rights and interests of development.

2.5 Carbon Emission Needs of Developing Countries The realization of the rights of human development needs to be guaranteed by a certain amount of resource consumption. With population growth and economic and social development, there is an increasing demand for natural resources. With the industrial revolution, human beings burned huge amounts of fossil energy and conducted extensive deforestation and forest destruction, resulting in an increasing carbon dioxide concentration in the air, a gradual breaking of the atmospheric carbon balance, a greenhouse effect and the aggravation of global climate change23 ; moreover, the capacity for atmospheric carbon emissions became an economically scarce resource.24 According to an analysis of the carbon emission scenario in the next 100 years, as carried out by the IPCC in 2000 (see Fig. 2.5), global greenhouse gas emissions will be mostly on the rise and will mainly come from the emission needs of developing countries.

23

The scientificity of climate change remains controversial; for example, based on weather satellite data, S. Fred Singer, former Director of the U.S. Weather Satellite Administration, believed that the evidence concerning climate change was insufficient (see S. Fred Singer, Hot Talk, Cold Science: Global Warming’s Unfinished Debate. The Independent Institute. California, 1997), and the simulation of future weather was also highly uncertain. However, the IPCC’s comprehensive evaluation showed that such a trend existed (see IPCC (Intergovernmental Panel on Climate Change), Synthesis Report on Climate Change. Cambridge: Cambridge University Press) and was becoming increasingly clear (see IPCC, Climate Change 1995; Climate Change 2001. Cambridge: Cambridge University Press). 24 According to the comprehensive evaluation conducted by Hourcade et al. (2001), the marginal abatement cost per ton of carbon in the developed countries exceeded 100 USD; the abatement cost, even in the developing countries, was higher than zero. See J. C. Hourcade, P. Shukla, S. Kvendokk, Regional, National and Global Cost and Benefit of Climate Change Mitigation. In B. Metz, O. Davidson, R. Swart and J. Pan (eds.), Climate Change 2001: Mitigation. Cambridge: Cambridge University Press.

2 A Conceptual Framework and Empirical Data for the Analysis … Proportion of the agricultural population (%)

20

per capita electric power consumption (kWh/person, year)

Human development index (a) Human development level and proportion of the working agricultural population (%)

Proportion of the agricultural population in the total population (%)

per capita CO2 emission (t/year)

(b) per capita carbon emission needs and proportion of the agricultural population in the total population (%)

Proportion of the agricultural population (%) (c) per capita electric power consumption and proportion of the agricultural population in the total population (%)

Fig. 2.4 Relations among the level of human development, the economic institutional structure and energy demand. Data source IEA (International Energy Agency), IEA Key Energy Statistics, Paris, 2000; FAO (Food and Agriculture Organisation), FAO Production Yearbook, Rome, 2000

21

per capita carbon emission (tC/y)

2.5 Carbon Emission Needs of Developing Countries

World OECD Economically transitional countries Asian developing countries Latin America, Middle East and Africa

per capita carbon emissions (tC/y)

Year (a) Trends of change in per capita energy consumption around the world, 1990-2100

World OECD Economically transitional countries Asian developing countries Latin America, Middle East and Africa

Year

(b) Trends of change in per capita carbon emissions around the world, 1990-2100

Fig. 2.5 Trends of change in per capita energy consumption (a) and per capita carbon emissions (b) around the world, 1900–2100. Data source AIB (Globalization and Economic Growth) subscenario data from the Special Report on Emissions Scenarios delivered by the Intergovernmental Panel on Climate Change. See N. Nakicenovic and R. Swart (eds.), Special Report on Emissions Scenarios. Cambridge: Cambridge University Press, 2000, pp. 380–385

Figure 2.5 shows the energy demand and the trends in carbon emissions in major regions around the world. The data in this figure come from the IPCC’s emission sub-scenario AIB,25 presenting a pattern of development driven by economic globalization and economic growth, tallying with the direction in which various countries are making efforts. As shown in this figure, the differences between developed countries and developing countries, whether in per capita energy consumption or in per capita carbon emissions, narrow with time. Per capita energy consumption tends to 25

The Intergovernmental Panel on Climate Change (IPCC) organized experts from various countries to design four scenarios for the pattern of development of the future world: A1, A2, B1 and B2. Scenario A embodies a global line of thought, while Scenario B presents a regional path. Category 1 stresses economic growth, while Category 2 places more emphasis on environmental protection. Thus, four possible future scenarios of development have been envisioned. To avoid any preference or guidance-oriented meaning, these four scenarios are not named but are expressed as A1, A2, B1 and B2. Under A1, three sub-scenarios have been envisaged: AIFI is a high fossil energy consumption scenario; AIT is a technical energy saving and new energy scenario; AIB is a comprehensive scenario. See N. Nakicenovic and R. Swart (eds.), Special Report on Emissions Scenarios. Cambridge: Cambridge University Press, 2001.

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2 A Conceptual Framework and Empirical Data for the Analysis …

be on the rise around the world, but the differences are shrinking. There is a convergence in per capita carbon emissions between developed countries and developing countries. This suggests that, first, human individuals’ needs regarding resources are not limitless. Rational consumption in developed countries leads to a decrease in carbon emissions. Second, the growth of carbon emission needs will mainly come from developing countries. In particular, the IPCC’s emission scenarios represent an analysis conducted according to the trends of economic development, population growth and technical progress by assuming that there is no climate change policy. The trends shown in Fig. 2.5 somewhat agree with the situation of human development potential. Table 2.1 shows a comparative analysis of the carbon emission needs of the countries with low levels of development and with high levels of development in terms of basic subsistence, quality of life, economic and institutional structure, socially apportioned costs and environmental protection needs. The increment in the carbon emission needs of high-income countries is relatively limited, while low-income countries still need a large amount of space for carbon emissions to realize their human development potential. Human development is not unlimited. Likewise, carbon emission needs are also subject to a quantitative restriction. Such restriction is manifested in the following two ways: per capita carbon emission needs tend to be at a relatively low level along with the realization of human development potential; the concentration of atmospheric greenhouse gas has stabilized in response to the restriction on total emissions. For needs involving the potential for human development, per capita emissions entail a process in which low income is accompanied by low carbon emissions, carbon emission needs increase with rising income, and high income comes with low carbon emissions (Fig. 2.6). Figure 2.6a shows the relationship between per capita income and per capita carbon emissions in 1998. Each point in this figure signifies the data concerning a country. As the level of human development was low, the needs for carbon emissions were low; as the level of human development became high, the needs for environmental quality were high, but the needs for carbon emissions were low. This figure demonstrates a typical Environmental Kuznets Curve.26 Per capita 5–8 t carbon dioxide emissions can meet relatively high needs for human development, and most of the developing countries were below this level. Figure 2.6b indicates the relationship between the intensity of carbon emissions (carbon dioxide emissions (kg) from one-USD GDP) and per capita income (purchasing power parity) in various countries in 1998. The intensity of carbon emissions increased and then decreased with rising income, also showing an obvious environmental Kuznets curve. Both per capita carbon emissions and the intensity of carbon emissions started declining when the per capita income was approximately 8000 USD/year. If the international community specifies a limit for atmospheric greenhouse gas concentration on the basis of scientific research, the capacity for atmospheric greenhouse gases would constitute a rigid constraint for human development. Bert Bolin, 26

World Bank, World Development Report. Oxford: Oxford University Press, 1992.

2.5 Carbon Emission Needs of Developing Countries

23

Table 2.1 Comparisons of carbon emission needs between the countries with low levels of development and countries with high levels of development Category of development rights and interests

Contents

Countries with high levels of development

Countries with Carbon emission low levels of needs assessment development

Basic subsistence

Clothing, food, housing (housing area, household appliances, air-conditioning, heating)

It has been basically satisfied

A large gap still exists

Needs will still considerably grow, mainly used in improving subsistence conditions for citizens in the countries with low levels of development

Quality of life

Medical treatment The level has and health, education been relatively and culture, life high expectancy, etc.

The level remains relatively low

Direct emission needs will be relatively low and negligible

Economic and institutional structure

Rational labor employment structure, social security, political and civil rights and interests

It has been basically established and tends to be well improved

The institutional inertia in the traditional agricultural sector hinders the establishment of a rational economic institutional structure

The countries with low levels of development will need to absorb and transform massive traditional and inefficient agricultural labor forces through industrialization, urbanization and legal development, which will certainly result in plenty of carbon emissions

Socially apportioned costs

Post and telecommunications, transportation, communication, roads, flood control and drought relief facilities, tap water and sewage disposal facilities, pollution control facilities, etc.

The system has been well improved; it mainly involves the input relating to maintenance and depreciation

The system has not yet been built or is being built; it mainly involves the input relating to construction

The carbon emission needs involving system maintenance will be relatively low, but that involving system construction will be enormous

(continued)

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2 A Conceptual Framework and Empirical Data for the Analysis …

Table 2.1 (continued) Category of development rights and interests

Contents

Countries with high levels of development

Countries with Carbon emission low levels of needs assessment development

Environmental protection

Pollution control, intensity of carbon emissions, etc.

Pollution has been basically controlled; the intensity of carbon emissions has been relatively low

Pollution is still spreading; the intensity of carbon emissions is relatively high

The countries with high levels of development are expected to see a further decrease in the intensity of carbon emissions, while the countries with low levels of development need to experience a process of increasing and then decreasing the intensity of carbon emissions

per capita carbon dioxide emissions (t/y)

per capita income 1,000 USD (PPP)/year

(a) per capita income and per capita CO2 emissions, 1998

Intensity of carbon emissions (kgCO2/$)

per capita income USD (PPP)/year

(b) per capita income and intensity of carbon emissions, 1998

Fig. 2.6 Relationship between the level of economic development and carbon emissions. Data source IEA (International Energy Agency), IEA Key Energy Statistics. Paris, 2000

2.5 Carbon Emission Needs of Developing Countries

25

former IPCC Chairman,27 analyzed three situations. He believed that it was practically impossible to stabilize at 450 PPM28 since global per capita emissions would decrease from the current 1.1 to 0.5 tC/yr29 in the middle of the twenty-first century. Developing countries would exceed this value within 16–30 years, while the value would decrease to only 2.5 tC/yr in developed countries within 50 years. If it stabilized at 550 PPM, per capita emissions would absolutely not exceed 1.3 tC/yr in developing countries, while developed countries would achieve such a goal in the second half of the twenty-first century. If it stabilized at 750 PPM, per capita emissions higher than 1.35 tC/yr would be absolutely prohibited. The current per capita level was 3.2 tC/yr in developed countries. It was absolutely impossible for developing countries, such as developed countries, to adopt fossil energy to achieve economic development. Given the above analysis, Bert Bolin30 held that, in view of the current economic, infrastructural and technical conditions, fossil energy would remain the main energy necessary for the development of the countries not covered in Annex I31 ; needs and equity served as a strong basis for the developing countries, and the developing countries should be allowed to use fossil energy to move towards their developmental goals.

2.6 Conclusions and Discussions The potential for human development does not necessarily linearly—infinitely— increase with time; instead, such a potential tends to have a constant value under certain technical and economic conditions. Citizens in high-income countries have fully realized the potential for their development, while the human development of citizens in low-income countries has remained at a relatively low level, and there is a very large amount of space for development to realize people’s potential for development. In consideration of the socially apportioned costs, the needs for basic subsistence and transformation of the economic system, it is very likely that the per capita carbon emission needs of citizens in the low-income countries may be higher than the world’s per capita level at a certain period; as the potential of development of citizens in the high-income countries has been almost completely achieved, the

27

Bert Bolin, and Haroon Kheshgi, On Strategies for Reducing GHG Emissions. Proceedings of the National Academy of Sciences, Washington DC. 2001. 28 PPM—parts per million is the unit of concentration, mostly defined by volume. The concentration was 280PPM before the industrial revolution; the current concentration is approximately 360PPM. 29 tC/yr is one ton of coal per year. Note: if the greenhouse gas CO is converted into carbon, the 2 coefficient is 12/48. 30 Bert Bolin and Haroon Kheshgi, On Strategies for Reducing GHG Emissions. Proceedings of the National Academy of Sciences. Washington DC. 2000. 31 They refer to the contracting parties not included in Annex I to the United Nations Framework Convention on Climate Change, and all of them are the developing countries with relatively low carbon emissions. See UNFCCC (http://www.unfccc.int, 2002).

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2 A Conceptual Framework and Empirical Data for the Analysis …

per capita carbon emission needs in the high-income countries may be lower than the level of the world’s per capita. Based on a current series of temporal and cross-sectional data, the per capita income and carbon emission level necessary for meeting the basic needs of citizens in low-income countries are roughly as follows: the proportion of the agricultural labor force in the total employed population is lower than 20%; per capita food consumption is close to 3200 cal/day; per capita income is higher than 8000 USD/year; and per capita carbon emissions is approximately 4–8 t CO2 /year. Restricting the carbon emissions of citizens in low-income countries at the current level would exert an adverse impact on the realization of the development rights and interests of lowincome groups. Due to the spillover effect of technologies, international cooperation helps low-income countries reduce the peak value of per capita carbon emissions and lessen the intensity of carbon emissions to satisfy the basic needs of human development. In international negotiations involving the mitigation of global climate change, considerations should be given to the emission needs of everyone on earth to realize their development rights and interests. Theoretically, this analysis framework for human development constitutes a denial of the developmental theory of neoclassical economics and welfare economics. Human development addresses income and utility, but more importantly, it stresses the potential for the development of social individuals or groups. Some basic indicators concerning human development, such as living consumption, life expectancy, and political and civil rights and interests, are the basic rights of human development and are bound by an explicit upper limit. These indicators cannot be and do not need to be infinitely expanded. However, realizing that this developmental potential is part of human rights is of great practical significance for developing countries. At present, developing countries are, for economic and technical reasons, unable to develop and utilize shared regional or global resources, but the use of certain shared resources is essential for realizing their potential for human development. This is part of the development rights of developing countries. Developing countries must strive to obtain these development rights to prevent developed countries from depriving them of those rights. However, it is necessary to carry out a great deal of research and conduct a quantitative analysis of the potential for human development to promote human development and the sustainable utilization of natural resources.

Chapter 3

Emissions Rights and Their Transferability: Equity Concerns Over Climate Change Mitigation Jiahua Pan

3.1 Introduction Equity is neither the cause of climate change nor the ultimate purpose of climate policies. The real concern is the impact of climate change and policies on equity. As equity has to be assessed against justifiable entitlement by parties and/or individuals involved, rights over the use of atmospheric resources constitute the key to understanding the question. Although all living organisms are entitled to the use of natural resources (see, for example, Taylor, 1986), climate change-related discussion on equity has largely focused on the impact on human welfare, in particular the fairness of resource allocation and burden sharing across nations (e.g., IPCC, 1996; Metz et al., 2001). The terms “justice” and “fairness” can carry different meanings (Albin, 1995), although in most literature, they are often used as synonyms. In general, the former means distributive justice, in a sense of general standard for allocating collective benefits and burdens among the members of a community at the local, national, or global level. In other words, “justice must be constitutive of its framework and not simply an attribute of certain participants’ plan of life” (Sandel, 1982). Principles of justice exist prior to and independent of any phenomenon to be judged.1 Fairness consists of individual perceptions of what is reasonable under circumstances, often in reference to how a principle of justice regarded as pertinent should be applied. Justice therefore can take priority over fairness in decision making with respect to equity concerns. Such a difference appears corresponding to the UNFCCC Article 3 notion of “common but differentiated”.2 1

Rawls (1971) considers that “Justice is the first virtue of social institutions, as truth is of systems of thoughts” (cited in Munasinghe, 2000). 2 In the UNFCCC (United Nations Framework Convention on Climate Change), the phrasing of equity consideration (on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities as given in Article 3) seems to separate the basis of equity and “common and differentiated responsibilities”. However, in the literature, the “common © Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_3

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3 Emissions Rights and Their Transferability: Equity Concerns …

“Common” suggests that stabilisation of atmospheric CO2 concentration is in the interest of everybody. It is accepted as just without considering the judgement of immediate outcome of burdens to individuals. “Differentiated” clearly acknowledges the requirement for a fair share of the costs involved in any actions against global warming, taking into account needs, ability, and responsibilities. However, equity discussion in both the literature and climate negotiations has been largely focused on fairness among nations at the international level. Developing countries collectively have strong political bargaining power in international negotiations to secure their fair share of the atmospheric resources allocated. At this level, equity across nations might be at least agreed upon. The poor in both the rich and the poor countries are, however, largely ignored in the discussion. The cost of climate policies may have a larger impact on the poor in rich countries, and the benefits negotiated at the international level may not reach the poor in developing countries. Clearly, there is a need to address equity concerns within nations, and additional considerations are necessary to protect the poor. It is in this respect that this paper aims to shed some light on the understanding of equity issues regarding emissions rights and their transferability. The paper is organised as follows. In Sect. 3.2, an overview is presented of existing discussions on equity at the international level, indicating a focus on economic implications and fair burden sharing. In Sect. 3.3, the importance of equity within nations is addressed, suggesting the need to include intranational equity concerns in the global framework. Section 3.4 considers the basis for the allocation and transferability of emissions rights. In Sect. 3.5, the relevance of the allocation and transferability of emissions rights to international negotiation is examined in light of securing the need for the poor and seeking efficient allocation of scarce atmospheric resources. Some concluding remarks are drawn in the last section, suggesting the need for more in-depth studies before any policy framework is established.

3.2 International Equity Considerations: Focuses on Economic Implications Across Nations In the literature, attempts have been made to classify or group equity principles from an international perspective. Based on the taxonomy constructed by Toth (1999), Banuri et al. (2001) categorise equity principles in accordance with rights, liability, poverty and opportunity. Poverty and opportunity principles are in essence need and ability-to-pay related requirements, which give heavier weight to the poor and the disadvantaged. In this sense, climate change is seen as an opportunity for the poor. In a similar manner, Rose et al. (1998) distinguish three different types of principles based on:

but differentiated responsibilities and respective capabilities” is often considered as an explanation of the basis of equity.

3.2 International Equity Considerations: Focuses …

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• Fairness in allocation: It focuses on the initial allocation of property rights of greenhouse gas emissions, such as egalitarian, sovereignty, polluter pays, and ability-to-pay principles. • Consequential fairness: This group of principles looks at the outcome in terms of welfare changes caused by emissions reduction efforts, such as the horizontal, vertical, compensation, and utilitarian principles. • Procedural fairness: This category recognises the libertarian, political consensus, and Rawlsian’ maximin as guiding principles to the process of emissions allocation. Evidently, fairness, as considered above, is assessed against political entities at the country level. All allocation schemes address the distribution of emissions rights to individual states rather than people. The consequences of emissions reductions are also compared across nations as input for international bargaining. Procedural equity is no exception, as individuals are not present at international negotiations. The representatives of individual countries may be considered to act on behalf of their country fellowmen, but this may not be the case, as their selection and participation are largely disconnected from their constituencies. As a result, equity concerns in many cases focus on fair resource distribution and/or burden sharing among nations. Table 3.1 presents an overview of shares of selected measures over the world total by a selection of countries or groups of countries. If the shares are to be the basis for Table 3.1 Percentage share of the world total by selected countries /country groups. If these indicators are used as the bases for allocation of the global common resources, their economic implications can vary a great deal Country

Population 1999

Brazil

2.8

China

Size of the Economy (1999)a

Commercial energy use 1997 (toe)

CO2 emissions (1996 MtCO2 )

2.5

1.8

1.2

20.9

3.4

11.8

14.8

1.4

7.1

3.7

3.8

India

16.7

1.5

4.9

4.4

Japan

2.1

14.0

5.5

5.1

Nigeria

2.1

0.1

0.9

0.4

Russia

2.5

1.1

6.3

7.0

4.6

28.6

22.9

23.4

85.1

21.6

50.0

52.7

Germany

USA Developing countries High income World a

14.9

78.4

50.0

47.3

100.0

100.0

100.0

100.0

GDP, measured using official exchange rate Source Based on data from World Bank (2000) Development Report 2000/1

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3 Emissions Rights and Their Transferability: Equity Concerns …

allocation of the atmospheric resources or fair burden sharing, it is quite straightforward which principle or equity argument a country or group of countries would most likely to employ in international negotiations to their own advantages. For the allocation of resources, the developing world would strive for egalitarian or per capita distribution, while the developed world would prefer sovereignty or grand-fathering principles. Countries such as Nigeria, China and India, which are characterised by an unproportionately high share of the world population in comparison to their share of the global economy and energy consumption, would certainly argue for the allocation of emissions rights on a per capita basis and demand for burden sharing according to the ability-to-pay/polluter-pays principle. The United States and Russia, on the other hand, would act in the opposite direction. Brazil, Japan and Germany are somewhat in between, but their preferences are well shown by the figures in the table. Developed countries do not object to the principle of ability-to-pay, but they also demand active participation and the contribution of poorly developing countries. The information in Table 3.1 is not only for equity concerns but also, more importantly, for economic calculations. In the case of any action against climate change, the cost has to be born by certain groups of current society. An understanding of burden sharing can be of vital information for political negotiation. Toth et al. (2001) summarise the numerical results of burden-sharing among geopolitical groups under different equity principles, including sovereignty, egalitarian, ability to pay, etc. Evidently, gainers under one equity principle could be losers under a different principle. For instance, Rose et al. (1998) calculate that Southeast Asia would gain 63.3 billion (US$1990) under egalitarian allocation of emission rights in contrast to a net loss of 2.1 billion using the sovereignty principle (grandfathering). As negotiations are undertaken by participating countries, equity could be addressed at the international level among nations or groups of nations. With strong political bargaining power, the developing world has successfully gained, as stipulated in the Kyoto Protocol, exemption from emissions reduction commitment and resource transfers from the North for energy efficiency in terms of technology and capital, using equity principles related to per capita emissions and income. On the other hand, with a strong backup of economic and technological power, developed nations have also secured flexibility in reaching their emissions reduction targets using arguments related to high economic costs. Among the flexibility mechanisms is emissions trading among nations. Is such an arrangement consistent with intranational equity? If the Kyoto Protocol results from a political compromise on the basis of economic understanding, equity at the international level can be agreed upon for practical interpretation and implementation. Can this arrangement be extended to equity within nations?

3.3 Intra-national Equity Concerns As the focus has been on the Kyoto Protocol after the Second Assessment Report (IPCC, 1996), few analyses have been made on both the procedural and sequential

3.3 Intra-national Equity Concerns

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Table 3.2 Gini Index and distribution of income/consumption in selected developed and developing countries Country

Survey year

Gini index %

% share of income or consumption Lowest 10%

Highest 10%

Brazil

1996

60.0

0.9

47.6

China

1998

40.3

2.4

30.4

Germany

1994

30.0

3.3

23.7

India

1997

37.8

3.5

33.5

Japan

1993

24.9

4.8

21.7

Nigeria

1996/7

50.6

1.6

40.8

Russia

1998

48.7

1.7

38.7

United States

1997

40.8

1.8

30.5

Source World Bank (2000) Development Report 2000/1

equity issues within nations, in particular with respect to developing nations.3 Equity at the national level is a matter of concern but less important for international negotiation. Additionally, domestic reallocation must occur after international distribution is agreed upon. Moreover, equity within one nation is a domestic issue related to sovereignty and therefore sensitive to international intervention. This does not mean that equity within a country is less relevant in climate change. First, equity within one nation is a necessary condition for public support for sound climate policies. For the general public at large, what is more relevant to their own choice is to look at people around them. If there is a large gap between the poor and the rich in income and energy consumption, the poor are unlikely to be persuaded to reduce their consumption without due compensation, just in the same manner between the North and South camps in international negotiations. In the Second Assessment Report of the IPCC, it is acknowledged that “Unless national equity issues are addressed explicitly, it may be impossible to mobilise public opinion for amelioratory action in both developed and developing countries (Banuri et al., 1996). Second, given the existing pattern of inequality in both developed and developing countries (Table 3.2), international equity concerns must be extended to resource allocation and burden sharing within nations. As noted in Sidiqi (1995), the average per capita consumption of energy by low-income households is often only approximately 10% of that of the high-income groups in developing countries, a pattern that parallels the 1:10 ratio of per capita energy consumption between the developed and developing world. If different income groups or regions within one country were well represented in the decision-making regime, it could be likely that the interest of 3

See, for example, Banuri et al (2001) and Toth et al (2001). However, there are a few exceptions. One such example is the paper by Rayner and Malone (2000) who make the link between climate change and intragenerational equity at national level. However, their analysis focuses on the poverty issues viewing the poor as disadvantaged. In another paper, Agarwal and Narain (2000) take a different view considering that the poor could help save the world in case of climate change.

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the poor would be taken into account in climate change actions in a similar manner to that at the international level. Even so, the poor are still disadvantaged, as the rate of participation by the poor is generally low and information is asymmetric. In many cases, the internal bargaining regime may not be functioning. Then, the rich would in general be in a better position to monopolise resources and impose burden-sharing schemes. Should this happen, the poor would not be given the amount of resources proportional to the allocation to the nation as agreed upon at the international level. As a result, the rich would take this opportunity to strengthen their power, and the poor would be further disadvantaged. Third, inequity in the developing world requires particular attention, as the income inequality gap in these nations is in general wider than that in rich countries (see Table 3.2). It might be interesting to note that poor nations with more unequal income distribution at home are more vocal for equity demand at international negotiations. In many developing countries, the Gini index is higher than 0.4. The figure for Brazil is as high as 0.6, with almost half of the national income going to the pocket of the top 10% of its population. Even though the Chinese economy is officially labelled “socialist”, its income inequality is comparable to that of the capitalist United States. In contrast, in most developed nations, particularly those of the European Union, national income is more equally distributed among their people. For instance, in Japan, the ratio of income by the highest 10% over the lowest 10% of its population is 4.5, while that in Brazil is 52.9. Moreover, policies and institutions for income redistribution and social security in developing countries have yet to be established or improved, and climate change-related costs and benefits in these countries could not be distributed fairly across their population. As a result, the rich minority in the poor world may take this opportunity to further marginalise the poorer section of its population. This outcome is clearly incompatible with equity treatment at international levels and may jeopardize the successful implementation of international agreements, as inequality may lead to social instability in these areas. Fourth, regional disparities within a nation can be as wide as among nations in the world. Figure 3.1 shows regional disparities among six regions inside China. Per capita GDP in the northwestern provinces is only half of that in the eastern provinces, but per capita energy consumption is one-fifth higher. Although the income disparity is not as wide as those of waste gaseous emissions and energy consumption, it does not correspond to the other two indicators. If a uniform energy or emissions tax is imposed, the lower income western part of China would be more heavily burdened than in the eastern part of the country. For illustration, let us consider one example. Within one country, the rich may gain control over all the emissions rights allocated at international agreement. If government officials were irresponsible or corrupted, all emissions rights might be sold in the international market for cash into the pocket of a few, leaving no prospect for use by others and in the future. This is an extreme case, but such a case can happen in some developing countries. In a developed nation, it is also possible for the poor to be deprived of their emissions rights as embedded in high energy prices, as they could not afford necessary energy consumption in the market. For instance, the poor may not be given emissions rights for their own disposal. Instead, emissions rights

3.3 Intra-national Equity Concerns

33

Fig. 3.1 Regional disparities of income, energy consumption and waste gaseous emissions from industrial combustion among north, north east, east, central and south, south west and north west parts of China 1998. Note (1) calculation is based on China Statistical Yearbook, 1999; (2) the comparison is made in per capita terms with the national average as 100

are priced in the market for higher energy prices. If the poor find the price too high, they may be unable to consume the necessary energy for heating or even cooking. In summary, the inadequate attention to intranational equity in the literature and climate change policy-making process causes concern over the effectiveness and successful implementation of climate policies agreed upon at the international level. The framework and mechanisms for international equity are already in position, but those for intranational equity concerns are largely in absence. International arrangements for equity considerations such as technology and monetary transfers may actually exacerbate income inequality in the recipient country, as the poor may be excluded from implementation. In the following section, a discussion will be presented on the basis and framework for equity and efficiency in climate change policy making.

3.4 Emissions Rights and Their Transferability If human beings are equally entitled to the use of atmospheric resources, an equal share can be allocated to individuals on a per capita basis in terms of divisible emissions rights. It should be useful, however, to distinguish three types of rights, as the nature of such rights can differ greatly. One is associated with basic necessity rights, such as the right to vote or to live, which are independent of any market transactions. For this type of right, economic implications do not normally take legal weight in decision making in their allocation or reallocation. In a democratic society,

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3 Emissions Rights and Their Transferability: Equity Concerns …

Table 3.3 Marginal abatement costs from modelling exercises (in 1990 US$/tC; 2010 Kyoto target) No Trading Modea

Annex I Trading

Global Trading

147

65

38

157

53

20

500

250

135

86

276

501

247

76

179

402

213

77

27

188

407

357

201

84

22

85

20

122

46

20

5

US

OECD-E

Japan

CANZ

AIM

153

G-Cubed

76

198

234

227

97

MERGE3

264

218

MIT-EPPA

193

MS-MRT

236

SGM WorldScan

Notes 1. Four regions under a no trading case are the USA, OECD Europe (OECD-E), Japan, and Canada, Australia, and New Zealand (CANZ) 2. Model names: AIM: Asian-Pacific Integrated Model (Japan); MERGE: Model for evaluating the regional and global effects of GHG reduction policies (US); SGM: Scenario generator model (IIASA); MS-MRT: Multi-Sector Multi-Region Trade model (US); G-Cubed: Global General Equilibrium Growth Model (Australia); MIT-EPPA: Massachusetts Institute of Technology Emissions Prediction and Policy Analysis (US); WorldScan: World Scenario Analysis (Netherlands) Data source: based on Table 8.7 of Chap. 8 of the IPCC TAR (Metz et al., 2001) a The names of the models are abbreviations or acronyms. For details, see Chap. 2 on emissions scenarios and 8 regional costs and benefits of climate change mitigation of the IPCC Third Assessment Report on Mitigation of Climate Change (Metz et al., 2001)

voting rights are not transferable by law. The amount of statistical value of life does not suggest that one could take the life of somebody if that amount was made in compensation.4 For this type of right, there is no price attached. The second type of rights may be partially tradable. Examples include land and regulated products. Only property rights in the case of land acquisition, for example, are traded but not collective or, more correctly, political sovereignty rights over the resource. Among the regulated goods are drugs and weaponry. There is a price tag for each item of partially tradable goods, but political sovereignty or the regulation authority is with the state, not with the market. The third type is related to ordinary consumption/capital goods. Once one pays, he gains the ownership. Once one sells, he receives monetary compensation, but he also gives up his rights over the goods. The attractiveness of tradability regarding different types of rights, apart from any political considerations, lies in its cost-saving potential for compliance with emissions reduction targets (see Table 3.3). Because of the wide differences in marginal abatement costs among countries, emissions trading could lead to an overall reduction in cost. However, this does not seem to be sufficient to justify the full tradability of all categories of emissions rights. The difficulty in reaching an agreement under the Kyoto Protocol proves how serious the parties look at emissions rights or the assigned amounts. In fact, the flexibility mechanisms under the Kyoto Protocol imply a distinction of the nature and tradability of emissions rights among them. Emissions 4

However, the statistical value of life can be estimated collectively for policy analysis such as the benefit for pollution control. See Hourcade et al. (2001).

3.4 Emissions Rights and Their Transferability

35

trading among Annex B countries treats emissions rights as ordinary tradable goods in the market. Under joint implementation, some political complications are involved, requiring political entities for approval and verification, while the implementation of the clean development mechanism demands official approval and certification for the acquisition of certified emission reductions without actually giving up corresponding emissions rights in the host countries. The message or decision in the Kyoto Protocol is that emissions rights are tradable but subject to certain requirements. It might be a matter of judgement to which category emissions rights over atmospheric resources go. If it was a basic necessity right, everybody should be born with it, and it is not transferable. This might be true, as every human being born on earth would need atmospheric resources for his/her survival in the form of consumption of a certain amount of energy and emission of a certain amount of greenhouse gases (GHGs). Any overuse or abuse of such rights is wrong and should be corrected at any expense. However, some wrong doing may be by accident, while others may be intentional. A car accident results in casualties. If it is by intention, that constitutes a crime. However, if that is a genuine accident, the loss of life might be settled by ways of compensation. Clearly, historical and current high levels of GHG emissions by the rich North are not the result of any intention to cause global warming by purpose. Therefore, compensation should be acceptable. In the meantime, it should be noted that such compensation could not be arranged before hand, and it is not for the sake of economic benefit to somebody. On the other hand, the wrong doing by the rich North does not provide an excuse for the poor South for their wrong doing in the future. The poor in the South do not have the right to abuse atmospheric resources, as scientific knowledge is there; therefore, abuse should be judged as intentional. Model names: AIM: Asian-Pacific Integrated Model (Japan); MERGE: Model for evaluating the regional and global effects of GHG reduction policies (US); SGM: Scenario generator model (IIASA); MS-MRT: Multi-Sector Multi-Region Trade model (US); G-Cubed: Global General Equilibrium Growth Model (Australia); MIT-EPPA: Massachusetts Institute of Technology Emissions Prediction and Policy Analysis (US); WorldScan: World Scenario Analysis (Netherlands). Data source: based on Table 8.7 of Chap. 8 of the IPCC TAR (Metz et al., 2001). If emissions rights are in the second category, then it is tradable but subject to collective or political restrictions. As defined in this paper, sovereignty rights are part of individual rights as contributions to a community or a political entity such as a state for use and decision making collectively or politically. This means that there are two characteristics of sovereignty rights: commercial and political. Political control over sovereignty rights over emissions can restrict the sale of such rights to noncitizens, sell such rights to another state for political or economic reasons, and be kept under state ownership or owned by individuals similar to land rights. In this sense, sovereignty rights over emissions are very similar to state control over the use of land. The commercial component would suggest that emissions rights could also be sold completely in the market as an ordinary good, as in history, land was sold for money between countries. Like many other natural resources, the rights over the use of atmospheric resources can also be regarded as a free capital/consumption good. In this case, no restriction

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3 Emissions Rights and Their Transferability: Equity Concerns …

would be imposed on its trading. Emissions rights would have a price equal to their marginal benefit to the buyers or users. In this way, efficient reallocation of such emissions rights would be possible regardless of the initial allocation. As shown in Table 3.3, the marginal cost in Japan is generally the highest in the modeling results, and the marginal costs in OECD countries are higher than those in nonOECD countries. Market exchange of emissions rights between countries or users with different marginal costs could reduce the overall cost of emissions reductions. The major equity concern for this type of unlimited trading is, however, the possible accumulation and concentration of emissions rights to those who are affordable to buy. There might exist a possibility under free trading that, in the end, the poor would be deprived of their rights even if they were allocated the same amounts as the rich at the beginning. To prevent this from happening, emissions rights may be separated into different categories. Basic necessity rights are associated with the satisfaction of the basic needs of individuals. They should not be transferable and should not be manipulated by political processes. They should be assessed and allocated independent of any economic considerations. No market transaction of this part of emissions rights should be allowed. The assessment of such needs would consider the energy requirements for cooking, food, clothing, and essential heating in harsh winter conditions. Any use of consumption that is in excess of the basic needs may be considered inessential. In case a resource is available, a higher or even a luxurious living standard does not constitute a crime or wrong doing. In theory, everybody may be entitled to enjoy that some luxury should resources be available. However, as this part of resource use is not a necessity for survival, it should be tradable in the market for efficiency.

3.5 Relevance of Allocation and Transferability of Emissions Rights in Climate Policy Making and International Negotiations The global atmosphere is a common and scarce resource. Equity concerns related to climate change or its mitigation do not provide any justification for the redistribution of global income, but there is a problem of allocation of scarce natural resources that were once free and considered unlimited. In international negotiations and national climate policy making, the allocation of emissions rights is an important equity issue, but their reallocation after initial distribution conveys even more important implications for equity at both national and international levels. In international negotiations, the notion of fairness across nations can be misleading, as the focus is largely on economic impacts on individual countries. This is because the ultimate purpose of equity principles is for the improvement of individual human beings rather than a country as a political entity. After comparing a variety of initial allocation schemes, Mueller (2001) demonstrates that equal per

3.5 Relevance of Allocation and Transferability …

37

capita distribution appears just based on a one-man-one-vote system. Under the existing institutional framework, it is unlikely that the one-country-one-vote system will be changed, but the stake of the poor in each country should also be taken into account in international negotiations and agreements that would affect everyone on earth. One basic issue in climate change equity concern is to what extent government representatives are authorised to negotiate emissions rights? As specified in this paper, emissions rights comprise distinct legal components for the use of atmospheric resources. Only the contributions by individuals to the state as collective or political sovereignty part of emissions rights are at the disposal by the government for political or economic manipulation at international negotiations. If the government takes control of the part that should be allocated in the market, inefficiency would result in welfare losses. The basic necessity part of emissions rights should not be taken away from the individuals. There appears to be a tendency for the state as a political entity to squeeze and take over both the market and basic necessity parts of emissions rights. Another policy issue concerning equity is the transferability of emissions rights. There is no doubt that the inessential part of the emissions rights allocated to individuals is tradable. This part of emissions may actually be left to the market without being distributed specifically to individual human beings. Collective emissions rights can also be tradable should the government consider the trade beneficial to the state. However, care should be taken in the transfer of this part, as regional disparities within one country may complicate the issue. Energy-intensive industries may be concentrated in one part of the country, and more emissions rights would be required for normal production (see Fig. 3.1 for example). A third issue is related to the possible excess “emissions” allocated to the poor in accordance with the per capita criterion. As the current emissions by people in the developing world are much lower than the world average, the basic necessity part may not be fully consumed due to low levels of living standards. The calculation of basic necessity emissions is based on the demand for a decent life standard. People in poverty do not require that amount of emissions. This part in principle is not transferable, but the poor may wish to trade part of it for poverty alleviation. In particular, the policy relevance here is that an increase in energy efficiency may reduce emissions while improving the level of living conditions. However, this increase in efficiency can take place through the exchange of emissions rights for technology or capital. This suggests that the basic necessity emissions rights might be used for welfare improvement for the poor. In the short run, both the rich and the poor would benefit from emissions trading. However, in the long run, the development goal in developing countries should not be restricted to the subsistence level and should have an opportunity for a decent life. Given the above consideration, the basic necessity part of emissions rights should not be taken away for good because of trading in the policy framework. Table 3.4 summarises the policy implications of the allocation and transferability of emissions rights. The exact share of each part of emissions rights is subject to assessment by scientific and policy-making communities and industries. In the case

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Table 3.4 Emissions rights and their transferability Nature of emissions rights

Assessment

Transferability

Policy framework

Basic necessity emissions rights by individuals

Basic needs for survival with respect to food, cooking, clothing, shelter, essential heating and air conditioning in extreme conditions

Correction of overuse/ abuse of rights in the North; no repetition of wrong doing by the South; No trading of such rights; cost-effective correction and avoidance of wrong doing in an affordable manner

Transfer of part of the unused rights from the South to the North during a transitional period in exchange of technology and financial resource transfers

Individual rights but collectively managed in the name of state sovereignty and/or under state regulation

Claim of state sovereignty over part or all of the entitlements from a political, economic or strategic perspectives by political entities

Tradability subject to political negotiation for both strategic and economic considerations of the political entity (state). Market may be created under political arrangement and supervision

Creation of bubbles and alliances for international trading for mutual political and/or economic interest

Non-basic necessity emissions by individuals or groups of individuals

Similar to any other consumption goods, in particular luxurious consumption goods

Fully tradable, efficiency through market reallocation of entitlements

Free market operations under “Market justice”

of basic necessity emissions, the purpose is recognition of the consumption of energy for a decent living standard. Equity consideration would reject the idea of emissions trading, but well coordinated transfer of emissions rights would help those in developed countries to lower their cost for reducing their emissions. Collective rights can be tradable, but the policy framework brings political and economic interests to the parties concerned. The inessential part of the emissions rights is additional to the first two categories and should be fully transferable in the marketplace. While the consideration of the transferability of emissions rights might be largely related to equity principles, the policy framework is mainly connected to the practical fairness of burden sharing. For long-term stability and sustainability, the acknowledgement of individual emissions rights may help discourage the wrong and encourage the right. Furthermore, recognition of individual emissions rights does not prevent the principle of burden sharing from functioning. We may first assess and quantify the emissions rights of individuals and then establish a policy framework for cost minimising while adhering to equity principles. The widely cited egalitarian approach of contraction and convergence proposed by the Global Commons Institute (1997) may be considered one of the possible policy frameworks aimed at correcting wrong doing in a fair burden sharing manner by allowing a transitional period for the

3.5 Relevance of Allocation and Transferability …

39

contraction of emissions from the North and convergence of the South to the equal per capita entitlement.5 In this way, intranational equity concerns can be well fitted into the policy framework at both international and national levels.

3.6 Conclusions The equity argument in the context of global climate change may be in practice a demand for unequal treatment in accordance with the interest of individual nations or political entities. The way of thinking appears to be heavily biased to and driven by self-interest. The nations that ask for per capita allocation of emissions rights for the sake of equity are those in many cases with a record of the most unequal income distribution and a lack of social security and basic human rights. Political compromise for equity considerations across nations, however, does not guarantee that the poor in both developed and developing countries would benefit from international equity agreements. Clearly, the debate on international equity has yet to be extended to the intranational level. The poor in both rich and poor countries should receive priority consideration in addressing equity concerns. Not all emissions rights are transferable or tradable. If emissions are associated with basic necessity consumption, no money-for-right trade should be allowed. However, this type of emissions constitutes only part of the emissions rights if allocated on a per capita basis. Part of the individual emissions rights may be subject to state sovereignty or regulation for collective or political purposes. These emissions rights are transferable but subject to political intervention by the state. In addition to necessity and collective rights, some of the emissions rights can be linked to inessential or luxurious consumption. Free trade should be allowed, and efficient allocation should be possible after their initial allocation. While the second category of emissions rights is subject to political manoeuvres, the third type is likely to lead to a concentration of entitlement through the market. In either case, equity principle could be undermined. An important issue remains unsolved: the proportion of emission rights to basic necessity, collective/state control, and inessential/luxurious consumption. Current negotiation and discussion on equity, as shown in the Kyoto process, tend to concentrate on the second part while ignoring or squeezing the first and third parts. Unlimited free trading of emissions rights is likely to result in their concentration in the rich parts of the world while depriving the opportunities of the poor in the South. Similarly, too large a share given to the basic necessity part would lead to waste of scarce resources. There may exist some objective quantification of the basic necessity part,

5

In a strict sense, the acknowledgement of the higher or overuse of the atmospheric resources by the North is more related to the acquired than the born entitlement as there is no indication that the poor South was subsidizing the rich North for their correction of wrong doing. However, this may still be considered at least “partial justice” (see Schokkaert and Eyckmans, 1999).

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3 Emissions Rights and Their Transferability: Equity Concerns …

but the exact share by each of these three parts may be more complex. Further examination in quantitative terms would represent an interesting case for study to gain a better understanding of the issue.

References Agarwal, A., & Narain, S. (2000). How poor nations can help to save the world. In M. Munasinghe & R. Swart (Eds), Climate change and its linkages with development, equity, and sustainability. Proceedings of the IPCC Expert Meeting held in Colombo, Sri Lanka, 27–29 April 1999. LIFE/RIVM/World Bank, pp. 191–214. Albin, C. (1995). Rethinking justice and fairness: The case of acid rain emission reduction. International Affairs, 21(2), 119–143. Banuri, T., Goran-Maler, K., Grubb, M., Jacobson, H. K., & Yamin, F. (1996). Equity and social considerations. In J. P. Bruce, H. Lee, & E.F. Haites (Eds.), Climate Change 1995: Economic and social dimensions of climate change. Contribution of working group III to the second assessment report of the intergovernmental panel on climate change. Cambridge University Press, pp. 83–124. Banuri, T., Weyant, J., Akumu, G., Najam, A., Rosa, L-P., Rayner, S., Sachs, W., Sharma, R., & Yohe, G. (2001). Setting the stage: Climate change and sustainable development. In B. Metz, O. Davidson, R. Swart, & J. Pan (Eds.), Climate Change 2001: mitigation. Cambridge University Press. Global Commons Institute. (1997). Contraction and convergence: A global solution to a global problem. Global Commons Institute. Houghton, J., Ding, Y., & Griggs, D. (Eds.). (2001). Climate change 2001: The scientific basis. Cambridge University Press. Hourcade, J-C., Shukla, P., Cifuentes, L., Davis, D., Fisher, B., Golub, A., Hohmeyer, O., Krupnick, A., Kverndokk, S., Loulou, R., Richels, R., Fortin, E., Seginovic, H., & Yamaji, K. (2001). Global, regional and national costs and ancillary benefits of mitigation. In B. Metz, O. Davidson, R. Swart, & J. Pan (Eds.), Climate Change 2001: Mitigation. Cambridge University Press. IPCC (Intergovernmental Panel on Climate Change). (1996). Climate Change 1995: Economic and social dimensions of climate change. Contribution of Working Group III to the Second Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press. IPCC. (2000). Special report on emissions scenarios. Cambridge University Press. Metz, B., Davidson, O., Swart, R., & Pan, J. (Eds.). (2001). Climate Change 2001: Mitigation. Cambridge University Press. Mueller, B. (2001). Fair compromise in a morally complex world. Paper presented at the Pew Conference on Equity and Global Climate Change. Washington DC, 17–18 April, 2001. http:// www.pewclimate.org/events/ Munasinghe, M. (2000). Development, equity and sustainability in the context of climate change. In M. Munasinghe & R. Swart (Eds.), Climate change and its linkages with development, equity, and sustainability. Proceedings of the IPCC Expert Meeting held in Colombo, Sri Lanka, 27–29 April 1999. LIFE/RIVM/World Bank. Rayner, S., & Malone, E. L. (2000). Climate change, poverty, and intragenerational equity at national level. In M. Munasinghe & R. Swart (Eds.), Climate change and its linkages with development, equity, and sustainability. Proceedings of the IPCC Expert Meeting held in Colombo, Sri Lanka, 27–29 April 1999. LIFE/RIVM/World Bank. Rawls, J. (1971). A theory of justice. Harvard University Press. Rose, A., Stevens, B., Edmonds, J., & Wise, M. (1998). International equity and differentiation in global warming policy: An application to tradable emission permits. Environmental and Resource Economic, 12(1), 25–51. Sandel, M. J. (1982). Liberalism and the limits of justice. Cambridge University Press.

References

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Schokkaert, E., & Eyckmans, J. (1999). Greenhouse negotiations and the mirage of partial justice. In M. H. Dore & T. D. Mount (Eds.), Global environmental economics: Equity and the limits to markets (pp. 193–217). Blackwell Publishers. Sidiqi, T. A. (1995). Energy inequities within developing countries: An important concern in global environmental change debate. Global Environmental Change, 5, 447–454. Statistical Bureau of China. (1999). China Statistical Yearbook. China Statistics Press. Taylor, P. W. (1986). Respect for nature: A theory of environmental ethics. Princeton University Press. Toth, F. (Ed.). (1999). Fair weather? Equity concerns in climate change. Earthscan. Toth, F., Mwandosya, M., Carraro, C., Christensen, J., Edmonds, J., Gay-Garcia, C., Lee, H., MeyerAbich, K., Nikitina, E., Rahman, A., Richels, R., Ye, R., Wake, Y., & Weyant, J. (2001). Decision making frameworks. In B. Metz, O. Davidson, R. Swart, & J. Pan (Eds.), Climate Change 2001: mitigation. Cambridge University Press. UNFCCC (United Nations Framework Convention on Climate Change). (1998). Framework convention on climate change. Bonn. UNFCCC. (1998). Kyoto protocol. Bonn World Bank. (2000). World Development Report, 2000/1. Oxford University Press.

Chapter 4

China’s Balance of Emissions Embodied in Trade: Approaches to Measurement and Allocating International Responsibility Jiahua Pan, Jonathan Phillips, and Ying Chen

4.1 Introduction Thirty years after its ‘opening and reform’, China earned its reputation as the ‘factory of the world’. China’s rise to become, according to some reports,1 the largest single emitter of greenhouse gases is closely linked to its economic growth, particularly the export sector that has driven this growth. Export volumes accounted for 40% of GDP in 2006, with the majority consisting of intermediate or consumption goods destined for developed countries’ markets. Under current Kyoto Protocol accounting rules, the emissions associated with these exports are fully attributable to China since they took place within its territory. As China and other developing exporters watch their emissions increase rapidly relative to the OECD countries, they are beginning to question why they are criticized for such rising emissions by the very consumers whose market demands they are supplying. In addition to their historic responsibility for cumulative emissions, a central question for a post-Kyoto framework is whether developed countries should take responsibility for a portion of current emissions from developing exporters such as China. This is an argument that was raised by senior Chinese officials at the Bali conference in December 2007.2 This paper makes three contributions to our understanding of the role of Chinese trade in the response to climate change. First, it estimates the scale of emissions embodied in China’s current trade pattern, demonstrating the magnitude of the differ-

1

Netherlands Environmental Assessment Agency (2007); see also IEA (2007). The issue was first raised on 4 June 2007 by Ma Kai, Director of the National Development and Reform Commission, at a press conference on China’s National Programme on Climate Change. It was reiterated at the Bali conference by his deputy, Xie Zhenhua, the head of the Chinese delegation to the 13th Conference of Parties to the United Nations Framework Convention on Climate Change (UN FCCC) Serving as the 3rd Meeting of the Parties to the Kyoto Protocol (COP13/MOP3).

2

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_4

43

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4 China’s Balance of Emissions Embodied in Trade …

ence between emissions accounts based on production rather than consumption. In doing so, it extends the range of country studies carried out (for example, Machado et al. (2001) on Brazil and Mukhopadhyay (2004) on India) and complements international comparative studies (Ahmad & Wyckoff, 2003; Ward, 2005). We show that China was a net exporter of 1660 mt of carbon dioxide (CO2 ) in 2006, a figure that is growing rapidly. These emissions are incurred to support consumption elsewhere, but establishing specific counterfactuals is difficult since production patterns and energy intensities are endogenous to historical development trajectories. However, for illustration, directly transferring responsibility for emissions from producer to consumer would have raised US CO2 emissions by 2.6% in 2002. Second, the paper improves on the methodologies used in previous studies of China, including Wang and Watson (2007), Shui and Harriss (2006), and Li et al. (2007), by taking into account the total energy intensity in upstream production and changes in energy intensity over time. This illustrates that a reliable consumptionbased accounting methodology is feasible and could improve our understanding of emissions responsibility in a post-Kyoto framework. Third, it assesses the economic factors, national policies, and international frameworks that explain the current pattern of emissions in trade. While producers’ locational decisions have been influenced by Chinese policies such as a depressed exchange rate and export tax rebates, we argue that complementary policies of deindustrialization in developed countries, trade liberalization, and the failure to harmonize international climate-change policy have also contributed to the emissions surplus. These considerations lead us to conclude that if Chinese production has merely substituted for production in developed countries, recent emissions reductions in developed countries may lack credibility. Reported Kyoto emissions performance may be a poor guide to the sacrifices that countries are making and the actual environmental impact of their consumption activities. Attributing full responsibility to China (and other developing countries) for historical emissions surpluses may then be unfair according to some normative criteria. Furthermore, the current Kyoto production methodology does not create appropriate incentives for global decarbonization but permits extensive leakages through trade. Consequently, as the distribution of abatement efforts comes to the fore in post-Kyoto negotiations, we stress that close attention should be given to emissions embodied in trade if future methodologies are to be simultaneously equitable and able to provide effective abatement incentives. Section 4.1 summarizes alternative emissions accounting methodologies and provides a framework for understanding the multiple effects of an expansion of trade on emissions. Section 4.2 estimates the emissions embodied in Chinese trade and national emissions on an alternative (consumption accounting) basis. Our methodology and results are also contrasted with previous studies. Section 4.3 discusses how we might efficiently and equitably reassign responsibility for these emissions, evaluating the merits of a consumption basis for emissions accounting.

4.2 Accounting for Greenhouse-Gas Emissions

45

4.2 Accounting for Greenhouse-Gas Emissions (i)

Trade and emissions

There are many links between international trade and emissions, including direct effects from transportation and more subtle links from foreign investment and ownership. In this paper, we focus only on the emissions embodied in traded goods themselves. The expansion of international trade has led to a significant divergence between the incidence of production and consumption. Just as countries with a balance-of-trade surplus export more than they import, countries run a surplus on the balance of emissions embodied in trade (BEET), where the emissions involved in producing the goods they consume (including those produced abroad) are less than the emissions from domestic production. However, there are a number of differences between trade in goods and in emissions. First, the two do not always coincide—a country running a trade deficit could nevertheless have an emissions surplus if its exports embodied more CO2 per unit of value than its imports. Second, there are equilibrating forces at work in goods markets to ensure countries cannot remain net goods importers or exporters in the long run (even if recent experience suggests imbalances can be prolonged and large). In contrast, these adjustments are impotent in the emissions trade, as there are no international mechanisms to enforce the settlement of ‘loaned’ emissions. Additionally, intertemporal balancing of trade accounts does not imply balancing of emissions accounts since technological advances imply that future production will be less carbon intensive. Therefore, a country may be a net emissions importer without ever having to be a net emissions exporter.3 Third, while there are well-developed accounting systems for valuing the level of trade, measuring the emissions embodied in goods along a global value chain is still a nascent discipline. (ii)

The components of different emissions accounting bases

If trade in emissions does not coincide with trade in goods, it is important to understand how traded emissions can be estimated. Figure 4.1 illustrates the components of emissions embodied in trading relationships. On a production basis—the prevailing Kyoto methodology—emissions are attributed to countries on the basis of territory; all emissions from China’s domestic production, labelled Y, are included. Domestic production includes goods exported for foreign consumption, X, and the emissions associated with their production are the emissions embodied in exports. Symmetrically, imported goods M C , although consumed domestically, embody emissions from production processes that take place abroad. In evaluating emissions on a consumption basis, we mean the emissions embodied in the complete production process of goods consumed by an entity, regardless of the geographical location of production. As Fig. 4.1 illustrates, in moving from the production to the consumption account, it is therefore necessary to subtract emissions 3

Since an emissions deficit in one country is a surplus for another country, this cannot imply a reduction in global emissions, but does affect the distribution between countries.

46

4 China’s Balance of Emissions Embodied in Trade …

Japan

USA China

Fig. 4.1 Components of emissions embodied in trading relationships

embodied in exports and attribute them to recipient countries (in this example, the USA, as the largest export partner) while adding emissions embodied in imports (in this example, Japan, as the largest import partner). The principal complication illustrated in Fig. 4.1 is that some imports, M X , may be inputs to domestic production of goods that are subsequently exported. We describe this as the ‘processing trade’ and attribute the emissions embodied in these imports (and any additional emissions embodied in their processing for export) to the country consuming the final exports (the USA in this case). Hence, imports for consumption must be included in the consumption account, but imports for the processing trade must be excluded. When dealing with many sectors of the economy, the estimation of both accounting bases must combine data from input–output tables with emissions-intensity data. We explain the measures algebraically below. In goods terms, the output vector Y i of any sector i can either be used as an input to another sector j, forming the matrix Y ij , or, for final use, forming the vector Z i , which includes consumption, investment, and exports. The final use of all goods, excluding imports, is then represented by Z. This allows us to write sectoral domestic output as   Y the vector Yi = nj=1 Yi j + Z i = nj=1 ai j · Yi + Z i where the matrix ai j = Yiij is the direct use coefficient. The Leontief Matrix, A, of aij represents the economy-wide production function. Total domestic output is then given by the scalar Y = (I − A)−1 Z, where (I − A)−1 is the Leontief inverse matrix.4 We define the direct unit emissions intensity of production processes within a sector as the vector Si = EYii (where E i represents aggregate sectoral emissions). The Leontief inverse matrix can then be used to construct the total unit emissions 4

I represents the identity matrix.

4.2 Accounting for Greenhouse-Gas Emissions

47

intensity vector Sˆ = S · (I − A)−1 , taking into account embodied emissions in the upstream value chain. On a production basis, emissions are measured as E P = Sˆ · Z: total emissions intensity per unit of output multiplied by output for final use. Note that E P includes emissions from production for exports but excludes emissions embodied in imports. There are two complications in extending  this  model to the consumption n G accounting basis. First, goods exports X = 1 1 X ig and imports M = n  G 5 1 1 Mig for each sector i are assessed over G countries. The gross emissions ˆ However, to obtain an estiembodied in exports are given by the scalar E X = S·X. mate of the exported emissions from domestic production, it would be necessary to subtract imported goods that make up the processing trade. This would be achieved using the import coefficient matrix N i = M i / (Z i + M i − X i ) to obtain the vector Sˆ (= S · (I − (I − N) A)−1 , which we term the total domestic unit emissions intensity. Thus, our estimate of exported emissions from domestic production would be the scalar E X’ = (X · Sˆ  ). However, in the absence of sectoral-level data on the breakdown between imports used for the processing trade and the proportion of export value that this accounts for, we use the gross measure E X . While this is a limitation of the analysis, inducing overestimation of exported emissions, the magnitude of the error is limited by the concentration of exports in sectors such as textiles that are only partially dependent on the processing trade. Additionally, the bias is counteracted by the re-importation of some goods into China, which may be incorporated incorporated at foreign rather than Chinese emissions intensities. Second, since imports arrive from many countries with varying emissions intensities of an accurate estimate of imported emissions would be the scalar  production, Mˆ = 1G n1 Sig · Mig . However, sectoral-level emissions-intensity data for every trade partner are not readily available. Some studies of ecological footprints, for example Li et al. (2007), have made the simplifying ‘import substitution’ assumption that the emissions intensity  of foreign production is equivalent to domestic production, such that Mˆ ∗ = n1 Si · Mi . This approach fails to capture potentially important national differences in both the energy intensity of foreign production and the carbon intensity of energy consumption. The compromise we adopt here is to assume that the national average  emissions intensity is representative of that country’s exported goods, so Mˆ  = 1G Sg · Mg . Imported emissions are then repre

sented by the scalar E M  = M  · S . The limitation of this approach is that bilateral trade is often concentrated in particular sectors, which may be more or less intensive than the national average. Specialization according to comparative advantage would reduce the risks of divergence, but in practice, such specialization is incomplete. Drawing these arguments together, emissions measured on a consumption basis can be expressed as the scalar E C = E P − E X + E M’ . The difference between the production and consumption estimates, the scalar E B = E P − E C , represents the BEET.6 This is our estimate of emissions that take place in Chinese territory but are 5 6

Note that M here includes all imports, whether for domestic consumption or the processing trade. See Muradian et al. (2002).

48

4 China’s Balance of Emissions Embodied in Trade …

not attributable to Chinese consumption. Equivalently, it is a measure of emissions attributable to foreign consumption. (iii)

Decomposing changes in the BEET

Whether a country has a BEET in deficit or surplus depends on whether the goods it consumes embody more or less emissions than the goods it produces. To understand the economic causes of any imbalance, we extend Copeland and Taylor’s (1994) decomposition of changes in production emissions to more than one polluting sector. p Produced emissions by sector are represented by the vector E 1 = Sˆi · Z i ,and both vectors S i and Z i can be rewritten to reflect economy-wide values   by the  weighted p Sˆi ˆ share of the sector in emissions, sˆ i , and output, zi , such that E i = S · Sˆ · Z · ZZi =   Sˆ · sˆi ·(Z · z i ). We rewrite sˆ i ·zi = d i , which is the weighted average share of output of a sector, where the weights are the relative emissions of the sector. The vector di serves as an index of the concentration of the economy in relatively emissionsp intensive or low-emissions activities. Then, E i = Sˆ · di · Z for a sector, and E p ˆ = S · d · Z for the economy. This can be approximated in differential form as E p =  Sˆ + d + Z . This shows that a change in production emissions can be decomposed into (i) a technique effect from changes in the emissions intensity of production; (ii) a composition effect, reflecting the share of ‘dirty’ versus ‘clean’ sectors in total output; and (iii) a scale effect from the growth or contraction of the economy. Each effect assumes that all other factors are held constant; for instance, if emissions intensity and the size of the economy are stable, production emissions may still increase if ‘dirty’ sectors—those that have higher emissions intensities than average—are expanding, while ‘clean’ sectors are contracting. The same decomposition can be applied to consumption emissions. The three components remain, but their interpretation now refers to changes in the technique, composition, and scale of consumed goods. We argue, therefore, that BEET will evolve to reflect the differences between production and consumption in a country along these three effects. (i)

(ii)

(iii)

Technique effects: Progress made in reducing emissions intensity in domestic industries may differ from other countries. A rise in BEET may therefore reflect faster technical progress in abatement by import partners relative to domestic production. Composition effects: If domestic production is shifting towards emissionsintensive sectors, while consumption goods maintain a relatively stable emissions intensity, BEET will grow. Trade facilitates this decoupling of production and consumption, and comparative advantage suggests that specialization is likely to push an economy towards concentration in particular sectors that may be above or below the emissions intensity of consumption. Scale effects: The BEET will be growing where the scale of production is increasing faster than the scale of consumption. This situation represents a growing balance-of-trade surplus. Therefore, while trade imbalances in the

4.2 Accounting for Greenhouse-Gas Emissions

49

goods and emissions contexts need not coincide, a trade surplus in goods makes it more likely that a country will have a surplus BEET. A surplus BEET must be offset by a deficit elsewhere, and the above effects therefore describe the distribution of emissions between countries. However, the literature has also identified potential reasons for aggregate changes in emissions arising from trade. First, if trade shifts out the global production possibility frontier, the increased economic activity may have a ‘global scale effect’, boosting both production and emissions. Offsetting this expansion of emissions, there may be an income effect that increases the demand for low-emissions production. This depends on an endogenous policy response and the turning point of the relationship, labelled the Environmental Kuznets Curve (EKC), which varies significantly between countries and pollutants and depends on the ‘deep’ determinants of trade, such as factor endowments and distance between markets (Brock & Taylor, 2004). Second, composition effects need not be zero-sum, while trade could lead to specialization by one country in emissions-intensive production, it could also allow each country to specialize in the goods it produces most efficiently. As Hayami and Nakamura (2002) found for trade between Japan and Canada, ‘global composition effects’ may reduce both countries’ emissions, with Japan exporting manufactured goods it produces at very low energy intensity and Canada exporting energy-intensive products using energy from hydroelectric power with a very low carbon intensity. Such efficiency gains are more likely where emissions are appropriately and universally priced so that specialization takes into account a country’s carbon efficiency. Where there are asymmetries between countries’ environmental policies, the ‘pollution haven effect’ may arise. In this case, the location of dirty industries is determined by lax environmental policy and not just comparative advantage. Not only could this concentrate dirty industry in particular countries and increase their BEET, it could also produce an aggregate increase in emissions by undermining the global composition effect. In practice, variation in labour costs, political risk, and the stage of industrialization (Pan, 2008) are likely to have overwhelming influences on locational decisions, but we merely wish to argue that trade plays an ambiguous role in shaping both the distribution and total level of emissions, particularly where environmental policies are not harmonized. Third, trade facilitates the diffusion of technology that can produce a ‘global technique effect’ as best practices diffuse and may even spur greater technological progress. The net impact of these effects is ambiguous; free trade is neither inherently good nor bad for the environment, and changes in a country’s BEET depend on patterns of trade that are shaped by comparative advantage and national economic policies.

50

4 China’s Balance of Emissions Embodied in Trade …

Table 4.1 Selected energy-intensity measures by sectors in China, 2002 Direct energy intensity Total energy intensity (tce/10,000 yuan) (tce/10,000 yuan) Farming, forestry, animal husbandry, fishery

0.23

Manufacture of textiles

0.33

0.80 1.54

Extraction of petroleum and natural gas

1.38

1.90

Smelting and pressing of ferrous metals

1.71

3.45

Raw chemical material and chemical products 1.38

3.07

Electronics and communications equipment

1.17

0.06

Average energy intensity in all 43 sectors

0.42

1.08

Average energy intensity in 37 traded sectors

0.57

1.13

4.3 China’s Emissions Embodied in Trade (i)

Data sources

The key data for estimating China’s emissions using an input–output methodology are the input–output tables of China in 2002 (NBS, 2006). We use energy consumption data from the China Statistical Yearbooks (NBS, various years) and carbon intensity data from the International Energy Agency (IEA) and the World Resources Institute (WRI). In the absence of comprehensive data on energy sources, we assume that the carbon intensity of energy use for exports is the same as for domestic production and the same across sectors. Data on trade in goods are sourced from UN Commodity Trade Statistics. Matching data sources required the classification of 122 sectors in the input–output tables and the Standard International Trade Classification (SITC) into the 37 traded sectors in the energy consumption statistics. (ii)

Energy-intensity calculations

Following the methodology in Sect. 4.1, Table 4.1 details the direct (S) and total ˆ energy intensities for a selection of sectors and across the economy in 2002, the (S) same year for which we have comprehensive input–output tables. This illustrates the increase from direct to total energy intensity as upstream activities’ embodied energy is included. The differences vary by sector, with primary-sector activities, such as the extraction of petroleum, showing little variation and downstream sectors with long production chains, such as electronics and communications equipment, showing much greater variation. The national average energy intensity derived by this method across all 43 sectors is 1.08 tons of coal equivalent (tce)/10,000 yuan RMB, which is identical to official estimates.7 Reflecting the higher energy intensity of traded sectors over nontraded services, the average energy intensity in the 37 traded sectors is 1.13 tce/10,000 yuan. 7

China Statistical Yearbook 2006 (NBS, various years). Note that there are nevertheless sectoral differences between our estimates and reported figures because we estimate intensity per unit of final demand while official statistics are based on unit of value added.

4.3 China’s Emissions Embodied in Trade

51

Table 4.2 Emissions embodied in exports, 2002 Export volumes (%: sector value of exports/total exports)

Emissions embodied in exports (%: sector total emissions/total export emissions)

17.41

13.41

1.02

2.32

Electronics and communications equipment

11.80

12.52

Raw chemical material and chemical products

3.53

7.13

Manufacture of textiles Smelting and pressing of ferrous metals

Our assumption that the carbon intensity of energy use is the same across all sectors means that the same pattern characterizes carbon intensity. The value for Chinese carbon intensity per unit of energy we adopt is the 2002 figure of 2.13 tonnes of CO2 per tonne of coal equivalent.8 This figure and all the estimates we present are based on CO2 emissions alone and not a broader measure of greenhouse gases. (iii)

Emissions embodied in exports

Calculating the emissions embodied in exports is simply a case of combining the total emissions intensity with the value of exports in each sector. Here, for consistency with the input–output tables, we provide the estimates only for 2002; time-series estimates are discussed in Sect. 4.2 (v). In 2002, China’s exports totalled $326 billion, embodied energy of 410 mtce, and embodied emissions of 880 mt CO2 (million tonnes of CO2 ). Domestic energy embodied in exports therefore amounts to approximately 28% of total Chinese primary energy consumption and exported emissions approximately 24% of production emissions. Table 4.2 shows the sectoral share of exports in volume and total emissions. As expected, emissions-intensive sectors, such as raw chemical materials, are responsible for a larger proportion of emissions embodied in exports than their share in the value of exports. High-value but low-emissions sectors, such as electronics and communications equipment, are responsible for a smaller proportion of exported emissions. Interestingly, this sector has even less responsibility when imports are removed, reflecting the importance of the processing trade to cleaner sectors. ‘Dirty’ sectors, such as smelting and pressing ferrous metals, rely predominantly on domestic inputs of raw materials. The top ten recipients of these exported emissions, who account for over 70% of total exports, are listed in Table 4.3. In most cases, embodied emissions correspond closely to export volumes. However, minor differences can arise owing to the 8

This conversion rate is based on CAIT (Climate Analysis Indicators Tool, an information and analysis tool on global climate change developed by the WRI, cait.wri.org). The conversion factor between toe and tce is approximately 1:1.43.

52

4 China’s Balance of Emissions Embodied in Trade …

Table 4.3 Recipients of exported emissions, 2002 Recipient

Chinese export volumes (%: country value of exports/total exports)

Emissions embodied in Chinese exports (%: country total emissions/total export emissions)

USA

21.49

20.64

HK (SAR)

17.96

17.81

Japan

14.88

14.12

4.76

4.97

South Korea Germany

3.49

3.41

Netherlands

2.80

2.82

UK

2.48

2.50

Australia

1.41

1.44

Canada

1.32

1.33

Russia

1.08

0.95

71.66

70.00

Total for top 10

structure of a country’s imports; South Korea’s imports of approximately 4.97% of exported emissions are higher than its share of export volumes because it receives approximately 16.9% of Chinese exports of emissions-intensive nonferrous metals. The USA is the largest importer of both Chinese goods and emissions, closely followed by Hong Kong SAR (Special Administrative Region), although in the latter case, one would expect the vast majority of goods to be re-exported.9 This illustrates the importance of adopting a global approach to any assessment of trade in emissions, since if these re-exports from Hong Kong were destined for consumption in the USA, then the energy ultimately embodied in Sino-US trade would be even greater than the estimate made here. (iv)

Emissions embodied in imports

It is straightforward to calculate imported emissions according to the simplistic import-substitution approach, where the energy intensity of imports is assumed to be the energy intensity of domestic production. Our estimate on this basis of 440 mtce of imported embodied energy is slightly higher than the exported value of 410 mtce, suggesting that China is a net importer of embodied energy. We illustrate below that simply by accounting for differences in the average energy intensity of trade partners, this story is dramatically reversed. Estimates of total energy intensity in each import partner are taken from primary energy intensity per unit of GDP.10 We examine the top 32 import partners (those 9

Hong Kong operates an independent trading system, but since April 2003 has been a party to the UN Framework Convention on Climate Change (FCCC) as a part of China. 10 We attribute this energy intensity to the full value of imported goods, assuming away any role for the processing trade in the country of origin. These linkages are hard to trace for single-country studies, but would emerge naturally from a comprehensive study that combined the input–output tables of all countries.

4.3 China’s Emissions Embodied in Trade

53

Table 4.4 Imported goods, energy, and emissions, 2002 Imports volume (%)

Energy embodied in imports (%)

Emissions embodied in imports (%)

Japan

18.11

5.27

5.28

Taiwan, China

12.89

10.74

11.52

9.67

9.08

8.62

South Korea USA

8.98

5.43

5.82

Germany

5.92

2.80

2.93

China (reimport)

5.07

11.49

14.21

HK (SAR)

3.62

0.92

0.90

Malaysia

3.15

4.61

4.51

Russia

2.85

16.26

15.78

Indonesia Total for top 10

1.52

3.62

2.97

71.78

70.22

72.54

exporting over $1 billion to China in 2001), which account for 93.4% of the total imported value. Assuming that these 32 partners also accounted for 93.4% of imported energy and emissions, we infer that the total energy embodied in imports is approximately 170 mtce. On the basis of emissions embodied in traded goods, China is then a net energy exporter of 240 mtce. Total imported emissions are estimated at 257 mt CO2 . Table 4.4 illustrates the share of import volumes, energy, and emissions for the top ten import partners. The degree of variation is striking compared to the export partners. One cause is the greater diversity in emissions intensity for import partners, while all exported energy is produced at the same (Chinese) emissions intensity. Additionally, as theories of comparative advantage and specialization suggest, it is likely that while the structure of Chinese exports is relatively constant across export partners, the structure of its imports and hence their emissions content is likely to vary much more sharply. Accordingly, while Japan is the largest import partner by volume, the energy and emissions embodied in its goods represent a much smaller share of imports owing to both the relatively ‘clean’ nature of the imported goods and the relatively low emissions intensity with which these were produced. In contrast, Russia accounts for less than 3% of the value of imports, but the concentration of these in raw materials and the high emissions intensity of their production make it the largest source of imported energy and emissions.

54

4 China’s Balance of Emissions Embodied in Trade …

Table 4.5 China’s balances of trade with key partners, 2002

(v)

Balance of trade in: Goods ($ billion)

Embodied energy (mtce)

Embodied emissions (mt CO2 )

Australia

−1.26

3.31

7.86

Russia

−4.88

−25.69

−32.35

Canada

0.67

3.21

9.05

HK (SAR)

47.8

70.90

153.10

South Korea

−13.04

5.11

21.13

UK

4.72

9.46

20.63

Netherlands

7.54

10.95

23.90

Japan

−5.03

48.94

109.65

Germany

−6.09

9.16

22.19

USA

43.48

75.24

165.14

Total

31.01

241.74

623.02

The balance of trade in emissions

It was noted earlier that the import-substitution approach implies that China is a net importer of energy. However, subtracting our methodology’s estimate of imported energy of 170 mtce from the exported estimate of 410 mtce suggests that China is a net exporter of some 240 mtce of energy, approximately 16% of its total energy consumption. The same is true of the balance of emissions: subtracting total imported emissions of 257 mt CO2 from total exported emissions of 880 mt CO2 suggests that China was a net exporter of approximately 623 mt CO2 , approximately 19% of its production emissions in 2002. Net exports to the USA alone account for 165.1 mt CO2 , approximately 5% of China’s reported production emissions in 2002. Attributing these emissions to the USA would have increased US emissions by 2.6% in 2002. Table 4.5 illustrates the geographical distribution of these flows of goods, energy, and emissions. In all but one case, China is running an energy and emissions surplus. With Russia, its deficit reflects the import of high emissions-intensity raw materials and the export of comparatively ‘cleaner’ goods at lower emissions intensity. (vi)

The balance of trade in emissions over time

Input–output tables are estimated only every 5 years, so to conduct a time-series analysis, we assume that changes in national energy intensity apply equally to all sectors. It is also necessary to make adjustments for exchange-rate movements over time, although this is simplified by the pegging of the yuan against the dollar until 2005. The methodology for assessing imports is unchanged when looking at the time-series data. Figure 4.2 illustrates the balance of trade in goods, embodied energy, and emissions (BEET) between 2001 and 2006. All are in surplus and rising rapidly, with emissions trends closely tracking changes in embodied energy.

