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ASIAN PERSPECTIVE, Vol. 31, No. 2, 2007, pp. 155-191.

CHINAS CLIMATE CHANGE POLICY:


DOMESTIC AND INTERNATIONAL
DEVELOPMENTS*

Grild Heggelund

This article demonstrates that prospects for emission


reduction are not realistic under the current policy environ-
ment, and China is unlikely to take on commitments in the near
future. The major determinants of and actors involved in
Chinas climate change policy are discussed, relating these to
Chinas stance in global climate change negotiations. Energy is
seen as the key to economic development and is one of the main
causes for Chinas unwillingness to take on emission reduction
commitments. Vulnerability to climate change is an emerging
issue in China, and could contribute to elevating the climate
change issue on Chinas domestic agenda in the future. Global
climate change is still seen as a remote matter by the countrys
policy makers, and remains a foreign-policy issue. International
pressure has not been able to change Beijings stance of no com-
mitments, although China is now an active participant in the
Clean Development Mechanism (CDM), which has become a
way to apply an international mechanism on domestic prob-
lems and one of the channels that China itself prefers to use in
its climate-change efforts.

* The author would like to thank all the interviewees in China for their time
and helpful comments, as well as the two anonymous reviewers for their
useful comments. Thanks to Steinar Andresen for useful comments, and
to Susan Hivik and Maryanne Rygg for assistance with language editing
and formatting. The Research Council of Norway provided funding for
the work.
156 Grild Heggelund

Key words: China, environmental protectionEast Asia, sustain-


able development

Introduction

China is a key country in the international climate regime


for two reasons. First, it is important in the global climate-change
game due to its status as the worlds second largest emitter of
greenhouse gases after the United States. Chinas emissions are
increasing steadily. Second, its status and influence in the G-77
of Third World states give it prominence in climate negotiations.
As the worlds largest developing country with an influential
voice in the United Nations, China is set to play an important role
in leading the developing world in the future climate regime.
How then will China contribute to efforts to reduce global
emissions? When will it take on emission reduction commitments
under the Kyoto Protocol? In recent years, some optimism has
been detected as China has engaged in dialogue in the negotia-
tions.1 Beijings stance has, however, not changed: It still holds
that the developed countries must take the main responsibility for
past greenhouse gas emissions. Therefore, I argue in this article
that China is unlikely to take on commitments in the near future. I
will demonstrate that prospects for emission reduction are not
realistic under the current policy environment for several reasons.
Moreover, the article discusses whether China is likely to leave
the Kyoto Protocol altogether and pursue other alternative chan-
nels to reduce its emissions.2

1. Interview with official, Norwegian Ministry of the Environment, 2005.


2. Asia Pacific Partnership on Clean Development and Climate (AP6) is
one channel that may be attractive for China to pursue. The AP6 was
established in July 2005 at the Association of Southeast Asian Nations
(ASEAN) regional summit. The members of the AP6 are Australia, China,
India, Japan, South Korea, and the United States. This group aims to
reduce greenhouse gas emissions through technology and voluntary
partnerships. (Richard Black, Climate Change Summit Postponed,
BBC News website, October 5, 2005, online at http://news.bbc.co.uk/2/
hi/science/nature/4311310.stm). The AP6 will not be dealt with in this
paper, but will be discussed in forthcoming work in 2007.)
Chinas Climate Change Policy 157

I begin by analyzing the reasons why China continues to resist


mandatory reductionsi.e., the major determinants for Chinas
climate change policyrelating these to the countrys stance in
the global climate change negotiations. The article discusses the
main actors involved in and responsible for Chinas climate
change policy, and how their dominance influences Chinas cli-
mate change policy. Chinas climate policy is determined by both
domestic and international considerations. Key domestic interests
in this regard are economic development, energy issues, and per-
ceived vulnerability. Understanding the domestic factors of
Chinas climate policy has the potential to enhance and lead to
more productive negotiations. Chinas stance in international
negotiations is also influenced by foreign policy, where major
issues are sovereignty, equity, and international image. The coun-
trys international standing and its wish to be seen as a respected
member of the international community are important factors.
These international and domestic issues will be discussed in the
sections below.
We will see how developments relate to both domestic and
international climate policy by examining Chinas involvement in
the Clean Development Mechanism (CDM). China is expected to
become a major recipient of CDM investments. Due to the coun-
trys coal-based energy, there is great potential for projects in ener-
gy efficiency, energy conservation, fuel switching, and renewable
energy. Developing countries, including China, were initially
skeptical about the CDM, as there was concern that public funding
could result in official development assistance (ODA) being divert-
ed. However, China is now becoming an active participant in the
mechanism. The article demonstrates that CDM is becoming
Chinas preferred methodology for participation under the Kyoto
Protocol (instead of mandates). Issues related to the implementa-
tion of CDM in China that might involve conflicts of interest
between equity, market mechanism, and competitiveness are dis-
cussed. Finally, some conclusions are offered regarding the direc-
tion of Chinas climate change policy.
158 Grild Heggelund

Economic Development and Energy in Chinas Policy


on Emission Reductions

There are several reasons for Chinas resistance to emission-


reduction commitments. The following sections discuss negative
and positive forces that currently influence its willingness to
take on commitments: economic development, energy, and vul-
nerability to climate changes. Energy is a common denominator
in the climate change discussion for China: It is the basis for eco-
nomic development, but it is also a cause of domestic pollution
and global emissions. Therefore, the energy sector will be dis-
cussed at some length here.

Economic Development

Chinas main official priorities are economic development,


poverty alleviation, and social stability. Climate change is one
area where the conflict between poverty and sustainable develop-
ment is apparent, as it is closely linked to economic development,
resource management, poverty alleviation, and energy use. Tak-
ing on emission-reduction commitments presently runs counter
to Chinas economic development strategy. With its population of
nearly 1.3 billion people, diminishing natural resources, serious
environmental pollution, and rapid economic growth, China
exhibits all the components of a typical developmental dilemma.
Since the late 1970s and the initiation of Deng Xiaopings new
economic policy, main political priorities have been to alleviate
poverty and improve the lives of citizens through the policy of
the Four Modernizations.3 The results of this policy have become
evident in rapid economic growth and higher living standards for
millions of people. The country has succeeded in reducing the
number of poor from 230 million in 1978 to 30 million in 2000.4
For the first time, in 2003 per capita GDP in China exceeded

3. The Four Modernizations relate to agriculture, industry, national


defense, and science and technology.
4. Chinese official figures for the population living below the Chinese
poverty line. See Office of the United Nations Resident Coordinator,
Millennium Development Goals, Chinas Progress 2003: An Assessment
by the UN Country Team in China (Beijing, 2004).
Chinas Climate Change Policy 159

$1,000, using the official exchange rate.5 China remains a develop-


ing country, however. Per capita gross national income (GNI)
amounted to $1,500 in 2004,6 whereas GDP per capita was $1,702
in 2005.7 More than 135 million people live on less than one US
dollar a day.8 Income disparity is increasing between urban areas
and more developed coastal provinces on the one hand, and rural
areas and the interior provinces of the west on the other. The rural
poor have per capita incomes below $78 (RMB 625).9 They also
often lack access to basic social and infrastructure services.
Even though environmental impacts associated with eco-
nomic growth are recognized by Chinese authorities, economic
growth remains an urgent priority to bridge the growing gap
between rich and poor. This is illustrated by the leaderships
decision following the 16th Party Congress in November 2002 to
focus on the rural poor in the country.10 Thus, economic growth,

5. Zhongguo tongji nianjian 2004 (China Statistical Yearbook 2004) (Beijing:


China Statistics Press, 2005). However, the estimated level of income
using purchasing power parity is much higher. According to the U.S.
Central Intelligence Agency, The World Factbook, GDP per capita (PPP)
amounted to $6,800 in 2005 (online at www.cia.gov/cia/publications/
factbook/index.html).
6. China is in the category of lower-middle-income economies ($876-$3,465).
The World Bank uses the Atlas method to measure gross national
income (GNI, formerly referred to as GNP). The purpose of the Atlas
conversion factor is to reduce the impact of exchange rate fluctuations in
the cross-country comparison of national incomes. See www.worldbank.
org and World Bank, World Development Indicators database, July 1, online
at http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/
0,,contentMDK:20535285~menuPK:1192694~pagePK:64133150~piPK:64
133175~theSitePK:239419,00.html.
7. Economist Intelligence Unit, Factsheet, July 6, 2006, Country Views
Wire online at www.economist.com/countries/China/profile.cfm?
folder=Profile-FactSheet.
8. World Bank, World Banks New Partnership Strategy for China Focuses
on Economic Integration, Poverty, and Sustainable Development, News
Release No:2006/416/EAP, May 23, 2006, online at http://web.worldbank.
org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/
CHINAEXTN/0,,contentMDK:20931682~menuPK:318956~pagePK:141
137~piPK:141127~theSitePK:318950,00.html.
9. Office of the UN Resident Coordinator, Millennium Development
Goals.
10. Wen Jiabao, Report on the Work of the Government, delivered to the Peoples
160 Grild Heggelund

social stability, and development are main priorities for Chinas


policy makers. In sum, taking on commitments under the Kyoto
Protocol is regarded as a threat to the economic development of
the country.

