China: ready to pay the price

By Bryan Walker 27/11/2010

James Hansen was in China when the American midterm elections were held, and he reports that while the rest of us were feeling pessimistic he was becoming optimistic. Not because of what was happening in the US, but because of China. He found two reasons for optimism, the first of which he has explained in a post on his website. The second will follow, but there’s enough in the first to warrant notice here.

In the activist dimension of his life — which he always makes clear is an expression of personal opinion and in this respect differentiated from his scientific work — Hansen opposes cap and trade approaches to limiting carbon emissions as ineffective and instead advocates a steadily rising carbon fee collected from fossil fuel companies and returned to the public on a per capita basis to allow lifestyle adjustments and spur clean energy innovations.

He considers there are signs that China is ready to consider a rising carbon price as part of a clean energy transition. At the Beijing Forum he attended he was impressed by what he described as the focused rational approach to dealing with the challenges, epitomized by Dr. Jiang Kejun (pictured), the lead speaker in the session “Global Environmental Policies and National Strategies”.

’Jiang Kejun laid out sector-by-sector projections of transitions to low-carbon and no-carbon energies and improved energy efficiency that would allow CO2 emission growth to be slowed and then reversed over the next few decades. Technology development is supported, and, when lower carbon technology becomes available, efficiency standards are promptly ratcheted downward. Most encouragingly, there is recognition that this strategy requires a rising carbon price for most successful results. The Chinese authorities appear to grasp that rapid attainment of the tipping points at which clean energies quickly displace dirty energy requires an economic incentive.’

Hansen remarks the advantages of the scale of manufacturing in China. It is so great that the unit price of new technologies can be quickly brought down, putting China in a position to sell carbon-efficient technologies to the rest of the world.

He compares the prevention of effective legislation by vested interests in the US with his impression that China has the capacity to implement policy decisions rapidly. He notes that the leaders seem to seek the best technical information and do not brand as a hoax that which is inconvenient. The power of fossil fuel interests is not as strong as in the US.

Hansen’s earlier view was that global action to stem climate change required agreement between China and the United States for a rising carbon fee. He acknowledges this is not realistic as the dysfunctional Congress would not approve such a treaty.

However, he sees a way around that. He envisages China finding agreement with other nations such as the European Union to impose rising internal carbon fees. And here’s the crunch:

’Existing rules of the World Trade Organization would allow collection of a rising border duty on products from all nations that do not have an equivalent internal carbon fee or tax.’

And the consequence:

’The United States then would be forced to make a choice. It could either address its fossil fuel addiction with a rising carbon fee and supportive national investment policies or it could accept continual descent into second-rate and third-rate economic well-being. The United States has great potential for innovation, but it will not be unleashed as long as fossil fuel interests have a stranglehold on U.S. energy policies.’

Nicholas Stern doesn’t share Hansen’s impatience with emissions trading schemes, but it is worth noting that he sounded very similar trade warnings in Auckland in September where he was delivering the Douglas Robb lectures. The world is embarking on a “new industrial revolution” of renewable energy and cleaner innovation, he told the Herald. Countries which don’t embrace it will find other countries reluctant to trade with them. Ten or fifteen years from now, those that produce in dirty ways are likely to face trade barriers.

However it is obtained, a rising price on carbon is an essential element in the transition to clean energy, and trade concerns may well play a part in making it global. Hansen insists that only a tax can achieve it, but there are indications that China is also considering a cap-and-trade system. Either way contributes to the seriousness Hansen discerns in China’s planning towards the transformation of its currently carbon-dependent economy.