55

net export (billion US$) net embodied energy export (Mtce) net embodied emissions export (MtCO2)

Emissions (MtCO2)

Goods (billion US$) and energy (Mtce)

4.3 China’s Emissions Embodied in Trade

Fig. 4.2 China’s balances of trade

To a large extent, growth in exports has driven both the trade surplus and associated energy and emissions surpluses. In 2006, exports reached $969 billion, a 27% increase in the previous year, while imports stood at $792 billion, a 20% increase in 2005. The share of exports in GDP grew from 24.4% in 2001 to approximately 40% in 2007. However, the BEET rose substantially in 2001–4 when the trade balance was stable, which leads us to believe that composition and technique effects, rather than just scale effects, are important. (vii)

Emissions on a consumption basis

In this section, we compare China’s emissions on a production basis and a consumption basis. The current Kyoto figures reflect the production basis and are obtained from the World Resources Institute and estimates for 2005/6 from the Netherlands Environmental Assessment Agency. Our methodology allows us to estimate emissions on a consumption basis by subtracting the BEET, E C = E P − E B .11 The results are displayed in Fig. 4.3. For 2006, produced emissions were approximately 5500 mt CO2 . Subtracting the 1660 mt CO2 BEET surplus implies consumption emissions of 3840 mt CO2 , some 30% lower.12 Just as importantly, the difference has grown over time, suggesting that if we are even partially interested in consumption measures of emissions responsibility, the production accounting method is becoming increasingly misleading. From 2001 to 2006, production emissions increased from 3050 to 5500 mt CO2 , indicating that 47% of the growth in production emissions between 11

As noted earlier, there are many components to a consumption account, of which the emissions embodied in trade estimated here are only one. Others include transportation and tourism. 12 According to WRI CAIT, the emission factor in 2006 is 0.86 tC/toe, larger than the figure of 0.83 tC/toe in 2002. Using WRI emissions factor, total emission of CO2 from fossil-fuel combustion is estimated at 5500 mt CO2 , which is lower than figure 6200 mt given in the study by the Netherlands Environmental Assessment Agency (2007). Please note our figure does not include emission from industrial processes, such as cement production and methane.

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Emissions (MtCO2)

Fig. 4.3 China’s emissions on different accounting bases

consumption emissions

production emissions

2001 and 2006 was due to the increase in BEET, with the remaining 53% reflecting increased levels of Chinese consumption. (viii)

Comparison with other estimates

Wang and Watson (2007) conducted a similar analysis and estimated the net export of emissions from China in 2004 at approximately 1109 mt CO2 , above our estimate of 748 mt CO2 . This is surprising, since Wang and Watson only undertook an analysis of direct energy intensity in traded goods, rather than the total energy intensity (including upstream inputs) considered here. Ahmad and Wyckoff’s (2003) comparative study estimated China’s trade emissions surplus at approximately 12% of production emissions in 1995. Given the growth in export volumes since that time, our estimate of 19% in 2001 and 30% in 2006 is not inconsistent with this estimate. The study incorporated detailed data, including Chinese input–output tables and country-specific emissions-intensity figures. However, its time-series estimates assumed unchanged energy technologies. Shui and Harriss (2006) focused on USA–China trade. Their methodology adjusts for national differences in the fuel mix of energy production but assumes that the energy intensity of Chinese production is the same as that in the USA, omitting the influence of different technology levels. Given that Chinese energy intensities are, in practice, higher, we would expect this method to provide underestimates. However, they estimate gross exports to the USA at 449 mt CO2 in 2002, which is much larger than our own estimate of 167 mt CO2 . The principal reason is that the authors use a purchasing power parity (PPP) adjustment to capture the fact that ‘the same dollar value of a US product and a Chinese export in the same/similar category can represent different quantities of merchandise produced in each country’. Therefore, the use of PPP exchange rates goes some way to capture the higher energy use per traded dollar of output in China—simply because more goods must be produced in China for $1 m worth of exports than for $1 m worth of US production. Adjustment is necessary because US energy intensity is clearly a poor proxy for Chinese energy intensity under a very different industrial structure. However, it is a blunt adjustment since PPP measures capture differences in the prices of nontradable inputs, which need not be directly related to differences in energy used to produce a particular dollar

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value of exports. Our use of direct energy-intensity figures is therefore preferable and avoids the need for (notoriously unreliable) PPP adjustments. Li et al. (2007) provide results that contradict our own, suggesting that China has consistently been a net importer of embodied energy since 2000. While their data rely on earlier input–output figures, since 1997, and they assume constant energy intensity across time, the crucial difference is the adoption of the import-substitution approach to assess the energy intensity of imports. The approach is chosen because the authors’ objective is to assess the ecological footprint of China and the impact of trade on energy use rather than to quantify real energy flows. (ix)

Decomposing changes in the BEET

In Sect. 4.1, we showed that changes in the BEET can be decomposed into scale, composition, and technique effects. Scale effects are unambiguous. Chinese nominal GDP grew at an average annual rate of 13.7% p.a.—10% in real terms—between 2001 and 2006. Therefore, it is not surprising that both production and consumption emissions show an upward trend. Moreover, BEET has risen because production growth has outpaced consumption growth. This is directly reflected in the growing balance-of-trade surplus, which rose from $22 billion in 2001 to $177 billion in 2006. For 2007, there was a further jump to $262 billion, 48% higher than that in the previous year. Composition effects are harder to detect, but the data suggest that there has been a gradual change in the sectoral composition of exports, most strikingly away from textile and clothing, which made up 22.69% of exports in 1998 and only 13% in 2006, towards electronics and communications, which has risen from 6.05% of exports in 1998 to 12.76% in 2006. Given the greater energy intensity of textile manufacturing, this is significant. However, in the most intensive sectors, such as ferrous metals, there has been a gradual increase in exports, from 2 to 4%, which has offset this trend. Rosen and Houser (2007) document an economy-wide shift from light to heavy industry. We are not aware of any estimates of composition effects arising from emerging consumerism, although Rosen and Houser note that any trend towards carbon-intensive activities, such as vehicle ownership, is extremely recent and limited to wealthier coastal provinces. Technique effects are assessed at the national level, and it is apparent that energy efficiency has contributed significantly to a reduction in energy-intensity figures. IEA data show that world total primary energy supply per unit of GDP has only decreased slightly from 0.365 kgoe/$US (kg of oil equivalent, 2000 prices) in 1990 to 0.315 kgoe/$US in 2005, while for China the fall has been from 1.941 kgoe/$US in 1990 to 0.908 kgoe/$US in 2005.13 Had it not outpaced world efficiency improvements, China’s BEET would have been even higher. However, more recently, the trends may have become adverse. China’s energy intensity has, in fact, risen from $0.844 kgoe/$US in 2002, while world trends have been stable. Garnaut et al. (2008, this issue) revise IEA projections upwards on the basis that this trend is likely to 13

If purchasing power parity (PPP) is used, the figures for China would be close to world averages. For example, in 2005 the world average was 0.209 kgoe/$US PPP and 0.219 kgoe/$US PPP.

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persist. Moreover, the carbon intensity of energy use has been rising, from 3.03 t CO2 per tonne of oil equivalent (toe) in 2000 to 3.23 t CO2 /toe in 2004.14 As Garnaut et al. explain, this reflects a growing reliance on coal-fired electricity generation and could have placed the BEET on an upward trajectory. (x)

Has Chinese trade caused an aggregate increase in emissions?

Our estimate of the growth of consumption emissions illustrates that, even abstracting from its export role, China’s rapid economic growth has not been decoupled from CO2 emissions. There is no evidence that China is anywhere near the downwardsloping part of the EKC. However, a ‘global scale effect’ is unclear because the counterfactual of Chinese growth in the absence of trade cannot be assessed. There is some evidence of a global composition effect having increased aggregate emissions. The pure relocation of production from developed countries to China has increased emissions because Chinese heavy industry has, in static terms, a 20– 40% higher energy intensity than its OECD counterparts (Wan, 2006). Accordingly, Shui and Harriss (2006) find that emissions avoided in the USA owing to imported Chinese goods were 314 mt CO2 in 2002, while China incurred significantly higher emissions of 449 mt CO2 in the process of exporting to the USA. Therefore, even if only a fraction of industry relocates, carbon leakage to higher-intensity production locations may rapidly cancel out any reductions achieved in developed countries. Finally, the evidence does not permit us to separate a ‘global technique effect’ from domestic efficiency improvements. We have seen that global efficiency gains have been limited in recent years, but it is plausible that the gains have been concentrated in countries such as China. A formal evaluation of aggregate effects is more difficult because (i) it is unclear how to specify the relevant counterfactual and (ii) we do not know whether China could have raised living standards so sharply without opening to trade. If China had never undertaken its ‘opening and reform’, production may have been substituted either in developed countries, affecting both the mix of goods produced and national emissions intensity, or in other developing countries with potentially higher emissions intensities. In short, the scale, composition, and techniques of the world economy have all been endogenous to China’s trade openness, making an assessment of its aggregate emissions impact difficult and uninformative. What is of interest is how we determine responsibility for emissions given the pattern of trade that has emerged.

4.4 Allocating Responsibility for Emissions (i)

Responsibility for the existing pattern of emissions

The current international framework attributes responsibility for emissions to China on a production basis. However, China is not yet required to make binding emissions 14

WRI CAIT.

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reductions, and an alternative accounting basis could still be adopted in any postKyoto agreement. Given our decomposition of the various effects that have created a BEET surplus, the causes can be traced to the unique role that China has claimed in global trade. China has grown rapidly on the basis of a comparative advantage in relatively emissions-intensive goods consistent with its self-image as the ‘factory of the world’. Garnaut et al. (2008) anticipate, contrary to the assumptions the IEA has made in its forecasts, further restructuring towards heavy industry in line with China’s exceptionally high levels of investment. In turn, this role has been shaped by national and international policies. At the international level, the absence of any global carbon-pricing framework has permitted trade patterns to develop without regard to environmental comparative advantage. Since appropriate carbon pricing would have encouraged a shift of production to countries with lower emissions intensities, current trade patterns are partly a reflection of global coordination failures. In contrast, the liberalization of international trade has been a comparatively successful endeavour. Copeland and Taylor (2003) distinguish the ‘pollution haven effect’, owing to changes in environmental regulation, from the ‘pollution haven hypothesis’ that trade liberalization encourages relocation to places where production is dirtier. They find little evidence to support the ‘pollution haven hypothesis’. However, trade liberalization could also affect the emissions pattern through the more potent force of comparative advantage. Grether et al. (2006) find evidence of significant changes in the pollution content of imports owing to differences in factor endowments, although they do not assess CO2 emissions. This supports our argument that changes in the location of production can have strong distributional impacts on emissions and may even affect aggregate emissions. However, the promotion of free trade has been a partnership between developed and developing countries, with developed countries sharing benefits directly through higher levels of consumption. The problem has not been trade per se, but emissions related to trade have evolved autonomously from the negotiated Kyoto process. A slightly more compelling argument is that China’s national policies have artificially boosted its heavy industry and that it should therefore be responsible for the resulting emissions. Rosen and Houser (2007) lay the blame on microeconomic policies, including the granting of tax rebates; ‘the abnormalities in costs and capital flows that have promoted energy intensive industry in China have altered the global distribution of production’ (Rosen & Houser, 2007, p. 35). The economic and environmental stresses of these policies have encouraged the government to repeal to them. Since 2004, the government has taken extensive steps to reduce or eliminate these rebates. From July 2007, the tax rebate was specifically lifted from 553 energy- and pollution-intensive goods.15 Perhaps most significantly, the artificial depression of the Chinese exchange rate has been explicitly motivated by the desire to encourage export-based growth. However, our analysis suggests that, in all these cases, responsibility for the resulting emissions need not automatically transfer to China. 15

Based on the Shanghai Securities Daily, 22 June 2007.

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Our decomposition of effects from trade underlines the complexity. To focus on bilateral trade with the USA, if the depressed exchange rate has attracted exporting industries and increased the scale of China’s economy or shifted its composition towards dirtier goods, then there would be a corresponding decrease in the scale of US production and a shift in its composition towards cleaner goods. The relocation of production is still meeting the same US consumer demand, and the counterfactual would have been the same pattern of consumption but with emissions produced in the USA.16 However, if relocation to China creates additional emissions relative to what would have occurred under US production, China may still bear some responsibility. The lower energy efficiency of Chinese industry may have created a global composition effect by replicating US production at higher emissions intensities. Any boost to aggregate economic activity may also have produced a global scale effect that has increased emissions. However, relocation may at the same time have improved the efficiency of the Chinese industry through a global technique effect, with potential spillovers to other sectors, even if this trend has recently slowed. Estimating these effects is difficult, but it may be possible to isolate a global composition effect using our data. Consider the net export of $43 billion of goods, 53 mtce of energy, and 167 mt CO2 of emissions from China to the USA in 2002. If the same energy had been used in the USA at its domestic carbon intensity, emissions would have been 133 mt CO2 . If the same goods had been produced in the USA at its domestic energy intensity, emissions would have been 25 mt CO2 . Therefore, while the bulk of net exported emissions are attributable to more carbon-intensive and more energy-intensive Chinese production, some emissions would have been unavoidable.17 While such an analysis is not a good basis on which to attribute responsibility—since the counterfactual is open to dispute and many other effects are omitted—it highlights the significant role that carbon leakage could play in boosting the emissions embodied in trade. It is not only China’s policies that have affected the pattern of emissions. At the same time, as China has ‘pulled’ production within its own borders, Helm et al. (2007) argue that developed countries have ‘pushed’ dirty production abroad by undertaking complementary policies of deindustrialization. The UK’s success in meeting its Kyoto targets and sustaining high levels of consumption have been premised on the possibility of displacing the production of dirty goods to developing countries such as China. Low savings and budget deficits in the USA have also contributed to a sustained trade deficit; just as the USA is consuming beyond its current income, it is consuming beyond its Kyoto footprint in emissions terms. In general, as part of a complex but rapid process of globalization, developed countries have been willing

16

Of course, we are abstracting from transportation emissions which necessarily rise when production is relocated abroad. 17 The exercise is only a hypothetical one; in practice, had the USA produced these goods the structure of its economy would be altered and its energy intensity would be endogenous to the alternative pattern of trade and industrial structure.

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partners in the relocation of production and the growth of China’s BEET, and they may even have benefited from ‘abatement through trade’. These arguments question the credibility of emissions reductions achieved by developed countries. On the one hand, if reductions have been premised on emissions increases in developing countries as industry has relocated, using the production account to allocate the burden of future emissions reductions may be unfair because ‘easy’ reductions have already been achieved by developed countries. One of the dimensions of equity referred to by Ashton and Wang (2003) is ‘comparability of effort’ and seems to rule out precisely this scenario in an equitable climate-change response. Additionally, developing countries may be unable to follow the same strategy when binding reductions are required; locked into their emissions-intensive comparative advantage, abatement may be disproportionately costly. On the other hand, the ability of developed countries to live outside of their carbon budgets by consuming emissions beyond their produced emissions implies that consumption has yet to be decoupled from emissions. Since there is not necessarily an equilibrating force in the BEET, the distributional transfer embodied in the BEET may dwarf offsetting financial transfers, such as the clean development mechanism (CDM). A related argument is made by Copeland and Taylor (2003), who emphasize that the EKC evidenced in developed countries might be an artefact of their encouraging dirty industry to relocate rather than of domestic abatement efforts. If this is the case, ‘even if an EKC exists for rich countries, the newly industrializing countries may not replicate the experience’ (Copeland and Taylor, 2003, p. 22); dirty industry must be located somewhere, and if it is located in developing countries, then eventual abatement investments will place a much larger burden on their economies. In the context of a global public bad, such as climate change, it is difficult to see how an equitable response can be created in the presence of such a fallacy of composition. (ii)

Responsibility for future emissions

While there is a strong case for giving at least some weight to a consumption basis when assessing historic emissions, accounting bases will have a more important role in shaping our ability to make future reductions. Especially as the cost of abatement rises, the scope for reducing emissions will depend not on their geographical location but on tackling their economic causes. Allocating responsibility to producers or consumers directly affects the incentives for emissions reductions, the distribution of this burden, and its political feasibility. Incentives and opportunities for abatement A major advantage of the consumption basis is that it avoids international spillovers arising from trade, including both carbon leakage and ‘abatement through trade’. To the extent that these have diluted environmental policy by displacing rather than reducing emissions, consumption accounts can help replace the pollution haven effect with a positive global composition effect that encourages carbon- and energy-efficient production in each country, just as it has between Japan and Canada. Additionally, as Peters and Hertwich (2008) stress, a consumption basis would solve allocation

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problems for international transportation, for which no one is currently responsible, and carbon capture and storage. However, the value of attributing emissions to producers is that they are physically in control of emissions production and have the most information about feasible abatement opportunities. Just as in the management of risk, responsibility is usually best placed with the agent most able to control the outcome. A consumer basis would leave countries responsible for emissions at all points in a potentially long global value chain but with no direct control over abatement. Indirect forms of consumer choice can be effective; just as individuals can choose between similar goods on the basis of both price and quality, countries can source their imports from countries with both low prices and low emissions. Indeed, Peters and Hertwich argue that this generates an intrinsic incentive for countries to transfer technology to their import partners, enhancing CDM. Nevertheless, a natural policy counterpart to consumption accounts is the delegation of emissions responsibility to individual consumers in the form of personal carbon budgets (Pan, 2008). The conditions for this to be effective are stringent, with consumers requiring information on the emissions embodied in imported goods if they are to discriminate between foreign producers. Distribution of burden We have shown that China’s emissions in 2006 would be 30% less if measured by consumption. Even in 1995, Ahmad and Wyckoff (2003) concluded that OECD countries’ emissions on a consumption basis were 550 mt CO2 greater than on a production basis. We have argued that beyond the historic responsibility for emissions that developed countries bear, they may be responsible for a significant proportion of current emissions at present attributed to developing countries such as China. A proliferation of equity concepts makes it difficult to assess what a fair distribution of the burden would require. However, our analysis is not independent of these concepts; for example, proposals for a regime of ‘contraction and convergence’ could have very different implications depending on whether per capita emissions are assessed on a consumption or a production basis. Footloose global production will cause these indicators to continue to diverge. When the moment comes for China to make binding emissions reductions, the accounting basis used should be consistent with the economic role it plays in the global economy. If China continues to run both a balance-of-trade and a BEET surplus, its role in supporting consumption in developed countries while postponing its own consumption suggests that it would be unfairly penalized by using a production methodology. As Ashton and Wang (2003) stress, ‘there are equity grounds for the proposition that those who receive the benefits from the emissions (or “embedded carbon”) associated with the production of such goods should carry the cost’. This would be particularly important if current failures in the international environmental architecture reinforced the specialization of certain countries in emissions-intensive sectors; if countries are locked into these trade patterns, a shift to more ‘efficient’ international policies could entail high and concentrated burdens. These arguments question the sovereignty sometimes attributed to the ‘polluter pays principle’. This principle has become more popular due to its simplicity and

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advocacy properties than its economic rationale. In a discussion of equity issues related to climate change, Ashton and Wang (2003) use the specific example of trade in carbon-intensive goods to stress the ambiguity of the principle. Where benefits and damage are spread widely and in complex chains of economic causation, an individual ‘polluter’ cannot be determined merely by the location of emissions release. Of course, in theory, it is possible to separate out the allocation of emissions responsibility from the financing of abatement efforts. Transfers of technology and finance are likely to play a role in any post-Kyoto agreement; what our analysis shows is that if a production-based methodology is retained, these transfers would have to play a much larger role to compensate for the increased burden that developing countries such as China will face. Political feasibility A political barrier to consumption accounts is that countries would become liable for the dirty production techniques of their import partners, and switching options may be limited or costly. Set against this, however, Peters and Hertwich note that the consumption approach would address competitiveness concerns, which have been a major barrier to previous international agreements. While the precise effects depend on the method of implementation, if UK consumers were required to make their consumption choices taking into account embodied emissions, UK firms would no longer be penalized than French or Chinese firms, whose goods the consumer can choose between. Indeed, this system creates a competitiveness boost for developed countries since emissions intensities are usually lower and domestic production inevitably minimizes transportation emissions. In this way, environmental performance would become an element of a country’s comparative advantage. One issue in the competitiveness debate has been the value of border tariff adjustments to supplement domestic carbon pricing. By extending national responsibility for emissions up the value chain, a consumption method- ology provides a more natural basis for countries to impose such adjustments on countries that fail to implement robust carbon pricing.18 Tariff adjustments may even help overcome the practical difficulties in exercising control over foreign abatement noted earlier. Consumption accounting is also likely to enhance the scope to bring developing countries into an effective post-Kyoto framework. According to the IEA, China’s production emissions will constitute 30% of global emissions increases until 2030.19 However, even on a production basis, per capita emissions are likely to remain below OECD averages, so participation by developing countries will need every encouragement.20 A consumption methodology would both extend developed countries’ control

18

However, the legality of border tariff adjustments remains unclear. See Deal (2008) for a summary. IEA World Energy Outlook 2006, Summary, p. 3. 20 Standard per capita emissions measures are undertaken on a production basis and so fail fully to reflect equality in emissions consumption that they usually aim to express. For example, with a population of 1.3 billion, our analysis suggests that Chinese consumption emissions per capita would be 3.5 t CO2 in 2006, compared to 4.8 t CO2 on a produced-emissions basis. 19

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over emissions growth beyond their own borders and allow developing countries to grow into their responsibilities as their consumption rises. A persistent challenge is perceived to be the difficulty of measuring emissions on a consumption basis. We have demonstrated that by using readily available input–output tables and emissions-intensity data, an informative estimate can be produced. Many other national studies are now accumulating, including of India, Brazil, Australia, Vietnam, Thailand, South Korea, Spain, Japan, Finland, Norway, and Italy.21 Crucially, there are increasing returns to the approach, since sectoral emissions intensities estimated for one country can be used to classify more accurately the emissions embodied in imports received by all other countries. While there are challenges, these are no longer insurmountable and, operating in parallel with production accounts, the improved understanding of emission flows would contribute greatly to our understanding of the drivers of emissions increases and the political economy of emissions reductions. Even if full consumption accounts proved intractable, estimating the BEET might facilitate adjustments to emissions accounts to reflect emissions-trade imbalances, mimicking the equilibrating forces present in the goods trade.

4.5 Conclusion Estimating China’s emissions on a consumption rather than a production basis both lowers its responsibility for CO2 emissions in 2006 from 5500 to 3840 mt CO2 and reduces the growth rate of emissions from an average of 12.5 to 8.7% p.a. between 2001 and 2006. Emissions growth from China’s transition to a consumer society has therefore been significantly slower than real income growth rates of 10%. China’s role as a net exporter of goods has made it responsible under the Kyoto protocol for a large volume of emissions—1660 mt CO2 —which support consumption abroad, primarily in developed countries. Conversely, developed countries’ emissions have been lower than if they had continued to produce these goods domestically; for the USA, 2002 emissions would have been 2.6% higher. The magnitude of these differences is large and rising because (i) China runs a large and growing balance of trade surplus; (ii) China has a comparative advantage in relatively energy-intensive production (although contradictory trends in low-emissions electronics and high-emissions raw materials may alter this); and (iii) China’s emissions intensity of production remains high, with efficiency improvements stalling since 2001. By taking into account the total energy intensity in upstream production and changes in energy intensity over time, our analysis shows that consumption accounts are both feasible and informative. A limitation of our approach, and an appropriate 21

Lenzen (1998), Machado et al. (2001), Straumann (2003), Mukhopadhyay (2004), SánchezChóliz and Duarte (2004), Chung (2005), Mongelli et al. (2006), Nguyen and Keiichi (2006), Limmeechokchai and Suksuntornsiri (2007), and Maenpaa and Siikavirta (2007).

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starting point for further research, is that the role of the processing trade is not fully accounted for, and the bias may increase as global production becomes increasingly fragmented. Our analysis is also informative for the energy market. In contrast to the findings of other studies and to popular perceptions, when the energy embodied in traded goods is taken into account, China is a net exporter of energy. This suggests that a more subtle interpretation of China’s impact on commodity prices is required, since its energy hunger has been as much to meet global demand as for domestic consumption. Nonetheless, a plateau in energy intensity reductions will make controlling energy use a long-term challenge. While appropriate counterfactuals are difficult to specify, it is possible that China’s unique role in global trade has boosted global emissions. However, this has been tightly bound up in the relocation of dirty industry away from developed countries. China’s depressed exchange rate and export tax rebates may have played some role in attracting industry, although these policies have recently been diluted. At the same time, policies of deindustrialization in developed countries have pushed dirty industries abroad, while a lack of international coordination has failed to price emissions efficiency into an industry’s locational decisions. Therefore, while China may hold some responsibility for the additional emissions that its production has generated, the bulk of its emissions from trade have merely substituted for developed countries’ production and supported their consumption. By allocating the full BEET to China’s emissions account, the Kyoto Protocol fails to reflect the complexities of global trade and these distributional concerns. Indeed, reported Kyoto emissions performance may be a poor guide to the sacrifices that countries are making and the actual environmental impact of their consumption activities. In this issue, Garnaut et al. (2008) stress the degree to which stabilization scenarios, even at 550 ppm-CO2 e, will require sharp reductions in the growth rate of emissions from developing countries. We have argued that the current production methodology creates leakages through trade that may do more to displace than to reduce emissions. This both reduces the efficiency of abatement and places a disproportionate burden of responsibility on developing countries. Just as importantly, it could also cast doubt on the credibility of the abatement efforts thus far undertaken by developed countries and which have allowed them to sustain growing levels of consumption. At the very least, acknowledgement of countries’ emissions embodied in trade could play an important role in bridging the gap between the concerns of developed and developing countries and encourage the active participation of key players such as China in a post-Kyoto framework.

References Ahmad, N., & Wyckoff, A. (2003). Carbon dioxide emissions embodied in international trade of goods. OECD STI Working Papers, 2003/15.

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Part II

Equity and Carbon Budget

Chapter 5

The Concept and Theoretical Implications of Carbon Emission Rights Based on Individual Equity Jiahua Pan and Yan Zheng

In 1990, the Intergovernmental Negotiating Committee was established for the United Nations Framework Convention on Climate Change (called “UNFCCC” for short) and started UNFCCC negotiations; in 1992, the UNFCCC was signed in the United Nations Conference on Environment and Development in Rio, Brazil; in 1994, it was ratified by all parties and then entered into force; in 1995, Berlin, Germany held its first conference of the parties. As of the end of 2008, 14 conferences of the parties were held. Currently, the Convention has 191 parties, including almost all sovereign nations of the world. To achieve an agreement on international emission reduction after the Kyoto Protocol, the Parties of United Nations Framework Convention on Climate Change (UNFCCC) have been disputing on emission reduction targets, emission reduction obligations, methods of allocating emission reduction obligations, and other issues. Because all human production and consumption activities are more or less dependent on fossil energy consumption and greenhouse gas emissions, this issue is closely related to the development rights, development space, and economic interests of all countries. As the largest developing country and a large emitter of global greenhouse gases, some developed countries have argued China to undertake the emission reduction obligation. When and how to undertake emission reduction responsibilities and obligations will directly affect China’s future social and economic development. Based on the basic needs of human development, scholars from developing countries have proposed the concepts of emissions per capita and cumulative emissions per capita from the perspective of individual equity, emphasizing that the responsibility in reducing emissions must take into account the historical emissions, actual stage of development and future development needs of all countries. Through defining concepts, interpreting theories, and quantitative calculations, the results show that in the international climate regime, allocating emission reduction obligations based on emissions per capita and cumulative emissions per capita is a fair and effective method.

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_5

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5.1 Theoretical Background and Basic Concepts The emissions reduction target would be related to the development space of all countries. Discussing carbon emission responsibility and the allocation of international emission reduction obligations involve some basic concepts and theoretical background. Accurately defining these basic concepts is conducive to the quantitative analysis and the understanding of policy implications.

5.1.1 Human Development and Carbon Emission Needs Human development includes not only the improvement of material life, such as food, clothing, housing, and transportation but also covers health, education, political participation, ecological services and social equity. These factors are classified as physical assets (such as buildings and infrastructure), natural assets, human assets and social assets. Natural assets refer to land and natural resources, including ecosystems, mineral resources, and other resource endowments; human assets include the physical assets and cultural assets of a country; social assets or cultural assets refer to the interpersonal social networks, institutional arrangements, and social rules (Amanda & Robert, 2006). All of these assets are accumulated in the process of human development, and these tangible or intangible social wealth or stock assets are also regarded as the main factors that are used to measure the gap in welfare level between different countries. Human Development Report 2007/2008, which was issued by the United Nations Development Programme, assessed 177 countries and regions with the Human Development Index (HDI); of this, 22 countries and regions had low HDI levels, and 70 countries and regions had high HDI levels. In many low human development countries, their basic needs have not yet been met, and even in countries with high human development, there are also poor social groups whose living conditions cannot reach a decent level. Human development is inseparable from certain material and energy consumption. For developing countries that have not achieved the targets of human development, to ensure that most people can achieve the general standard of living of developed countries, industrialization and urbanization must be substantially completed to ensure that people have needed social wealth for a decent life, including housing, utilities, infrastructure, and govenance of “soft power”. Modern industrial society relies heavily on fossil energy-based physical infrastructure inputs, which will inevitably lead to corresponding high carbon emissions. According to the analysis of basic needs theory, Chinese scholars believe that at the current technical and economic level, approximately 6 tons of carbon dioxide emissions per capita can meet the basic needs, and 8 tons per person can meet the needs of a more decent life (Pan, 2003). However, to address climate change, greenhouse gas emissions must be controlled within the limits of appropriate global emissions space and responsibility. As International Energy Agency statistics indicated, in 2008, the U.S. Carbon dioxide emissions

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per capita are 18.38 tons, the UK is 8.32 tons, and OECD countries are 10.61 on average; in contrast, the world average emissions per captita are 4.39 tons, and China is 4.92 tons, India is 1.25 tons, and African countries are only 0.9 tons on average. Stern Report noted that for a 50% reduction in global emissions by 2050, the world average per capita must drop to two or three tons (Stern, 2007). Clearly, the task of future global emissions reduction is very difficult even considering an optimal technical improvement. In December 2009, the 15th Conference of the Parties of United Nations Framework Convention on Climate Change reached the Copenhagen Accord, of which the allocation of emission reduction obligations has still not been legally addressed since a large discrepancy between parties on the principle and responsibility of sharing the emission reduction. Currently, there are basically two kinds of principles on the allocation of international carbon emission rights: the first is international equity, and the second is individual equity. International equity takes the total emissions of a country as the calculation basis; individual equity stresses the principle of emissions per capita. The difference is that the former emphasizes national responsibility, while the latter attaches importance to individual rights. In fact, only when responsibility is allocated to individuals can it be consistent with the true meaning of fairness. On the one hand, carbon emissions are rooted in people’s consumption demand; on the other hand, every person on Earth has equal rights to access global public resources— carbon emissions rights. Because the stages of development of different countries are different, their emission reduction tasks can vary. The incremental demand for carbon emissions of high-income countries would be reversed, and they could effectively fulfill their emission reduction responsibilities with their technology advantages; low-income countries need more emission space to achieve their human development potential, and meanwhile, they should avoid the lock-in effect of technology and investment, while focusing on low-carbon development path.

5.1.2 Definition of Concepts In the construction of the international regime of climate change, domestic and foreign scholars have proposed many concepts, which are different in presentation and connotation. To ensure the consistency of the analysis, the definitions of the related concepts are listed below: National total carbon emissions refer to the total amount of CO2 emissions of a country in a unit time, usually one year or one accounting period (for example, the Kyoto Protocol target year 2008–2012), including the emissions of fossil energy consumption and of industrial production processes. According to the provisions of the Kyoto Protocol, developed countries and some countries in transition to market economies agreed to limit or reduce their greenhouse gas emissions. There are six kinds of greenhouse gases that are quantified to be reduced, including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride; of this, the most important is carbon dioxide, accounting for the total amount

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of greenhouse gases by 60%. The carbon emissions involved in this paper refer to the carbon dioxide (CO2 ) emissions brought about by energy-related activities. National cumulative carbon emissions are the year-by-year cumulative emissions of carbon dioxide of a country in a given period of time. Carbon emissions per capita are the average carbon dioxide emissions according to the total population of a country in unit time, usually one year or one accounting period. Cumulative carbon emissions per capita are the year-by-year per capita cumulative emissions of carbon dioxide of a country in a given period of time. The concept of cumulative carbon emissions per capita was initially proposed by domestic scientists in the field of climate change based on the causal chain of “burning fossil fuels— emitting greenhouse gases-increasing the concentration of greenhouse gases-global warming”. They adopt specific climatic patterns to calculate the accumulation and reduction of carbon dioxide in the atmosphere and then obtain the relative contribution rate of emission sources of different countries/regions to the increment of global warming (i.e., the contribution rate of apportioning the increment of global warming according to each country’s total emissions, or the extent of causing such harm, with which to share the global emission reduction obligations) (Miu, 1998; Ren et al., 2002). In this paper, the authors adopt the definition of the former, but the calculation is slightly different in methodology, and it is mainly based on the perspective of ecological economics, and explores the consumption of global carbon resources (mainly fossil fuels) and atmospheric resources (carbon emissions space) of a country in the overall industrialization process, without taking into account the attenuation effect of carbon dioxide in the atmosphere. The cumulative emissions per capita rate refers to the specific value of a country’s cumulative carbon emissions per capita in a given period of time to the sum of all countries’ cumulative carbon emissions per capita in the same period of time. Hu Guoquan and his colleague associated carbon dioxide (CO2 ) emissions per capita with global warming and proposed “the cumulative carbon emissions per capita contribution rate”, and from the perspective of per capita, they evaluated the contribution of a country’s historical cumulative emissions to global warming (Hu et al., 2008). The “cumulative emissions per capita rate” is mainly studied from the relationship between fossil energy consumption and the global carbon emissions footprint, without taking into account the complex relationship between emissions and concentration and temperature increase. However, according to the comparison with the abovementioned study, the estimation results have little difference. Suppose there are (k) countries in the world, the population of each country is (Pk ), and the carbon emissions are (E k ); then, the formula of cumulative carbon emissions per capita of (No. i) country from the starting year to the target year (0 − t) is:    Cumulative carbon emissions per capita = k0 E it /Pit ; suppose cumulative carbon emissions per capita are (W ); then,  Cumulative carbon emissions per capita rate = Wit / k1 Wkt where (W i ) is the cumulative carbon emissions per capita of (No. i) country in a given period (0 − t); (W k )

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is the sum of (k) countries’ cumulative carbon emissions per capita in the same given period (0 – t). The cumulative carbon emissions per capita rate reflects the proportion of a country’s carbon emissions to global carbon emissions at the per capita level. The greater the difference in cumulative emissions per capita between countries is, the greater the difference in cumulative emissions per capita rate is, and the more unfair the allocation of carbon emission rights in the world will be. If the historical cumulative emissions per capita rate of a country is higher, it indicates that the country consumes more carbon resources at the per capita level, and its future carbon budget space will be smaller. Here, the carbon budget refers to the global total greenhouse gas emissions without triggering the “critical point” of catastrophic global warming. British and German scientists found that by 2050, the available global “carbon budget” is approximately one trillion tons of carbon. They point out that if we continue to burn fossil fuels in the present way, the carbon budget will be exhausted in only 20 years, and the increment of global warming would far exceed the 2 °C risk limits (Meinshausen et al., 2009). From the perspective of meeting the basic needs of human development, Pan Jiahua and other scholars proposed that it should be based on the carbon budget to allocate carbon emissions space for all countries (Pan, 2008).

5.1.3 Interpretation of Key Concepts The international community takes the national political entity as a unit and addresses climate change through intergovernmental negotiations. Therefore, the international sharing of responsibilities for emission reduction is mainly made from the perspective of international equity, and the Kyoto Protocol only adopts the indicator of national total carbon emissions. The Kyoto Protocol, which was ratified in 1997 and entered into force in 2005, stipulates that in the first commitment period, i.e. From 2008 to 2012, major developed countries should reduce their greenhouse gas emissions by an average of 5.2% over 1990; of this, the EU should reduce the emissions of 6 kinds of greenhouse gases by 8%, the United States by 7%, Japan by 6%, Canada by 6%, and Eastern European countries by 5–8%; New Zealand, Russia and Ukraine can stabilize their emissions at the 1990 level. Populations in developing countries account for 80% of the global population, their basic needs have not been satisfied, and they will become the major subjects of global emissions in the future. In the long run, the emission reduction regime based on national total emissions apparently ignores individual equity and overlooks the interests of developing countries. In this regard, scholars of developing countries have proposed the concept of greenhouse gas emissions per capita, which is used as a theoretical tool to win over development space in international climate negotiations. On the basis of emissions per capita, scholars of developed countries have proposed “contraction and convergence” programs. “Contraction and convergence” theory is based on the idea of carbon emissions per capita reduction and has a certain influence. There have been many different related proposals based on this theory, such as the

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“contraction and convergence” program proposed by GCI in 1990, the “one principle, two convergence” program proposed by Chinese researchers, Chen et al. in 2005, and the “common but differentiated contraction” program proposed by Horn in 2006. In April 2008, Stern’s new report “Breaking the Climate Deadlock: A Global Deal for Our Low-Carbon Future” is also based on this principle, and this report proposes that the upper limit of emissions per capita of all countries by 2050 should be 2 tons, developed countries should take the initiative to reduce their carbon emissions, and developing countries should begin to set carbon emission reduction targets in 2020 (Chen et al., 2005; Stern, 2008). The basic idea is to choose the greenhouse gas concentration of a target year (e.g., 2050) to determine the corresponding global emissions per capita targets (such as 2 tons of carbon dioxide per capita). Starting from the actual national emission level, developed countries gradually reduce their emissions per capita, and developing countries can continue to increase so that, at a future time point, global emissions per capita can be convergent, and ultimately, the global goal of stabilizing carbon dioxide concentration can be realized. Although this line of thought is based on the per capita concept, before the realization of convergence, emissions per capita of developed countries are always higher than the convergence value, while emissions per capita of developing countries can only be lower than the target convergence value, which actually sets an upper limit for the development of developing countries and ignores historical responsibility; therefore, it is unfair. The concept of cumulative emissions was first seen in the Brazil Proposal proposed by the Brazilian government in 1997. The proposal estimates the relative contribution of the emission sources of different countries and regions to global climate change, aiming to quantify emission reduction obligations. This concept considers the historical responsibility for climate change, revealing the fact that the accumulated greenhouse gas emissions in the atmosphere caused by human activities brought about global warming, which has an appropriate scientific basis. The Brazil Proposal believes that greenhouse gases in the atmosphere have a certain life cycle and that global climate change is largely because of the accumulated greenhouse gas emissions in the atmosphere in the 200 years since the Industrial Revolution of developed countries; therefore, in considering the actual responsibility for emissions, tracing back to historical responsibility can reflect better fairness. Originally, the Brazil Proposal was aimed at developed countries, and later, scholars of developed countries extended it to developing countries. In fact, it has provided developing countries with a theoretical basis in climate negotiations because its scientificity has been recognized by many scholars of developed countries. In April 2009, an article published in Nature noted that the relationship between cumulative emissions and peak warming is remarkably insensitive to the emission pathway (timing of emissions or peak emission rate). Hence, policy targets based on limiting cumulative missions of carbon dioxide are likely to be more robust to scientific uncertainty than emission-rate or concentration targets (Allen, 2009). However, the cumulative emissions concept only considers national total emissions, regardless of emissions per capita; it only stresses that polluters should pay for historical emissions, without taking into account the differences in national development stages, reality and future development needs; therefore, it is still insufficient in the expression of individual equity.

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The concept of cumulative emissions per capita originates from the concept of cumulative emissions and emissions per capita, and it was first proposed by Chinese scholars in the field of climate science based on the Brazil Proposal to reflect the contribution of historical cumulative emissions to climate change at the per capita level. This concept combines the advantages of the above several concepts, taking into account the responsibility for historical emissions, the differences in stages of development, the future needs of human development, and other factors; compared with the emissions per capita of a particular time point, it is more just and fair. The theoretical significance of this model is that it reflects the law of change of a country’s carbon emission needs for human development and embodies the cumulative effect of capital stock so that it deepens the concept of emissions per capita, describes the dynamic characteristics of emissions per capita, and is helpful for the international community to accurately position the emission demand and specify the emission responsibility in accordance with the different stages of development of all countries. In recent years, under the active advocacy and unremitting efforts of developing countries, the issue of historical responsibility and equity for emission reduction has aroused increasing attention, and relevant concepts related to individual equity are gradually understood and accepted by scholars and governments of developed countries. Since the 1990s, Chinese scholars have begun to focus on international equity issues in the climate regime, and they have conducted extensive discussions on theoretical frameworks and emission reduction strategies (Xu et al., 1997; Xu, 1994; Xu & He, 2000; He et al., 2004; Gao, 2006). In recent years, along with postKyoto climate negotiations, Chinese scholars have designed a variety of proposals for carbon emission rights allocation with cumulative emissions per capita as an analytical tool. Pan Jiahua, Chen Ying and other scholars have proposed the “carbon budget proposal” and have calculated the shares of cumulative emissions that all countries can have under the limited global carbon emissions space. They pointed out that the 50% target of global carbon emissions reduction by 2050 faces very serious challenges because the historical cumulative emissions of the United States, Britain, Germany and other developed countries have severely overdrawn the global carbon budget for the future, and they have even invaded the future emission space of developing countries. Currently, the carbon emissions per capita of developed countries are over approximately 3 times the global carbon budget per capita. China is in the rapid development stage of industrialization and urbanization; with the increase in people’s living standards, the emissions per capita will further increase, and the future carbon budget will be a deficit (Pan & Chen, 2009). In addition, based on the concept of cumulative emissions per capita, the Development Research Center of the State Council proposed a theoretical assumption of establishing a national emissions account; scholars of the Chinese Academy of Sciences proposed a framework of controlling the atmospheric concentration of carbon dioxide at 470 ppm v (volume unit of part per million, i.e., Under the same temperature and pressure, the volume is one part per million of the total volume of air) and pointed out that the Western G8 countries had already used up most of their emissions quota, and the cumulative deficit was more than 550 million U.S. dollars; although China occupies 30% of total global emissions from 2006 to 2050, China must decrease the growth

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rate of emissions to avoid emissions deficits (Ding et al., 2009; Project Team of Development Research Center of the State Council, 2009). Foreign scholars have also proposed greenhouse development rights (GDR), which makes this concept begin to emerge and causes concern at both the domestic and international levels. The Stockholm Environment Institute (SEI) proposed the Greenhouse Development Rights (GDR) proposal, which gives the poor and the rich different carbon emissions rights based on the income gap per capita to ensure the development needs of the poor who are under the development threshold value. This proposal also includes a “responsibility-capacity index” that takes GDP and cumulative historical emissions as the core indicators and suggests establishing an international fund promoting national emissions reduction and promoting the poverty reduction and development of developing countries. However, this method only considers the historical responsibility for national emissions, without considering the needs of future emissions, and there is controversy regarding the development threshold hypothesis, the calculation of cumulative historical emissions, and the source of required statistics (Klartha et al., 2008). Late, in 2008, at the UNFCCC conference in Poznan, Poland, negotiators of the Chinese government delegation openly proposed looking upon the issue of global greenhouse gas emission reduction from the perspective of “cumulative carbon dioxide emissions per capita”, which has led to some response in the international community. On July 9, 2008, in the Energy Security and Climate Change Summit of Major Economies held at Lake Toya in Hokkaido, Japan, Chinese President Hu Jintao first proposed the view, “China’s emissions per capita is low, and cumulative emissions per capita is even lower”. On December 2, 2008, in Poland, at the 14th Conference of Parties of the United Nations Framework Convention on Climate Change, the Chinese government delegation first expressly claimed that global greenhouse gas emissions reduction should be treated from the perspective of “cumulative carbon dioxide emissions per capita”. He Jiankun, a member of the Chinese government delegation, a scholar of Tsinghua University, pointed out that the cumulative carbon emissions per capita of developed countries are 7 times those of China, and this concept can better reflect equity to developing countries than the concept of emissions per capita. This paper aims to define and conduct quantitative analysis on the two indicators of emissions per capita and cumulative emissions per capita from the perspective of economics to promote the relevant concepts evolving from concept innovation of scholars to better theoretical tools and from academic research to negotiation strategies.

5.2 Analysis of the Carbon Emissions Per Capita of Major Countries The development process of some countries shows that emissions per capita could follow a route, i.e., from low-income and low carbon emissions, then with the increase

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of income and increase of carbon emissions, to high-income and low carbon emissions. This means that there is an inverted “U”-shaped carbon emission Kuznets curve between a country’s stage of development and its greenhouse gas emissions. This association is of great theoretical and practical significance to international climate negotiations and the allocation of emission reduction obligations.

5.2.1 Carbon Emissions Kuznets Curve The environmental Kuznets curve (EKC) hypothesis has been widely used to test the relationship between environmental pollution and economic development. Climate change is a global environmental problem caused by greenhouse gases generated from fossil fuel combustion. Since the 1990s, carbon dioxide (CO2 ) and other greenhouse gases have begun to be used as environmental pollutants in the research area of the Environmental Kuznets Curve, i.e., Carbon Emissions Environmental Kuznetz Curve (referred to as the “CKC”), and that is to say, emissions per capita may change with respect to the variation of income per capita, and presents an inverted “U” shaped variation trend, i.e., increasing first and then decreasing. Studies show that the level of a country’s carbon emissions per capita is mainly driven by the following socioeconomic factors: (1) the increased income per capita of a country enhances the ability to pay for environmental goods and the willingness to pay; (2) technological progress improves the energy utilization efficiency; (3) the impact of demographic changes on total energy consumption; (4) the transformation of energy structure enhances the proportion of clean energy and reduces carbon emission intensity; (5) the gradual transfer of changes in industrial structure and the transfer of pollution and emissions caused by trade and investment activities; (6) environmental policies, such as pollution control legislation, induce the transfer of certain pollutants to the outside; and (7) the impact of the international environment, such as the promotion of Kyoto Protocol and the concept of low carbon development. The goal of stabilizing global greenhouse gas concentrations has applied a volume constraint to future total global emissions, and under this threshold value, human development and the expansion of demand for carbon emissions are restricted. In general, a higher income level means more emissions. Prior to the completion of industrialization, because of the need for infrastructure and other material stock capital, the energy consumption and emission levels of all countries will maintain rapid growth. With the impetus of technical progress and other factors, the demand for carbon emissions per capita will converge to a lower level with respect to the realization of human development potential. Studies find that in both developed and developing countries, the gap between their carbon dioxide per capita and the average of all countries is gradually narrowing, i.e., a trend of convergence, which proves that the carbon emission Kuznets curve possibly exists in practice and provides empirical support for the “contraction and convergence” emission reduction proposal (Westerlund & Basher, 2008). In 2005, the British government and the international academic community, led by the British economist Sir Nicholas Stern, carried out economic

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evaluations on the risks and costs of global climate change. In October 2006, the 700-page long Assessment Report, Economics of Climate Change, was published, and it is also called the Stern Report. In the international community, this evaluation is by far the most comprehensive research on economics of climate change, and it has aroused wide concern worldwide. The report notes that global climate change will be one of the most serious challenges faced by human beings in the twentieth century; if no action is taken, the annual costs caused by the risks of climate change could be equivalent to losing 5% of global GDP; this report calls on the world to take immediate joint action to reduce greenhouse gas emissions (Stern, 2006). In April 2008, on the basis of this report, Stern released a new report aiming at providing policy recommendations and action plans for the implementation of a global emissions reduction strategy (Stern, 2008). However, the Stern Report also noted that the turning point of a country’s carbon emissions will not automatically appear, and without sufficient policy intervention, the positive relationship between carbon emissions per capita and income per capita may be long lasting. Therefore, climate policies must be made based on a variety of factors that affect carbon emissions, and the peak value of the inflection point of the carbon emissions Kuznets curve should appear earlier and be decreased so that a country can achieve its emission reduction targets earlier after entering into a higher level of development.

5.2.2 Comparative Analysis of the Carbon Emissions Per Capita and Economic Development of Major Countries To verify the relationship between the level of development and carbon emissions per capita of all countries, we use the World Development Indicators 2007 (WDI) database of the World Bank (World Bank, 2008) and choose 23 Annex I countries and 15 non-Annex I countries to carry out EKC analysis on the historical emissions per capita (1960–2005) of these countries. Annex I of the United Nations Framework Convention on Climate Change lists the parties that have completed their industrialization, including 38 developed countries and economies in transition (referring to the former Soviet Union and Eastern European countries). Parties that are not included in Annex I are non-Annex I parties, and all are developing countries (including some newly industrialized countries that have already joined the Organization for Economic Cooperation and Development, such as Mexico, Korea, and Singapore). The empirical analysis of CKC on 38 Parties of the United Nations Framework Convention on Climate Change finds that the CKC of some countries does show a significant trend of inverted U-type, and some countries are still in the early stages of CKC; in addition, some countries do not exhibit the CKC variation trends. Specific performance is as follows:

5.2 Analysis of the Carbon Emissions Per Capita of Major Countries

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The CKCs of Annex I Countries Are Divided into Three Subgroups:

The first sub-group: Countries that have crossed the peak point of CKC and begin to significantly decrease; they are mainly Western and northern European countries, and their income per capita is approximately 25,000–35,000 U.S. dollars, including Belgium, Denmark, France, Germany, Britain, Switzerland, and Sweden. The second sub-group: Countries that are at the peak point of CKC and are in a stable or wandering condition, including Austria, Hungary, Finland, Netherlands, Norway, and so on. The third sub-group: Countries that have not reached or may be drawing near the peak point of CKC, whose emissions per capita are still on the rise, and whose income per capita is approximately 10,000–40,000 U.S. dollars, including Australia, Canada, the United States, Russia, Greece, Italy, Japan, New Zealand, Portugal, Spain, Turkey, and so on.

5.2.2.2

The CKCs of Non-annex I Countries Are Divided into Two Subgroups:

The first sub-group: Countries that are in the senior stage of the process of industrialization; these countries are close to or have reached the inflection point of CKC, and their income per capita is approximately 5000 U.S. dollars, including Korea, Singapore, Mexico and other newly industrialized countries. The second sub-group: Countries that are in the early or middle stage of the process of industrialization; these countries are still in the climb phase of the curve, and their income per capita is less than 5000 U.S. dollars, including China, Cuba, India, Indonesia, Pakistan, Argentina, Chile, Peru, the Philippines, South Africa, Thailand, Vietnam and other developing countries. These results suggest that not only are there clear differences between Annex I countries and non-Annex I countries, but there is also obvious differentiation within these two country groups. The study finds that in the range of 8000–30,000 dollars of income per capita, the carbon emissions per capita and carbon intensity of some developed countries begin to decline. The range is relatively larger, which may mean that these countries have significant differences in technology, population growth, consumption patterns, energy structure, policy orientation, etc. Among the above member states of the United Nations Framework Convention on Climate Change, we choose 16 representative countries to compare their carbon emissions per capita and economic development level (GDP per capita) and find that in the current international climate change negotiations, there are three main large interest groups (see Fig. 5.1): (1) the interest group represented by European Union (6–10 tons of emissions per capita); (2) the umbrella country group represented by the United States (15–20 tons of emissions per capita); and (3) group of 77 and group of developing countries represented by China (the average emissions per capita of 4.2 tons).

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5 The Concept and Theoretical Implications of Carbon Emission … Canada France

Carbon emissions per capita (tons of CO 2)

Germany Canada

Italy the U.S.

Britain the U.S.

Australia

Japan Australia Russia

South Korea

Germany Britain South South Korea Africa Mexico China

Japan

Indonesia Mexico

Italy

South Africa France

India China Brazil

Brazil india

Russia

Indonesia

GDP per capita (constant US dollar of 2000)

Fig. 5.1 Comparison of carbon emissions per capita and GDP per capita of 16 major economies (1960–2005)

Among them, the Umbrella Group, which is a loose coalition of non-EU developed countries, formed following the adoption of the Kyoto Protocol. Although there is no formal list, the Group is usually made up of Australia, Canada, Iceland, Japan, New Zealand, Norway, the Russian Federation, Ukraine and the US. The Umbrella Group evolved from the JUSSCANNZ group, which was active during the Kyoto Protocol negotiations (JUSSCANNZ is an acronym for Japan, the U.S., Switzerland, Canada, Australia, Norway and New Zealand), according to the United Nations Framework Convention on Climate Change website introduction, available at: http://unfccc. int/parties_and_observers/parties/negotiating_groups/items/2714.php, the Umbrella Group, such as US, Australia and Canada, is rich in resources and sparsely populated; as immigration countries, their population and economy have maintained sustained growth, and they have maintained a higher level of emission per capita. Although Japan also belongs to the Umbrella Group, because of the limitation of its population and resources and coupled with the promotion of energy efficiency technology in industrial sectors, Japan’s emissions per capita are significantly lower than those of the United States, Canada, and Australia, and they are similar to EU countries. Moreover, Russia’s situation is unique; as a transition one in Annex I countries, Russia’s emission reduction targets are relatively easy to achieve; its GDP per capita is approximately middle-income countries; in recent years, Russia’s emissions per capita have increased rapidly. In international climate negotiations, among relatively important developing countries, including China, India, Brazil and other large developing countries, and South Korea, South Africa, Mexico and other newly industrialized countries, the emissions per capita of some countries are close to those of the group of developed countries.

5.2 Analysis of the Carbon Emissions Per Capita of Major Countries

83

Overall, in Fig. 5.1, the position of developing countries is far behind, and they need to strive for more development space in international negotiations. It should be noted that within developing countries, differentiation trends are increasingly clear. China is in a controversial status because of its larger total emissions; India takes developed countries and the large developing country China as reference and emphasizes its advantage of low emissions per capita, while the emissions and income per capita of South Korea, Mexico, Singapore and other newly industrialized countries are in the middle between developed and developing countries, so that they have a special position in the international climate negotiations. In fact, in international climate negotiations, the emission reduction issues of South Korea and other emerging industrial countries have begun to be proposed; to enhance its international image and status, Mexico and South Africa actively camp closer to developed countries, and they had already raised their own national emissions reduction proposals at the end of 2008 and early in 2009, respectively. This will place a certain pressure on China’s implementation of emission reduction obligations. Viewing from the current situation and trends of emissions per capita, in the future, some countries’ emissions per capita will grow rapidly, such as China, the United States, Australia, South Korea, and Mexico. If all countries do not take positive and effective measures to reduce emissions, the future basic pattern of global emissions will not change much. Overall, for developing countries, due to their rapid population growth and unsatisfactory basic needs, their future emissions per capita are bound to continue to grow. According to the forecast of future emissions per capita of all countries by U.S. Energy Information Administration (EIA), by 2030, China’s total emissions will account for approximately 28% of the world, equivalent to 1/3 of the total emissions of Annex I countries, or nearly 1/2 of non-Annex I countries; viewing from emissions per capita, in 2030, China will reach 8–10 tons, and the global emission per capita will reach 6–7 tons. China’s economy will continue to grow, and it is expected that China’s greenhouse gas emissions may begin to decline after 2050 (“China official said that China’s Emissions Will Not Continue to Rise Beyond 2050”, available at: [UK] Financial Times, http://www.ftchinese.com/story.php?Storyid= 001,028,175). As a big developing country, when China undertakes global emission reduction obligations, China should take into account its actual situation of development, should choose policy goals and means of emission reduction, and should not accept mandatory emission reduction or legal binding provisions, otherwise China may limit its reasonable development space.

5.3 Analysis of the Cumulative Carbon Emissions Per Capita of Different Countries Climate change is largely the result of the cumulative effects caused by historical emissions in the atmosphere of industrialized countries. Carbon emissions per capita reflect a country’s emission level at a certain time point, and it cannot reflect the

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responsibilities and obligations of a country to global emissions in the entire period of its industrialization process. Therefore, it is necessary to study emissions and development from the perspective of cumulative emissions per capita.

5.3.1 Theoretical Implications of the Cumulative Carbon Emissions Per Capita As mentioned above, the cumulative carbon emissions per capita are the result of accumulating year-to-year all the carbon emissions of global villagers living in different countries in the industrialization period. This concept reflects the accumulation characteristics of a country’s wealth and stock of capital in the process of industrialization. Assuming that the energy consumption and carbon emissions of each country in the whole process of industrialization can be abstractly measured with a “standard resident” (each country lives on earth, so its inhabitants must be “global villagers”. Here, a country’s political attributes become irrelevant, and what counts is the abstract theory of “global villagers”. From the perspective of ecological ethics, it is to compare a country’s existence and survival to the natural life cycle of a person; it supposes that each country and each natural person have certain rights and obligations for the sustainability of global environment and resources, and it advocates reducing the consumption on earth’s resources within the life cycle of each natural person or standard resident.), then based on the differences of all countries in resource endowments, economic structure, technological level, social system, climate and geographical features, cultural practices and historical background of the development, the carbon emissions curve of standard residents of different countries will be different. The proportion of national total cumulative carbon emissions per capita of each country to the total volume of the world is the cumulative carbon emissions per capita rate of each country. It was determined according to cumulative carbon emissions per capita data of the World Resources Institute CAIT Database. It is equivalent to assuming that there are 17 standard residents in the world; in addition to those 16 countries, the “other countries and regions” are considered a complete country group, whose cumulative emissions per capita are the average cumulative emissions per capita of 169 countries excluding those 16 countries. Because the resources of the earth and the environmental capacity are limited in nature, based on the perspectives of ethics (individual equity) and ecological economics (resource scarcity), each individual should strive to bind its resource consumption and environmental footprint in his or her entire life cycle. The carbon budget sets a threshold value for the balance between global carbon dioxide emissions and ecological capacity. The theoretical implication of the concept of cumulative emissions is that under the premise of satisfying human development needs, any standard global villager (country) should try to minimize its carbon emissions in the process of industrialization and avoid misappropriating other countries’ development space because of extravagant emissions. In theory, according to the relationship

5.3 Analysis of the Cumulative Carbon Emissions …

85

between carbon emissions per capita and economic development, only when the accumulation of social wealth and infrastructure reaches a certain extent and the basic needs are met can the growth trends of a country’s cumulative emissions per capita gradually flatten. 2008 World Development Indicators On line World Bank Development Data Group, & Washington, D. C.: The World Bank, http://go.worldbank.org/.

5.3.2 Comparison of Historical Cumulative Emissions and Historical Cumulative Emissions Per Capita of Major Countries According to the Climate Analysis Indicators Tool (CAIT) database of the World Resources Institute, the different contribution rates of cumulative emissions per capita of each country to global climate warming can be determined, i.e., cumulative emissions per capita rate (see Table 5.1). As seen from Table 5.1, from 1850 to 2005, those whose historical cumulative total emissions, historical cumulative emissions per capita, and cumulative emissions per capita rate were at the top were all developed countries. Analysis shows that (1) historical cumulative total emissions: the 16 countries account for 76.9% of the whole world, and of this, the sum of 7 developing countries accounts for just 14.9% of the whole world, while 9 developed countries account for 62.0% of the whole world, and the first three countries that have the largest historical cumulative total emissions are the United States, China and Russia; (2) historical cumulative emissions per capita: China is 71.3 tons, ranking 89 in the world, and the first three countries that have the largest historical cumulative emissions per capita are Luxembourg, the United Kingdom and the United States; (3) cumulative emissions per capita rate: among the 16 countries, China is less than 1%, and the United Kingdom, the United States and Germany are 15.5, 15.3 and 13.2%, respectively, ranking the top three in the 16 countries. In addition, 1850 belongs to the early period of the Industrial Revolution; 1900 is a century ago, and it is close to the fading period of carbon dioxide; the source of the statistics after 1960 is more authoritative and reliable, and in this period, the emissions of all countries are relatively high, especially because many developing countries have begun their industrialization process; 1990 is the starting year of emissions reduction stipulated in the Kyoto Protocol in the international climate regime; before that, because people have not been fully aware of climate change and its threat, 1990 is taken as the starting point with regard to the appropriate exemption principle of “Ignorance can be forgiven”. The base year is 2005, and the target year is 2030 because of data availability. In addition, many countries have set their mid-term emission reduction targets at 2030. Taking the periods of 1850–2005, 1900–2005, 1960–2005, and 1990–2005 as the cumulative period, the cumulative carbon emissions per capita rate of China is approximately 0.9–2.0%.

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Table 5.1 Comparison between the Indicators of Historical Cumulative Carbon Emissions of 16 Countries Country

National cumulative emissions (1850–2005)

Cumulative emissions per capita (1850–2005)

Total Ranking Proportion to Emissions Ranking Proportion to emissions the global (tons of CO2 ) the global (billion tons volume (%) volume (%) of CO2 ) Britain

67.78

5

6.04

1 125.4

2

15.52

the U.S.

328.26

1

29.25

1 107.1

3

15.26

Germany

79.03

4

7.04

958.3

6

13.21

Canada

24.56

9

2.19

760.1

8

10.48

Russia

90.33

3

8.05

631.0

12

8.70

Australia

12.25

14

1.09

600.6

15

8.28

France

30.03

7

2.85

526.2

21

7.25

Japan

42.74

6

3.81

334.5

36

4.61

Italy

18.41

12

1.64

314.1

37

4.33

South Africa

12.44

13

1.11

265.4

45

3.66

South Korea

9.25

20

0.82

191.6

57

2.64

Mexico

11.32

15

1.01

109.8

76

1.51

China

92.95

2

8.28

71.3

88

0.98

Brazil

9.11

21

0.81

48.8

99

0.67

6.26

25

0.56

28.4

118

0.39

26.01

8

2.32

23.8

122

0.33

Indonesia India

Data source Climate Analysis Indicators Tool (CAIT) Version 6.0, Washington, D.C.: World Resources Institute (2009), http://cait.wr.iorg

5.3.3 Cumulative Emissions and Cumulative Emissions Per Capita of Major Countries in the Future Due to the large difference in stages of development, China, India, Brazil and other large developing countries in the future will maintain a rapid growth of emissions, so it is necessary to analyze the cumulative emissions per capita of these countries in the future to analyze their possible future emission space. The authors choose the EIA scenarios of future global emissions (including high emission and low emission scenarios) and calculate the future cumulative emissions (see Table 5.2) and cumulative emissions per capita rate. Here, we also choose 1850, 1900, 1960, 1990, and 2005 as the starting points of cumulative emissions and calculate the total cumulative emissions and cumulative emissions per capita of major countries by 2030. In Table 5.2, the global cumulative emissions per capita are the global average value of dividing the global total emissions by the global population, and it is different

5.3 Analysis of the Cumulative Carbon Emissions …

87

Table 5.2 Comparison of future cumulative carbon emission indicators of major countries Country/year

National cumulative emissions (billion tons of CO2 ) (2005–2030)

Cumulative emissions per capita (tons of CO2 ) (2005–2030)

EIA low emissions scenario

EIA high emissions scenario

EIA low emissions scenario

EIA high emissions scenario

Worldwide

869.06

967.71

142.61

149.76

China

201.12

225.27

160.77

172.69

India

39.85

44.50

38.38

40.65

Mexico

13.76

15.37

140.95

149.06

Brazil

11.53

13.18

65.20

70.52

South Korea

14.39

16.43

318.06

340.32

Australia/New Zealand

12.61

13.71

548.65

559.63

The U.S.

168.84

186.12

608.95

627.71

Russia

48.03

54.01

358.51

377.26

Japan

32.02

35.05

270.24

274.29

Canada

16.82

18.53

556.73

573.44

Note In the forecast scenarios of the U.S. Energy Information Administration (EIA), Australia and New Zealand are regarded as a whole. The country–specific data of European Union countries are unavailable, so they are not included in Table 5.2. In addition, the forecast scenario is the data of national total carbon emissions; we take 2005 as the base year and assume a constant population to calculate the annual emissions per capita of each country in the future, then total up and get the cumulative carbon emissions of each country in the future. The population data are from the World Development Indicators database of the World Bank Data source Climate Analysis Indicators Tool (CAIT) Version 6.0., Washington, D.C.: World Resources Institute, 2009, http://cait.wr.iorg 2008 World Development Indicators On line World Bank Development Data Group & Washington, D.C.: The World Bank, http://go.worldbank.org/

from the one in Table 5.1, in which the average cumulative emissions per capita are determined based on the assumption of standard residents. Analysis shows that: (1) global situation of future emissions: from 2005 to 2030, the annual growth rate of global emissions is likely to be 1.3–2.1%, and the total global emissions in 2020 would increase by 36.9–66.3% over 2005, and of this, the Annex I countries would grow by 25.2% and non-Annex I countries would grow by 114%, and the fastest ones will be large developing countries, such as China, India and Brazil; (2) future total cumulative emissions: China would account for approximately 23% of the world, and the United States is approximately 19%; (3) future cumulative emissions per capita: the United States, Canada, and Australia rank the top three, and China will also exceed the global average; (4) cumulative emissions per capita rate: China would account for 5% of the global, and the United States is approximately 19%.

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5 The Concept and Theoretical Implications of Carbon Emission …

Comparing the future emissions between China and the U.S., China’s total emissions exceed those of the U.S. and China would become the largest emitter of the world. Therefore, the proportion of China’s total emissions to global emissions will be increasing; by 2030, it will account for nearly 1/4 of global emissions, while the U.S. is approximately 1/5. In terms of cumulative emissions per capita, although China will exceed the global average, it is still well below the current level and future level of the United States.

5.3.4 Comparison Between the National Cumulative Emissions Rate and Cumulative Emissions Per Capita Rate Due to the diversity of national conditions and stages of development, the proportion of total cumulative emissions and cumulative emissions per capita of each country to those of the global is different. Based on the global carbon budget constraint, a country’s excessive use of its carbon emissions rights will cause a crowding-out effect on other countries’ emission space, so the cumulative emissions of a country (or standard resident) at a period of time can be regarded as its contribution to global warming. Based on the principle of international equity, the national cumulative emissions rate is defined as the proportion of a country’s total cumulative emissions to the global total cumulative emissions, and it is used to measure a country’s consumption and occupation of global emission space at the scale of national total emissions; based on the principle of individual equity, cumulative emissions per capita rate is defined as a country’s occupation of global emission space at the scale of per capita, and then we can compare the different impacts of different countries’ national total emissions and cumulative emissions per capita on global climate change (see Fig. 5.2). First, according to the above analysis on historical and future cumulative emissions, taking different periods as the starting year, we calculate cumulative emissions per capita and national total cumulative emissions of each country and find that the corresponding emission contribution rates are of small difference, which indicates that the choice of starting year of accumulation is not important, and what counts is to choose what kind of principle of equity to calculate the emission reduction responsibility. However, for China, its industrialization starts late, so that the later the starting year of calculation is, the higher the proportion of cumulative emissions (total or per capita) to the whole world will be. Second, comparing the emission contribution rates of each country calculated according to two different principles of equity, we find that although the proportion of total cumulative emissions of developed countries to the whole world is not high, their cumulative emissions per capita are generally higher than the global average. Because developing countries (such as China and India) have large populations, there is a large gap between their cumulative emissions per capita and those of developed countries. Taking the United States and China as examples, from 1960

5.3 Analysis of the Cumulative Carbon Emissions …

89

Total Cumulative Emissions Rate

Brazil

China

Mexico

Korea

South

South Africa

Italy

Japan

France

Australia

Russia

Canada

Germany

the U.S.

Britain

Proportion (%)

Cumulative Emissions per Capita Rate

Fig. 5.2 Comparison between national total cumulative emissions rate and cumulative emissions per capita (1850–2005)

to 2005, the U.S. national cumulative emissions account for 25.7% of the world, and among the 16 countries, its cumulative emissions per capita rate accounts for 15.6% (accounting for 15.2% of the world), while in the same period, China’s national cumulative emissions and cumulative emissions per capita rate are only 9.8 and 1.3%, respectively. This suggests that adopting different principles of equity to allocate global carbon emissions rights will have different impacts on the emissions reduction responsibility of different countries. The above analysis helps us to learn more about the differences in emissions caused by the differences in national population, stages of development, and income levels, and it is in favor of us seeking cooperation from difference and seeing differentiation in cooperation in international negotiations to develop an enabling negotiation strategy.

5.4 Conclusions and Policy Implications Climate change has scientific, political and economic complexity and specificity. In principle, on the issue of climate change, any country and any individual should bear the responsibility and corresponding emission reduction obligations. The current international climate agreement, to some extent, takes into account the different historical responsibilities of developed and developing countries, reflecting statelevel equity, so it has some positive meaning. Due to the great difference in stages of development and levels of development, the adoption of the national total emissions

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reduction approach actually covers individual equity with international equity. Analysis shows that studying the equity issues of carbon emissions from the perspective of individuals is more meaningful. The concept of emissions per capita is based on respecting and protecting each individual’s survival and development needs, and it can ensure the basic needs of human development of developing countries to ensure the realization of individual equity and international equity at the national level. Through the analysis of emissions per capita and cumulative carbon emissions per capita, we draw the following conclusions. First, in the process of building the international climate regime, it is necessary to discuss the allocation of emission reduction obligations based on the different conditions and stages of development of different countries. The analysis of the carbon emissions and economic development of a variety of countries shows that once the GDP per capita is over $10,000, the growth of carbon emissions per capita of some developed countries (such as France, Germany, and the United Kingdom) begins to slow down or even decline, and some developed countries (such as the United States and Canada) have maintained an upward trend. Most developing countries have not yet completed the process of industrialization and urbanization, so their total emissions and carbon emissions per capita are still in the continuous upward phase. These conclusions fit into the fundamental principles of China upon addressing climate change issues, i.e., always adhering to the framework of sustainable development to address climate change and insisting on the principle of “common but differentiated responsibilities”. Second, the influencing factors of carbon emissions of all countries include resource endowments, technology, energy structure, industrial structure, consumption patterns, environmental policy and other factors. For example, due to differences in resource endowments and consumption patterns, although the United States and some EU countries have higher levels of income per capita, their carbon emissions per capita are quite different. The United States should change its consumption patterns, which are based on high energy consumption and high emissions. Compared with India, which is also a large developing country, China’s population policy has a certain contribution to mitigating global climate change; meanwhile, presetting the carbon budget of all countries, reasonable and appropriate population control can bring China and India that have a large population with more emissions space. Third, in accordance with the calculation of total carbon emissions, in 2005, China’s greenhouse gas emissions accounted for 17.5% of total global emissions, and China’s total emissions in 2030 would account for 25% of the world. According to the historical total cumulative emissions, at present, China accounts for approximately 10% of the world. According to historical cumulative emissions per capita, China only accounts for approximately 1% of the world, and even if taking into account the future demand for China to realize industrialization, by 2030, China’s cumulative emissions per capita rate is only 5%. Therefore, taking emissions per capita and cumulative carbon emissions per capita as a theoretical and analytical tool in climate negotiations is conducive for China to rationally pursue development space. In summary, given that the issue of emission reduction has been associated with the development of all countries and taking into account the fact that the future emissions

5.4 Conclusions and Policy Implications

91

of developing countries to meet their basic needs will be a major part of global emissions growth, the construction of international climate regimes should be based on the following premises: recognition, protection and support to the satisfaction of basic needs, the distinction between international equity and individual equity, and on this basis to promote emission reduction. At the global level, the international community needs to consider the historical responsibility, actual emissions, and future needs of all countries and determine a scientific and reasonable allocation program of emission reduction obligations to achieve the 50% goal of global emissions reduction by 2050. At the national level, developed countries should fulfill their emission reduction obligations under the UNFCCC, reduce their greenhouse gas emissions per capita, and compensate for the extra development burden of developing countries induced by climate change impacts caused by the historical emissions of developed countries; in accordance with actual conditions, developing countries should also implement emission reduction policies and actions, reflecting the “common but differentiated responsibilities” to global sustainable development. At the individual level, the public must be fully aware of the impact of climate change, advocate and practice a lowcarbon lifestyle, limit an individual’s overconsumption and extravagant and wasteful consumption with the help of a carbon tax, consumption tax, and other means to make one’s contribution to protect the global environment.

References Allen, M. R., Frame, D. J., & Huntingford, C. (2009). Warming caused by cumulative carbon emissions towards the trillionth tone. Nature, 458, 1163–1166. Amanda, W. V., & Robert, C. (2006). The role of human, social, built, and natural capital in explaining life satisfaction at the country level: toward a National Well–Being Index (NWI). Ecological Economics, l58(1), 119–133. Chen, W. Y., Wu, Z. X., & He, J. K. (2005). Two convergence approaches for future global carbon permit allocation. Journal of Tsinghua University (science and Technology), 6, 850–854. Development Data Group, & Washington, D. C. (2008). World development indicators. The World Bank, Available online: http://go.worldbank.org/ Ding, Z. L., Duan, X. N., Ge, Q. S. et al. (2009). Control of atmospheric CO2 concentration by 2050: an allocation on the emission rights of different countries. Science in China (Series D: Earth Sciences), 52(10), 1447–1469. Gao, G. S. (2006). A study of carbon emission right allocation under climate change. Advances in Climate Change Research, 6, 301–305. He, J. K., Liu, B., & Chen, W. Y. (2004). Analysis on the equity of global climate change issues. China Population, Resources and Environment, 6, 12–15. Hu, G. Q., et al. (2008). The calculation and significance of historical cumulative emissions per capita contribution rate. Papers of Poznan (COP14) Side Event of United Nations Framework Convention on Climate Change. Kartha, S., Athanasiou, T., & Baer, P. (2008). A fair sharing of effort: Operationalizing the greenhouse development rights framework. Side Event, UNFCCC Meeting, Bonn, June 6, 2008, www. ecoequity.org/GDRs/ Meinshausen, M., Meinshausen, N., Hare, W. et al. (2009). Greenhouse gas emission targets for limiting global warming to 2°C. Nature, l458, 1158–1162.

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Miu, X. M. (1998). Study on the CO2 cumulative emissions per capita and fulfill emission obligations with respect to contribution rate. China Soft Science, 9, 28–23. Pan, J. H. (2003). A conceptual framework for understanding human development potential–with empirical analysis of global demand for carbon emissions. Social Sciences in China, 6, 35–48. Pan, J. H. (2008). Carbon budget for basic needs: Implications of international equity and sustainability. Journal of World Economics and Politics, 1, 35–42. Pan, J. H., & Chen, Y. (2009). The carbon budget scheme: An institutional framework for a fair and sustainable world climate regime. Social Sciences in China, 5, 83–97. Project Team of Development Research Center of the State Council. (2009). Greenhouse gas emissions reduction: A theoretical framework and global solution. Journal of Economic Research, 2009(3), 4–13. Ren, G. Y., Xu, Y., & Luo, Y. (2002). The historical and current situation of CO2 emissions around the world. Meteorological Science and Technology, 3, 129–134. Stern, N. (2006). The economics of climate change: The stern review. Cambridge University Press. Stern, N. (2007). Bali: Now the rich must pay—A fair and global effort to tackle climate change needs wealthy states to take the lead in CO2 cuts. The Guardian. Available online: http://www. guardian.co.uk/commentisfree/2007/nov/30/comment.climatechange Stern, N. (2008). Key elements of a global deal on climate change. The London School of Economics and Political Science. http://www.lse.ac.uk Westerlund, J., & Basher, S. A. (2008). Testing for convergence in carbon dioxide emissions using a century of panel data. Environmental & Resource Economics, l40(1), 109–120. Xu, S. L. (1994). Study on the equity and efficiency principle of international environmental law: Concurrently reviewing the global CO2 emission reduction rules. The Journal of Quantitative & Technical Economics, 4, 10–14. Xu, Y. G., Guo, Y., & Wu, Z. X. (1997). Carbon rights allocation: Global carbon emission rights trading and participation incentives. The Journal of Quantitative & Technical Economics, 3, 72–77. Xu, Y. G., & He, J. K. (2000). Equity in the context of global climate change: A critical review. World Environment, 2, 17–21.