Energy

Economic growth in China continues to be fuelled by fossil-


based energy. Expansion of energy consumption has been critical to
Chinas development. The countrys energy policy is therefore one
of the key priorities in Chinas development process. Understanding
the background for energy policy making can help us reach a better
understanding of a crucial determinant for its climate policy.
Chinas large emissions are caused by its heavy reliance on fossil
fuels. China contributed 15 percent of global greenhouse gas (GHG)
emissions in 2000.11 During the 1990s, Chinas GHG emissions
increased by almost 40 percent, due to strong economic growth.12

Figure 1. Economic development, Population Growth and CO2


Emissions in China, 1971-2000

Source: World Resources Institute, CAIT; Guri Bang, Grild Heggelund and Jonas
Vevatne, Shifting Strategies in the Global Climate Negotiations, Report 6/2005
(Lysaker: Fridtjof Nansen Institute, 2005).

Congress annual meeting in March 2003 (Beijing: People Press, 2003).


11. World Resources Institute, CAIT, part I, country-based data and indicators,
online at http://pdf.wri.org/navigating_numbers_chapter2.pdf.
12. Ibid.
Chinas Climate Change Policy 161

Even though China has managed to reduce the rise in GHG


emissions through various measures,13 it seems set to overtake
the United States as the worlds largest emitter by 2010 unless
drastic measures are taken.14 Chinas emissions by 2030 are
expected to represent more than one quarter of the increase in
world emissions.15 Energy policy is closely linked to climate poli-
cy: We could say that Chinas energy policy is the countrys cli-
mate policy. Therefore, awareness of Chinas energy policy and
developments in this area is crucial to understanding the coun-
trys choices in global climate policy. Cheap energy has engen-
dered rapid economic growth, reduced poverty, and raised living
standards. From another angle, however, while Chinas energy
consumption merely doubled between 1980 and 2000, its GDP
quadrupled.16 And in 2001 China announced plans to quadruple
its GDP by 2020, while again doubling its energy consumption.
Although this de-linking between economic growth and energy
use is positive, Chinas plans also pose serious challenges, as ener-
gy consumption is once more increasing strongly after a decline
in the late 1990s.17

13. Population control is one such measure; see William Chandler, Roberto
Schaeffer, and Zhou Dadi, Climate Change Mitigation in Developing Coun-
tries: Brazil, China, India, Mexico, South Africa, and Turkey (Pew Center on
Global Climate Change, October 2002).
14. International Energy Agency, World Energy Outlook 2006 (Paris: IEA/
OECD, 2006). Nan Li, Zhuanjia: Zhongguo qihou keneng jixu biannu-
an; 2050 nian jiang shangsheng 2.2C (Experts: Chinas Climate Will
Most Likely Continue to Warm Up; in 2050 Temperatures Will Rise 2.2
Degrees Celsius), China Climate Change Info-Net (2004), online at www.
ccchina.gov.cn/source/aa/aa2004062402.htm; International Energy
Agency, World Energy Outlook 2000 (Paris: IEA/OECD, 2000).
15. International Energy Agency, World Energy Outlook 2004 (Paris: IEA/
OECD, 2004).
16. Development Research Center, Zhongguo nengyuan fazhan zhanlue yu
zhengce yanjiu (National Energy Strategy and Policy Report 2020) (Beijing:
Chinas Economic Science Press, 2004); Jonathan E. Sinton, Rachel E.
Stern, Nathaniel T. Aden, and Mark D. Levine, eds., Evaluation of Chinas
Energy Strategy Options (Berkeley, Calif.: Lawrence Berkeley National
Laboratories, 2005); T. Sugiyama and S. Oshita, eds., Virtuous Asia: Policy
Development Cooperation on Energy Efficiency for the Better World (Winnipeg,
Canada: International Institute for Sustainable Development, 2006).
17. According to Sinton et al., Evaluation of Chinas Energy Strategy Options,
energy consumption is growing faster than GDP, presenting challenges
162 Grild Heggelund

Chinas dilemma is the increasing demand for energy as the


economy develops and living standards rise. The energy situa-
tion also reflects the development disparity in the country, as
commercial energy consumption by rural residents is dispropor-
tionately lower than in the urban areas, although it is bound to
grow. In 2004, the country consumed 1.97 billion tonnes of coal,
an increase of about 90 percent over 1990;18 in 2005 it consumed
2.2 billion.19 Despite high production, China experienced power
shortages, in particular in 2004, and the response has been to
invest in energy supply by building new power plants.20 Although
China is attempting to shift toward cleaner fuels, and coal con-
sumption in the energy mix decreased from 75 percent in 1996
to 67.7 percent in 2004, fossil fuels will remain the main source
of energy. With 114 billion tons of proven coal reserves, coal is
bound to remain dominant in the near future21 and is expected
to constitute 53 percent of total energy consumption in 2030. In
addition, oil has become an important energy source and a
source of pollution.22
Chinas increase in energy consumption, the subsequent
impact, and the energy shortages are obvious reasons for the
renewed political focus on energy. As a result, the countrys deci-
sion makers have introduced important energy policy changes
and are attempting to reorient the basic structure of energy. Ener-
gy conservation and renewable energy now top the political agen-

to sustainable development.
18. Zhongguo tongji nianjian 2005 (China Statistical Yearbook 2005) (Beijing:
China Statistics Press, 2005).
19. China to Cut Energy Consumption by 4 percent in 2006, Peoples Daily
Online, online at http://english.people.com.cn/200603/05/eng20060305_
248040.html.
20. Sinton et al., Evaluation of Chinas Energy Strategy Options.
21. International Energy Agency, World Energy Outlook 2004. China and
India will account for 48 percent of total world coal demand, up 40 per-
cent from 2003. International Energy Agency, World Energy Outlook
2005: Middle East and North Africa Insights (Paris: IEA/OECD, 2005).
22. China was self-sufficient in oil until 1993, when it became a net oil
importer. The country now imports over 40 percent of its oil consump-
tion. Oil consumption increased by 16 percent in 2004, and accounted
for 30 percent of the global demand increase. Transport and the grow-
ing number of vehicles are the main reasons for this increase. Interna-
tional Energy Agency, World Energy Outlook 2005.
Chinas Climate Change Policy 163

da. The high energy consumption and the ensuing problems have
resulted in policy measures being introduced. The China Medium
and Long-term Energy Development Programme (2004-2020) and a
key policy document for energy conservation, the China Medium
and Long Term Energy Conservation Plan23 approved by the State
Council in June 2004, highlight government support for energy
conservation. The latter document lists ten implementation mea-
sures to improve the energy situation in the country, including
energy conservation in planning of projects and the setting of
energy targets. However, without financial resources to imple-
ment the plan, critics do not see how it can be effective.24
A further sign of attention to energy issues is the govern-
ment work report presented by Wen Jiabao at the National Peo-
ples Congress (NPC) in March 2006. Here, energy efficiency was
emphasized as a key measure of economic growth, and a 4 per-
cent reduction in energy intensity for 2006 was proposed.25 From
2006, the energy consumption per unit of output for all regions
and major industries will be made public on an annual basis.
Moreover, the recently-issued 11th Five-Year Social and Econom-
ic Development Programme26 lists improvement of energy effi-
ciency as a major objective; the goal is to reduce the ratio of total
energy use to GDP by 20 percent in 2010 compared to 2005. Ener-
gy efficiency is also increasingly viewed as a key element of the
countrys energy security.27 In addition, a high-level task force
has been set up to draft a law on energy, with representatives
from several ministries. Furthermore, a Renewable Energy Law
endorsed by the various ministries was approved in February
2005 and went into effect in January 2006.28 Under the law, the

23. National Development and Reform Commission, Jieneng zhong changqi


zhuanxiang guihua (China Medium and Long Term Energy Conservation
Plan) (Beijing: China Environmental Science Press, 2005).
24. Authors interview, Beijing 2005.
25. Energy intensity is energy consumption per unit of Gross Domestic
Product (GDP).
26. The Five-Year Plan (jihua) is now called the Five-Year Program (guihua),
implying that the targets should be considered more as guidance than
as mandatory goals (Sugiyama and Oshita, Virtuous Asia).
27. Vice Premier Zeng Peiyan spoke to the Standing Committee of the NPC
on December 27, 2005 on this issue.
28. The Renewable Energy Law will make it compulsory for power-grid
164 Grild Heggelund

government has set as a target that 15 percent of all energy is to


come from renewable sources by 2020.29
Energy is definitely the key to economic development in
China. Poverty alleviation and economic development are main

