China: Fed up With Growth at Any Cost
May 17, 2013
In the past year, we’ve seen images of extreme pollution events across China, far in excess of anything that would be tolerated in developed countries.
What’s been largely uncovered by mainstream media in the west, are the protests and demonstrations, sometimes violent, that have been breaking out against new coal power stations, oil and gas development, and polluting industries across China.
It’s a standard climate denial talking point that “whatever we do will make no difference because China yada yada”. Time to put that one to rest. Not only has China been leading the world in the development of renewable energy, but has now begun serious discusions about when to introduce a carbon tax of their own..
Environmental carnage of all sorts is a truly major emergency in China, both in the short term and as a potential limit on the country’s development;
Chinese emissions are a problem not just for its own people but also for the world. It has now overtaken the U.S. as the biggest carbon emitter; most of the coal that is burned anywhere on Earth is burned in China.
Contrary to what you might think, China’s economy is relatively less efficient, and more polluting, than those of rich countries. It takes more energy to heat and cool the standard Chinese building than one in Europe or the US; Chinese farmers use more water, fertilizer, and pesticide per unit of output than is typical even with mechanized farming in the US; Chinese factories put out more air and water pollution per dollar of production than rich-country counterparts. On a per capita basis, the Chinese economy uses less energy than America’s. On a per dollar (or per RMB) basis, it uses more. Simplest way to remember this point: China’s economy is nowhere near as large as America’s now, but it puts out more emissions.
China’s pollution problems are a subset of the larger structural challenge for the Chinese economy — in a way that is well explained at Dance to the Revolution. For more than thirty years price controls have been set to speed/subsidize the growth of huge export-manufacturing industries, and to increase farm output. Thus all these things have been kept artificially cheap: coal and gasoline; fertilizer, pesticide, water; plus financing itself, and use of the environment as a free good. Because they’re cheap, companies and farmers have of course used these things freely and often wastefully.
Everyone in the Chinese economic world knows that the country is not going to move out of cheap-workhouse status, toward the realm of “real” rich-country corporate power and prosperity, unless (among other changes) it begins removing these price distortions. So that’s the significance of a modest carbon tax, beyond its limited immediate environmental effect. It’s part of the effort to “rebalance” the Chinese economy by removing some of its most distorting factors.
Bonus diplomatic-leverage point: Chinese officials have long used U.S. inaction on climate and carbon-tax issues as a rationalization for not taking steps of their own. On average, we’re still quite a poor country, the spokesmen would say. If the rich U.S. can’t “afford” to deal with emissions, how could we? Now the country is taking this carbon-tax step for reasons of its own reasons — as a way to deal with pollution and as another step in un-distorting the economy. But as a bonus it gets talking points to prod the US to do its part.
Takeaway. The movement away from fossil fuels is part of a global awakening by large numbers of ordinary people, who get it that, while economic development is important, the planet’s life support system is now at risk. It is wrong to assume that China is a monolithic, lockstep society with no dissenters or competing factions. There is a struggle going on that needs to be recognized, and when possible, supported.
Bloomberg is now reporting that implementation of the carbon tax has been delayed for now.
China will wait until after this year to introduce a tax on carbon, deferring to concern that economic growth might suffer, a government researcher said.
The nation eventually expects to introduce a levy of 5 yuan to 10 yuan (80 cents to $1.61) per ton of carbon, Jia Kang, head of research at the Ministry of Finance, said in Beijing yesterday. The tax, proposed in China’s latest five-year plan, was intended to apply to carbon emissionsfrom fossil fuels, KPMG International said in a May 2011 report.
The carbon tax is “still in internal discussions,” as there is “obvious opposition,” Jia said without identifying the opponents.
The delay comes just as China, the world’s biggest emitter, steps up effort to reducegreenhouse gases and improve energy efficiency. The government will cut emissions and energy use per unit of gross domestic product by at least 3.7 percent in 2013, the National Development and Reform Commission said yesterday. The previous target was 3.5 percent.
Obviously, China has its own Republicans and science deniers, as here. Stay tuned.