Chapter 6

Carbon Budget Proposal: An Institutional Framework for an Equitable and Sustainable World Climate Regime Jiahua Pan and Ying Chen

Climate change is now a hot-button issue around the world. The international regime and action to address climate change will inevitably have long-term and profound impacts on the world economy and international politics in the future. At the end of 2007, the 13th Conference of the Parties of United Nations Framework Convention on Climate Change (UNFCCC) was held in Bali, Indonesia, and the Parties reached Bali Action Plan (UNFCCC, Bali Action Plan, http://unfccc.int/). Under the Convention, the negotiation process aiming at promoting long-term cooperative action was launched (Currently, the international climate negotiations adopt the two-track parallel modes: one is the Ad Hoc Working Group on Long-term Cooperative Action under the Convention, AWG-LCA; the other is the Ad Hoc Working Group (Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol, AWGKP.) The two jointly promote the international climate negotiation process. See http://unfccc.int/), and the target is to reach a new agreement toward the post-2012 international climate regime in the 15th Meeting of the Parties held in Copenhagen, Denmark at the end of 2009. The current international climate negotiation has 5 key elements: shared vision of long-term global cooperative action, mitigation, adaptation, technology and finance (There are mainly two ways for humanity to address climate change, i.e., mitigation and adaptation. Mitigation refers to the relevant human activities to reduce greenhouse gas emissions or increase carbon sinks; adaptation refers to the adaptation of natural or man-made systems to new or changing environments. According to the provisions stipulated in the Bali Action Plan, the shared vision should include a long-term global greenhouse gas emission reduction target. Mitigation includes the mitigation commitments of all developed countries, developing countries’ mitigation actions suited to national conditions, and reducing the emissions caused by deforestation and forest degradation in developing countries. Adaptation actions refer to the various actions taken to reduce the vulnerability of all parties, including disaster prevention and mitigation, risk management, promoting pluralism, and so on. Technology and finance

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_6

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refer to technological development and transfer as well as the provision of financial resources and investment support for the purpose of supporting mitigation and adaptation actions. Of this, the core issue is how to reflect the specific circumstances of countries, how to impartially share responsibility for greenhouse gas emissions reduction or allocate emission rights, and how to ensure its implementation through appropriate international mechanisms. China, as a large developing country, holds an important position in international climate negotiations and is also facing increasingly strong international pressure. The existing Kyoto Protocol mode is based on the emissions of 1990 and determines the emission reduction obligations of developed countries through negotiation (the Kyoto Protocol provides that in exceptional circumstances, a minority of countries are allowed to choose the base year otherwise). The emission reduction targets for the main parties of the Kyoto Protocol are as follows: the EU is 8%, Japan is 6%, and the United States is 7%. Among them, the EU as a whole commits an emission reduction target, which is supposed to be further subdivided into all member states. For example, the emission reduction target of the UK is 12.5% and that of Germany is 21.7%. In 2001, the United States announced its withdrawal from the Protocol, so its emission reduction obligations under the Protocol have no legal effect. For details, see the text of Kyoto Protocol. http://unfccc.int/). In this paper, the authors cast off the mindset of the existing Kyoto model, study and develop a carbon budget proposal for global greenhouse gas emission reduction based on the theories and methods of basic carbon emission needs for human development (Pan, 2005). This proposal can not only better reflect the “common but differentiated responsibility” principle of the UNFCCC but also help to achieve the intermediate and long-term global emission reduction goal, and it is an integrated proposal for establishing a more equitable and effective international climate regime.

6.1 Basic Idea of the Carbon Budget and Equity Implications From an economic point of view, the atmosphere has the property of global public goods with non-exclusive and non-competitive characteristics. If not managed well, it may see a “tragedy of the commons”, which is likely to cause irreversible adverse impacts on the global environment. Greenhouse gases are mainly from human activities, especially the combustion of a great amount of fossil fuel. Under the condition that the global energy system is fossil fuel-based, greenhouse gas emissions are “byproducts”, which are difficult to avoid in the development of human society. Therefore, to protect the global climate system, the limited environmental capacity of the atmosphere to accommodate greenhouse gas emissions has become a scarce resource. Greenhouse gas emission rights and property rights (such as land and other property rights) in a general economic sense are essentially different. This kind of difference is mainly expressed in the homogeneous characteristics of air space; once

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greenhouse gases are emitted into the atmosphere, they will spread uniformly in the atmosphere, and the impact is worldwide. However, land resources have differentials, and if the land is of different levels, land revenue will be different, and the amount of rent will be different. For land resources, there is no dispute over sovereignty, and they do not involve the allocation of development rights; however, the sovereign property of greenhouse gases is not yet clear, so it is impossible to enter market transactions. Therefore, it is necessary for the international community to negotiate an international climate regime and promote the rational use of limited resources of carbon emission rights to maximize global welfare. To date, the international community has proposed many schemes for the mitigation issue of the post-2012 international climate system (for details, see IPCC, “Climate Change 2007: Mitigation of Climate Change”, Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 2007), and most schemes have been proposed by scholars of developed countries (Bodansky et al., 2004). However, due to the limitations of national interest, these schemes can hardly balance the principle of equity and sustainability; even if the schemes are for the interest of developing countries, it is difficult to fundamentally reflect the conditions and the fundamental interests of developing countries. For example, the United Kingdom Global Commons Institute (GCI) proposed the Contraction & Convergence (C & C) proposal (Aubrey Meyer, “GCI Briefing: Contraction & Convergence”, Engineering Sustainability, 01/12/2004.), which should start from the reality of developed and developing countries, take emissions per capita as the standard, gradually achieve the convergence of emissions per capita, and ultimately at a certain time point in the future realize equal global emissions per capita. Viewing from the point of fairness, this proposal gives tacit consent to the unfairness of the history, the reality, and longterm future process to achieve such convergence. Although it is in line with the law of development that after the completion of industrialization, developed countries will return to the road of low-carbon economy; however, for developing countries that are still in the process of industrialization, their emission space is seriously restricted, and therefore it is not fair. Brazil Protocol is a representative proposal that takes historical responsibility into consideration (Brazil Protocol is a suggestion concerning the allocation of emission reduction obligations presented by Brazil government to the Secretariat of the Convention prior to Kyoto conference. Brazil, “Proposed Elements of a Protocol to the UNFCCC”, presented by Brazil in response to the Berlin mandate, 1997 (FCCC/AGBM/1997/MISC.1/Add.3), Bonn: UN-FCCC. http://unfccc.int/cop4/res ource/docs/1997/agbm/misc01a3.htm. Accessed on July 2, 2009). Because greenhouse gases in the atmosphere have a certain lifetime, today’s global climate change has largely been the cumulative effect of greenhouse gas emissions for two hundred years since the industrial revolution of developed countries; therefore, in considering the responsibility of actual emissions, historical responsibility should be taken into account to better reflect fairness. The Brazil Protocol was originally presented against developed countries, and later, scholars of developed countries applied this proposal to developing countries (Pinguelli Rosa et al. 2001). However, this allocation approach to emission reduction obligations based on historical responsibility

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only considers a country’s total emissions, without considering the emissions per capita, and only emphasizes that polluters should pay for their historical emissions without taking into account the current and future development needs of countries at different stages of development; therefore, it is still fairly biased from the fairness point of view. The greenhouse development rights (GDR) framework (Baer et al., 2008) presented by scholars of the Stockholm Environment Institute (SEI) suggests that only the rich have the responsibility and capacity of emission reduction and that setting a development threshold can protect the development needs of the poor with a lower development threshold. This method adopts two indicators of the total population that have exceeded the development threshold, i.e., the overall capacity (the adjusted GDP through purchasing power parity) and the total responsibility (cumulative historical emissions) to allocate the emission reduction obligations aiming at controlling the increase of global temperature within 2 °C. However, this method only considers the historical responsibility of national emissions, regardless of future emission requirements. Moreover, the development threshold hypothesis and the calculation of cumulative historical emissions, as well as the source of the statistics, are controversial. In this paper, the carbon budget proposal is based on human development theory (Sen, 1997). It starts from the finiteness of basic needs of humanity and the finiteness of the carrying capacity of the Earth system and stresses that the international climate regime should first guarantee the basic needs of humanity, promote low carbon development, curb extravagance and waste, and meet the dual goals of equitable sharing of emission reduction obligations and protecting the global climate (Pan, ). The carbon budget proposal starts from the generally accepted concept of global equity and proposes that the principle of fairness should have the following meanings. First, equity refers to interpersonal fairness, which is the same as the basic starting point of the emissions per capita approach. Although contemporary international society takes political entities as a unit and addresses climate change through international climate negotiations between governments, the intention of fairness in ethics is not to protect the “international fairness” between countries but to promote “interpersonal fairness”. This is because food, clothing, housing, transportation, and other personal consumption have to consume energy sources, and public consumption that is necessary for the normal operation of a community also needs to consume energy. Under the condition that it is difficult to completely change the fossil energy-based energy system, greenhouse gas emission rights are clearly an important part of basic human rights to protect human survival and development. Second, to promote equity between people, the key is to protect the human rights of the contemporary so that everyone can enjoy greenhouse gas emission rights as a global public resource. Greenhouse gas emissions are from people’s consumption in the final analysis. It has been proven that population control policies are important for the mitigation of global climate change (Jiang, 2009). This requires that the population of a base year be selected as the basis for the allocation of emission rights. We believe that the contemporary is the inheritance of history and that it influences the future population. If choosing the contemporary population as the basis

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for the allocation of emission rights, the newly increased population will not obtain additional emission rights. Therefore, to protect the basic needs of the additional population, we can only “dilute” the emission per capita rights of the existing population. If the future population decreases, the allocated emission rights will not be reduced. Then, the existing population can enjoy the “demographic dividend” due to the relative increase in per capita emission rights. This seems to be unfair to the future population. However, carbon emissions are the result of human consumption, and a reasonable climate system should not encourage the adoption of population growth to obtain more emission rights. Moreover, viewing from the subsequent advantages of technological spillover, due to technological progress, the carbon emissions of the same amount of consumption for the future population will be less than those of contemporary people. Therefore, taking the contemporary population as the basis for the allocation of emission rights is fair. Of course, as human rights, emission rights should migrate with the migration of the population accordingly. Third, to promote interpersonal fairness, the key is not flow rate (annual emissions) fairness at a time point of the present or the future but stock fairness in the whole process of history, the present and the future, and it can be measured with the total cumulative emissions from the initial year (e.g., 1900) of history assessment to the deadline year (e.g., 2050) of future assessment. Greenhouse gas emissions can rapidly increase with the progress of industrialization, urbanization and modernization, and the completion of industrialization and urbanization process indicates that urban infrastructures, housing construction, regional transport, water conservancy facilities and other basic infrastructures are in place, and do not need further increase but the maintenance and updating to the existing facilities. The process of industrialization in developing countries starts later, so their historical consumption and emissions are relatively lower, and less social wealth is accumulated. The development level of the contemporary is low, and the phenomenon of unmet basic needs is still prevalent. Thus, they have a greater demand for emissions in the future process of industrialization. That is, historical emissions and future demand are negatively correlated, so seeking stock fairness in the whole process from history to present and the future is more reasonable than giving tacit consent to the unfairness of historical emissions and only focusing on the allocation of future emission space. Finally, to promote interpersonal fairness, it is necessary to reflect country-specific national conditions and give full consideration to the impact of climate, geography, resource endowments and other natural factors on the satisfaction of basic needs to make objective and necessary adjustments to the volume of carbon emissions.

6.2 Overall Carbon Budget and the Initial Allocation How can the sustainability goal of global climate protection be balanced with the development goal of each person’s basic needs be balanced? Generally, there are two different ideas: one is the “bottom-up” approach. This requires first defining the basic human needs and standards, adjusting the basic needs according to national

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circumstances, and then estimating the amount of carbon emissions to meet basic needs of different countries in certain socioeconomic and technical conditions. By summing the amount of carbon emissions of different countries, we can obtain the total amount of global emissions, and we can judge whether it can meet the longterm goal of protecting the global climate. If it exceeds the goal, it is necessary to accordingly adjust the definition and standards of basic needs to form a feedback mechanism (Zhu, 2006). The other is “top down bottom” approach. This requires first defining a long-term global goal, and starting from the goal, we estimate the global carbon budget that can meet the long-term global goal. Then, we fairly allocate the global carbon budget to different countries and make necessary adjustments according to country-specific conditions. Then, under this carbon budget constraint, every country can accordingly develop its own national development and emission reduction policies to meet basic human needs and judge whether the policies can meet the revised carbon budget. If the policies cannot meet the revised carbon budget, they should be accordingly adjusted to form a feedback mechanism (Pan, 2008a, 2008b). The key of the former approach lies in its priority of meeting basic human needs, but the computation process is relatively complicated and many technical details are controversial; the key of the latter approach focuses on the priority to meet the global long-term goal, and its computation process is relatively simple and practicable. This article attempts to combine the “from top to bottom” approach with the “from the bottom up” approach. With the “top down” approach, the author investigates the allocation, adjustment and transfer of the carbon budget on the basis of a defined global emission reduction target; with the “bottom-up” approach, the author analyzes the national real emission trends and how to meet their basic needs under the carbon budget constraint. The definition of the total global carbon budget is a process of deepening scientific understanding and developing consensus on political will. As it is the construction of institutional framework, for simplicity, we take the emission amount of roughly meeting 450 ppm (ppm is an abbreviation form of volumetric concentration unit, equal to part per million. In the construction of future global emission scenarios, global long-term goals can be expressed in many different ways. For example, the emission target of the Kyoto mode is a 450 ppm stable atmospheric concentration of greenhouse gases; the EU advocates a less than 2 °C increase in global atmospheric temperature. Although there is a certain functional relationship between emissions, concentration and temperature increase goals, it is not a one-to-one correspondence, and there is also a certain uncertainty) equivalent to the level of greenhouse gas concentration as a budget line of carbon emissions and takes the current level of scientific understanding and the commitment of political will as the basis for the research proposal. The Fourth Assessment Report of the United Nations Intergovernmental Panel on Climate Change in 2007 made it clear that by 2050, global greenhouse gases should be reduced by at least 50% over the present (Core Writing Team, 2007). In July 2008, the G8 Summit clearly committed in its Declaration to approve the 50% longterm global emission reduction goal by 2050 and the 2ton converging goal of per capita carbon emissions by 2050 proposed in the Stern Report (Stern, 2008). In this study, the author adopts the scenario analysis method

Total global CO2 emission (billion ton of CO2)

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A Scenario B Scenario

Year Fig. 6.1 Global CO2 emissions of fossil fuel consumption and future emission scenarios

and chooses 2005 as the base year and 2050 as the deadline year for the assessment; two emission scenarios are assumed for the future path of emission reduction under the conditions of meeting the global emission reduction targets: A. Assuming that the global emission reaches the peak in 2015, and the peak value is 10% higher over 2005; B. Assuming that the global emission reaches the peak in 2025, and the peak value is 20% higher over 2005 (see Fig. 6.1). After the future global emission scenarios and corresponding emission path are defined, the global carbon budget is the total amount of accumulated global emissions from the base year to the deadline year (limited by available statistical data on greenhouse gases, the statistics of CO2 emissions resulting from fossil energy consumption and industrial production processes are more adequate and more reliable than the CO2 emissions from land use, land use change and forestry (LULUCF)). Therefore, this study only focuses on the CO2 emissions resulting from fossil energy consumption and industrial production processes. All the global and national historical emission statistics are from the U.S. Oak Ridge National Laboratory database. CDIAC, Global, Regional and National Fossil Fuel CO2 Emissions, http://cdiac. ornl.gov/trends/emis/meth_reg.htm, updated on Aug. 27, 2008, Accessed on July 2, 2009.). For simplicity, we choose the direct cumulative method to calculate, and the calculation results are shown in Table 6.1. Although the UK’s industrial revolution began in the mid-eighteenth century, the total emissions at that time were not enormous, and the emissions had decayed naturally, so its warming potential to the present is almost negligible. Moreover, calculated with 1850 and 1900 as the base year, there is only a small gap of 1.7%. However, with global economic development, there are an increasing number of industrialized countries, and the industrialization process is accelerating, so global emissions will increase year after year. Calculated with 1900 and 1960 as the base year, there is a gap of approximately 23% between the calculation results of global cumulative emissions; the gap is more apparent. If we choose 2050 as the deadline year, there are 151 years from 1900 to 2050, and the figure is rather close to the 142-year life span of CO2 in the atmosphere. Therefore, we

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Table 6.1 Global carbon budget (Unit billion ton of CO2 ) Global carbon budget (from base year to 2050)

Historical cumulative real emissions (from base year to 2004)

Base year

A scenario

B scenario

1850

2311.1

2472.0

1143.5

1900

2272.5

2433.4

1104.9

1960

2019.1

2180.0

851.5

2005

Future carbon (from base year

Budget to 2050)

A scenario

B scenario

1167.6

1328.5

choose 1900 as the base year and investigate the responsibility of cumulative historical emissions, and we can clearly see the huge gap between developed countries and developing countries. Under scenarios A and B, there is a gap of approximately 14% in the future global carbon budget. Similarly, to achieve the 50% reduction goal over 2005 by 2050, the later the turning point appears, the higher the peak value of the turning point is, and the larger the emission space is. Instead, the earlier the turning point appears, the lower the peak value of the turning point is, and the smaller the emission space is. Table 6.1 shows that under scenario A, in these 151 years from 1900 to 2050, the global carbon budget is approximately 2.27 trillion tons of CO2 . In 2006, the total global population was approximately 6.46 billion (global and national population data are from the World Bank database). http://www.worldbank.org/), so the cumulative emissions per capita are approximately 352.5 tons of CO2, and the carbon budget per capita per year will be 2.33 tons of CO2 . If calculated according to scenario B, in these 151 years from 1900 to 2050, averaged with the total population of 2005, the cumulative emissions per capita are approximately 376.7 tons of CO2, and the carbon budget per capita per year will be 2.5 tons of CO2 . According to the estimation of the International Energy Agency (IEA) in 2008 (IEA, 2008), in 2006, the CO2 emissions per capita from energy combustion were 4.28 tons and those of developed countries (including the Soviet Union and Eastern European countries that have finished the industrialization process) were 11.18 tons, while those of the majority of developing countries were only 2.44 tons. In 1990, the base year of the Kyoto Protocol, the global emissions per capita was 3.99 tons and that of developed countries was 11.82 tons, while that of developing countries was only 1.58 tons; from 1990 to 2006, the CO2 emissions per capita of developed countries decreased by 5.4%, while that of developing countries increased by 4.3%. Even in the United States, refused to honor the Kyoto Protocol commitment; during this period, despite an increase of 17.1% in the total amount, the CO2 emissions per capita also decreased by 2.3%. By exchange rates, in 1990, the GDP per capita per day of developing countries was only $2.86 (in 2000 constant prices). According to the World Bank’s survival requirement of $2 per day per capita income, in 1999, the 1.5 tons of CO2 emission

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level per capita of developing countries could not meet the survival needs. In 2006, under the 2.44 tons of CO2 emission level per capita and by exchange rates (in 2000 constant prices), the GDP per capita per day was only $4.85. Although some developing countries have higher income levels, or some rich people in poor countries or regions may also have a high income, on the whole, emission levels of developing countries in 2006 are still on the stage of meeting basic needs. If the atmospheric greenhouse gas concentration is to be stabilized at the 450 ppm level, the global emissions per capita per year should be only 2.33 tons (A Scenario, cap year 2015) to 2.5 tons (B scenario, cap year 2025). This means that to protect the global climate, the global carbon budget can only meet the basic needs of 6.5 billion people under the current techno-economic and consumption patterns. From the perspective of fairness, under the limited carbon budget constraint, each global villager has the right to meet his own basic needs. From the perspective of improving social welfare, on the marginal level, the incremental emission of high-income groups results in the decrease in welfare improvement, or even negative; however, the incremental emission of low-income groups results in the increase in welfare improvement (Pan, 2008a). This means that high-income groups are involved with high emissions due to luxury consumption, taking up the carbon budget of low-income groups for basic needs and even for survival. Considering the 6.5 billion global villagers, the global carbon budget allows no more room for extravagance and waste in the current techno-economic and consumption mode. Fairness in the ethical sense and welfare improvement in the economic sense require that the limited global carbon budget be fairly allocated among global villagers. Therefore, the initial allocation of the global carbon budget is defined according to the global per capita. The population size of different countries varies greatly, and the initial allocation of the carbon budget on the basis of population size shows that a country’s overall greenhouse gas emission space depends on the proportion of its population in the base year to the total global population. To illustrate the carbon budget allocation and adjustments between countries, we choose some typical countries to carry out indepth analysis according to the classification of major countries and country groups in international climate negotiations. Among Annex I countries (hereinafter referred to as “Annex I”) of the UNFCCC, we mainly investigate the European Union, Canada, Japan, Russia, the United States, and Australia; among EU member countries, we focus on France, Germany, Italy, and the United Kingdom (Annex I countries include 39 developed countries and economies in transition. Economies in transition refer to the Soviet Union and Eastern European countries). Among the non-Annex I countries (hereinafter referred to as “Non-Annex I”) of the UNFCCC, we emphasize Brazil, China, India, and other large developing countries, as well as South Korea, Mexico, South Africa, and other developing countries with higher levels of industrialization (non-Annex I countries include all developing countries other than Annex I countries). The calculation results of the initial allocation of the carbon budget of different countries are shown in Fig. 6.2. Because of the large population, the total initial allocation of the carbon budget of China and India as political entities is the largest; however, Canada and Australia are developed countries, but their populations

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South Africa

Mexico

Brazil

India

China

The EU

The U.S.A

Russia

Japan

Canada

Australia

Cumulative CO2 emission (billion ton of CO2)

102

Fig. 6.2 The initial allocation of carbon budget of different countries from 1900 to 2050: A Scenario

are relatively small, so their total initial allocation of the carbon budget is relatively small.

6.3 Carbon Budget Adjustment and Transfer Payment In principle, the needs of people on carbon emissions result from energy consumption needs. In international negotiations on climate change and the construction of global climate systems, national situations must be taken into consideration (in the United Nations Framework Convention on Climate Change and the Kyoto Protocol, there are provisions taking into consideration the differences in national situations). The initial allocation of the carbon budget is a simple per capita distribution without considering the national conditions. Moreover, the national conditions are nothing less than natural conditions and socioeconomic situations. Natural conditions are related to climate, geography, energy resource endowments and other content, while the core of socioeconomic situations is the supply and demand balance of the carbon budget. Specifically, humanity, as a biological entity, needs a suitable temperature range. If the temperature falls out of this range, socioeconomic activities and even vital movement will be affected. Clearly, in extremely high and extremely low temperatures, maintaining carbon emission rights in a suitable temperature range is necessary to meet basic human needs. Similarly, compared with densely populated areas, sparsely populated areas need much more carbon emissions to meet the basic needs of transportation. Moreover, a country’s energy consumption on high-carbon coal, on cleaner oil and natural gas, on zero-carbon nuclear power, hydropower, wind, and solar energy, or on carbon–neutral (Carbon neutral means that the green plants absorb carbon dioxide from the atmosphere through photosynthesis, and give off carbon dioxide by burning or rotting. Under equilibrium conditions, the absorption and emission

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of carbon dioxide through biomass energy are equivalent, and biomass energy can result in quite different carbon emissions towards the same energy services. Therefore, the initial national allocation of the carbon budget should be adjusted according to the general pattern of carbon emissions and related technical parameters. Overall, the analysis shows that the natural conditions of countries have a relatively small influence on the adjustment of the carbon budget; the huge gap between the actual demand and the initial allocation of the carbon budget should be addressed through transfer payments to maintain the overall balance of the global carbon budget and national carbon budget.

6.3.1 Adjustment to the Initial Carbon Budget Based on Natural Conditions 6.3.1.1

Climatic Factors

Climatic factors mainly influence national building energy consumption and carbon emissions. In mature developed economies, building energy consumption accounts for approximately 1/3 of the total final energy consumption. Of this, the heating and cooling energy consumption accounts for approximately 1/2 of the total building energy consumption, so we spare 1/6 of the global carbon budget for adjustment. The two important indicators, which are used to measure the natural climatic conditions and population distribution of different countries, are population-weighted “heating degree days” and “cooling degree days” (heating degree days and cooling degree days are the result of population-weighted daily accumulation of the gap between the daily average temperature and the standard 18 °C. These indicators comprehensively reflect the natural and weather conditions and population distribution. Some areas where the weather conditions are extreme are sparsely populated, so they have little impact on the weighted comprehensive index. The index data are from the World Resources Institute. WRI, “Carbon Analysis Indicators Tool (CAIT)”, http://www. wri.org/project/cait). According to these two indicators, the adjustment result shows that the carbon budget of cold climate countries, such as Russia and Canada, and the relatively hot climate countries, such as India and Indonesia, has increased, while the carbon budget of relatively moderate climate countries, such as South Africa, Australia, Mexico and Brazil, has decreased slightly, and the adjustment ranges from − 10 to + 14%.

6.3.1.2

Geographical Factors

Geographical factors mainly influence national transport energy consumption and carbon emissions. In mature developed economies, transport energy consumption accounts for approximately 1/3 of the total final energy consumption. The average

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distance of trips and transport is closely related to the geographical distribution of the population. Therefore, 1/3 of the global carbon budget can be reallocated according to the geographical factors of different countries. An important indicator that is used to measure the geographical distribution of the population is the land area affected by human activities (this indicator is different from the territory of a country because traffic involves human activities, and if there are no human activities, there will be no transport energy consumption or emissions on the land. The index data are from the World Resources Institution (WRI). WRI, “Carbon Analysis Indicators Tool (CAIT)”, http://www.wri.org/project/cait). According to this indicator, the adjustment result shows that the carbon budget of large but low population density countries, such as Australia, Canada, and Russia has increased, while the carbon budget of high population density countries, such as Korea, Japan, and India, has decreased slightly, and the adjustment ranges from − 14 to + 62%.

6.3.1.3

Energy Resource Endowments

Resource endowments, particularly energy resource endowments, have a certain relationship with the energy consumption structure. With strong economic strength, developed countries can shake off the constraints of resource endowments. For example, Japan lacks resource endowments, and almost all its petroleum consumption depends on imports. However, the energy consumption structure of developing countries is often greatly subject to domestic energy resource endowments. To meet the same energy needs, the carbon emissions of some countries that have more coal resource endowments or coal-based energy consumption structures will be greater. Therefore, it is necessary to compensate those countries for their carbon budget due to a heavier national energy consumption structure, but such compensation of the carbon budget must be appropriate; otherwise, it will not be conducive to encouraging countries to promote the development of low-carbon or renewable energy sources. Therefore, we come up with 1/2 of the global carbon budget, in accordance with the carbon intensity indicator of national energy consumption (measured with the carbon emission data per unit of energy consumption of 2004; the total energy consumption data are from the “Carbon Analysis Indicators Tool (CAIT)” of the World Resource Institute (WRI), http://www.wri.org/project/cait. The carbon emissions data are from the U.S. Oak Ridge National Laboratory database. http://cdiac.ornl.gov/trends/emis/ meth_reg.htm) to adjust the initial allocation of the national carbon budget. The results show that the carbon budget of some countries, such as China, India and South Africa, which depend on coal as the main energy resources, has increased, while the carbon budget of some developed countries, such as France, Canada, and Italy, the carbon intensity of which is relatively low, and the carbon budget of some developing countries, such as Brazil and Kenya, which consume more biomass fuels, has decreased slightly, and the adjustment ranges from − 40 to + 25%. On the whole, as shown in Fig. 6.3, the adjustments according to the above three factors have, to some extent, offset the effect of each other. Ultimately, the adjustment to the total national carbon budget ranges from − 20 to + 78%, and the range becomes

6.3 Carbon Budget Adjustment and Transfer Payment

South Africa

Mexico

Brazil

India

China

The EU

The U.S.A

Russia

Adjusted

Japan

Canada

Australia

Cumulative CO2 emission (billion ton of CO2)

Initial

105

Fig. 6.3 The integrated adjustment to the national initial carbon budget based on natural conditions from 1900 to 2050: A Scenario

relatively smaller. Compared with the fact that there is a gap of nearly 5 times between the initial allocation of the carbon budget of developed and developing countries, such adjustment is minimal. The feedback to this carbon budget proposal from some scholars of Harvard University and Australian National University shows that the adjustment based on natural factors may have little practical significance, but the controversy it causes may be great. This is because, first, humanity needs a process of adaptation to the natural conditions, and no additional increase in emissions or only a small amount of increase in emissions is needed (such as the adaptation to climate factors, people living in the tropics are more heat resistant); second, it is difficult for all countries to reach a consensus on the influencing factors and intensity upon the adjustment; third, under the conditions of economic globalization, international trade can eliminate at least part of the adverse impact of natural resource endowments (On November 10, 2008, Pan Jiahua held a seminar in Kennedy School of Harvard University, and the scholars discussed this issue in depth. In the Australia-China Climate Forum held in Canberra on April 15, 2009, Pan’s keynote speech received enthusiastic feedback from the participants.

6.3.2 Transfer Payments of the Carbon Budget Based on Actual Demand To protect the global climate and stabilize atmospheric concentrations of greenhouse gases, global greenhouse gas emissions must be controlled within limits of the global carbon budget. Then, will the actual emissions and future needs of all countries be

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within the national initial allocation of the carbon budget or the adjusted carbon budget based on the natural conditions? If the carbon budget of all countries is balanced, the global total budget will be balanced; if a country has deficit, the deficit must be relieved with other countries’ budget surplus, and part of the carbon emissions will not be within the future carbon budget of the country. By maintaining a balanced budget at the national level, the goal of overall balance in the global carbon budget can be achieved to ensure the sustainability of the global climate. This means that transfer payments of carbon budgets are needed between different countries. According to the above calculation results, to achieve the target of 50% emission reduction by 2050, the carbon budget emissions per capita per year is 2.33 tons of CO2 under scenario A. Viewing from the historical and present emission data, the real amount of carbon emissions of many countries, especially developed countries, is several times their carbon budget; however, the historical emission level of some countries, mostly developing countries, is far below their carbon budget, and their present carbon emissions are also lower than or close to their carbon budget. For example, in 1971, the emissions per capita of the U.S. has amounted to 21 tons of CO2 , and despite its decrease in 2006, it is still as high as 19 tons of CO2 ; even in the more energy-efficient Japan, in 1971, the emissions per capita also reached 7.24 tons of CO2 , which is over twice its carbon budget, and in 2006, it even increased to 9.49 tons; in Luxembourg, an EU member country, in 1971, its emissions per capita was up to 45.1 tons of CO2 , and by 2006, it decreased by nearly half, but it was still as high as 23.64 tons of CO2 ; that is, in Luxembourg, the current one year’s carbon emissions needed 10 years of its carbon budget (IEA, CO2 emissions from fuel combustion). It can be seen that, both historically and at present, developed countries have had high carbon budget deficits. However, the industrialization process in developing countries starts late, proceeds slowly, and is at a low level, so both their historical and present carbon emissions are lower than their carbon budget. For example, India’s carbon emissions per capita in 1971 is only 0.36 tons of CO2 , and even in 2006, it is only 1.13 tons, with over 50% of the annual budget surplus; Bangladesh’s carbon emissions per capita in 1971 is only 0.04 tons of CO2 , and by 2006, its per capita level has reached only 0.24 tons CO2 , and if calculated according to this level, 10 years of emissions of Bangladesh only spends one year of its carbon budget; China’s carbon emissions per capita in 1971 is only 0.95 tons of CO2 , with 60% of the annual budget surplus, and by 2000, China’s carbon emissions per capita has reached 2.41 tons of CO2 , roughly flat with the use of the annual budget, and by 2006, it increases to 4.27 tons of CO2 , exceeding 83% of its annual carbon budget. The above investigates the carbon budget balance in history. What about the future? The historical deficit of most developed countries would inevitably lead to huge budget overdrafts. For example, the historical cumulative carbon emissions of the U.S. are already 2.6 times its total budget, and the United Kingdom is 2.9 times. The future use of carbon budgets in developing countries will be quite different. As a country with relatively higher industrialization and with the acceleration of industrialization and urbanization processes and the improvement of people’s living standards, China’s carbon emissions per capita will further increase, and its future

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carbon budget will deficit. In Asia’s newly industrialized countries, such as South Korea and Singapore, their carbon emissions per capita in 2006 exceeded 9 tons of CO2 , while for those countries that just started or had not started their industrialization process, their future use of the carbon budget undoubtedly had a large surplus. Obviously, transfer payment of the carbon budget is necessary. First, the historical debts of developed countries must be repaid; otherwise, it is difficult to balance the budget. Second, developed countries have overdrawn their future carbon budget; in some older industrialized countries, such as Britain and the United States, they have no carbon budget available, but according to the previously discussed principles of ethics and economics, their basic needs of carbon budget must be met. Therefore, from the perspective of developed countries, international transfer payments of carbon budgets are necessary. For some of the more industrialized developing countries, if their future carbon emissions exceed their carbon budget, transfer payments are also necessary, but whether to choose cross-time, self-transfer payments due to historical surplus or international transfer payments depends on the specific conditions. Because the total global carbon budget is determinate, whether cross-country transfer payment of carbon budget or cross-time, self transfer payment is feasible or not depends on whether there is carbon budget surplus. In principle, the industrialization level of less developed countries is relatively low, their commercial energy consumption is limited, their future industrialization process also has large uncertainty, and their historical and future carbon budget have a large surplus. Even in the future, these countries start the process of industrialization, taking into account the late-mover advantage of technology spillover, and compared with the current and past industrialization process, the same industrial development will need a much lower carbon budget. It is almost impossible for the current highly industrialized developing countries to have a surplus in their future carbon budget, and there may be a deficit, but their historical budget must have a considerable surplus. For example, entering the twenty-first century, South Korea’s emissions per capita reached as high as over 9 tons of CO2 , but in 1971, it was only 1.58 tons of CO2 . For such countries, the carbon budget of different periods of a country fits into cross-time, self-transfer payments. For early industrialized countries that have seriously overdrawn their future budget, their finance and technology advantages may result in low-carbon or zero emissions, coupled with the due population decline in the future (the carbon budget is allocated according to the population of the 2005 base year, without taking into account changes in the future). Therefore, if the future population declines, the future per capita amount will increase; otherwise, it will decrease), and the future carbon budget of these countries will not necessarily have a deficit. This indicates that international transfer payments and cross-time, self-transfer payments are feasible based on the overall surplus of less developed countries, the historical surplus of industrialized developing countries, and the population decline and zero-carbon technology options of developed countries. The transfer payment of the carbon budget is not only necessary but also feasible. Taking into account the fact that climate change negotiations and the sharing of international obligations are based on national political entities, this article focuses

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Fig. 6.4 Adjusted carbon budget and the adjusted carbon budget after transfer payment measured with cumulative emissions from 1900 to 2050: A Scenario

on international transfer payments instead of cross-time, self-transfer payments. The international transfer payment includes two aspects: one is the historical budget deficit of developed countries; the other is the carbon emissions to meet the future basic needs of developed countries. How much will the two transfer payments of the carbon budget be? The transfer payment for the historical overdraft of developed countries will be approximately 310 billion tons of CO2 . The second transfer payment of the carbon budget to meet the future basic needs of every person in developed countries will be approximately 145.6 billion tons of CO2 . Adding the two together, the total size of the carbon budget transfer payment will be approximately 455.6 billion tons of CO2 , equivalent to 0.58 tons of CO2 per capita per year in developing countries, and it accounts for approximately 1/4 of the total carbon budget. After the above two transfer payments of the carbon budget, the carbon budget of developed countries has increased significantly, measured with cumulative emissions. As shown in Fig. 6.4, the carbon budget of the U.S. increases from 117.2 billion tons of CO2 to 341.1 billion tons of CO2 , and the EU increases from 166.6 billion tons of CO2 to 320.7 billion tons of CO2 , increasing nearly 3 times. If measured with cumulative emissions per capita per year, the carbon budget level of developed countries is obviously higher than the average level of the global carbon budget, which violates the principle of fair allocation of the carbon budget to each person. As we can see from Fig. 6.5, the global carbon budget per capita per year is 2.33 tons of CO2 , the United States is 7.7 tons of CO2 , and the EU is 7.2 tons of CO2 . On the whole, for the carbon budget of Annex I countries and Non-Annex I countries, the proportion of initial allocation of carbon budget of the two groups is 19.5:80.5 (The initial allocation depends on carbon budget per capita, and because of a larger population of developing countries, they have a larger share), and after the adjustment with natural factors, it becomes 21.0:79.0, and after the two times of transfer payment of carbon budget, the proportion become 40.5:59.5. Therefore, the actual use of the carbon budget and the pattern of greenhouse gas emissions

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6.3 Carbon Budget Adjustment and Transfer Payment

Fig. 6.5 Adjusted carbon budget and the adjusted carbon budget after transfer payment measured with cumulative carbon emissions per capita per year from 1900 to 2050: A Scenario

have changed considerably. It should be noted that the actual emissions of developed countries may still be higher than this figure because the emissions of developed countries are much higher than the level of their basic needs, and to ensure that their current level of development is not affected, developed countries may purchase a carbon budget in the market.

6.4 Does the Carbon Budget Proposal Have Preferences for Specific Countries? The carbon budget proposal has the dual advantage of equity and sustainability, and it seems to be beneficial to late-mover developing countries with large populations. Admittedly, to these late-mover developing countries with large populations, this proposal protects their residential greenhouse gas emission and basic rights of development because they are at the vulnerable side, and what’s more, as late-movers, they will not repeat the low energy efficient technology option of early industrialized countries, and the high starting point, high efficiency, and low emission advantages will enable developing countries, especially less developed countries, to have great carbon budget surplus both in history and in the future. Therefore, this proposal actually protects the interests of relatively vulnerable groups in the international community (Rawls, 1971); it can meet the development needs of developing countries. The transfer payment of the carbon budget is especially good for low carbon development in developing countries, and if they can obtain finance and technology in return, it will be much better. For this reason, when this proposal was first proposed in the international community, the immediate response of Western scholars is that the starting point and goal of this proposal are for China’s interests (for example, Bert Metz, the united chairman of IPCC Working Group III, has made it clear that this is a strategy of developing

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countries with large populations, but later after full understanding of the situation, in principle, he supports this proposal.). However, little analysis will show that this reaction is superficial and biased. The theoretical basis of the carbon budget is solid, the methods are scientific, and it is suitable to everyone and every country in the world; it is not designed for one country. Of course, the meaning of any proposal is clear to a specific individual or a country. This proposal has clarified the historical responsibility of developed countries and has safeguarded the basic rights of carbon emissions and interests of developing countries, including the rights and interests of the rich. Moreover, the transfer payment of the carbon budget is associated with finance and technology returns, and a win–win result of sustainability and economic benefits can be achieved. Then, for China, what is the significance of the proposal? First, from the population point of view, although a large population will have a large budget, for each individual, it is equal, and there is no advantage at all. Since the family planning policy was first adopted in China in the 1970s, approximately 400 million births have been averted, but this is not within the carbon budget. Taking the population of 2005 as the base is a realistic and objective choice, which is not because China has the largest population in 2005. In fact, according to the forecast of the State Family Planning Commission (State Family Planning Commission, 2007), China’s population will continue to grow until approximately 2033, when the peak value of the population will be 1.5 billion. The new population has no carbon budget. In this sense, the population of developing countries is still in rapid growth, so the future population will be larger than the current population, while the carbon budget will not be increased due to population increase. Therefore, the base year option is not favorable to developing countries, including China. However, for developed countries, the population is steadily dropping. In Europe and Japan, the future population projection is lower than the current population level, while their carbon budget is not cut because of future population reduction. In this sense, the proposal for these mature economies should be more favorable. Of course, the United States, Canada, Australia and Russia have vast land but low population density, and the natural growth of the population of these countries is similar to that of Europe and Japan; although population immigration will lead to the mechanical growth of the population in these countries, the proposal allows the carbon budget quota to move with the population among countries, and therefore, the adverse effects of the mechanical growth of the population in these countries can be basically eliminated. Second, China is a relative late-mover country. China’s current level of technology in the industrialization process is much higher than the technological level of early industrialized countries in the eighteenth, nineteenth and twentieth centuries. It should be noted that the early industrialized countries looted a large number of resources from backward countries through aggression and colonization. When China was in a semifeudal and semicolony society, China was forced to cede territory and pay reparations, which indicates that a large amount of the early finance accumulation of industrialized countries depends largely on the “contribution” of developing countries. Although the present industrialization of China and India and

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the industrialization of less developed countries in the future have late-mover technological advantages, the accumulation of carbon stocks associated with the development process can only be achieved at home. Compared with late-mover countries that have not started industrialization processes, China’s current technology on the whole is of high carbon; if the static one-time allocation of the total carbon budget would benefit these countries, China is only in a moderately favorable position, not prominent. According to the overall design of the carbon budget proposal, China’s initial budget is 458.8 billion tons of CO2 , and adjusted with natural factors, it will be 454.2 billion tons of CO2 , which has little comprehensive effect on China. China is a relatively late-mover country with relatively less historical emissions. From 1900 to 2004, China’s historical actual emissions were 84.2 billion tons of CO2 , accounting for only 18.5% of the total budget; from 2005 to 2050, the future carbon budget surplus was approximately 370 billion tons of CO2 . The next 46 years account for less than 1/3 of the total time period, while the left carbon budget remains 81.5% of the total. At first glance, China’s future carbon budget seems to be adequate, but China’s development can only be gradual. Even if China can continuously improve its energy efficiency and energy structure, it is impossible for China to achieve zero emissions in the next 46 years. As shown in Fig. 6.6, following Scenario 1, China’s carbon emissions will reach a peak in 2030, increasing by 105% over 2005, and by 2050, they will increase by 90% over 2005; the cumulative future emissions will exceed the available budget by 80.1 billion tons of CO2 . Only through low-carbon development and international cooperation, following Scenario 2, can China’s carbon emissions reach the peak in 2030, increasing by 55% over 2005, and in 2050, the carbon emissions will increase by 45% over 2005; the carbon emissions can be controlled within the budget, but there will be no extra budget available for sale. In 2006, the net increase in China’s carbon emissions was 154% over 1990; to achieve Scenario 1 and Scenario 2 and to reach the peak in 2030 and realize corresponding

Emissions in production, Scenario 1 Emissions in consumption, Scenario 2 Emissions in production, Scenario 3

2050 (Year)

Fig. 6.6 The carbon emission scenarios on the production and consumption side in China from 2005 to 2050

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targets of controlling emission growth, China faces more severe challenges than other countries. Of course, some analyses indicate that China is a “world factory”, and approximately 30% of its energy consumption and emissions are the result of international trade (Chen et al., 2008). As shown in Fig. 6.6, if measured from the consumption side, China’s carbon budget constraints will increase by approximately 8%. In fact, the production of high energy consumption and carbon-intensive products does not match the consumption of such products, and this kind of situation actually originates from the earlier stage of the industrial revolution. In the British Industrial Revolution, it is a global manufacturer of textiles, and a significant proportion of its products are for global consumption, followed by Europe, North America, and Japan as the “world factory”. China is the current “world factory”, and 20 or 30 years later, India or Africa may replace China as the “world factory”. Undoubtedly, it is very difficult to count the old and new accounts of all “world factories”. Moreover, as a “world factory”, through large-scale production, the carbon productivity of domestic consumption should also be internationally competitive. Moreover, the measurement of emissions on the consumption side cannot bring much budget room for China, and it may cause much dispute. Therefore, in this article, the carbon budget proposal does not place special emphasis on the differences in emissions resulting from the mismatching of production and consumption. In summary, the carbon budget proposal does not have any preference for a particular country or country group but is relatively objective. China, a developing country with a large population, cannot benefit from the carbon budget and reduce its pressure on international emission reduction. In contrast, as a hard constraint, the carbon budget indicates that China can only take low-carbon development.

6.5 Design of Related International Mechanisms The carbon budget proposal involves the initial allocation, adjustment, transfer payment, market, funding mechanism, reporting, verification, and compliance mechanism, and its implementation requires a set of corresponding international climate regimes. Although the carbon budget proposal is scientific in theory and methodology, as an overall global greenhouse gas emission reduction proposal, many elements of it still need to be discussed in international political and diplomatic negotiations before it comes into being finally. This article only discusses some of the key mechanisms, including the market mechanism, the mechanism, and the compliance mechanism.

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6.5.1 Market Mechanism Fundamentally speaking, the carbon budget proposal is a “cap and trade” proposal (both the EU’s emission trading proposal and the current emission trading proposal of the U.S. restrict the total volume, and they allow users to trade quotas in the market), but its cap finds expression on three levels. The first is the global total greenhouse gas emissions, which have been scientifically proven and have reached political consensus around the world, to protect the global climate. The second is the national total carbon budget adjusted according to a country’s population and natural socioeconomic situations. The third is to meet the basic needs of individuals, and carbon emissions can be budgeted to each person; once the carbon budget is approved, the international and interpersonal transaction of the carbon budget is feasible in principle. Because the current emissions per capita of developed countries are more than 3 times the amount of their carbon budget, the transfer payment of the carbon budget is only to protect their basic needs, and the excess part of carbon emissions can be obtained through the carbon emission market. On the one hand, developed countries can obtain additional carbon budgets with lower costs to meet their current consumption needs; on the other hand, developing countries selling part of their budget surplus can obtain necessary finance and technology to promote their lowcarbon development. The scale of the future international carbon market will depend on actual supply and demand conditions and national efforts to reduce emissions. If the demand exceeds the supply, then the carbon price will rise, which will stimulate developing countries to strengthen domestic emission reduction and increase supply, and developed countries will also expand international cooperation to achieve emission reduction abroad. The transaction of the carbon budget can also be realized within a country. The government can allocate the carbon budget to enterprises or consumers by auctioning or rationing, and then the carbon budget market will come into being. Current emission trading occurs mainly among manufacturers. In fact, because each person’s consumption level varies, carbon emission trading may also occur among consumers.

6.5.2 Mechanism Mitigation and adaptation are the two key aspects for addressing global climate change. Mitigating greenhouse gas emissions requires finance and technology; adapting to climate change also requires finance and technology; especially for the majority of developing countries, finance is a major problem. Where does the finance come from? The carbon budget proposal provides a good mechanism. First, it is about the transfer payments of the carbon budget. To maintain the balance of the global carbon budget, we do not take asset properties into consideration; since carbon is a scarce resource, it should have a price, and its transfer

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payments will result in returns of currency. Of course, for transfer payments, we need to consider its particularity. Historical budget deficit is a fact, but before 1992, greenhouse gas emissions were not supposed to be controlled, and there was no legally binding, so carbon emissions then did not involve any legal responsibility. However, a considerable amount of greenhouse gases in the current atmosphere is still derived from carbon emissions before 1992; for this part, the price of transfer payments should be relatively lower. Since 1992, greenhouse gas emissions have proven to be harmful by law, and for this part, the price of transfer payments for the historical budget deficit should be relatively higher. The transfer payments for future basic needs should not be measured with the price of extravagance and waste emissions for currency returns because they are used to meet the basic needs. The transfer payments for historical budget deficit and the transfer payments for basic needs total up to 455.7 billion tons CO2 . If the price of CO2 in the current international market is 10 Euros per ton, the total value of transfer payments of the carbon budget will be up to 4.6 trillion euros, an average of approximately 100 billion euros per year for the future, which is much higher than the amount that developed countries provide for developing countries to fulfill their obligations to offer assistance. Second, the current emissions per capita of developed countries remain high, and a mere 2.33 tons of CO2 per person per year in transfer payments can only meet the basic needs, not enough to maintain their current standard of living, so developed countries will inevitably have a huge amount of carbon budget requirements. In 2006, the total population of Annex I countries was 12.67 billion, and the emissions per capita was 11.8 tons CO2 , indicating that each person should buy 5 tons of CO2 on average and that CO2 budget transactions would amount to six billion tons; if the price of CO2 in the current international market was still 10 Euros per ton, the total value of transfer payments of the carbon budget would be up to 60 billion euros. Third, if developed countries do not change their way of life and zero-carbon energy production cannot meet the needs of emission reduction, then a punitive mechanism should be adopted. This mechanism is the progressive tax on carbon emissions. The current carbon emission per capita of developed countries is 11.2 tons of CO2 . Of this, the transfer payment for basic needs is 2.3 tons of CO2, and 5 tons of CO2 can be bought in the market, but there are still five tons of CO2 over the budget. For the excess part, it is necessary to levy a carbon tax through a punitive mechanism. The carbon tax is levied based on the actual amount of exceeding the carbon budget, and the tax rate is capped at the price of renewable energy. If the tax rate reaches the price of renewable energy, the Party will choose to replace traditional energy sources with renewable energy to achieve domestic emission reduction and will not choose to pay a fine. For example, in the United States, if the international market can only meet half of its purchase needs, its future cumulative carbon emissions will be 2.6 times the budget. If the price of CO2 in the current international market is still 10 Euros per ton, then the total taxable amount from 2005 to 2050 will be nearly 400 billion euros, an average of approximately 8.7 billion euros per year. These funds should be injected into existing funding mechanisms or used to establish a new global fund to support developing countries in mitigation and adaptation

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and to promote technology transfer. The national contribution to the transfer of the carbon budget should be taken into consideration with respect to the use of funds and the allocation of the carbon budget. India and other countries that have made larger contributions to the transfer of carbon budgets will benefit most. It should be noted that even if the fine is paid for the part exceeding the carbon budget, it does not mean that the country is exempt from emission reduction obligations and can obtain an additional carbon budget; the current excess part of the carbon budget should be deducted from its carbon budget for the next commitment period (after 2050). In the long run, the balance of the global carbon budget must be maintained; otherwise, it is impossible to achieve the sustainability goal of protecting the global climate. The EU’s emission trading system fits into such an arrangement.

6.5.3 Compliance Mechanism Due to the rigid constraints of the carbon budget, each country must abide by it, and the fairness and sustainability of the carbon budget proposal can materialize. The above punitive funding mechanism is a compliance mechanism. However, regarding how to implement this mechanism, there are still many specific issues to be resolved. For example, how can the progressive tax rate be defined? Who is responsible for levying carbon tax? Is it an international mechanism, or should it be levied by the state? Should the tax be used by the international community, or should it be used by each state? Should it be used for emission reduction or for adaptation? Should it be used for advanced countries or for developing countries? These issues are to be resolved through international negotiations and consultations. Overall, the carbon budget proposal is not only transparent and predictable in budget allocation, adjustment and transfer, which enhances the operability of the proposal but is also greatly compatible with the existing Kyoto Protocol mechanism with respect to the design of its international mechanisms. First, it can be implemented phase-by-phase based on the determination of long-term goals. The above mechanisms are designed for the period 2005–2050, and according to the negotiation process, they can be divided into a number of commitment periods for implementation. Second, expand market mechanism. All countries can participate in the global carbon market. Third, strengthen the mechanism. The existing funding mechanism is voluntary, while the funding mechanism under the carbon budget is larger and mandatory. Fourth, assessment, reporting and verification mechanisms were established. Because the carbon budget allocation, adjustment and transfer are transparent and predictable, as long as the emission data are collected through the existing reporting mechanism and regularly measured to see whether they can meet the carbon budget, the measurable, reportable and verifiable mechanism will have no more new difficulties. Fifth, strengthen the compliance mechanism. The existing compliance mechanism is very weak, and a punitive funding mechanism should be introduced to the carbon budget proposal to strengthen the compliance mechanism for the implementation of the budget.

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6.6 Conclusions and Discussion The carbon budget proposal proposed in this article adheres to the human development concept and is a package proposal that is operational, that gives consideration to both equity and global climate protection and that is related to the allocation of quantified emission rights and relevant international mechanisms. Defining a reasonable level of carbon budget faces the choice between development objectives and sustainable environmental goals. The key to development objectives is to protect basic human needs, while the sustainable environmental goals are to protect the global climate. The latter is a hard constraint, so it should be given priority. On the one hand, the carbon budget stresses its universal nature, and it extends the equal emission rights of each person to the entire development process. Except for the population, the differences in some other factors of all countries are temporary; such factors include the present stage of economic and social development and related GDP, energy consumption, emission levels, and other factors. Such factors are not used as the main basis for the allocation of emission rights. On the other hand, the carbon budget takes into account the differences. Considering the differences of all countries in natural conditions, the carbon budget is adjusted accordingly, but in any event, reasonable adjustment to the budget is far less than the real differences in carbon emissions. Moreover, the carbon budget proposal is an integrated package one, which covers the entire process of development and is different from the Kyoto Protocol and other such schemes that only consider only one time period and have no overall objectives. The carbon budget proposal has established the standard of cumulative emissions per capita that can meet the long-term global goal and fairly reflect national differences. Everyone should strive to control the personal “carbon footprint” within a reasonable range. All countries should have appropriate policies and measures to protect people’s basic needs, to curb extravagance and waste and to encourage the formation of sustainable consumption habits. Both developed and developing countries have this responsibility. Of course, the methodology of the carbon budget should be further studied and improved. For example, in the above calculation, all the calculations of cumulative emissions are performed with the direct accumulation method. From a scientific perspective, the increase in the atmospheric concentration of CO2 incurred by carbon emissions will occur over time, so a function should be introduced, and a method should be used to calculate the cumulative emissions. However, the accurate calculation of function requires complex climate models, particularly those involving the impact of future emission paths on atmospheric concentrations; if there is no correction to observed data, there will be a large uncertainty (UNFCCC, 2002). From a qualitative point of view, developed countries have much historical emissions, and they can greatly reduce their carbon emissions in the future, while developing countries have less historical emissions, and their future emission growth will be evident. Therefore, the introduction of a function to the calculation of cumulative emissions

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plays down the historical responsibility of developed countries and is beneficial to developed countries. In the methodology of carbon budget proposal, the choice of some parameters could be controversial. For example, the long-term goal for global emission reduction, the base year for the calculation of historical cumulative emissions, and so on. Some disputes can be resolved through negotiations, and sensitivity analysis can be carried out to study the impact of these parameters on the calculation results. In any case, the carbon budget proposal is on a scientific basis; it combines the principle of equity to meet the basic needs with the sustainability goals of the whole world, and it is a complete proposal designed for the post-2012 international climate regime. The quantitative analysis of the carbon budget in this article is helpful for the whole world to reach a consensus on the following important fact: if global carbon emissions are to decrease by 50% by 2050, severe challenges must be faced because the carbon emissions of developed countries in history, at present, or in the future exceed and exceed and will inevitably exceed their carbon budget, which seriously encroaches on the emission space as a global public resource. Although the carbon emissions of developing countries are lower than their carbon budget and they have the rights of development and emission, to protect the global climate, which is the common interest of the whole world, developing countries must contribute to mitigating climate change through low-carbon development. The post-2012 international climate regime should be established based on the above facts and be reasonably arranged; under the premise of being equity and protecting the global climate, we should achieve the long-term goals of addressing global climate change through international cooperation. Such policy implications provide valuable new ideas for breaking the current deadlock in international climate negotiations.

References Baer, P., Athanasiou, T., Kartha, S., & Kemp-Benedict, E. (2008). The greenhouse development rights framework: The right to development in a climate constrained world (revised 2nd ed.). Available online: http://www.ecoequity.org/docs/TheGDRsFramework.pdf. Accessed on July 2, 2009. Bodansky, D., Chou, S., & Jorge-Tresolini, C. (2004). International climate efforts beyond 2012. Pew Center on Global Climate Change. http://www.pewclimate.org/docUploads/2012%20new. pdf. Accessed on July 2, 2009. Chen, Y., Pan, J. H., & Xie, L. H. (2008). Energy embodied in goods in international trade of China: Calculation and policy implications. Economic Research, 7, 11–25. Core Writing Team, Pachauri, R. K., & Reisinger, A. (Eds.). (2007). IPCC climate change 2007 synthesis report. Released on November 17, 2007, Valencia, Spain, http://www.ipcc.ch/ipc-cre ports/ar42syr.htm. Accessed on July 2, 2009. IEA. (2008). CO2 emissions from fuel combustion. OECD Publishing. Jiang, L. W., & Hardee, K. (2009). How do recent population trends matter to climate change. Population Action International. http://www.populationaction.org/Publications/Wor king_Papers/April_2009/population_trends_climate_change_FINL.pdf. Accessed on July 2, 2009.

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Pan, J. H. (2005). Fulfilling basic development needs with low emissions—China’s challenges and opportunities for building a post-2012 climate regime. In T. Sugiyama (Ed.), Governing climate: The struggle for a global framework beyond Kyoto (pp. 87–108). International Institute for Sustainable Development (IISD). Pan, J. H. (2008). Carbon budget for basic needs: Implications of international equity and sustainability. World Economics and Politics, 1, 35–42. Pan, J. H. (2008). Welfare dimensions of climate change mitigation. Global Environmental Change, 18(1), 8–11. Pinguelli Rosa, L., & Kahn Ribeiro, S. (2001). The present, past, and future contributions to global warming of CO2 emissions from fuels: A key for negotiation in the climate convention. Climatic Change, 48, 289–308. Rawls, J. (1971). A theory of justice (H. He et al., trans.). China Social Sciences Press. Sen, A. (1997). Development as freedom. Oxford University Press. S. F. P. Commission. (2007). Research report for state population development strategy. China Population Publishing House. Stern, N. (2008). Key elements of a global deal on climate change. The London School of Economics and Political Science (LSE), April 30, 2008. http://www.lse.ac.uk/col-lections/granthamInstitute/ publications/KeyElementsOfAGlobalDeal_30Apr08.pdf. Accessed on July 2, 2009. UNFCCC. (2002). Scientific and methodological assessment of contributions to climate change. Report of the Expert Meeting, Document number FCCC/SBST A/2002/INF. Zhu, X. L. (2006). Carbon emissions: Meeting the basic needs of human development. PhD thesis, Graduate School of CASS.

Chapter 7

Carbon Budget Management on the Road to New-Type Urbanization Jiahua Pan

China’s urbanization is a large-scale, rapid and long process. It has been achieved against a number of challenges involving land, energy, water resources and the environment; these challenges are ultimately subject to the rigid constraint of a carbon budget. The philosophy and principle of an ecological civilization are incorporated into the process of urbanization. The carbon budget constraint brings about opportunities resulting from a huge demand for raw materials, labor force and a keen demand on the consumer goods market and constitutes an enormous source of power for economic growth; more importantly, such a constraint has a vital bearing on national energy security and contributions to global ecological safety.

7.1 Carbon Budget for Protecting the Global Climate From the Copenhagen Accord to the 2015 Climate Agreement1 that needs to be reached to start the Durban Platform negotiations, the objective was to control the rise of global temperatures within 2 °C relative to the level before the Industrial Revolution. To achieve this objective, assuming that the probability level is 50%, the space for global carbon dioxide emissions will be approximately 2.2 trillion tons in 200 years, from 1850 to 2050.2 Based on the population in 2005, the per capita cumulative emissions will be approximately an annual 2.33 t carbon dioxide. Developed countries exhausted their carbon budget quotas, equitably allotted under the principle of per capita historical accumulation, during their industrialization and urbanization. As China’s industrialization and urbanization are accelerating, 1

A package agreement reached in the United Nations Climate Change Conference in Doha on December 9, 2012. See http://www.UNFCCC.int/doha/. 2 See Carbon Budget, Pan Jiahua, Zhang Ying, Social Sciences Academic Press, 2012.

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the historical surplus is being massively consumed, and the carbon budget deficit will inevitably loom large. In 1970, China’s per capita emissions were only 0.95 t, which was 1/4 of the world’s average level. In 2010, China’s per capita level reached 5.39 t, which was 21.4% higher than the world’s per capita level3 ; the urban per capita emission level in China exceeded the EU’s average level, while the level in some cities, such as Tianjin, was close to that in the USA. In 2011, carbon dioxide from the burning of fossil energy and cement production in China accounted for 28% of the total carbon dioxide in the world, and it was more than the sum of the total carbon dioxide in the USA (16%) and 27 EU countries (11%).4 The report of the 18th National Congress of the Communist Party of China stressed the goals for building a moderately prosperous society in all aspects, doubling the GDP of 2010 and the level of the residents’ income by 2020, which means that the annual average economic growth rate must be kept at approximately 7.5% in the future; as estimated according to the energy consumption elasticity coefficient in the past 30 years,5 an energy consumption of an annual average growth rate of approximately 4.5% is necessary. Given that the proportion of nonfossil energy in China will increase from 8.3% in 2010 to 15% in 2020, carbon dioxide from the burning of fossil energy will grow annually at a rate of more than 3.5% on average. Thus, China’s carbon dioxide emissions will grow by 36.3% in 2020. Whether in terms of the international response to climate change, the need to contribute to the global ecological security pattern or the reality of domestic energy security and sustainable development, China’s urbanization drive is subject to rigid constraints on the carbon budget.

7.2 Carbon Constraints for the Quality of Urbanization New-type urbanization should be an urbanization characterized by an ecological civilization. Being cyclic, green and low-carbon are necessary for enhancing the quality and effectiveness of urbanization and transforming the modes of production and consumption. A cyclic development is carried out by transforming the linear production and the consumption modes—“raw materials—products—wastes” and “products— consumption—wastes”—into a cyclic utilization mode—“raw materials—products—wastes—raw materials” and “products—consumption—wastes—raw materials”, mitigating, and even removing, the pressure from the demand for raw materials, environmental pollution and occupation of environmental space by wastes. The only 3

See IEA, 2012, CO2 Emissions Highlights 2012, International Energy Agency, Paris. IEA’s statistics only include carbon dioxide from the burning of fossil energy. 4 The Global Carbon Budget 1959–2011, Earth Syst. Sci. Data Discuss, 5, 1107–1157. 5 The energy consumption elasticity coefficient in the past 30 years was 0.4–1.6 (except the East Asian financial crisis in 1997) and averaged approximately 0.6. See China Statistical Yearbook (2012). 0.6 is taken here.

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choice for sustainable development on Earth, as a “spacecraft” with limited capacity and volume,6 lies in developing a cyclic economy. Green development calls for controlling pollution emissions within the self-purification capacity of the environment and containing the utilization of natural resources within the bearing capacity of the environment. To be low-carbon, efforts only seem to be required to reduce the consumption of fossil energy and control carbon emissions at a relatively low level. Theoretically, if sufficient inexpensive energy is available, it is enough to be cyclic and green as long as investments and facilities can be operated. For example, municipal solid wastes make up a vast treasure trove of endless raw materials. Their classification, transfer and purification require considerable energy consumption. As long as the sewage pipe network and sewage treatment factories are built through investments and they are operated, municipal sewage can certainly be treated to reach the standard, but each segment must be guaranteed by energy. As long as there is sufficient low-price energy, sea water can be desalinated, and water can be delivered over a long distance to address water shortages in cities. It is difficult to obtain highcarbon fossil energy, let alone guarantee the supply of zero-carbon nonfossil energy. If energy becomes more cyclic and greener, the carbon emission level will be higher. If there is a constraint on carbon emissions, efforts to make it more cyclic and greener will be restricted. Therefore, in practice, it is not difficult to make energy cyclic and green, while the real difficulty consists of achieving a low level of carbon. The level at which and the way in which it becomes cyclic and green are subject to the constraint from low carbon. Low carbon serves as the final—the most effective—yardstick for testing for intensive, intelligent, green and low-carbon urbanization.

7.3 Low-Carbon Opportunities from the Development of Urbanization The rigid constraints of the carbon budget present both challenges and opportunities. Developing zero-carbon nonfossil energy and utilizing fossil energy in a more efficient way to bring down, even to eliminate, carbon emissions and take the road towards low-carbon urbanization foster new economic growth points and employment opportunities. If China seeks to control its total energy consumption at 5 billion tce and achieve 15% nonfossil energy by 2020, the output of zero-carbon commercial energy equivalent to 0.75 billion tce is required. The production, installation, operation and maintenance of onshore and offshore wind generators, the stimulation of domestic demand for addressing the capacity for photovoltaic power generation, hydropower construction and the commercialization of biomass energy not only serve as sources for maintaining growth but also provide a large number of jobs. 6

Boulding, Kenneth E., 1966, The Economics of the Coming Spaceship Earth, http://dieoff.org/ page160.htm.

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Large-scale urbanization requires a great quantity of energy-efficient products, such as heat insulating building materials, energy-saving electric appliances and pure electric vehicles. The existing high-carbon products should be replaced, and the currently available products should be renovated and transformed so that the scale of the energy-efficient products is continuously expanded. Efforts should also be made in a low-carbon way to make it cyclic and green. For example, municipal domestic sewage should be treated by adopting a wetland natural purification system to effectively avoid the consumption of fossil energy; even conventional sewage treatment facilities should also be operated by wind power and solar power, making these facilities zero-carbon and green. If households and communities use renewable energy, near-zero emissions can be achieved. For example, solar water heaters can be used in households and public buildings such as schools and hospitals, greatly decreasing the consumption of commercial fossil energy. The migrant agricultural population that has obtained the status of “citizen” no longer needs to directly burn the biomass energy used in rural areas and use small biogas facilities, but large and medium-sized biogas production and biological carbon production can fully become important sources of energy for new-type urbanization. Urban residents also need a host of low-carbon products to enjoy a liveable and good-quality life. Low-carbon transportation requires the operation of more public transportation facilities. Bicycles are also necessary for residents since they enable residents to travel in a low-carbon manner, keep fit and perform physical exercise. Massive afforestation, the building up of green spaces and a wetland ecological environment offer a good deal of carbon sink and biomass energy, as well as quiet and comfortable places for residents’ travel and leisure. Theoretically and practically speaking, low carbon does not necessarily give rise to economic and social constraints. In contrast, if we seize opportunities to develop lowcarbon industries and create a low-carbon environment, we can truly fuel economic growth and promote green growth by increasing the level of urbanization.

7.4 Strategic Management of the Carbon Budget in New-Type Urbanization The rigid carbon budget constraint is not groundless, but it is inevitable. In the UK, a law was passed in 2005, explicitly stating that the emission level should be reduced by 80% by 2050 compared with 1990, and the total quantity constraint mechanism for working out a quinquennial carbon budget should be adopted to achieve its long-term emission reduction goal.7 It is necessary for us to strategically manage the carbon budget in new-type urbanization. Intense management of the goal is carried out to lower carbon dioxide emissions per unit of GDP by 40%-45% by 2020 compared with 2005; a total quantity 7

The Energy Bill, http://www.publications.parliament.uk/pa/bills/cbill/2012-2013/0100/130100. pdf.

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restriction goal for carbon dioxide emissions by 2030 is set at the national level, and China’s emission level should peak prior to 2030; it is inevitable for China to reduce emissions by an absolute quantity of 2040. For the future, the strategic management of the carbon budget in China will involve a process that goes from the reduction of emission intensity to the restriction of the total quantity of emissions to the reduction of the absolute quantity of emissions. From another perspective, given that there are regional differences and different stages in China’s urbanization, the strategic management of the carbon budget should take into account the regional pattern and developmental process of urbanization. In the eastern coastal areas, such tier-one cities as Beijing, Shanghai, Guangzhou and Shenzhen, the space for extensive development has become saturated, while intensive improvement directly results in enhancing the energy efficiency and increasing the use of zero-carbon energy. From a certain perspective, the carbon budget management in these tier-one cities should ensure a restriction on the total quantity of emissions by 2020 and a reduction in the absolute quantity of emissions by 2030. In the central and western regions where massive additional urban population is absorbed, the reduction of the intensity of emissions by 2020, a restriction on the total quantity of emissions by 2030 and a reduction of the absolute quantity of emissions by 2040 should be considered. As specified in the report at the 18th National Congress of the Communist Party of China, we will work with the international community to actively respond to global climate change on the basis of equity and in accordance with the common but differentiated responsibilities and respective capabilities of all countries. In light of China’s urbanization process, China should make a law, at the national level, to carry out carbon budget management, specify the guidance and goals, and incorporate the philosophy and principle of ecological civilization into various aspects and into the whole process of urbanization.

Part III

Economic Analysis of Low-Carbon Transformation

Chapter 8

Low Carbon Transformation Jiahua Pan and Ying Zhang

Along with industrialization and urbanization processes, China’s emission of greenhouse gases has been increasing rapidly and substantially over the past 40 years, as measured in aggregate and in per capita terms. While there are reasons to drive up emissions, the Chinese government has made efforts to lower the rate of increase in emissions, as emission reduction is consistent with China’s pursuit for energy security and sustainable development. Ambitious targets and aggressive actions have been made in China to accelerate the process of low carbon transformation. However, challenges remain, and additional policies will be required to accomplish the process of low carbon transformation.

8.1 Introduction In the past four decades, great transformation has taken place in China with respect to industrialization and urbanization. The rapid growth of the Chinese economy has caused increasing concerns over environmental indicators. Such imbalanced treatment between economic growth and environmental protection has led to international trade surpluses and degradation of the environment domestically. Evidently, this should not be continued. Starting from its 11th FYP (five-year plan, 2006–2010), the Chinese government has included a set of environmental indicators, with some of them having specified mandatory targets. However, climate change issues were not highlighted in the 11th FYP. Climate change is not only an issue for global sustainability but also an issue for sustainable development in China. China is vulnerable to climate change impacts, and emission reduction can have cobenefits for energy efficiency and energy security.

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_8

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As the Chinese economy continues to grow, attention has to be paid to the mitigation of carbon emissions. The Chinese economy needs to be rebalanced in the global economic system. In the meantime, China’s drastic increases in emissions have to be curbed, as they have been rapidly reshaping the global emission pattern. Emission mitigation can greatly help the rebalance of the economy in terms of structural changes and technological upgrading. Increasingly, as a global player, China has to take corresponding responsibilities. In 2009, before the United Nations Climate Conference in Copenhagen, the Chinese government pledged to reduce carbon emissions per unit of GDP 40–45% by 2020 compared to the level in 2005. This target is further disaggregated and included in the 12th FYP (2011–2015), requiring a 17% reduction by 2015 on the basis of the 2010 level. Critical among the 12th FYP objectives is the rebalancing of China’s growth pattern toward a more services- and consumption-driven model, away from the past emphasis on industrial production, capital investment, and exports, which is necessary to address the social, environmental, and external imbalances of China. As a reflection of the importance the Chinese government places on climate change policy and its resolution to rebalance the economy, this paper gives an overview of the background and perspective on China’s low-carbon transformation for rebalancing the Chinese economy. The main topics covered are China’s increasing share of global emissions and the main driving forces behind it; an outline of China’s strategic position to mitigate emissions and the key elements of its strategy for dealing with the issue; and a discussion of the main constraints and opportunities offered by China’s low-carbon development and economic rebalancing process. Based on the discussion, some policy implications are derived.

8.2 China’s Emissions Pathways 8.2.1 Overall Trend of Emissions in Aggregate According to statistics compiled by the International Energy Agency (IEA, 2012), total emissions from fossil fuel combustion in China outnumbered the figure in the US in 2007. This means that at the country level in aggregate, China replaced the United States to become the world’s largest greenhouse gas (GHG) emitter in 2007 (see Fig. 8.1). Driven by rapid economic growth and increasing energy consumption, the annual growth rate of CO2 emissions in China from 2000 to 2010 has reached double digits, ranging from 11.2 to 11.9% (Auffhammer & Carson, 2008). In 2011, China accounted for 28% of the world total emissions of CO2 from fossil fuel combustion, which was higher than the US (16%) and EU27(11) combined.1 Since the financial crisis in 2007, most developed countries have been on track to decrease their emissions, while emerging economies such as China and India have 1

CDIAC Data.

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US

EU(France, UK, Germany)

China

CO2 Emission (Million Metric Tons

India

United States Japan India Brazil United Kingdom China

Fig. 8.1 China’s GDP and CO2 Emissions as compared to selected economies. a China and other major economies’ GDP, 1970–2010. b China and other major economies’ CO2 Emissions since 1980. Source World Bank and IEA

been increasing their emissions at a relatively high speed. Four years after the start of the crisis, for example, emissions were + 9.9% in 2011 compared to the previous year in China and + 7.5% in India, while the numbers for the US and EU were – 1.8 and – 2.8%, respectively. From Fig. 8.1, we may also see that the US’s economy is still the largest one over the world; its GDP of 2010 in current US dollars is almost twice that of China’s. China’s total GDP exceeded Japan in 2010 and has ranked second in the world ever since then but is still less than that of EU countries as a whole group.2 In 1971, China’s total emissions accounted for only 5.7% of the world total, and the share in 1990 increased to 10.9%. In 2010, 24.0% of the world total emissions in fossil fuel combustion sources originated from China (IEA, 2012). This is in contrast 2

In the figure, we just calculate the sum of UK, France and Germany’s GDP to indicate the trend of EU’s economy growth.

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Table 8.1 Per capita energy-related CO2 emissions (Tones) 1971

1980

1990

2000

2010

2020

2030

20.7

20.2

19.1

19.7

17.3

16.8

15.8

Japan

7.2

7.5

8.7

9.4

9.0

9.3

9.0

China

1.0

1.4

2.0

2.4

5.4

7.0

8.0

India

0.4

0.4

0.7

1.0

1.4

1.6

2.3

Brazil

0.9

1.5

1.3

1.7

2.0

2.3

2.5

EU

8.1*

8.7*

8.6

7.9

7.3

7.9

7.5

US

to the cases in developed countries where emissions have been rather stabilized or even on the decline and in other developing countries where the rate of growth in emissions is seen much slower.

8.2.2 Changes in China’s Per capita Emissions However, the picture in terms of per capita emissions provides a somewhat different perspective. The US is by far among the world’s largest per capita CO2 producers (4 times the global average in 2010), although the rate has declined by approximately 20% since 1971 (see Table 8.1). On the other hand, per capita emissions by an average Chinese in 2010 reached a level nearly a quarter higher than the world average, which is 5 times higher than the rate in 1971. In contrast, per capita emissions in the developed world, such as those in the EU and Japan, have stabilized, while the number in the United States has even declined over the past decades. There is an increase from Indians and Brazilians, but the rate of increase is not as fast due to factors such as differences in energy mixes and trade patterns among the countries.

8.2.3 China’s Cumulative Emissions In terms of cumulative emissions, from 1904 to 2004, carbon dioxide emissions from fossil fuel combustion in China made up only 8% of the world’s total over the same period, and its cumulative emissions per capita only ranked 92nd in the world. If measured with accumulated emissions from industrial revolution for the period from 1850 to 2004, studies by the China’s National Climate Center suggest per capita for world is averaged at 173.5 t CO2 , while the number for China is at 68.9 t, as compared to 15 t for India and 318.7 t for the United States. Using accumulated historical emissions at the country level for 13 major economies (G8 + 5 countries), the United States accounts for 39.0% compared with China at the 10.8% aggregate level for the period between 1950 and 2004. However, if the number is per capita historical accumulated emissions for the same period, the contribution by an average

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Chinese is at 1%, higher than an average Indian at 0.4%, but much lower than the number at 21.3% for an average American, 16.6% for Canadian and 16.4% for a British.