Figure 2. Total Energy Consumption and Its Composition


for China in 200430

Sources: China Statistical Yearbook 2005; National Development and Reform Com-
mission, China Medium and Long Term Energy Conservation Plan.

companies to buy electricity generated from renewable energy sources


(such as water, wind, solar, biomass, geothermal, and marine-based
power), and all end users will share the costs. Guan Xiaofeng, Law on
Renewable Energy in Pipeline, China Daily (Beijing), October 21, 2004,
online at www.chinadaily.com.cn/english/doc/2004-10/21/content_
384164.htm.
29. Wind energy is one alternative currently targeted. The political emphasis
on this energy source is illustrated by the Beijing International Renew-
able Energy Conference in 2005, attended by high-level policy makers
such as the Vice Premier Zeng Peiyan, and the World Wind Energy
Association, which held the 3rd World Wind Energy Conference &
Renewable Energy Exhibition (WWEC 2004), in Beijing in late 2004.
30. Nuclear power was not specified in the China Statistical Yearbook, but is
often merged with hydropower. According to NDRC, hydropower and
nuclear power accounted for 7.6 percent of total primary energy pro-
duction in 2002.
Chinas Climate Change Policy 165

priorities for Chinas leadership, so climate-change policy must be


seen in this context. Fossil-based energy has been the main energy
source and will remain so in the near future. Chinas continued
reliance on energy consumption and production results in consid-
erable domestic air pollution and GHG emissions. The leadership
has recognized the need to curb local air pollution resulting from
energy consumption and production and has made energy policy
a priority. But mechanisms are needed to ensure the successful
implementation of this policy. Moreover, Chinas increasing ener-
gy demand will pose challenges, as will the rapidly growing
transport sector. In addition to being crucial to economic develop-
ment, energy is also central to Chinas climate change policy.

Climate Change in China: How Will It Affect China?

The effects of climate change and the economic losses due to


climate change are emerging issues in the domestic debate on cli-
mate change in China. The question is how the vulnerability
issue will affect China, and to what extent climate change may be
perceived as a potential threat to its national interests. The fol-
lowing section discusses some of the known impacts in China.

Vulnerability

Chinas vulnerability to the effects of climate change could


also be an important determinant for the development of climate
policy. Damage costs may be high. Chinese scientists have been
involved in climate change work since the early 1990s, and have
been concerned about the negative effects of climate change on
China.31 Their studies have focused on four areas that are all close-
ly related to the economy: coastal areas, water resources, terrestrial
ecosystems, and agriculture.32 Policy makers have not been equal-

31. A recent publication on the climate change impact in China is Qin Dahe,
Chen Yiyu, and Li Xueyong, eds., Climate and Environment Changes in
China (Beijing: China Science Press, 2005).
32. Zhonghua renmin gongheguo qihou bianhua chushi guojia xinxi tongbao
(PRC Initial National Communication on Climate Change) (Beijing:
China Planning Publishing House, October 2004).
166 Grild Heggelund

ly concerned, however, as climate policy has been characterized by


scientific uncertainty. However, due to the increasing droughts in
North China, decrease in runoff of major rivers, flooding in the
south, sea-level rise, glacial shrinkage in western China (by 21 per-
cent), and other natural disasters, the authorities have begun to
pay greater attention to the vulnerability issue. Recently, the disas-
ter relief department of the Ministry of Civil Affairs announced
that an increasing number of natural disasters are disrupting the
lives of 200 million to 400 million people on the mainland every
year and sending 10 million farmers back into poverty, causing
economic losses of more than 200 billion yuan a year.33 This is
partly attributed to global warming; moreover, China will have to
prepare for more extreme weather due to global warming. This
was stressed in the official report, Chinas Initial National Communi-
cation on Climate Change (2004), in the chapter on climate change
impact and adaptation.
Although the National Communication states in the introduc-
tion that climate change impact and adaptation research are still in
the early stages, it nevertheless concludes that the trend toward a
warmer climate is consistent with the global warming trend of the
past century. Coastal areas in the south and east are densely popu-
lated, and a rise in sea levels could greatly damage the economi-
cally dynamic and prosperous Zhujiang and Yangtze deltas.34
Increasing temperature levels could have a negative impact on
agricultural productionand Chinas agriculture is already under
pressure due to environmental degradation and pollution. Climate
change will further exacerbate this pressure. This development
could have a serious influence on food production, which, under
the present cropping system, could decrease by 10 percent due to
extreme weather conditions. China has a very long (32,000 km)
and densely populated coastline, with some of the largest and
most economically developed cities such as Shanghai, Tianjin, and
Guangzhou situated in low-lying coastal areas. Chinese research

33. Josephine Ma, 400m Lives Disrupted by Disasters Each Year, South
China Morning Post (Hong Kong), July 5, 2006, online at http://china.
scmp.com/chimain/ZZZYTL9P7PE.html.
34. Jiahua Pan, China and Climate Change: The Role of the Energy Sector,
Science and Development Network (2005), online at www.scidev.net/
dossiers/index.cfm?fuseaction=policybrief&dossier=4&policy=64.
Chinas Climate Change Policy 167

has estimated that a one-meter rise in sea level would inundate


92,000 square kilometres of Chinas coast, thereby displacing 67
million people living in coastal areas.35
In sum, China can be characterized as highly vulnerable to
climate change, and the vulnerability issue may become more
important if the climate becomes more extreme. Awareness of
vulnerability and adaptation is fairly recent in China, and these
issues have not been perceived as being of major importance in
negotiations. However, the growing emphasis on the need for
adaptation activities and economic support for such activities
indicates that climate change is increasingly perceived as a poten-
tial threat to Chinese national interests.36 Adaptation to impacts
of climate change will include securing the supply of food and
water, and the protection of coastal areas. China states that the
countrys low per capita resources make such adaptation chal-
lenging.37 Should many people fall into poverty as a result of nat-
ural disasters linked to climate change, this might well affect the
measures taken. It is clear that in poverty-reduction efforts, China
must consider the possible linkage between climate change and
the vulnerability of the poor. Vulnerability could also contribute
to elevating the climate change issue on Chinas domestic agenda
in the future.

Domestic and International Policy Making

As noted above, China also suffers from effects of climate


change such as increased flooding. However, the global climate
change debate has been kept distant from other domestic policy
issues, and does not relate to national development priorities.
Understanding the domestic context in which policy decisions are
made is crucial to understanding Chinas foreign policy. Unfortu-
nately, discussions of Chinas foreign-policy decisions seldom

35. World Bank, 1997, in Paul G. Harris, ed., Global Warming and East Asia:
The Domestic and International Politics of Climate Change (London: Rout-
ledge, 2003).
36. See Ida Bjrkum, China in the International Politics of Climate Change:
A Foreign Policy Analysis, FNI Report 12/2005, Fridtjof Nansen Insti-
tute, 2005.
37. PRC Initial National Communication on Climate Change.
168 Grild Heggelund

take into account the domestic context in which those decisions


are made.38 In domestic policy making, Chinas most influential
body, the National Development and Reform Commission
(NDRC), is in charge of economic policy, energy policy, and cli-
mate change policy. This has implications for climate policy.
Global climate change is not on the top of the political agenda and
is not considered to be a primary priority for Chinas decision
makers.39 Global climate change is seen as more closely related to
foreign policy, which means that it is affected by spillover from
other foreign-policy areas, as we will see below.

Domestic Decision Making

Chinas climate change policy is shaped by the interests and


priorities of a few key actors, with input from several less influ-
ential actors. The State Development Planning Commission
(renamed the NDRC in March 2003) was charged in 1998 with
coordinating the countrys climate-change efforts, following the
governmental reorganization that year. To promote coordination
among the numerous ministries involved in climate work, the
National Climate Change Coordination Leading Small Group
(CCCLSG; Guojia qihou bianhua duice xietiao lingdao xiaozu) was
established in 1990. The highest climate policy-making organ in
China, it is an inter-ministerial level committee chaired by the
NDRC. The committee has fifteen members (see Figure 3 below).
A Climate Change Office, established within the NDRC in 1998,
functions as secretariat to the coordination group.
Before the restructuring in 1998, responsibility for climate
change coordination was with the China Meteorological Adminis-
tration (CMA). Together with the Chinese Academy of Sciences
(CAS), the CMA is one of the lead agencies in the scientific discus-
sion on climate change. The CMA represents China in the Inter-
governmental Panel on Climate Change (IPCC), and its adminis-
trator (Qin Dahe) is the co-chair of the IPCC Working Group I.

