As we look forward to the Climate Change Summit to be held in Copenhagen between 7th and 18th December 2009, expectations fluctuate from week to week. Opinions vary from those which see it as an empty gesture likely to result in few commitments and little action, to those which hail the meeting as the “last chance to save the world”. A more measured view would be realistically sceptical about the chance of firm deals being agreed, but modestly optimistic that the very process of holding the summit will lead individual governments to take steps to address climate change, regardless of the lack of or weakness of internationally-agreed commitments.
But this then leads to the question of the scope individual governments have to draw up and effectively implement strategies and plans to drive through a radical change in their domestic energy sectors. This is where the real difficulties start, as we in the United Kingdom have experienced over the last few years. Delivery has lagged far behind rhetoric.
The two countries which attract the greatest attention in climate change discussions are the USA and China, for they are the world’s largest energy consumers, accounting for 20% and 18% of the world’s primary energy consumption in 2008. They are also the largest consumers of coal, accounting for 17% and 43% of global coal consumption – and coal is the greatest emitter of greenhouse gases among the main sources of commercial energy. Though the USA and Europe are indeed the greatest historical contributors towards global warming, the future definitely lies in Asia, and particularly in China given its rapid economic growth, relatively high energy intensity and dependence on coal.
Over the last few years China’s government has drawn up strategies to address, first, energy efficiency and, second, climate change. Though the government continues to resist external pressure to make long-term, binding commitments on energy use and carbon emissions, there is no doubt that the government is trying hard and with some significant success to enhance energy efficiency and to promote cleaner forms of energy.
In this column in August 2008, I identified a number of constraints to the sustained success of China’s energy efficiency strategies, namely: the government’s unwillingness to supplement administrative measures with robust financial and economic instruments; the continuing dependence on heavy industry to drive economic growth; weaknesses in the political systems for formulating and implementing energy policy; and the apparent unwillingness of citizens to voluntarily adapt their behaviour to support government policy
The challenge of constraining and eventually reducing carbon emissions from China’s energy sector requires much more radical adjustments than those which comprise the current energy efficiency strategy. Yet these additional adjustments are themselves constrained by such fundamental factors such as the natural resource endowment, the energy infrastructure, and the links between energy and other sector policies.
The most immutable aspects of a country’s energy sector are the scale, nature and geographic distribution of its primary energy resources. In the case of China, these comprise an abundance of coal resources and only modest oil and gas resources, all of which lie mainly in the north of the country, far from the current centres of economic activity in the south and east. Though efforts have be made to encourage the diffusion of economic activity to the west and north, for example through the Develop the West Strategy, and to develop new and renewable forms of energy, the country is condemned for the foreseeable future to rely on an essentially inefficient and dirty fuel (coal) and on the need to transport energy over long distances.
Investment in new infrastructure to produce, transform and transport energy has continued at a prodigious and accelerating rate. For example power generation capacity doubled from 357 GW to 713 GW over the period 2002 to 2007, and some 90% of this growth was in coal-fired plants. Investment in rail networks to transport coal, in electricity transmission lines and in oil and gas pipelines has also been massive. Though such investment is clearly necessary in order to supply the energy required to support economic growth, the nature of this investment is such that it perpetuates and ‘locks in’ the country to the existing system of energy supply. Given how much of China’s energy infrastructure is relatively new and given that its working life should be on the order of decades, these recent investments provide a tight constraint on future government energy policy.
Likewise, at the other end of the energy supply chain, the nature, the energy properties and the location of new factories and of civil, commercial and residential buildings will play a strong role in determining the scale and nature of energy demand for many years.
Energy is linked to almost every sector of the economy. The manner and rate in which energy is consumed is dependent on the size, rate of growth and structure of the national economy, and on the state of technology applied in the consumption of energy in the industrial, commercial and household sectors. The manner in which investment is made in energy production and consumption varies according to the way in which finance are made available, for example through banks or directly from the government, and the systems for pricing energy products, commodities and manufactured goods. In turn, the pricing of energy is itself linked to the nature of the social welfare systems, for if these systems are not well developed it may be essential to use energy subsidies as an instrument for poverty alleviation. If energy is imported or exported, this energy trade is likely to be supported by actions in the field of diplomacy and security.
As a consequence, energy policy is intimately linked with many other national policies. National economic development policies will set out the desired rate of economic growth, the overall structure of the economy, and the role of exports or imports. In the case of China, the desire for a sustained high rate of growth, continuing investment in heavy industry and infrastructure, and the drive to maximise exports have all contributed to the size and structure of demand for energy. These strategies tightly constrain the scope for changes in energy policy.
These constraints posed by the resource endowment, the energy infrastructure and the policy linkages are formidable by themselves. A further consideration is the extent to which the government is committed to drive through the required changes. Yet the really critical question for China, and indeed for any other country, is the extent to which the institutional framework governing the economy in general and the energy sector in particular is suited to encouraging and supporting the required adaptations. The institutional framework includes the government organisations, the systems of policy-making and implementation, the judicial system, and the laws and regulations, as well as the shared beliefs and expectations which govern social and economic interactions.
This is not the place for a detailed analysis of China’s institutions of governance, but any assessment of the ability of China to sustain its climate change and energy policies over several decades has to include such considerations. A focus on rhetoric and short-term success may lead to quite misleading conclusions about the long-term. This applies to all countries, whether rich or poor.
Philip Andrews-Speed is Director of the Centre for Energy and Mineral Law and Policy at the University of Dundee, Scotland.