8.2.4 Future Trend of Emissions The indicates that without any change in the current energy use patterns and policy measures, GHG emissions will continue to increase, and the world temperature will follow a warming trend. The IEA (2008) calculates that under the business-as-usual scenario, from 2006 to 2030, the annual growth rate of world energy-related CO2 emissions would be 1.6%, and the rate for the US would be 0.1%, but China’s CO2 emissions would maintain a growth rate of 3.1% annually, much higher than the world average level. As shown in Fig. 8.2, without taking actions and measures in the future, China’s emissions would increase over time and reach 16.2 After 2030, if energy technologies are put into place, there will be 11.7 Gt emission savings by 2050, which means that China’s future CO2 emissions depend on development pathways. In terms of per capita CO2 emissions in the future, China’s per capita CO2 emissions increased to 4.6 ton/per capita in 2007, greater than the world average level of 4.4 ton/per capita. Table 8.1 shows that China’s per capita CO2 emissions would overtake the EU and be close to Japan by 2030.

Business as Usual (BAU) Emissions Control (EC) Emissions Abatement (EA)

Fig. 8.2 China’s future CO2 emissions. Source UNDP (2009)

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8.3 Major Drivers for Emission Increases There are several key elements driving the high rate of energy consumption and greenhouse gas emissions, including growth of the economy; structure of the economy (and particularly the industrial structure); the dominance of coal in the overall energy mix and the likelihood that this dominance will persist well into the foreseeable future; and urbanization.

8.3.1 Increase in Size of the Economy Since economic reform and opening up in the late 1970s, China’s rate of economic growth has been kept at nearly double the digit level. Over the 18-year period 1990– 2008, China’s annual real rates of growth fluctuated in the range of 4–15%, but the average annual growth rate was approximately 9.8% per annum. This sustained growth rate has significantly changed the world and China’s place within it. However, this growth has been achieved at a high environmental price through the development of what has been described by the World Bank as a “high growth, high pollution” economy, a mode of economic growth that makes it very difficult to decouple emissions from growth. A high rate of economic growth is projected or expected to continue. At the 18th Congress of the Chinese Communist Party, a target is set to double the level of income by 2020. This would mean that the economy will have to grow at an annual rate higher than 7.5%. This number is lower than that in the past 30 years but gives the current size of the economy and the scale of manufacturing facilities; this rate will constitute a huge challenge for new leadership. In the past several years, the rate has dropped from approximately 10% a year before 2008 to approximately 8% or even lower.

8.3.2 Economic Structure China’s phenomenal growth could not have been achieved if the structure of the economy had remained the same as they were in the early 1980s, at which time, according to NBS data, secondary industry accounted for approximately 48% of GDP, primary industry for approximately 28% and the tertiary sector (which was almost exclusively government-owned), accounted for only 24%3 Thirty years later, in 2009, the role of secondary industry actually remained stable (approximately 46.8% of total GDP in 2009), but the significance of primary industry declined considerably (to just less than 11% in 2009). The contribution of the tertiary 3

In China, the primary sector includes agriculture, forestry, animal husbandry and fisheries. The secondary sector includes mining, manufacturing, utilities and construction. The tertiary sector is everything else.

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sector grew fairly consistently through the 1990s until it reached approximately 40% in 2001. From 2001 to 2008, it seemed to stop growing in relative terms (its contribution to GDP actually declined slightly to the range 40–41%), but in 2009, it increased to 42.6%, perhaps signaling a resumption of its upward trend of the 1990s. A lion’s share of energy consumption goes to the industrial sector. Of the total amount of electricity consumed at 4.96 trillion kWh in 2012, 73.9% was by the secondary sector, compared to 2.0, 11.5 and 12.6% by the primary, tertiary and household sectors, respectively.4 From an environmental point of view, the most disturbing development over the last decade is the apparent change in the growth trajectories of the secondary and tertiary sectors. There seems to have been a change in trend in 2009, but it remains unclear whether this will be maintained. It is difficult to see how China can meet either its social or energy efficiency objectives unless it increases the role of the services (tertiary) sector—a fact that is explicitly recognized in the 11th Five Year Plan which noted that the economy relies too heavily on secondary industry while the share of the tertiary sector is too small.

8.3.3 Energy Mix The endowment of fossil fuel resources in China determines that the coal-dominant energy mix cannot be changed dramatically in the near future. However, most of the declines in the relative importance of coal took place prior to and including 1998, at which time the role of coal had already reduced to approximately 70% of the total mix. Since then, there have been no further significant and sustained reductions. China’s energy profile is a major factor influencing the GHG emission path and will continue to represent a major challenge over the coming years. It is almost impossible to foresee a medium-term future (10–20 years) in which coal does not maintain its leading position in the energy supply mix. With respect to electricity generation, the total installed capacity reached 1144 GW in 2012. Coal is dominant not only in the installed capacity but also in the total output (see Table 8.2).

8.3.4 Urbanization Each year over the past 3 decades, approximately one percentage point of the urbanization rate has reduced the share of the rural population by 30 percentage points. This means that each year, 13 million people are added to the urban sector. This huge number of newly urbanized people would require shelters, jobs and urban infrastructures. 4

National Energy Administration, January 14, 2013.

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Table 8.2 Installed capacity and actual output of electricity generation in 2012

Installed capacity (%)

Output of electricity (%)

Thermal

71.6

77.7

Hydropower

21.8

17.4

Nuclear

1.1

2.0

Wind

5.4

2.0

Solar PV

0.1

< 0.1

Note Total installed capacity is 1144 GW and total amount of electricity generated 4.96 trillion kWh in 2012 Source for installed capacity, National Energy Administration, for electricity generated, China Electricity Monitoring Board, January 15, 2013

The official statistic for the rate of urbanization was 53.6% in 2012, compared to less than 18% in the late 1970s. Projections for 2020 and 2030 give numbers of 60 and 70%, respectively. This would mean that there will be some 300 million people to be further added to the urban sector by 2030. However, this number is an underestimate, as there are now some 260 million migrant urban residents who live and work in cities but are rejected in part of all entitlements to urban social services such as education, medical care, pension, and even the right to buy a car and an apartment for living. This duality situation has to be changed, and the government is making efforts to “urban citizenize” these huge secondary class urban citizens. If the yearly rate to absorb these migrant people is assumed to be 13 million, some 20 years would be required to accomplish the process. In addition, most old towns and rural villages that are encircled in city boundaries are without necessary urban infrastructures such as sewage pipelines and natural gas pipelines. All these would require reconstruction. Urbanization, urban citizenization and reconstruction would have clear implications for energy demand. The rapid urbanization process imposes huge pressure on China’s environment and energy consumption pattern. Perhaps the greatest environmental challenge posed by urban development is due to the increased per capita energy consumption that is generally associated with it. Urban residents consume far more energy for transport, heating and cooling, use of domestic appliances, and power the industries associated with urban life than their rural counterparts.5 Energy consumption creates negative externalities, for example, in the form of CO2 emissions and acid rain, which is already a critical environmental problem in China. Managing the energy consumption of continuing urban development is one of the major environmental challenges facing the government.

5

For example, it has been calculated that, in 2005, urban households in the CHINA consumed 360% more commercial energy than their rural counterparts.

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135

8.3.5 Prospects for Medium and Long Term Future In July 2010, the IEA released preliminary data showing that China overtook the United States to become the world’s largest energy consumer in 2009. Even though the Chinese government and many scholars disagreed with that conclusion, the reality is that the two countries are on significantly different energy consumption trajectories. According to BP statistics, China’s total energy consumption was 15.2% higher than that of the US in 2011. In 2012, energy consumption in China further increased by 3.9% over the previous year, totaling 3.62 billion tce. Figure 8.3 shows the government’s baseline energy consumption projections for the period 2000 to 2050. The projections provide for a more or less continuous increase in the annual rate of consumption throughout the projection period, although with a slight flattening in the rate of annual increase commencing approximately 2020. The growth scenario for the 12th FYP (2011–2015) is based on a rate of economic growth of 8% per annum, an energy consumption elasticity of 0.51 and a 3.7% per annum reduction in economic energy intensity. Total primary energy consumption would reach 4.2 Billion tce per annum and coal would remain the dominant source (accounting for approximately 64% of the total, equivalent to 3.80 billion tons per annum of raw coal), although the projected flattening off of consumption beginning in 2020 seems rather optimistic. The role of nonfossil fuel sources would increase, but they will still remain relatively insignificant in the total picture (by 2015, hydropower would supply 6% of the total, nuclear 1.6%, wind 1.4% and biomass 0.5%). Total energy demand by 2050 is projected to reach 6.66 Btce, approximately 94% higher than the likely current (2010) demand of 3.44 Btce.

Millions tce

Coal Oil Gas Hydro Nuclear Other Total

Fig. 8.3 Actual and projected total China energy demand 2000–2050 (Mtce). Note “Other” includes wind, bio-electric and bio-diesel. Data source Energy Foundation (2009)

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8.4 China’s Determination to Pursue a Low Carbon Development Path 8.4.1 China’s Strategic Need for Addressing Climate Change Global climate change is considered to have a profound impact on the existence and development of humanity and is a major challenge faced by all countries.6 It is closely linked with various factors, such as the development stage, lifestyle, population size and resource endowment of countries and the international division of labor. Therefore, climate change challenges have to be addressed in the course of development and solved through common development. In the last few years, China has increasingly recognized the adverse consequences of soaring demand for energy, the impact of pollution on the welfare of its own citizens, and its vulnerability to the effects of climate change. China also sees considerable potential in capturing a greater market share in the production and export of green technologies.

8.4.2 Major Initiatives Promoting Low Carbon Development China’s climate change policy advanced dramatically since 2006, when China initiated its 11th five-year plan (2006–2010). Faced with soaring energy demand, the Chinese government in November 2005 called for a reduction in energy intensity by 20% in 2010 compared to 2005. To ensure the emission reduction and energy-saving target can be achieved successfully, 10 specific measures were introduced, including: (1) strengthening energy-saving responsibility to evaluate the emission reduction targets assessment; (2) resolutely curbing high energy consumption and high emission industries growing excessively; (3) speeding up the elimination of outdated production capacity; (4) increasing the energy intensity of the implementation of emission reduction of key projects; (5) focusing on key areas of energy-saving; (6) strengthening pollution prevention; (7) speeding up energy-saving technology development and promotion of emission reduction; (8) implementing economic policies conducive to energy conservation and emission reduction; (9) strengthening supervision and inspection work of energy-saving performance; (10) organizing campaigns for energy conservation and emission reduction in various ways. Meanwhile, the national-level goal was translated down to the provincial, local, and firm levels, where they were incorporated into the performance evaluations of officials. Moreover, local financial incentives were put in place to ensure compliance; these incentives include subsidies to install higher energy efficient equipment and performance-based distribution of funds.

6

Speech made by the Chinese President Hu Jintao at UN Summit on Climate Change, 22 Sept 2009, in New York.

8.4 China’s Determination to Pursue a Low Carbon Development Path

137

As industry is the largest energy consumer and greenhouse gas emitter thus far, Chinese policies are now focused most strongly on improving industrial efficiency to reduce emissions. Additionally, the target of emission reduction and energy savings was accompanied by a number of sectoral policies, including the “Thousand Enterprises Program”, which identified 1008 top energy consumption enterprises (33% of the country’s total energy consumption, 47% of the industrial energy consumption, and approximately 43% of the country’s GHG emissions). Particular incentives have been applied to improve their energy efficiency. In addition, other actions, such as a small plant closure program, enforcement of new building energy and a program for appliance standards and labeling, have also been implemented. In addition, Chinese officials extended such demand-side measures to automobile fuel efficiency. The fuel efficiency standard for motor vehicles is increasingly stringent. Furthermore, in an effort to stimulate growth in its renewable sector, China has set a clear target on raising the proportion of renewable energy (including large-scale hydropower) in the primary energy supply by up to 10% by 2010 and 15 percent by 2020.

8.4.3 Efforts Made to Emission Reductions and Energy Savings After implementation of the 11th FYP, China’s energy intensity decreased by 19.1% in 2010 compared to 2005, close to the target but obviously higher than other developed countries and the world average level over the same period. China has also vigorously developed and utilized renewable energy and has obtained impressive achievements. From 2006 to 2010, the size of wind power doubled at an annual basis, making China the largest in terms of installed capacity. Currently, China is building dozens of large-scale wind power projects at the 1 GW level and will focus on the construction of three great wind power plants at the 10 GW level in the Hexi Corridor in Gansu, Inner Mongolia and northern Jiangsu coastal areas. Developing at this speed, it is expected to arrive at 20 GW in 2010 and 100 GW in 2020, which will greatly exceed the targeted number of 30 GW. China is actively developing solar energy power generation and solar thermal utilization. By the end of 2007, the collector area of solar water heaters reached 120 million square meters and has been ranking first in the world for many years. In 2007, solar photovoltaic power generation reached 0.1 GW, the annual production capacity of photovoltaic cells reached 1 GW and is the world’s largest producer of photovoltaic cells. In 2000, the installed capacity of nuclear power in China was 2.1 GW, and in 2008, this number has increased to 9.1 GW, accounting for 1.3% of the total installed capacity of power, far lower than the average rate of 16% of the total power generation of nuclear power plants around the world. It is expected that by 2010, China’s installed

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capacity of nuclear power will reach 12 GW, which is equivalent to 80 million tons of CO2 emission reduction. The government also delivers relevant polices and incentives to promote biomass power generation and methane utilization in rural areas. By the end of 2008, there were approximately 32 million household biogas digesters nationwide, 140,000 biogas digesters on wastewater purification pools, and more than 28,300 biogas projects on livestock farms and industrial wastewater treatment sites.7 With an annual methane output of approximately 10 billion cubic meters, these initiatives supply quality fuel for cooking and heating to an estimated 80 million rural people. Although other biomass energy applications in China are still in the early development stages, it is worth noting that venture capital firms have begun seeking viable biomass technology projects in China, which may speed the commercialization of these applications nationwide. By the end of 2008, the installed capacity of biomass power generation was approximately 3.14 GW. Biomass liquid fuel is an important substitute for oil, including fuel ethanol and biodiesel. Currently, the main challenge for domestic biomass development is feedstock collection. The seventh forest reserve assessment showed that China’s wooded area covered 1.95 billion hectares in 2009, the percentage of forest cover was 20.36%, and the forest stored up 137.27 billion cubic meters. At the 2007 APEC conference, China pledged to the world to increase the forest coverage rate to 20% by 2010, which was realized well ahead of time. At the same time, the Central Party Committee and State Council published the “Decision about Speeding up Forestry Development” in June 2003, which estimated that the Chinese forest cover percentage would reach 26% in 2050.

8.4.4 The Need to Accelerate Low Carbon Transformation A low carbon development strategy is not only a response to global climate change but is also necessary for environmentally sustainable development and energy security. China’s fossil fuel situation is characterized by a lack of oil and gas but a great abundance of coal. China’s import of raw oil amounted to 270 million tons in 2012, 6.8% higher than the previous year, close to 60% of total consumption. China is said to be rich in coal, but China has become a net importer of coal, and in 2012, China’s net import of coal reached 200 million tons,8 even though it has the third largest coal reserves in the world.9 China’s proven reserve of oil is estimated to last 9.9 years of consumption. 7

Data cited from Ministry of Agriculture. China General Customs Office, January 10, 2013. 9 Imports in 2009 were 10million tons. Net imports for 2010 reached approximately 17 million tons which will make the China the largest coal importer in the world. China’s total reserves are 114.5 billion tonnes, placing it third in the world after the US (238.3 billion tonnes) and Russia (157.0 billion tonnes) (Source). China was a net coal exporter until 2003 but the government, in the interests of energy security, has placed controls on coal exports in the form of taxes and quotas. 8

8.4 China’s Determination to Pursue a Low Carbon Development Path

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Global oil reserves will meet global consumption at the current rate for approximately 40 years if the current production/reserves ratio remains the same. The production/reserves ratio for natural gas in China is three times higher than that for oil but would meet the demand for 32.3 years of consumption, approximately half as much as the global outlook (some 60 years). China’s coal supply situation is much better, but at the current production/reserves ratio, even these reserves will only support 33 years of consumption, which is 1/4 of the global average (112 years).10 Of course, the reserve situation is constantly changing, but the government considers that it has a clear strategic interest in not relying too heavily on the global market for something as fundamental as energy. In any event, domestic coal mining has many associated adverse environmental and social impacts that provide additional reasons for diversification of the energy base. Thus, the real question for China is not whether the transformation to a lower carbon society should be made but how to accelerate the process. Nevertheless, the government considers that the rate of low carbon transformation has to be kept compatible with the country’s development level. Reducing carbon emission intensity in China is a relative target. Even if carbon emission intensity has been reduced by 45%, China’s GHG emissions would still increase by 60% given the expectations on GDP growth. Reducing China’s carbon intensity (i.e., emissions per unit of GDP) by 40–45% in 15 years (2006–2020) is a rather ambitious and difficult objective, as no country in history has ever achieved it and China is experiencing a particularly critical period of industrialization and urbanization.11 However, the economy has been growing at 10% on average for the last 30 years, and the industrial sector has shifted from a labour intensive to a capital-intensive mode of growth. In 2012, China’s raw steel output reached 715 million tons, while cement production totaled over 2 billion tons; both represent approximately 50% of global production.12 It is difficult to imagine that either sector will be able to sustain 10% growth rates in the future. After the accomplishment of the 11th five-year plan, China has further detailed energy saving and renewable energy development targets in its 12th five-year Energy Plan (see Table 8.3). In general, development targets are in the category of being anticipatory, while environmental and energy intensity targets are made compulsory. However, China has a long way to go before it can reach the level of performance of the more developed economies. Key developments that will be required include (i) the level of efficiency of all kinds in the industrial sector must improve significantly; (ii) the role of the tertiary sector must expand in parallel with domestic consumption rises; and, in the longer term, (iii) China’s target is to develop a predominantly service economy similar to most OECD countries at the stage of post-industrialization. 10

The global estimate is from IEA (2008). Between 1990 and 2005, CO2 emission intensity reduced by 49% in China (IEA, 2007). Emission intensity reductions for other countries were mostly under 30% over the same period. 12 China’s share of global steel production now exceeds the combined production of the US, the EU 27, Russia, and Japan, which historically were the largest producers of steel. For 2010, annual steel production capacity in China is as high as 740 million tons while actual production in 2010, according to official statistics, reached 627 million tons. 11

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Table 8.3 12th Five-Year Plan for energy development Unit

2010

2015

Rate of change

Note

Total primary energy

Billion tce

3.25

4.00

4.3%/a

A

Non-fossil fuel share

%

8.6

11.4

2.8% points

M

Energy intensity

Tce/10,000 rmb

0.81

0.68

16%

M

Thermal power efficiency

Grams coal /kW

333

323

– 0.6%/a

A

Electricity installed

GW

970

1,490

9.0%/a

A

capacity

GW

660

960

7.8%/a

A

Thermal

GW

220

290

5.7%/a

A

Hydro

GW

10.8

40.0

29.9%/a

A

Nuclear

GW

26.4

56.0

16.2%

A

Natural gas

GW

31.0

1000

26.4%/a

A

Wind

GW

0.9

21.0

89.5%/a

A

Solar PV

17%

M

CO2 reduction

g/kWh

2.9

1.5

– 12.4%/a

M

SO2 reduction NOx

g/kWh

3.4

1.5

– 15.1%/a

M

Note A: anticipatory target; M: mandatory target Source State Council, Directive 2013(2). January 1, 2013

During the course of these developments, and even without specific government intervention, China’s GHG emissions would continue to increase, but at a rate to lower year after year.

8.5 Challenges and Opportunities in the Process of Low Carbon Transformation 8.5.1 Global Energy Consumption and Emission Pattern One remarkable trend of world energy consumption and emission is the share over the global total between the South and the North, with the North decreasing while the South increasing. BP’s primary energy consumption data suggest that China’s energy consumption growth rate of 2010 (11.2) ranked 1st of the world and accounted for 24.8% of the total world energy consumption, 5.8% higher than US, whose share of primary energy consumption ranked second in the world. Although the US still accounts for a large share, its growth rate was just 3.7% in 2010 over 2009, lower than that in emerging economies such as China, Brazil and India and lower than that in Japan, close to the OECD average level. Between 2008 and 2009, primary energy consumption increased significantly in Asia, China and Brazil.

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One of the most important recent developments in the world economy is the increasing economic integration of large non-OECD countries, in particular Brazil, the Russian Federation, India, China and South Africa, the so-called BRICS countries. BRICS represent almost one-third of world GDP, up from 18% in 1990. In 2009, these five countries represented 33% of global energy use and 37% of CO2 emissions from fuel combustion. These shares are likely to rise further in coming years if the strong economic performance currently occurring in most of these countries continues, as many would expect. In fact, China, the Russian Federation and India are already three of the four countries that emit the most CO2 emissions in absolute terms. The change in global energy consumption and emission patterns shows that a rebalancing process of economic development, energy consumption and emission paths worldwide has already started. The share of developed countries of total energy consumption and emissions will gradually decrease. Meanwhile, developing countries, especially emerging economies, will account for a larger share. This means that China needs to do more to improve energy efficiency to deal with the accompanying pressure during the economic development process.

8.5.2 Overcoming the Barriers to Low-Carbon Development The Chinese government has been pushing the low carbon pathway to cope with sustainability and climate change challenges. To support China’s transition toward a low carbon economy, there is a need to overcome policy barriers, including (a) lack of long-term strategy/planning and no systematic approaches to deal with climate issues; (b) poor coordination between national, regional, and local decision making, fragmentation among authorities and different sectors within the policies issued, which weakened the power of the legal system; (c) insufficient measures or instruments or approaches that local governments can follow on how to reach climate goals, such as institutional arrangement, financial supports, information sharing and other specific actions needed for the target; and (d) limited capacity for monitoring, reporting and enforcing mechanisms designed for policy implementation and assessment. Currently, most climate policy focuses on command and control instruments. Market-based mechanisms for effectively managing climate issues have yet to be strengthened. A carbon tax system, for example, will have an impact on China’s macroeconomy, but the cost will be affordable in the long run and represents an economically effective means of reducing CO2 emissions. However, it will be important for the introduction of such a tax to be revenue neutral (government revenue has been increasing at twice the rate of GDP in recent years). In addition, revenues from carbon taxes need to be used for specific related purposes, such as R&D on clean technologies, provision of subsidies for renewable energy, investments in climate change funds for disaster relief and risk management, provision of financial assistance to disadvantaged people accessing basic energy services and adaptation to climate change, and encouragement of low-carbon lifestyles.

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8.5.3 Policy Instruments Currently, most climate policies mainly focus on administrative measures of command and control instruments. Incentive-based mechanisms will let the market operate with effectiveness and efficiency. A carbon tax system will have an impact on China’s macroeconomy, but the cost of the tax policy is affordable in the long run, and its effectiveness of CO2 emissions reduction can be significant. However, it has to be clear that such a tax must be revenue neutral, as the tax burden in China on taxpayers is already high and the government revenue has been increasing at twice the rate of GDP. A cap-and-trade system should function the same as a carbon tax does in emissions reduction if it is designed reasonably. Through such practices, we will gain experience in designing the trading system and policies based on China’s reality, provide opportunities for enterprises to make use of the carbon market, work out solutions to the issues, and accumulate data and information for the expansion of China’s carbon market. In 2005, China enacted the Renewable Energy Law, which came into effect on January 1, 2006. In 2009, China officially announced the target for renewable energy target at 15% of total primary energy consumption in 2020. All these factors have shown a positive impact on renewable energy utilization. As shown in Table 8.4, the actual turnout of renewable energy production in 2010 was much higher than planned. It is very like that the target of a share by renewable energy over total primary energy consumption at 11.4% would be exceeded if the total production of energy from renewables would reach the number as planned for 2015 at 478.00 mtce. Regarding the usage of renewable energy, international cooperation is necessary to mitigate risks and to accelerate the process. To save energy and lower carbon emissions, a strategic view must be taken to create and enhance overall carbon productivity and competitiveness. Table 8.4 Renewable energy development: targets for 2015 Unit

2005 actual

2010 planned

2010 actual

2015 target

Hydropower

GW

117.39

190.00

216.06

260.00

Wind

GW

1.26

10.00

31.00

100.00

Solar PV

GW

0.07

0.3

0.8

21.00

Biomass electricity

GW

2.00

5.50

5.50

13.00

Biogas

B m3

8.0

Household bio-digesters

m

18.00

40.00

40.00

50.00

Solar water heaters

M m2

80.00

150.00

168.00

400.00

Ethanol

M tons

1.02

2.00

1.80

4.00

Bio-diesel

M tons

0.05

0.20

Total output

Mtce

166.00

19.0

14.0

22.0

0.50

1.00

286.00

478.00

Source State Council, 2013. 12th Five Year Plan for Renewable Energy Development, Beijing

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8.6 Conclusions and Policy Implications Low carbon transformation is actually part of the process to rebalance the Chinese economy, both domestically and internationally. Reduction of energy and carbon intensity promotes structural change of the economy and upgrading technologies. As China is now in the process of low carbon development, carbon constraints will lead to a decrease in exports of goods with a large amount of energy and emissions embedded for international trade. All these findings indicate that low carbon transformation in China will result in both mitigation of carbon emissions and help with rebalancing the economy. With regard to energy demand, China experienced a slow rate of growth during labor-intensive industrialization towards the end of the twentieth century and then a rapid rate during its capital-intensive industrialization stage during the first decade of the twenty-first century. Due to its size of population and economy, the scale of increase in fossil fuel energy consumption has been unprecedented. How much further can such increase go? Two factors are critical: (1) the transition from a capitalintensive to a knowledge-intensive economy or a more balanced economic structure and (2) a change in consumer behavior. This would mean that China’s energy demand will continue to increase but at a slower rate in the 12th five-year plan and peak at approximately 2025 given that China’s manufacturing capacity is already close to or at its peak level, such as iron and steel, cement, electric appliances, etc. China’s contribution to global warming can also be seen from perspectives. Historically, China’s contribution was minimal, but in aggregate, the current level was high, and the high aggregate number will continue for the years to come. In terms of per capita emissions, many urban Chinese have already had a higher rate of emissions than their counterparts in developed nations. However, a large rural population lowers the rate of per capita emissions. Per capita emissions in rural areas will increase, but the rate is unlikely to be comparable to the rate by their urban counterparts in the short run. China is driven to address climate change issues by an array of factors: (1) rebalancing the Chinese economy domestically and internationally, (2) concerting global climate efforts to keep the temperature increase below 2 degrees; (3) domestic energy security; (4) climate security/vulnerability; (5) human environment and health impacts, and (6) sustainable development (environmental pollution control and ecological conservation). As a result, China has taken ambitious and in many cases aggressive actions to reduce emissions by (1) improving energy efficiency in the industrial, transport and building sectors; (2) fast and large-scale development and deployment of nonfossil fuel energy technologies, including nuclear and renewables; (3) large-scale afforestation and reforestation to increase forest sinks; (4) structural changes of the economy by increasing the share of the tertiary sector over GDP; and (5) R&D in carbon capture and storage. A number of policy initiatives have already been put in position, including energy and carbon intensity target setting, incentives and disincentives

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such as subsidies and taxes, establishment of carbon markets, low carbon planning at local and national levels, and legislation and standards. However, China’s transition to a low carbon economy will have to overcome a series of barriers: the need to accomplish its process of industrialization and urbanization, slow process of commercialization of renewable energy technologies, uncertainty concerns over carbon capture and storage technology, duplication of lifestyle from rich countries, resource constraints for forest sinks, and lack of institutional capacity to accelerate the transition process smoothly. China has been making active efforts addressing climate change issues. Investment in adaptation using engineering (physical infrastructure such as dikes and irrigation facilities), technical (such as new crop varieties) and institutional (such as planning and legislation) technologies has upgraded China’s capacity to deal with climate change impacts. Mitigation targets were set in the 12th five-year plan and disaggregated for enforcement at the local and sectoral levels. Given that China is the largest emitter in aggregate at the global level and that a further increase in emissions is envisaged, China will need to take further actions to work together with the international community to address climate change issues. China’s problem is not only the responsibility of the Chinese but also the challenge to everybody on Earth. Key areas that international communities and the Chinese government can work together may include the following: (1) global climate regime building. As a key member of the BASIC group and G77 + China, China’s role in climate change negotiation is highly important. (2) Exploration of the possibility for China to take a lead to the transition to a lower carbon economy, in particular through promotion of commercialization of renewable energy technologies. (3) Increase in energy efficiency in all aspects. (4) Establishment of a climate friendly life style. (5) Low cost and low carbon adaptation to climate change. (6) Approaches to reduce non-CO2 gases and increase forest sinks. (7) R&D in renewable energy, energy efficiency, CCS and other technologies that would mitigate and adapt to climate change. In addition, (8) building up institutional capabilities.

References Auffhammer, M., & Carson, R. (2008). Forecasting the path of China’s CO2 emissions using province-level information. Journal of Environmental Economics and Management, 55(3), 229– 247. British Petroleum (BP). (2013). BP statistical review of world energy 2011. http://www.bp.com/sec tionbodycopy.do?categoryId=7500&contentId=7068481. Accessed September 25, 2013. International Energy Agency (IEA). (2008). World Energy Outlook 2008. OECD/IEA. REN21.2009. Renewables Global Status Report: 2009 Update. Paris, REN21 Secretariat. International Energy Agency (IEA). (2012). World energy outlook 2009. OECD/IEA. United Nation Development Programme (UNDP). (2009). China human development report 2009/2010: China and a sustainable future-towards a low carbon economy & society. China Translation and Publishing Corporation.

References

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UN General Assembly. (2009). Climate change and its possible security implications: Report of the secretary-general. http://www.unhcr.org/refworld/docid/4ad5e6380.html. Accessed 20 June 2010.

Chapter 9

From Industrial Civilization to Ecological Civilization Jiahua Pan

With the industrial revolution, industrial civilization replaced agricultural civilization; the world’s pattern was reshaped; and there was a lack of justice and human rights disasters. The global agenda, led by the United Nations established after the Second World War, giving expression to human rights and development, the environment and development, and sustainable development, continuously transformed and adjusted the developmental outlook on the industrial civilization and manifested elements of the ecological civilization. The developmental outlook of human society has shifted to an outlook on an ecological civilization that stresses that humans are an integral part of nature and that harmony between humans and nature is essential.

9.1 Human Rights and Development: The Developmental Agenda Expanding the North–South Divide Before the industrial revolution, human society was dominated by an agricultural civilization; the productive forces were weak; the people conformed to nature; material production and the capacity for and level of consumption were relatively low. Although the gap between the rich and the poor was wide within countries, the developmental gap among countries was limited. There was a dynamic equilibrium relationship among the population, natural resources and disasters. It was difficult to get out of the Malthusian Trap, and ecological degradation occurred; however, nature’s capability to restore itself enabled a state of equilibrium at a relatively low level between human society and the natural environment. The technical innovations and the fast-growing material wealth from the industrial revolution took the lead in industrial civilization, in which the survival of the fittest and the law of the jungle governed; efficiency was emphasized and competition

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_9

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was encouraged; nature merely served as a source of resources; a ruthless struggle for natural resources begot conflicts; human rights were contemned and the people were harmed. Seventy years ago—after the Second World War—world order was reconstructed, the United Nations was established, and human rights were emphasized. The governance framework of the United Nations led by industrialized countries safeguarded the rights and interests of developed countries and reinforced the voice of developed countries. In the financing system for development, including the World Bank and the International Monetary Fund, voice was allotted according to the proportions of fund contributions, and almost no voice over development resources was allotted to developing countries. The armed plunder of natural resources in the colonial era before the Second World War evolved into the institutionalized General Agreement on Tariffs and Trade. Under the banner of trade liberalization, natural resources, economic resources and intellectual resources endlessly flowed from disadvantaged developing countries to developed countries. The developmental agenda, initiated under the United Nations system built after the Second World War, has reduced armed confrontation, and industrialized countries have entered a mature and developed stage after the completion of the process of industrialization. However, developing countries, as a whole, are still in a state of poverty; consequently, the north–south divide is expanding, and the wealth gap among countries, especially groups of countries, is widening. According to the data from the World Bank, based on the exchange rate, per capita GDP in the Organization for Economic Cooperation and Development (OECD)— the club of developed countries—was 9.9 times that in developing countries in 1960. This figure was 14.4 and 19.8 in 1980 and 2000, respectively. Per capita GDP in the least developed countries was only 1/30 of that in the OECD countries in 1980, while the figure was 1/80 in 2000. This means that the north–south gap widened after the Second World War. With the developmental course of the United Nations over half a century, the level of domestic production of a citizen in a developed country is equivalent to that of 20 citizens in a developing country and 80 citizens in one of the least-developed countries. The efforts made by citizens in developing countries are not less than those made by citizens in developed countries.

9.2 The Struggle Over Environmental and Developmental Issues on the United Nations’ Agendas Industrialization was powered by fossil energy and consumed huge amounts of nonrenewable resources, changing the natural ecosystem and causing massive emission of pollutants. Industrialization was accompanied by resource exhaustion, ecological degradation and environmental pollution. However, poverty in developing countries was not fundamentally contained. The call and desire for development was very strong in the United Nations process.

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149

Photochemical smog occurred in London in the 1950s; a multitude of birds were killed through the food chain due to extensive use of pesticides in the early 1960s, and subsequently, the book Silent Spring was published; the oil crisis broke out as a result of the rapid depletion of nonrenewable resources in the early 1970s; consequently, the developed countries put environmental protection on the international agenda, and the first Conference on the Human Environment was held in Stockholm in 1972. However, developing countries, in most parts of the world, are still at a stage of poverty. The case where pollution abatement is conducted by industrial means is basically unsuitable for developing countries, while pollution control appears to be complicated by interwoven difficulties in developed countries. Sewage treatment works consume more energy. New technologies enable the economical exploitation and utilization of marginal resources; for example, the secondary and tertiary exploitation of oil leads to a more thorough exhaustion of oil resources in the places where oil is exploited. Against such a background, the international community put the environment and development in parallel in the mid-1980s. The Brundtland Report—Our Common Future—submitted in 1987 clearly put forward the idea of sustainable development, stressed intergenerational equity and stated that we cannot foster our current development at the expense of the capability for development of our future generations. In other words, we should save resources and protect the environment for our future. Therefore, social equity, economic development and environmental protection were taken as three pillars of sustainable development and were widely recognized by the international community. The United Nations Conference on Environment and Development was held in Rio de Janeiro, Brazil, in 1992, with the theme extending from the human environment—to which developed countries paid attention—to the environment and development. Agenda 21 resulting from this Conference concurrently incorporated the environment—to which the developed countries paid attention—and development, for which the developing countries hoped, and this represented the orientation of the United Nations’ agendas.

9.3 From the Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs) Although the concept of sustainable development was recognized, the actions and performance in sustainable development were very limited. The north–south development gap did not narrow but, on the contrary, widened. For the sake of survival, developing countries utilized backward, inexpensive and inefficient industrial technologies, polluting the environment and destroying the ecology. Therefore, the sources of pollution could not be eradicated unless poverty was eliminated. At the turn of the century, the development of developing countries became the theme of United Nations agendas.

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In September 2000, the Millennium Declaration, which aimed to identify the developmental orientation for the new century, was released in the UN Summit. Subsequently, the Millennium Development Goals (MDGs) to be achieved by 2015 were specified, focusing on poverty alleviation in developing countries. The Millennium Development Goals cover 8 major fields: eradicating extreme hunger and poverty; achieving universal primary education; promoting gender equality and empowering women; reducing child mortality; improving maternal health; combating the HIV/AIDS virus; ensuring environmental sustainability; and developing a global partnership for development. Positive effects were produced in poverty alleviation and development in developing countries, and the north–south gap narrowed somewhat. According to statistics from the World Bank, based on the exchange rate, the ratio of per capita GDP in the OECD countries to that in the developing countries and that in the least developed countries decreased from 19.8 and 79.4 in 2000 to 8.9 and 43.5 in 2013, respectively. The proportion of the urban population in OECD countries in the world’s urban population declined from 53% in 1960 to 27% in 2013. However, from another perspective, the world’s population soared from 3.03 billion in 1960 to 7.13 billion in 2013, with nearly 90% of the net population growth coming from developing countries. The population in the least developed countries increased from 241 million in 1960 to 898 million in 2013, a net increase of 657 million. The proportion of primary energy consumption in the OECD countries in the global primary energy consumption decreased from 61.0% in 1971 to 39.3% in 2012. The proportion of carbon dioxide emissions from the burning of fossil energy in the OECD countries in global emissions declined from 69.0% in 1971 to 39.6% in 2012. Total emissions in OECD countries and developing countries climbed by 29.6 and 440.6%, respectively. The level of per capita emissions in the OECD countries decreased by 7.75%, from 10.43 t in 1971 to 9.68 t in 2012, while that in the developing countries increased from 1.47 t in 1971 to 3.20 t in 2012, an increase of 1.18 times. Obviously, thanks to the implementation of the Millennium Development Goals, the economy in developing countries has grown faster than that in developed countries. However, resource consumption, environmental pollution and ecological damage in developing countries have unfolded to the extent that attention has to be given to these issues. If developing countries pursue their development by following the path once adopted by industrialized countries, the contradictions among global resource exhaustion, ecological unsafety and environmental unsustainability will surpass the north–south contradictions and become the greatest challenges for the human race. Against such a background, apparently, the post-2015 development goals cannot merely take development into account, but they should also stress sustainable development. Developing countries need to develop in a sustainable way, while developed countries need to secure sustainable production and consumption and help developing countries achieve sustainable development.

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9.4 Transformation Development in the New Millennium Goals Six out of eight major fields involved in the millennium goals of the United Nations are related to economic and social development: one is environmental sustainability, and one is a guaranteed target, almost all of which touch upon developing countries, especially less developed countries. With more than 10 years of development in the twenty-first century, great changes have taken place in the economic, social and environmental patterns in the north and the south—even some changes are fundamental. New developmental goals should give weight to poverty, while development must be environmentally friendly. Both developed and developing countries should undergo developmental transformation. No consensus concerning the post-2015 developmental goals was reached in the Summit held in Rio de Janeiro, Brazil in 2012. Instead, the Summit yielded a political document, The Future We Want, and determined the establishment of the Open Working Group (OWG) of the United Nations and the building of a system for sustainable development goals. With two years of efforts, in July 2014, the Open Working Group of the United Nations submitted a draft for sustainable development goals, covering various aspects of sustainable development and the directions for actions, broadly divided into five major categories: eradication of poverty; resource guarantee for development rights and interests; equitable and sustainable transformation development; global environmental safety and means of implementation. The overall objective and special goals were identified for each field.

9.5 The Goal System for Transformation Development Comparing and explaining the Millennium Development Goals (MDGs) and the New Millennium Development Goals (see Table 9.1) reveals the transformational change from development to sustainable development. First, although both stress eradication of poverty, the former focuses on eradication of poverty in developing countries, while the latter underscores the guarantee for development rights and interests and the improvement of the capacity for development of all countries. Second, both emphasize global environmental safety, but the former is relatively broad, while the latter specifically underlines global shared resources for long-term sustainable development, such as air, sea and biodiversity. Third, both involve the means of implementation for sustainable development, but the former stresses a one-way solution from developed countries to developing countries, while the latter places more emphasis on north–south two-way equitable interaction, subjective initiative and responsibilities of the various parties. Fourth, the improvement and maintenance of development rights and interests needs to be based on the guarantee of sustainable natural resources, especially the sustainable use of water resources and energy; this

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Table 9.1 Comparison of MDGs, SDGs, and goals of ecological civilization Millennium Development Goals (MDGs, 2001–2015)

New Millennium Development Goals (sustainable development goals (SDGs), 2016–2030)

Elements of ecological civilization

1. Eradicating extreme hunger and poverty; 2. Achieving universal primary education; 3. Promoting gender equality and empowering women; 4. Reducing child mortality; 5. Improving maternal health; 6. Combating the HIV/AIDS virus

1. Ending poverty in all its forms everywhere; 2. Ending hunger, achieving food security and improved nutrition and promoting sustainable agriculture; 3. Ensuring healthy lives and promoting well-being for all at all ages; 4. Ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all; 5. Achieving gender equality and empowering all women and girls

Social equity: equitable, decent development of the people

Resource guarantee for development rights and interests

6. Ensuring availability and sustainable management of water and sanitation for all; 7. Ensuring access to affordable, reliable, sustainable and modern energy for all

Harmony between people and nature

Equitable and sustainable transformation development

8. Promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent jobs for all; 9. Promoting sustainable industrialization; 10. Reducing inequality within and among countries; 11. Making cities and human settlements inclusive, safe, resilient and sustainable; 12. Ensuring sustainable patterns of consumption and production

Sustainable production, sustainable consumption, inclusiveness, resilience, harmony, equity, sharing

Eradicating poverty: enhancing and guaranteeing the people’s capability for development

(continued)

9.5 The Goal System for Transformation Development

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Table 9.1 (continued) Millennium Development Goals (MDGs, 2001–2015)

New Millennium Development Goals (sustainable development goals (SDGs), 2016–2030)

Elements of ecological civilization

Ensuring global environmental safety

7. Ensuring environmental sustainability

13. Taking urgent action Respecting and to combat climate conforming to nature change and its impacts; 14. Conserving and sustainably using the oceans, seas and marine resources for sustainable development; 15. Protecting, restoring and promoting the sustainable use of terrestrial ecosystems, halting biodiversity loss

The means of implementation of sustainable development

8. Developing a global partnership for development

16. Promoting peaceful and inclusive societies for sustainable development, providing access to justice for all and building effective, accountable and inclusive institutions at all levels; 17. Strengthening the means of implementation and revitalizing the global partnership for sustainable development

Social equity: a system for guaranteeing an ecological civilization for a system and capacity for social governance

aspect is not fully embodied in the MDGs. Fifth, the MDGs touch less upon development rights and interests and the guarantee and improvement of sustainability, including economic growth, employment, industrialization, urbanization, production, consumption and distribution, which, however, are systematically reflected in the SDGs.

9.6 Orientation Towards Ecological Civilization in the “Post-2015 Agenda” Report In December 2014, Ban Ki-moon, Secretary General of the United Nations, delivered a comprehensive report on the Post-2015 Agenda, clearly stating that the path for 2030 consists of ending poverty, achieving life transformation, protecting the planet and moving towards human dignity. This is a line of thinking regarding the course

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9 From Industrial Civilization to Ecological Civilization

of development of human society of the future and emphasizes the necessity for a real transformational agenda and a transformation of the developmental paradigm. The “Post-2015 Agenda” Report delivered by Ban Ki-moon reviews the development agendas of the United Nations over the course of 70 years and focuses on three pillars of sustainable development and, from the perspective of development, stresses economic transformation, environmental protection, the guarantee of peace and the realization of human rights. The Post-2015 Agenda should be considered an agenda universally and holistically applied to sustainable development and based on human rights. In this sense, the sustainable development goal system, submitted by the OWG, covering 17 goal fields and 169 specific goals, gives prominence to the orientation towards action, globality and universal applicability. In this transformation agenda, Ban Ki-moon put forward six basic elements of a comprehensive sustainable transformation, including dignity, people, prosperity, earth, equity and partnership. These six elements profoundly shed light on the sustainable development goal system proposed by the OWG, fundamentally deny the developmental outlook of industrial civilization and reflect ecological civilization as the orientation of development. Dignity means the end of poverty and war against inequity. The philosophy of industrial civilization advocates competition and occupation by the strong and ignores socially disadvantaged groups. Ecological civilization stresses social equity, fairness, and harmony among people and between the people and society. With regard to the people, it is necessary to ensure a healthy life, knowledge and the inclusiveness of women and children. Obviously, this element is closely related to dignity and denies environmental pollution, the pursuit of material wealth and ignorance of health, which are the characteristics of the outlook of an industrial civilization. Prosperity refers to robust, inclusive and transformative economic growth. Prosperity does not mean, as advocated in industrial civilization, the maximization of profit or disruptive, predatory and unsustainable growth, which pursues golden and silver hills rather than green hills and clear waters. Prosperity means, as upheld in an ecological civilization, sustainable production and consumption, green growth and the improvement of social welfare. With respect to the element—earth, it is necessary to protect our ecosystem for the entire society and for our future generations. Industrial civilization remades and destroys nature, while the restoration of industrial civilization to nature is achieved through the destruction of nature by means of industrialization. Apparently, as suggested by this element, it is essential to respect and conform to nature and recognize the limits of the earth and harmony with nature. In regard to equity, it is necessary to promote social security and peace as well as a powerful institutional system. The agendas of the United Nations during the course of 70 years were developed under the philosophy of an industrial civilization as the north–south developmental divide deepened; the wealth gap widened; the environmental resources were unfairly distributed and there was a lack of social equity. The transformation, as stated in the Post-2015 Agenda, represents efforts to stress social equity and ecological equity, build a powerful institutional system of an ecological civilization, and promote social harmony. With regard to a partnership, it is necessary

9.6 Orientation Towards Ecological Civilization …

155

to foster global collaboration for sustainable development. In an industrial civilization, collaboration is impossible since one benefits himself/herself at the expense of others and there is a zero-sum game. In an ecological civilization, collaboration, mutual assistance and sustainable development are possible since there are harmony, inclusiveness, sharing and a win–win outcome. The transformation characterized by an ecological civilization is not discussed in the sustainable development goal system and the Post-2015 Agenda; however, a number of goals and the Agenda not only reflect on and criticize industrial civilization but also search for a transformation of the developmental paradigm and an overall transformation of civilization. In fact, the inheritance and practice of China’s ecological civilization has renovated and improved the practice of industrial civilization in China to weaken the impact of industrial civilization and seek a new path of ecological civilization during the industrialization and urbanization of China. In fact, the keywords in the Post-2015 Agenda of the United Nations, including harmony, responsibility, sustainability, welfare, transformation, integration, governance, human rights, the rule of law, equity, sharing and inclusiveness, are the basic concepts of an ecological civilization and highly agree with the building of China’s ecological civilization. We should actively participate in shaping the United Nations’ Post-2015 Agenda, making an ecological civilization universally accepted by the world.

Chapter 10

Research on the Regional Variation of Carbon Productivity in China Jiahua Pan and Lifeng Zhang

In 2008, China’s carbon dioxide emissions exceeded those of the USA, and China became the largest carbon dioxide emitter in the world. As the international community mitigated CO2 emissions, China’s carbon emissions and their changes became the focus of attention from countries around the world. At present, some domestic scholars have been conducting relevant research on the quantity of carbon emissions, on the intensity of carbon emissions, on the affecting factors and on emission reduction measures in various provinces (autonomous regions, municipalities), and the eastern, central and western regions of China, while few research projects focus on carbon productivity. He (2009) only analyzed the annual rate of the growth of national carbon productivity and the ways for enhancing carbon productivity. Currently, there is a lack of research on regional carbon productivity. Carbon productivity refers to the ratio of GDP to the quantity of carbon dioxide emissions in a certain period and is the reciprocal of the intensity of carbon emissions per unit of GDP. Carbon productivity reflects the economic benefits per unit of carbon dioxide emissions. Although carbon productivity has a reciprocal relationship with the intensity of carbon emissions per unit of GDP, the former is essentially different from the latter. Carbon productivity is defined by taking, from an economic perspective, carbon as a factor input that is hidden in energy and material products; it is used to measure the output achieved by an economy through consumption of a unit of carbon resources and can be compared with traditional labor or capital productivity (Pan, 2010). Carbon productivity means that a maximum output is obtained by a minimum amount of carbon resources at a certain technical level and under certain technical conditions. Carbon emissions have become an input factor and a constraint indicator for social and economic development. Future competition is competition in neither labor productivity nor oil productivity; instead, it is competition in carbon productivity (Pan, 2010). Carbon emission space is an element that is rarer than labor and capital, while the intensity of carbon emissions—a method of representation based on intensity—deals with issues from an environmental perspective. It emphasizes carbon emissions as the appendant of output and its impact on the environment. It does not contain, in terms of the input © Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_10

157

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10 Research on the Regional Variation of Carbon …

factor, the constraint conditions for economic and social development; thus, it is easy to unduly pursue output and overlook the control of carbon emissions. This paper seeks to analyze the regional differences in carbon productivity, its characteristics of change and affecting factors at the regional level in China to put forward measures for enhancing regional carbon productivity and reducing emissions.

10.1 Estimation and Analysis of Regional Carbon Emissions 10.1.1 Method for Calculating Carbon Emissions To avoid an excessive error resulting from the simple classification method based on primary energy as adopted in the past, according to the China Energy Statistical Yearbook, final energy consumption is divided into eight categories, including coal, coke, crude oil, gasoline, diesel oil, kerosene, fuel oil and natural gas. Given that the specific carbon emission coefficient suitable for China has not yet been identified through study in China, this paper adopts Method 1 among three methods for estimating the CO2 emissions from combustion of fossil fuel as provided in the 2006 IPCC National Greenhouse Gas Inventory Guideline (IPCC, 2006). According to Method 1, carbon emissions from all combustion sources can be estimated according to the quantity of burnt fuel and the carbon emission coefficient. It is necessary to introduce the calorific value to convert the units of various types of fuels into the general energy unit. The lower heating value is used in China’s energy statistics. Thus, the formula for calculating the carbon emission coefficient is as follows: carbon emission coefficient = oxidation rate × carbon content × lower heating value. The carbon emission coefficients for various types of fuels are shown in Table 10.1. Table 10.1 Carbon emission coefficients for various types of fuels Fuel type

Lower heating value (kJ/kg)

Carbon content (kgC/GJ)

Oxidation rate

Carbon emission coefficient (tC/t)

Raw coal

20,908

25.8

1

0.5394

Coke

28,435

29.2

1

0.8303

Crude oil

41,816

20.0

1

0.8363

Gasoline

43,070

18.9

1

0.8140

Diesel oil

42,652

20.2

1

0.8616

Fuel oil

41,816

21.1

1

0.8823

Natural gas

38,931 (kJ/m3 )

15.3

1

0.4478

Kerosene

43,070

19.5

1

0.8399

Source The data concerning lower heating values come from the China Energy Statistical Yearbook

10.1 Estimation and Analysis of Regional Carbon Emissions

159

After the carbon emission coefficients for various types of fuels are obtained via calculations, these coefficients are multiplied by the consumption of various types of fuels to determine the carbon emissions from various types of fuels.

10.1.2 Estimation and Difference Analysis of Regional Carbon Emissions This paper estimates and analyzes regional carbon emissions and differences at the provincial level and the levels of the eastern, central and western regions. The eastern region covers 11 provinces and municipalities: Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan. The central region covers 8 provinces, Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and Hunan. The western region covers 12 provinces, autonomous regions and municipalities: Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Ningxia, Qinghai and Xinjiang. This paper does not include Tibet since there is a data restriction. The consumption of 8 material objects, including coal, coke, oil and its products, and natural gas, in 30 provinces, regions and municipalities in China from 1995 to 2008, as provided in the China Energy Statistical Yearbook, was chosen in this paper for calculation. The carbon emission coefficients for various types of fuels and the consumption of various types of fuels in different regions in Table 10.1 are used to estimate the total amount of carbon emissions from provinces (autonomous regions, municipalities) and the eastern, central and western regions of China from 1995 to 2008, with the population data over the years in different regions considered to estimate per capita carbon emissions. Given the length of this paper, the following section only presents the data concerning the total carbon emissions and per capita carbon emissions in the eastern, central and western regions of China from 1995 to 2008 (see Table 10.2). The total amount of carbon emissions reflected the overall carbon emissions in a region. In terms of the cumulative carbon emissions in provinces, regions and municipalities from 1995 to 2008, the top five provinces were Shanxi, Shandong, Hebei, Liaoning and Jiangsu, while the cumulative carbon emissions were the lowest in Hainan and relatively low in some western provinces, including Qinghai, Ningxia, Guangxi and Chongqing. Furthermore, with respect to the annual average rate of the growth of the total amount of carbon emissions in provinces, regions and municipalities in 14 years, the provinces with double-digit growth were Hainan 18.3%, Inner Mongolia 12.8%, Ningxia 11.4%, Fujian 10.7%, Shandong 10.5% and Zhejiang 10.2%; the provinces with an annual growth rate below 5% were Jilin 4.9%, Shanghai 4.2%, Heilongjiang 3.8%, Beijing 2.5% and Sichuan 1.9%. Hainan, with the lowest cumulative amount of emissions, saw the highest emission growth rate; Ningxia, with a relatively low amount of cumulative emissions, also maintained a relatively high

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Table 10.2 The total amount of carbon emissions and per capita emissions in the eastern, central and western regions of China from 1995 to 2008 Year

Eastern region

Central region

Western region

Total amount of carbon emissions (104 tC)

Total amount of carbon emissions (104 tC)

Per capita carbon emissions (tC/person)

Total carbon emissions (104 tC)

Per capita carbon emissions (tC/person)

Per capita carbon emissions (tC/person)

1995

48,995.36

1.08

36,328.31

0.89

24,531.49

0.72

1996

50,071.93

1.09

37,188.94

0.91

26,278.13

0.77

1997

50,476.05

1.09

36,670.71

0.89

24,994.52

0.72

1998

50,420.65

1.08

36,550.67

0.88

25,048.66

0.72

1999

52,080.96

1.11

35,686.92

0.85

24,141.41

0.69

2000

55,975.52

1.16

36,756.18

0.87

24,759.63

0.7

2001

58,244.03

1.2

38,668.77

0.91

25,820.23

0.72

2002

62,263.91

1.27

42,368.69

1

28,381.42

0.79

2003

70,848.93

1.44

47,600.74

1.11

33,703.7

0.93

2004

83,063.01

1.67

53,635.67

1.25

40,628.16

1.12

2005

99,843.85

1.99

61,871.85

1.43

45,951.59

1.29

2006

109,051

2.16

67,974.13

1.56

52,304.89

1.46

2007

119,302

2.33

73,375.58

1.68

57,931.48

1.61

2008

125,058.1

2.42

75,696.06

1.72

63,870.83

1.76

Total increase amplitude (%)

155.24

124.07

108.37

160.36

144.44

7.64

7.12

Annual 7.47 growth rate (%)

6.4

5.81

93.26

5.19

Source The results of the calculations in this paper

emission growth rate. Beijing and Shanghai—two economically developed municipalities—witnessed relatively low average rates of the growth of the total amount of carbon emissions, which were closely related to the industrial structure and the structure of the energy consumption in both municipalities. As indicated in Table 10.2, the three major regions of China were obviously different in the total amount of their carbon emissions, and carbon emissions decreased from the eastern region to the central and western regions; those in the eastern region were much higher than those in the central and western regions. In 2008, carbon emissions in the eastern region accounted for almost half (47.3%) of the total national amount of carbon emissions, while the proportions of those in the central and western regions were 28.6 and 24.1%, respectively. In 2008, carbon emissions in the eastern region were 1.7 and 2 times those in the central and western

10.1 Estimation and Analysis of Regional Carbon Emissions

161

regions, respectively—the difference was not large between the central and western regions. In more than a decade, the total amount of carbon emissions decreased in the eastern, central and western regions. From 1995 to 2008, driven by energy consumption, carbon emissions in the eastern, central and western regions increased year by year—the average annual growth rates were 7.47, 5.81 and 7.64% in the eastern, central and western regions, respectively; there was the highest growth rate in the western region, followed by the eastern and central regions. From 1995 to 2008, per capita carbon emissions in the eastern region were apparently higher than those in the central and western regions and declined gradually from the eastern and central regions to the western region. Per capita carbon emissions in the eastern region started at a high level and exceeded 1 t carbon/person in 1995, while those in the central and western regions became higher than 1 t carbon/person in 2002 and 2004, respectively, and those in the western region grew faster later on. Both the overall growth and average annual growth in the western region surpassed those in the eastern and central regions; per capita carbon emissions grew annually by an average of 7.12, 6.40 and 5.19% in the western, eastern and central regions, respectively, from 1995 to 2008; per capita carbon emissions in the western region exceeded those in the central region in 2008. Moreover, the carbon emissions in the three major regions showed noticeable stage characteristics: the three major regions saw a relatively low growth of carbon emissions from 1995 to 2000, showing a stage of steady growth; the growth of carbon emissions fluctuated less in the three major regions in these six years; in particular, the average annual growth rates in the central and western regions were only 0.23 and 0.19%, respectively. The growth of the carbon emissions in the three major regions accelerated noticeably from 2001 to 2008, presenting a stage of rapid growth—the average annual growth rates in the eastern, central and western regions reached 10.57, 9.45 and 12.58%, respectively.

10.2 Estimation and Difference Analysis of Regional Carbon Productivity 10.2.1 Estimation of Regional Carbon Productivity After the data concerning the carbon emissions in provinces and the eastern, central and western regions were obtained, the GDP data1 adjusted with 1995 as the base year were used in this paper to determine the carbon productivity values concerning provinces, regions, municipalities and the three major regions according to the definition of carbon productivity. Given the length of this paper, the following section 1

The data come from the statistical yearbooks of the provinces, regions and municipalities over the years, and have been adjusted to the price of the year 1995 with the regional gross domestic product index.

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Table 10.3 Carbon productivity in the eastern, central and western regions of China from 1995 to 2008. Unit 10,000 yuan/tC Year

Eastern

Central

Western

National

1995

0.6662

0.3968

0.4250

0.5232

1996

0.7291

0.4352

0.4378

0.5654

1997

0.8060

0.4893

0.5052

0.6354

1998

0.8907

0.5329

0.5517

0.6982

1999

0.9474

0.5899

0.6179

0.7623

2000

0.9742

0.6231

0.6554

0.7972

2001

1.0305

0.6462

0.6847

0.8367

2002

1.0748

0.6477

0.6872

0.8561

2003

1.0697

0.6378

0.6452

0.8406

2004

1.0425

0.6383

0.6043

0.8199

2005

0.9839

0.6222

0.6044

0.7921

2006

1.0283

0.6403

0.6017

0.8160

2007

1.0757

0.6769

0.6226

0.8542

2008

1.1512

0.7399

0.6490

0.9123

Source The results of the calculations in this paper

only shows the carbon productivity data concerning the eastern, central and western regions of China from 1995 to 2008 (see Table 10.3). In 2008, at the national level, carbon productivity was the highest (2.0048) in Guangdong Province and the lowest (0.2324) in Ningxia, while the average national level was 0.9123. From 1995 to 2008, carbon productivity increased year by year in most of the provinces, and its upward trend was not obvious in the western provinces, regions and municipalities; there was a downward trend in Hainan, while it rose and then declined in Shandong. The carbon productivity value was highest in the eastern region, followed by the central and western regions. The average annual rate of the growth of carbon productivity was the highest (4.91%) in the central region, followed by the eastern region (4.30%) and the western region (3.31%). Carbon productivity in each of the three major regions increased and then decreased and rose. Such a trend was relatively noticeable in the eastern region; it rapidly increased from 1995 to 2002, declined from 2003 to 2005, and then rebounded somewhat in 2006.

10.2.2 Difference Analysis of Regional Carbon Productivity (1)

To further analyze the differences in regional carbon productivity in China, in this paper, the statistical software SPSS and the clustering method were used to cluster carbon productivity in various provinces, regions and municipalities, with five categories identified. The clustering result is as follows: 7

10.2 Estimation and Difference Analysis of Regional …

(2)

163

provinces and municipalities, Jiangsu, Guangxi, Zhejiang, Beijing, Shanghai, Fujian and Guangdong, fall within one category; 4 provinces and municipalities, Tianjin, Jiangxi, Chongqing and Sichuan, are included in another category; 8 provinces, Anhui, Hunan, Hainan, Hubei, Shandong, Heilongjiang, Jilin and Henan, fall within another one; 5 provinces, Yunan, Qinghai, Liaoning, Shaanxi and Hebei, fall into another one; and 6 provinces, Gansu, Xinjiang, Inner Mongolia, Shanxi, Ningxia and Guizhou, belong to another one. The results of this classification show that, basically, the economically developed provinces in the eastern region fall within one category; the provinces in the central region are included in another category; some less developed provinces in the western region fall into another category. Similar to the above analysis results, carbon productivity shows regional differences. The Theil index (Theil, 1967, 1972) was used to calculate the Theil index concerning carbon productivity in the three major regions, the total difference, the difference within a group, the difference among groups and respective contribution rates. The results of the calculation are shown in Fig. 10.1 and Table 10.4.

Comparisons of the Theil index in three major regions (see Fig. 10.1) reveal different characteristics of the Theil index in the three major regions. There was an obvious downward trend in the eastern region, and the difference in carbon productivity within the eastern region narrowed; in particular, its value in the eastern region was evidently smaller than that in the central and western regions after 1997, suggesting that the difference in carbon productivity within the eastern region was the smallest. The Theil index in the central region increased and then decreased, with its value higher than that in the eastern and western regions before 2004; the difference in carbon productivity within the central region was relatively large, and Fig. 10.1 The trends of change of the Theil index in the eastern, central and western regions of China from 1995 to 2008

Eastern

Central

Western

0.1379

0.1382

0.1427

0.1388

0.1290

0.1279

0.1316

0.1394

0.1406

0.1303

0.1276

0.1319

0.1304

0.1301

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0.0986

0.0995

0.1010

0.1004

0.0976

0.1082

0.1105

0.1071

0.1053

0.1033

0.1078

0.1133

0.1054

0.1078

75.79

76.26

76.54

78.64

74.93

76.98

79.28

81.43

82.34

80.06

77.66

79.40

76.31

78. 21

0.0315

0.0310

0.0309

0.0273

0.0327

0.0324

0.0289

0.0244

0.0226

0.0257

0.0310

0.0294

0.0328

0.0301

24.21

23.74

23.46

21.36

25.07

23.02

20.72

18.57

17.66

19.94

22.34

20.60

23.69

21.79

Contribution rate (%)

Value

Value

Contribution rate (%)

Difference among groups

Difference within a group

Data source The results of the calculation in this paper

Total difference

Year

Table 10.4 Breakdown of the overall regional differences in carbon productivity

40.70

41.58

40.00

42.12

37.14

36.12

37.65

40.73

42.85

41.55

40.76

42.57

42.04

45 0.50

Eastern contribution rate

17.53

17.50

19.39

19.52

22.05

25.06

26.29

23.86

23.37

22.82

22.99

22.91

22.88

22.28

Central contribution rate

17.56

17.18

17.15

17.00

15.74

15.8

15.34

16.84

16.12

15.69

13.91

13.92

11.39

10.43

Western contribution rate

164 10 Research on the Regional Variation of Carbon …

10.2 Estimation and Difference Analysis of Regional …

165

it decreased after 2004, smaller than that in the western region but larger than that in the eastern region. The Theil index in the western region rose noticeably, suggesting an increasing difference in carbon productivity within the western region. According to the data concerning carbon emissions and the regional GDP, in the eastern region, carbon emissions, which accounted for 41.2% of the national amount of carbon emissions, yielded a regional GDP that made up 60% of the national GDP from 1995 to 2008, showing that the overall efficiency of energy utilization in the eastern region was higher than that in the central and western regions. In the central region, carbon emissions, which accounted for 27.1%, yielded a regional GDP that made up 23.9%. In the western region, carbon emissions, which accounted for 31.7%, yielded a regional GDP that made up 16.1%.2 On the one hand, this indicates that there were relatively large differences in the level of economic development within the central and western regions; on the other hand, it shows that, in the central and western regions, low efficiency of energy utilization, a coal-dominated energy consumption structure and more carbon dioxide emissions resulted from the undertaking of the transfer of carbon emissions from the eastern region. According to Table 10.4, the total Theil index concerning carbon productivity shows that there were obvious differences in carbon productivity in the eastern, central and western regions of China. The overall difference in carbon productivity mainly resulted from the differences within regions, but the rates of contributions from the differences within regions to the overall difference have declined in recent years. The differences within the central and western regions contributed less to the overall difference, and the contribution rates were increasingly close between the central and western regions; the contribution rate in the central region was basically equal to that in the western region in 2008. However, the rate of contributions from the differences within the western region has increased in recent years, while that in the eastern region was approximately 40% and stable over the years. The differences within the eastern region constituted an important factor for the differences within regions and the main source for the overall difference in regional carbon productivity in China. The rates of contributions from the differences among regions were relatively low and kept at approximately 20% but have markedly increased in recent years. Although the differences within regions contributed more to the overall difference, the differences within regions, in general, gradually narrowed by an average annual 0.68%, while the differences among regions gradually widened by an average annual 0.35%. This suggests that with the introduction of a series of economic policies for various regions, including the development of western China, the rise of central China and the rejuvenation of the old northeastern industrial base, the differences in the level of economic development and the degree of industrialization within regions narrowed, but the differences among regions widened. (3)

2

As a comparison of two total quantities in the same period and a static relative indicator, carbon productivity cannot better reflect the direction, degree and law of the developmental changes in things in the analysis period; thus, this

The data in this paper are based on carbon emissions and adjusted GDP data in the eastern, central and western regions from 1995 to 2008.

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10 Research on the Regional Variation of Carbon …

paper adopts the decoupling index (Tapio, 2005) to dynamically reflect the degree, law of and interregional difference in the developmental changes in regional carbon productivity in different periods. The decoupling index is a dynamic relative index and is the result of dividing the rate of change in carbon emissions by the rate of change in GDP in the same period. Table 10.5 shows the decoupling indexes concerning the eastern, central and western regions Table 10.5 The decoupling indexes concerning the eastern, central and western regions of China from 1996 to 2008 Year

Eastern Decoupling index

Central Decoupling state

Decoupling index

Western Decoupling state

Decoupling index

Decoupling state

1996

0.19

Weak decoupling

0.19

Weak decoupling

0.68

Weak decoupling

1997

0.08

Weak decoupling

-0.13

Strong decoupling

-0.50

Strong decoupling

1998

-0.02

Strong decoupling

-0.04

Strong decoupling

0.02

Weak decoupling

1999

0.34

Weak decoupling

-0.29

Strong decoupling

-0.46

Strong decoupling

2000

0.72

Weak decoupling

0.34

Weak decoupling

0.29

Weak decoupling

2001

0.41

Weak decoupling

0.57

Weak decoupling

0.48

Weak decoupling

2002

0.61

Weak decoupling

0.97

Expanded connection

0.96

Expanded connection

2003

1.05

Expanded connection

1.20

Expanded negative decoupling

1.63

Expanded negative decoupling

2004

1.21

Expanded negative decoupling

0.99

Expanded connection

1.59

Expanded negative decoupling

2005

1.50

Expanded negative decoupling

1.23

Expanded negative decoupling

1.00

Expanded connection

2006

0.65

Weak decoupling

0.75

Weak decoupling

1.04

Expanded connection

2007

0.65

Weak decoupling

0.56

Weak decoupling

0.74

Weak decoupling

2008

0.40

Weak decoupling

0.24

Weak decoupling

0.69

Weak decoupling

Note Strong decoupling means the decoupling index < 0 — the GDP growth rate is higher than 0, while the carbon emission growth rate is lower than 0. Weak decoupling means 0 < the decoupling index < 0.8. Expanded connection means 0.8 < the decoupling index < 1.2. Expanded negative decoupling means 1.2 < the decoupling index

10.2 Estimation and Difference Analysis of Regional …

167

of China from 1996 to 2008. As the GDP growth rate in each of the eastern, central and western regions was higher than zero in the sample period, there were no strong states of negative decoupling or weak negative decoupling in the three major regions. As shown in Table 10.5, the decoupling indexes concerning the eastern, central and western regions had similarities and differences. The years when strong decoupling occurred in the three major regions were concentrated in the period 1997–1999, during which, with the ripple effects from the Southeast Asian financial crisis, the impact from China’s policies for cooling the overheated economy and curbing lowlevel construction, and the once-in-a-century flood in China in 1998, the economic growth in various regions across China was affected to varying degrees, and energy consumption markedly declined, resulting in decreasing amounts of carbon emissions; therefore, there was a strong decoupling—the GDP grew but carbon emissions grew negatively. This was caused by external shocks, unlike the strong decoupling characteristic of the developed countries. However, the differences in the strong decoupling among the eastern, central and western regions were that the time of the strong decoupling in the eastern region was short and was only 1998; the absolute value of the decoupling index was relatively small—only 0.02; carbon emissions decreased by only 0.1% compared with the previous year; accordingly, carbon productivity in 1998 was higher than that in 1997 but was not noticeable. The strong decoupling in the central and western regions lasted for a longer time. The absolute value of the decoupling index in the central and western regions was higher than that in the eastern region from 1997 to 1999. Carbon emissions in the central region from 1997 to 1999 decreased by 1.4, 0.3 and 2.4%, respectively, compared with the previous year. Carbon productivity in the central region in 1997 was higher than that in 1996 and 1995, while carbon productivity in 1999 was higher than that in 1998 and 1997. Carbon emissions in the western region in 1997 and 1999 declined by 4.9 and 3.6%, respectively, compared with the previous year, while carbon productivity in 1997 was higher than that in 1996 and 1995, and carbon productivity in 1999 was higher than that in 1998. Meanwhile, it was also shown that the capacity of the economy in the eastern region to combat external shocks and achieve recovery was higher than that in the central and western regions. In general, each of the three major regions showed a developmental characteristic: weak decoupling—expanded connection—expanded negative decoupling— weak decoupling, which tallied with the stage of China’s economic development, suggesting that carbon emissions were apparently driven by economic development. The stage of expanded connection—expanded negative decoupling—was mainly concentrated in the period from 2002 to 2005, during which the stage of China’s heavy chemical industry started, and the heavy industries, especially the high energyconsumption industry, developed rapidly in various regions; as a result, energy consumption and carbon emissions increased, and the growth of the amount of carbon emissions was noticeably faster than the growth of the GDP. Differences also existed in the three major regions. There were more years during which weak decoupling occurred in the eastern region, indicating that the growth of

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GDP was accompanied by the growth of the total amount of carbon emissions in the eastern region, but the growth of the total amount of carbon emissions was smaller than the growth of GDP. The weak decoupling index and carbon productivity varied with different years, and carbon productivity was higher in the years during which the decoupling index was small. The eastern region was characterized by expanded connection—expanded negative decoupling—expanded negative decoupling from 2003 to 2005, showing that the growth of the total amount of carbon emissions was larger than the growth of the GDP; the expanded negative decoupling was more extensive than the expanded connection; and the corresponding carbon productivity declined. The expanded connection—expanded negative decoupling in the central and western regions lasted for a longer time than that in the eastern region; in particular, the expanded connection in the western region appeared early and persisted for a long time from 2002 to 2006, which was directly related to the introduction of the national policy for the development of western China, and carbon emissions in the central and western regions were driven more by economic development than they were in the eastern region. In the central region from 2002 to 2005, the expanded connection—expanded negative decoupling took place by turns; the growth of the total amount of carbon emissions was larger than the growth of the GDP; the corresponding carbon productivity fluctuated at low and high levels; carbon productivity was lower in the years during which the decoupling index was high. The decoupling index and carbon productivity in the western region had characteristics similar to those in the central region. The decoupling index and the characteristics of the change in carbon productivity varied with different stages of economic development. Even in the same state of decoupling, there were differences in carbon productivity among the eastern, central and western regions, and carbon productivity in the eastern region was higher than that in the central and western regions. From 1980 to 2000, GDP quadrupled and energy consumption doubled in China. From 1996 to 2000, the decoupling index in the three major regions presented a state of weak decoupling, and carbon productivity steadily improved. China’s industrialization accelerated, and the characteristics of the heavy chemical industry occurred from 2001 to 2004. In 2004, China’s economy, as a whole, entered the first half of the medium stage of industrialization; the heavy chemical industry developed rapidly in most of the provinces; there was no constraint by the energy environment policy in the various regions, the decoupling index fluctuated greatly and it was in a state of weak decoupling, expanded connection, and even expanded negative decoupling; carbon productivity changed greatly. In the 11th FiveYear Plan, China set the target for reducing energy consumption per unit of GDP by 20% in 2010 compared with 2005. Subject to the constraint of the policy mechanism, in 2006, the three major regions were in a state of weak decoupling and carbon productivity increased gradually, but the weak decoupling in this period was different from the state of weak decoupling in the period from 1996 to 2000, and carbon productivity was obviously higher than that in the period from 1996 to 2000. Carbon productivity reflected the relationship of dependence that existed between economic growth and carbon emissions. The factors affecting economic growth and carbon emissions had an impact on carbon productivity. As the level of economic

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169

development, the industrial structure, the structure of energy consumption, the efficiency of energy utilization and the consumption mode were different in the various regions, there were regional differences in carbon productivity, which was mainly attributable to the following factors. (1)

(2)

(3)

3

Differences in the level of economic development. The level of economic development in the eastern region was higher than that in the central and western regions. The eastern region accounted for only 9.5% of the national land area,3 but the proportion of regional GDP created in the eastern region in the national GDP and per capita GDP in the eastern region were much higher than those in the central and western regions. The regional GDP in the eastern, central and western regions accounted for 55.58, 27.49 and 16.93% of the national GDP, respectively, in 2005, while these proportions were 53.84, 27.83 and 18.33%, respectively. In 2009, the figures in the eastern region were larger than the sum of the figures in the central and western regions. The per capita GDP in the eastern, central and western regions increased year by year, but the figure in the eastern region much exceeded that in the central and western regions. The per capita GDP in the eastern region in 2005 and 2009 was 23,768 and 40,800 yuan, respectively. The per capita GDP in the central region in 2005 and 2009 was 11,830 and 21,863 yuan, respectively. The per capita GDP in the western region in 2005 and 2009 was 9338 and 18,286 yuan, respectively. As excessive emphasis was placed on the quantitative growth of GDP, the economy generally grew in a quantitative and extensive way in the eastern, central and western regions. Differences in the structure of energy consumption. The rate of energy selfsufficiency reached 92% in China in 2010, but 70% of the supply of energy remained coal.4 According to the energy consumption data concerning the various provinces, regions and municipalities over the years,5 coal made up approximately 70% of the structure of energy consumption in the eastern and central regions, while that proportion was approximately 60% in the western region. Coal is a high-carbon energy. Optimizing the structure of energy consumption and reducing the proportion of coal consumption is the key to energy conservation and to the reduction of emissions. Differences in the industrial structure. In China’s current industrial structure, the secondary industry made up the highest proportion, followed by the tertiary industry and the primary industry. The eastern, central and western regions, as a whole, also presented the same industrial structure, but there were some differences among these regions. As shown in Table 10.6, the proportion of secondary industry in the eastern region, especially industry, was higher than

The data come from the 2006–2010 China Statistical Yearbook, from which all of the other data in this section are from. 4 Based on the data from the 2010 Statistical Communiqué on National Economic and Social Development. 5 Based on the data concerning various provinces, regions and municipalities in the China Compendium of Statistics 1949–2008.