38. Joseph Fewsmith and Stanley Rosen, The Domestic Context of Chinese
Foreign Policy: Does Public Opinion Matter? in David M. Lampton,
ed., The Making of Chinese Foreign and Security Policy in the Era of Reform,
1978-2000 (Stanford, Calif.: Stanford University Press, 2001).
39. PRC Initial National Communication on Climate Change, 2004, p. 11.
Chinas Climate Change Policy 169

With the climate change focus turning increasingly toward eco-


nomic impact, the influence of the CMA has diminished. On the
other hand, in view of the growing problems of flood, drought,
and other extreme weather related to climate change, the exper-
tise and scientific advice of the CMA and other climate scientists
will most likely receive more attention. Qin has expressed concern
about Chinas rising emissions.40 For several years now, Chinese
researchers have been involved in domestic and international
cooperation projects on climate change.41 Recently, twenty-eight
Chinese experts were selected for the write-up of the fourth assess-
ment report of the IPCC.42 Chinese scientists are also included in
the delegation to the Conferences of the Parties (COPs),43 and
their expertise seems to be increasingly applied in the negotia-
tions, although it is not known to what extent their advice has
influenced actual policy making. Moreover, economistsmainly
from the Chinese Academy of Social Sciences (CASS), Qinghua
University, and Renmin Universityhave become increasingly
involved in climate-change work and have been part of Chinas

40. The head of Chinas Meteorological Administration, Qin Dahe, stated


that Chinas CO2 emissions may surpass those of the United States by
2030-2035 (Nan Li, Experts). Qins statement does show that concern
about Chinas global CO2 emissions exists in China.
41. In 1989 Chinas climate-change research program involved forty projects,
twenty ministries, and five hundred experts. See Elizabeth Economy,
The River Runs Black: The Environmental Challenge to Chinas Future (Ithaca,
N.Y.: Cornell University Press, 2004).
42. Wo guo yi zhengshi qidong quanqiu qihou bianhua di sici kexue pinggu
(The Country Has Officially Initiated the Fourth Scientific Assessment
of Global Climate Change), Xinhua, August 13, 2004, online at www.
ccchina.gov.cn/index1.htm.
43. The Chinese delegation consisted of thirty-four delegates to COP/MOP
12. From agencies and institutions engaged in climate-change research
in China, there were sixteen delegates: three each from the China Mete-
orological Administration and the Energy Research Institute (NDRC),
one from the CAS, one from the Centre for Policy Studies (SEPA), two
from the Chinese Academy of Agricultural Sciences, one from the Chinese
Academy of Forestry, two from the Chinese Academy of Agricultural
Sciences, one from Renmin University, and two from Qinghua University.
See list of participants Conference of the Parties (COP) Twelfth Session,
Nairobi, November 6-17, 2006, online at http://unfccc.int/resource/
docs/2006/cop12/eng/inf01.pdf. Link to the COP websites online at
http://unfccc.int/meetings/archive/items/2749.php.
170 Grild Heggelund

delegations to climate negotiations. This reflects the growing


attention given to the economic aspects of climate change.
Chinese scientists are in general concerned about the impact
of climate change on their country and believe that measures must
be carried out to solve domestic problems. A recent publication
that illustrates this is the two-volume study, Climate and Environ-
ment Changes in China, edited by CMAs Director Qin Dahe among
others. They directly link the marked increase in climate change
over the past 50 to 100 years to human activity. Nevertheless, many
economists hold that it is necessary for China to develop before
taking on commitments, and that this should be done in a sustain-
able manner. One approach in their opinion could be to develop
cooperation along alternative paths, such as the Asia-Pacific Part-
nership on Clean Development and Climate (often called AP6),
carbon capture and storage, and energy cooperation, rather than
making commitments to reducing emissions.44 These actors with
different backgrounds that bring in information are important in
the decision-making process in general in China, although little is
known about their potential influence in the climate change area.
Increasingly, information and knowledge are serving as the
basis for policy making in general in China. Such information is
frequently provided by think tanks at research institutes, acade-
mies, and agencies that furnish policy makers with research
results.45 These think tanks may be independent bodies, or subor-
dinate to commissions or ministries. The increasing number of
independent think tanks seems to be influencing both domestic
and foreign policy in a way unthinkable only a few years ago,46
but further study is needed on the extent to which this is the case
in the field of climate change, where think tanks have the greatest
influence.47

44. Authors interview February 2006; see also Pan, China and Climate
Change: The Role of the Energy Sector.
45. Bonnie S. Glaser and Philip Saunders, Chinese Civilian Foreign Policy
Research Institutes: Evolving Roles and Increasing Influence, China
Quarterly, No. 171 (2002), pp. 597-616.
46. David Shambaugh, Chinas International Relations Think Tanks: Evolving
Structure and Process, China Quarterly, No. 171 (2002), pp. 575-96; Glaser
and Saunders, Chinese Civilian Foreign Policy Research Institutes.
47. Glaser and Saunders (ibid.), in their study of foreign-policy research
institutions, list four types of influence to reach policy makers that are
Chinas Climate Change Policy 171

The NDRC is one of the most powerful commissions in China;


it has been a central commission in the planned economy and it
has overall responsibility for economic development issues. Even
though China has moved toward a market economic system and
to a great extent abandoned the planned economy, the NDRC still
has responsibility for the five-year plans for economic and social
development (with input from other ministries). The commission
is a latecomer in the climate-change policy making process, but it
has assumed an increasingly salient role as economic and energy
issues have inched upwards on the domestic agenda. Its impor-
tance received a further boost following the March 2003 restructur-
ing, at which time it took over responsibilities of the State Economic
and Trade Commission.48 The Climate Change Office functions as
the secretariat to the National Climate Change Coordination Com-
mittee, but in practice has the responsibility for climate work in
China. The office has grown in size with the increasing activity in
the climate change area, in particular the Clean Development
Mechanism (CDM). Different officials in the office are responsible
for the CDM, the Asia-Pacific Partnership for Clean Develop-
ment and Climate (AP6), and the follow-up work in relation to
the Gleneagles Plan of Action.
Delegating the responsibility to the NDRC signified that cli-
mate change was no longer perceived solely in scientific terms,
but increasingly in political and economic terms. Moreover, it sig-
nified that the domestic discussion about Chinas potential contri-
bution to the international efforts to combat climate change had
taken a moderate, and not very proactive, direction. The NDRC
(together with the Ministry of Foreign Affairs, MFA) emphasized
economic development and sovereignty concerns in the climate
negotiations, which has resulted in a limited Chinese response.
Other actors (such as the State Science and Technology Commis-
sion, now the Ministry of Science and Technology, and the then
National Environmental Protection Agency, renamed the State

relevant for the study of climate change decision making: positional


influence, expertise influence, personal influence, and experiential influ-
ence. These issues will be examined in future work on climate change
policy making in China.
48. The State Economic and Trade Commission (SETC), which had been
responsible for energy-related matters, was abolished, and the NDRC
took over many of the responsibilities.
172 Grild Heggelund

Environmental Protection Administration in 1998) had been more


positive and believed there were potential benefits for China (for
instance access to technology) with a more proactive approach in
the negotiations.49
In addition to economic issues, the NDRC is also responsible
for developing energy policy. The Energy Bureau in the NDRC
has had primary responsibility for Chinas energy industry since
2003, following the above-mentioned institutional changes. The
Energy Bureau of the NDRC was given responsibility for energy
supply, while energy consumption and efficiency belong to a
division of the environment department (Department of Environ-
ment and Resources Conservation). China does not have a sepa-
rate energy ministry, but the establishment of a separate ministry
is being discussed in China. Analysts advocate that such a min-
istry with a clear mandate and authority be established in order to
achieve efficient implementation of energy policy.50 To reflect the
importance of energy issues, an Office of the National Energy
Leading Group was established in 2005 at the ministerial level.51
This office is in charge of overall energy strategy, but its actual
functions are as yet unclear. It serves the National Energy Lead-
ing Group, a high-level task force led by Premier Wen Jiabao (and
vice premiers Huang Ju and Zeng Peiyan) that meets annually.52
With the establishment of these institutions, energy concerns have
been elevated to the highest political level. Thus, when the NDRC
vice-chairman heads the delegation to the climate-change negotia-
tions and leads the high-level discussions, in close cooperation
with the Ministry of Foreign Affairs, the economic development
and energy issues are main concerns and are the source of Chinas
stance of no commitments.
One of the most influential ministries represented in the

49. Elizabeth Economy, The Impact of International Regimes on Chinese


Foreign Policy-making: Broadening Perspectives and Policies...but Only
to a Point, in Lampton, ed., The Making of Chinese Foreign and Security
Policy.
50. Sinton et al., Evaluation of Chinas Energy Strategy Options.
51. The office is headed by Ma Kai, the NDRC minister. The need for a sepa-
rate energy ministry is under discussion.
52. Other members of the Leading Group include the NDRC minister, Ma
Kai; Foreign Minister Li Zhaoxing; Finance Minister Jin Renqing; and
Commerce Minister Bo Xilai.
Chinas Climate Change Policy 173

