How will Beijing’s latest green pledges affect the United States? Linden Ellis asks a roundtable of experts and business figures what they think of China’s 12th Five-Year Plan.
Last week, as China set impressive targets to reduce emissions and increase investment in environmental services, politicians in the United States presented a bill to strip the US Environmental Protection Agency (EPA) of its authority to regulate greenhouse gases. The world’s two biggest carbon emitters appear to be pulling in different directions on green investment. But how will China’s 12th Five-Year Plan influence the debate over American environmental policy? And what business opportunities and risks does it present? Here, a group of US experts offer their opinions.
How do green investments in China’s 12th Five-Year Plan reflect on the United States?
Jake Schmidt, international climate policy director, Natural Resources Defense Council
China’s 12th Five-Year Plan introduces several key climate change and environmental targets – including carbon intensity and two additional major pollutants – and phrases correctly the dangers of unsustainable development. A national climate-change law, for which the National Development and Reform Commission [China’s top economic planning body] just opened a commenting phase, could potentially guide this transformation.
Of course, as with anything in China, the devil is in the details: we have heard a lot about “new market mechanisms” and strategic industries. It will be critical for China to translate these policy commitments into energy-specific plans and to implement regulations that have meaningful teeth.
China is embracing the clean-energy economy – a US$13 trillion [85.4 trillion yuan] market over the next two decades. This investment is starting to pay dividends in China as new industries are emerging, creating jobs, reducing unsustainable development and bringing local air-pollution benefits. Sadly, some politicians in US Congress are taking a short-sighted view of job creation. They are choosing to cut key funding that will drive clean-energy investments now and into the future. The Obama administration is standing strong to these challenges.
Policymakers in the United States are following China’s movements very closely. So it is my hope that China’s ambition is matched and exceeded by US resolve. A clean-energy race to the top is our best solution to climate change.
Dian Grueneich, former commissioner, California Public Utilities Commission, 2005-2010
China’s new five-year plan – combining economic growth with energy efficiency – follows the path that the US state of California has taken successfully for three decades. The focus on creating clean-technology jobs and curbing carbon is likewise similar. The United States provided significant short-term clean technology funding in the American stimulus package. However, to compete globally, the next steps must be to establish a national clean-energy plan with mandatory efficiency and renewable standards, a carbon emission reduction law and sustained clean-technology investment.
Through codes and standards and utility-efficiency programmes, California has kept its per capita electricity consumption flat, while achieving economic growth comparable to the rest of the United States. China’s new development plan can accomplish the same.
In 2008, I oversaw the creation of the “California Long-Term Energy Efficiency Strategic Plan”, a 12-year roadmap for comprehensive market transformation efforts. Looking at China’s new plan, it has many of the necessary elements. However, it will be essential that China independently measures the changes in carbon-intensity and energy-intensity, through state-of-the art evaluation, measurement and verification (EM&V).
There will be challenges in China’s increased use of renewables but here too, China and California can learn from each other, as California moves towards its 33% renewable goal. A major focus is transmission planning and integration of intermittent resources into the grid.
I look forward to the implementation of China’s new five-year plan and certainly offer any lessons learned in California from our similar efforts.
How should the United States respond to the environmental and climate elements in China’s 12th Five-Year Plan?
Jennifer Morgan, director, Climate and Energy Program, World Resources Institute
On climate change, China is showing positive signs by setting clear and concrete carbon and energy intensity targets. These targets are consistent with China’s previous goals – in the range of 40% to 45% reductions by 2020, compared to 2005 levels – ensuring that as China’s economy grows, it can rein in its emissions.
The 12th Five-Year Plan also contains a goal for China to meet 11.4% of its fuel consumption with non-fossil fuels by 2015. This will include development of new nuclear and hydro capacity, as well as at least 70 gigawatts of wind-power capacity and 5 gigawatts of solar-power capacity.
While the United States and China are clearly at different levels of development – including with regard to the environment – they share many integrated interests. Greater investment in clean energy can help drive clean-energy production in the United States by opening new markets and reducing supply costs.
As the world’s two largest greenhouse-gas emitters, both China and the United States need to do their part to reduce global emissions. On the climate front, the US administration has stood by its goal of reducing carbon emissions by 17% by 2020. But more action is needed to meet this target.
Ultimately, what matters most are results on the ground. Both countries should aspire to achieve the same goals: continued economic prosperity, while protecting people and the environment.
What risks and opportunities does China’s 12th Five-Year Plan present to US businesses?
Sean Randolph, president and chief executive,Bay Area Council Economic Institute
The outlines of China’s 12th Five-Year Plan confirm and build on directions set in the 11th Five-Year Plan: an accelerated commitment to lower carbon intensity, reduced energy consumption per unit of GDP and increased use of renewables. Despite the obstacles and challenges it will face – including implementation at local and provincial levels and the fact that, in absolute terms, the use of coal will actually increase – the Chinese government has shown it has the will and capacity to meet these targets.
The energy components of the plan link to broader national strategies, including increased expenditure on research and development, more domestic innovation, lower reliance on imported technology and a shift toward higher domestic consumption. From a US business standpoint, there are several take-aways:
- Despite some continuing criticism of China’s unwillingness to agree to global greenhouse-gas reduction targets, the government is committed to energy goals that are consistent with those targets, and is acting on them. From a climate-change perspective, this is good news.
- China’s growing commitment to efficiency and renewables presents a market opportunity for overseas partners. However, its emphasis on indigenous innovation and reduced technology imports raises the possibility that trade barriers could limit those opportunities – something that US companies and the US government should watch closely.
- China’s growing strength as an exporter of cleantech products will challenge US producers, and will also raise the question of whether more should be done to encourage production in the United States.
- If barriers in both directions can be kept to a minimum, bilateral opportunities should grow for joint research and investment in both directions.
Ginny Fang, executive director, ChinaSF
In the years since China’s accession to the World Trade Organisation, we have seen the start of an unprecedented transformation within the global economic, political and social order. It comes as no surprise that the Chinese central government will include high targets to reduce energy and carbon intensity, primary energy consumption and increase non-fossil energy sources in the country’s 12th Five-Year Plan.
China’s top leaders have adopted sustainability, both economic and environmental, as a key target for the future development of the country.
Next week, I will travel to Beijing to speak to a conference on the development of China’s green building industry and highlight some of San Francisco’s development projects that exemplify leading sustainable-development strategies. Naturally, I am there to spotlight our city's accomplishments, but also to seek partners interested in being part of these developments.
San Francisco has many pioneering companies that can benefit from China’s climate and environmental targets by actively seeking partnership and business opportunities overseas. Furthermore, as Chinese companies are pushed to go abroad – another important part of the 12th Five-Year Plan – the increased internationalisation of Chinese companies will offer further opportunities.
Although there will be challenges to navigate, I believe that there will be a net positive benefit to both American and Chinese businesses. With increased contact, there will be a greater level of understanding on both sides, enhancing the possibility of collaboration. And this, hopefully, will yield not only financial benefits, but also help drive the innovation needed to address the energy challenges we face together, as a planet.
Linden Ellis is US project director at chinadialogue.
Homepage image from the White House