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Table 10.6 The structure of three industries in the eastern, central and western regions across China from 2005 to 2009. Unit % Item

Eastern 2005

The primary industry The secondary industry

Central 2008

2009

2005

Western 2008

2009

2005

2008

2009

7.9

6.8

6.5

15.4

13.7

12.9

17.7

15.6

13.7

51.6

51.7

50.2

47.7

51.6

49.3

42.8

48.1

47.5

Industry

46.5

47.0

44.1

41.3

45.6

43.4

35.3

41.1

39.7

The tertiary industry

40.5

41.5

44.2

36.9

34.7

36.9

39.5

36.3

38.8

Source 2006–2010 China Statistical Yearbook

that in the central and western regions. Amid accelerating industrialization and urbanization, industry was a larger energy consumer and an emission emitter; thus, carbon emissions in the eastern region were higher than those in the central and western regions. Regarding the proportions of the output value of three industries, regardless of the primary, secondary (including industry), or tertiary industry, from the three major regions in the national output value (see Table 10.7), those in the eastern region were higher than those in the central and western regions; in particular, the output value of the secondary industry or the industry accounted for approximately 55% of the national output value. For the proportions of the output of major products in the national output, the proportion of electric energy production in the eastern region was higher than 40%, higher than that in the central and western regions; the proportion of crude steel exceeded 55%, higher than the sum of the proportions in the central and western regions; the proportion of cement in the eastern region declined somewhat, but remained higher than that in the central and western regions, while the proportions in the central and western regions rose year by year, to which attention should be given. Currently, the production of electric energy is mainly carried out through thermal power in China. Since 2000, thermal power Table 10.7 The proportions of the output from three industries and of major products in the eastern, central and western regions across China in the national output from 2005 to 2009. Unit % Item

Eastern 2005

Central 2008

2009

2005

Western 2008

2009

2005

2008

2009

The primary industry

37.7

36.0

36.5

36.5

37.1

37.4

25.8

26.9

26.1

The secondary industry

58.5

55.0

53.9

26.8

28.3

28.4

14.8

16.8

17.7

Industry

59.8

55.9

55.0

26.3

28.0

28.1

13.9

16.1

16.9

The tertiary industry

57.2

58.2

57.8

25.8

25.1

25.0

17.0

16.7

17.3

Electric energy production

45.1

42.2

41.1

30.4

29.8

29.7

24.4

28.0

29.1

Crude steel

55.2

55.2

55.5

31.9

32.0

31.5

12.9

12.8

13.0

Cement

51.6

45.0

42.0

27.8

31.9

32.7

20.6

23.0

25.3

Source 2006–2010 China Statistical Yearbook

10.2 Estimation and Difference Analysis of Regional …

(4)

(5)

171

generation has accounted for approximately 82% of electric power generation. Thermal power is mainly based on coal, while coal is a high-carbon energy, and the carbon content in coal is much greater than that in oil and gas. Both crude steel and cement are highly energy-consuming industries, in which energy consumption is high and carbon emissions are consequently high. Differences in the efficiency of energy utilization. According to Table 10.8, the energy consumption per unit of GDP in each of the three major regions declined, suggesting a gradual improvement in the efficiency of energy utilization. However, some differences existed among the eastern, central and western regions. In general, the efficiency of energy utilization in the eastern region was higher than that in the central and western regions. Although the energy consumption in each of the three major regions decreased, the energy consumption in the eastern region declined year by year, the energy consumption in the central region increased slightly from 2002 to 2004, and the energy consumption in the western region climbed noticeably from 2002 to 2006. This can explain why the level of economic development and the amount of carbon emissions in the eastern region were higher than those in the central and western regions, but carbon productivity in the eastern region remained higher than that in the central and western regions due to the high efficiency of energy utilization. Differences in the structure of consumption and the level of consumption. As a result of the dual urban–rural structure in China, there were obvious differences in the level of consumption, the structure of consumption and the mode of consumption among the rural and urban residents in the eastern, central and western regions. These differences led to differences in the carbon emissions from the consumption by residents in those three major regions. Since the reform and opening up, the income gap between rural and urban residents in China has widened. The disposable income and the nonproductive expenditure of urban residents were much higher than the per capita pure income and the total expenditure of living consumption of rural residents, and they decreased

Table 10.8 The energy consumption per unit of GDP in the eastern, central and western regions across China from 1995 to 2008. Unit: t/10,000 yuan Year

Eastern

Central

Western

Year

Eastern

Central

Western

1995

1.8170

2.7882

2.8001

2002

1.2937

1.7317

2.0074

1996

1.6686

2.5219

2.6550

2003

1.2842

1.7391

2.1210

1997

1.5029

2.2624

2.5552

2004

1.2896

1.7944

2.2419

1998

1.4043

2.0858

2.361 1

2005

1.3190

1.7687

2.2618

1999

1.3095

1.8527

2.1705

2006

1.2765

1.7036

2.2304

2000

1.3515

1.7736

2.0900

2007

1.2199

1.6257

2.01 15

2001

1.3143

1.7448

2.0507

2008

1.1443

1.5244

2.0074

Source China Statistical Yearbook and China Energy Statistical Yearbook over the years. GDP is adjusted to the price of the year 1995

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Table 10.9 The average year-end number of durable consumer goods owned by each 100 rural households in the eastern, central and western regions from 2005 to 2009 Item

Eastern 2005

Central 2008

Western

2009

2005

2008

2009

2005

2008

2009

Refrigerators

40.11

52.56

57.75

34.51

65.11

84.04

10.55

21.14

27.53

Air-conditioners

18.71

29.77

34.26

3.89

9.33

11.88

0.81

2.00

2.77

Home computers

6.20

12.15

15.66

2.14

6.42

10.55

0.42

1.45

2.49

Source 2006–2010 China Statistical Yearbook

Table 10.10 The average year-end number of durable consumer goods owned by each 100 urban households in the eastern, central and western regions from 2005 to 2009 Item

Eastern 2005

Family cars Home computers

Central 2008

2009

2005

6.11

14.35

17.33

57.31

74.86

82.19 62.53

2.52

Air-conditioners 122.99 145.69 152.92 89.6

Western 2008 7.84

2009 10.72

2005

2008

2009

2.57

6.06

7.47

93.94 105.48 32.28 48.31 54.51 110.85 117.99 55.41 62.55 70.01

Source 2006–2010 China Statistical Yearbook

gradually from the eastern and central regions to the western region. In 2009,6 9 of the top 10 provinces and municipalities in terms of per capita disposal income of urban residents were located in the eastern region, while all of the last 10 provinces, regions and municipalities in the ranking were located in the central and western regions. The gap in the per capita disposable income of urban residents between Shanghai, No. 1 in the ranking of the eastern region, and Inner Mongolia, No. 1 in the ranking of the central and western regions, reached 12,988.59 yuan, while the gap in the per capita disposable income of urban residents between Hainan, the last one in the ranking of the eastern region, and Gansu, the last one in the ranking of the central and western regions, reached 1821.07 yuan. The income level determined the level of consumption and the structure of consumption and gave rise to different modes of consumption, producing different effects on carbon emissions. For the average year-end number of durable consumer goods owned by each 100 urban and rural households (see Tables 10.9 and 10.10), the number of refrigerators, air conditioners, family cars and home computers with high energy consumption increased in the three major regions year by year, but the number of these durable consumer goods owned in the eastern region was noticeably larger than that in the central and western regions, showing apparent differences.

6

The data come from 2010 China Statistical Yearbook.

10.3 Conclusions and Countermeasures

173

10.3 Conclusions and Countermeasures This paper analyzes the differences in regional carbon productivity and the influencing factors by taking 30 provinces, autonomous regions, municipalities, and the eastern, central and western regions across China as objectives, the period from 1995 to 2008 as the sample period, and by using methods including clustering analysis, the Theil index and the decoupling index. As shown in the results of the study, the total amount of carbon emissions in the eastern region was more than that in the central region of China, while the total amount of carbon emissions in the central region was more than that in the western region; this pattern remained unchanged for more than a decade. In 2008, carbon emissions in the eastern region accounted for 47.3% of the total national amount of carbon emissions, while this proportion in the central and western regions was 28.6 and 24.1%, respectively. Carbon emissions in the three major regions increased year by year—the average annual growth rates in the eastern, central and western regions were 7.47, 5.81 and 7.64%, respectively. Carbon productivity in most of the provinces across China increased year by year—the upward trend was not noticeable in the western provinces, while it declined gradually in Hainan and increased and then decreased in Shandong. Carbon productivity decreased gradually from the eastern and central to the western regions. However, the average annual rate of the growth of carbon productivity was the highest (4.91%) in the central region, 4.30% in the eastern region and the lowest (only 3.31%) in the western region. The overall Theil index for carbon productivity shows obvious regional differences in carbon productivity in China. As indicated by the Theil index for carbon productivity in the three major regions, the differences within the eastern region narrowed, those within the central region widened and then narrowed, and those within the western region expanded. The overall distribution difference in regional carbon productivity in China was mainly caused by the differences within regions, while the differences within regions mainly came from those within the eastern region. The rate of contribution from the differences among regions was low and remained at approximately 20%, but it has increased in recent years, suggesting that the differences among the eastern, central and western regions have been generally widening, exerting an important impact on the trend of change in the differences in carbon productivity in China in the future. The decoupling index was used to dynamically analyze the characteristics of decoupling between economic growth and carbon emissions in the three major regions across China, further reflecting the regional differences in carbon productivity. According to the results of the analysis, the decoupling index and the characteristics of the change in carbon productivity varied with the different stages of economic development. Even in the same state of decoupling, there were differences in carbon productivity among the eastern, central and western regions, and carbon productivity in the eastern region was higher than that in the central and western regions. To achieve China’s target for emission reduction by 2020, there should be fewer carbon emissions, they should not increase, and they should even decrease as much as possible according to the industrial structure, the technical level and the capital

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capacity while maintaining economic growth in the eastern, central and western regions, but the focuses should be different among the eastern, central and western regions. In the eastern region, emphasis should be placed on controlling carbon emissions while maintaining steady economic growth. In the central and western regions, particular stress should be placed on economic growth, and attention should be given to reducing emissions, but the developmental path in the eastern region should not be followed to promote economic growth; otherwise, the situation of the reduction of carbon dioxide emissions will be very severe in China in the future. (1)

(2)

Given that it is difficult to noticeably change the energy structure and the structure of industry, reducing carbon emissions is the most effective way to improve the efficiency of energy utilization in the short term. As China is a developing country, emissions from industries, especially heavy industry, make up a very large proportion, advanced and backward technologies coexist in industries, and backward technologies cause high energy consumption and more emissions. In the eastern region, with an obvious abundance of heavy industry, actions should be taken to utilize capital advantages, introduce advanced technologies and equipment, combine them with self-dependent innovations, continuously increase the technical level, enhance the energy-saving rate and reduce product energy consumption. In the central and western regions, priority should be given to phasing out the backward production capacity, reducing the predatory development and extensive utilization of resources, eliminating the wasting of resources while improving carbon productivity. The transformation of the mode of economic growth is the fundamental solution. In the eastern region, the traditional developmental mode, characterized by high resource consumption, high dependence on the export market, the low end of the industry chain, low prices and large quantities, has been subject to increasingly severe challenges and has come to an end; thus, it is necessary to transform from the traditional developmental mode to the new-type developmental mode. The power of consumption for boosting GDP should be increased in the future. It is essential to improve the investment structure and place more emphasis on investments in technologies to optimize the industrial structure so that investments can be more conducive to economic development. Whether in the long term or in the short term, economic development in the central region is obviously driven by consumption, and investments lag far behind consumption in stimulating GDP in the central region. Investments have played an important role in helping an economically underdeveloped region shake off poverty to foster development, which has been proven in the eastern region. Therefore, on the one hand, it is necessary to optimize the structure of consumption and maintain the role of consumption in promoting economic development in the central region; on the other hand, it is essential to increase investments in the central region to help the central region break away from the single economic growth mode under which economic growth is mainly fueled by consumption. Since the implementation of the national policy for developing western China, the economic growth mode in the western region has improved increasingly.

10.3 Conclusions and Countermeasures

(3)

175

The state should continue to maintain the good momentum of development in western China—on the one hand, it is necessary to continue to stimulate investments; on the other hand, consumptions should be expanded, and they should be combined with investment policies to push forward the sustained and sound development of the whole economy. The optimization and upgrading of the industrial structure is the key. The industrial structure is developing at different levels in the eastern, central and western regions, where differentiated development should be pursued according to respective resource endowments. In the eastern region, the advantage of reengineering should be exploited to impel continuous industrial optimization and upgrading amidst rising business and labor costs and increasing environmental constraints on industrial development. First, steps should be taken to resolutely shut down and phase out a number of enterprises and products that waste resources, pollute the environment and involve backward equipment. Second, the high-end manufacturing industry should be developed vigorously. It is necessary to further improve the investment environment, intensify efforts to attract businesses and investments, actively encourage technical innovations and the development of new products, carry out brand-building projects, gradually transform from manufacturing to creation, and boost industrial upgrading. Third, actions should be taken to energetically develop the high-end service industry; great importance should be given to developing the modern service industry, including financial services, modern logistics, cultural creative undertakings, and economic servitization, which should be actively promoted. Fourth, it is necessary to encourage enterprises with developmental potential that are subject to land and cost restrictions to move to the surrounding areas and the central and western regions. In the process of industrial transfer and undertaking, prominence should always be given to development amidst undertaking and undertaking in development. We should introduce the industries at a high starting point and develop the industries at a high level. We should identify the priorities in industrial undertaking and the direction for industrial development. We should strive to build an industrial undertaking platform, stringently execute the industrial access standard, and strictly prohibit the introduction of outdated production capacity. We should endeavor to combine the undertaking of industrial transfer with the promotion of the adjustment and upgrading of the industrial structure. We should continuously reinforce the capability for self-independent innovations amidst undertaking, realize innovations during undertaking, seek development from innovations, and combine the undertaking of industrial transfer with self-independent innovations. In the central region, efforts should be made to quicken comprehensive rural reform, promote agricultural industrialization and develop modern agriculture. It is necessary to increase the technological content in industries, reduce dependence on the resource environment, develop new and high-technology industries, and promote industrial transformation and upgrading. We should seize the huge opportunities in the age of high-speed rail and cater to the

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needs of consumption upgrading to promote the rapid development of the tertiary industry. In the western region, it is necessary to proceed from different geographical and weather conditions, different cultural and historical characteristics, take the market-oriented approach, give play to the region’s own advantages, adjust and optimize the industrial structure, foster the characteristic economy and advantageous industries with developmental potential, form a distinctive industrial scale, cultivate and shape new economic growth points to seek leapfrog development. The adjustment of the energy structure represents a direction. First, we should gradually decrease the proportion of coal consumption, increase the development of technologies for the clean utilization of coal, make it marketoriented and industrialized, and gradually move towards low-carbon development. Second, we should develop clean energy and build a new energy industry system. The development of new energy should be based on local conditions. With regard to this development, we should not rush headlong into action and should avoid repeated construction, excess production capacity and low-end cutthroat competition. Technical progress is a support. Technical progress should be relied on to phase out the outdated production capacity, enable the clean utilization of coal and develop clean energy, while technical progress requires increased input in research and development. In the central and western regions, governments should allocate more public financial resources or increase governmental policy subsidies. In the eastern region, enterprises should make more commercial investments.

References Beinhocker, et al. (2008). The carbon productivity challenge: Curbing climate change and sustaining economic growth. McKinsey Global Institute. Dan, T., & Huang, X. (2008). An association analysis and comparison of the economic development and carbon emissions in the Eastern, Central and Western Regions across China. China Population Resources and Environment, 18(3). He, J., & Su, M. (2009). Carbon productivity analysis to address global climate change. China Soft Science, 10. IPCC. (2006). IPCC guidelines for national greenhouse gas inventories. IGES. Li, G., & Li, Z. (2010). A study of the regional differences and the affecting factors in carbon dioxide emissions in China. China Population Resources and Environment, 20(5). Pan, J. (2010). How to develop China’s low-carbon economy. China Market, 11. Pan, J., & Zhuang, G. (2010). An analysis of the conceptual recognition and the core elements of a low-carbon economy. International Economic Review, 4. Theil, H. (1967). Economics and information theory. North Holland Publishing Co. Theil, H. (1972). Statistical decomposition analysis. North Holland Publishing Co. Tapio, P. (2005). Towards a theory of decoupling: Degrees of decoupling in the EU and the case of road traffic in Finland between 1970 and 2001. Transport Policy, 12.

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Xu, D. (2010). An analysis of the regional differences in China’s carbon emission structure. Jiangxi Social Sciences, 4. Zou, X., Chen, S., & Ning, M. (2009). An empirical analysis of the affecting factors for carbon emissions in Provinces across China. Ecological Economy, 3. Zhang, L., Huang, Y., Li, Y., et al. (2010). An analysis of regional pattern changes in carbon emissions and the emission reduction paths in China. Resources Science, 32(2).

Chapter 11

Clarification of the Concept of a Low-Carbon Economy and the Analysis of Its Core Elements Jiahua Pan, Guiyang Zhuang, Yan Zheng, Shouxian Zhu, and Qianyi Xie

A low-carbon economy is the inevitable choice for human beings against the background of climate change. After the Copenhagen Conference, the international community gradually came to a general agreement: The development of a lowcarbon economy is the principal way to address climate change. Although various countries believe that it is necessary and urgent to develop a low-carbon economy, they have not yet gained a unified understanding of what a low-carbon economy actually is. As the practice of a low-carbon economy is in full swing in the world, it calls for solutions and theoretical guidance. A pressing issue lies in reaching an agreement on the concept. Only when we proceed from a scientific concept can we seek an effective way to realize it.

11.1 Concept and Connotation of a Low-Carbon Economy The idea of a low-carbon economy arises against the background of climate change. Scientific evidence shows that the global climate change caused by human activities is an indisputable fact. In response to the challenges posed by climate change to the sustainable development of various countries, at the level of the international climate regime, the international community has signed the United Nations Framework Convention on Climate Change, the Kyoto Protocol and other relevant documents, confirming the principle of “common but differentiated responsibilities” and cooperation in addressing the issue of climate change. At the level of domestic policy, many countries have actively taken actions towards the reduction of emissions and have realized that the high dependence of the traditional economic system on fossil energy must be changed to realize sustainable development with low-carbon emissions.

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_11

179

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11 Clarification of the Concept of a Low-Carbon Economy …

Although the term “low-carbon economy” was mentioned in the literature in the late 1990s,1 this term was not included in official documents until the white paper entitled Our Energy Future-Creating a Low-Carbon Economy was released by the former UK Prime Minister Tony Blair on February 24, 2003. According to the UK’s Energy White Paper, the UK will reduce its greenhouse gas emissions by 60% by 2050 compared with the level in 1990, fundamentally turning the UK into a country with a low-carbon economy.2 The Stern Review, launched by the British Government and led by Nicholas Stern, a former chief economist at the World Bank, in October 2006, pointed out that an input equivalent to 1% of the annual GDP in the world can prevent an annual loss of 5%-20% of the GDP in the future and called for a global transformation towards a low-carbon economy.3 After the fourth assessment report was released by the Intergovernmental Panel on Climate Change (IPCC) in 2007, the scientific conclusion contained in that report has undeniably become the mainstream words in today’s international community: Human beings must take concerted actions to address the challenges posed by climate change; it is more economically feasible to act early. The IPCC’s report expressly stated that the future emissions of greenhouse gases in the world would depend upon the choice of the developmental path. Since the Bali Roadmap was hammered out, the international community has been intensifying its actions to address climate change, and the developmental path of a low-carbon economy has attracted increasing international attention. The United Nations Environment Programme adopted the “Kick the Habit!Towards a Low-Carbon Economy” as the theme of the World Environment Day in 2008, with the hope that the philosophy of a low-carbon economy would quickly gain consensus among decision-makers at various levels. Although the parties at the Copenhagen Conference failed to reach an agreement on controlling greenhouse gas emissions, that Conference initiated a global transformation towards a low-carbon economy. Although the UK proposed the concept of a low-carbon economy, it did not clearly define it. Academic circles and decision-makers have not yet reached a consensus on whether a low-carbon economy is an economic form, a development mode or both. One of the objectives of the Strategic Programme Fund, launched by the UK Foreign and Commonwealth Office in 2003, was to promote a Low-Carbon-High Growth of the global economy.4 This can, to some extent, be considered an understanding of the British government about a low-carbon economy. Zhuang Guiyang used carbon emission elasticity as the decoupling index to analyze the characteristics of decoupling between the per capita income and the growth of greenhouse gas emissions in 20 major greenhouse gas-emitting countries in the world at different

1

Kinzig and Kammen (1998). DTI (Department of Trade and Industry) (2003). 3 Stern (2007). 4 Refer to the relevant information from the British Embassy in China. http://ukinchina.fco.gov.uk/ zh/working-with-China/spf/. 2

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181

stages of development and believed that a global transformation towards a lowcarbon economy presented the characteristics of multiple stages.5 According to Zhou Shengxian, the Minister of the Ministry of Environmental Protection of China, a low-carbon economy is an economic mode based on low energy consumption, low emissions and low pollution, and it shows the great progress made by human society following primitive civilization, agricultural civilization and industrial civilization. Its essence consists of improving the efficiency of energy utilization and creating a clean energy structure. Its cores are technical innovations, institutional innovations and the transformation of the outlook on development. The development of a low-carbon economy represents a global revolution involving the production mode, lifestyle, values, national rights and interests.6 As stated in the report delivered by the China Council for International Cooperation on Environment and Development (CCICED), a low-carbon economy is an economic form that emerged in postindustrial society and is designed to reduce greenhouse gas emissions to a certain level to prevent various countries and their citizens from being adversely affected by climate warming and ultimately secure a global sustainable human environment.7 He Jiankun believed that the essential requirement for achieving a low-carbon economy is the improvement of carbon productivity—each unit of carbon dioxide emission should yield more GDP.”8 In fact, the above concepts partially capture the core characteristics of a low-carbon economy—low carbon emissions, high carbon productivity and the characteristics of multi-stages—and reveal that the objective of a low-carbon economy is to meet the challenges regarding energy, the environment and climate change and the practical path of a low-carbon economy is to carry out technical innovations, improve energy efficiency and make the energy structure clean. However, there are also some drawbacks to the above concepts: On the one hand, the definition of low-carbon emissions and its relationship with the realization of the human development goal are not explained thoroughly; on the other hand, the internal driving forces in a low-carbon economy are not analyzed in depth. In current academic research on the international climate system and climate change, “low-carbon emissions” are considered from different perspectives. First, based on the international equity principle, the obligation for the reduction of emissions is undertaken to the extent of the total national quantity; thus, low-carbon emissions should be an absolute reduction in a country’s total amount of emissions. Second, based on the interpersonal equity principle, it is believed that low-carbon emissions are one of the basic rights of a country or of an individual for realizing human development; it is held that actions should be taken to reduce the extravagant and wasteful carbon emissions in developed countries and ensure the carbon emissions that are necessary for meeting the basic needs of developing countries. 5

Zhuang (2007). See Zhou (2008). 7 China Council for International Cooperation on Environment and Development, International Experience and China’s Practice in a Low Carbon Economy (research report), December, 2008. 8 He (2009). 6

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Third, based on the principle of cost benefits regarding the resource input and output, carbon is considered a factor input that is hidden in the energy and material products to measure the output from the consumption of a unit of carbon resource in an economy—the case where an increase in greenhouse gas emissions is smaller than the increment in the economic output is considered a low-carbon emission. Carbon productivity is the total GDP yielded from the emission of a unit of carbon equivalent. Carbon productivity is the inverse of carbon emissions from a unit of GDP output. Generally, carbon productivity can be used to measure the level of efficiency of an economy. As carbon productivity depends upon both per capita carbon emissions and per capita GDP, the level of income is not directly associated with carbon productivity. According to the data from the World Resources Institute, in 2005, among the developed countries, Norway had the highest carbon productivity—5,656 USD/t (carbon dioxide), and the USA had a carbon productivity of 2,104 USD/t; among the developing countries, India and China showed carbon productivity of 1,998 USD/t and 956 USD/t, respectively. It is worth noting that some highly poverty-stricken—and small—countries enjoyed a high carbon productivity; for example, Chad had a carbon productivity of 107,527 USD/t—the highest in the world, followed by Afghanistan and Mali.9 As shown, as one of the indicators for measuring the status of development of a low-carbon economy, carbon productivity is relatively suitable for drawing comparisons among the countries whose levels of economic development (or levels of human development) are relatively close. Furthermore, carbon productivity cannot measure the level of human development in and the extravagant emissions from a country (economy). As various countries are at different stages of development, the emissions from various countries exhibit the characteristics of multiple stages, which can be expressed by carbon emissions elasticity (the ratio of the growth rate of carbon emissions to the growth rate of the GDP). The objective of a low-carbon economy is low carbon-high growth; thus, carbon emissions elasticity mainly sheds light on the extent of the decrease in the economic growth rate amid growing carbon emissions subject to positive economic growth. As revealed by research and analysis, developed countries, such as the USA, the UK, 27 EU countries, Germany, Canada, Australia, Italy, Spain, France, Japan and Russia, were mainly characterized by strong decoupling (the carbon emissions elasticity was lower than 0) and weak decoupling (the carbon emissions elasticity was lower than 0.8) between carbon emissions and economic growth—the UK was the most prominent one and always presented strong decoupling. Although the carbon emissions elasticity was lower than 0 during a certain period in some developing countries, it was mainly caused by economic fluctuations that occurred for various reasons; because their economic growth rate was negative, they obviously fell outside our expectations regarding a low-carbon economy. A weak decoupling (the carbon emissions elasticity is between 0 and 0.8) also arose in the developing countries, but it was not the main trend and generally they were at a stage of expanded connection (the carbon emissions elasticity is between 0.8 and 9

Refer to Climate Analysis Indicator Tool of WRI, http://cait.wri.org/. The sources of the data in the later part of this paper are not listed.

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1.2). For developing countries, an ideal trajectory for transforming towards a lowcarbon economy is one in which the carbon emissions elasticity gradually decreases subject to positive economic growth.10 Pan Jiahua et al. believed that a low-carbon economy meant an economic form in which carbon productivity and human development reached certain levels and aimed to realize the global shared vision11 for controlling greenhouse gas emissions.12 Carbon productivity refers to the GDP yielded per unit of CO2 emissions. An improvement in carbon productivity means that less consumption of materials and energy brings about more social wealth. Human development means that economic development and social progress are achieved at human dimensions such as economic capability, health, education, ecological protection and social equity. This concept has the following characteristics: On the one hand, it imposes carbon emission constraints on human development; on the other hand, it stresses that carbon emission constraints cannot harm the goal for human development, which is addressed by making technical progress and saving energy as well as by adopting other means to enhance carbon productivity. This concept is not purported to differentiate absolute low carbon emissions from relatively low carbon emissions; however, in the short term, subject to not changing the energy structure and the industrial structure, the efficiency of energy utilization and the efficiency of carbon output can be boosted to achieve relatively low carbon emissions. In the long term, with technical progress, means such as clean energy substitution and the application of low-carbon technology can be adopted to enable an absolute decrease in the total amount of carbon emissions of a country. As shown in the concept-related discussions about a low-carbon economy, low carbon is merely a means rather than a goal; it is important to ensure that the goal for human development is achieved. In an agricultural society, the consumption of fossil energy and carbon emissions hardly occurred; social productivity was not high, but the economic output per unit of carbon emissions might be very high. As the level of social development was generally low, obviously, it was not the low-carbon economy sought after during the development of human society. In the process of industrialization, a great deal of fossil energy is consumed, and plenty of greenhouse gases are emitted; although enormous material wealth is amassed, human beings may suffer a disastrous consequence in the long run. This is not our goal, either. In practice, there are different views about the concept of a low-carbon economy, and the concept of a low-carbon economy is confused with the concept of low-carbon development in some cases. In fact, there is a complementary relationship between the two concepts as an organic unity. A low-carbon economy is an economic form.

10

Zhuang (2007). The Global Shared Vision is one of the elements for the Long-term Cooperative Action under the Convention as specified in the Bali Action Plan and an important issue in the current international climate negotiations. The core of the Global Shared Vision is the long-term emission reduction target for 2050. The Copenhagen Conference resulted in a consensus that the global temperature rise should not exceed 2 °C. 12 Pan et al. (2009). 11

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The transformation towards a low-carbon economy is a process of low-carbon development, with the goal of low carbon-high growth and an emphasis on the developmental mode. A low-carbon economy is achieved through leapfrog technological development and institutional constraints, which are characterized by improved energy efficiency, an optimized energy structure and rational customer behaviors. Competition involving a low-carbon economy is competition regarding low-carbon technologies, with a focus on the long-term competitiveness of low-carbon products and low-carbon industries. Low-carbon development has different implications for different countries. As the core connotation of low-carbon development, low-carbon emissions may be relative or absolute—the key lies in differentiating the stages of development and the emission reduction obligations. For developing countries, the basic needs for human development have not yet been met, so the case where carbon emissions have somewhat decreased while increasing economic aggregates is considered low-carbon development. Developed countries where the goal for high human development has been achieved should undertake the emission reduction obligation in the increasingly limited global emission space and bring about an absolute decrease in the total amount of carbon emissions on the basis of maintaining a high level of human development.

11.2 Core Elements of a Low-Carbon Economy According to the above definition of a low-carbon economy, the goal for a low-carbon economy is inevitably associated with international efforts to control greenhouse gas emissions. Indisputably, a successful climate change action plan must support the following two goals: stabilizing the concentration of atmospheric greenhouse gases and maintaining economic growth. The low-carbon process of transformation towards a low-carbon economy is defined at two levels: First, the proportion of the carbon emissions from energy consumption is decreasing—making the energy structure clean, which depends upon resource endowment, capital and technical capacity; second, the energy consumption necessary for a unit of output is declining—the efficiency of energy utilization is improving. For the long-term trend of social and economic development, carbon productivity will also improve continuously thanks to technical progress, the optimization of the energy structure and energy conservation measures. Therefore, the low-carbon process is also a process of persistent improvement in carbon productivity. However, high carbon productivity does not necessarily mean a low-carbon economy. This is because excessive and wasteful consumption is sufficient to offset the improvement in carbon productivity so that the total amount of emissions in society remains high. An obvious example is that the carbon productivity in developed countries is much higher than that in developing countries, but the level of emissions in developed countries is several times higher than the per capita level in developing countries.

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According to the above analysis, a low-carbon economy should contain four core elements: the stage of development, low-carbon technology, the mode of consumption and the resource endowment. A low-carbon economy can be expressed in the following conceptual model: LCE = f (E, R, T, C), where E is the stage of economic development, which is mainly embodied in the industrial structure, per capita income and urbanization; R is the resource endowment, including traditional fossil energy, renewable energy, nuclear energy and carbon sink resources. Apparently, these resources include natural resources and human resources—renewable energy and nuclear energy and other energy cannot be efficiently utilized without the input of manpower and capital; T represents the technical factors—the levels of carbon efficiency of major energy-consuming products and processes; generally, the technical level is the outcome of a developmental stage, but a low-carbon economy is not the case: With the adoption of advanced low-carbon technologies, some countries can go beyond the traditional developmental stage of treatment after pollution, which many developed countries once experienced, to achieve leapfrogging lowcarbon development; C represents the consumption mode, which mainly refers to the carbon needs or emissions from different consumption habits and qualities of life.

11.2.1 Resource Endowment Resource endowment is the material foundation for achieving a low-carbon economy. Resource endowment extensively involves mineral resources, renewable energy, land resources, labor resources, capital and technical resources, all of which are important input factors necessary for developing a low-carbon economy. In addition to the wellknown energy resources and carbon sink, it should also include climatic resources and ecological resources that can regulate atmospheric and hydrologic circulation and affect the human environment. The liveability of the natural and geographic conditions will have an impact on the basic necessities of life for residents and the degree of dependence of society and economy on energy. As shown, low-carbon resources are abundant and play a very positive role in promoting low-carbon development. Carbon emissions stem from the use of fossil energy and extensively come from human production and lifestyles. The carbon emissions coefficient decreases in the order of coal, oil and gas. Green plants are carbon neutral. Renewable energy sources such as solar energy, water energy, wind energy and nuclear energy are clean zerocarbon sources of energy. The energy resource endowment can be analyzed by the energy structure (carbon emission factor per unit of energy consumption) and the proportion of nonfossil energy in the primary energy. The higher the carbon emission factor per unit of energy consumption is, the more unclean its fossil energy structure is. According to data from the World Resources Institute, in 2005, the carbon emission factor per unit of energy consumption in the Congo was 4.36 t CO2 /toe (one ton of oil equivalent emitted 4.36 t carbon dioxide), the highest value in the world. Among the developed countries, Australia, the USA, the 27 EU countries, Japan and Germany

11 Clarification of the Concept of a Low-Carbon Economy …

Oil

Nuclear energy

Hydropower

Mexico

Brazil

India

China

Russia

Japan

Gas

South Africa

Coal

Canada

UK

Italy

The

U.S

Germany

The

France

Proportion (%)

186

Fig. 11.1 The energy consumption structures in various countries (2008). Data source BP (2009)

saw 3.13 t CO2 /toe, 2.52 t CO2 /toe, 2.26 t CO2 /toe (average), 2.35 t CO2 /toe and 2.40 t CO2 /toe, respectively. Among the developing countries, India, China and Brazil witnessed 2.27 t CO2 /toe, 3.25 t CO2 /toe and 1.68 t CO2 /toe, respectively. To optimize and clean the energy structure, various countries have attached great importance to developing renewable energy. According to China’s National Medium and Long-term Plan for the Development of Renewable Energy, China’s renewable energy was expected to account for 10% of the primary energy consumption by 2010 and will account for 15% of the primary energy consumption by 2020. The EU has made it clear that its renewable energy consumption will account for 20% of its final energy consumption by 2020. The energy consumption structures in various countries (see Fig. 11.1) depend upon their capital and technical capacity in addition to resource endowment. The forest carbon sink refers to the process, activity or mechanism of reduction of the concentration of atmospheric carbon dioxide in the forest ecosystem. Forest serves as the largest carbon storage bank and an economical carbon absorber on land. As estimated by the United Nations’ Intergovernmental Panel on Climate Change (IPCC), the global terrestrial ecosystem stores approximately 2.48 trillion tons of carbon, among which 1.15 trillion tons of carbon is stored within the forest ecosystem. Scientific research shows that whenever forest trees grow by 1 m3 , such growth can result in the absorption of approximately 1.83 t carbon dioxide on average. Therefore, the restoration and protection of forests are important measures for mitigating climate change at low costs. According to the fourth assessment report on global climate change released by the IPCC in 2007, forestry can deliver a number of benefits and perform the dual function of climate change mitigation and adaptation.

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11.2.2 Technical Progress The factors regarding technical progress exert a crucial impact on a low-carbon economy. Technical progress can give impetus to the low-carbon process from different perspectives, including energy efficiency, the levels of development of low-carbon technologies (e.g., carbon capture technology), management efficiency, and energy structure. Generally, low-carbon technologies mainly address the major energy-consuming sectors, such as electric power, transport, building, metallurgy, the chemical and petrochemical sector, and automobiles; they include not only the applications of the existing technologies and the technologies that can be commercialized in the near future but also the technologies that may be applied in the long term. For example, at the current stage, the low-carbon technologies for the energy sector involve new technologies for emission reduction, including energy conservation, the clean and efficient utilization of coal, the exploration and development of oil and gas resources and coalbed gas, technologies for the utilization of renewable energy and new energy, and carbon dioxide capture and storage (CCS). Take China as an example. Wind power has developed rapidly in China in recent years thanks to the implementation of the Renewable Energy Law and China’s Medium and Long-term Plan for the Development of Renewable Energy and to the introduction of advanced foreign wind power technologies under the Clean Development Mechanism (CDM) program. As forecast in the Stern Review, by 2050, the CCS could make 20% contributions to reducing carbon dioxide emissions in the world, while the technologies for the improvement of energy efficiency may make more than 50% contributions to emission reduction. There is a large gap between the level of energy consumption of Chinese products and the advanced international level (see Table 11.1). Taking the coal consumption in coal-fired power plants as an example, the national average consumption of coal for power supply in China’s electric power industry was 374 g/kWh in 2005, which lagged far behind the advanced foreign level; for example, the consumption of coal for power supply in Tokyo electric power, Electricité De France and Bavarian electric power was 320 g/kWh, 331.6 g/kWh and 332.1 g/kWh, respectively, in 1999. The above comparison clearly shows that the gap between the average consumption of coal for power supply in China’s electric power industry and the advanced world level (1999) was approximately 50 g/kWh.13 Specifically, the large units in China’s electric power industry lagged less behind the foreign units of the same type in terms of level of efficiency. The relatively low overall level of energy efficiency of the generating units was mainly due to a large number of small thermal power generating units. Taking the motor vehicle exhaust emission standard as another example, the EU carried out the Europe IV standard in 2006, while Beijing and China did not start the implementation of the Europe III standard until 2005 and 2007, respectively. The EU planned to implement the Europe V standard in 2011, while China planned to carry out the Europe IV standard in 2010. 13

Zhang (2006).

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Table 11.1 Energy consumption of major high-energy-consuming products and international comparisons China 2000

2005

2007

Advanced International

Energy consumption

2007 gap +%

Coal consumption for thermal power supply (gce/kWh)

392

370

356

312

44

14.1

Comparable energy consumption for steel (kgce/t) (large and medium-sized enterprises)

784

714

668

610

58

9.5

AC power consumption for electrolytic aluminum (kWh/t)

15480

14680

14488

14100

388

2.8

Comprehensive 1277 energy consumption for copper smelting (kgce/t)

780

610

500

110

22.0

Comprehensive 181 energy consumption for cement (kgce/t)

167

158

127

31

24.4

Comprehensive 25 energy consumption for plate glass (kgce/weight case)

22

17

15

2

13.3

Comprehensive 118 energy consumption for crude oil processing (kgce/t)

114

110

73

37

50.7

Comprehensive 1125 energy consumption for ethylene (kgce/t)

1073

984

629

355

56.4

Comprehensive 1699 energy consumption for synthesis ammonia (kgce/t)

1650

1553

1000

553

55.3

Comprehensive 1435 energy consumption for caustic soda (kgce/t)

1297

1203

910

293

32.2

Comprehensive 406 energy consumption for sodium carbonate (kgce/t)

396

363

310

53

17.1

(continued)

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Table 11.1 (continued) China 2000 Power consumption for calcium carbide (kWh/t)

2005

2007

Advanced International

Energy consumption

2007 gap +%

3450

3418

3030

388

12.8

Source 2050 China Energy and CO2 Emissions Report (2009), Science Press

Technical progress is the core of the response to climate change and low-carbon transformation. To accelerate technical progress in the future, China should, on the one hand, reinforce its self-independent technical innovations and, on the other hand, strengthen international cooperation in technological research and development and accelerate the introduction and assimilation of technology. As the economic levels are different among the various regions, the implementation of technical standards and indicators may lead to technical or trade barriers and trade protectionism; however, national mandatory technical standards may stimulate enterprises to phase out outdated technologies and expedite investments in the research and development of low-carbon technologies.

11.2.3 Consumption Mode All social and economic activities are ultimately translated into practical or future consumption activities, so all of the energy consumption and emissions are fundamentally driven by various kinds of consumption activities throughout society. With economic development, the consumption desire and consumption needs of the people are on the rise, and manufacturers make every possible effort to meet the diverse consumption needs of the people and provide various conveniences. As shown in Table 11.2, there were only 15 types of home appliances in a typical British family in the 1970s, while 51 types of home appliances were available in 2006. According to research, there are differences in the developmental level, natural conditions, lifestyle and other aspects; thus, energy consumption and carbon emissions from residents are greatly different among different countries. In fact, in addition to the impact of natural and climatic conditions, the per capita income level, culture and customs, and resource endowment on consumption emissions, the impact of the consumption model and behavioral habits on emissions cannot be underestimated. For example, the per capita GDP in the USA and EU countries, including the UK, exceeded 30,000 USD, but their consumption emissions were greatly different. Taking traffic emissions from the household sector as an example, the per capita travel emissions from households in the USA were approximately 4 t due to dependence on private cars, 2 times that in other countries. The number of motor vehicles owned by every 1,000 people in the USA ranked No. 1, higher than that in EU countries and

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Table 11.2 A list of electric appliances for a typical British family 1970s

After 2000

Electric heater Kitchen stove Lamp Refrigerator Washing machine Television Electric blanket Electric iron Radio Vacuum cleaner Sewing machine Cassette recorder Self-assembled household electrical appliance Toaster Hair drier

Microwave Oven Personal computer Electric blanket Electric oven Monitor Portable computer Game machine Electric hob Printer Coffee machine Refrigerator/freezer Scanner/fax machine Digital clock / radio Washing machine Broadband connector Electric mower Drum-type drying machine Beverage cooler

Dishwasher Portable fan Radio Television Vacuum cleaner Wireless telephone Video recorder Digital camera Answering machine DVD player/recorder TV set top box Mobile phone Music Stand Electric shaver Remote control Mobile phone Steam iron

Hair drier Juicer Sorbet machine Hair iron Home electronic security system Ice cream machine Electric toothbrush Halogen lamp Digital radio Food Processor Juice device Mini audio system Electric tool Personal Care Products Smoke lampblack machine Electric kettle Lawn mowing machine

Data source Energy Saving Trust, “Rise of the Machine”, 2006.

Japan with an equivalent level of per capita GDP. Moreover, as globalization separates production activities from consumption activities, real consumption emissions from a country are covered by emission transfers in international trade. If the intensity of carbon emissions is the same in various countries, the higher the degree of dependence of a country’s consumption upon foreign countries is, the larger the quantity of carbon emissions from consumption is. Therefore, investigating the carbon emissions from the actual consumption by a country’s citizens from the perspective of the consumption side rather than the production side is conducive to taking a more impartial approach to promoting low-carbon development at the source.

11.2.4 The Stage of Economic Development When economic development reaches a certain degree, the accumulative effect of social wealth can boost the development of a low-carbon economy in the following two ways: First, the accumulation of knowledge and technologies gives rise to a certain degree of progress in low-carbon technologies; second, the need for accumulating economic capital stock decreases greatly; consequently, more energy is available for being consumed in the service industry, increasing the consumption level of citizens. The factors contributing to carbon emissions vary, to a certain extent, with the countries; however, with regard to the stage of development, carbon emissions are determined by two factors, consumption and production. In short,

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carbon emissions in developed countries mainly result from the consumer society of the postindustrial era, while those in developing countries are mainly caused by the accumulation of capital stock driven by the input of productive investments and infrastructures. For example, developed countries such as the UK, the USA and Germany enjoy enormous amounts of economic stock, where material stock derived from hundreds of years of economic growth (stores, halls, guesthouses, dikes, roads, houses and other public facilities) is still accessible to the people. Therefore, in these countries, economic growth at an average annual rate of approximately 2% can maintain a relatively high level of the living consumption of citizens because only a very small portion of the increase in their national wealth is used in stock investment, while most of the energy input is committed to the service industry and the area of household consumption. However, as a developing country, China is at the stage of stock accumulation for economic development; in China, continued high economic growth aims at covering the shortage of the capital stock such as infrastructures, and only when the physical capital stock is accumulated to a certain degree can the level of human development level increased, while the resource and energy consumption necessary for maintaining a rapid economic growth is difficult to decrease in a short time before such accumulation. Therefore, the stage of economic development is the starting point and background for a country’s transformation towards a low-carbon economy. Developed countries have achieved the goal of high human development, while developing countries must realize two goals: low-carbon transformation and human development. This will certainly increase the difficulties for developing countries in achieving low-carbon transformation. At present, in EU countries, emissions are decreasing slightly due to slow population growth and the adoption of active measures for emission reduction; in the USA, Australia and Canada, emissions continue to increase as the population and economy grow, and the trend towards external economic expansion is relatively evident. In developing countries, emissions will certainly continue to grow since the population is growing rapidly and basic needs have not yet been satisfied. According to research, there is an approximate inverted-U-shaped curve relationship between per capita greenhouse gas emissions and per capita GDP, while developing countries, including China, are at the stage of climbing on this curve.14 As various countries are at different historical stages, they face different problems when moving towards a low-carbon economy, and the corresponding policies, measures, path choices and emission reduction costs vary with the countries.

14

Zhuang (2008).

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11.3 Removal of Misunderstandings About a Low-Carbon Economy A low-carbon economy is a cutting-edge philosophy; thus, there are many misunderstandings about it.15 Dispelling these misunderstandings is an important precondition for transformation towards a low-carbon economy. A successful way that can be used for reference is unavailable, so it entails a process from practice to understanding, practice again and further understanding. First, a low-carbon economy is not synonymous with an impoverished economy. In the economic society before the industrial revolution or the current poorest, least developed territories and countries, fossil fuels and commercial energy were/are being developed and utilized at very low levels; the levels of production and consumption of the human society were/are limited; it was/is difficult to enjoy a comfortable living environment created by cooling and heating, and the people could not/cannot enjoy a pleasant travel by modern means of transportation. Therefore, the level of greenhouse gas emissions from human activities was/is considerably low, and naturally, there was/is a “low-carbon” state. For example, at present, the carbon productivity in countries with very low levels of development, such as Chad and Senegal, even surpasses that in developed countries such as Germany and Canada, but their levels of development are much lower than the desired level in human society, so it is not a low-carbon economy. The development of a low-carbon economy should not result in poverty; instead, this development should lead to prosperity, subject to protecting the environmental climate. Second, a high quality of life does not amount to a high amount of emissions. Currently, the level of per capita carbon emissions in developed countries is very high—that in EU countries and Japan is approximately 10 t, while that in the USA is 20 t, much higher than the average level in developing countries and the world. Therefore, many people believe that only a high amount of emissions can bring about a relatively high quality of life and that a low-carbon economy is unrealizable. The process of transformation towards a low-carbon economy presents the characteristics of multiple stages, so developing countries need a certain growth of carbon emissions. However, we must point out that the current high level of development (social productivity) in developed countries depends on the huge capital accumulation from past uncontrolled emissions, while their excessive and wasteful emissions have, to some extent, offset the improvement in their carbon productivity. In Nordic countries and their cities, the standard of living and carbon productivity are very high, while the level of carbon emissions has been decreasing. Therefore, the quality of life is not measured by the quantity of carbon emissions; the level of greenhouse gas emissions can be decoupled from the level of social and economic development. Third, the development of a low-carbon economy does not restrict the introduction and development of particular industries, such as energy-intensive industries; the technical levels of these industries cater to the needs for developing a low-carbon 15

See Zhuang (2009), Zeng (2009), The Climate Group (2010).

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193

economy as long as the technical levels are industry-leading. Historically, industrial expansion from a small scale to a large scale and the upward movement of the industrial structure from a low level to a high level are governed by a law, and the general trend of development is agriculture—light industry—basic industries—heavy chemical industry—processing industry with high value added—modern service industry and a knowledge-based economy. Among the three industries, the secondary industry is moving from a low level to a high level in a particularly evident way—on the one hand, the secondary industry is expanding; on the other hand, the secondary industry is developing towards high levels. Energy-intensive industries (the main fields in which a low-carbon economy is misunderstood to restrict industrial development) and relevant industrial products are indispensable for China’s industrialization and urbanization, and they constitute an essential material foundation and an unbeatable developmental stage for realizing China’s modernization. As shown, industrial development follows an objective scientific developmental law, and the development of particular industries should not be blindly rejected during the development of a low-carbon economy. Fourth, a low-carbon economy does not mean a “high input”. The development of a low-carbon economy calls for saving energy, improving the efficiency of energy, developing low-carbon energy, including renewable energy, developing and applying technologies for reducing greenhouse gas emissions, developing forestry carbon sinks, and promoting behavioral changes at the final points of consumption, which entail costs. However, the corresponding measures will also deliver a number of benefits in energy conservation, environmental protection, employment and economic growth. Therefore, it is meaningless to merely focus on the cost input in the development of a low-carbon economy. According to some research conducted by McKinsey & Company, to achieve the target of 2 °C for global climate change, 75% of the reduction of the corresponding greenhouse gas emissions can be made by nontechnical measures or the existing mature technologies without the development of new technologies. Furthermore, among all of the emission reduction potential and emission reduction technologies, approximately 25% of the potential of emission reduction incurs zero or even negative cost—there are some net benefits—in the whole life cycle of technology. Even though a special price needs to be paid for developing a low-carbon economy, given that a low-carbon economy is attractive to international investors, this price is worthwhile for fostering long-term strategic competitiveness. Fifth, a low-carbon economy is not merely what needs to be done in the future. The development of a low-carbon economy is a long-term goal, but it is not merely the “future economy”. To realize the goals for addressing global climate change as specified in the United Nations Framework Convention on Climate Change, people around the world must, as soon as possible, ensure that the greenhouse gas concentration in the atmospheric environment no longer increases. Developed countries have heavy historical responsibilities, while the relatively high level of social and economic development and carbon productivity currently available in developed countries have laid a solid foundation for their low-carbon transformation. The future world will certainly be a low-carbon one. Developed countries have made or are making strategic

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arrangements. Whosoever has low-carbon competitiveness will gain initiative in the future world. For developing countries, the current efforts to transform their society and economy into low-carbon ones can prevent a major “lock-in effect” and help build their future core competitiveness. Combating global warming requires international cooperation and involves efforts from every country (territory) and everyone on earth as well as the responsibilities of enterprises. In the medium and long term, the development of a low-carbon economy is the inevitable choice for the sustainable development of human beings and is unrelated to “morality”. Research shows that a delay in action will cause more costs and losses. Sixth, the development of a low-carbon economy is not merely the action taken by developed countries. Under the principle of “common but differentiated responsibilities” specified in the United Nations Framework Convention on Climate Change, various countries should take “common but differentiated” actions in light of their respective national conditions and capabilities. In essence, developing a low-carbon economy, taking the low-carbon developmental path or building a low-carbon society and economy is the core of mitigating greenhouse gas emissions in addressing climate change. Major economies in the world have proceeded from their national conditions to proposing strategies and measures for developing a low-carbon economy. A number of countries have also carried out a great amount of successful low-carbon practices at the municipal and regional levels. Therefore, the development of a lowcarbon economy is a common goal worldwide. In China, national and local efforts to develop a low-carbon economy focus on taking low-carbon development as the core strategic choice for pushing forward technical innovations, improving policies and systems, transforming social and economic developmental modes, and coordinating the relations between economic development and the protection of the global climate to achieve a win-win outcome in the global response to climate change and sustainable domestic development. Seventh, a low carbon economy does not mean a mandatory requirement for a “zero-carbon economy”. Low carbon can be divided into absolute low carbon, low carbon that meets a certain goal and relatively low carbon. Absolute low carbon is zero carbon, but it is not objective and feasible under the current social and economic conditions. The transformation from high carbon to low carbon is a huge and complex systematic project and must be carried out gradually. A zero-carbon economy is a lowcarbon economy, but a zero-carbon economy is not mandatorily required to achieve a low-carbon economy. Low carbon that meets a certain goal—such as the consensus on 2 °C reached during the Copenhagen Conference—is realizable and very challenging for various countries. This is the reason why various countries vehemently wrestled during the negotiations. At the current stage, developing countries should make every effort to reduce their carbon intensity and improve their carbon productivity. A lowcarbon economy does not mean a low return. With increasing input, policy support, learning and transfer, the cost curve for low-carbon technologies shows a declining trend, while some new energy technologies will have an economic foundation and commercial value for fully replacing fossil energy for the generation of power. Eighth, there are similarities and differences between a low-carbon economy and a “low-carbon society”. The differences between them are related to the structure of

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carbon emissions in various countries. In developing countries, industrial emissions account for 70% of the total amount of emissions, while in developed countries, industrial, building and transport emissions each account for 1/3. China’s development of a low-carbon economy should focus on the industrial economic sector for building a low-carbon industrial economy. In developed countries, the development of a low-carbon economy should center around reducing carbon emissions from residents’ living consumption to create a low-carbon social life. At present, low-carbon economic construction in China is carried out mainly at the technical and industrial levels, but the importance of reducing greenhouse gas emissions at the social consumption level cannot be ignored. While developing a low-carbon economy, we should work on pushing forward the change of the whole society and building a low-carbon society. Ninth, a low-carbon economy cannot be equivalent to “energy conservation and emission reduction”. The reduction in greenhouse gas emissions should cover the increase in carbon sinks and the decrease in carbon sources. According to the KAYA Consensus, the growth of carbon dioxide emissions from a country depends upon the population, the per capita GDP, the energy consumption per unit of GDP and the energy structure. In China, as the population base is large and will continue to increase in a certain period to come, a rapid growth of per capita GDP is required to meet the increasing material and cultural living needs of the people; thus, both factors exert an adverse impact on China’s control of the growth of carbon emissions. The measures adopted by China consist of reducing the energy consumption per unit of GDP and increasing the proportion of renewable energy in primary energy consumption. Although the control of carbon emissions is consistent with energy conservation and emission reduction, energy conservation and emission reduction is merely a specific action in China’s current low-carbon economic transformation. A low-carbon economy covers various aspects, including low-carbon production, low-carbon consumption, low-carbon resources, low-carbon buildings, low-carbon transportation, a low-carbon life, a low-carbon environment and a low-carbon society. Tenth, a low-carbon economy is not a “trading economy”. There is an urgent need to establish China’s carbon trading market, build a long-term, transparent market mechanism with a certainty of boosting the reduction of carbon emissions, and tap China’s huge carbon market potential to stimulate China’s low-carbon economic growth. Compared with Europe, the USA and other countries, China is still in the period of development led by high-carbon industrialization (coal makes up 69.5% of China’s energy consumption), with an irrational energy structure. It is imperative for China to vigorously promote energy conservation and emission reduction and increase the economic effectiveness of carbon by means of policies and a market mechanism. Many domestic cities are full of enthusiasm for building carbon emissions permit trading platforms—the representative ones are the China Beijing Environment Exchange, the Shanghai Environment and Energy Exchange and the Tianjin Climate Exchange established in 2008. Greenhouse gas emissions permit trading to merely serve as an economic market means, while the transformation towards a low-carbon economy is a systematic project; thus, a low-carbon economy cannot be one-sidedly understood as a trading economy.

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Eleventh, there are similarities and differences between a low-carbon economy and a green economy and a recycling economy. When delivering an important speech entitled Join Hands to Address Climate Change Challenges at the opening ceremony of the United Nations Climate Change Summit on September 22, 2009, Chinese President Hu Jintao stressed that China will energetically develop a green economy and actively develop a low-carbon economy and a recycling economy. In practice, people have many misunderstandings about a green economy, a low-carbon economy and a recycling economy. There are associations and differences between a low-carbon economy and a recycling economy. As an economic form with a special purpose, a low-carbon economy addresses greenhouse gases, leading to global climate change, including carbon dioxide, and the carbon-based energy system dominated by fossil fuels; a lowcarbon economy aims at effectively allocating and utilizing carbon-related resources and environmental elements. From the perspective of the connotation of a low-carbon economy, among the specific routes for achieving it, the reduction of energy consumption and the improvement in energy efficiency well embody the “reduction” requirement in a recycling economy, while the capture and storage of greenhouse gases including carbon dioxide—especially carbon dioxide sequestration and the increase in crude oil recovery ratio—well give expression to the principle of “reuse” and “recycling” in a recycling economy. Furthermore, the development and application of nongreenhouse gas substitutes for ozone layer-depleting substances mirrors the requirements, in a broader sense, of “redesign, rerepair, remanufacturing” in a recycling economy. Therefore, a low-carbon economy is closely connected to a recycling economy. A green economy is a relatively vague concept. It may be believed that all economic forms and developmental modes associated with environmental protection and sustainable development can be incorporated into the scope of a green economy. However, it is very difficult to quantify and evaluate a green economy, and the constraint conditions for social and economic development are not contained in terms of input factors. In a low-carbon economy, subject to the traditional basic elements—labor, land and capital—for social and economic development, the inputs of natural resources, including land, are further divided into the consumption of natural resources, including energy, and the environmental capacity for greenhouse gas emissions, so that carbon emissions become an input factor and constraint indicator for social and economic development. The concepts of a green economy and a low-carbon economy are broader than those of a recycling economy since they cover green production, green consumption and low-carbon consumption. A green economy is not the same as a low-carbon economy. “Green” involves ethical, economic and environmental aspects. A lowcarbon economy is well targeted, and its scope is smaller than that of a green economy but larger than that of a recycling economy. Being green is not necessarily being lowcarbon. China places more emphasis on a green economy because China’s traditional ecological problems—such as water pollution, air pollution and solid wastes—have not yet been solved, and China hopes to tackle these problems in addressing climate change, and the synergistic effect should be sought to develop a low-carbon economy.

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It is more difficult to evaluate a green economy than a low-carbon economy—for example, the research on green GDP calculation, initiated in China several years ago, has not yet been popularized. The biggest difference between a green economy and a low-carbon economy is that a green economy is not subject to the rigid constraints of carbon emissions.

11.4 Conclusions As a shared global vision for economic development, the transformation towards a low-carbon economy is certainly a long process. Such a transformation should take into account the developmental stage, resource endowment, technical level, consumption model and other aspects. A low-carbon economy is not a fashionable concept, and it can be put into action, while a number of misunderstandings must be removed in practice. China has vowed to reduce its carbon emissions per unit of GDP by 40–45% by 2020 compared with 2005 and ensure that nonfossil energy will account for 15% of its primary energy consumption while achieving the forest management target. China’s current tasks for a low-carbon economy are based on the above targets. China strives to transform its economic developmental mode, its consumption mode, its energy structure, and the improvement of the efficiency of its energy so that China can move towards a low-carbon economy and a low-carbon society.

References DTI (Department of Trade and Industry). (2003). Energy white paper: Our energy future—Create a low carbon economy. TSO. He, J. (2009). The key to developing a low carbon economy lies in low carbon technical innovations. GreenLeaf, 1. Kinzig, A. P., & Kammen, D. M. (1998). National trajectories of carbon emissions: Analysis of proposals to foster the transition to low-carbon economies. Global Environmental Change, 8(3), 183–208. Pan, J., Zhuang, G., et al. (2009). Conceptual recognition and evaluation indicator system of a low-carbon economy. Internal Report. Stern, N. (2007). Stern review on the economics of climate change. Cambridge University Press. The Climate Group. (2010). Ten questions concerning a low-carbon economy. In Training Regarding Low Carbon Guangdong SPF Program, March, 2010. Zeng, J. (2009). Ten major misunderstandings must be removed in the development of a low-carbon economy. China Financial and Economic News, September 8, 2009. Zhang, A. (2006). An analysis of the factors of the energy conservation and consumption reduction in China’s power industry. Power Demand Side Management, 6. Zhou, S. (2008). In K. Zhang, J. Pan, D. Cui (Eds.), Introduction to a low-carbon economy. China Environmental Science Press. Zhuang, G. (2007). How will China move towards a low-carbon economy. China Meteorological Press.

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Zhuang, G. (2008). How will China move towards becoming a low- carbon economy? Journal of China & World Economy, 3. Zhuang, G. (2009). Understanding a low-carbon economy from the surface to the center, Economic Daily, January 7, 2009.

Part IV

Economics of Adaptation to Climate Change

Chapter 12

Adapting to the Carrying Capacity, Ensuring Ecological Safety Jiahua Pan

A basic precondition for building a beautiful China is that our social and economic activities do not go beyond the carrying capacity of the ecosystem. As the capacity of the Earth’s resources and the environment is available within a certain limit—the ecological supply is fixed; therefore, if the ecological needs exceed the supplying capacity of the Earth’s ecosystem, ecological degradation is inevitable, and natural beauty will be destroyed. To build a beautiful China, we should strike a balance among the population, the resources and the environment, place equal emphasis on the economic, social and ecological benefits, and respect, conform to and protect nature according to the philosophy and principle of an ecological civilization; it is necessary to keep the natural supply of ecology in its best state, and more importantly, it is essential to control the needs of ecology—only when our ecological footprint is smaller than the carrying capacity of ecology and ecological safety is guaranteed can our grand blueprint be achieved.

12.1 Changing the Manner of Consumption, Reducing the Ecological Footprint The ecological footprint refers to various goods and services—directly or indirectly supplied by the natural ecosystem—consumed by the people who rely on nature, and the land—or water—area, endowed with some productivity of the ecosystem, occupied by the ecosystem for absorption of the wastes generated from the production and consumption of these goods and services.1 Therefore, the ecological footprint represents the ecological needs and has a supply-demand relationship with production capacity or the ecological carrying capacity of the ecosystem—the ecological supply.

1

This concept was first proposed by William Rees in 1992. See Rees (1992).

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Both the ecological footprint and the ecological carrying capacity are measured by the global hectare—one global hectare represents a land area of one hectare used at the average global level of productivity of the ecosystem. Some key ecological factors— for example, the ecological footprint of the greenhouse gases and the ecological footprint occupied by water resource consumption—are expressed in carbon footprint and water footprint—the unit remains the unit of land area at the average global level of productivity of the ecosystem. The ecological footprint is an effective tool for measuring the needs of human beings for natural resources and the consumption of natural resources by human beings. It quantifies the supply of and the demand for renewable resources in the ecosystem, provides a rational basis for formulating environmental and economic policies, and chooses the manners of production and consumption, and offers an objective standard for promoting the construction of an ecological civilization. The supply from the ecosystem is mostly restricted by the natural capacity. Even though the carrying capacity can be, to a certain extent, increased by investments and technical means, the natural capacity itself will not be fundamentally changed. The ecological footprint is not the case since it reveals the needs for the ecosystem from the people’s consumption—such as the ecological footprint of food consumption: In the case of grain, the cultivated land with a certain area is required for production; if the consumption contains animal food such as beef and mutton, the required land area is more than the ecological footprint necessary for grain production. For some industrial products and investments in infrastructure, consumption directly or indirectly originating from or used by people involves a consumption choice—for example, the difference in the ecological footprint between public transport and cars may be several tens of times. The ecological footprint corresponding to these kinds of consumption can be calculated—for example, steel production consumes energy and water, causes emissions that pollute and occupies land. The global hectares occupied by the unit steel production and consumption can be calculated according to the energy soundly converted from the ecosystem and the level of land use. Regarding the emissions of the greenhouse gas carbon dioxide, the carbon footprint can also be calculated according to the fixed absorption through green plant photosynthesis. Regardless of how advanced science and technology may be, human beings always rely on nature to obtain water, food and energy. Since the 1970s, the annual needs of human beings from Earth’s ecosystem have exceeded their regeneration capacity. According to 2012 data,2 the global ecological footprint reached 18.2 billion global hectares and per capita 2.7 global hectares in 2008. In the same year, the carrying capacity of the global ecosystem was 12 billion global hectares, and the per capita

2

The World Wildlife Fund brought together domestic and foreign scientists to update and estimate the global ecological footprint and that of China, and released relevant data in 2012. See the World Wildlife Fund, China Ecological Footprint Report 2012, p. 64, http://www.wwf china.org/wwfpress/publication/shift/footprint2012en.pdf; http://d2ouvy59p0dg6k.cloudfront.net/ downloads/china_ecological_footprint_report_2012_small.pdf.

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carrying capacity was 1.8 global hectares.3 In other words, the global ecological deficit rate reached 50% in 2008—1.5 earths were required for producing renewable resources to be used by human beings and absorbing carbon dioxide from them. According to this trend, by 2030, two earths would not be enough to support the consumption needs of human beings. China’s fragile ecosystem is currently subject to enormous—and growing—population and developmental pressure. According to the World Wildlife Fund,4 China’s per capita EF was 2.1 global hectares in 2008, which was approximately 80% of the average global level. However, China’s ecosystem is relatively fragile, with ecosystem productivity much lower than the average global level. China’s per capita EF was more than two times the productivity of the ecosystem. This is also evidenced by the fact that China has been importing oil, iron ore and other natural resources heavily since the beginning of the twenty-first century. Moreover, the goal of building a moderately prosperous society in all aspects by 2020 means a higher urbanization rate and a higher quality of consumption. The existing lifestyle and production mode have overburdened the ecosystem for a long time. Development accompanied by ecological debts has threatened and loses the safety of the ecosystem, which used to be the foundation for economic and social development. Regarding the construction of an ecological civilization, from the perspective of the people’s initiative, subject to guaranteeing the people’s quality of life, the ecological footprint varies with different manners of consumption—for example, the income level and the standard of living in the USA are roughly the same as those in the EU, but the per capita carbon emissions in the USA is 2.4 times that in the EU5 because of different lifestyles. Therefore, to build a beautiful China, it is necessary to adjust and change the manner of consumption and reduce the ecological footprint to make our needs for the ecosystem fall within its capacity to preserve the natural foundation for a beautiful China.

12.2 Conforming to Nature, Preserving the Productivity of the Ecosystem If the productivity of the ecosystem is subject to man-made disturbances and disruption, the ecosystem will be scarred and devastated, and beauty will be out of the 3 The World Wildlife Fund, China Ecological Footprint Report 2012, p. 168, http://www.wwf china.org/wwfpress/publication/shift/footprint2012en.pdf; http://d2ouvy59p0dg6k.cloudfront.net/ downloads/china_ecological_footprint_report_2012_small.pdf. 4 The World Wildlife Fund, China Ecological Footprint Report 2012, p. 64, http://www.wwf china.org/wwfpress/publication/shift/footprint2012en.pdf; http://d2ouvy59p0dg6k.cloudfront.net/ downloads/china_ecological_footprint_report_2012_small.pdf. 5 The per capita carbon emission levels in both the EU and the USA passed their peaks, mostly declined in a stable state. The EU saw a relatively large per capita decrease since the beginning of the twenty-first century. The data presented here are 2011 data. BP Statistical Review of World Energy 2012, World Bank WDI Database, http://data.worldbank.org/data-catalog.

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question. Natural productivity serves as the foundation for beauty—there is a loose environment to live in, and beauty comes naturally. In an effort to maintain the productivity of the ecosystem, it is essential to follow the philosophy of an ecological civilization and conform to nature rather than run against it and destroy it under the pretext of remaking it. When large-scale industrialization and urbanization initiated after the reform and opening up in the 1980s, China vowed to protect the ecological balance. For the ecological balance at that time, more weight was given to take the perspective of protecting nature to maintain the stability of the natural ecological supply. After the founding of new China, Chinese society became stable, with continuous economic development and rapid population growth; thus, objectively, more ecological supply was required. The movement of “Learning from Dazhai in Agriculture” sprang up across China in the 1960s—with the aim of utilizing the natural space to yield more ecosystem output—where land was reclaimed from lakes and output was obtained through deforestation; as a result, water and soil erosion occurred, riverways were choked with silt and droughts and flood disasters occurred frequently. In many cases, the output of the ecosystem did not increase; instead, there was degradation of the ecosystem, and its productivity declined. In that period, an ecological balance was achieved mainly by natural recovery, while environmental pollution did not constitute a main threat to the ecosystem. After the reform and opening up, China’s rapid industrialization shifted the focus of the economy and labor employment towards industrial manufacturing; mineral resources and fossil energy were exploited and utilized on a large scale, and a large quantity of industrial wastes were emitted into the environment. Meanwhile, the destruction of nature led to the poisoning of some ecosystems in addition to the degradation of the productivity of the ecosystem. Agricultural productivity and unit output increased, and material products became diverse. However, the water was polluted, the atmosphere was no longer clean, and the quality of the food was no longer at a safe level even though the food supply might have been guaranteed. Pollution due to heavy metals in the land, the pesticide residue, PM10 and PM2.5,6 affected material output in the ecosystem and incurred qualitative changes in the ecosystem and its products—they were poisoned. There was an impact on the health of both the ecosystem and human beings. Compared with the degradation of the ecosystem, the damage caused by the poisoning of the ecosystem to its productivity was more far-reaching for ecological safety. If respect for nature is considered an ethical and moral philosophy, the rule of conduct is conformant to nature. The failure to act according to natural law and respect nature amounts to the destruction of the productivity of the ecosystem. The key to conforming to nature lies in adapting to the capacity and space of the ecosystem. In essence, the construction of an ecological civilization is designed to 6

PM refers to particulate matter. PM10 and PM2.5 mean the particulate matters with the particle diameter smaller than or equal to 10 µm and 2.5 µm, respectively. PM10 is the inhalable particulate matter, while PM2.5 is the respirable particulate matter. These particulate matters mostly contain chemical ingredients and heavy metals, and are the important pathogenic factors.

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build a resource-saving, environmentally friendly society—based on the carrying capacity of resources and the environment and governed by natural law, with the goal of sustainable development—and to preserve the productivity of the ecosystem. The carrying capacity is ultimately restricted by the productivity of the ecosystem. China has a vast area of land where the climatic differences are great and the productivity of the regional ecosystems shows an obvious spatial differentiation; the basic social and economic pattern has taken shape accordingly. In the western region, the environmental capacity is small, and the productivity of the ecosystem is low, making it difficult to carry out large-scale urbanization and industrialization. Subject to the same area, the productivity of the ecosystem in the eastern region is several times—even many more times—higher than that in the western region. With regard to conformance to nature, it is necessary to evaluate the carrying capacity of resources and the environment based on the productivity of the ecosystem instead of assessing balanced regional social and economic development.

12.3 Respecting Nature, Adapting to the Carrying Capacity of the Ecosystem Can natural beauty be produced or created through technical innovations and capital inputs? The ecosystem presents its own spatial pattern and temporal variation. Can the productivity of some areas or of the whole ecosystem be enhanced if this natural pattern is changed by technical engineering means? In an industrial civilization, it is believed that technologies and investments can improve the environmental capacity and raise the productivity of the ecosystem. However, the improvement in its partial productivity does not mean the expansion of the natural capacity and space. Furthermore, technologies and investments result in an apparent expansion of the capacity and space and the man-made enlargement of the risks and fragility of the ecosystem. More investments may mean higher risks. For example, some water diversion projects in the lower reaches of the Yellow River might artificially enhance the productivity of the ecosystem in the areas to which water is diverted from the Yellow River; however, once the Yellow River is cut off, some other irrigated areas or cities that are supplied with water from the Yellow River will lose their environmental capacity and carrying capacity. Therefore, the diversion of water from the Yellow River is, to a certain extent, a zero-sum game. The areas other than those to which water is diverted from the Yellow River will experience a decreasing amount of water because the natural rainfall at the source or in the basin of the Yellow River has a rigid climatic capacity and the resulting water amount is fixed. If the natural carrying capacity is exceeded, the water amount for distribution cannot meet the needs of different areas at the same time. Another example is the management of water use in Beijing. As rainfall is limited in North China, the water sources fall short in this region. The move to guarantee the water supply for Beijing but restricting the water supply for the areas surrounding Beijing may greatly improve the economic and

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social benefits from water use; however, this is also a typical “zero-sum arrangement” in terms of the environmental capacity of water. The middle route subproject of the South-to-North Water Diversion Project utilizes the climatic capacity of the Hanshui River Basin to subsidize Beijing’s climatic capacity, thus artificially enhancing the carrying capacity of the ecosystem in Beijing. However, with a water diversion distance of 1,200 km, once the circulation of the water in the Hanshui River Basin changes, the carrying capacity of this ecosystem, whose expansion is based on the external capacity, becomes extremely risky and fragile. Where the technical means and manner of social governance of an industrial civilization are adopted to restrict the beauty of a place or use the beauty resources of a place to bring about or enhance the beauty of another place, this is neither respect for nature nor does it represent real beauty if a certain limit is exceeded. Obviously, the technologies for remaking and conquering nature under the philosophy of an industrial civilization do not completely satisfy the needs of an ecological civilization or for building a beautiful China. The principles of an ecological civilization are respect for nature and compliance with the law. The technologies under these principles are conditional on respecting the carrying capacity of the ecosystem—for example, the technologies for improving energy efficiency and renewable energy technologies do not produce a “zero-sum” effect on the capacity and space of the ecosystem; instead, they enable a real capacity expansion or an improvement in the carrying capacity. Of course, the improvement of the energy efficiency is not subject to having no bounds, while the production of renewable energy cannot be unlimited—taking photothermal or photovoltaic utilization as an example; the total amount of solar radiation to the Earth’s surface is at a certain level, while we have no technologies for expanding the area of the Earth’s surface. However, we can carry out technical innovations to increase the efficiency of the utilization of limited optical energy. This means that some technologies under the philosophy of an industrial civilization can be compatible with the construction of an ecological civilization, while some can be enhanced and renovated by the philosophy of an ecological civilization. Conformance to nature calls for compliance with the rigid constraints of the capacity and space of the ecosystem. In the process of building an ecological civilization and a beautiful China, the capacity and space of the ecosystem should not be under full-load operation, a certain space should be made available to be shared with other living beings, and a part of that space should be reserved for our future generations. As shown, economic development needs to be based on respecting nature. The carrying capacity added by conquering and remaking nature should be addressed by conducting an assessment of productivity at the level of the whole ecosystem, while the utilization of the carrying capacity should take into account the transfer payment or price of the ecosystem and embody the scientific cognition of and respect for nature.

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12.4 Protecting Nature, Increasing the Level of Ecological Safety To build a beautiful China, it is necessary to proceed from the current technical and economic conditions to develop the economy and improve the environment within the capacity and space of the ecosystem. In areas where the intensity and level of social and economic activities have exceeded the carrying capacity of the ecosystem, it is essential to take a three-pronged approach: reduce the ecological footprint, gradually conform to nature and adapt to the capacity of the ecosystem. First, it is necessary to rationally reduce the intensity and level of social and economic activities. Returning farmland to lakes, converting grain plots to forestry, transforming farmland to grassland and reducing grazing are the most direct ways to produce effects and may, however, meet with maximum constraints or resistance. This is because the economy and society in one area have certain rigid needs for the output of the ecosystem. In Xihaigu, Ningxia, an area with poor natural conditions, the climatic capacity is limited and is insufficient to support the inhabitants; thus, the corresponding capacity must be available to support them. The level of water use in Beijing exceeds the carrying capacity of the ecosystem, while the removal of some water-consuming industries out of Beijing will obviously exert an adverse impact on local finance and employment in Beijing. Second, actions should be taken to increase the technical level and improve the systems and mechanisms. The efficiency of the use of resources should be enhanced to continuously raise the input-output ratio—for example, the cultivation and popularization of drought-resistant varieties of plants and crops in arid and water-deficient areas can increase output and meet social needs while not increasing or even mitigating pressure on resources and the environment. Third, space should be left for the restoration of the natural ecosystem. For a long time, urbanization and industrialization have consumed and destroyed excessive natural resources, thus straining the capacity of the natural ecosystem and causing severe degradation. “Restoration”, which goes against natural law, must be avoided to protect nature. In the case of beautifying the environment in water-deficient areas, it is obvious that a lawn with high water consumption cannot be chosen. Arid areas are only suitable for growing grass-type plants, and afforestation in these areas actually damages the environment. Only beauty that conforms to nature is real—sustainable—beauty. The man-made pattern of ecological safety without support from the productivity of the ecosystem appears to provide protection, but it actually causes damage. In many cities in arid and semiarid areas, the environment is “beautified” by adopting engineering means to build extensive artificial lakes; as a result, the costs are high, the water resources are wasted, there is no harmony with the natural environment, and this “beauty” is unsustainable because the water sources cannot be secured. In many places, superlarge squares and ultrawide roads are built; the valuable capacity and space of the ecosystem is occupied recklessly, ruining the natural beauty. Artificial buildings are irreversible to a great extent. Soil capable of conserving water sources and suitable for biological existence is a product formed naturally over a very long period of time.