CCCLSG is the MFA, which ensures that Chinas political and eco-
nomic interests are served in international negotiations. The MFA
plays an important role in the international political process on cli-
mate change, although it has been less involved in the scientific
and technical aspects. In the negotiations, it has argued that the
industrialized countries are responsible for global climate change,
and has continually stressed the need for technology transfer and
for establishing a favorable international funding mechanism. In
general, the MFA has been more in line with the position of the
NDRC in climate policy making to ensure the development needs
of China. With the MFA representing the Chinese government as
head negotiator, climate change is seen as being a foreign-policy
issue and is therefore influenced by other issue areas under the
purview of that ministry (see the section on international negotia-
tions). Moreover, the MFA sees China as speaking for the develop-
ing world, especially the G-77 countries.53
The Ministry of Science and Technology (MOST) is another
key ministry in the CCCLSG due to its relation to scientific research
and technology transfer. MOST established a research program
on climate change in the 1990s (funded by the then SDPC) and
MOST officials have traditionally been sympathetic to environ-
mental concerns. MOST has been represented in the delegation at
COPs, and one of its officials is a representative on the CDM
Executive Board. MOST is the ministry with the broadest techni-
cal expertise about CDM in Chinas bureaucracy, and has played
a central role in laying the ground for the development of CDM
projects in China.
The State Environmental Protection Administration (SEPA)
has participated in climate change work since the 1980s.54 SEPA
has been regarded as a weak administration; but it was strength-
ened as a result of the restructuring process in 1998, when it was
elevated from agency to administration, and received a large
increase in its responsibilities.55 SEPA is still not a full ministry,

53. An overview of the G-77 countries is at www.g77.org/. See Sjur Kasa,


Anne T. Gullhaug, Grild Heggelund and Ida Bjrkum, The Group of
77 in International Climate Negotiations: Recent Developments and
Future Directions? (unpublished ms., in submission).
54. Elizabeth Economy, The Impact of International Regimes.
55. SEPA took over responsibilities from the abolished Ministry of Forestry
(which became the Forestry Administration) for biodiversity, nature
174 Grild Heggelund

nor a full member of the State Council, but the SEPA administrator
has nevertheless been given ministerial status. And the adminis-
tration has become more vocal in the past few years. In particular,
SEPAs vice minister Pan Yue is outspoken on environmental issues.
SEPA is a member of the CDM Approval Board, established a
CDM team in 2004, and has been very active in CDM project devel-
opment such as landfill gas capture/recovery and HFC23 projects.
In sum, several ministries and administrations are engaged in
formulating Chinas negotiation positions, with varying degrees
of influence. The NDRC heads the delegation to climate negotia-
tions (on the vice-minister level) while the lead negotiator is often
from the MFAs Department of Treaty and Law. The NDRC sets
the agenda on domestic issues and MOST provides technical
advice. The NDRC has responsibility for both economic policy
and energy policy, since a precondition for economic develop-
ment is to have sufficient energy resources. In negotiations the
NDRC, together with the MFA, has the responsibility to ensure
that China does not take on commitments that can impede eco-
nomic development or impact on energy security, as would be
the case, in their view, with emission-reduction commitments.
Climate change being defined as a foreign-policy issue, the MFA
exercises great influence on what positions China should take in
climate negotiations. International climate policy in general is
regarded as a highly sensitive topic, as it is seen as closely linked
to the countrys economic development. The positioning is there-
fore usually left to Chinese negotiators with lengthy experience in
handling such delicate foreign-policy questions.
Actors representing core energy interests as well as economic
development interests have dominated the climate decision-mak-
ing process in the past decade, in particular the NDRC. Actors rep-
resenting economic interests may be less positive toward policies
that give priority to climate mitigation measures that may result in
negative effects on economic growth. MFA and NDRC have com-
mon interests to fend off taking on commitments, although the

reserve management, and wetland conservation; received increased


right to control marine pollution two miles from shore from the State
Oceanographic Administration; and assumed a more important role in
influencing nuclear energy developments. Abigail R. Jahiel, The Orga-
nization of Environmental Protection in China, The China Quarterly,
No. 156 (December, 1998), p. 774.
Chinas Climate Change Policy 175

reasons for this may be different. MFA stresses the responsibility


of the industrialized countries to reduce emissions, and it protects
Chinas membership in the G-77. NDRC emphasizes economic
and energy aspects. There have also been differences of opinion
between the two actors, mainly concerning domestic issues, and
differences within the NDRC as well.56 This was apparent in the
discussion regarding the HFC23 project. There was great uncer-
tainty whether development of HFC23 and N2O projects would be
allowed under the CDM in China, as they were regarded by some
NDRC officials as less sustainable than other projects and as not
being a priority area. The MFA was more positive. NDRC decided
to include the HFC23 and N2O projects as possible CDM project
development areas, albeit not as priority areas and subject to being
heavily taxed (see CDM section). Some actors (such as SEPA) exer-
cise less influence, but have traditionally been interested in using
climate change to promote alternative energy sources in order to
reduce pollution and emissions.57

China on the International Scene

China has been an active participant in international climate


negotiations, usually acting in concert with the G-77/China. It
has ratified the Kyoto Protocol,58 but has opposed any discussion
about commitments for the developing countries. Chinese nego-
tiators have repeatedly emphasized that developing country fol-
lowup of the UN Framework Convention on Climate Change
(UNFCCC) is contingent on the developed countries fulfilling
their obligations, on new and additional funding, and on transfer
of technology. Their main argument has been that China is still a
developing country.59 Even though the level of development in

56. Personal communication.


57. Elizabeth Economy, Negotiating the Terrain of Global Climate Change
Policy in the Soviet Union and China: Linking International and Domestic
Decision-making Pathways (UMI Dissertation Services, 1994).
58. China ratified the Kyoto Protocol on August 30, 2002. Zhu Rongji
Announces at the Summit the Approval of the Kyoto Protocol (in Chi-
nese), Xinhuanet, September 3, 2002, online at http://news.xinhuanet.
com/newscenter/2002-09/03/content_548448.htm.
59. See Kristian Tangen, Grild Heggelund and Jrund Buen, Chinas Climate
176 Grild Heggelund

its coastal regions is high, this is not representative of the rest of


the country. Chinese officials argue that increased emissions
must be allowed in order for China to develop its economy and
industry. The argument of low per capita emissions has been
convincingly used in negotiationsone eighth of the U.S. emis-
sions and about half of the world average.60 Chinese negotiators
have contrasted the survival emissions of developing countries
with the luxury emissions of developed countries, saying that
the developed countries should change their own patterns of
production and consumption, not force developing countries to
remove food from peoples tables.61
Historical responsibility for global warming is another argu-
ment: Beijings position is that, since China industrialized long
after the United States and Europe, it is the latter countries that
have a historical responsibility for taking the lead. China has also
carried out measures that have meant substantial emission cuts.62
Such measureswhich include energy efficiency and conserva-

Change Positions: At a Turning Point? Energy & Environment, vol. 12,


Nos. 2&3 (2001), pp. 237-52.
60. Interview with MFA official, Beijing, 2004. However, according to WRIs
CAIT database, Chinas per capita emissions (2000 figures) are higher,
about one sixth of the U.S. total.
61. Earth Negotiations Bulletin, Closing Plenary, vol. 12, No. 66, p. 9, online
at www.iisd.ca/vol12/.
62. Chandler et al., Climate Change Mitigation in Developing Countries. For an
extensive overview of measures in the energy and forestry sector imple-
mented in China that have led to reduced emissions, see State Develop-
ment and Planning Commission, Greenhouse Gas Mitigation from Sustain-
able Energy and Forestry Action in China (Beijing: SDPC, 1998). China
reduced emissions in the period 1996-1999 (David G. Streets et al., Recent
Reductions in Chinas Greenhouse Gas Emissions, Science, vol. 294,
(November 30, 2001), pp. 1835-37.), but this has been debated by experts
(Libo Wu, Shinji Kaneko and Shunji Matsuoka, Driving Forces Behind
the Stagnancy of Chinas Energy-related CO2 Emissions from 1996 to
1999: The Relative Importance of Structural Change, Intensity Change and
Scale Change, Energy Policy, vol. 33, No. 3 (February, 2005), pp. 319-35.).
Streets et al. claim that Chinas emissions were reduced in the period
while China was experiencing economic growth (decoupling Chinas
emissions from growth). For a discussion of possible reasons for the drop
in energy and coal consumption, see Jonathan E. Sinton and David G.
Friedley, What Goes Up: Recent Trends in Chinas Energy Consump-
tion, Energy Policy, vol. 28, No. 10 (August, 2000), pp. 671-87.
Chinas Climate Change Policy 177

