The price of cleanlinessOct 22nd 2009From The Economist print editionChina is torn between getting greener and getting richerTHE Taiyanggong Thermal Power Plant in north-east Beijing is delightfully green. Unlike most of China’s smoke-belching power stations, ithas such low emissions that luxury flats are being built next to it. They are fetching high prices. Owners will look out over something thatlooks more like a cluster of office buildings (apart from a couple of grey chimneys) than a power plant. The cooling towers, near a grove ofdate trees and an ornamental pool, look a bit like the Great Wall.With the help of two natural-gas-fuelled turbines built by America’s General Electric, Taiyanggong produces only half the carbon emissionsof a coal-burning facility of comparable size in China. It also generates much less smog-forming nitrogen oxide. Its steam supplies heat to1m homes. When Hillary Clinton visited the power station in February, she called it a “wonderful collaboration” between China and Americain clean-energy production. “We need to figure out ways to do more and more of this,” Mrs Clinton said. That is where the problems begin.The Beijing authorities built Taiyanggong to impress the world in the run-up to the Olympic games which opened in the city in August2008—on the same day that America opened a new embassy in Beijing (heated, American officials say proudly, by Taiyanggong). Some5,000 workers toiled night and day to deliver on the Chinese government’s promise to provide an environmentally friendly power source forthe games. Taiyanggong was connected to the grid with nearly eight months to spare.Money was no object. It was clear that natural gas would be considerably more expensive than coal, the fuel used by most power plants,and American-made state-of-the-art turbines would be far costlier than those made at home. Maintaining the GE machinery would keeprunning costs high for years to come. But the government was in a high-spending mood, pouring about $40 billion into an infrastructuremakeover for the games.Now the power station’s owners, led by a municipal state-owned company, are struggling to make it work financially. Luckily for them,Taiyanggong has qualified for funding under the UN’s Clean Development Mechanism (CDM), which enables rich countries to offset carbonemissions by paying for carbon cuts in developing ones. Zhang Yandong, a senior manager at the plant, says it will receive about 80m yuan($12m) in CDM money this year. Even with this, he says, the plant will at best break even. A CDM project report estimates that it costs50% more to generate electricity at a plant like Taiyanggong than it does at an equivalent coal-fired facility.But American officials hope this will change, and that co-operation on climate change will even help strengthen the relationship overall. Atthe UN in September Mr Obama said America was “determined to act” on climate change. When he visits China next month, the topic willbe the centrepiece. He is likely to secure an agreement on greater co-operation over clean-energy development between the two countries.He might even prise out of Mr Hu what he meant when he spoke of a “significant cut” in China’s carbon intensity (the amount of carbonemitted per unit of GDP) by 2020.But even if Mr Hu and Mr Obama appear in broad agreement on what needs to be done, persuading politicians and the public in bothcountries will not be easy. China has set impressive targets but struggles with ill-motivated bureaucrats. In America even lacklustreclimate-change legislation now before Congress could founder as Mr Obama devotes political energy to what he clearly sees as a higherpriority: health-care reform.The road to CopenhagenIn Beijing the two presidents will avoid airing public doubts about each other’s countries’ fitness for the task. If China and America—theworld’s two biggest greenhouse-gas polluters, which between them account for 40% of the world’s carbon-dioxide emissions—are seen tobe in accord, their officials reckon, there will also be a better chance of agreement at the UN climate conference in Copenhagen inDecember. That meeting is meant to come up with a successor to the Kyoto protocol of 1997, a treaty on cutting carbon emissions thatCongress never ratified.Securing vague agreements will be the easy part. Having recently overtaken America as the world’sbiggest carbon emitter (see chart 3), China is anxious not to be singled out as the main obstacle toclimate-change prevention. To China’s leaders, image counts for a lot. China will cling to the view(shared by most developing countries) that the developed world bears the main responsibility fordealing with the problem. But it is also keen to co-operate. Cutting the growth of its carbonemissions happens to fit well with China’s longstanding campaign to use energy less wastefully andreduce its dependence on imported oil (see chart 4). If the rich world, through CDM arrangements,can help China achieve that, so much the better.What China will want in return is lots of money. Unfortunately for its environment, coal is plentifuland cheap. About 70% of China’s electricity supply comes from coal-fired power stations. So thequestion is how fast China can introduce technologies to reduce carbon emissions fromcoal-burning, or else replace coal with cleaner forms of energy, both of which will be expensive.China will demand that developed countries foot the bill and also help provide the technology.This will be hard for Mr Obama to sell to Congress.Politicians will worry about how to monitor China’s success in achieving its targets. China pledgedin 2006 to reduce the amount of energy used per unit of GDP by 20% by the end of this decade.Officials say the country is on track to achieve this. But stimulus spending is flowing into energy-burning industries. In the pursuit of growth local governments are even less inclined to takeenergy-saving targets seriously. And verifying whether China is meeting its energy targets will behard. For China to measure its carbon emissions and for America to be satisfied with the resultswill be even harder. Even a pledge for emissions to peak by 2035 will not go down well in America.Kenneth Lieberthal of the Brookings Institution says China will be under pressure to make it earlier,perhaps 2020 or 2025.Technology transfer will also be a thorny issue. China resents the idea of American clean-energycompanies taking
View Full Document
Unlocking...