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Once artificial reinforced concrete is turned into a surface landscape, it will take at least hundreds of years to restore the natural ecosystem to its level of productivity. As analyzed above, ecological safety should be built from the perspectives of the productivity of the ecosystem and the ecological footprint. Ecological supply can be increased to some extent by technical and economic means, but the capacity or carrying capacity of the ecosystem is so limited that the ecological footprint cannot be increased infinitely. To reduce the ecological footprint, it is necessary to change the manner of production and lifestyle, and the choice of the manner of consumption is most important. If an extravagant and wasteful manner of consumption is chosen, regardless of the improvement in the manner of production, the ecological footprint will certainly go beyond the carrying capacity of the ecosystem, and it is difficult to realize ecological safety; furthermore, the foundation for a beautiful China will fall apart. As the ecological footprint does not necessarily have a linear relationship with the quality of life, following the philosophy and principle of an ecological civilization, pursuing a healthy and a high-quality lifestyle and carrying out moderate consumption can impose an effective constraint on ecological needs, enhance ecological safety, achieve harmony between the people and nature, and orderly and steadily promote the building of a beautiful China.

Reference William, E. (1992). Rees, ecological footprints and appropriated carrying capacity: What urban economics leaves out. Environment and Urbanisation, 4(2), 121–130.

Chapter 13

Scientific Planning as the Key to New-Type Ecologically Friendly Urbanization Jiahua Pan

New-type urbanization serves as the carrier for the construction of an ecological civilization, while an ecological civilization is an effective metre for judging whether urbanization is “new-type”. The salient urban diseases in urbanization signal drawbacks in the construction of an ecological civilization. When speaking of how to overcome urban diseases, General Secretary Xi Jinping stressed that urban planning played an important role in guiding urban development; scientific planning delivered the maximum benefits, while faulty planning caused maximum waste; and the self-inflicted fruitless planning effort was the biggest taboo. Scientific planning is the key to a new type of ecologically friendly urbanization.

13.1 The Pattern of Urbanization Driven by Industrialization—An Imbalance of Gravitational Centers The spatial pattern of urbanization is formed naturally and driven by industrial investments, both of which have the connotation of scientific planning. With the need for expansion in the process of industrialization and the continuous increase in the technical level, people shape the urban spatial layout and scale pattern to artificially build cities and change nature. Large-scale investments can rapidly build a new city. In pursuit of industrial expansion, a 10–1,000 km2 land lot can be immediately turned into an industrial park containing a number of plants. The industrial civilization was an interest-oriented one; massive capital was rapidly accumulated and profit maximization was sought, thus the people turned a blind eye to the basic elements of an ecological civilization—the unity of man and nature, the respect for nature and putting people first, thus focusing urban planning on industries rather than on cities, on profits

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and taxes rather than on the people’s livelihood, further causing an imbalance at the gravitational center of the urbanization pattern driven by industrialization. Overall, the spatial layout of China’s urbanization includes the regional pattern of the eastern, central and western regions, the scale pattern—large-, medium- and small-scale cities, and the pattern of urban functional zoning. Since the reform and opening up, China’s economy has increasingly become part of the world’s economic integration, and large-scale industrial investments have greatly promoted urbanization; as a result, the regional pattern of China’s urbanization is generally characterized by highly concentrated belts in the eastern region, point clustering in the central region and scattered point expansion in the western region. In the eastern coastal region, there has been the location advantage of a labor-intensive outward-looking economy; a large number of industrial workers have been attracted thanks to the expansion of the industrial scale; thus, the uninterrupted belts of industry-driven urbanization have taken shape in the eastern region. With the excessive aggregation of the outcomers and the incompleteness of urban infrastructures and social service functions, it is difficult for hundreds of millions of rural migrants to become real citizens in the places where they work in the eastern region. With the large wave of a market economy, some backbone industries—especially the “third-line” enterprises led by the government in the mid-twentieth century—in the central and western regions have shifted to the eastern region, and domestic talent and capital have flocked to southeastern China. In the central region, the scale has been expanded, and vast stretches of areas with numerous cluster points have been developed to improve the “economic primacy ratio” of provincial capitals. Large-scale development and output of the energy and mineral resources in the western region have impelled a dotted expansion of cities in the western region. In terms of the scale structure, the extensive expansion of large cities is robust, the development space for medium-sized cities is compressed, and the motive forces for the development of small cities are inadequate. The proportion of the population of large cities in the total urban population has increased from 24% before the reform and opening up to the current 43%, while the proportion of the population of small cities has decreased from 65 to 45% in the same period. Urban functional zoning stresses large industrial parks but does not take the functions into account; thus, a functional mismatch has occurred. Industrial parks, covering an area of several or even one hundred square kilometers, are far from the system of urban public services. Even the residential quarters are built in an extensive continuous area and are independent of the commercial development of the system of urban public services. For these residential quarters, the industrial integration and the supporting construction of public service facilities are ignored and even rejected. The imbalance in the layout of the urbanization system causes periodic migrations of China’s population. During holidays and festivals, especially the Spring Festival, a multitude of people flow from the eastern region to the western region, from large cities to small and medium-sized cities as well as rural areas. A large number of working people commute between the large urban residential quarters and the industrial parks—and old urban areas—where jobs and social services are concentrated, overwhelming the intercity and urban transport. Industrial parks and populations

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cluster greatly in large cities, occupying plenty of quality land, compressing green space, and driving up housing prices. With inexpensive resources, small and mediumsized cities attract investments involving industries with high energy consumption and high amounts of emissions, exceeding the self-purification capacity of the urban environment and causing a shortage of resources, pollution of water sources and haze. The imbalance in the spatial pattern of urbanization in China is an important cause of the formation and exacerbation of city diseases. Investment-driven, interest-oriented urbanization planning enables Chinese cities to serve as carriers for “the world factory”. New-type urbanization calls for adopting the philosophy of an ecological civilization to enhance and renovate the industrial civilization, conducting a scientific type of planning, integrating cities into nature and returning cities to the people’s livelihood.

13.2 Identifying the Development Boundary—Adapting to the Carrying Capacity of Resources in the Environment Under urban planning in an industrial civilization, technology, capital and interests are the basic elements, and it is not necessary to establish the boundary of urban development; the urban boundary can be continuously expanded as long as there is room for profit. A new type of ecologically friendly urbanization gives prominence to integration with nature and requires clarification of the boundary of urban development. In fact, the formation of the pattern of China’s urban regions objectively shows that the development of the system of urbanization is subject to natural environmental restrictions and the rigid constraints of the boundary. The overall spatial pattern, to some extent, corresponds to the basic pattern of resources in the environment. The natural productivity of the ecosystem in the eastern region is relatively high, while the ecological environment in the western region is relatively fragile. However, it is necessary to accept more than 200 million migrant agricultural people who have worked and lived in cities and accommodate approximately 300 million additional migrant agricultural people during the future urbanization of China. As the current spatial space has been out of step with the carrying capacity of resources in the environment, the question is: How can we adapt the speed and scale of China’s urbanization, in the spatial pattern, to the carrying capacity of resources in the environment? First, the red line of farmland area must be strictly maintained to ensure food security. Urbanization changes the surface structure, making it difficult to reverse land use. The productivity of the land per unit area in the eastern region is several, or even several hundred, times greater than that in the western region. If urbanization is expanded in a disorderly fashion to occupy the land in the eastern region, it is difficult to strike a requisition-compensation balance in the productive capacity of

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the cultivated land in the western region. It is impossible for a population of 1.3 billion to rely on the world’s grain market. Therefore, space for grain production and a green living space are essential for the continuous urban belts in the eastern region. Merely the empty red line of farmland area is insufficient to make water clear, mountains green, a land flowing with milk and honey be worthy of the name. Fertile farmland is encroached upon to go after money and improper gains. Fertile farmland must be protected by guaranteeing comparative interests. The extensive sprawl of megacities at the expense of the fertile farmland appears to deliver economic benefits; however, in practice, it is unsustainable and does more harm than good from the perspective of the ecological civilization—for example, the basic guarantee for a population of 23 million in Beijing basically comes from industrial technical means: the energy is delivered through the West-to-East Natural Gas Transmission Project and from Inner Mongolia and Shanxi; the supply of water relies on the South-to-North Water Diversion Project and the surrounding areas; vegetables are all transported via railways and roads. Fossil energy is unrenewable; the water source, more than 1,000 km away, has natural fluctuations and uncertainties; the production, storage and transportation of vegetables not only increase energy consumption and costs but are also subject to food safety risks. In this sense, Beijing’s sprawl to occupy the cultivated land for vegetable and grain production exerts an adverse impact on protecting the red line of the cultivated land in areas other than Beijing since the facilities for production and storage of various necessities and the transportation routes for them certainly use up the cultivated land. Second, it is necessary to calculate the environmental capacity and specify the ecological red line. The western region is vast, but hydrothermal resources constitute a strict capacity constraint. The development of the western region does not mean large-scale urbanization and the development of high-polluting industrial parks and landscape garden cities in the western region. In cities with a shortage of water resources, pumping underground water that has exceeded its capacity, intercepting natural runoff from rivers, making investments in building anti-seepage facilities, developing an artificial river, lake, wetland landscape and golf courses isolated from nature all run counter to nature and are unsustainable. Moreover, the western and central regions are the barriers and sources for the eastern region; the ecological degradation and pollution in the western and central regions will diminish, even ruin, the carrying capacity of the eastern region. This means that it is, under China’s “twohorizontal-axis and three-vertical-axis” urbanization pattern, it is not necessary and impossible to, on a large scale, expand the city groups and build cities and economic growth poles in the central and western regions, especially the environmentally fragile areas in the western region. The intensity of urban development in the central and western regions must give way to a respect for nature and the reinforcement of the strict constraint of the ecological red line. High pollution density, high economic intensity and high pollution load within the limited territorial space of megacities cannot be sustained unless there is support from the surrounding environmental capacity. In fact, the developmental boundary of megacities is the constraint of the ecological red line. The higher the degree of dependence of megacities on external

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resources is, the higher the fragility is. There is a saying that “small is beautiful”, while its logical basis lies in conforming to and being in harmony with nature. Third, it is essential to integrate cities into nature and “drift with the wind and the current”. There is a need to ensure that residents can obtain access to green mountains, clear water and nostalgia. This is a vivid portrait of high quality of life; more importantly, this is a requirement for conforming to nature. If wind channels are obstructed and the water system is blocked in our cities, the atmosphere’s capacity for self-purification will certainly decrease, and water disasters (shortage and flooding) will be bound to worsen. As a Chinese saying goes, “the big trees higher than a forest will be sure to be blown down by wind”. As the race for bringing forth “the tallest building” unfolds, the risks increase; the intensity of building higher and the increased height lead to consumption of more resources; although it is possible to increase the land plot ratio, generally more capacity for resources in the environment will be occupied and wasted. It is not wise to raise the land plot ratio. When a multistory building exceeds a certain height, the energy consumption for handling the material, for the movement of personnel and for water supply will increase nonlinearly. Once a fault occurs in the power supply system and equipment, the risks and fragility of the tall building will be enlarged nonlinearly. Fire protection for super high-rise buildings has gone beyond the strength of firefighters. An ecological civilization calls for harmony, and one basic norm for harmony is that various elements and ingredients proportionally support each other.

13.3 Balanced Allocation of Public Resources—The Efficiency Basis for Planning An ecological civilization calls for harmony, and one basic norm for harmony is that various elements and ingredients proportionally support each other. The new-type ecologically friendly urbanization should not—it is impossible that such urbanization—be carried out in such a way that there are no communities and public service facilities within an industrial park covering an area of 10 km2 and no workplaces are available within the scope of more than 10 km around a sleepers’ town covering an area of several square kilometers. Under urban planning in an industrial civilization, various investments and technical means are utilized to develop a number of transportation facilities for “moving” the population, while a scientific plan of an ecological civilization requires the integration of industrial functions and urban functions, job-housing combination, resource balance, proportional allocation of various elements, and a nearby “anchorage” of the population. As the gathering place for social public resources, a city provides a wide range of social services necessary for urban residents. If public resources are excessively concentrated, it is difficult to effectively control the scale and boundary of megacities, and the liveable and developmental space in small- and medium-sized cities will certainly be squeezed out.

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A new type of urbanization serves as the carrier for the construction of an ecological civilization, while ecological civilization is an effective metric for judging whether urbanization is “new-type”. Most of China’s top-quality educational, medical, health, cultural and sports resources are concentrated in tier-one cities, municipalities directly under the central government and provincial capitals. An increasing expansion of large cities is directly associated with the high degree of concentration of the monopoly of social and public resources in large cities. As the capital of China, Beijing was home to 91 regular higher educational institutions and 577,000 undergraduate and junior college students in 2012—there were 209,000 graduate students in 52 higher educational institutions and 117 scientific research institutions. Large cities enjoy not only the concentration of high-quality public service resources but also intensive control of high-quality infrastructures and economic sources. Most transportation hubs are built in large cities, the majority of which are not shared with small- and medium-sized cities. These excellent resources are mostly concentrated in urban areas—for example, Dongdan of Beijing is home to three national-level hospitals, while Zhongguancun of Haidian District, Beijing enjoys a high concentration of well-known domestic higher educational institutions and national-level scientific research institutions. In foreign countries, there is a relative concentration in the financial service industry, while other public resources and industries are relatively scattered. The prestigious universities of Oxford and Cambridge are not situated in London, UK. Cambridge’s hospital is not located in an urban area, while a great number of general practitioner clinics are available within the communities in urban areas. The University of California, USA, has ten branch campuses, which are located in southern and northern California and are not concentrated in Los Angeles or San Francisco. The private school of Stanford University is not situated in a large city. The capital of the Netherlands is Amsterdam, but the government, the royal family and the supreme court are located in The Hague. South Africa has three capitals that are completely isolated in the geographical space—administrative capital (the seat of the central government), judicial capital (the seat of the supreme court) and legislative capital (the seat of the parliament)—Pretoria, Bloemfontein and Cape Town, respectively. To overcome the large-city diseases in China, it is necessary to allocate social public resources in a balanced way. First, administrative, high-quality educational, medical and cultural resources should not be excessively concentrated to prevent diseconomies of scale. The capital of Brazil has been relocated from the coastal area to an inland area, and the capital of South Korea has been moved to Seoul due to the optimization of the regional spatial layout. The relocation of the Shougang Group out of Beijing is designed to address the need to adjust the industrial layout and promote green development. It is necessary to extend such outward relocation to high-quality three-industry resources outside the manufacturing industry. Second, the urban infrastructures should give prominence to the regional public attributes and sharing rather than ownership—for example, if Beijing’s second airport is built in Tangshan or Baoding, the intercity rail connection can be integrated at the level of the city, greatly mitigating the environmental resources and the pressure of the population in Beijing and facilitating the structural adjustment and the improvement

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of the quality of the environment in the areas surrounding Beijing. Rail transportation in large cities is connected to the surrounding small and medium-sized cities, thus effectively sharing the urban functions and preventing the spatial separation of the urban system—for example, Yanjiao Town, Sanhe City, Hebei Province is the result of Beijing’s external expansion; it has a population of more than 0.5 million and has reached the scale of a large city, but the independence of its employment and public services are insufficient; no rail transportation or environmental infrastructures are effectively connected and shared between Beijing and Yanjiao Town, so Yanjiao’s transportation presents tidal characteristics. The phone calls between Beijing citizens who live in Yanjiao town and those in Beijing are long-distance calls, and medical insurance, status as a student and endowment insurance accessible to Beijing citizens are not suitable for Yanjiao town. Being adjacent to Beijing, Yanjiao town is part of Beijing’s urban sprawl but appears to be distant. Therefore, the software and hardware within a city cluster are interconnected, and regional separation is approached to achieve urban integration. Third, industrial functions and urban functions must be integrated within the urban space. Job-housing separation and functional segmentation must be prevented to avoid resource wasting. Fourth, the connotation of “increasing the population density in the built-up areas” should be understood scientifically. For China’s urban construction, the status of the central urban area in planning is very conspicuous. Beijing’s ring road pattern is copied in almost all of the large cities. The population density in the urban center and old urban areas exceeds 20,000 people/km2 , while that in the developmental parks and new urban areas is very low. In general, we should increase the population density in the built-up areas and improve the efficiency of urban land utilization; however, we should also make it clear that the urban functions should be decentralized, which means that the population in the old urban areas and the central urban areas should be evacuated to relieve traffic jams and improve the living environment. Otherwise, the long-standing problems in the central urban areas, including traffic jams, water shortages, severe pollution and high housing prices, cannot be fundamentally solved. A scientific layout consistent with the philosophy of an ecological civilization is the characteristic of and the guarantee for new-type urbanization. If we understand and conform to nature and reduce friction with nature, we can decrease the consumption and loss of resources that result from going against nature—such as long-distance water diversion or excessive extraction of deep underground water— and save environmental costs for social operations. To achieve a scientific layout and urbanization planning, arrangement and pattern, it is necessary to strictly carry out the ecological red line and the large-city developmental boundary identified on the basis of the environmental carrying capacity. The government should enforce rather than violate laws. This requires actions to improve the evaluation mechanism for urban development, incorporate indicators such as natural resource assets and liabilities, ecological benefits, employment security and residents’ health, and decrease the weight of the economic growth rate. A number of economic means, including progressive taxation for resource consumption and ecological compensation, should be adopted to guide and support the balanced allocation of social public resources and

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the sharing of regional infrastructure resources and gradually overcome excessive concentrations of high-quality public resources. There is no precedent in the history of human development to achieve new-type urbanization covering a population of 1.3 billion in a green, livable and peopleoriented way in China where the conditions of the national resources show huge differences; the ecological environment is extremely fragile; the constraint of the resource environment is rigid and social and economic development is subject to very severe challenges. Technical efficiency at the micro level is conducive to mitigating pressure on resources in the environment; however, more importantly, we should intensify the construction of an ecological civilization, respect and conform to nature, shape a scientific and rational macro layout that is in harmony with the carrying capacity of resources in the environment, define and give play to the roles of the market and the government and allocate social public resources in a balanced way to ensure that China’s urbanization is green and healthy.

Chapter 14

Climate Capacity: The Measurement for Adaptation to Climate Change Jiahua Pan, Yan Zheng, Jianwu Wang, and Xinlu Xie

14.1 Introduction Climate change economics is the fast-growing discipline subsumed in the category of environmental economics, and it cuts across climate science, ecological science and economics. As a burgeoning discipline, it desperately needs innovation in theory and methodological development (Zheng et al., 2011). Adaptation to climate change is a real and urgent need faced by developing countries. China put a special emphasis on adaptation to climate change in the Twelfth-Five Year Plan and made it an important work of governments. As the most populous country in the world, China is faced with the dual challenges of developmental deficits and adaptation deficits. In the meantime, China’s population growth and socioeconomic development are subject to her geographical and climatic conditions as well as land resources. In view of these facts, we feel that it is imperative to develop new concepts, theories, and methods specific to China’s practical situations. To clarify the relationship between adaptation and development to advance climate change economics studies, this article articulated the concept of climate capacity and closely examined the implications, research methods, and relevant theories related to this concept. In doing so, we hope that the current research could provide a useful analytical framework and methodological support for China’s adaptation studies.

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_14

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14.2 The Concept of Climate Capacity and Its Implications 14.2.1 The Concept of Climate Capacity The concept of “capacity” or “carrying capacity” has been widely applied in studies on population, natural resources, environmental economics and sustainable development. It maintains that human activities may not exceed the capping limit set by the carrying capacity of a particular ecological system. The essence of this concept is to set a long-term but reasonable limit for human sustainable development. This concept carries a strong “upper limit” and ethical implications. It also bears a close relationship to natural resource endowment, technologies, social choice and human values. The subject of “carrying capacity” can be approached in two ways. One is to study biocapacity from an ecological perspective. This tradition focuses primarily on land carrying capacity, water resource carrying capacity, ecological carrying capacity, and environmental capacity (Gao & Zhang, 2007). The other is to study the relationship between population and the environment. This tradition deals with the constraints imposed on human development by ecology and natural resources, with population carrying capacity being the dominant discourse (Tong, 2012). For instance, carrying capacity could be termed “the limit of growth or development of each and all hierarchical levels of biological integration, beginning with the population, and shaped by processes and interdependent relationships between finite resources and the consumers of those resources” (del Monte-Luna et al., 2004). As the perspectives on carrying capacity vary from discipline to discipline and each research method has inherent limitations, many studies overlooked the complex interactions between the ecosystem and the population carrying capacity. The concept of sustainable development thus fulfills the function of integrating society and the economy with the ecosystem and creates a broad analytical framework. In doing so, this concept can better deal with the global population carrying capacity and the threshold value of development (Daly, 2001). “A moderate population carrying capacity” is not only dependent on the amount of resources and the environment but also even more dependent on humans’ exploitation of natural resources and the environment. It is also closely related to the mode of development and production as well as human lifestyle (Cohen, 1997; Pan, 1997). Given these circumstances, some researchers constructed an integrated environmental assessment model and aimed to reveal the interconnectedness and the interactions between the environmental system and population carrying capacity. For example, Berck et al. (2012) incorporated population carrying capacity and human activities into his model to assess their impacts on the environment. However, studies in this aspect in China give less consideration to the impacts of climate change on carrying capacity as well as the interactions between human activities, climate, and environment. Population and resource carrying capacity studies in the traditional sense made the climatic and geographical factors exogenous variables and further postulated that climatic and geographical conditions were constant, so the ecological carrying capacity and population carrying capacity under normal conditions should also be constant. Against the background of global climate change,

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the uncertainty of each climatic factor increases, thus complicating the relationship between human beings and the ecological system. Under such circumstances, it is imperative to propose and delve deeply into the concept of climate capacity. Climate capacity is an emerging concept under the background of global climate change. In a broad sense, the core of climate capacity is to explore the capacity issue related to global and regional sustainable development under climate change. Theoretically, this concept cuts across the fields of mitigation and adaptation. For example, from the standpoint of reducing greenhouse gas (GHG) emissions, some argued that climate capacity could be best understood as the ability to absorb GHG emissions without undermining the stability of climatic conditions (Gong, 2010). This definition is very close to the implications of environmental capacity, which emphasizes the self-purification ability of the Earth’s atmospheric and ecological systems. The policy implications of the above “climate capacity” lie in the allocation of GHG emission entitlements and the configuration of world political and economic order under the specified capacity. It should be noted that the definition of climate capacity given in this article was different than the narrative. The implication of climate capacity was closer to “climatic productivity” and “climatic resources carrying capacity” in some meteorological research; for example, “potential climatic productivity” refers to the maximum productivity of the ecosystem jointly determined by climatic resources such as temperature, sunlight, and precipitation, complemented by optimum performance of technologies, management, and financial inputs (Chen & Long, 1984; Hou, 2007; Sun, 2008). The “climatic resources carrying capacity” refers to the maximum possible population carrying capacity the land could provide based on climatic productive potential (Bai et al., 2010; Li, 2010). Relevant studies have shown that climate change has significant impacts on water resources, the ecosystem and socioeconomic development (IPCC, 2007). Specifically, climate change may have an impact on agriculture, forestry, fisheries, population carrying capacity, and socioeconomic development potential by means of climatic resources such as temperature and precipitation. Batchelder and Kashiwai (2007) evaluated the impacts of climate change on pelagic fish resources around the north polar area of the Pacific based on the relationship between climate and the ecosystem. It is known that the variability in the mean precipitation and temperature plays a key role in impacting the long-term vegetation cover of a particular area. Relying on meteorological and remote sensing data on China’s northern area over the past 20 years, Gao et al. (2004) found that the primary productivity of the ecosystem of this particular area markedly decreased with increasing temperature and decreasing precipitation. Climate change contributed to 90% of the decrease in primary productivity, while the variability in land use only contributed to 10% of the decrease in primary productivity. Using the long-time climatic indices, Gong et al. (2010) measured the primary productivity and livestock carrying capacity in the alpine zone and argued that climate change to warm and humid conditions in China’s arid northwestern areas might be conducive to the development of husbandry. Zhou et al. (2008) examined the changes in productivity of forestry, farmland, grasslands, wetland and crop production of China’s northeastern regions and estimated the population carrying capacity according to varying levels of consumption and predictions

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of climate change patterns 100 years ahead. There has been some similar work in the project of Adapting to Climate Change in China (ACCC), for example, a prediction of the population carrying capacity of the district of Hongsipu of Ningxia by 2020 based on the patterns of climate change. The concept of climate capacity outlined in this article integrated and extended the implications of the abovementioned concepts conceptually and methodologically. First and foremost, the elements of climate capacity not only include temperature, sunlight, precipitation, and amount of evaporation but also include climate risks such as drought, thunderstorms, typhoons and rises in sea level. It is strongly suggested that climate risks are important factors impacting the overall carrying capacity of a particular area. Next, what climate capacity “carries” is not only limited to land, water resources, ecosystem, and population, it also “carries” particular industries, agriculture for example, and socioeconomic system of a particular area.

14.2.2 Implications of Climate Capacity 14.2.2.1

Climate Capacity

The earth is an organic system composed of lithosphere, atmosphere, hydrosphere, cryosphere, and biosphere. The complex interactions of these five layers forming the existing atmospheric system determine the transformation of nature (Zhang, 2006). Global climate and environmental change are the result of interactions between human activities and the climatic system. As a complex human-ecological system, climate change issues are characterized by their complexity, dynamics, and uncertainty (Folke et al., 2005). Climate capacity is very indicative of the dynamic relationship between the human system and the ecological system. It may also facilitate the study of the impacts, vulnerability, and risk analysis occasioned by global climate and environmental change. In the long run, climate capacity can be understood as the background conditions of climate supposed to support finite natural resources, population, and socioeconomic development. The core of climate capacity is the natural level of climatic elements. The combination and variability of the key climatic elements consequently form the sheer magnitude of climate capacity of a particular area. Generally, one or several climatic elements may play a dominant or a decisive role in shaping the climate capacity of a particular area, such as sunlight, temperature, and rainfall. Climatic elements may vary from season to season and from year to year. Given the terrain, topography, soil, and vegetation, climate capacity may also vary from place to place. The natural climate capacity in some places may shrink as a result of the export of capacity to other places, whereas the natural climate capacity in some places may expand due to the import of capacity from other places. The deterioration of drought and soil erosion in China’s western area occasioned by global warming is clearly a sign of capacity shrinkage. However, snow melting

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in these areas undoubtedly increases the amount of water in lakes and rivers in the lower reaches, a sign of expansion of capacity. The safety threshold of natural climate capacity is dependent upon the very bottom line of climatic elements, such as precipitation in the driest period. However, if there is a greater variability or fluctuation in precipitation between years, we will run considerable risk by using the average precipitation of multiple years for decision making in that we fail to take the bottom-line capacity into consideration. The concept of bottom-line capacity refers to the basic or protective capacity (also known as safe capacity) supposed to prevent the socioeconomic system from collapsing. For example, if the annual precipitation of a city is below 300 mm and eventually leads to a short water supply, then the threshold value can be regarded as the bottom-line capacity.

14.2.2.2

Derived Climate Capacity

The concept of derived climate capacity refers to the ecological carrying capacity, water resources carrying capacity, land carrying capacity and environmental carrying capacity within the specified climate capacity. Although the derived climate capacity is subject to climatic elements, it could be increased to a large extent through technological development, scientific management, economic, and social activities. The derived climate capacity includes the following dimensions: (1)

(2)

(3)

(4)

Ecological carrying capacity: This type of carrying capacity refers to the carrying capacity engineered by man-made ecosystems, including afforestation, cultivation of grasslands and wetlands, and water conservancy projects. The indices of this type of carrying capacity generally include biomass, livestock carrying capacity, primary productivity, etc. Water resources carrying capacity refers to the total water resources based on the accumulation of precipitation, surface water, and underground water. It can refer to the theoretical water resources, and it can also refer to the utilizable water resources. Land carrying capacity refers to all organisms produced by the transformation of matter and energy under the effects of photosynthesis and absorption. For example, the agricultural output per unit of land area, such as rice yield per acre, cotton yield per acre, etc. Environmental capacity or environmental carrying capacity refers to the ability to restore the environment or the ability to self-purify the environment by meeting environmental standards within a given area. For example, the ability to self-purify chemical oxygen demand (COD) and ammonia and nitrogen in water bodies and the largest possible emission of SO2 or dust are below the specified environmental protection standards.

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14.2.3 Climate Capacity and Population Carrying Capacity Population carrying capacity jointly affected natural factors as well as socioeconomic factors. China’s natural environment has had and will have a profound impact on the general patterns of the distribution of population and socioeconomic development. Previous studies found that climate change was a key factor responsible for the general patterns as well as the large changes in population distribution in the past 2000 years (Li, 1999; Wang, 1998; Wu & Wang, 2008). Hu (1990) found that in China’s landscape, there was a geodemographic demarcation line from Heihe of Heilongjiang Province to Tengchong of Yunnan Province known as the “HeiheTengchong Line”. This line marked a striking difference in the distribution of China’s population. This line nearly overlapped the 400 mm isohyetal line in the natural geographical sense. Thus, the Heihe-Tengchong line was also regarded as the line separating China’s semiarid area from the semihumid area. From the vantage point of meteorology and geography, the western part of China is arid, while the eastern part of China is humid. In terms of topography, the southern part of China is lower, while the northern part of China is higher. These features, plus the effects of monsoons occasioned by atmospheric circulation, contribute to the uneven distribution of China’s population characterized by high population density in the east and low population density in the west (Fang et al., 2012; Wang, 1998). This pattern of geographical distribution, consistent with China’s meteorological and geographical characteristics, displays an amazingly high level of stability. According to the fifth national census conducted in 2000, on each side of this demarcation line, the southeast accounted for 94%, while the northwest accounted for 5.9% of China’s population (Ge & Feng, 2008). Fang et al. (2012) examined the relationship between the distribution of China’s population and some natural elements. They found that climate, topography, and river systems were the major determinants of the distributive patterns of China’s population. Among these factors, the climate factor is most affected by the annual average temperature and precipitation, annual accumulated temperature (with 5 °C as the starting point), variance in precipitation, net primary productivity, index of warmth, sunshine hours, relative humidity, etc. Under the effect of these natural factors, China’s population is mainly concentrated in areas with better natural conditions and greater climate capacity typified by coastal and riverside areas and plains. Only a small population is concentrated in plateau and mountainous and desert areas characterized by worse natural conditions, small climate capacity, and an underdeveloped economy (Liu et al., 2010). Evidently, the distributive patterns and socioeconomic development formed thousands of years ago are very indicative of the constraints imposed by the background conditions of climate capacity. These serve as central premises on which any adaptive policy is based.

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14.2.4 The Threshold Value of Climate Capacity and Applications The measurement of climate capacity can be made by using different threshold values. For example, the indices of crop yields and the livestock carrying capacity of grasslands can be used to predict the change in agricultural and industrial output under the circumstances of climate change. The indices of water resources carrying capacity or land carrying capacity can be used to predict the maximum population carrying capacity of a given arid area in the future. The rise in these levels or typhoons and floods may help us determine the optimum size of the population as well as the layout of industries and infrastructure of coastal areas in the future. The reference indices of threshold values of climate capacity are presented in Table 14.1. It should be noted that the climatic risk factors can be the threshold values of climate capacity. A place may have great climate capacity, but it may not be fit for human habitation. Therefore, any planning of population carrying capacity or socioeconomic development must take the impacts occasioned by many and various Table 14.1 Thresholds and indicators of climate capacity Thresholds of climate capacity and derived capacity

Determinants

Reference indices

Policies on capacity increase

Thresholds of natural climate capacity

Temperature Precipitation Extreme weather events

Growing degree-days (GDD) Average annual precipitation Frequency and intensity of extreme weather events and climatic disasters (average level of multiple years)

Difficult to change locally, but global green house gas emission (GHG) reduction measures would help

Derived climate capacity: thresholds of ecology

Water resources carrying capacity Ecologic carrying capacity Land carrying capacity

Per capita water resources (e.g. nolessthan 500 m3 ) Primary productivity (livestock carrying capacity) Per capital and resources Per capita output of land

Engineering methods to alter the patterns of water resources distribution Technological methods to change needs or improve efficiency A combination of engineering and technological measure

Derived capacity: thresholds of climatic risks

Indices of climatic risks (frequency and/or intensity of climate-related hazards, rise in sea level, etc.)

Economic losses as a proportion of gross domestic product (GDP)

Engineering, technological and institutional measures

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climatic risks on habitability, human, and socioeconomic safety into consideration. For example, Shaanxi Province has launched a massive ecological migration program aimed at relocating 2.4 million people living in the mountainous region in the southern part of this province (Renming Net, 2011). This region, located in the south of Qinling Mountain, has good climatic conditions, such as agreeable temperature, abundant sunlight, and rainfall. However, this region is prone to torrential rains, floods, and landslides throughout the year. Although governments have provided large amounts of aid for disaster relief operations, the investment yields a low return. Under such circumstances, relocation became a reasonable choice for minimizing climatic risks, developing the economy, and relieving poverty.

14.2.5 Characteristics of Climate Capacity (1)

(2) (3)

(4)

(5)

Rigid constraint: natural climate capacity is stable. Generally, it is very difficult for human activities to remove the rigid constraints imposed on climate capacity by climatic and geographical background conditions. Fluctuationality: affected by the climatic system and climate change, climate capacity may fluctuate from season to season and from year to year. Regionality: Climate capacity varies from place to place. For example, there is a greater difference in the distribution of water resources in different basins of China. Conductivity and transferability: affected by key environmental elements such as terrain, topography, and water resources, the change in climate capacity of one area usually impacts that of neighboring areas. Taking water resources, the key element of climate capacity, as an example, we argue that water resources can be either imported or exported across different basins. In addition, water diversion projects between regions can realize the transfer of climate capacity, both temporally and spatially. Interactivity and reciprocity: globally, the socioeconomic system and climate capacity can affect each other. Human activities can have considerable impacts on climate capacity. For example, GHG emissions will certainly lead to greenhouse effects and global warming and consequently lead to changes in climate capacity. Conversely, the change in climate capacity may also have an impact on human activities. For example, climate change usually leads to extreme events such as long-term drought, floods, typhoons, and rises in sea level and may consequently lead to relocation of the population and more adaptive policies and adaptations.

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14.2.6 Measures to Increase Climate Capacity and Guiding Principles Climate capacity refers to the natural capacity based on climate change. Under normal circumstances, productivity of the natural climate capacity can sustain only a moderate level of ecosystem and socioeconomic development. Keeping the role of technological advancement and human capital aside, the natural climate capacity is a constant. It is believed that with the growth of the population and the improvement of quality of life, the current climate capacity (including natural capacity and derived capacity) can hardly meet the needs of socioeconomic development, and the gap is likely to grow increasingly larger with the passage of time. This article argued that the conflict between climate capacity and socioeconomic development could not only give rise to climatic security but also increase water resource security, food security, economic security, and so on. It may even threaten social stability and national security. Given these circumstances, we need to adopt engineering-, technology-, and institution-based adaptive strategies. Climate capacity is not only a synthesis of natural elements but also a synthesis of human efforts. By relying on human activities such as technological advancement, scientific management, and hydraulic systems, we could increase climate capacity and consequently convert the bad natural environment to a habitable environment. By relying on production and trade, human beings can also realize the spatial and temporal transfer of climate capacity. The former methods are basically engineering oriented. They include affecting weather through artificial means, building water diversion projects and water conservancy facilities, ecological protection, etc. The latter methods include the import and export of foods, timber, and energy-consuming products, which is also a spatial and temporal transfer of embedded energy and virtual water. The fossil fuels we heavily rely on in this industrial age are actually a form of solar energy resources accumulated in organisms of prolonged geological age. In a sense, the exploitation of fossil fuels is also the use of climate capacity at different points in time and space. It should be noted that regulating climate capacity through artificial means is only local and small-scale and carries risks. For example, damming rivers for hydropower plants or extracting underground water in arid areas might increase the vulnerability of local ecosystems and socioeconomic systems. If we are determined to develop (increase) the climate capacity of a particular region through human efforts, we need to follow the following principles: (1)

(2)

Principle of economic rationalism: Any act designed to increase the climate capacity of a place should take cost-benefit analysis into consideration. For example, diverting water from the Bohai Gulf into the deserts of Inner Mongolia and blasting a hole in the Himalayan Mountains were pure imaginations and clacked technological and economic feasibility. Principle of ecological integrity: Any effort to increase climate capacity should take the impacts of policies on a particular region or ecological balance on the macro level into consideration to make the ecological system and functions safe and sound.

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(3)

Principle of climate protection: In view of climate safety and climate proofing, adaptive measures should give priority to the regions and groups prone to extreme weather events, i.e., regions prone to inundation due to sea level rise and climatic disasters of various sorts. For these regions, relocation of population is needed. Principle of equity: The change and transfer of climate capacity are actually a form of redistribution of climatic resources. Given this situation, governments should prioritize the population most adversely affected by climate change and the population desperately in need of greater climate capacity. In doing so, the goal of ensuring a fair distribution of climatic resources could be achieved, and the benefits can be shared. For example, the South-North Water Diversion Project, the mega project of Three Gorges, may lead to changes in climate capacity both in space and in time. Under this circumstance, compensation and reciprocity are needed.

(4)

The application of the aforementioned principles varies according to the given circumstances. For example, for the population suffering from property damage and casualties resulting from climatic disasters and those that are desperately in need of relocation and rescue, governments should apply the principle of climate protection. Under this circumstance, the issue of cost should be put aside.

14.3 Case Studies on Climate Capacity Conventional wisdom suggests that economic development and poverty relief are two important ways of increasing adaptiveness to climate change. Our study found that development-based poverty relief efforts failed to produce the expected results in some northwestern regions and north China. In general, adaptation to climate change is related to economic development. However, under particular circumstances, economic development may not always be the most effective means for human society to adapt to climate change. To fully understand the implications of climate capacity, for this article, we chose two places on each side of the geodemographic demarcation line for analysis. One was Ningxia, and the other was Shanghai. It was expected that the two case studies may help us understand the climatic risks with which the two places were faced and the strategies they should adopt to cope with the risks.

14.3.1 Constraints of Climate Capacity and Ningxia’s Relocation Program Ningxia is located in the arid area in the western part of China. Since the 1980s, Ningxia has relocated more than 600.0 people in phases. During the period of the

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Twelfth Five-Year Plan, Ningxia was planning to relocate another 350.0 people. The starting point for Ningxia’s relocation program is to alleviate poverty, promote economic development, and protect the environment in places with fragile ecosystems. Outwardly, relocation was triggered by deteriorating the environment and poverty. In essence, the vicious circle of population pressure-ecological degradationpoverty was driven by worsening the environment and climate change. As a result, the limited climate capacity made these places unable to produce adequate crop products and feed on increasing populations. Relocation of population thus became a must. By performing two case studies on Xihaigu, an area exporting immigrants, and Hongsipu, an area receiving immigrants, this article examined the relationship between adaptation and development from the perspective of climate capacity.

14.3.1.1

“The Unique Environment of a Place Does Not Satisfy Its Inhabitants Basic Needs”-Xihaigu of Ningxia with Limited Climate Capacity

Xihaigu of Ningxia, one of the key national impoverished areas, is best known for its extreme and harsh living conditions. Xihaigu includes nine key impoverished counties (districts) in mid- and southern Ningxia, accounting for 60% of the land area of Ningxia. The population of the Xihaigu area is two million, accounting for 1/3 of Ningxia’s total population. Xihaigu is an ecologically frail area in the sense that it is extremely arid and the soil quality is very poor. Xihaigu lacks natural resources. Even worse, Xihaigu is beset by frequent natural disasters. Xihaigu also suffers from serious soil erosion. The annual precipitation of Xihaigu is in the range of 200– 650 mm, and the per capita water resources are 136.5 m3 . Xihaigu is rated one of the most arid and water-deprived regions of China. Judged by the poverty line of 1350 yuan set by China, nearly one million inhabitants are now living below this line. Approximately 350,000 people live in remote areas with great traffic problems. As this region lacks a modern communication system, the inhabitants are totally blind to the development of the outside. As livelihoods are threatened by climatic and environmental factors, locals have a burning desire to migrate to places with water accessibility and a better environment. Given this situation, this article argued that the conventional method of development or development based on poverty relief may not fundamentally solve the poverty problem. The development characterized by more input into infrastructure building, water resource tapping and modern industrial basis and urbanization can only backfire when the ecological system of Xihaigu is destroyed and the climate capacity and adaptability are decreased.

14.3.1.2

“Bare Lands Turning into Oases”: The Immigration City of Hongsipu with Increased Climate Capacity

Ningxia launched the relocation program in the late 1980s. However, only a small percentage of people are allowed to move to the northern irrigation area of Ningxia

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with better climatic conditions and greater population carrying capacity. To meet the needs of relocation, the Ningxia governments turned the deserts of central Ningxia into oases by exploiting the water resources from the Yellow River and then built an area with 190,000 immigrants called Hongsipu City. Hongsipu can be regarded as a successful case of increasing climate capacity through artificial means. However, in the long run, the climate capacity of Hongsipu would be unstable. Although the effects of the concentration of immigrants may bring the local government new opportunities for development, it may also alert the local government to the dangers of scarce water resources and the fragile ecosystem. Once the quantities of water in the Yellow River are impacted by climate change, it may aggravate Hongsipu’s population growth and economic development. Even worse, the survival of Hongsipu, a man-made oasis, might become a problem.

14.3.2 Climate Risks of Coastal Cities China’s coastal areas have always been prone to typhoons, storms, and tides; thus, coastal areas are high-risk areas. The large concentration of population and wealth along China’s coastline is the main reason for the potential high risks. Shanghai is located in the Yangtze River Delta (hereafter the Delta) and is characterized by superior geographical conditions, rich natural resources, and a well-developed economy and culture. As the leading city of the Delta economic circle, Shanghai’s per capita GDP was well above US $10,000 in 2010, on par with the moderately developed countries. Shanghai boasts a population of more than 23 million. Shanghai is also the most heavily urbanized city of China, with 80% of its population living in cities. Situated in the alluvial flood plains and thanks to the high climate capacity endowed by nature, Shanghai is a well-known land of plenty. It is estimated that the population density of Shanghai is more than 30 times as high as the density of Ningxia, while its land area is only one tenth of that of Ningxia. Despite this, the output of GDP of Shanghai is 106 times as high as the output of Ningxia per unit of land area. To further exploit the various sorts of potential of Shanghai, Shanghai has been determined to free herself from the constraints of land resources. For example, Shanghai invested 40 billion yuan in building a new town of 133 km2 and reclaimed 45% of the land from the sea. Reclaiming land on the sea may help Shanghai relieve the pressure on the growth of population and urban sprawl. However, climate change may lead to an increase in sea level or, even worse, increasing risks from typhoons, storms, tsunamis or inundation by tidal waves. Under such circumstances, relocation would become inevitable someday. Given these facts, the authors argued that it is imperative for governments to make careful assessments of climate capacity and take potential climatic risks and adaptation into consideration in urban planning. Based on the two cases of Xihaigu of Ningxia and Shanghai, we found that climate capacity can have a very direct impact on the human development of a place. We believe that the threshold values of climate, land, ecology, water resources, and climatic risks dictate climate capacity. It is strongly suggested that the development

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of any development or adaptation strategy must be based on this premise. Therefore, it is imperative for governments to monitor the environment and climate change in the densely populated regions of the east to save the ecological system from deteriorating. At the same time, governments should make ever effort to protect and cultivate the ecologically frail mid- and western areas of China to keep and increase the climate capacity and population carrying capacity in the long run.

14.4 Implications for Policy Making on Climate Capacity The concept of climate capacity is not only based on a solid scientific foundation but also has manifest implications for policy formulation. This is because the concept includes a new variable of climate change compared with other concepts, such as ecological carrying capacity and population carrying capacity, and thus facilitates governments’ efforts to formulate adaptation policies under different circumstances. For adaptation in places with limited climate capacity, poor background conditions dictate that policy makers should show complete respect for natural law. In this principle, policy makers should spare no effort to control the size of the population and regulate the speed of economic development and size of the economy. In doing so, the collapse of the ecological system should be avoided, and the safety of humans can be protected. For development-driven adaptation, policy makers should fully realize that the increase in risks is the result of rapid population growth and economic development. For this reason, policy makers should, on the one hand, enhance the adaptability of natural ecosystems of these places through development. On the other hand, policy makers should increase financial, technological, and human capital inputs into adaptation and climate proofing. In the meantime, governments should figure out away of scientific distribution of industries and population. It is expected that the vulnerability and climatic risks should be minimized to the largest extent. Climate capacity is very indicative of the complex interactions between humanity and natural ecosystems. It may facilitate impact assessment, vulnerability assessment, and risk assessment in the field of climatic science. As the study of climate capacity adopted the theories and ideas and methods of eco-economics, it can be used to study the optimal population size and economic size in places with limited climate capacity. These are the important economic implications of this concept. Since the concept of climate capacity and the assessment of its threshold values can provide policy support for socioeconomic development and adaptations, this article outlined the following steps: (1)

To make continuous assessments of the key elements of climate capacity in the broad context of climate change. To achieve this goal, scientists should try to identify the key factors responsible for local climate change and then make predictions of natural threshold values of local climate capacity, such as temperature, precipitation and extreme events. The data should be an important basis for climatic risk assessments.

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(2)

To study the temporal and geographical distribution of variables contributing to the fluctuations of the carrying capacity of water resources, ecological carrying capacity, land carrying capacity, atmospheric carrying capacity and derived carrying capacity and climate risks. To design various possible scenarios of population and socioeconomic development and then make estimates of the greatest possible potential of the size of population and industry and socioeconomic system constrained by particular resources such as water resources, grasslands and their carrying capacity, climate risks, etc. Based on the assessments of climate capacity, for example, the greatest possible potential of development (e.g., population, economic size) in the context of a particular type of climate change, or the smallest possible potential of exposure to risks (e.g., population or social wealth), policy makers should be able to devise middle- or long-term adaptive and development strategies accordingly. For example, governments may initiate immigration and climate proofing projects of different scales. Governments may also improve the standards of climate proofing and strain for technological innovation. To make policy evaluations of the effectiveness of some specific adaptive measures. Methodologically, the before-and-after method should be adopted to measure the change in indices of climate capacity, and the findings should form the basis of decision making.

(3)

(4)

(5)

Thus, climate capacity can be adopted as the basis of decision making or policy evaluation. For example, if population growth or economic development s to reduce the climate capacity of a place, as evidenced by over-urbanization in arid areas, it suggests that such a policy be flawed and not sustainable. If an adaptive policy is conducive to the increase in climate capacity of a place (e.g., returning cultivated land for forest), this policy should be sustainable and promise good adaptiveness. The concept of climate capacity can thus integrate the reduction of emissions of GHG, adaptation, disaster risk management and sustainable development into a holistic perspective, which greatly facilitates the development of policies on ecological protection, climate change and trade as well as disaster prevention and mitigation. First, globally, any act of mitigation and adaptation aimed at coping with climate change can be understood as efforts to maintain or increase global climate capacity, keep the balance between population and threshold values of climate and support the sustainable development of human society in the long run. Next, from the local point of view, the increase in climate capacity of a place is likely to impact the climate capacity of other places. For example, temporarily increasing rainfall through cloud seeding or damming rivers for hydropower plants is a cost-effective way of sustaining socioeconomic development. However, in the long run, these measures might cause the problem of fair and sustained use of climate capacity. Theoretically, the water resources, the land, and the ecosystem of the earth can only support a moderate population size to meet the basic needs of development of each individual of the earth in the context of global climate change. It is strongly suggested that should climate

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capacity be fully utilized, the global climate capacity is quite similar to Pareto optimality in the sense that the increase in climate capacity of one country or area could mean the decrease in climate capacity of another country or area. However, with technological advances, climate capacity is likely to expand. In the context of an open economy hypothesis, climate capacity can be transferred between countries and regions, either free or not free. It can also be transferred temporally. For example, policies imposing a carbon tax, reducing GHG emissions, and providing ecological compensation may realize the distribution of climate capacity to some extent. As the importance of climatic resources is increasingly being emphasized by each country, the comparative advantage of a country is reflected not only in financial resources, technologies, and human capital but also in the wind power resources, land resources, water resources and other types of renewable resources a country possesses. It can be argued that with the advancement of technologies, the country endowed with abundant climatic resources promises the greatest potential of economic development.

14.5 Conclusions To achieve the goals of both adaptation and development, governments should take multiple goals of socioeconomic development into consideration in regard to policy formulation. As the concept of climate capacity is based on science and the practical experience of humanity, it can truly reflect the interactions between human development and the natural environment. Without a doubt, it can be used as an analytical instrument in studies on human resources and environmental economics, and it is more suitable for climate risk assessment and adaptation studies. China is a typical agricultural country. The large population and relatively scarce resources have caused a real bottleneck for this country’s development. In the final analysis, China’s efforts to adapt to climate change are a matter of climate capacity, i.e., the ecosystem as well as the frequency, intensity, and scale of human socioeconomic activities the climatic resources of a particular geographic area were supposed to support. In regions with high climate capacity, adapting to climate change is normally believed to be an issue caused by development, whereas in regions with very limited climate capacity, development runs the risk of damaging the environment. This article strongly argued that China, due to the vast expanse of territory and uneven socioeconomic development, should adopt differentiated adaptation policies across different regions. Each government should try to ensure that its adaptation to climate change and socioeconomic development match climate capacity. In the meantime, each government should conduct cost-benefit analysis and consider equity in adaptation. Only in this way could China ensure fairness, efficiency, and zero regret in the use of climate resources. As climate capacity varies from place to place enormously, China needs to make different government agencies and administrative regions work together to coordinate policies and actions on adaptation. China’s National Climate Change Adaptation Plan was published in November 2013 and will

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be a strategic guide for adaptation planning at the provincial level. In general, the concept of climate capacity provides a scientific basis for adaptation studies. It also serves as an important basis for the assessment of water resources and ecological carrying capacity of a particular area against the background of climate change. Thus, it can help governments and scientists develop scientific and rational populations and socioeconomic planning.

References Bai, M., Hao, R., Gao, J., et al. (2010). Climate resources potential productivity and its population capacity evaluation in Inner Mongolia. Agricultural Research in the Arid Areas, 28(6), 253–257. Batcheldera, H. P., & Kashiwai, M. (2007). Ecosystem modeling with nemuro within the pices climate change and carrying capacity program. Ecological Modelling, 202, 7–11. Berck, P., Levy, A., & Chowdhury, K. (2012). An analysis of the world’s environment and population dynamics with varying carrying capacity. Concerns and Skepticism. Ecological Economics, 73, 103–112. Chen, M., & Long, S. (1984). Discussion on China’s climatic potential productivity zoning. Natural Resources, 3, 72–79. Cohen, J. E. (1997). Population, economics, environment and culture: Introduction to the human carrying capacity. Journal of Applied Ecology, 34, 1325–1333. Daly, H. E. (2001). Beyond growth: The economics of sustainable development (D. Zhu and S. Hu, Trans.). Shanghai Translation Publishing House. Del Monte-Luna, P., Brook, B. W., Zetina-Rejón, M. J., et al. (2004). The carrying capacity of ecosystems. Global Ecology and Biogeography, 13, 485–495. Fang, Y., Ouyang, Z., Zheng, H., et al. (2012). Natural forming causes of China’s population distribution. Chinese Journal of Applied Ecology, 23(12), 3488–3495. Folke, C., Hahn, T., Olsson, P., et al. (2005). Adaptive governance of social-ecological system. Annual Review of Environmental Resource, 30, 441–473. Gao, Z., Liu, J., Cao, M., et al. (2004). Impacts of land use and climate change on regional net primary productivity. Acta Geographica Sinica, 59(4), 581–591. Gao, L., & Zhang, H. (2007). Progress in research of ecological carrying capacity. China Population, Resource and Environment, 2, 19–26. Ge, M., & Feng, Z. (2008). Research on the distribution pattern of the population of China in 2000 based on GIS: Compared with Hu Huanyong’s research in 1935. Population Research, 32(1), 51–57. Gong, Y., Hu, Y., Adeli, M. D., et al. (2010). Analysis of adaptation of a climate productivity model on Alpine Grassland. Acta Prataculturae Sinica, 19(2), 1–7. Gong, X. (2010). On the legal attributes and distribution principles of global climate capacity. Wuda International Law Review, 13, 297–312. Hou, X. (2007). Temporal and spatial dynamics of climatic potential productivity in China from 1951–2000. Arid Land Geography, 31(5), 723–730. Hu, H. (1990). The distribution, regionalization and prospect of China’s population. Acta Geographica Sinica, 2, 139–145. IPCC, Climate Change. (2007). Impacts, adaptation and vulnerability (p. 982). Cambridge University Press. Li, B. (1999). The influence of climate change on China’s historical population fluctuation. Population Research, 23(1), 15–19. Li, Y. (2010). Climate capacity distributes characteristics in the Ningxia arid area. Journal of Arid Land Resources and Environment, 24(8), 96–99.

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Liu, R., Feng, Z., Yang, Y., et al. (2010). Research on the spatial pattern of population agglomeration and dispersion in China. Progress in Geography, 29(10), 1171–1177. Pan, J. (1997). Economic analysis on sustainable development. Economic Science Press. Renming Net. (2012). Shaanxi Launched Large-Scale Ecological Migration Projects [N/OL]. (201102-22). http://unn.people.com.cn/GB/13970849.html Sun, W. (2008). Climate resources. China Meteorological Press. Tong, Y. (2012). Research on population carrying capacity: Evolution, problems and prospect. Population Research, 36(5), 28–36. Wang, G. (1998). Regional distribution and change of China’s population. Population Research, 22(6), 41–46. Wu, J., & Wang, Z. (2008). Agent-based simulation on the evolution of the population geography of China during the past 2000 years. Acta Geographica Sinica, 63(2), 185–194. Zhang, R. (2006). Climate observing system and related crucial issues. Journal of Applied Meteorological Science, 17(6), 705–710. Zheng, Y., Pan, J., Zhuang, G., et al. 2011. Review on climate change economics. Economics Department of CASS. CASS Economics Annals 2011 (pp. 117–132). Chinese Social Sciences Press. Zhou, G., Yuan, W., Zhou, L., et al. (2008). Terrestrial ecosystem productivity and carrying capacity in Northeast China. Journal of Plant Ecology, 32(1), 65–72.

Chapter 15

From Climate Change Vulnerability to Adaptation Planning: A Perspective of Welfare Economics Yan Zheng, Jiahua Pan, Xinlu Xie, Yamin Zhou, and Changyi Liu

15.1 Introduction As climate change is the most complex, long-term global environmental issue with the greatest externalities, climate change research is, from the beginning, unable to dispense with ethical issues such as equity, value and welfare, and the economics of climate change cannot develop without overall considerations of scientific, political and ethical issues (Dietz et al., 2009; IPCC, 2012, 2014). According to the fifth scientific assessment report delivered by the United Nations Intergovernmental Panel on Climate Change (IPCC), the global temperature rise caused by human activities in the past 130 years was 0.85 °C, while the global average temperature rise will exceed 1.5 °C by the end of the twenty-first century, and it is likely that the trend of increasing global warming in the future will exert a severe, prevalent and irreversible impact on human beings and on the ecosystem (IPCC, 2014).1 The United Nations Framework Convention on Climate Change (UNFCCC) is designed to prevent the irreversible dangers that human activities may pose to the climate system. The Paris Agreement, adopted at the 21st Conference of the Parties (COP21) in December 2015, took the average global temperature rise of 2 °C as the dangerous level of climate change and identified some global action goals. In recent years, economic analysis for mitigating disaster risks and adapting to climate change has replaced the economics of emission reduction to become a new research hotspot in the economics of climate change (Vale, 2016). The economic impact of climate change on social welfare and its cost-benefit assessment are always the core issues in the economics of climate change. The economic costs of climate change include the direct and indirect economic losses 1

The climate change mentioned in the IPCC Report includes the natural variability of the climate system and the climate change caused by human activities. Climate change and its mitigation and adaptation actions specified in the Convention on Climate Change mainly refer to the climate change caused by human activities. © Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_15

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incurred by climatic disasters, emission reduction costs2 and adaptation investment costs3 (Handmer et al., 2012). Climate change and its policy design will change the redistribution of resources, resulting in income and welfare effects. A greater temperature rise leads to more losses and action costs caused by climate change, while developing countries and disadvantaged groups are subject to the greatest adverse impact (IPCC). According to estimations, under different scenarios with a global temperature rise of 1–4 °C, the overall costs and risks incurred by climate change are equivalent to an annual global loss of 1%-5% GDP (Nordhaus, 2013). As estimated in the World Bank’s report The Economics of Climate Change Adaptation, the overall cost for adapting to climate change in developing countries worldwide during 2010–2050 was approximately 70–100 billion USD (Narain et al., 2011). In The Stern Review on the Economics of Climate Change, Stern suggested that national governments should annually spend 1% GDP in their adaption actions (Stern, 2007). At present, climate change impact assessments mostly focus on developed countries and sectors (Nordhaus, 2013), while there is insufficient research on the economic impact of climate change on developing countries and its welfare distribution effect. According to behavioral economics, compared with the income effect, people have more risk aversion, inequity aversion and loss aversion, making it more difficult for those who benefit to compensate for those suffering losses and for the current generation to compensate future generations in climate change decisionmaking (Gowdy, 2008). In the analysis of the welfare economics of climate change, it is suggested that a greater share of welfare should be given to impoverished countries and territories by regional equity weighting (Botzen & van den Bergh, 2014), and the principle of giving priority to the most vulnerable one should be followed to allocate limited international adaptation funds (Zheng & Liang, 2011). According to some research, human capital (health, the level of education), material capital (the infrastructure for providing the basic necessities of life), and natural capital (climatic conditions, water resources, ecosystem services, land resources, etc.) are not only important factors affecting national welfare (Vemuri & Costanza, 2006) but also the main fields that are vulnerable to adverse impacts from climate change (Handmer et al., 2012). However, as real market prices are unavailable, many noneconomic welfare factors are difficult to monetarize, and it is also difficult to total up utilities because of income differences among different regions and groups (Botzen & van den Bergh, 2014). Therefore, the vulnerability assessment of climate change has become an important decision-making method for supplementing and replacing impact assessments (Patt et al., 2011).

2

Callaway (2004) pointed out that it was necessary to weigh the costs and benefits associated with the emission reduction and adaptation actions taken in different countries and territories. When the global adaptation cost = global emission reduction cost, and local marginal adaptation cost = global marginal emission reduction cost, this was the optimal point of adaptation actions of various countries. 3 Tol et al. (2004) suggested that only 7–24% of the climate change cost estimation in the early research was adaptation input. This is related to the adaptation cost definition in the literature, or indicates that there was a lack of adaptation planning in various countries at the early stage.

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China is one of the hot-spot regions subject to climate change. China’s direct economic loss caused by meteorological disasters was equivalent to 1% (“rate of direct economic loss”) of the GDP from 1990 to 2014, much higher than that in developed countries (e.g., 0.55% in the USA) and the average global level (approximately 0.2%) (Li et al., 2015).4 Some scholars and international institutions have carried out economic assessments of China’s climate change impact and adaptation costs. Ruiz Estrada (2013) incorporated indicators such as the rate of climate change temperature rise, the degree of vulnerability and the natural disaster impact scale into the macroeconomic assessment model—taking two floods in South China in 1931 and 2010 as examples: it was found that climate change exerted a significant economic impact on China. Liu et al. (2012) built a climatic economic model on the basis of the Cobb–Douglas production function and pointed out that a number of climatic factors—including extremely high temperature, low temperature, heavy precipitation and drought—produced marked long-term effects on the regional differences in China’s agricultural economic output. Luo et al. (2010) adopted the econometric and panel data model and found that the marginal impact of China’s total GDP on the meteorological condition changes from 1984 to 2006 was approximately 12.36%, and the climatic sensitivity of the economic output in the northern provinces was higher than that in the southern provinces, while the climatic sensitivity in the western provinces was higher than that in the eastern provinces. As estimated in the report Economics of Climate Change in East Asia released by the Asian Development Bank, China’s adaptation costs relating to the climatic protection of the infrastructure (such as roads, transport, water supply and drainage, electric power and communication, buildings) from 2010 to 2050 amount to approximately 3–44 billion USD/year (Westphal et al., 2013). Climate change adaptation planning (“adaptation planning”) outlines planned, systematic and forward-looking adaptation policies and actions for addressing potential climate change risks in the future. Given the local characteristics of climatic risks and adaptation actions, government-led adaptation actions should be taken by clarifying the responsibilities of governments at different levels and focusing on research support, information sharing, regulations and legislation, mechanism design and public investment decision-making (Hallegatte et al., 2011). In view of the differences in the political system and the decision-making process, adaptation planning mainly involves two governance modes: first, the national adaptation strategy is carried out to promote local implementation in a top-to-bottom way; second, local governments and people from all walks of life spontaneously take actions in a bottomto-top manner. Zhang et al. (2015) assessed eight sectoral adaptation plans released in China from 2008 to 2012 and stated that the scenario design and uncertainties of climate change were not fully considered, and the future risks and nonclimatic factors were not assessed5 ; thus, there was no solid scientific basis for adaptation actions. 4

Meteorological disasters include various weather and climatic disasters and the resulting secondary disasters. For the purpose of this paper, climate disasters are equivalent to meteorological disasters. 5 Including human resources, funds, social capital, natural resources and physical capital closely related to the impact of climate change and adaptation capacity (Preston et al., 2011).

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In light of China’s national conditions, adaptation to climate change is the basic requirement of building an ecological civilization in China and its socioeconomic developmental planning. The Report to the 18th National Congress of the Communist Party of China clearly stresses efforts to adapt to global climate change and build a scientific, rational urbanization pattern, a pattern for agricultural development and a pattern for ecological security.6 China’s economic development is fueled by the following strategy combination: developing the western region, revitalizing the northeast region, boosting the rise of the central region, and ensuring that the eastern region takes the lead in development as well as by developing the Silk Road Economic Belt, the twenty-first century Maritime Silk Road, the Beijing-Tianjin-Hebei region, and the Yangtze Economic Belt,7 while such a strategy combination provides strategic guidance for the macro layout of adaptation planning. The National Strategy for Climate Change Adaptation, released in November 2013, divides the key national areas into three types of adaptation areas—urbanization, agricultural development and ecological security—and requires actions to be taken to push forward adaptation planning as soon as possible. In September 2014, the National Development and Reform Commission released the National Plan for Addressing Climate Change (2014–2020), China’s first medium- and long-term plan for addressing climate change. In June 2015, the Chinese government submitted a document Enhanced Actions on Climate Change: China’s Intended Nationally Determined Contributions to the Secretariat of the United Nations Framework Convention on Climate Change. This progress not only embodied China’s responsibility awareness as a large country for earnestly fulfilling the United Nations Framework Convention on Climate Change but also presented a favorable opportunity for propelling the building of an ecological civilization, green low-carbon development and the transformation of the economic structure in China. Climate change adaptation is a more urgent realistic challenge than climate change mitigation. The following major issues urgently need to be addressed in pressing ahead with China’s adaptation planning: (1) to assess the impact of climate change on various social welfare elements and their adaptation capacity; (2) to quantify and calculate the future potential welfare risks (including total quantity and regional distribution characteristics)8 ; and (3) to define the adaptation responsibilities at the national, local and departmental levels to promote fair and effective adaptation actions. This paper is designed to provide a scientific and feasible theory and line of analysis for dealing with the above issues. The second part introduces the 6

Hu Jintao, The Report to the 18th National Congress of the Communist Party of China “Firmly March along the Path towards Socialism with Chinese Characteristics and Strive to Complete the Building of A Moderately Prosperous Society in All Respects”. November 8, 2012, Guangming Daily. 7 Li Keqiang, The Report on the Work of the Government in the Third Session of the 12th National People’s Congress. March 5, 2015, www.China.com.cn. 8 Hanley and Tinch (2004) believed that, although there were not a few difficulties in the cost-benefit assessment of climate change, the government needed a quantitative assessment result so they could make decisions. Tol et al. (2004) thought that the assessment of the economic impact was disputed, but it remained the effective choice for analyzing the equity topic.

15.1 Introduction

239

basic concept and the framework for analysis. The third part presents a climate change vulnerability assessment concerning China’s provinces and regions. The fourth part specifies three types of typical regions for adaptation planning. The fifth part estimates—in light of China’s future climate change and economic development scenarios—the economic losses caused by disasters in different regions and the welfare risks based on the regional equity weighting and offers three designs for a governance path towards adaptation planning.

15.2 Construction of a Framework for the Analysis of the Social Welfare Function 15.2.1 Economic Welfare and Its Risk Assessment Economic welfare is a monetary measurement of the elements of social welfare, while income and economic output (such as GDP) are the most common core indicators for measuring economic welfare. Climate change exerts an adverse impact on and produces a positive effect on economic welfare. The welfare impact from climate change and its assessment of costs and benefits serve as the scientific basis for adaptation planning; however, it is difficult to define the scope of the impact and the limits of adaptation and to estimate the costs and benefits of adaptation (Callaway, 2004; IPCC, 2014). Figure 15.1 shows the limit or boundary for climate change adaptation—for example, the unavoidable residual loss resulting from constraining Full adaptation

Failure in full adaptation

Climate change loss (in adaptation) Selfadaptation

Avoidable adverse impact

B Suboptimal adaptation point A Optimal adaptation point

Optimal adaptation point

Technical restriction

Adaptation cost

Residual impact =0

Unavoidable residual loss

Adaptation cost Avoidable impact

Residual impact

Fig. 15.1 Adaptation cost and residual loss. Source IPCC (2014), Fig. 17.2

Adaptation cost

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15 From Climate Change Vulnerability to Adaptation …

factors including risk threshold or institutional culture and technologies (usually expressed in the direct economic loss in disaster statistics). Adaptation planning aims at identifying Point A at the optimal level of adaptation (marginal adaptation cost = marginal adaptation benefit) through cost-benefit analysis; however, it is very difficult to realize this ideal assumption in practice, while the actual level of adaptation is generally located at suboptimal point B (IPCC, 2014). Climate change risk refers to the potential adverse impact of climate change on the natural system and the socioeconomic system, mainly characterized by extreme weather/climatic events9 caused by climate change—such as high temperatures, heavy rainfall, typhoons—and long-term climatic variability changes—such as aridification, continuous temperature rise, glacier melting and sea level rise. The IPCC () put forward an adaptation decision-making framework based on the assessment of climatic risks and described a risk as the probability of occurrence of a certain adverse consequence or the function of the following three core factors: (1) hazard: the degree of the hazard of causing disasters, such as the frequency of occurrence and the intensity of an extreme weather/climatic event; (2) exposure: the population, infrastructure and social wealth exposed to hazards; and (3) vulnerability10 : the sensitivity or vulnerability of a system and its response, resistance and recovery capability as well as other inherent characteristics in case of exposure to a certain hazard. The formulas are shown below: Risk(R) = Impact(I) ∗ Probability(P)

(15.1)

Risk(R) = f {Hazard(H); Exposure(E); Vulnerability(V)}

(15.2)

Impact(I) = f {Exposure(E); Sensitivity(S)}

(15.3)

Vulnerability(V) = f {Sensitivity(S); Adaptation capacity(A)}

9

(15.4)

Anomalous events in excess of a critical value and far away from the climate mean state (Qin et al., 2015). 10 The concept of vulnerability appeared earliest in the ecological field. Ecological science and disaster science emphasize the important roles of the environmental and climate change factors in vulnerability assessment; the researchers in the field of social sciences believe that the main driving factor for vulnerability is human beings and stress the impact of the economic, social, cultural and political process on vulnerability (Adger, 2006; Patt et al., 2011).

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15.2.2 China’s Social Welfare Function Against the Background of Climate Change Climate change poses a number of theoretical and practical challenges to classic welfare economics, and the main difficulty lies in setting the key variables, including risk uncertainty, risk preference and time preference, while these issues often fall outside the scope of normative economics. In public investment projects or climate policies, welfare weighting is introduced to the cost–benefit analysis method to achieve the social welfare goal of Pareto optimality, while its theoretical basis is the Karldor Hicks principle11 (Florio, 2014; Hanley & Tinch, 2004). The cost-benefit analysis of climate policy centers on building a social welfare function, while such a function results from totaling up a number of individual utility functions. The Bergson-Samuelson social welfare function is the basic form most widely used in the climate-economic assessment model; moreover, there are the Utilitarianist function, the Bernoulli-Nash function, the Rawlsian Maxmin function, etc. (Botzen & van den Bergh, 2014; Dietz et al., 2009). The structural design of a welfare function is highly uncertain (Weitzman, 2010); the choice of a welfare function is essentially a value judgment and a political consideration—for example, a decision on whether to consider the equity factor has a great impact on the result of the estimation concerning the economic loss caused by climate change (Fankhauser et al., 1997; Tol et al., 2004).12 Based on the IPCC’s risk analysis framework, this paper adopts the BergsonSamuelson social welfare function to build China’s social welfare function against the background of climate change.13 Against the background of climate change, the overall national social welfare level depends upon the utility level U(C) and the population size N as well as other factors in provinces and regions. Climate change will affect the individual income and consumption level (C), including market products and services—such as agricultural products, electric power and insurance— and nonmarket services—such as climatic comfort and ecological system services. It is assumed that there is a standard consumer in each province or region,14 who 11

In other words, if A becomes better because of this change and thus can compensate for B’s loss and enjoys surplus, this change is a (Pareto) improvement. Given that this principle is only an ideal assumption for compensation, in reality, it is very difficult to determine the party (parties) subject to damage and the share of compensation in most cases, thus a feasible welfare distribution plan only provides compensation for a few victims subject to the most serious damage (Little, 2014). 12 For example, both actions to praise and criticize the Stern Review are related to the equity assumption in its social welfare function. Stern adopted a very low discount rate, which means that the same weight was given to the welfare of both the future generations and the current generation. Nordhaus criticized that this assumption obviously deviated from the traditional principle of economic rationality based on the cost–benefit analysis and the net present value analysis. 13 Refer to Fankhauser et al. (1997), Callaway (2004), Dietz (2011), Florio (2014), Botzen and van den Bergh (2014). 14 In the climate-economic model, a standard individual consumer is often used to represent the utility and welfare level of the people of different generations; this assumption overlooks the income distribution differences among the people of the same generation and within regions (Botzen and van

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15 From Climate Change Vulnerability to Adaptation …

is subject to the net impact from the regional mean climate change; thus, the total utility U i (C t ) in the ith province or region in period t is the product of the utility (u i ) of the standard consumer and population N i in this province or region. The consumption utility under a particular circumstance of climate change in each province is: Uit = U (Cit ) =

n 

(u i · Ni )

(15.5)

i=1

The utility loss caused by climate change in each province15 is: Ui = U (Cit ) − U (Ci0 ) = U (Dit )

(15.6)

where D is the net consumption loss caused by climate change. U (Dit ) =

m n    i=1 j=1

 Dit (A j ) ·



Ti

β

T

(15.7)

Equation (15.7) is the utility loss function, where Aj is j social welfare factor combinations in the ith province, T i is the average temperature rise in the ith province, T is the average national temperature rise, and β is the change curvature coefficient of the loss function, suggesting that the marginal loss exponentially increases with temperature rise.16 In the welfare economic analysis of climate change, a constant relative risk aversion (CRRA) function is usually developed to determine the risk preference of an individual or a region (Weitzman, 2010). The standard form of that function is shown below: U (Cit ) =

(Cit )(1−η) η = 1 or U (Cit ) = ln(Cit )η = 1 (1 − η)

(15.8)

where η is the risk aversion coefficient, which is generally expressed in the income elasticity or consumption elasticity of marginal utility; 1 − η is the equality weighting coefficient, which reflects the degree of tolerance in different regions or groups in terms of the income gap and disaster loss rate. The higher η is, the higher the risk den Bergh, 2014). To facilitate the analysis, this paper assumes that the population is exogenous; the size is unchanged; the utility is homogeneous; the consumption growth rate is a positive exogenous variable. 15 Hallegatte and Przyruski (2010) pointed out that, in the climatic disaster loss assessment, the assets and output loss—such as the change in the GDP—can be taken as a proxy variable for measuring the consumption loss to arrive at the utility loss function. 16 Dietz (2011) stated that this index function form can better fit the disaster loss curve and thus is widely applied.

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243

aversion degree; under the precautionary principle, people are willing to partially reduce their current consumption to guard against future risks (Liu, 2012). By totaling the utilities in all of the provinces, one arrives at China’s social welfare function, as shown below: Wt =

 T  n   (Cit )(1−η) (1 + δ)−t (1 − η) t=0 i=1

(15.9)

where Ct is the consumption level under a specific climate change scenario— assuming that when t = 0, it refers to the welfare level in the case of no climate change or in the base year; when t ≥ 1, it refers to the welfare level in the case of climate change or in a certain forecast period; δ is the discount rate which reflects time preference—the weighting coefficient which gives expression to the intergenerational equity. The value of δ represents the risk sharing between the current and future generations. The higher the value of δ is, the higher the value assigned for the current period or the time of the current generation; in contrast, the value assigned for the future generation is higher. If δ = 0, it means that when members of the current and future generations are subject to risks of the same magnitude, the present values of their economic losses are the same. The total welfare risk resulting from climate change in China or in the forecast period compared with the base period is: W = W t − W 0

(15.10)

As shown, the welfare risk caused by climate change produces a reduction effect on social wealth. If a certain climate change scenario is more beneficial to a certain province or region or the disaster loss is lower and its utility level is higher, that province or region contributes more to increasing the total social welfare; in contrast, it decreases total national welfare.