tion, pricing, and population controlhave been implemented


not in order to curb global emissions growth, but to meet domes-
tic imperatives such as economic development, poverty allevia-
tion, and pollution abatement.
Chinas relations with the United States also seem to influ-
ence its positions. The U.S. withdrawal from the Kyoto Protocol
was not taken lightly: The spokesperson of the Chinese Ministry
of Foreign Affairs branded it irresponsible behavior.63 The gov-
ernment official stated that Washington was using the argument
about developing countries not having taken on commitments as
an excuse for withdrawing from the Protocol. Furthermore, the
U.S. withdrawal is regarded as an equity concern. As long as the
USA is not willing to take on commitments, and its energy use
continues to increase, this is not politically acceptable to China.64
Nevertheless, at COP-8 in New Delhi, the United States suddenly
shifted both rhetoric and alliances and supported the G-77 in its
rejection of discussing future (post-2012) commitments.65 At the
time, this seemed an unexpected policy shift, but this trend has
been strengthened since then.66 Moreover, the Asia-Pacific Part-
nership for Clean Development and Climate, of which both the
United States and China are members, may be another sign of a
new alliance.
When Chinese negotiators interpret climate negotiations in
the context of foreign affairs, Chinas status in the G-77 is also
relevant, for many of those countries hold China in high regard
because it is a shrewd, well-prepared negotiator. China enjoys
considerable influence in this group and there are no indications
of its intending to leave the G-77 in the near future.67

63. Ministry of Foreign Affairs of the PRC, The Spokesperson of the MFA
Comments on U.S. Withdrawal from the Kyoto Protocol (in Chinese),
online at www.fmprc.gov.cn/chn/9966.html.
64. Authors interview with Ministry of Foreign Affairs, Beijing, October
2002.
65. Bang et al., Shifting Strategies in the Global Climate Negotiations; Thomas
R. Jacob, Reflections on Delhi, Climate Policy, vol. 3, No. 1 (2003), pp.
103-106.
66. Steinar Andresen, Can Leadership Move the Climate Negotiations
Forward? in G. Sjsted, ed., The Kyoto Protocol: Overcoming Stumbling
Blocks (IIASA, forthcoming).
67. Interview, MFA official, Beijing, 2004. See more on G-77/China in Kasa
178 Grild Heggelund

China scholars generally agree that China used to be skeptical


about these regimes,68 but this may gradually be changing as
China is also interested in preserving an image as a responsible
power.69 This interest is related to the countrys rising status in the
world, in both economic and political terms. China aspires to be
seen as a nation abiding by the rules and regulations of interna-
tional environmental regimes. Chinas submission of its initial
National Communication to the UNFCCC in November 2004 must
be understood in the above context.70 The country is also an
emerging economic superpower, and the pressure to take on com-
mitments is intensifying. This is increasingly acknowledged by
Chinese officials and is reported in the media.71 The level of
national economy will be an important issue in future negotia-
tions. Incomes are rising and the estimated level of income, in
terms of purchasing power parity, is four times higher than the
official Chinese figures.72 When the Kyoto Protocol was negotiated
in 1997, China indicated that it would not even consider taking on
emission-reduction commitments until it had achieved a medium
level of development, indicating a per capita annual income of
$5,000.73 This argument appears to have diminished in relevance
and is seldom heard now. Indeed, China has stated that it will
remain a developing country for some time to come.74 Although

et al., The Group of 77 in International Climate Negotiations (forthcoming).


68. Economy, The Impact of International Regimes.
69. Wo guo guoji diwei xianzhu tigao (Chinas International Position has
been Raised), Renmin ribao (Peoples Daily, Beijing), September 30, 2002.
70. See the PRC Initial National Communication on Climate Change, which
was launched on November 9, 2004. Summaries in Chinese and English
are available on the China Climate Change Info Net, www.ccchina.gov.cn.
The full Chinese version (ibid.) has been published and was circulated
at COP-10.
71. Jingdu Yidingshu shengxiao zaiji; Zhongguo jingji zaoyu qihou yali
(Kyoto Prototcol Soon to Go into Effect; Chinas Economy will Encounter
Climate Pressure), China Climate Change Info Net, online at www.
ccchina.gov.cn/index1.htm (originally published in Huanqiu shibao
[Global Times], December 27, 2004).
72. See for example, International Energy Agency, World Energy Outlook
2004.
73. Pan, China and Climate Change: The Role of the Energy Sector.
74. Woguo jianchi yi fazhanzhong guojia shenfen shuxing Jingdu Yidingshu
(China Will Maintain Developing Country Status in Implementing the
Chinas Climate Change Policy 179

China has become more willing to enter into dialogue at the cli-
mate negotiations in the past few years, its stance of no commit-
ments has not changed. Moreover, at the latest COP/MOP in
Nairobi 2006, China seemed to be preoccupied with legal aspects
and wording details, which was seen by negotiators as a step
back.75 China thus seems unlikely to bow to the growing interna-
tional pressure and take on new commitments in the near future.

Domestic and International Interaction:


Chinas Involvement in the CDM

China has been perceived as being less difficult to deal with


in the negotiations during COPs, even though no change in its
principal position has been detected. China still maintains (as do
other developing countries) that the industrialized countries
must take responsibility for the present situation, and that the
poorer countries must be allowed to increase their emissions in
order to develop their economies. Nevertheless, the Clean Devel-
opment Mechanism is one area where interaction between Chi-
nese domestic priorities and international policies takes place,
strengthening the impression that Beijings current intention is to
participate in global climate-change efforts by means other than
commitments.

The Clean Development Mechanism (CDM)

The CDM is one of the three flexible mechanisms established

Kyoto Protocol), China Climate Change Info Net, online at www.ccchina.


gov.cn/index1.htm.
75. See Earth Negotiation Bulletin, Summary of the Twelfth Conference of the
Parties to the UN Framework Convention on Climate Change and Second
meeting of the Parties to the Kyoto Protocol, November 6-17, 2006, vol. 12,
No. 318 (November, 2006), published by the International Institute for
Sustainable Development (IISD), online at http://www.iisd.ca/climate/
cop12. Since COP 11, a change in lead negotiator from the MFA occurred,
as the previous lead negotiator went to the UNFCCC Secretariat. At the
last COP 12 in Nairobi, China was perceived as being a bit more difficult
than at the previous COPs, being preoccupied with language aspects,
but it is too early to say if this is due to change of negotiators only.
180 Grild Heggelund

under the Kyoto Protocol that enables the countries listed in


Annex I in the UNFCCC to invest in greenhouse gas emission
reduction projects in non-Annex I developing countries. This
enables Annex I countries to claim Certified Emissions Reductions
(CERs) to assist them in complying with their binding commit-
ments to GHG emission reduction at home.76 The second objective
of the CDM is to assist the developing countries in achieving sus-
tainable development. As noted, China was initially skeptical
about the introduction of the flexible mechanisms, seeing them as
instruments whereby the developed countries could escape
responsibility. There was also concern regarding public funding,
resulting in the diversion of ODA. However, Chinas position has
changed since COP 7 (the Marrakech Accords).77 It now actively
supports the CDM, and has developed an apparatus for identify-
ing, approving, and implementing CDM projects (see Figure 3
below).
The following discussion will present the domestic Chinese
CDM process, showing policy changes regarding the CDM. The
next section focuses on the current status of CDM in China and
the latest regulations, as this has relevance for Chinas potential to
attract and implement projects. The section also discusses whether
Chinas demand for equity in climate negotiations could be reflect-
ed through the CDM due to the possible contradiction between
equity and the market-based CDM mechanism.

Status: Policy and Regulations

After a few years of preparation, in June 2004 China announced


the establishment of a Designated National Authority (DNA), the
NDRC.78 The State Council adopted and issued interim measures
for the provisional rules for management of CDM projects.79

76. International Bank for Reconstruction and Development, Clean Develop-


ment Mechanism in China: Taking a Proactive and Sustainable Approach
(Washington, D.C.: World Bank, 2004).
77. Kristian Tangen and Grild Heggelund, Will the Clean Development Mecha-
nism be Effectively Implemented in China? FNI Report 8/2003 (Lysaker:
Fridtjof Nansen Institute, 2003).
78. Following approval of CDM projects by the national CDM Board, the
DNA issues a letter of approval.
79. National Development and Reform Commission, Interim Measures for
Chinas Climate Change Policy 181

Revised measures for management of CDM projects were issued in


October 2005.80 The approval procedure is that applications are
sent to the NDRC, which forwards them to an expert review. Should
the proposal pass the expert assessment (approximately one
month), the project proposal is then sent to the CDM Board (see
Figure 3), which appraises the proposal and makes a joint decision.
Should the proposal be rejected, it will have to undergo revision
and then be resubmitted. Following approval by the CDM Board,
the NDRC (the DNA) issues a letter of authorization, with formal
endorsement from the MFA and MOST.