15.3 Comprehensive Assessment of Climate Change Vulnerability Climate change vulnerability refers to the vulnerability, sensitivity, adaptability and other inherent characteristics of the socioeconomic system in case of exposure to the impact of climate change. The vulnerability assessment of climate change concerning different provinces and regions in China is conducted according to the following three steps. First, an assessment indicator system is built. We define the primary assessment indicators as five welfare factors, including material capital, economic capital, human capital, natural capital and social capital, and divide the primary indicator

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15 From Climate Change Vulnerability to Adaptation …

at each dimension into two secondary indicators, including sensitivity and adaptation capacity, as shown in Table 15.1. Second, determine the indicator weight. Factor analysis was used to analyze the main factors (driving factors) of each secondary indicator and its weight. Third, the comprehensive vulnerability index (comprehensive vulnerability degree) was calculated. Calculate the factor scores, normalize and total Table 15.1 Design of indicator system for climate change vulnerability Primary indicator Indicator nature

Secondary indicator a

Indicator attribute b

Material capital

Climatic safety index (climatic disaster economic loss/land area)

+

Climatic sensitivity

Adaptation capacity Climatic protection capacity index (proportion of the adaptation input in the fiscal expenditure) Economic capital Climatic sensitivity

Economic sensitivity index (rate of direct economic loss caused by climatic disasters)

−

+

Climatic sensitive industry + index (proportion of the agriculture in the regional GDP) Adaptation capacity Economic adaptability index (per capita GDP) Natural capital

Human capital

Climatic sensitivity

Water resource safety index (per + capita water consumption/per capita water resource)

Adaptation capacity Natural resource endowment index (forest coverage rate)

−

Climatic sensitivity

Population vulnerability index (proportion of the vulnerable population c )

+

Disaster sensitivity index (proportion of the disaster-affected population)

+

Livelihood vulnerability index (family dependency ratio)

+

Adaptation capacity Population education index (illiteracy rate)

Social capital

−

Climatic sensitivity

+

Population health index (regional life expectancy)

−

Public health adaptation capacity index (number of doctors per 1000 people)

−

Social equity index (urban and rural income ratio) d

+ (continued)

15.3 Comprehensive Assessment of Climate Change Vulnerability

245

Table 15.1 (continued) Primary indicator Indicator nature

Secondary indicator a

Indicator attribute b

Adaptation capacity Environmental risk governance + capacity index (number of environmental events/per capita GDP) a

The secondary indicators in this table are the results obtained through multiple cyclic steps including literature consulting, expert evaluation and factor analysis. We made comparisons and did screening, improved the indicator design, weighed the data availability, factor analysis validity, theories and policy implications, and finally chose 15 indicators (see the indicators within parentheses) b The indicator attribute refers to the value symbol of each indicator: “+” means that this indicator makes a positive contribution to the comprehensive vulnerability degree—a higher value suggests greater contribution to the comprehensive vulnerability degree. “−” means a negative contribution— the higher the indicator is, the lower the vulnerability is c The proportion of the vulnerable population refers to the proportion of the population at the age below 16 and above 65 in the total population d This paper chooses such variables as the rate of social security coverage, the ratio of urban and rural incomes and the proportion of the population enjoying the guarantee of minimum living to measure the social equity index, while the ratio of urban and rural incomes is incorporated into the final model

them to the comprehensive index for the climate change vulnerability concerning each province and region, rank them, draw the vulnerability regionalization map.

15.3.1 Indicator Design and Data Collection To match China’s five-year plan, the period from 2006 to 2010 (the 11th Five-Year Plan period) was chosen as the base period for the assessment of climate change vulnerability. The data mainly come from the China Statistical Yearbook and the China Civil Affairs Statistical Yearbook. Some composite indicators are included in Table 15.1, for example: Climatic protection capacity index. The key adaptation fields specified in the National Strategy for Climate Change Adaptation include infrastructure, agriculture, water resources, coastal belts and relevant sea areas, forests and other ecosystems, human health, tourism and other industries. The adaptation input is hereby defined as the public expenditure on environmental protection, medical treatment and health, agriculture, forestry and water conservancy, land and weather and other fields, and the climatic protection capacity (CPi ) of different provinces is defined as the proportion of the adaptation input (AI i ) in the regional fiscal expenditure (F i ) (average five-year value). The formula is shown below: C Pi = Avg{AIi /Fi } · 100%

(15.11)

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15 From Climate Change Vulnerability to Adaptation …

Economic sensitivity index. The statistics on the economic loss caused by natural disasters are an important internationally accepted indicator for measuring disaster risk sensitivity. Statistical data on natural disasters except earthquakes in provinces and regions as indicated in the China Civil Affairs Statistical Yearbook are used to determine the losses (Lossi ) caused by climatic disasters (drought, storms, typhoons, low temperatures/freezing/snow, flood/landslides/mud-rock flows) in provinces and calculate the rate of direct economic loss caused by climatic disasters (Lossratei ) (average five-year value). The formula is shown below: Lossratei = Avg[Lossi /G D Pi ] · 100%

(15.12)

15.3.2 Assessment Results and Analysis In the assessment of climate change vulnerability, the vulnerability indicator is an observable indicator (manifest variable), and the common factors show the common driving factors behind the vulnerability indicator (latent variable). Factor analysis is designed to use the observed values to identify the potential driving factors affecting vulnerability; the statistical model is shown below17 : X i = αi1 f 1 + αi2 f 2 + · · · + αik f k + ei k < n (i = 1, 2, . . . , n)

(15.13)

where x i (i = 1, 2, …, n) means n original indicators, f j (j = 1, 2, …, k) means k common factors, and ei means the difference factor of the ith indicator. aij is the loading coefficient of the ith indicator X i at the jth common factor f j , reflecting the degree of correlation between the original indicator and the common factor. The results are shown in Table 15.2. The climate change vulnerability index was divided into five grades. The results show that the top three provinces in terms of the highest vulnerability (comprehensive vulnerability degree = 5) were Gansu, Ningxia and Guizhou, while the top three provinces in terms of the lowest vulnerability (comprehensive vulnerability degree = 1) were Beijing, Tianjin and Shanghai. Regionally, the comprehensive vulnerability degree gradually increased from the eastern region to the western region; namely, a region with a higher level of development had a greater capacity for adaptation and

17

Assessment steps: (1) data preprocessing. Normalize indicators to ensure that indicators have the same vulnerability direction—the higher the indicator value is, the higher the vulnerability is. (2) Use statistical software SPSS16 to conduct factor analysis to obtain the rates of variance contribution X −min X of common factors and calculate the factor weights. The standard formula is xi j = maxi jX j −min jX j ; max X −X

j ij xi j = max X j −min X j (i = 1, 2, …, m; j = 1, 2, …, n), where max and min are the maximum value and the minimum value of a certain indicator, respectively (m = 31, n = 15).

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Table 15.2 Results of the assessment of climate change vulnerability concerning China’s provinces and regions Indicator

Principal component factor (weight) a Climatic sensitivity factor (0.36)

Population vulnerability factor (0.22)

Social development factor (0.18)

Environmental governance capacity factor (0.12)

Ecological vulnerability factor (0.12)

Proportion of the 0.924 population affected by climatic disasters

0.087

−0.026

0.264

−0.058

Proportion of the 0.722 economic loss caused by climatic disasters in GDP

0.103

0.284

−0.101

−0.129

Proportion of 0.667 climatic sensitive industries

0.439

−0.041

−0.23

−0.149

Proportion of the adaptation input in fiscal expenditures

0.833

0.203

0.279

−0.256

0.081

Per capita GDP

0.791

0.458

0.195

−0.1

−0.16

Number of 0.623 doctors per 1,000 people

0.547

0.086

−0.012

−0.204

Family dependency ratio

0.181

0.935

0.132

0.049

−0.06

Proportion of the vulnerable population

0.472

0.801

0.267

−0.013

−0.029

Illiteracy rate

0.156

0.175

0.819

0.082

−0.032

Regional life expectancy

0.602

0.276

0.641

−0.277

−0.077

Ratio of urban 0.494 and rural incomes

0.448

0.548

−0.072

−0.016

0.04

0.076

0.890

0.106

−0.07

−0.572

0.607

−0.196

0.006

−0.128

−0.026

0.929

Number of environmental events/per capita GDP

−0.113

Economic loss −0.01 per unit land area Per capita water consumption/per capita water resources

−0.191

(continued)

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Table 15.2 (continued) Indicator

Forest coverage rate

Principal component factor (weight) a Climatic sensitivity factor (0.36)

Population vulnerability factor (0.22)

Social development factor (0.18)

Environmental governance capacity factor (0.12)

Ecological vulnerability factor (0.12)

0.002

−0.32

0.484

0.142

0.647

a The KMO value of factor analysis is 0.76; the Bartlett sphericity test shows significance, suggesting

that this indicator system is suitable for factor analysis. Five common factors in Table 15.2 can explain 82.4% of the population variance

higher climatic sensitivity. For the differences among different provinces, the adaptation capacity of the western provinces was generally lower than that of the central and eastern provinces. According to an analysis of the correlation between the welfare factors and vulnerability, (1) the climatic sensitive factors contributed more than 1/3, while the factors that were affected the most were economic capital, material capital and human capital; (2) The adaptation capacity of provinces and regions was mainly driven by the economic capability, the quality of human capital and social infrastructures, thus an increase in human capital and infrastructure input in the western region might help reduce vulnerability18 ; (3) Ecological resource endowment and environmental governance capacity contributed 12% to climate change vulnerability, and showed regional differences.

15.4 Regionalization of Adaptation Based on Climate Change Vulnerability There are great developmental differences among the different regions in China; thus, China suffers both developmental deficits and adaptation deficits, and it has huge developmental adaptation needs and considerable incremental adaptation needs 18

Jin (2012) calculated the economic infrastructure capital stock in different regions in China, and found that there was a significant correlation between interregional per capita infrastructure capital stock and per capita GDP. Wang and Zhao (2005) pointed out that the rapid growth of China’s economy in more than 20 years was accompanied by relatively low economic welfare conversion, as evidenced by the fact that the proportion of the expenditures on social development in the GDP was at a relatively low level for many years, and there was a lack of coordination in the economic and social development. Some research regarding the geography of well-being also supported the above conclusion—for example, Liu et al. (2014) stated that the distribution of China’s poverty-stricken population exhibited typical geographical spatial characteristics; Liu et al. (2006) examined the regional differences in China’s population health, and found that total per capita health expenditures in East and Central China were much higher than those in West China, while life expectancy and other health indicators in West China were significantly lower than those in East and Central China.

15.4 Regionalization of Adaptation Based on Climate …

249

Table 15.3 Incremental adaptation mode and the developmental adaptation mode Adaptation mode Conventional climatic risks

New risks caused by climate change

Total risk value

Incremental adaptation

Risks of loss: 100 Developmental inputs (DRR): 100 Net losses: 0

Risks of loss: 30 Adaptational inputs (ACC): 0 Net losses: 30

Total risks: 130 Total inputs: 100 Total net losses: 30

Deficit: 0

Deficit: 30

Total deficit: 30

Risks of loss: 100 Developmental inputs (DRR): 60 Net losses: 40

Risks of loss: 30 Adaptational inputs (ACC): 0 Net losses: 30

Total risks: 130 Total inputs: 60 Total net losses: 70

Developmental adaptation

Deficit: 40

Deficit: 30

Total deficit: 70

Developmental deficit

Adaptation deficit

Developmental deficit + adaptation deficit

(Pan et al., 2011).19 Taking climatic disaster risk as an example, long-term input and practice have resulted in the accumulation of various kinds of capital in traditional disaster prevention and reduction fields to cope with conventional risks (it is assumed that they are mainly caused by natural climatic variability). In climate change scenarios, generally speaking, the developed regions only call for the incremental adaptation input to address the new climatic risks, while the underdeveloped regions see insufficient conventional risk input and an inability to tackle the new risks amidst historical developmental debts. It is assumed that the adaptation deficit means that the conventional climatic risks from development have been addressed, but there is a lack of input in dealing with the incremental risks caused by extreme and long-term climate change; the developmental deficit means that there are no resources or input for coping with both conventional risks and new climate change risks. Table 15.3 describes the basic characteristics of the incremental adaptation mode and the developmental adaptation mode. To make it more visible, two types of indicators—climatic sensitivity and adaptation capacity—in Table 15.1 can be used to separately design the comprehensive index and draw coordinate graphs (see Fig. 15.2) and divide 31 provinces in China into three types of typical adaptation regions.20 19

Incremental Adaptation refers to the incremental input necessary for considering the new risks on the existing foundation of the system against the background of climate change. This adaptation means that the developmental needs have basically been satisfied and it is only necessity to carry out the adaptation activities needed for addressing new climatic risks. Developmental Adaptation means that both developmental needs and new climatic risks should be considered in a coordinated way as there is a certain lagging behind in development, making the capacity and input of the system insufficient for coping with the conventional risks. 20 In Fig. 15.2, when the indicator value of a province or municipality is closer to the average value, its score is closer to 0. First standardize the indicator values—(indicator value-average value)/standard deviation—and adopt the Component Score Coefficient Matrix to calculate the scores of provinces and municipalities. Make reference to the results of a cluster analysis and with ±0.3 as the boundary,

250 Adaptation

15 From Climate Change Vulnerability to Adaptation … Beijing Shanghai

capacity

Tianjin

Zhejiang

Guangdong

Type I Fujian

Liaoning Hainan

Jilin Heilongjiang

Type II

Shandong

Jiangsu

Shaanxi Inner Mongolia Hebei

Shanxi

Type III Jiangxi

Hunan

Chongqing

Sichuan

Hubei

Henan

Guangxi Anhui Yunnan

Xinjiang

Ningxia Qinghai Tibet

Guizhou

Gansu

Climatic sensitivity

Fig. 15.2 Three types of regions for adaptation planning in China

As shown, there was a strong correlation between climatic sensitivity and adaptation capacity in China’s provinces—most of the provinces were located in two typical regions: high sensitivity-low adaptability and high adaptability-low sensitivity. This result is separately similar to vulnerable countries and sustainable countries among the four types of countries classified by Tol et al. (2004) according to their climatic risks.21 On the one hand, this proves a close connection between the level of development and the capacity of adaptation; on the other hand, this shows that vulnerability and the level of development of China’s provinces and regions are greatly affected by climatic and geographical factors, which reveals a unique geographical environment and territorial development in China. Most Type I provinces in Fig. 15.2 are located in the western region, where the ecological environment is sensitive, the development foundation is weak and the local governments face the double specify the following three types of regions: (1) Type I regions (giving priority to developmental adaptation): Gansu, Ningxia, Guizhou, Qinghai, Anhui, Yunnan, Tibet, Guangxi, Chongqing; (2) Type II regions (giving priority to incremental adaptation): Beijing, Tianjin, Zhejiang, Shanghai, Fujian, Guangdong, Liaoning, Jilin, Heilongjiang, Jiangsu; (3) Type III regions (placing equal emphasis on developmental and incremental adaptation): Jiangxi, Hainan, Hunan, Hubei, Henan, Hebei, Shandong, Shanxi, Inner Mongolia, Shaanxi, Sichuan, Xinjiang. 21 Tol et al. (2004) adopted two indicators—exposure to the impact of climate change (agriculture, water resources, sea level rise and biodiversity) and the adaptation capacity (human development index)—to classify different countries into four types by climatic risks: (1) Vulnerable type: high impact-low adaptation capacity—Bangladesh is the most typical of this type; (2) Residual loss type: low impact-low adaptation capacity, such as Africa’s Namibia; (3) Developmental opportunity type: high impact-high adaptation capacity—the USA is a representative of this type; (4) Sustainable type: low impact-high adaptation capacity, such as Canada, Norway.

15.4 Regionalization of Adaptation Based on Climate …

251

challenge of developmental deficit and adaptation deficit. There is an urgent need to increase the developmental adaptation input in science and technology, education, health, disaster prevention and reduction, poverty alleviation and ecological protection. Type II provinces include the developed urbanized southeastern coastal regions and the northeastern region, where the foundation for development is good, the current adaptation capacity is relatively strong, and efforts to improve the adaptation capacity should focus on the incremental input. Type III provinces are mostly located in the central and western regions—the cases with both high sensitivity and high adaptability are not striking, and Xinjiang is relatively typical of this with both low sensitivity and low adaptability. For the provinces around the average value, attention should be given to the constraints from climate change on resources and the environment and population carrying capacity, and considerations should be given to both developmental and incremental adaptation input during intensified urbanization and industrialization.

15.5 The Assessment of China’s Economic Welfare Risk and Its Policy Implications With increasing input from disaster prevention and reduction in China, the rate of direct economic loss caused by meteorological disasters declined from an annual average of 3–6% in the 1980s to approximately 1% in the present century; however, great differences still exist among regions (Li et al., 2015). In the twenty-first century, climate change will lead to more disaster risks in China, including high temperatures, flooding and drought; with the growing population and economic aggregate in China, importance should be attached to the risk amplification effect of climate change disasters caused by the vulnerability characteristics of the socioeconomic system (Qin et al., 2015). In this paper, the period from 2006 to 2010 was taken as the base period, and the period from 2016 to 2030 was chosen as the forecast period. The regional welfare weighting method was adopted to estimate the economic losses and welfare risks caused by climatic disasters in China’s different regions.

15.5.1 Estimation of Economic Loss and Welfare Risk The RCP8.5 climate change scenario under the CMIP5 climate scenario mode of the National Climate Center was adopted, and the frequency of occurrence and intensity of two main climatic disasters—drought and flooding—were used to measure the disaster hazard against the future climate change background.22 The most common 22

RCP8.5 is the high concentration emission scenario, roughly corresponding to the temperature rise above 2 °C in the forecast period. The drought and flood risk index is calculated by provincial spatial interpolation and the normalization of a number of meteorological indexes including the

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economic welfare indicator “regional economic aggregate (regional GDP)” was taken as the risk exposure.23 It was assumed that climate change vulnerability in provinces and regions in the forecast period was the same as that in the base period; thus, the possible economic welfare risk in China in the future is the expected economic welfare loss measured by the GDP in the future. Risk(W ) = E(W ) =



U (G D P)

(15.14)

First, the social welfare function of climatic disasters should be built. Refer to the IPCC risk assessment formulas (15.1) and (15.3) and loss function (15.7) and determine the utility loss function U(Di t ) of each province and region in China. Di t is the direct economic loss caused by climatic disasters in the ith province or region in forecast year t. The formula is shown below: Dit = Iit · PiT = E it · SiT · PiT = G D Pit · [Lossrateio · (1 + HiT · PiT · Vi0 )] (15.15) where T is the whole forecast period, I i t is the climate change impact in the ith province in year t, Pi T is the impact occurrence probability under this climate change scenario in the forecast period (the disaster hazard probability was considered as 100%), and E i t and S i T are the risk exposure expressed in the economic aggregate (annual gross domestic product GDPi t ) and its sensitivity to climatic disasters in this province, respectively. H i T is the average level of disaster hazard (the frequency of occurrence and intensity of drought and flooding) within the whole forecast period relative to the base period.24 “Lossratei ” is the rate of direct economic loss caused by climatic disasters in the ith province in the base period. The sensitivity index S i t consists of three indicators, including the historical disaster loss rate, future disaster hazard and the current level of vulnerability with respect to climatic disasters in provinces, which amounts to the addition of a risk amplification coefficient on the highest air temperature, the number of days of high temperature, the frequency of precipitation and the extreme value of precipitation. The data were calculated and provided by doctor Dong Siyan and researcher Xu Ying from the National Climate Center. The calculation formula for the disaster T T 0 0 risk caused by climate change is (Hdr ought + H f lood )/(Hdr ought + H f lood ). It means that the rate of increase in two climatic disaster risks—drought and flooding—in the forecast period (T ) compared with the base period (0). 23 GDP data concerning China’s provinces from 2016 to 2030 were calculated by associate researcher Feng Yongsheng from the National Academy of Economic Strategy, Chinese Academy of Social Sciences by using the time series model. The calibration of the national GDP growth rate—national GDP = total GDP from the provinces—was carried out by making reference to the data from the program Goals for Building a Moderately Prosperous Society in All Aspects in the 13th Five-Year Plan Period and the 2030 Outlook in the charge of researcher Li Xuesong from the Institute of Quantitative & Technical Economics, Chinese Academy of Social Sciences. This paper adopts the exogenous assumption: Climatic disasters do not affect the regional GDP growth rate. 24 The base period for the climate model data is the period from 1986 to 2005. Compared with the base period, China’s high temperature and flood disaster hazards will increase in the short term (2016–2035) and high risks will further increase in the medium and long term.

15.5 The Assessment of China’s Economic Welfare Risk …

253

basis of the base period—an increase in the future climate change hazard will lead to an increase in the future disaster loss rate. Second, the estimated utility losses in provinces are summed to obtain the total national economic welfare loss from 2016 to 2030. Given that vulnerability is salient and the capacity for bearing risks is low in the western region, a regional equity weighting coefficient θ can be set to increase the welfare distribution weight of the vulnerable region. With the average loss rate of 0.5% with respect to national meteorological disasters in 2014 (equivalent to the loss rate in a moderately vulnerable region in the base period) as the target level, the following formula is adopted to calculate θ and U(Di t ) of each province25 : U (Dit ) =

T  n 

Dit · θ η , θ =

t=0 i=1



Li L

 =

Lossrate 0.5

(15.16)

To reflect the time preference and risk aversion level of Chinese residents,26 the time discount rate δ is deemed to be 1.5. The risk aversion coefficient η is introduced to weight θ, assuming that η = 0, 1, 1.5, 2. The Bergson-Samuelson social welfare function and the following two welfare functions were used to calculate the regionally weighted economic welfare risks.27 1.

Utilitarianist welfare function: the same weight is given to the loss of different provinces; the calculation formula is shown below: WT =

T  n 

[U (Dit ) · θ η ] · (1 + δ)−t

(15.17)

t=0 i=1

2.

25

Maxmin welfare function: The welfare of the groups with the lowest income is required to be maximized; thus, only the utility loss of Type I regions—nine highly vulnerable provinces i = 1, 2, …, m—was calculated. The formula is shown below:

Reference has been made to the utility function forms developed by Fankhauser et al. (1997) and Weitzman (2010), which means that more importance is given to the highly vulnerable region with a higher disaster loss rate, without any essential difference from the standard formula (15.8). 26 According to research, the level of pure time preference and risk aversion of Chinese residents was very high. As estimated in relevant literature, the risk aversion coefficient of Chinese residents was 3–6, and the initial discount rate was 6–8%, much higher than the levels in the developed countries (Liu & He, 2015). Given a lack of support from empirical research, the climatic risk aversion coefficient adopted in this paper was determined by making reference to the common value 1–3 available in the international literature, while the pure time preference rate is based on the market discount rate of 1.5% used by Nordhaus (Liu, 2012). 27 Refer to the welfare function forms and regional welfare weighting methods specified by Fankhauser et al. (1997) and Florio (2014).

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Table 15.4 Results of the regionally weighted assessment of China’s economic welfare risk (2016– 2030) (unit: trillion yuan/year; constant price in 2010) Function form

Bergson-Samuelson function

Utilitarianist function

Maxmin function

Regional equity weighting coefficient

η=0

η=1

η = 1.5

η = 1.5

η=2

Type I regions: Regions giving priority to developmental adaptation

0.61

1.68

3.88

3.88

9.44

Type II regions: Regions giving priority to incremental adaptation

0.31

0.65

1.07

–

–

Type III regions: 0.64 Regions placing equal emphasis on developmental and incremental adaptation

2.22

4.38

–

–

Annual national average

4.55

9.32

–

–

W = Max T

1.34

T  t=0

U Min (D) =

T  m 

[U (Dit ) · θ η ] · (1 + δ)−t

(15.18)

t=0 j=1

The results are shown in Table 15.4. As indicated, the results greatly vary with different regional equity weighting. A highly vulnerable underdeveloped region (region giving priority to developmental adaptation) is given with a higher equity weighting coefficient, suggesting that the direct economic loss on the same scale will bring about a greater negative impact and a higher utility loss in this region and will contribute more to national welfare risks than that in a less vulnerable developed region. In reality, the probability of disaster occurrence and economic loss show interannual fluctuations due to the nonlinear characteristics of the climate system. From 2004 to 2014, the direct economic loss caused by meteorological disasters was an average of 304.6 billion yuan in China—the lowest and highest direct economic losses occurred in 2004 and 2010 and were 156.6 billion yuan and 509.8 billion yuan, respectively (Li et al., 2015). The forecast results in this paper reflect the regional differences due to data restrictions more; thus, the regional or national total average annual forecast indicators were adopted in Table 15.4. According to the assessment, it is assumed that, from 2016 to 2030, the vulnerability of provinces will be unchanged and there will be no adaptation cost, with

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the growing economic aggregate of provinces and increasing disaster risks caused by climate change; (1) in the case of no weighting (η = 0), the average annual total direct economic loss caused by climatic disasters will exceed 1.34 trillion yuan in China, approximately 4.4 times that in the period from 2004 to 2014—the average annual loss (0.61 trillion yuan) in the highly vulnerable Type I regions will be close to the level (0.64 trillion yuan) in Type III regions, approximately 2 times the estimated loss (0.31 trillion yuan) in the developed Type II regions. (2) As indicated by the results of the regional weighting estimation based on the maximin welfare function (η = 1.5), the economic welfare risk in the most vulnerable Type I region in the next 15 years will be as high as 3.88 trillion yuan, approximately 6.3 times the unweighted national average risk level. As shown, whether regional weighting is considered, future climate change will pose significant welfare loss risks in the vulnerable western region. The above calculation results could serve as the basis for estimating the willingness of the whole society to pay and offer a reference for adaptation planning and its fund mechanism design.

15.5.2 Adaptation Planning Design for Reducing Welfare Risks Based on the design of the adaptation fund mechanism, adaptation planning can be carried out according to the following governance paths and the welfare equity principle.

15.5.2.1

Adaptation Planning Led by Local Governments (Capacity Principle)

The governments of provinces, regions and municipalities conduct adaptation planning according to their respective capacity and risk urgency by determining the whereabouts and scale of the adaptation input. The advantage is that local autonomy is high, which helps incorporate adaptation goals into local medium- and longterm developmental planning and take adaptation actions according to adaptation needs and local conditions. For the major disasters, the central government provides different proportions of support concerning disaster relief and postdisaster recovery and reconstruction according to the capacity principle.28 The disadvantage is that it 28

The Interim Measures for Management of Living Assistance Funds for Coping with Natural Disasters, released by the Ministry of Finance and the Ministry of Civil Affairs in 2011, stresses that the regions affected by extraordinarily serious natural disasters should be provided with living assistance funds from both central finance and local finance according to the proportions determined in light of the local levels of economic development, the financial position and the characteristics of natural disasters (in the case of the central and western regions, 70% and 30% of funds should be borne by the central finance and the local finance, respectively). Furthermore, the paired help and support policy adopted in the poverty alleviation and disaster relief fields in China is actually

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15 From Climate Change Vulnerability to Adaptation …

is very difficult in underdeveloped regions to utilize limited developmental funds to prevent future risks since the capability is insufficient in these regions.

15.5.2.2

Department-Led Adaptation Planning (Demand Principle)

In light of the major fields of climate change adaptation—such as agriculture, forestry, water conservation, building, transportation, energy, public health, science, technology and education—funds are provided according to departmental planning to intensively support climatic protection input in high-risk regions. The advantage is that the responsibilities of various departments are clear, and it is easy to implement policies at lower levels, which is conducive to increasing the input from the adaptation infrastructure at the major and vulnerable spots. The disadvantage of the departmental path is that there is a lack of collaborative planning at the macro and strategic levels, and it is difficult to pool efforts together.29

15.5.2.3

Adaptation Planning Led by the Central Government (The Principle of Giving Priority to the Most Vulnerable Regions)

At present, a mechanism for the coordination of climate change adaptation decisionmaking led by the National Development and Reform Commission has been established in China, but emission reduction and adaptation work is still carried out mainly by various departments, as well as the governments of provinces, regions and municipalities according to their respective responsibilities; moreover, the adaptation goals have not yet been truly incorporated into the overall national developmental plan, and a special funding mechanism is not available for support. Given that the developmental gap among regions is large and the developmental deficit is salient in China, China can, by making reference to the green climate fund mechanism under the United Nations Framework Convention on Climate Change, design a special national adaptation fund to be mainly allocated to the highly vulnerable provinces in the western region or the major construction projects of national strategic significance—such as key water control projects, river basin management and the South-toNorth Water Diversion Project. Developed regions with low vulnerability and high adaptation capacity can be encouraged to take self-adaptation actions and give full scope to the role of the market mechanism.

a compensation design based on the Karldor Hicks Principle—the developed regions with high capability support the underdeveloped regions at fixed points. 29 Biesbroek et al. (2010) compared the national adaptation strategies of seven European countries, and pointed out that their implementation was subject to realistic obstacles including multi-level governance and policy integration. Hallegatte et al. (2011) stressed that the adaptation policies cannot be designed merely from the perspectives of various departments, and emphasis should be placed on how to produce the synergistic effect among departments.

15.6 Conclusions

257

15.6 Conclusions Adaptation planning is a policy design based on the prevention principle. The welfare economics analysis of climate change is able to provide scientific decision-making support for adaptation planning. According to the research in this paper, the risks of welfare loss incurred in highly vulnerable regions by climate change are huge and long-term; to increase the overall welfare level of the whole society and practically achieve Pareto improvement, adaptation planning should focus on top-level design and policy coordination among different regions and departments. The policy suggestions include the following: (1) Full consideration should be given to the regional differences, and the developmental and adaptation goals should be coordinated in adaptation planning. Developmental adaptation is a typical “no-regret” measure. The adaptation goals should focus on reducing climatic sensitivity, improving adaptation capacity, and increasing the input of public goods, including science, technology, education, health and medical treatment, and climatic protection infrastructure. (2) A special national adaptation fund should be established. An overall and forwardlooking design should be carried out from the strategic perspectives of climatic equity and climatic safety. Adaptation resources and input should be channeled to the most vulnerable regions to meet their basic needs and enhance their long-term capability for sustainable development. (3) The assessment of climate change risk and vulnerability should be taken as the basis for scientific decision-making. Intensified efforts should be made to assess and study the impact and risks of climate change on economic and noneconomic welfare in China’s different regions. As climate policy research is a typical interdisciplinary research field, the drawbacks were unavoidable in the exploratory work in this paper—for example, the climate policy was introduced usually adopting multiple climate scenarios and socioeconomic scenarios to conduct the risk assessment, while this paper used a single scenario to analyze the climatic risks in the short and medium term but did not take into account the climate change trend and the socioeconomic impact of extreme climatic events in 50–100 years. This is the most uncertain part with the greatest impact among climate change risks and is also currently the research hotspot in international academic circles. Moreover, this paper adopted some theoretical assumptions to estimate economic welfare risks—such as the high temperature rise scenario, the exogeneity of the population and economic growth, and utility homogeneity—but did not touch upon the indirect economic loss caused by disasters and human capital loss. These simplified calculations need to be improved in subsequent research.

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Part V

International Climate Regime Building

Chapter 16

Climate Regime Building in a Changing World and China’s Role in Global Climate Governance Jiahua Pan and Mou Wang

16.1 Introduction After the Doha Conference, international climate negotiations entered a new stage. On the one hand, it focuses on how to implement the outcome of Bali negotiating mandate, while on the other hand, it refers to how to build up a new future international climate protocol. With global social, economic, and environmental changes, each party may adapt their concerns and appeals in negotiations so that international climate regime construction shows a new pattern. To recognize these new patterns and analyze the focal points and appeals of each party under the new situation is to further clearly realize the position and role of China in international climate regime construction and have a greater contribution to global climate governance and sustainable development with better coordination between international and domestic developmental interests.

16.2 Transition in Negotiating Mandate from Bali Roadmap to Durban Platform The 2012 Doha Conference of international climate negotiations completed negotiating mandate of the Bali Roadmap (hereinafter referred to as Bali mandate) and finally reached a series of outcomes including the second commitment of the Kyoto Protocol, ad hoc working group of long-term cooperation, ad hoc working group of Durban Platform, financial institutions, etc. This puts the full stop inside the Bali mandate.

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_16

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The year 2013 is the first year of implementing Bali mandate negotiations and is also the first year of starting consultations under the Durban Platform. In terms of international climate negotiations, the transition from the dual track under the Bali mandate to the one track under the Durban Platform does not mean that every party’s significant concerns and positions under the dual-track negotiations disappear. All the parties seek a proper way to reflect their appeals for negotiations under the Durban Platform. Developing countries think that although the pattern of dual-track negotiations does not continue to work, the negotiations under the Durban Platform should respect historical facts and reflect the differentiation of responsibilities and obligations between developed countries and developing countries. In terms of emissions reduction, financial support, and technology transfer in the future protocol, the negotiations should treat the developed and developing countries shaping their different systems differently. Developed countries hope to make use of opportunities for transition from the dual-track to the one-track by the Durban Platform, further seek to break the responsibilities differentiation model created in the Kyoto Protocol, require developing countries to undertake responsibilities for and obligations of emissions reduction and financial support, and promote reaching a guideline and the form of binding in terms of international emissions reduction framework applicable to all countries. In this sense, the parties of the Durban Platform negotiations remain different, and their key concerns have no large adjustments. However, the form and means of achieving appeals for negotiations may be adjusted based on new situations.

16.3 New Pattern of Major Powers of Negotiations The pattern of major negotiating powers under the Durban Platform shows obvious differences from that under the Bali mandate. Positions from the North and South groups are clearly different under the Bali mandate, while these North and South groups show a trend toward vague positions related to key issues under the Durban Platform. This reflects adjustments to their appeals of negotiations from different parties. The negotiation under the Durban Platform shows the game of three main powers. Europe Union (EU) and Alliance of Small Island States (AOSIS): During the Durban Conference, EU, AOSIS, and the Least Developing Countries Group released a joint statement in terms of operating Durban mandate, while many developing countries had not reached a consensus. During the next few discussions, in terms of emissions reduction, finance, and legal form, the EU and AOSIS expressed similar positions. Additionally, in terms of trade and unilateral measures, the range of consensus between AOSIS and EU is wider than that between AOSIS and most developing countries. Therefore, EU and AOSIS converged to become the most positive power to promote Durban Platform negotiations. The Umbrella Group includes the US, Canada, and Russia: Despite their different opinions on participation in the Kyoto Protocol, members of the Umbrella Group

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265

converged in terms of the Durban Platform negotiations. The Umbrella Group is not a positive promoter to the Durban Platform but agrees to accept the one-track negotiation under the Durban Platform because of their oppositions to dual-track negotiation under the Bali mandate. When requiring developing countries to commit to emissions reduction and undertake obligations of financial support, the Umbrella Group and EU share the same position. However, with regard to the legal form in the future protocol, the Umbrella Group, because of their domestic obstacles to legalization and recognition of climate change issues, shows positions similar to those in most developing countries more than the EU and AOSIS. Like-Minded Developing Countries (LMDC): Members of the LMDC are emerging economies such as BASIC, including China, India, Brazil, and South Africa. These countries are in a period of rapid economic growth, and most of them are in the process of urbanization and industrialization, demanding economic and technology transition, finance, technology, poverty eradication, and social wealth. They have rigid demand for an increasing emission of GHG in the future under current technology conditions, and they have finite historical emissions, which gives them confidence. Given that developed countries force developing countries to undertake responsibility for emissions reduction and financial support, these emerging economies are united in efforts to gain emission interest and oppose the obligations of emissions reduction and financial support, which does not comply with the principle of equity.

16.4 Key Divergences Over Building Future International Climate Regime Divergence over opinions of the principle in negotiations: Any protocols complete the framework design and guide the negotiating procedure under guidance of certain principles. As its negotiations are under the UNFCCC mandate, the Durban Platform must respect the principles in the UNFCCC. The main divergence over the principle among parties is how to understand and explain the principle of common but differentiated responsibilities. Developing countries commonly think that the Kyoto Protocol reflects the principle of common but differentiated responsibilities and requires developed countries to achieve total emission reduction, provide finance and technology assistance for developing countries, and help developing countries raise their capability of adaptation to climate change. Due to their priority of poverty eradication and economic development, developing countries should have action on reducing emissions of GHG based on national capabilities. The parties from developed countries point out that they need a dynamic understanding of the principle of common but differentiated responsibilities with global economic development and hope that developing countries undertake additional responsibilities for emissions reduction. Some developed countries basically deny the principle of common but differentiated responsibilities and require developing countries to implement emissions reduction

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at the same level under the same framework. Parties maintain divergence over understanding the principle of common but differentiated responsibilities. How to define the principle and how the principle guides the negotiating procedure will become the key issues in Durban Platform negotiations. Mitigation Model and Target: Mitigation is a key point of international climate protocol. The nature of future international climate protocols is the institutional arrangement of global coordinated emissions reduction. Financial support and technology transfer better achieve the target of emissions reduction. EU and AOSIS promote an international emissions reduction model with strict legal binding, set an ambitious global target of reducing emissions according to conclusions from IPCC reports, encourage the world to implement emissions reduction at a higher level, require all parties to reach their emissions peaks, implement national targets of emissions reduction, and secure the implementation of targets in domestic and international legal forms. The Umbrella Group, including the US, is inclined to propose targets for emissions reduction, build relevant institutions for conducting reviews on the implementation of targets, and review the implementation of targets for emissions reduction. Through long-term experiences, developing countries realize that development means emissions increase under the current technology level. Therefore, developing countries are more likely to accept the target of emissions reduction or the plan of target set based on national conditions, reiterate that the target of emissions reduction should be in accordance with the principle in the UNFCCC, differentiate the responsibilities between developed and developing countries, secure the type and the extent of the target of emissions reduction in order to protect the developmental space of the developing countries. Financial source and governance: Financial issues are important content in Durban Platform negotiations. In the Bali roadmap negotiations, the promise to propose the target of action on reducing emissions by developing countries depends on financial support from developed countries. Therefore, developing countries hope to further discuss the source, scale and use of finance in future international cooperation. Developed countries think that financial issues have been solved under the Bali mandate. Developed countries do not intend to keep promise related to finance and discuss financial issues. The Copenhagen Accord requires developed countries to provide 30 billion US dollars between 2010 and 2012, which is considered a fast starting finance of global actions on addressing climate change. Despite the fact that developed countries insist on their financial support through various channels, only 3.6 billion US dollars of fast-starting finance is implemented due to repeated calculations and unreasonable accounting systems (Zhang et al., 2013). On the one hand, developed countries avoid the obligation of financial support, while on the other hand, they intend to make use of so-called creative institutions to bring developing countries to the system of financial sources to reduce the obligation for financial support by developed countries. More importantly, developed countries make use of developing countries’ desires for financial support and divide the negotiating positions among developing countries. Developed countries encourage some developing countries to accept the proposal of financial support from creative institutions and guarantee that

16.4 Key Divergences Over Building Future International Climate Regime

267

these countries can acquire more stable and wider scales of financial assistance. This causes difficult coordination and a lack of consensus among developing countries in terms of financial issues. Financial issues are the key point of international climate cooperation, and their sources and governance are involved in multiparty interests and influence the position and baseline of negotiations of some countries. Undoubtedly, financial issues are a key point in building future international climate regimes. International Cooperation Institution Shaped by Bali Mandate: After five years of intensive negotiations, the Bali action plan shapes relevant international cooperation institutions in terms of the second period of commitment of the Kyoto Protocol, mitigation, adaptation, finance, technology, etc. The normal operation of this international cooperation institution is not only a guarantee for achieving the national target of emissions reduction and of actions on reducing emissions but also a basis for political trust in future negotiations of international climate regimes. Under the current situation, these institutions have not been improved, and institutional arrangement, staff management, financial source and use, and implementation require further details. For example, parties maintain divergences over how to create financial channels related to adaptation and technology cooperation, how to collect short-term and long-term finance, and how to secure stable financial support. These divergences cannot make relevant institutions to implement and cannot contribute to international cooperation. To reduce their obligations, developed countries do not carry on negotiations to improve cooperation institutions and do avoid further discussion and implementation related to relevant institutions in the sake of which the Bali mandate negotiations ended. Developing countries require detailed and deep negotiations and promote substantial international cooperation. Therefore, whether international negotiation is to improve the cooperation institutions shaped by the Bali mandate is one of the divergences over the future international climate regime. Legal Form: The legal form of future climate protocols has been a focal point of argument in international society in recent years. Before the Durban Conference, legal form issues mainly referred to a discussion over the legal form of negotiations documents related to long-term cooperation action working groups under the Bali mandate. However, during the negotiation of the Durban Platform Mandate, the legal form issue of future outcomes of the Durban Platform becomes a focal point of every party. Some parties, including EU and AOSIS, encourage us to reach a legally binding protocol applicable to all parties. Developing countries, including China and India, disagree with early decisions related to legal form issues in the current period when many uncertainties remain because they are not able to foresee post-2020 social and economic development. In terms of the legal form of outcomes of the Durban Platform, the divergence will remain and become a focal point of Durban Platform negotiations.

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16.5 New Situations of China’s Participation in Building International Climate Regime Economic emissions data attract global attention. Since the 1970s, global patterns of economy, energy, and emissions have dramatically changed. Although absolute changes in developed countries and most developing countries are not dramatic, China, an emerging economy, witnesses an obvious rise in its status and has become the second largest economy, the largest energy consumer, and the largest carbon dioxide emitter. In terms of economic level, the proportion of China worldwide increased from 1% in 1971 to 21.9% in 2012. The US remains the largest economy around the world, and its proportion decreased from 30% in 1971 to 21.9% in 2012. In China, GDP per capita in some advanced regions, such as Beijing and Shanghai, approaches the per capital level of high-income countries. In terms of energy patterns, energy consumption in China accounted for less than half of that in the US in 1999, while the consumption in China was higher than that in the US, which accounted for 21.9% of the world, accounting for 23.8%. The portion of total energy consumption of the US worldwide decreased from 24.2% in 2001 to 17.7% in 2012 (IEA, 2013). Since entering the twenty-first century, China has witnessed a growing gap between energy production and consumption that is higher than production and a heavy dependence on world energy. In 2012, import oil, including oil products, in China reached 310 million tons, and import coal in China was 290 million tons (NBS, 2013). In terms of total emissions of GHG, fossil fuel in China accounted for just 5.7% of that in the world in 1971, while the proportion increased to 10.7% in 1990. In 2006, China became the biggest emitter. In 2012, China contributed 26% to global GHG emissions. The US, the second largest emitter, accounted for 16.8%. Despite increased emissions, India showed a slow rate of growth of emissions, taking up 5.3% of the world level (IEA, 2013). EU, an advanced economy, has limited space for physical expansion of its economy and decreases its energy consumption and GHG emissions because of emerging energy and improved energy efficiency. Other major economies, such as Russia, Japan, and Brazil, do not have the possibility for a larger growth of emissions. Emissions in China have difficulty reaching their peak before 2020. Thus, an absolute emissions reduction is not a possible choice of options. The responsibility of a large country becomes obvious, while the role of a developing country is required for transition. With a huge change in world economic, resource, and environmental patterns, international appeals for China basically change. The role of China in world geopolitics and the economy is in transition when every power calls China to undertake more obligations and responsibilities. In international politics, China confronts pressures from two frontiers. On the one hand, after the Cold War, despite international consensus about peace and development, some developed countries, such as the US and Japan, considered China to be a competition partner. Nicolson, ex-president of the US, pointed out that China would become a super country of economy and military power and that China’s

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participation in addressing climate change is significant. The process of the US positioning China remains and becomes stronger. On 7 March 2012, Hillary Clinton, the Secretary of State of the US, blamed that China should not obtain dual benefits1 by employing “a growing big country” and “a developing country”, in her speech to the Institute for Peace in Washington. Additionally, in June 2011, Hillary described Chinese investment in Africa and Latin America as new colonialism2 during her visits to three African countries. On the other hand, developing countries have a sceptical attitude toward the role of China being played as a developing country. With regard to climate change negotiations, AOSIS considers China as their opposition and focuses on large emitters, including China building the Durban Platform with EU in the Durban Conference. The 5th IPCC report points out that China is like a developed country in terms of historical emissions and responsibility for future emissions. This means that regardless of whether China adjusts its position, the role of China has been in transition by international society and is required for undertaking more international responsibilities. Overseas investment and overseas assistance have had a high level. Being higher than 4,000 US dollars of income per capita is considered the beginning of the fast development of overseas investment. The income per capita of China was higher than 6,000 US dollars in 2012. With an increase in domestic production costs and a growth in demand for external markets, the scale of overseas investment is rising. By the end of 2011, China had direct overseas investment equivalent to 430 billion US dollars, 18,000 overseas companies in 177 countries and regions, and the total property and capital of overseas companies equivalent to 2,000 billion US dollars. According to the World Investment Report in the United Nations Conference on Trade and Development (UNCTAD, 2012), Chinese direct investment accounts for 4.4% of the rate of flow and 2% of the rate of storage worldwide. In 2011, China was the 6th largest country in terms of the rate of flow and was the 13th largest country in terms of the rate of storage of Chinese direct investment. Since 2004, the overseas assistance of China has continued to grow rapidly, with an increase of 29.4% per year between 2004 and 2009 on the basis of the rapid growth of economic development and the rise of comprehensive national power. According to the white paper on China’s Foreign Aid, China provided a total of 256 billion yuan as overseas assistance for 161 countries and over 30 international regional organizations. The data3 show that China positively shapes the image of a responsible big country while it focuses on economic development and adjusts its role from a country that conventionally acquires assistance. China exempts the debt for least developed countries and provides finance for South–South cooperation, which reflects China’s efforts to participate in international cooperation and its adjustment and realization of its role. 1

Hillary addressed a speech on US–China relations in a ceremony to commemorate the 40th anniversary of Nixon’s visit to China held in the Institute of Peace in Washington on 7 March 2012. 2 Hillary said in an interview of Zambia local media that Africa should be careful of China’s “neo-colonialism” as China continues to strengthen relations with Africa. 3 China’s foreign aid. http://www.gov.cn/gzdt/2011-04/21/content_1849712.htm.

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16.6 China’s Role in the Participation of International Climate Governance It is partially reasonable that China should undertake more responsibilities. It is a fact that the status of China is rising in the world pattern, and it is partially reasonable that developed countries and developing countries are expecting China to have more responsibilities for international affairs. China can make a concession or an active response to developed countries. However, this concession or responsibility should be in accordance with the right and interest in the framework of international governance. China does not hold the possibility and necessity of responding to financial appeals from developing countries. China should have principles and build reasonable institutions. Because financial assistance overseas comes from taxpayers, the cost-benefit effect should be considered. In this sense, the economic and political benefits from investment in education and culture are higher than those from large investments in so-called international conference centers and so-called large cultural and sport buildings, which are irrelevant to normal residents and demand a huge cost of operation. Although European and American countries have not invested in large public buildings in China, they provide funds for encouraging Chinese students to study abroad and have a large group of Chinese elites to understand Western history, culture, institutions, economies, and technology. Public funds should be the basis for encouraging Chinese culture and companies to go to the world and make them more internationalized and sustainable. Realizing Gap and Clarifying Position: China should clearly realize that the discourse power of China remains limited and far away the position of leading the world in terms of international climate governance procedures. Because of the large population and wide land scale, many indexes related to China are positive. However, the index of per capita and quality better reflects a real situation. According to the 2013 Human Development Index calculated by the United Nations Development and Plan Department (UNDP), China ranks 101, which is lower than the Latin American countries considered to have mid-income pitfalls, such as Chile (40), Mexico (61), and Brazil (85). International society always exaggerates the general index of China and ignores indices related to per capita and quality, causing misjudgment and misunderstanding. Economic globalization and rapid economic development make China’s high-level development, particularly in facilities and soft power. However, China must have a clear awareness of its situation. China is an absolute large importer of crude oil and iron and the largest producer and exporter of daily products. However, the discourse power of China in determining the price mechanism is limited. The discourse system of world culture and mainstream media is led by Western countries. There is a long road to becoming mainstream and gaining leadership for Chinese culture. China’s participation in international climate governance, regardless of its role in transition or in adjustment, still needs to lower its voice, strengthen its power, balance responsibilities and rights, and take actions with considerations. Despite eco-politics, international economic resources and environmental patterns have dramatically changed, and China must clearly realize that it has no leading role in discourse systems and

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comprehensive national power. If China holds leadership, it will never seek hegemony and will contribute to harmonious international order.

References International Energy Agency (IEA). (2013). CO2 emission highlight from fossil fuel combustion. At exchange-rates. Paris. National Bureau of Statistics (NBS). (2013). Statistical Bulletin of National Economic and Social Development in 2012. February. United Nations Conference on Trade and Development (UNCTAD). (2012). World Investment Report. Zhang, W., Wang, M., & Lian, H. (2013). The progress of quick start-up capital of the convention and the new tendency of developing countries’ implementation. Ecological Economics, 4, 20–32.

Chapter 17

Meeting Human Development Goals with Low Emissions: An Alternative to Emissions Caps for Post-Kyoto from a Developing Country Perspective Jiahua Pan

17.1 Introduction A variety of approaches of commitment to climate change mitigation have been documented in the literature (e.g., Baumert, 2002; Hoehne et al., 2003; Pew, 2003) targeting either emissions or policies and measures (PAMS). Emissions targets are specified in terms of carbon and set either in absolute (Kyoto type) or in relative (intensity) terms. Policies and measures are aimed at sustainable development, including their impact on or implications for carbon emissions. Emission reduction is therefore a co-benefit (on some occasions, it can be negative) of policies and measures for sustainable development. GHG emissions arise from human economic activities but serve an ultimate purpose of human development. There should be no disagreement to a commitment that is made to human development. For human development, some emissions are essential, such as those for basic needs, while others, such as luxury and wasteful emissions, are not only unnecessary but also conflict with human development. Emissions should not be used solely to power economic growth or to generate dollar value. Instead, emissions should be designated for human development. It is against the above background that an alternative approach to commitment is proposed focusing on human development.

17.2 Re-consideration of Emissions Target as a Goal The target has to be set in a straightforward manner for stabilization of the atmospheric concentration level. However, the experience since the Berlin Mandate has been rather confusing and frustrating. For climate change mitigation, it is necessary to limit emissions of greenhouse emissions, but GHG targets can be constrained by many other goals, even higher priority levels. There is an urgency to revisit the goals © Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_17

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of Article 2 of the UNFCCC and, in the meantime, a reconsideration of how to treat carbon targets as a goal for the global community.

17.2.1 Kyoto Targets: From Berlin Mandate to Marrakech With the UNFCCC entering into force in 1994, it was envisaged that a deep cut in GHG emissions would be agreed upon. A political will is well expressed in the Berlin Mandate. In March 1997, the European Council set a target of 15% reduction relative to 1990 emissions levels either individually or jointly by 2010 (EU, 1997), a few months before the birth of the Kyoto Protocol. The analyses in the literature consider a wide spectrum, from zero to 50% cuts in emissions, including developing countries (Pan et al., 1999). However, the actual target in the Kyoto Protocol is a 5.2% reduction in aggregate by Annex I parties relevant to their 1990 levels, ranging from a 10% increase to an 8% decrease for different parties in Annex B. After the agreement of the Kyoto target in 1997, many of the Annex I parties were able to excuse themselves from the implementation of the binding targets. First, some parties demanded the change of base year in favor of a larger reference level of emissions. This agreement led to a decrease in the target level from 5.2 to 3.6%. Second, further compromise is made to accommodate the request for inclusion of sinks. As a result, the level of GHG emissions is reduced further. The US refusal to honor its commitment in early 2001 and the Russian unwillingness to ratify the Protocol have now effectively prevented the Protocol from coming into force, despite the ratification by 117 parties.1

17.2.2 Emissions Target as a Goal of Priority? A few countries do not honor the commitment made in Kyoto, and developing countries demand that developed countries take the lead. This position is based on clear reasons. Clearly, GHG mitigation does not seem to be their first priority target in decision-making. For both developed and developing countries, the order of goals might be as follows: (1) first level: political and/or social stability; (2) second level: economic growth or development; and (3) third level: environmental pollution control and natural conservation. Climate change is only a subset of goals likely at the fourth level and must be subject to the requirement of higher-order goals. Even after a lower-level goal is committed, it may be disregarded simply because of its conflict with higher priority goals. This is one of the key reasons why the commitment should be made to human development rather than carbon emissions.

1

As of December 2003.

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17.2.3 Dual Nature of Emissions Carbon emissions have very distinct features from other conventional pollutants. For carbon emissions, there are three implications, each of which relates to dualism. First, emission of carbon is both a commodity and a right. If it is linked to basic human needs, it falls into the category of human rights that should not be traded in the market (Pan, 2003). However, if it is a commodity, it should be tradable. Therefore, part of it is transferable and part of it is not. Second, carbon emissions are not simply good for household consumption, such as electricity and gasoline. More importantly, it is also a commodity for collective consumption, for example, physical infrastructure such as road and wastewater treatment systems. That is, emissions are used for both collective and household consumption. Third, emissions are both a public good and a public bad. As a public good, carbon emissions generate utility for individuals and society at large. As a public bad, they produce negative externalities such as global warming. In summary, it is not surprising that the Kyoto target does not work as agreed upon owing to the quantitative limit of carbon emissions. Carbon should not be made a target in its own right. Rather, it can only be an ancillary target and a secondary- or even tertiary-level target subject to fulfillment of higher-level goals.

17.3 Emissions for Human Development Carbon emissions are associated with industrial processes and can be attributed to individual sectors. Like any other products or services, however, carbon eventually enters into the basket of consumers, individually (household consumption) or collectively (public goods and services). Emissions cannot be the goal of a government but serve the goals of political stability, economic development and environmental protection. Three types of emissions can be identified: (1) emissions for basic needs satisfaction; (2) collective consumption and (3) luxury/wasteful emissions. All these emissions are relevant to human development, although themselves are not necessarily the goals.

17.3.1 Final Consumption of Carbon Emissions For household consumption, two categories of goods and services can be distinguished: basic needs and luxuries. A decent living standard would require the consumption of necessary calories for survival, shelter, basic health care and education, and access to clean water and commercial energy. Luxurious consumption includes, for example, living space larger than necessary, large cars when smaller ones can accommodate travel purposes, excessive heating and cooling.

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Infrastructure is a major category of public goods such as roads, railways, undergrounds, public utilities, airports, water supply and treatment facilities, flood control and drainage systems. All these require energy-intensive materials such as steel, cement and chemicals in addition to heavy machinery for their construction. Other examples include hospitals, schools and public buildings. If we look at carbon demands associated with these final consumptions, we may note that carbon for basic needs (C basic ) is fixed at say, C basic , but that for luxury consumption (C lux ) is unlimited; carbon for infrastructure (C infrast ) can be substantial, but once it is constructed (C infrast ), its maintenance does not require much additional carbon. That is, total emissions in terms of final consumption (C total ) are: Ctotal = Cinfrast + Cbasic + Clux As Cinfrast ≤ C infrast ; Cbasic ≤ C basic ; Clux → ∞, C total ≤ C infrast + C basic if C lux is excluded. Take nutrition as an example. The human requirement for daily intake of calories per capita is approximately 3200 k/d/c (Pan, 2002b). Lower than this may mean insufficient energy intake, while higher may indicate excessive nutrition. Therefore, an indicative figure for basic needs with respect to nutrition intake can be set at 3200 k/d/c. that is, C basic = 3200 k/d/c. For luxury or wasteful food consumption, however, the level can be unlimited. That is, C lux = ∝. A party can make a commitment without any risk to emissions limitation at C total , specifically designated to C infrast and C basic for human development. These emissions can then be traced back to industrial sectors. C total can be treated as a right leading to a decent living standard, but no ethical ground can be found to guarantee C lux as a necessary right to emissions. Therefore, no commitment should be designated to C lux . Cinfrast is for collective consumption, not only by individuals of the current generation but also for future generations. Highways, railways, airports and many buildings can be used for generations. C basic is necessary for human survival and decent standard of living. Achievement of human development potential by the current generation is beneficial to future generations.

17.3.2 Development with Low Emissions The above discussion on the types of emissions can be useful for the allocation and marketing of emissions credits. Emissions demand for basic needs can exceed available quantities of GHG emissions prescribed for the stabilization of atmospheric concentrations. The proposition here is not to compromise the fulfillment of human development goals. As a result, there is a need to seek low-emission paths to meet the same level of development goals. Figure 17.1 conceptualizes such a possibility. Suppose that the human development goal is determined at a decent living standard without luxury or wasteful emissions. As this goal is at a priority level and must be achieved, it does not consider the constraint by carbon emissions. For a developing

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emissions

Currently inuse technologies (CUT) Dev’ed countries no wasteful consumption

CUT for BAT potential Emissions path to fulfillment of human development under current in use technologies

Best available technologies (BAT)

Emissions path to fulfillment of human development underbest available technologies

Subsistence/survival emissions

time Fig. 17.1 An overall framework for commitment

country, conventional carbon-intensive technologies are likely to be used, as there is a general lack of capital and technologies (CUT curve as shown in Fig. 17.1). The emissions level can take a trajectory AA¢ to accommodate the need for infrastructure (Pan, 2002b), industrialization and urbanization (Pan, 2002a). However, the trajectory can be lowered to AB¢ if more energy-efficient technologies (BAT, as shown in Fig. 17.1) are made available and low/zero carbon energy possibilities are technically viable in developed countries. Therefore, low carbon emissions can be made possible without lowering human development goals. Low-carbon possibilities may include (1) structure of the economy: less carbon intensive; (2) structure of energy mix: zero carbon energy; (3) improvement of energy efficiency; (4) use of carbon sinks; and (5) social policies: e.g., family planning, poverty elimination.2 In Fig. 17.1, excessive emissions are discouraged so that emissions from developed nations will decrease. For many LDCs, their current level of emissions is at the subsistence level, much lower than a decent living standard.

2

These policies do not have direct connection to mitigation but they have immediate impacts on energy demand and capability for energy efficiency. For example, lower population growth through family planning policy would lower demand for energy consumption as the ultimate demand for energy is by people. Reduction in poverty can help increase capability for efficiency improvement.

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17.4 Commitments to Low Emissions for Human Development Three types of commitment can be identified here: voluntary, conditional and obligatory. It is conceivable that voluntary commitments could become obligatory commitments if emissions reductions can be made with certainty. Conditional commitments can be granted to developing countries only under the condition that the obligation is restricted to emissions of greenhouse gases within the country that are defined as excessive/wasteful. A salient feature is that this commitment is made to human development rather than to carbon emissions per se.

17.4.1 Voluntary Commitments Two factors may contribute to the autonomous reduction of emissions without any intentional intervention: technological progress and institutional innovation. For all energy users, there is in principle an internal incentive to increase energy efficiency to reduce costs. For countries at lower levels of technological development, spillover effects tend to speed up the diffusion of technologies compared to countries that developed earlier. For instance, during their industrialization process, currently developed nations that experienced energy demand elasticities (percent change in energy use divided by percent change in GDP for a given period) were 1.0 or higher. However, in the case of China, this figure has been only approximately 0.5 or so (i.e., energy consumption has grown at approximately half the rate of the economy) for the past three decades or so (Zhou et al., 2003). This is primarily a natural or autonomous process linked to technological improvements and restructuring of economic activities. Before climate change was recognized as a problem, such a trend had already existed. This trend will continue and may accelerate as the depletion of fossil fuels approaches reality. Institutional factors are also important in reducing emissions. Increased awareness of climate change may lead consumers to voluntarily adjust their behavior towards more energy- and carbon-saving ways of life. For instance, in standby mode, a typical television set consumes 8 kW h per year more than it would if it could be completely switched off. There are billions of television sets in use in the world, and aggregate electricity savings of reducing standby power use could exceed 10 billion kW h per year. Institutional arrangements such as emissions standards and policy initiatives may also be designed to favor low emissions. As this trend would continue autonomously, a party could make a voluntary commitment in accordance with the rate of autonomous energy-efficiency improvement. For this part of the commitment, no external support would be required, and no strict obligation would be implied. Energy-efficiency improvement can be measured in both monetary and physical terms, i.e., energy use per unit of economic or physical output. Therefore, voluntary

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commitments may be made with respect to intensity as measured by unit monetary or physical output. While physical terms are preferred, since monetary measurements are subject to fluctuation in market prices, for some sectors, especially services, this may be impractical. For developed nations, this part of their commitment could also be made obligatory, since they lead developing technologies in energy-efficiency and low-carbon energy resources. It is easier for developed countries to measure changes in energy intensity per unit GDP because their economies are more stable.

17.4.2 Conditional Commitments Owing to technological inertia and lack of mitigative capability in the developing world (Banuri et al., 2001), an external push may help developing country parties make extra emissions reductions without compromising their development goals. Conditional reductions would serve several purposes, i.e., they would (1) make extra emissions reductions to contribute to the stabilization of atmospheric GHG concentrations; (2) reduce the costs of emissions in developed countries; and (3) achieve development goals in developing countries. Thus, this is a ‘three-wins’ solution: emissions reductions for a better environment, lower cost for developed country parties to meet their commitments, and fulfillment of human development targets in developing countries. The term ‘conditional’ has three special meanings here: (1) the extra reductions of emissions are conditional on the transfer of technologies or financial assistance by developed country parties to developing country parties; (2) emissions reductions will not compromise human development goals or encourage luxurious or wasteful emissions in recipient countries; and (3) no credits of emissions reductions will be counted if no progress is made towards fulfillment of human development goals, to avoid the creation of ‘hot air’. These conditions also imply that the costs of emissions reductions in developing countries are lower than those in investing countries; otherwise, there would be no incentives for such transfers of resources from one party to another. It is also essential that the reductions in emissions be made consistent with human development goals. Assessment of emissions reductions would be made with respect to development goals. Failure to make progress in human development would result in no crediting of conditional emissions reductions, even technology transfers or financial assistance to lead to ‘theoretical reductions’. These conditions are similar to those employed in the Montreal Protocol for the replacement of ODS (ozone depletion substances). The phase-out of ODS in developing countries was made conditional upon technology transfers and financial assistance from developed nations. With such assistance, China successfully phased out most of the production and consumption of CFCs and halons.

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17.4.3 Obligatory Commitments For human development and global environmental sustainability, satisfaction of basic needs is a basic human right and should not be compromised, but excessive consumption must be restricted. Therefore, the obligation here has two aspects: (1) satisfaction of basic human needs and (2) restriction of excessive and wasteful emissions. No distinction should be made between developed or developing countries in this regard. For all human beings and communities in both developed and developing countries, emissions for basic needs must be granted, and excessive or wasteful emissions must be discouraged. It would be wrong to say that developed nations should restrict their emissions below the level of basic needs. It would also be incorrect to say that luxurious and wasteful emissions should be encouraged if the overall emissions level were low in a particular developing country. It might be the case that the handful of rich people in poor countries live a more ‘luxurious’ life than many of the rich persons in developed nations. A practical problem arises in operationally defining ‘luxurious’ or ‘wasteful’ emissions. Despite greatly differing circumstances among nations and cultures, it would not be wise to use double or multiple standards to discriminate against any nation or culture. A simple criterion such as world-average consumption level or 120% of world-average consumption level might be used as a starting point. As nutritional and other essential requirements can be assessed and obtained from biological needs, figures such as those for nutrition, shelter and clothes can be employed. It should be noted that this scheme does not entail eliminating luxury or wasteful emissions. There are several reasons for tolerating luxury emissions: (1) it is against human nature to forbid luxury consumption; (2) as earning power varies widely among individuals, a small handful group of consumers or even ordinary consumers may be able or willing to enjoy some degree of luxury; and (3) the pursuit of luxury is an incentive for creativity and innovation and at the same time contributes to fiscal revenues for income redistribution.

17.5 Reporting and Implementation Once the elements of commitments have been agreed upon, we need to make them operational. First, targets must be specified, and amounts of emissions must be calculated as the basis for reporting. Then, emission reductions must be verified before reductions are accepted. In addition, certain incentives need to be adopted for the effective implementation of commitments. These topics are treated in turn below.

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17.5.1 Quantification of Emissions Targets Emissions targets must be linked to human development goals. One practical way is to assess and translate national development goals into energy demand and emissions requirements. In doing this, the following steps may be followed: Step 1: Assess development goals. Many countries make comprehensive mediumand long-term development plans. Setting such goals is not limited to the practice of setting targets under planned economic systems. Medium- and long-term economic projections and forecasting are also made by academic or governmental agencies in countries with market economies. In China, for example, five-year plans have been made at national, sectoral and local levels. All plans should be country-specific and practically attainable. The intent is to assess (1) whether development goals are consistent with human needs, (2) whether there are wasteful or luxurious development projects such as five-star hotels, golf courses and factories producing luxury cars, and (3) how the goals are linked to strengthen human development. Commitment periods can be made consistent with the duration of development planning (5 years is typical). Step 2: Specify socioeconomic and environmental targets. After the assessment of development goals, socioeconomic and environmental targets can be identified. These would include rates of economic growth, demographic features, welfare improvement, environmental protection, and so on. Such specifications may be made at different levels (national, sector, regional and local) for the calculation of low-carbon targets. Step 3: Identify low-carbon development paths taking into account the availability of capital and technology. The above goals are high-priority targets and would be the basis for low-carbon paths. The calculation of quantitative targets will include the following components: (1)

(2)

(3)

Voluntary. A given country or industrial sector will plan or assume energyefficiency improvements for a specified commitment period, given the resources and technology at its disposal. For the whole world, the rate of autonomous energy-efficiency improvement has been over 1% annually, and the figure has been two to three times higher in developing countries due to technological spillover effects. This target can be set at either the national level or the sector/project level. Both developed and developing countries can make such commitments. Conditional. The technologies in use in a developing country are in general less energy-efficient than the advanced technologies used in developed nations. The difference in carbon saving can be made a target conditional on the provision of advanced technologies and financial assistance. Obligatory. Obligations must be made to avoid or restrict all wasteful and luxurious consumption and associated emissions. This would require rejection of some development projects and their emissions.

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17.5.2 Verification of Emissions Reductions Commitments such as those stated above would be subject to international scrutiny and compared to resource endowments such as technology, capital availability and energy supply. This would serve two purposes: (1) to factor out hot air, that is, emissions related to unrealized human development, and (2) to provide information on the scope for lower emissions to achieve the same level of human development and thereby enable the differences to be traded on international markets. The verification process could take the following steps: (1)

(2)

(3)

Ex ante information. The process must be transparent, and information must be made available to the international community. As this is associated with development planning, required information would include the choice of development goals, the setting of socioeconomic and environmental targets, and the specification of voluntary, conditional and obligatory commitments. To reduce transaction costs, no formal evaluation would be required, and the final effects would be evaluated ex post. Ex post verification. Whether emissions reductions can be accepted and credits accrued to the host or investing country, the verification would be dependent on the final outcome. That is, at the end of each commitment period, a comprehensive review would be conducted to validate different types of emission reductions: voluntary, conditional, and/or obligatory reductions. Net reductions. The final acceptance would include only net reductions. All luxury or wasteful emissions were excluded.

17.5.3 Incentives and Disincentives for Implementation For implementation, both carrots and sticks are needed. In most cases, sticks do not work well in international agreements, as a party has a choice to withdraw from commitments. Therefore, incentives play a more important and crucial role in the implementation of commitments. (1)

Emissions trading. In principle, voluntary reductions are not eligible for trading, as these should be considered baseline activities and the result of no regret policies. The conditional part is additional reduction and should be tradable. For the obligatory part, there is a need to look at the direction of change. If the reduction is achieved by restriction of luxury emissions, credits should be awarded. However, if the reduction is relative to any increase in luxury consumption, there would be an actual increase in emissions. The increase in emissions due to luxury consumption should be deducted from reductions in trading. If the voluntary commitment is not honored, the conditional and obligatory reductions will have to deduct the voluntary part before credits enter the market. This would prevent the voluntary part of emission reductions from entering the market for trading.

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(3)

(4)

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Conditionality requirement. Reductions should not compromise development goals that are associated with basic needs. If the development, socioeconomic and environmental targets are lower than expected or planned, emissions reductions should be reassessed in accordance with the goals of human development. This requirement is designed to guarantee that development goals take priority and to avoid overestimating emissions reductions. Progressive tax on emissions. A financial mechanism is essential to discourage excessive emissions. Similar to an income tax, a progressive tax on emissions is proposed here. The tax rate would rise as the level of emissions rises. For emissions lower than the basic needs level, exemptions may be granted, or a negative tax (that is, a subsidy) might be applied. If the emissions were at the basic needs level, a normal or basic rate could be employed. As emissions increase above this level, higher rates would be levied. For such a tax mechanism, the following purposes are kept in mind: (1) reduction of luxury emissions; (2) raising resources for low-carbon development; and (3) provision of a strong market signal to carbon emitters for efficient and effective carbon reductions. Given the existing international regime, it may not be easy to have it managed under an international government, but it is possible to have it harmonized across nations for implementation and redistribution. No exemption of luxurious emissions. The assessment of development goals and the use of progressive taxes on emissions should be fully applicable whether a country is rich or poor. This is particularly true in developing countries where emissions per capita are low but wasteful or luxurious emissions are concealed.

17.6 Evaluation of Environmental Effectiveness When human development goals are in conflict with emissions targets, environmental goals give way to higher-level goals. At least in the short run, emissions targets may not be realizable if such a situation exists. However, each case must be examined before a conclusion is drawn.

17.6.1 Environmental Integrity As under this scheme commitments would not be made directly to carbon emissions reductions, there is reason for concern regarding environmental integrity. However, the goals of meeting basic human needs, such as those set in the Millennium Development Goals, are consistent with the stabilization of GHG concentrations in the atmosphere. First, there exists an upper emissions limit (C total ) associated with basic human development if C lux is excluded. Excessive consumption or emissions are not in the interest of just the current generation but also of future generations.

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Second, as emissions in many developing countries may be much lower than this upper limit, immediate realization of human development potential may cause a rapid and substantial increase in emissions (IPCC, 2000). However, development is a lengthy and gradual process. Some countries may grow faster than others, while a few may actually decline not only in terms of the rate of economic growth but also in terms of the size of the economy (IEA, 2003). The spillover effect would speed up the process, but emissions would also be much lower. Many industrialized countries have already reached the upper level and started to reduce emissions because of technological progress. Third, wasteful and luxury emissions will be discouraged, although not eliminated. This would have two effects: (1) reduction of such emissions and (2) promotion of low-carbon or decoupled development in developing countries for meeting basic needs, using resources obtained from taxes levied on wasteful and luxurious emissions. Fourth, there may be several alternate paths to reaching the goals of human development. As concrete goals are established for human development, emission scenarios may be assessed and compared to select a low-instead of highemissions path. As a result, actual emissions should be lower than committed levels of emissions. For different countries, C infrast may lie between 0 and C infrast .3 For many developed countries, the development of infrastructure has already reached its upper limit. In such cases, there is no need to produce carbon-intensive materials such as steel and cement for bridges and roads except for repair and replacement. For this reason, in many EU countries, the consumption of construction materials has been on the decline. No further emissions should be allocated to the construction of new infrastructure. On the other hand, the infrastructure in many developing countries either does not exist or is under construction. Emissions should be allowed for these countries to expand the infrastructure essential for a decent life for their citizens. Similarly, differentiation can also be made regarding emissions for basic needs between developed and developing nations. Most importantly, emissions for basic needs and luxuries should be treated differently. Policies and measures should be directed to discourage wasteful and/or luxurious emissions. However, wasteful and luxury emissions should be treated the same regardless of whether they originate in a rich or a poor country. Low total emissions levels from a poor country are not a reason to conceal or excuse wasteful and luxurious emissions from that same country.

3

For instance, a road connection between two cities. An extreme case is no connection. In this case, actual carbon emissions are zero, as no products entailing carbon emissions are used for infrastructure. Once a highway is constructed, there would be no need to construct a second highway. In this case, all carbon-intensive investment has been made. There is no need for more carbon emissions associated with new roads.

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17.6.2 Uncertainties There are many uncertainties around emissions in developing countries arising from the divergence between desired and actual achievements of human development. Voluntary targets may not be reached because development goals are set too high or due to political and social instability. Conditional targets may result in greater emissions reductions, but socioeconomic and environmental targets may at the same time be compromised or lowered. Higher levels of commitments would not provide any scope for the creation of ‘hot air’, as no sale of emissions rights would be permitted. As a result, this source of uncertainty regarding excessive emissions would be avoided.

17.6.3 Comparison with the Kyoto Protocol to the United Nations Convention on Climate Change There are a number of similarities and differences between Kyoto-type quantitative carbon-based targets and the human development-based commitment scheme described above. The principle is the same, i.e., common but differentiated responsibilities, and both represent commitments to reducing emissions either directly or indirectly. However, some of the differences between the two approaches are fundamental. The basis of commitments under Kyoto is direct restriction of GHG emissions in terms of quotas allocated to Annex I parties. Under the human development approach, however, the basis of commitments is human development goals that take priority over environmental and GHG emissions targets. Human development goals are then translated into emissions implications, lower-emissions approaches are assessed, and commitments are made to meeting human development goals through these alternate paths. With respect to methodology, the Kyoto approach is basically top-down. The global community agrees on a global target and allocates quotas to particular parties. This way of thinking is still prevalent: Article 2 target of the Convention would suggest selection of a concentration level which is then translated into an emissions limit for allocation and commitment. Since national circumstances differ, there are many bottom-up elements incorporated in the protocol’s implementation to accommodate the concerns of individual parties. For instance, the base year was permitted to be adjusted; targets for GHG reduction were not uniform across the parties; and flexibility mechanisms were introduced. The human development approach, on the other hand, is driven by countryspecific circumstances. As levels of human development vary widely, commitments are assessed and made in accordance with specific conditions, including growth of the economy, capital and technological availability, level of human development, etc. Thus, reductions in emissions under all types of commitment do not follow any

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top-down requirement but rather depend on the potential at the project, sectoral, and economy-wide levels. The human development approach is also unique in separating emissions associated with basic needs and luxury/wasteful activities. Kyoto commitments do not explicitly discourage luxury/wasteful emissions, nor do they acknowledge essential emissions for basic needs satisfaction, although developing countries are not required to take legally binding reduction targets. In contrast, the human development approach attempts to protect the rights to emissions for basic human needs. No restriction should be placed on development goals that are directed to enhance the welfare of the poor at large. Development goals are not compromised for reasons of emissions control. Luxurious/wasteful emissions do not stimulate welfare improvement and should therefore be discouraged if not totally eliminated. Under Kyoto, incentives come from the sale and/or purchase of emissions credits. Regardless of whether one is rich or poor, the same price has to be paid for emissions. Within a human development framework, a progressive tax system is implemented. The more one consumes, the more one pays. This not only discourages excessive emissions but also supplies a fair and effective fundraising mechanism for low-carbon technologies. The Kyoto commitment is legally binding, while the human development-based commitment does allow flexibility for both voluntary and conditional reductions. In addition, a third type of commitment is also proposed under the human development approach in the form of moral commitment to restricting excessive emissions. In terms of environmental integrity, a Kyoto-type commitment can minimize uncertainty if commitments are honored. If parties withdraw from the agreement, environmental goals cannot be achieved. Human development goals are not directly linked to environmental targets; therefore, environmental integrity can be problematic. As low-carbon development paths can generate considerable reductions, parties would maximize their efforts to reach their goals to acquire a better image. Their actual effects can be even better, as no party would have an incentive to withdraw from their commitments. To date, only developed country parties are required to participate in commitments to GHG reductions, and developing country parties are exempted from any quantitative limitations. The human development approach is primarily concerned with developing country participation, but developed nations can make their voluntary and conditional commitments legally binding. Therefore, there could be much wider participation under a low-carbon development approach than under a Kyoto-type commitment. As a base year has to be selected for proportional or relative reductions under the Kyoto scheme, hot air can be created if there is a recession or economic downturn, as in the case of Russia and Eastern Europe. Under the low-carbon development approach, goals are linked to human development. If no progress is made in human development, emissions credits may not be counted either in theory or in practice. All carbon reductions are assessed against planned goals of human development, preventing the creation of hot air. Bottom-up approaches are based on self-assessment and self-interest, so there is an intrinsic drive to implement development goals. In sum, the human development approach creates win–win solutions rather than the zero-sum games that become the focus of attention under a Kyoto-type target.