Figure 3. Organization of Chinas CDM Apparatus81

Operation and Management of Clean Development Mechanism Projects


in China (2004), online at http://cdm.ccchina.gov.cn/. These measures
have been replaced by the permanent measures referred to in note 82.
80. National Development and Reform Commission, Measures for Opera-
tion and Management of Clean Development Mechanism Projects in
China, online at http://cdm.ccchina.gov.cn.
81. MFA (Ministry of Foreign Affairs), NDRC (National Development and
Reform Commission), MOST (Ministry of Science and Technology), CAS
(Chinese Academy of Sciences), CMA (China Meteorological Adminis-
tration), Mcom (Ministry of Communications), Mcon (Ministry of Con-
182 Grild Heggelund

From a fairly slow start, the approval procedure has now


become quite efficient. The first CDM project to be approved by
the DNA, the Anding Landfill Gas Recovery and Utilization Pro-
ject (see Table 1) received a letter of approval from the NDRC in
late 2004. The process had been rapid: It took only two months for
the NDRC to issue the letter of approval.82 Moreover, by Decem-
ber 31, 2006, 255 projects had been approved by the DNA.83 Priori-
ty areas for CDM projects in China are energy efficiency improve-
ment, development and utilization of new and renewable energy,
and methane recovery and utilization (CDM Measures).84 Most
projects belong to the priority area of renewable energy projects,
while the projects with the greatest GHG reduction potential are
the large HFC23 projects. There are a few methane recovery and
utilization projects and a few energy efficiency projects (see Table 1).
The DNA meets frequently, and the approval system appears
to be dynamic and predictable, especially for priority projects.
The process is also fairly transparent. In addition, the National
CDM Management Center (CDM guanli zhongxin) has recently
been established within the Energy Research Institute (ERI).85
This center, under the guidance of the Climate Change Office in
the NDRC, will mainly operate at the project level and will
assist the office with receipt of material for CDM project applica-
tions, organize experts, and keep a database of projects. With a
semi-governmental status, the center will make sure that gov-
ernment CDM policies are followed. Other CDM centers and
training programs are also being prepared throughout the coun-

struction), MOA (Ministry of Agriculture), MOF (Ministry of Finance),


MWR (Ministry of Water Resources), SEPA (State Environmental Pro-
tection Administration), SETC (State Economic and Trade Commis-
sion), SFA (State Forestry Administration), SOA (State Oceanographic
Administration), CAAC (General Administration of Civil Aviation of
China), and Mofcom (Ministry of Commerce). See www.ccchina.gov.
cn/index1.htm.
82. NDRC official, November 2004.
83. For further details on the types of projects, see http://cdm.ccchina.gov.
cn/web/NewsInfo.asp?NewsId=1024 (in Chinese).
84. Office of National Coordination Committee on Climate Change, Measures
for Operation and Management of Clean Development Mechanism Pro-
jects in China, online at http://cdm.ccchina.gov.cn/english/NewsInfo.
asp?NewsId=905.
85. Interview with Climate Change Office, November 2006.
Chinas Climate Change Policy 183

Table 1. Projects Approved by DNA of China (as of December 31, 2006)

Number of Estimated Average GHG


Project type
Projects Reduction (tCO2e/y)
Energy saving and efficiency improvement86 29 7,436,363
Renewable energy 179 21,893,127.95
Methane recovery and utilization 26 15,022,050
HFC23 (Chemical pollutants reduction) 8 51,093,068
N2O Decomposition 3 14,726,343
Afforestation and Reforestation 1 20,020
Fuel substitution 9 6,491,107
TOTAL 255 116,682,078.95
Source: CDM in China, http://cdm.ccchina.gov.cn/web/NewsInfo.asp?NewsId=1024.

try, in particular in the less developed areas.


Another important step for building CDM implementation
capacity is being taken by international assistance organizations
and bilateral and multilateral donors. Projects are carried out by
the UNDP, World Bank, Asian Development Bank (ADB), and
some bilateral donors.87 This assistance could greatly benefit China
and future CDM investors, helping China to create an effective
system for approval of projects and enhancing awareness of the
opportunities offered by CDM among local stakeholders.

CDM Measures

As noted above, the interim CDM measures were issued in


June 2004. The regulations were not clear in some areas and
were later revised in light of experience from project implemen-
tation. The new measures became effective as of October 12, 2005
(Measures for Operation and Management of Clean Development
Mechanism Projects in China), replacing the interim measures.

86. The official list of approved CDM projects lists the following project
types in the energy sector: improvement of energy efficiency, energy
saving, energy saving and efficiency improvement. Table 1 above places
these projects in one category.
87. See Lin Wei, Grild Heggelund, Kristian Tangen and Li Jun Feng, Efficient
Implementation of the Clean Development Mechanism in China? FNI Report
1/2004 (Lysaker: Fridtjof Nansen Institute, 2004).
184 Grild Heggelund

The revised CDM regulations reflect the uncertainty Chinese offi-


cials have with regard to implementing CDM projects. Regulations
repeat Beijings stance on making no commitments and the fear
that ODA can be reduced as a result of the CDM. In particular,
two issues have come to the attention of international investors/
experts. One concerns ownership. Article 11 of the Interim Mea-
sures requires that the CDM project developers must be enterpris-
es that are wholly owned by Chinese or enterprises with Chinese
majority ownership. Certified Emissions Reductions (CERs),
which are permits generated through the CDM, are considered to
be state sovereignty resources, and revenues from sales of CERs
should go partly to the state through a CDM levy.
The revised measures announced a tax of 2 percent on pro-
jects in the priority areas. Afforestation (and possibly reforesta-
tion projects: zhishu zaolin) will also be subject to a 2 percent tax.
Heavier taxes are to be levied on HFC and PFC projects (65 per-
cent), and N2O projects (30 percent): These are not priority areas
and are regarded as less conducive to sustainable development
despite their high value in terms of CERs. The fees collected
from these projects will go into a fund managed by the Ministry
of Finance and jointly decided by the NDRC and other relevant
ministries, to be spent on climate change activities.88 The Asian
Development Bank and the World Bank are assisting China with
the operation of this fund by providing capacity building as well
as help in developing a CDM fee-collection mechanism.89
All the new projects will be required to pay such a tax, but
previous projects are exempt from such a payment. The eligibility
of companies for CDM projects is a key feature that the Chinese
government uses to protect the benefits of CDM. According to
Chinese officials, if enterprises are wholly foreign owned, the
benefits merely go from the enterprise in China to the enterprise
headquarters abroad, with less benefit for China. China does not
wish for companies to become involved solely for the sake of

88. See National Development and Reform Commission, China Medium


and Long Term Energy Conservation Plan.
89. See Asian Development Bank, Peoples Republic of China: Establishment of
the Clean Development Mechanism Fund, Technical Assistance Report (2006);
and Chinese Firms, WB Ink Deal on Carbon Emission, China Climate
Change Info-Net, December 20, 2005, online at www.ccchina.gov.cn/
en/NewsInfo.asp?NewsId=4387.
Chinas Climate Change Policy 185

profit, but also for sustainable development. Moreover, Chinese


enterprises are less competitive in the CDM market than foreign
companies operating in China. If all the companies in China
should be made eligible for CDM projects, the Chinese compa-
nies would not be able to have any CDM projects. But it is these
Chinese enterprises that need the transfer of technology and
financial resources for clean development. On the other hand,
officials are also aware of the need for flexibility. In principle 51
percent of an enterprise should be Chinese-owned. However, it
appears that some leeway may be allowed, for instance if a for-
eign-owned company is willing to invest in sustainable develop-
ment and poverty-alleviation projects in China. This flexibility is
still uncertain and is not specifically mentioned in the CDM
measures.

Market Understanding and Stakeholders

Lack of market understanding and awareness among deci-


sion makers and stakeholders in the financial sector could be one
factor affecting Chinas allocation of projects. After many years as
a planned economy, the country is only gradually shifting to a
market-based economy. In the past few years it has, however,
managed to build up vital expertise in its civil service regarding
CDM policy making, especially at the central level. A few
research institutes have also developed competence in the techni-
cal aspects of CDM projects, and several consultancies (both Chi-
nese and foreign) have now been established with staff who had
previously worked in official agencies. The CDM picture in Bei-
jing is gradually becoming more diversified, but capacity remains
low outside the capital. Although the government has paid con-
siderable attention to CDM rules and procedures, the various
local authorities and project developers have not been very
involved in that process. However, China has begun taking steps
to ensure that economists and market specialists become familiar
with the international market, which will increase the countrys
chances of competing successfully internationally for CDM pro-
jects. Promoting local stakeholder involvement is also likely to
provide considerable benefits. Training is held for enterprise
managers through the international capacity-building projects
outside Beijing. Since projects will be evaluated as commercial
186 Grild Heggelund

ventures, it will be increasingly important to bring in project


developers in China. Countries have been ranked according to
their investment climate.90 Initially, China ranked fairly low; but
now it has risen to the top of the ranking list as analysts have rec-
ognized that regulations have improved and that approval proce-
dures are functioning.

CDM and Emissions Reduction Potential

Chinas environmental policy priorities are focused at the


local and regional level, which means that GHG reduction is
attractive as a side effect (co-benefit) of domestic mitigation efforts.
The CDM can contribute to reducing emissions, and China has the
potential to generate half of the total worldwide annual CERs.91
Currently, eighteen projects have been approved by the CDM
Executive Board and 125 projects have been approved by Chinas
DNA. The number of projects is increasing steadily.92 China still
lags behind India, however. India has 62 percent of all CDM pro-
jects in Asia while China comes in second, with 21 percent. On the
other hand, China is currently the world leader in terms of CER
volume from registered projects until 2012: 51 percent, compared
to Indias 31 percent. It is especially HFC23 and N2O decomposi-
tion projects (five and one respectively) that explain this sizable
GHG reduction potential.93
Chinese officials note that CDM is one of several initiatives
taken by China to curb emissions.94 One recent example is the
Asia-Pacific Partnership that focuses on technology cooperation.
Areas where the CDM would make a difference are also key areas

90. See Point Carbon online at www.pointcarbon.com.


91. International Bank for Reconstruction and Development, Clean Develop-
ment Mechanism in China.
92. For further details see UNFCCC, Registered CDM Project Activities,
online at http://cdm.unfccc.int/Projects/registered.html. The CDM/JI
Pipeline Overview of the CDM & JI, online at www.cd4cdm.org/Publi-
cations/CDMpipeline.xls.
93. See UNEP Risoe Centre CDM capacity building website, online at
www.cd4cdm.org/Publications/CDMpipeline.xls.
94. Gao Feng, then in the Department of Treaty and Law, MFA (now UNFCCC
secretariat), at the inception meeting for the UNDP Capacity Building
Project, November 20, 2003, Beijing.
Chinas Climate Change Policy 187

of political focus in China: energy, energy efficiency improve-


ment, and new renewable energy development. There is a great
potential in the energy sector for CDM projects. Currently, most
projects are renewable-energy projects, but as yet there have been
few energy efficiency projects developed in China. The explana-
tion is that such projects are costly, and approved methodologies
are missing (at the CDM EB). GHG reduction projects could gen-
erate annual CER credits equal to 151 to 225 million tons of car-
bon dioxide equivalent. The CER revenue from CDM projects has
been calculated to have a potential annual revenue stream of
$1.51 billion to $2.25 billion, based on $10 per million tons of car-
bon dioxide equivalent.95 The funding for CDM projects in China
would be small in comparison with (for instance) foreign invest-
ment in China (estimated at $60.3 billion in 2005)96 and the size of
the Chinese economy. Although it is still too early for comprehen-
sive evaluations of CDM projects in China, the CDM path does
seem a promising way for China to reduce its GHG emissions.

Conclusion

This article can only provide some preliminary conclusions


based upon long-term research into Chinas policy making on cli-
mate change. China is facing major challenges with regard to
future developmental needs, not least in the energy sector. Given
these challenges, will China be able to reduce its large GHG
emissions in the near future? We may note both negative and
positive trends. One side effect of continued economic growth
the number-one priority in Chinais that energy consumption is
now on the rise again after a reduction in the late 1990s. This
could be a negative factor that might influence the potential for
reducing emissions. In addition to industrial energy needs, rising
living standards have resulted in greater energy demands in the

95. Asian Development Bank, Peoples Republic of China: Establishment of the


Clean Development Mechanism Fund.
96. UNCTAD, Data Show Foreign Direct Investment Climbed Sharply in
2005, press release UNCTAD/PRESS/PR/2006/002, January 23, 2006,
online at http://www.unctad.org/TEMPLATES/Webflyer.asp?docID=
6733&intItemID=1528&lang=1.
188 Grild Heggelund

transport and building sectors. Should todays patterns of energy


consumption continue, an increase in GHG emissions as well as
in domestic pollution seems unavoidable.
On the other hand, there are also some positive trends. In the
long run, the greater political focus on finding alternative energy
sources will impact positively on both the domestic and global
environments. The Outline of Chinas Medium and Long-term Energy
Development Program (2004-2020), the China Medium and Long
Term Energy Conservation Plan, and the renewable-energy law
illustrate this positive development. However, political focus alone
cannot guarantee efficient implementation: Achievements here
are dependent upon funding and upon measures and mecha-
nisms to ensure that policies are carried out. This will be a chal-
lenge for China. The energy issue is closely linked to the climate
issue. The energy sector is one area where China would be able
to carry out emission-reduction measures fairly quickly, provid-
ed the technology and funding could be made available.
Energy policy relates directly to the central priorities of the
Chinese leadership. It is decided at the highest levels as it is con-
nected to the countrys main priority: economic development.
Energy conservation and energy efficiency have now become top
political priorities for the Chinese leadership, and this is a promis-
ing development with regard to emission reductions. Climate
change on the other hand is dealt with at the vice-ministerial
level. Mainstreaming of climate change policy into economic
development policy is necessary for China as the current climate
change debate is kept separate from the development priorities of
China.
Will vulnerability play a role in shaping Chinas climate poli-
cy? Climate changes have already taken place in China, according
to Chinese climate change experts and Chinas National Communi-
cation.97 Increasing storms and extreme weather conditions are
occurring more frequently, and are more often related to climate
change. Vulnerability to climate change may also make the coun-
try more willing to accord global climate change prominence on

97. PRC Initial National Communication on Climate Change, 2004; Qin Dahe,
Chen Yiyu, and Li Xueyong, eds., Zhongguo qihou yu huanjing yanbian
(Climate and Environment Changes in China), vols. I and II (Beijing:
China Science Press, 2005).
Chinas Climate Change Policy 189

the domestic political agenda, although it is too early to predict to


what extent this will influence policy. The attention increasingly
paid to the issue of vulnerability may result in scientists gaining
greater influence in climate change policy making.
Chinas climate policy is largely formed by one commission
and a few ministries. The powerful NDRC is responsible for eco-
nomic development, climate change, and energy policya clear
indication of the economic aspect of climate change and the
importance placed on the issue. The MFA has the main responsi-
bility for climate negotiations; together with the NDRC, its repre-
sentatives make up the central policy-making team. The MOST is
also an important player, providing technical advice, especially
regarding CDM. These commissions/ministries also appear to be
communicating with an increasing number of think tanks and
consultancies on scientific and economic issues. The trend is to
involve more think tanks, thereby increasing the number of actors
in the policy-making process. This in turn has resulted in the
inclusion of more social scientists (mainly economists) in climate
change research in China. Some of them also participate in the
delegations to climate negotiations. This development reflects the
increased focus on the economic perspective related to climate
change. For China, it will be useful for scientists to take part in
international climate change organizations such as the CDM EB
and IPCC, because of the ensuing exchanges. This could also be a
way to promote greater understanding of Chinese issues and per-
spectives in international discussions on climate change.
How will China participate in global efforts to combat climate
change? Will it agree to emission reductions under the Kyoto Pro-
tocol? China participates in international efforts, under the Kyoto
Protocol and in other types of multilateral, regional, and bilateral
cooperation aimed at mitigating climate change, including cooper-
ation on the CDM, technological development of renewable ener-
gies, and carbon capture and storage. In the international negotia-
tions China had been perceived as more forthcoming than before,
although this was less so at the last COP in Nairobi in 2006. How-
ever, its principal position has not changed, and it is not likely that
major policy changes can be expected in the near future. A tenta-
tive conclusion based on the discussion in this article is that while
China views these different forums as an arena for cooperation on
energy technology, it considers the UN (and in this case the Kyoto
190 Grild Heggelund

Protocol) the appropriate arena in which to express its opinions on


development issues and demonstrate its new role as a world
leader in politics and economy.
One positive development is the CDM, which can be seen as
one way for China to cope with some of its domestic pollution
problems by utilizing an international mechanism. Initially
skeptical, China has become one of the most active and attrac-
tive countries for CDM projects and its projects have increased
rapidly since the establishment of the DNA. An efficient CDM
apparatus has been established, and expertise is being devel-
oped further throughout the country. The increasing interest
shown by foreign governments and enterprises in developing
projects in China can provide a good opportunity for China to
reduce its growing emissions through the CDM, thereby active-
ly participating in global efforts aimed at dealing with climate
change.

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