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Finally, we look at flexibility/cost issues. Under Kyoto, three flexibility mechanisms are initiated for cost-effective implementation of GHG reductions. This can significantly reduce the costs of carbon reductions if markets function well. However, in many cases, the carbon market is complicated by political processes in a manner similar to the oil market. As a result, the scope for cost-effectiveness reductions can be limited. Under the human development approach, by contrast, incentives are intrinsic to voluntary and conditional commitments. Autonomous energy-efficiency improvement is a natural process and constitutes a ‘no regrets’ option. Without carbon policies, industries and enterprises together with consumers do their best to increase energy efficiency. Moral commitment is somewhat different, as many people tend to have intentionally or unintentionally luxurious or wasteful consumption behaviors. In this case, regulatory policies are necessary.

17.7 Discussion and Conclusions Through comparison with Kyoto-type commitments, the major attractiveness of the human development approach is ‘no regrets participation’ by both parties and nonparties to the Kyoto Protocol, as the basis of commitment is made to human development rather than to GHG emissions. In addition to this fundamental advantage, there are also a number of merits in practice, including full consideration of national circumstances, basic needs satisfaction, international cooperation, and incentive mechanisms for implementation. On the other hand, there are a number of practical problems as well. The first is the difficulty of coming to a clear and widely acceptable definition and specification of basic needs satisfaction. Emissions for public goods and services can be relatively easy to clarify, including major types of infrastructures such as roads, railways, airports, flood control and drainage systems, water supply and wastewater treatment facilities, and urban metro networks. Once completed, there is no need for excessive construction of such a physical infrastructure. Luxurious and wasteful emissions would not be eliminated, but setting the rate of progressive tax can be a political process. The use of the funds raised by such a tax system can be even more a difficult issue. In any case, if the principle is acceptable, actual figures can be worked out for operational purposes. These are productive areas for further investigation.

References Banuri, T., Weyant, J., Akum, G., Najam, A., Rosa, L., Rayner, S., Sachs, W., Sharma, R., & Yohe, G. (2001). Setting the stage: Climate change and sustainable development. In B. Metz, O. Davidson, R. Swart, & J. Pan (Eds.), Climate change 2001: Mitigation (pp. 73–114). Cambridge University Press.

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Baumert, K. A. (Ed.). (2002). Building on the Kyoto protocol: Options for protecting the climate. World Resources Institute. EU (European Union). (1997). Bulletin EU 10-1997: Environment. Available at: http://europa.eu. int/abc/doc/off/bull/en/9710/p102182.htm. Accessed August 27, 2004. Hoehne, N., Galleguillos, C., Blok, K., Harnisch, J., & Phylipsen, D. (2003). Evolution of Commitments under the UNFCCC: Involving Newly Industrialised Economies and Developing Countries. Research Report 20141255, ECOFYS GmbH, on behalf of the German Federal Environmental Agency, Berlin. IEA (International Energy Agency). (2003). CO2 Emissions from Fuel Combustion, 1971–2001. Organization for Economic Cooperation and Development. IPCC (Intergovernmental Panel on Climate Change). (2000). Special Report on emissions scenarios. Cambridge University Press. Pan, J. (2002a). Rural energy patterns in China: A preliminary assessment of available data sources. Paper presented at Stanford-TERI (Tata Energy Research Institute) Workshop on Rural Energy Transitions and Sustainable Development, New Delhi, November 5–8, 2002. Available at: http:// pesd.stanford.edu/docs/2002mtg_TERI/pres/Pan_5nov.ppt. Accessed August 27, 2004. Pan, J. (2002b). An analytical framework for human development, with empirical data. Social Sciences in China, 6, 9–17. (in Chinese). Pan, J. (2003). Emissions rights and their transferability: equity concerns over climate change mitigation. International Environmental Agreements: Politics, Law and Economics, 3(1), 1–16. Pan, J., Swart, R., & von Leeuman, N. (1999). Economic impact of climate change mitigation. In Proceedings of IPCC expert meeting on economic impacts of climate change mitigation, April 4–6, 1999, published for IPCC. RIVM. Pew (Pew Center on Global Climate Change). (2003). Beyond Kyoto: Advancing the international effort against climate change. Pew Working Paper. Available at: http://www.pewclimate.org/glo bal-warming-in-depth/all_reports/beyond_kyoto/index.cfm. Accessed August 27, 2004. Zhou, D., Dai, Y., Yi, C., Guo, Y., & Zhu, Y. (2003). China’s sustainable energy scenarios in 2020. China Environmental Science Press.

Chapter 18

Road to Paris: What Has Changed and What Remains Unchanged in the System of International Responsibility Jiahua Pan, Qingchen Chao, Mou Wang, Yongxiang Zhang, Zhe Liu, Xiaodan Wu, Xiaochen Guo, and Fan Bai

18.1 A Changing World Pattern Developing countries, represented by emerging economies, have developed rapidly since the 1990s; in particular, they have swiftly gained momentum and have rapidly increased their shares in the fields of economy, trade, emissions and other fields since 2000, resulting in adjustments to world patterns in relevant fields.

18.1.1 Developing Countries Have Enjoyed More Shares in the Global Economy Developed countries have seen decreasing shares in the global economy. With the rapid economic development of developing countries, especially emerging economies, the international economic pattern has changed significantly since 2000. Developed countries—mainly OECD countries1 —have witnessed their share of the year-by-year decrease in the world’s economy—their share in global GDP exceeded 81% in approximately 2000 but was lower than 63% in 2014. Meanwhile, the medium- and low-end manufacturing industries have massively shifted from developed countries to developing countries, further propelling adjustments to the world’s 1

In this paper, it is generally assumed that the OECD countries represent the developed countries (except for the emission data analysis) in the case of analyzing the social and economic statistical data. Although the OECD countries also include a small number of traditional developing countries, these countries only have a small share in relevant fields involved in this paper’s analysis, thus exerting no impact on the judgment of the trend and the analysis.

© Social Sciences Academic Press 2022 J. Pan, Political Economy of China’s Climate Policy, Research Series on the Chinese Dream and China’s Development Path, https://doi.org/10.1007/978-981-16-8789-1_18

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Fig. 18.1 Changes in the world’s economic and trade pattern. Data source The World Bank’s database

economic and trade structure. The proportion of the export trade of developed countries in global export trade declined year by year from approximately 75% in 1998 to 59% in 2014 (see Fig. 18.1). In the same period, developing countries enjoyed a rapid growth of their foreign trade. With the impact of the economic crisis, which broke out in 2008, some developed countries have been experiencing slow economic recovery and a decline in global influence, while emerging economies have been rising—the large developing countries, including China and India, have maintained a growth rate above 5%, while the major developed countries have shown a GDP growth rate below 5%, and some developed countries are still suffering negative economic growth. Changes in the world’s economic and trade patterns may have an impact on the fundamental foundation for various countries’ participation in global governance, including international climate governance. Developed countries may become more conservative in their willingness to provide funds in their manner of cooperation, emission reduction actions and international trade and will have more appeal for the emission reduction actions of developing countries. Where the willingness of developing countries to take action does not increase significantly, the process of international climate governance may come to a deadlock.

18.1.2 The Proportion of Emissions from Developed Countries Was Smaller Than that of Emissions from Developing Countries Regarding the pattern of global emissions, with industrial transfer triggered by the global work division, the production capacity of the medium- and low-end manufacturing industries intensively shifted to developing countries, and greenhouse gas

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emissions from developing countries increased rapidly, accompanied by adjustments in the pattern of global carbon emissions. In the early 1990s, when the Convention was concluded, the carbon emissions from the Annex I countries—mainly the OECD countries and the economic transitional countries—were two times those from the non-Annex I countries and accounted for 66% of global carbon dioxide emissions (see Fig. 18.2), while by 2012, most of the Annex I countries were participating in carrying out actions towards total reduction of greenhouse gas emissions in the first commitment period of the Kyoto Protocol; thus, the overall carbon dioxide emissions from the Annex I countries declined compared with 1990 and accounted for 41.4% of the total global emissions. During the same period, the rate of carbon dioxide emissions from the non-Annex I countries increased, and the total amount of their emissions exceeded that from the Annex I countries. For the future trend in emissions, as almost all of the Annex I countries have made the commitment to reduce the total amount of their greenhouse gas emissions, the increase in the global emissions of greenhouse gases, including carbon dioxide, will basically come from the non-Annex I countries; furthermore, greenhouse gas emissions from the developing countries will continue to increase rapidly as a result of their continued rapid economic growth. As the pattern of world emissions is changing, some developed contracting parties are less conscious of their responsibility and have attempted to change the cooperation foundation for international climate governance—turning global attention from the responsibilities and obligations for historical emissions to those for future emissions; they emphasize the responsibilities of developing countries—especially emerging economies with rapid economic development—in the process of international climate governance and promote the transformation of the international climate governance mode. Annex I countries

Non-Annex I countries

Proportion of Annex I countries

(Year)

Fig. 18.2 Changes in the pattern of world emissions. Data source WRI CAIT database

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18.1.3 Changes in the System of International Governance With the development and evolution of the pattern of international economics and trade, the system of international governance of the environmental, financial and other fields is changing. Changes are taking place in the system of international environmental governance. Developing countries are participating increasingly in international trade—on the one hand, their economic strength is growing, and their social environmental awareness has improved gradually; on the other hand, they have also actively or passively accepted more international standards and become active participants in international governance. The significant change in international environmental governance is that, previously, the developed countries led and took action and provided funding support to the developing countries, and gradually, the developed and developing countries have jointly assumed responsibilities and have taken action jointly. Although developing countries are different in recognizing common responsibilities and joint actions, it is very clear that developed countries want to take advantage of changes in the patterns of international economics, trade and emissions to spur developing countries to jointly assume responsibilities. The system of international financial governance has been reformed. With adjustments in the pattern of the world’s economics, trade and emissions, the mode of international allocation of production factors is changing, giving rise to changes in the international governance system. As production activities in developing countries have been on the rise, the demand for production factors—including capital and facilities—investment activities and capital flow has increased. Figure 18.3 shows the trend of investment growth in developing countries since 2003 and the trend of an overall decrease in the proportion of international investments attracted to developed countries (OECD countries) since the 1970s—a decrease from 84.2% in 1970 Net direct investment inflow to OECD members (USD) Net direct investment inflow to low and middle income countries (USD) Proportion of net FDI inflow to OECD countries (right axis)

Fig. 18.3 Flows of international direct investment funds. Data source The World Bank’s database

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to 49.8% in 2014. With the movement of financial activities towards developing countries, developing countries have called for a greater say in the system of international financial governance, and objectively, there is a need to reform that system. According to the 14th General Review of Quotas released by the IMF in December 2010, IMF special drawing rights (SDRs) will double from 238.5 billion in 2008 to 477 billion; emerging economies will be granted more voting rights thanks to their increasing contributions. Once the reform is carried out, China’s share will climb from the current 4–6.39%, making China the third largest shareholder in the IMF, after the USA and Japan, with China’s voting rights increasing from 3.65 to 6.07%. Meanwhile, the original two seats for European countries will be assigned to developing countries. Brazil, India and Russia will be listed among the top ten shareholders. Developing countries have not only pushed ahead with the change in the existing system of international financial governance but have also actively promoted the establishment of a new mechanism to better boost economic and social development—for example, the Asian Infrastructure Investment Bank and the BRICS Bank have impelled a change in the system of international financial governance at a certain level.

18.1.4 The Diversity of International Organizations Paying Attention to Climate Change To push forward negotiations concerning the Convention, the contracting parties have established a number of mechanisms for dialogue and cooperation outside the convention system. These cooperation mechanisms serve as a supplement to the convention mechanism and have played active roles in enhancing mutual understanding among the contracting parties and stimulating various parties to reach a consensus. These mechanisms can be divided into three main categories: political, technical and economic incentive/constraint mechanisms outside the Convention. The political mechanisms outside the Convention mainly include the UN Climate Summit, the Millennium Development Goals Forum, the Major Economies Forum on Energy and Climate, the G20 Summit, the G8 Summit and the APEC Meeting. The common characteristic of these mechanisms is that government leaders or highranking officials hold consultations and reach political consensus on some major issues but do not discuss technical details—for example, the 2008 G8 Summit issued a statement stressing that the Group of Eight would make concerted efforts to achieve the long-term goal of decreasing global greenhouse gas emissions by at least 50% by 2050. Although a long-term target of global emission reduction was put forward during this Summit, no specific arrangements for reaching this target were discussed. These mechanisms (except the UN Climate Summit) share another common characteristic: Most of them focus on the hot issues of the current year, and the issue of climate change is not necessarily a focus in each meeting—for example, the 2009 G20 Summit centered on the response to the financial crisis and its subsequent economic

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revival; thus, this Summit did not touch upon any issue concerning climate change, and the subsequent Pittsburgh and Toronto meetings were less concerned with climate change. Therefore, political mechanisms outside the Convention, such as the G20 Summit and the UN Climate Summit, generally play an important role in global, long-term and political issues. As the participation level is very high, especially in the case of the leaders’ summit, some major issues that have baffled the negotiators of the Technical Group under the Convention for a long time can be addressed, thus moving the negotiations forward under the Convention. The technical mechanisms outside the Convention mainly include the International Civil Aviation Organization, the International Maritime Organization, the United Nations Secretary-General’s High-level Advisory Group on Climate Change Financing and other mechanisms of cooperation. These mechanisms focus on special research and discussions about some specific issues concerning the negotiations under the Convention, after which the results of the discussions and some suggestions were delivered to the Secretariat of the Convention, promoting the negotiations involving relevant issues under the Convention. These mechanisms are subject to a number of limitations. First, climate change is not the focus of these bodies or mechanisms, and their perspectives and objectives may be different from those of the Convention. Second, different mechanisms are governed by their respective rules of procedure and guiding principles. The rules and principles of different bodies may differ from those of the Convention; thus, there are mismatches in understanding. The economic incentive/constraint mechanisms outside the Convention include the trade mechanism relating to climate change, the mechanism for setting the production standards relating to production activities, domestic and foreign market expansion and other consultation mechanisms outside the Convention. Economic incentive measures are auxiliary issues in negotiations under the Convention and are not the core issues in negotiations under the Convention most of the time, but these issues are closely related to the operations of the real economy and the developmental interests of relevant industries and fields. Such mechanisms as the trade mechanism and the mechanism for setting standards have developed with a certain level of accumulation for a long time as they existed before the international governance mechanism for climate change issue came into being; however, since the mechanism of climate change governance emerged, the boundaries among various mechanisms have become vague and their principles differ from each other, thus the discussions and consultations concerning the climate change issue under these mechanisms cover not only technical issues but also political issues and the issues of principle. The mechanism for international cooperation is designed to promote cooperation among various countries to govern the climate change issue in a cooperative way. A fair and efficient international cooperation mechanism is the foundation for and the goal of international cooperative governance. As indicated by the comprehensive influence of various mechanisms, including their roles in the process of international climate governance, their functions, the binding forces and degrees of participation, the Convention undoubtedly plays the leading role in the process of international cooperative climate governance, while the cooperation mechanisms outside

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the Convention should serve as a supplement to the mechanism under the Convention and assist in pushing forward the negotiations under the Convention. Such a governance mechanism can give expression to the equity principle of international cooperation (the highest degree of participation). Meanwhile, the specialization and legal force of the Convention can also better ensure the efficiency of international cooperation.

18.2 The System of Responsibility Has Not However, Changed Fundamentally Some adjustments have occurred in the world’s economic, trade and emission structure, and the share of developing countries in the global arena has increased to some extent; however, the situation where developed countries have generated most of the historical cumulative carbon dioxide emissions, the amount of per capita emissions in developed countries is much higher than that in developing countries, and developed countries have controlled international financial, technical and standard systems has not yet fundamentally changed. Therefore, no fundamental changes have taken place in the system of responsibility under which developed and developing countries engage in international cooperation to address climate change.

18.2.1 Developed Countries Still Have the Main Share of Historical Emissions According to the consensus reached by the contracting parties when concluding the Convention, climate change is not only a realistic problem but also a historical issue, and it is the current and future global climatic risk caused by historical cumulative greenhouse gas emissions. Therefore, facing historical emissions and assuming historical responsibility for emissions is the theoretical and moral foundation for international climate cooperation. As shown in Fig. 18.2, the positions of developed and developing countries in the pattern of international emissions have changed significantly since the 1990s—developing countries have become the main contributors to current, even future, global greenhouse gas emissions. However, from the perspective of the total historical cumulative emissions from developed and developing countries, the responsibilities and obligations for addressing climate change that developed countries should assume are still enormous. According to the statistical data from the U.S. Natural Resources Research Institute (see Fig. 18.4), the historical cumulative carbon dioxide emissions from the developed countries (Annex I countries) accounted for 82% of the global emissions in 1990; that proportion declined dramatically but was still as high as 71% in 2011. This suggests that although the carbon dioxide emissions from developing countries have increased

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(Year)

Fig. 18.4 The pattern of the historical cumulative carbon dioxide emissions from the developed and developing countries. Data source WRI CAIT database

rapidly in recent years and the total annual amount of emissions from developing countries has exceeded that from developed countries, there are no fundamental changes in the theoretical and moral foundation for developed countries to assume the main responsibilities and obligations in the process of international cooperation for addressing climate change.

18.2.2 Huge Differences Still Exist in the Amount of Per Capita Emissions From the perspective of equity, the equitable per capita right of emissions is an important connotation of the principle of equity. As the right of emissions is part of human rights, everyone enjoys equal rights to utilize atmospheric emission capacity resources as global public resources. In terms of economic development, the stage of social development and the degree of affluence are positively related to per capita carbon dioxide emissions. According to the data from the U.S. Natural Resources Research Institute, the amount of per capita carbon dioxide emissions has been kept at approximately 10t in the developed countries—the OECD countries—since the 1970s; the developed countries have massively shifted the low and medium-end manufacturing industries to the developing countries and have thus reduced their carbon emissions from their production sector since the 1990s, but the level of carbon emissions in the consumption field has not decreased markedly so that the amount of per capita emissions has remained at approximately 10t. This may be the level of carbon emissions that is necessary for guaranteeing a high quality of life at the current technical level. During the same period, the amount of per capita emissions in developing countries was only approximately 2 t—it has grown slightly since 2003 and was approximately 3.2 t in 2012 (see Fig. 18.5), greatly differing from that in developed countries.

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(ton)

Developed countries (OECD countries)

297 Developing countries (non-OECD countries)

Fig. 18.5 Per capital emission levels of the developed countries (OECD countries) and the developing countries (non-OECD countries). Data source WRI CAIT database

The per capita historical cumulative emissions are an indicator that can better reflect a country’s historical responsibility for emissions. This indicator can reveal the degree of emission equity and emission equity in the historical process of development. The relatively mature economies developed early have a high carbon emission stock and a relatively high per capita historical cumulative level of emissions, while most of the developing countries developed later, their carbon emission stock is low and their per capita historical level of cumulative emissions is much lower than that in the developed countries. This indicates that developing countries will experience a process of carbon emission stock accumulation in their future development. According to the data from the CAIT database of the World Resources Institute, generally, the per capita historical levels of cumulative emissions in the developed countries (territories) were very high—the per capita levels of carbon dioxide emissions in the USA, the UK and Germany were in excess of 1,000 t—1,159 t, 1,107 t and 1,208 t, respectively, and the levels in Canada and the 27 EU countries were 808 t and 647 t, respectively, while the levels in the developing countries generally did not exceed 100 t—the level in China was 104 t, an intermediate level among the developing countries, and the level in India was only 29 t (see Fig. 18.6). Climate change is caused by historical greenhouse gas emissions. The per capita levels of historical cumulative emissions in various countries reveal the historical responsibilities of various countries in international cooperation for addressing climate change and their needs for future emission space. Overall, the developed countries developed early, with high carbon emission stock and full-fledged infrastructure, and their future carbon emissions will be mainly used to maintain the existing high standard of living, making it easy to control them, while the developing countries developed later, with low carbon emission stock, and they are still at the crucial stage of building their infrastructures, and their future emissions will be mainly designed to meet the basic living needs and gradually improve the standard of living, making it relatively difficult to control the

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(ton)

The USA

The UK

Germany

Canada

The EU

China

India

Country (territory)

Fig. 18.6 The levels of per capita historical cumulative emissions in major emission countries (territories) (as of 2011). Data source WRI CAIT database

speed and total quantity of emissions. However, the needs of developing countries for incremental emissions are undoubtedly rigid and rational. Therefore, developed countries should assume their historical emission responsibilities in the process of international climate governance and utilize the advantage of future control over emissions to continue leading the process of global climate governance and help developing countries achieve low emission development.

18.2.3 The International Economic Pattern Led by Developed Countries Remains Unchanged Emerging economies have become new engines for world economic growth, but they are not the major economic gainers in the world. Although developing countries have experienced a rapid growth of the economic aggregate, their main economic forms are still at the low end of the value chain in the international work division—for example, China’s manufacturing industry has, to a great extent, fueled the world’s economic growth, but it mainly involves processing and assembling with a relatively low added value and the production of simple parts, and it does not secure the leading position in the high added-value production segments, including technology research and development, the production of advanced parts and service production. As a result, some key products and technologies still need to be imported, and a huge margin of profit has been surrendered. The product added value rate in China’s manufacturing industry was only 26%, lower than that of the USA, Japan and Germany, and even that of many developing countries. Meanwhile, because of this, the enterprises in the developing countries are less competitive in the international arena and less capable of making profits; moreover, it is difficult for them to lead the industrial innovations and change—for example, in 2011, the revenue of the top 100 Chinese electronic

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enterprises totaled 272.5 billion USD, while that of IMB and Apple Inc. was 106.9 billion USD and 108 billion USD, respectively; in the same year, the profits of the top 100 Chinese electronic enterprises totaled 15.1 billion USD, while those of IMB and Apple Inc. was 15.9 billion USD and 25.92 billion USD.2 Developed countries still lead the world economy despite their economic slowdown. The economy of developed countries is recovering slowly, but their economic aggregate is still playing a dominant role in the global economy. As shown in Fig. 18.1, the OECD countries saw slow economic growth and a significant decrease in the proportion of their GDP in the global GDP after 2000, but that proportion still hit approximately 63%, and they still enjoyed a leading role in the world economy until 2014. Since 2010, the total GDP of the G8 still accounts for approximately 50% of the world’s economic aggregate, while the economic aggregate of the four BRIC countries representing the developing countries—China, India, Brazil and South Africa—has made up less than 1/5 of the world’s economic aggregate. As shown, the world economy is still led by developed countries, while developing countries remain in a disadvantageous position, although they have made great contributions. Global industrial and trade structures have changed, but the ownership of pricing power remains unchanged. With expanding globalization, the labor-intensive, capital-intensive, energy-intensive and pollution-intensive sectors in the manufacturing industry have gradually moved out of developed countries. This is determined by the comparative advantages of the factor prices and is related to the levels of environmental regulation of various countries. These manufacturing sectors, transferred from developed countries, often involve relatively simple processes and are mostly located at the initial end of the industrial chain, while their finished products generally flow to developed countries for further processing. Developed countries still enjoy dominance in intellectual property R&D and utilization, the high-end manufacturing industry and the service industry, and high-end manufacturing has not yet flowed from developed countries to developing countries. Meanwhile, developed countries always have the final say of pricing power over bulk resources and energy products. China has gradually increased the importation of crude oil since 2000, but the import price of crude oil has risen at the same time. China has little impact on the international crude oil market price despite the increasing degree of China’s dependence on crude oil imports. As of late November 2014, China’s total exportation of steel in 2014 was 83.74 million tons, up 46.8%; the average export price was 767 USD/t, down 10.3%; steel importation was 13.29 million tons, up 2.7%; the average annual import price was 1,260 USD/t, up 3%,3 compared with the previous year, and the difference between the average annual import and export prices of steel was 493 USD/t. The low bargaining power of developing countries is attributable to the following two aspects: On the one hand, there are a large number

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The Research Group for the Impact of China’s Development on the World Economy: The Impact of China’s Development on the World Economy, Management World, 2014 (10):1–16. 3 www.zgw.com, A Review of China’s Steel Imports and Exports in 2014 and the Outlook for 2015. http://news.steelcn.cn/a/110/20141227/761699751AB9E0.html.

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of import and export enterprises, making their say dispersive; on the other hand, developing countries have no influence or control power on the international market. The structure of the international financial industry has changed, but the ownership of international investment and financing decision-making power has not yet changed fundamentally. Since the global financial crisis in 2008, the pattern of global banking dominated by the banking industry in developed countries, including the USA, Europe and Japan, has changed. The proportion of pretax profits in the banking industry in developed countries declined from 69% in 2007 to 42% in 2013. The banking industry in the Asian-Pacific region, represented by China, showed continued sound development, with the proportion of pretax profits increasing from 15% in 1995 to 44% in 2014.4 Moreover, the emerging banks in developing countries—such as the BRIC Development Bank and the Asian Infrastructure Investment Bank—have exerted a certain impact on the structure of the international banking industry. Developing countries have enjoyed an increasingly important status on platforms for global economic governance, including the International Monetary Fund, the World Bank, the World Trade Organization and the G20, but their disadvantaged status has not yet changed fundamentally—for example, according to the decisionmaking rules of the International Monetary Fund and the World Bank, important resolutions cannot be adopted unless they are approved by more than 85% of the voting rights, while the voting rights of the USA account for 17.39 and 15.85% of those in the International Monetary Fund and the World Bank, respectively; thus, the USA has veto power, and its leading status remains unchanged.5 The influence of developing countries in the structure of international financial governance does not match their economic strength, and their national soft power lags behind that of major developed economies.

18.2.4 No Change Has Occurred in the Situation Where Developed Countries Control Technologies and Set Standards The technical level is an important reference and the basis for determining the stage and quality of development. The extent to which a country controls the key technologies reflects not only the level of its development but also the level of its radiation and influence on global affairs. With the first mover advantage, developed countries have almost firmly controlled the international technology market. From 1985 to 2006, the registrations of new patented technologies made by developed countries—OECD countries—accounted for more than 80% of the total registrations in the world; the registrations of patented technologies made by developing countries have soared since 2007 and were almost equivalent to those made by developed 4

Shao (2014). The Research Group for the Impact of China’s Development on the World Economy: The Impact of China’s Development on the World Economy, Management World, 2014 (10):1–16.

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countries in 2013 (see Fig. 18.7). However, as indicated by the applications and incomes of the key technologies, developed countries still keep a firm hand on the pattern of the international technology market. Figure 18.8 shows the proportions of the incomes obtained by the developed countries—the OECD countries—and lowand middle-income countries—mainly the developing countries—from the international technology market. According to Fig. 18.8, even in 2013, when developing countries obtained relatively high technology incomes, developing countries occupied only 2.7% of the international technology market, while developed countries controlled more than 90% of the international technology market. Advanced high-end technologies possessed by developed countries but not available on the international technology market are quite unattainable for developing countries. Developing countries have expanded their share in the world economy through vigorous development of the middle and low-end manufacturing sectors, but it is still difficult to shake developed countries’ status of controllers of technological development and of the international technology market. The standards of production technology are important measures for controlling the manner of production and even for influencing international trade. Production standards are of greater significance in the production system with increasingly internationalized production collaboration and industrial division. Setting and controlling the production standards can reflect a say in the relevant field of production and in the control over the investment activities, including production capacity and technology upgrading; furthermore, if there is the capability for setting and controlling the production standards, specific production standards can be adopted to design the standards for market access to influence the international trade activities involving relevant products. As the setting of the standards of production technology is certainly Proportion of patent applications filed by the developed countries (the OECD countries) Proportion of patent applications filed by the developing countries

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Fig. 18.7 Proportions of patent registrations made by the developed countries (the OECD countries) and the developing countries in the world. Data source The World Bank’s database

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Proportion of technology income obtained by developing countries

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Fig. 18.8 Proportions of technology income obtained by the developed countries (the OECD countries) and the developing countries. Data source The World Bank’s database

based on the technical level, developed countries undoubtedly enjoy natural advantages in setting those standards thanks to their high capabilities for technological development and control. The International Organization for Standardization (ISO) is currently the main internationally recognized platform for setting the standards of production technology with its full members, including 119 countries (territories), among which developing countries make up a considerable proportion. However, developing countries are in an absolute disadvantageous position in standard setting due to their limited capability and funds. Only three developing countries—China, India and South Korea6 —are included in the top 20 countries that actively participate in standard setting that takes place in nearly 300 specialized technical committees of the ISO. As shown, although developing countries have a certain proportion of seats in the ISO, developed countries remain the dominator and controller in standard settings.

18.2.5 Poverty Reduction and Development Remain the Top Priorities for Developing Countries The Convention reaffirms that poverty reduction and development are the priorities of developing countries. The first priority for the populations and countries in poverty lies in guaranteeing ample food and clothing, the basic subsistence rights and interests of the people. According to the empirical data on historical development, the levels of emissions from the poverty-stricken populations and countries were not high, and 6

Only Three Developing Countries Are among the Top 20 Countries Which Participate in the ISO’s Standard Setting. http://www.iso.org/iso/home/about/iso_membershtm?membertype=mem bertype_MB.

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Low-income countries

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Fig. 18.9 Proportions of the poverty-stricken populations in the world and the countries at different income levels. Data source The World Bank’s database

the conditions for high levels of emissions were unavailable. Figure 18.9 show the proportion of the poverty-stricken population in the low- and middle-income countries. According to Fig. 18.9, the low- and middle-income countries, especially the middle-income countries, have seen a dramatic decrease in the proportion of the poverty-stricken population since the 1980s, but thus far, that population still makes up a considerable proportion there. As indicated by the results of the 6th population census, China’s total population exceeded 1,339 million7 ; based on the poverty standard in 2011,8 there was a poverty-stricken population of 128 million.9 According to the data from the Statistical Communiqué of the People’s Republic of China on the 2014 National Economic and Social Development, the rural poverty-stricken population was 70.17 million in 2014.10 As measured by the poverty standard released by the United Nations—the daily living expense is lower than 1.25 USD, currently, India has a poor population of 355 million, accounting for 29.8% of the total national population11 ; 300 million people cannot obtain access to electric power,12 and basic public facilities, including restrooms, are also in quite a short number. Therefore, reducing the poor population and developing the domestic economy remains the priority for developing countries, including emerging developing countries, while developed countries are able and duty-bound to engage in more active emission

7

http://money.163.com/11/0428/10/72NHUULC00253B0H.html. The per capita pure income of the rural household is 2,300 yuan/year. 9 http://www.chinanews.com/gn/2012/03-12/3737442.shtml. 10 National Bureau of Statistics, The Rural Poverty-stricken Population Was 70.17 Million in 2014, Down 12.32 Million. 11 India Overview. http://www.fmprc.gov.cn/ce/cein/chn/gyyd/ydgk/. 12 300 Million People Cannot Get Access to Electric Power in India. http://finance.sina.com.cn/zl/ management/20140715/121419709049.shtml. 8

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reduction activities, lead global climate governance cooperation, and help developing countries prevent the high-carbon lock-in effect from backward technologies during poverty reduction and development to achieve low-carbon development.

18.3 Cooperative Building of an Equitable and Efficient International Cooperation Mechanism With enhanced international response to climate change, global awareness about the protection of the climatic environment has developed considerably. The contracting parties participating in the negotiations under the Convention should, based on respecting the principles of the Convention and facing up to the historical emission responsibility, take an active attitude towards constructively engaging in the negotiations concerning the Paris Agreement to build an equitable and efficient post-2020 international climate system.

18.3.1 The Convention Should Be Taken as the Main Channel for International Climate Governance The Convention and the mechanisms outside the Convention constitute the governance system for the international community to address climate change. The mechanisms outside the Convention—such specialized organizations as the International Civil Aviation Organization and the International Maritime Organization—often enable more professional and detailed consultations to propel various parties to reach an understanding of key issues and seek solutions acceptable to all parties, thus feeding back progress under the Convention and helping reach a consensus on the corresponding issues under the Convention. As the scope of issues is narrow, the influence of these mechanisms on the Convention is partial; however, the achievements under these mechanisms serve as the reference for and contribute to the progress under the Convention. Multilateral political consultation mechanisms outside the Convention—such as the G20, APEC and MEF—provide platforms for promoting communication and gradually building consensus. High-level political decision-making brings about breakthroughs in key issues covered by the negotiations under the Convention, giving a boost to those negations. The mechanisms outside the Convention have somewhat of an impact on the progress in the negotiations under the Convention, but no mechanism can, alone or in conjunction with others, replace the leading position of the Convention in the global cooperation for addressing climate change. The Convention is the main platform for the international community to address climate change in a systematic, comprehensive and cooperative way, while the mechanisms outside the Convention can supplement the Convention’s mechanism and promote cooperation under such a mechanism. The mechanisms outside the Convention should deal

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with the issues regarding climate change by fully respecting the principles of the Convention and the basic consensus reached by the various parties to advance rather than dismember the Convention.

18.3.2 Developed Countries Should Continue to Assume the Main Responsibilities for Addressing Climate Change The following is clearly stated in the preface to the Convention: “Noting that the largest share of historical and current global emissions of greenhouse gases has originated in developed countries, that per capita emissions in developing countries are still relatively low and that the share of global emissions originating in developing countries will grow to meet their social and developmental needs”. As stressed in the part of the Convention, which specifies various principles, “The contracting parties should protect the climate system for the benefit of present and future generations, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities.“ In recent years, the rapid economic development of developing countries has indeed brought about some changes in the pattern of the world’s economy, trade and emissions; however, from the perspective of the root cause for climate change—historical cumulative greenhouse gas emissions—as of 2011, the share of developed countries still accounted for more than 71% of global historical cumulative carbon dioxide emissions. The developed countries have witnessed a gradual decrease in their share of the historical cumulative emissions amidst the growth of the total amount of emissions from the developing countries; however, the pattern—the historical cumulative emissions in the developed countries will remain much higher than those in the developing countries in a certain period of time to come, and great differences will still exist in the per capita historical cumulative emissions and per capita emissions from the developed countries and the developing countries—remains unchanged. In terms of the economic strength, technical capacity and stage of development for addressing climate change, the developed countries still possess the most advanced production technologies and the global high-end manufacturing industry and control most of the funding flows in the world through financial companies and multinational corporations, and they also lead the setting of the standards for global production technology. Therefore, in view of emissions equity and the capability to take action, developed countries should continue to shoulder the main responsibilities for the global response to climate change and lead the international process of climate governance.

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18.3.3 Developing Countries Should Intensify Their Actions of Mitigation and Adaptation to Address Climate Change Developing countries are facing more severe challenges from climate change due to a lack of capital, technologies and risk control capability; climate change has a more serious impact on developing countries. Therefore, although developing countries assume fewer historical responsibilities and emission reduction obligations in the international process of climate governance, developing countries should, while vigorously promoting economic development, incorporate climate change into the top-level design of their national development, actively adjust their developmental policies to adapt to climate change, and choose a path of low emission development as far as possible. Developing countries will become the main sources of the increase in global emissions in the future. The future developmental mode of developing countries will determine the speed and amplitude of the increase in global emissions; therefore, to effectively control global greenhouse gas emissions, it is necessary to reduce the total amount of emissions from developed countries and actively engage in international cooperation to provide conditions to developing countries and help them achieve economic development in a more low-carbon and sustainable way. As the construction of infrastructure is insufficient, increasingly frequent extreme climatic events pose a number of challenges to the sustainable economic and social development of developing countries. How to adapt to the rapidly changing climate is realistic and urgent for developing countries. Developing countries should actively participate in international cooperation and energetically draw on advanced international experience, integrate the understanding of climate change into urban-rural construction planning and urban governance, and combine climate change adaptation with socioeconomic development and low-carbon developmental goals to explore a path of sustainable development.

18.3.4 An Equitable and Efficient Funding Mechanism Should Be Built More Quickly Funding is one of the focal issues in international climate negotiations and an important issue in international environmental governance. This is the key supporting issue for taking international cooperative action to address climate change. In recent years, extreme climatic events have increased rapidly around the world; the losses caused by climatic disasters have become increasingly heavy; the international community has paid increasing attention to actions for addressing climate change; and the funding mechanism relating to global cooperative actions for addressing climate change has also become the focus of attention from the international community. According to the Convention, the developed contracting parties should provide new and additional funds to support all of the total or incremental costs necessary for the

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developing contracting parties to fulfill the Convention; the intensity of the efforts made by the developing countries to carry out the actions established by the Convention depends upon the extent to which the developed countries fulfill the Convention by providing funds and technical support. This is the responsibility and obligation that developed countries should assume. This also reflects the principle of “common but differentiated responsibilities”. However, the negotiations involving the funding issue under the Convention have always been beset with difficulties—the developed countries have seldom put forward explicit funding goals in negotiations and have been unwilling to discuss the amount of funds that the developed countries should, at different stages, provide to the developing countries for fulfilling the Convention in the process of cooperative climate governance, and there has been a lack of relevant constraints for verification and evaluation of the completion of the funding. During the Copenhagen Conference, developed countries undertook to provide quick start funds worth 30 billion USD from 2010 to 2012 and achieve the quantitative funding goal of mobilizing 100 billion USD by 2020. This was the first funding commitment with the specific funding scale made by developed countries. This is also the scale and mechanism of the funding provision that the parties would actively promote in the international community after this conference. Poverty reduction, the building of domestic infrastructures and the improvement of social welfare are the most pressing tasks for developing countries, but those countries have no conditions and find it very difficult to actively take action regarding climate change if there is no external funding support. Therefore, an efficient funding mechanism under the Convention is not only the basic guarantee for developing countries to carry out actions to address climate change but also the precondition for mobilizing other funds to support and help developing countries take those actions.

18.3.5 The Promotion and Popularization of Technologies Should Be Deepened to Prevent the Lock-In Effect Technology is a key issue in international climate negotiations and a core issue concerning whether low-carbon development can be achieved at the global level. The development and utilization of low-emission technologies can reduce the total amount of carbon emissions in particular industries and countries and stimulate the international community to set more ambitious emission reduction targets to ensure the realization of the targets specified during the Convention. Technological progress can, from different perspectives, promote responses to climate change, including improving the efficiency of energy utilization, the efficiency of the energy structure and management efficiency. Generally, climate-friendly technologies mainly focus on major energy-consuming sectors, including electric power, transportation, building, metallurgy and the chemical, petrochemical and automobile sectors. These technologies include the applications of the existing technologies, the technologies that can be commercialized in the near future and those that can be utilized in the

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long term—for example, low-carbon technologies in the energy sector at the current stage involve energy conservation, the clean and efficient utilization of coal, the exploration and development of oil and gas resources and coalbed gas, technologies for the utilization of renewable energy and new energy, carbon dioxide capture and storage (CCS) and other emission reduction technologies. Intellectual property rights are considered one of the most controversial issues in climate negotiations. The role of intellectual property rights in the transfer of climate-friendly technologies has been emphasized in Agenda 21.13 The Marrakesh Agreement, adopted by COP7 in 2001, urges contracting parties, especially developed contracting parties, to improve the supporting environment for promoting the transfer of climate-friendly technologies, including protecting intellectual property rights and boosting access to publicly funded technologies, to spread those technologies throughout the commercial and public fields.14 The Bali Action Plan, adopted by COP13 in 2007, explicitly states that contracting parties should be encouraged to prevent the formulation of trade and intellectual property policies that restrict the transfer of technology and avoid the formulation of trade and intellectual property policies that do not involve the transfer of technology.15 However, thus far, various parties have not yet reached a consensus on the intellectual property issue; its root cause is the disagreement over interests behind the negotiations—the developed countries do not want to give up the huge economic benefits in the international technology market, including the possible economic benefits from climate-friendly technologies. As developed countries blockade high-end technologies and pursue the maximization of commercial and technical benefits, it is impossible to maximize the utilities of many climate-friendly, environmentally friendly technologies that should be promoted and deployed on a global scale as early as possible and as soon as possible, all of which do not help human society control greenhouse gas emissions or safeguard the general situation of global climate safety. Regarding technical cooperation in addressing climate change, the international community should, under the general background of moving towards the goals set during the Convention, identify and choose the key technologies that actively protect global climate safety and promote cooperation between the Convention and relevant organizations, including the World Intellectual Property Organization and the World Trade Organization, so that technologies beneficial to global climate safety can be deployed and applied rapidly and efficiently around the world to deliver the maximum environmental benefits while preventing the technical lock-in effect from traditional technological investments.

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Paragraph 10, Chapter 34, Agenda 21. UNFCCC. Decision 4/CP. 7: Development and transfer of technologies [R/OL], 2001, http://unf cccint/resource/docs/cop7/13a01.pdf#page=22. 15 Wang and Jiang (2014). 14

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18.3.6 Support for the Capacity Building of Developing Countries Should Be Increased As an important means for the global response to climate change, developed countries should help developing countries enhance their capacity to address climate change. This has attracted increasing attention with the intensification of international negotiations involving issues concerning climate change capacity building. Reinforcing capacity building is also an important guarantee for mitigating the adverse impact of climate change on developing countries. Global warming will exert an overall impact on human life. Due to their economic, technical and other advantages, developed countries are more able to endure adverse impacts from climate change than developing countries. A small number of developing countries are often characterized by an excessive population burden, economic underdevelopment, land deterioration, weak infrastructure, and a fragile ecological environment. The sensitivity of the natural and social systems to climate change is high, and the capacity for self-regulation and recovery is low. Generally, in the case of extensive climate disasters, developing countries will be affected first and bear the most disastrous consequences; however, they are unable to cope with such an adverse impact. All of these factors will cause catastrophic damage to their social and economic development and to their natural environment. Therefore, it is necessary to continuously strengthen the capacity building of developing countries to address climate change, reduce the adverse impact of climate change and constantly improve their comprehensive capacity to resist climate change.

18.3.7 An Open and Cooperative International Trade System Should Be Built In international climate governance cooperation, various countries carry out different emission reduction policies due to the different stages of their development—for example, under the Kyoto Protocol, developed countries undertake quantified emission reduction targets, but there are differences in the intensity of emission reduction among different countries; developing countries focus on poverty reduction and economic development and do not undertake special emission reduction targets. Some countries, mainly developed countries, believe that the differentiated emission reduction policy may lead to a transfer of relevant industries from countries with relatively high emission reduction targets to developing countries with relatively low emission reduction targets, especially to those without specific emission reduction targets, so carbon leakage occurs. Even if these industries are not transferred, they may become less competitive on the international market due to higher environmental costs than those in developing countries. Thus, these developed countries hope to avoid carbon leakage and protect the market competitiveness of their

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domestic enterprises by levying the carbon tariff on products coming from developing countries. The Report on Trade and Climate Change, jointly released by the World Trade Organization (WTO) and the United Nations Environment Programme (UNEP) in 2009, divides the border adjustment measures (collectively referred to as carbon tariffs) into three categories: first, customs duties, including anti-subsidy duty or anti-dumping duty; second, border tax adjustment, which is based on the rate of domestic carbon tax or energy tax that has been levied within the developed countries, and makes tax adjustments of the imported products so that the imported products are subject to the tax burden that is borne by the domestic production enterprises; third, other border measures, such as the border adjustment measures based on emission allowances, which require that the exported products from the countries without implementation of the emission reduction policy are subject to purchasing emission allowances from the carbon market of the developed countries so that these countries actually undertake the responsibility of emission reduction. As shown, regardless of the measures taken, the carbon tariff actually ensures that developing countries undertake the corresponding emission reduction obligations for their exported products to share the responsibilities and obligations of developed countries for climate change. The carbon tariff certainly hinders international trade, further affecting the economic and social development of developing countries. According to statistics, in 2014, the export of goods and services accounted for 29.7% of the GDP in developing countries in East Asia and the Pacific Region, 35.3% in developing countries in Europe and Central Asia, and 22.9% in developing countries in Latin America and the Caribbean Region.16 If trade is obstructed, it will certainly increase the burden on developing countries in poverty reduction and development and greatly dent the confidence of developing countries in participating in international climate governance. Since 2012, the USA and the EU have launched both anti-dumping and anti-subsidy investigations against solar power generation equipment from China; as a result, the solar energy industries in the USA, the EU and China have lost many jobs, the booming solar energy industry has suffered a great setback and the willingness to make follow-up investments in this industry has declined; this is detrimental to the plans of relevant countries for adjusting the energy structure and for the realization of the greenhouse gas emission control targets specified in the Convention. Regarding climate cooperation, the contracting parties to the Convention should work together to promote a beneficial and open international economic system that will enable the sustainable growth and development of all contracting parties, especially the developing contracting parties, so that they are able to better address climate change.17

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The World Bank, goods and services export database. http://data.worldbank.org/indicator/NE. EXP.GNFS.ZS/countries?display=graph. 17 Article 35 of the United Nations Framework Convention on Climate Change. http://unfccc.int/ resource/docs/convkp/convchin.pdf.

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18.3.8 Global Economic Growth and Climate Governance Should Be Pushed Forward in a Cooperative Way For a long time, the difficulty in international climate negotiations has been that various countries consider actions towards addressing climate change to be incremental costs for economic development and a burden on economic and social development. Therefore, they bargain during international negotiations, take no further actions where possible, or hope that other countries will take more actions while they themselves can act less or take no action at all. This also tallies with the following characteristics: technical costs for addressing climate change are high, and the level of understanding is low at the early stage. Taking solar photovoltaic power generation as an example, the cost at the earliest was approximately 5 USD/kWh,18 which gradually decreased to 1 USD/kWh, 0.5 USD/kWh and is currently 0.9 yuan/kWh or so. Indeed, the early high production costs might impede the popularization and utilization of climate-friendly technologies; however, with the increasing joint efforts made in human society at addressing climate change and the decreasing costs for more and more environmentally friendly technologies—especially energy-saving technologies and those for enhancing the efficiency of energy utilization—the costs for the actions taken to address climate change—if the long-term technical returns are considered—may be acceptable, even in some fields, a negative cost increment may occur. Therefore, for countries with a wealth of funds available in the short term— such as most developed countries—climate-friendly technologies with economic and environmental benefits may be commercially popularized on a large scale, giving birth to some new types of business. Regarding developing countries with a lack of capital and technologies, the commercial promotion of relevant technologies relies on support from the international community, and new technologies can be promoted and popularized by using small amounts of international cooperative funds. Thanks to a more profound understanding of the global response to climate change, a decrease in technical costs and the establishment of the international cooperation mechanism, an increasing number of contracting parties are confident in the actions taken to address climate change. Developing countries did not undertake emission reduction obligations under the Kyoto Protocol but have put forward INDCs under the Durban Platform, while developed countries have also set great total emission reduction targets. As of early October 2015, 147 contracting parties promoted INDCs, making fresh progress in international cooperation for addressing climate change. The response to climate change in the developmental agendas of countries (territories), including the EU, the USA, China and other contracting parties, has shown a transformation from burden to opportunities. Various countries have explored how to promote economic development and foster new economic growth points by addressing climate change. China is actively coordinating the response to climate change with economic transformation and upgrading and ecological environmental governance to maximize economic, social and environmental benefits. 18

Analysis Report on the Development of China’s Photovoltaic Solar Power Industry during 2007– 2008. http://www.chinabgao.com/report/26909.html.

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International climate governance is a process of doing by learning. It is also a process of dynamic changes along with global economic development and an increasing level of understanding. As various countries have different capabilities of taking action, the significance of international cooperation lies in balancing the differences in the action capabilities to carry out common governance and share the achievements. As developed countries far overtake developing countries in terms of capital, technology and comprehensive capability and the historical emission responsibilities of developed countries are heavier, developed countries are obligated to actively explore a way to cooperate in promoting global climate governance and economic growth, leading developing countries to take joint action to safeguard climate safety and achieve sustainable social, economic and environmental development worldwide.

References Shao, K. (2014). The ranking of 1,000 banks in the world exhibits the change in the pattern of global banking in the last 20 years. International Finance, 11. Wang, C., & Jiang, J. (2014). Progress in the technology transfer issue negotiations in the UN climate negotiations. In W. Wang & G. Zheng (Eds.), Annual report on actions to address climate change (2014)—Scientific understanding and political debates. Social Sciences Academic Press.

Chapter 19

Post-Paris Process: A Transformational Breakthrough Is Still Needed Jiahua Pan

The Paris Climate Agreement, reached at the UN Climate Conference held in Paris in December 2015, is of epoch-making significance and is highly commended by the Parties. The brightest spot of the Paris Climate Agreement is that the global climate framework will not be turned into a completely new framework and that there will be no reckless, fruitless actions or retrogression. However, we must be aware that the bottom-up Intended Nationally Determined Contributions (INDCs) involved in the Paris Climate Agreement means a dilemma in the sharing of responsibilities; it is very difficult to imagine that the post-Paris process will go smoothly in full swing. Transformative breakthroughs are essential for achieving the upper limit target—a temperature rise of 2 °C, as specified in the Agreement.

19.1 The Paris Climate Agreement: Starting a New Process The international community has addressed climate change at the legal level for a quarter of a century. Given the long process of climate change, the attribute of interest of the actions taken to address climate change and the uncertainties in science and technology, the international process of addressing climate change is full of twists and turns. The Paris Climate Agreement has been successfully concluded and is of historic significance mainly thanks to explicit targets, extensive participation, “convergence of many tricklets into a river”, transparent stocktaking and steady progress. The explicit targets mean that it has been confirmed in a legally binding document for the first time that actions are required to hold the increase in the average global temperature to well below 2 °C above preindustrial levels and pursue efforts to limit

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the temperature increase to 1.5 °C above preindustrial levels. Although no shortterm emission reduction target is specified, the Agreement makes it clear that the Parties aim to reach the global peaking of greenhouse gas emissions as soon as possible, that the long-term emission reduction targets are more revolutionary, and it clearly requires that a balance must be achieved between the anthropogenic carbon emissions by sources and removals by sinks of greenhouse gases in the second half of this century—the net emission is zero. The United Nations Framework Convention on Climate Change, adopted in 1992, does not spell out the clear temperature target or the short-term, medium-term or long-term emission reduction target. The Kyoto Protocol only specifies the short-term or medium-term target for the reduction of greenhouse gas emissions of developed countries. Although the Copenhagen Accord sets forth the 2 °C temperature control target, it does not touch upon the reduction of long-term carbon emissions. Only when there are the expectations and constraints of a long-term emission reduction target can one assessment standard be available for a short-term or medium-term emission reduction target. Extensive participation means that 195 countries—all contracting parties—participated in negotiations and agreed to conclude an agreement. Moreover, before October 1, 2015, 147 contracting parties submitted 117 INDCs, accounting for 75% of all contracting parties and 86% of global emissions in 2010. All contracting parties provided information concerning the mitigation contributions. One hundred contracting parties, accounting for 84% of INDCs, also provided information regarding adaptation in their INDCs. As of the end of the Paris Conference, 186 countries submitted their INDCs, with covered emissions accounting for 96% of global emissions. In the second commitment period under the Kyoto Protocol, currently only the EU and New Zealand have covered emissions of an amount that is less than 14% of the total amount of global emissions. The way to participate in the Paris Climate Agreement is “convergence of many tricklets into a river”—autonomous participation and bottom-up participation rather than passive participation. There is no unified plan for emission reduction and fund allocation; in contrast, the contracting parties autonomously make decisions, and these autonomous decisions are not legally binding “commitments”, but they are “contributions” indicated in the decision made during the Conference. There are no unified format requirements for the contributions of emission reduction, while the contracting parties chose the indicators and parameters. Therefore, the contracting parties measured their intended “contributions” in different ways in terms of the selection of the base year, the target year, absolute quantity, relative quantity, peak value, renewable energy and forest carbon sink. Moreover, with respect to the contribution funds, the contracting parties determined their contributions by themselves—not only the developed countries but also the developing countries had their intended contributions—for example, Nguyen Tan Dung, Prime Minister of Vietnam, announced, at the Paris Climate Change Conference, that Vietnam would donate one million USD to the Green Climate Fund (GCF) and would gradually increase its support for the Fund; as a developing country, China provided 20 billion yuan, which was not donated to the Green Climate Fund but was directly used in the South-South climate change cooperation. However, neither emission reduction nor contribution

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funds are under the top-down arrangement, and specific task sharing is not included in the articles of the Paris Climate Agreement; thus, there is no legal binding. Such a bottom-up method enables “many tricklets to make a river”. With regard to the bottom-up “convergence of many tricklets into a river”, how many tricklets converge and what is the size of the river? Can the target requirement be satisfied? Obviously, the corresponding information is essential for further actions and respective adjustments of the “contribution” mode and quota. Thus, it is necessary to take stock of the respective contributions and assess the overall global contribution. Furthermore, the contribution costs and achievements should also be examined; the whereabouts and actual effects of such contributions, as funds and carbon sinks, should be assessed. Open, transparent and standardized stocktaking is necessary. With regard to this, Article 92 of the decision made at the Paris Conference required the Ad Hoc Working Group for the Paris Climate Agreement to put forward a number of modalities, procedures and guidelines and complete them (Article 97) prior to 2018. This means that INDCs are not empty talk and are subject to examination and appraisal by the general public. If the submitted INDCs are not carried out, although there is no legal binding or punishment, transparent stocktaking1 is also acceptable under the flag of climate morality or in the court of climate morality. In a sense, the Paris Climate Agreement is a “soft” constraint—INDCs are included in the Paris Conference’s decision with an international political attribute rather than the Paris Climate Agreement with an international legal attribute. However, the hard and brilliant spot of the soft Paris Climate Agreement is the steady and progressive legal arrangement. According to Article 4 of the Paris Climate Agreement, each Party has to communicate a nationally determined contribution every five years, and each Party’s successive nationally determined contribution will represent a progression beyond the Party’s then current nationally determined contribution and reflect its highest possible ambition (Paragraph 3). According to Article 14 of the Paris Climate Agreement, it is necessary to take stock of global contributions; the first global stocktaking should be undertaken in 2023, and global stocktaking should be conducted every five years thereafter. The outcome of global stocktaking will inform the parties in updating and enhancing the intensity and level of contributions. These provisions indicate that various countries must stress progress rather than regression in their contributions, and the extent of that progress should be continuously increased. Reference must be made to the information concerning global stocktaking, while such information can reveal that the contributions are insufficient and the gap with the target is huge. The Paris Climate Agreement is considered feasible because it is relatively easy to satisfy the conditions for bringing it into force—the number of contracting parties ratifying it is required to be not less than 55, and the emissions from these contracting parties must account for not less than 55% of the total amount of global emissions. The difficulty in concluding the Kyoto Protocol was that the emissions from the ratifying parties had to account for 55% of those from the Annex I countries rather than the number of ratifying contracting parties exceeding 55. The USA and Russia accounted for 35.1% and 15.7%, respectively. As long as these two countries did not ratify it, it could not go into force; the U.S. Senate refused to ratify it. Therefore, the

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EU persuaded Russia; afterwards, it barely came into force in 2005. If there is no problem in the condition for entry into force of the Paris Climate Agreement—the number of ratifying contracting parties has to be not fewer than 55, it would not stall in terms of proportion—55% of the emissions—due to obstacles from one or two countries. According to the latest data on the emissions of fossil energy combustion in 2013 released by the International Energy Agency in 2015, the emissions from the largest emitter—China—accounted for 27.9%, followed by the USA (15. 9%), 28 EU countries (10.4%), and Russia (only 4.8%, one percentage point lower than the proportion of emissions from India—5.8%). Only if the USA, China and the EU were in agreement would it be possible to veto the Paris Climate Agreement. Obviously, this possibility did not exist. Even if the U.S. Senates refuse to ratify the Paris Climate Agreement, such as the Kyoto Protocol, and such refusal would not affect entry into force of the Paris Climate Agreement. According to the decision made at the Paris Conference, the United Nations Secretary-General has the duty to invite state leaders to collectively sign the Paris Climate Agreement in New York on April 22, 2016 (the World Earth Day). After the Paris Climate Conference, the leaders of some major countries completely recognized the Paris Climate Agreement. It is believed that the Paris Climate Agreement has initiated a new process of the reduction of global emissions.

19.2 How Fast It Could Advance: Constraining Factors Still Exist The Kyoto Protocol was adopted and came into force. Even if it cannot be considered unsuccessful, it has failed to yield concrete results. The Copenhagen Accord was concluded and “noted” (The Copenhagen Accord was not accepted by the United Nations Climate Change Conference. The Conference’s resolution only stated that the Conference had “taken note of” the Copenhagen Accord. The Durban Platform Negotiations initiated in 2011, and the Paris Climate Agreement concluded in 2015, to some extent, continued Copenhagen’s style and content. In some ways, the progress made in the Paris Climate Agreement—such as the medium- and long-term targets and the principle of common but differentiated responsibilities—even exceeded the Copenhagen Accord), and it opened a new path but failed. However, many elements of the Copenhagen Accord either remained unchanged or were changed or were adjusted and improved and reflected in the Paris Climate Agreement. In this sense, Copenhagen’s failure did not simply serve as a foil but led to the success of the Paris Climate Agreement. The Paris Climate Agreement will not come to an untimely end; however, some challenges for the Copenhagen Accord do not automatically disappear, and it is still subject to constraining factors. As shown in Table 19.1, the Kyoto Protocol has both limitations and strong points. The Kyoto Protocol does not specify the medium- and long-term targets, and the nonAnnex I countries, as contracting parties, do not participate in emission reduction

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Table 19.1 From the Kyoto Protocol to the Paris Climate Agreement: goals, legal binding and participation Kyoto Protocol Emission Long-term / reduction targets Medium-term /

Copenhagen Accord

Paris Climate Agreement

2 °C

2 °C → 1.5 °C

Achieve the emission peaks in the world and various countries as soon as possible

Achieve the global emission peak as soon as possible, and realize net zero emission after 2051

Short-term

The average emission level in the Annex I countries in the target year declined by 5.2% compared with the overall level in the base year

Each contracting Each contracting party should party should autonomously submit INDCs submit the emission reduction pledges

Target year

2010 (2008–2012) 2020

After 2020 (2030)

Base year

1990

Inconsistent (mostly 1990, 2005)

The latest national information communication data when or before the Agreement was adopted (December, 2015)

Legal force

Strong: emission reduction commitment

Relatively strong: pledges

Relatively weak: contributions

Funds

Adaptation fund, The developed clean development countries raised 30 mechanism billion USD from 2010 to 2012, and will increase the amount to an annual 100 billion USD by 2020 to help the developing countries

The amount of the jointly raised funds will not be lower than an annual 100 billion USD prior to 2025

(continued)

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Table 19.1 (continued) Kyoto Protocol

Copenhagen Accord

Paris Climate Agreement

Review mechanism

National information communication

MRV (measure, report, verify), submit through national information communication every two years

Stocktaking (once every five years; each country should take stock in a unified format; the global stocktaking is conducted and serves as the reference for each country’s INDCs in the next five years)

Scope of participation

Only the Annex I All contracting countries parties should participate in submit pledges emission reduction (limitation)

All contracting parties should submit INDCs

Principle of common but differentiated responsibilities

Explicit: the developed countries should provide additional funds to the developing countries, while the developing countries should foster low-carbon development and adapt to climate change

Weaken: all contracting parties should submit pledges, but the text still differentiates the Annex I countries from the non-Annex I countries

Vague: all contracting parties should submit contributions; the text no longer differentiates the Annex I countries from the non-Annex I countries

Parties taking actions

Sovereign governments

Sovereign governments

Sovereign governments, local governments and enterprises

Market mechanism

Emissions trading, joint implementation, clean development mechanism

Taking the market opportunities, no specific mechanism (Article 7)

Voluntary cooperation, no specific mechanism (Article 6)

commitments. As there is legal binding for emission reductions, some developed countries—as contracting parties—which are unwilling to make efforts to reduce emissions have exited to dodge their responsibilities of emission reduction, greatly undermining the emission reduction effects of the Kyoto Protocol. Developing countries are not obligated to reduce their emissions, but they can obtain funds to achieve

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low-carbon development, which is obviously a relatively beneficial legal arrangement. In this sense, developed countries believe that this is unfair; thus, developed countries have spared no effort in reversing the unfair situation where only developed countries are obligated to reduce their emissions. As a result, developing countries have been incorporated into the emission reduction camp under the Copenhagen Accord, and the emission reduction effects shall be reported and checked every two years, while the emission reduction commitments of developed countries have been weakened to pledges; developed countries have agreed to provide funds, but the funding sources are relatively extensive. Evidently, such an arrangement seems to have been made with undue haste and hypercorrection—the developing countries have been forced to reduce their emissions when preparations have not been made, while the funds and technologies from the developed countries are far from being put into place; thus it is not a surprise that the developing countries have laid aside the Copenhagen Accord just like the developed countries have abandoned the Kyoto Protocol. Developing countries have accepted the Paris Climate Agreement because of the changes in the emission pattern in addition to their willingness and determination to address climate change. According to the greenhouse gas data on the emissions from fossil energy combustion released by the International Energy Agency, the emissions from the Annex I countries and the developing countries, respectively accounted for more than 2/3 and less than 1/3 of the global emissions in 1990, but the proportion of the emissions from the Annex I countries decreased to 40% of the global emissions in 2013, when nearly 60% of the global emissions came from the non-Annex I countries. In the same period, the per capita level of the emissions in the Annex I countries declined to some extent, but that in the non-Annex I countries was doubled from per capita 1.53 t carbon dioxide in 1990 to per capita 3.13 t carbon dioxide in 2013. However, from another perspective, the per capita emissions in Annex I countries reached 9.89 t in 2013, three times more than those in nonAnnex I countries. This information shows that the Paris Climate Agreement is a compromise, and the constraining factors still persist; thus, the post-Paris process will be affected. First, the intensity of emission reduction. The Kyoto Protocol was originally designed to enable developed countries to set an example to lead low-carbon development and serve as a model for developing countries, similar to the industrial revolution; however, developed countries have failed to do so; thus, developing countries cannot take the old path of developed countries by embarking on high-carbon industrialization. Although the increase in carbon emissions from developed countries is limited and negative growth has occurred in many of them, developed countries set no zero carbon examples for reference. Developing countries lack confidence when they are required to peak at a relatively low per capita emission level under such circumstances, so it is impossible to achieve peak and emission reductions at a high level of intensity. It is difficult for developed countries to rapidly realize zero carbon or low-carbon transformation; developing countries will also not try out the low carbon or zero carbon path by reducing their speed of development. After each country takes stock, the next INDCs shall be submitted by making reference to the

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results of the global stocktaking. If developed countries cannot decrease their per capita emission level very rapidly, contributions from developing countries can be imagined: it is difficult to go beyond developed countries. The contributions of emission reduction from some developing countries are conditional: the contributions of emission reduction cannot be made unless developed countries provide funds and technologies to them. If funds or technologies cannot be put into place, these conditional contributions are nothing but a castle in the air—for example, India’s INDCs: the emission intensity will decline by 33–35% by 2030 compared with 2005 (China: 60–65%), the generation of non-fossil energy power will account for 40% of the total generation of power, and cumulative 2.5–3 billion tons of carbon sinks will be generated by forests. However, these contributions to be made by India are subject to the following conditions: funds, technology transfer and capacity building. The debates on the ambitions of emission reduction or responsibilities of emission reduction will delay the post-Paris process. The stakeholders, who are not countries, involved in the Paris Conference’s decision (Article 134) include the civil society, the private sector, financial institutions, cities and other sub-national authorities, which represents some progress; however, they are only the Parties taking actions rather than the submitters of “contributions”; they are not included in the Paris Climate Agreement. Second, funds. There is a good case: countries such as emerging economies that have reached or approached the medium income level will not compete with less developed countries to obtain funds from developed countries. Furthermore, some developing countries will also provide funds through South-to-South cooperation. However, in spite of this, the funds provided by developed countries cannot reach the expectations of less developed countries. The form of government in some developed countries requires that the taxpayers’ money be subject to budget approval by the parliament, in which the governmental powers are limited. The Paris Climate Agreement (Article 9), with legal significance, does not spell out the specific amounts but only states, in a principled way, that climate financing should be mobilized from a wide variety of sources, instruments and channels. Only the Paris Conference’s decision (Article 54) with a political attribute set a quantified goal from a floor of 100 billion USD per year prior to 2025, but this quantified goal is “collective” among all contracting parties and does not come from developed countries. Therefore, developed countries place hopes on the private sector. However, if the money provided by the private sector cannot deliver returns and is not safe, the funds from the private sector are relatively limited. Third, legal binding. The contributions submitted by each country, regardless of emission reduction or funds, are included in the non-legally binding decision of the Conference rather than the legally binding Paris Climate Agreement. Obviously, the “contributions” are legally weaker than “pledges”, let alone “commitments”. Even so, they are not included in the Agreement. This means that the contributions from each country are voluntary. If the “contributions” are not made, no punishment mechanism works. As the Kyoto Protocol is binding, some contracting parties exited it, and the post-Kyoto process is not advancing quickly or far. The Paris Climate Agreement is not binding upon emission reduction and fund “contributions”; the post-Paris process may go very far but not very quickly.

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Some people believe that the principle of common but differentiated responsibilities will remain the focus of North-South confrontations. In the Copenhagen Accord, all countries submitted emission reduction “pledges”, but there is a distinction between Annex I countries and non-Annex I countries, and the principle of common but differentiated responsibilities is actually weakened but is still considered. The Paris Climate Agreement reaffirms this principle in some sentences but does not mention Annex I countries and non-Annex I countries, so the foundation for this principle is actually canceled. A distinction of the contracting parties is no longer drawn between the Annex I countries and the non-Annex I countries but is continuously defined by a “spectrum”. If we insist that the principle of common but differentiated responsibilities remains valid, there are differences in the emission reduction commitments of the Annex I countries in the Kyoto Protocol. In the Paris Climate Agreement, the INDCs submitted by developing countries are also “differentiated” by themselves. In regard to “common but differentiated”, the “common but differentiated” in the Agreement and the Protocol does not appear to be marked. In fact, some developing countries show a certain degree of vagueness on the funding issue, as they provide funds through South-to-South cooperation or directly through the Green Climate Fund. There are some debates at a technical level, including the modalities and procedures for stocktaking and the utilization of funds. However, obviously, the challenges are not as severe compared with emission reduction, funds and legal binding.

19.3 Enhanced Actions: A Transformative Breakthrough Is Urgently Needed With respect to INDCs, on the one hand, the contracting parties leave some leeway to ensure implementation; on the other hand, there is no worry about the consequence in case the conditions have changed or they cannot be realized. Under such a circumstance, when the parties take stock of the contributions and use the results as the reference for enhanced actions to make new “contributions”, it is extremely likely that the upper limit for temperature rise—2 °C—will not be satisfied and the net zero emission target will not be achieved in the second half of this century. Although this target is specified in the Paris Climate Agreement and is legally binding, it does not state who is bound and how to bind. According to the evolution of the world’s population and emission patterns, some developed countries and developing countries have experienced an increase in the amount of energy consumption due to population growth and economic development. If nonfossil energy cannot meet the needs of industrialization and economic expansion, fossil energy will become the first choice. According to the data in Fig. 19.1, the rate and amplitude of the increase in the per capita greenhouse gas emissions from the combustion of fossil energy have not increased but have declined slightly in industrialized developed countries such as European countries and the USA since

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USA Africa India China Europe World

(Year) Fig. 19.1 Trajectory of changes in the level of per capita emissions in some economies (1971– 2013). Note 1971 = 1.00. Data source IEA 2015. Highlights of CO2 Emissions from Fossil Fuel Combustion. International Energy Agency, Paris

1971. Interestingly, the rate of decrease in the USA was almost the same as that in Europe: the per capita emission level decreased by 22% in 2013 compared with 1971; with regard to the absolute emission reduction, the level in the USA decreased from 20.6 t in 1971 to 16.2 t, a decrease of 4.4 t; in the same period, the level in Europe declined from 8.6 t to 6.7 t, with a decrease of less than half of that in the USA. According to the experience of developed countries, the levels of per capita emissions decrease at roughly the same rate; however, developed economies with a high level of per capita emissions see a greater decrease than developed countries with a relatively low level of per capita emissions. As two emerging economies with rapid industrialization and urbanization, China and India were experiencing a rapid increase in the levels of per capita carbon emissions due to their economic development and the rising level of consumption. China and India saw increases of 6.5 times and nearly 5 times, respectively, compared with the levels in 1971. Africa, which, as a whole, is a developing economy where industrialization is at an early stage or has not yet started, had no rapid growth in economic development or the level of consumption. The level of per capita emissions in Africa increased by only 45% in 2013 compared with 1971, a net increase of only 0.3 t from 0.67 t to 0.97 t. In the same period, the average global increase was 0.8 t, India 1.2 t and China 5.6 t. As shown by the trajectory of the increases in per capita emissions in the developing countries, the emissions rose at a high rate and a large amplitude along the conventional industrialization path and might reach the level of per capita emissions in the developed countries in a very short time. In fact, China’s level of per capita emissions was the same as that in the EU.

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The target year for INDCs involved in the Paris Climate Agreement is 2030; stocktaking is undertaken once every five years, with continuous progress to achieve net zero emissions after 2050. If the rate of energy transformation remains conventional and the emissions still decrease progressively in developed countries, it will be difficult to make great reductions in emissions. Regarding China, INDCs and the per capita emission peak will be achieved soon; the total quantity peak means a decrease in the level of per capita emissions. Regarding India, as it is still in the middle stage of industrialization, its level of per capita emissions will increase greatly if it follows China’s path of industrialization. Regarding low-income developing countries, such as Africa, the level of per capita emissions will climb to some extent if the process of rapid industrialization is not initiated in the short term, but the increase will not be dramatic. According to a comprehensive assessment conducted by the Secretariat of the United Nations Framework Convention on Climate Change, INDCs submitted by the contracting parties before October 1, 2015—including the conditional contributions of emission reduction of some developing contracting parties, by 2030, the total global emissions will reach 49 billion tons (an equivalent of 37.4–48.7 billion tons of carbon dioxide. The datum in this paper is the median one). According to the analysis of the 5th assessment report of the Intergovernmental Panel on Climate Change, if the 2 °C temperature control target is achieved at a probability of 66%, the global available total carbon budget after 2011 will only be 100 billion tons of carbon dioxide. Even if all of the INDCs are achieved, the global cumulative emissions will be 748 billion tons by 2030. In view of the 2 °C target, let alone the 1.5 °C target, the global carbon budget stock will be only 252 billion tons after 2030. According to the data from the International Energy Agency, the total global amount of carbon dioxide emissions only from the combustion of fossil energy reached 32.19 billion tons in 2013, and the emissions in 2013 did not reach the global peak. Even if, by 2030, it managed to return to the level of 2013, the balance of global carbon emissions after 2031 will last for only 8 years. Therefore, in order to achieve the 2 °C temperature control target specified in the Paris Climate Agreement, it is necessary to make a further reduction of 15.1 billion tons on the basis of the INDCs (if the greenhouse gases not covered by the INDCs are included, the total global emissions will be 56.7 billion tons (the median of 53.1–58.6 billion tons) by 2030. In other words, an additional reduction of 26.6% is necessary on the basis of INDCs by 2030. However, there are challenges for achieving INDCs, let alone a further reduction. According to the data in Fig. 19.2, the future population trend in the major economies shows that the emissions will have a further increase in many countries. As greenhouse gas emissions are caused by social and economic development, the size of the population and the level of consumption are the determining factors. As indicated by the future population trend in Europe and China, it is relatively certain that INDCs will be achieved amidst an accelerated utilization of renewable energy. As the population in the USA will grow by 20%, if the level of per capita emissions declines by 20% in the USA in the next 35 years, the level of total greenhouse gas emissions in the USA by 2050 will be the same as the current level. The level of per capita emissions in the USA is nearly 4 times the average world level and 17 times the level in Africa (2013), so emission reduction in the USA is particularly important.

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USA Africa India China Europe World

(Year)

Fig. 19.2 The trends in population change in some economies in the world (2015–2050). Note The vertical coordinates refer to the change multiples over the years relative to the population in 2015. Data source United Nations Statistics Division’s Intermediate Program for Population Forecast

As India’s population will increase by 1/3 by 2050 compared with 2015, if the level of per capita emissions rises by three times, India’s total level of emissions will be much higher than China’s emission peak by 2050. Even if Africa’s level of per capita emissions does not increase, the level of emissions will at least be doubled, as the population, in 2050, will be two times more than the current population. According to the above simple analysis of the emission and population trends, the achievement of the INDCs is insufficient for reaching the 2 °C temperature control target specified in the Paris Climate Agreement. Moreover, the space of emission demand in the USA, India and Africa will increase together with substantial population growth. If the manner of consumption in the U.S.A. remains unchanged, it will be very difficult to reduce the greenhouse gas emissions there. From the perspective of equity, developing countries—especially low-income countries—need inexpensive but high-carbon fossil energy to promote industrialization and increase the standard of living; thus, the emission demand is huge. At the Paris Conference, Chinese President Xi Jinping stressed the unity of man and nature, respect for nature and the construction of an ecological civilization as well as the formation of a new pattern of the construction of modernization characterized by harmonious development of people and nature. The United Nations 2030 Agenda for Sustainable Development gives prominence to the transformation of the world. It is certainly difficult to achieve the targets set in the Paris Climate Agreement without breakthroughs in overall transformation towards an ecological civilization.