US-China Assignment

Hello Reader,

In this post I present to you one of the essays I completed as part of my coursework. Please note that this essay was turned in on 18th March 2010, so some of the remarks in the conclusion are already a bit dated. For example, "the current political gridlock" in Washington has moved beyond the national healthcare debate; however, it has yet to actually reach a culminating point on climate change and energy! On the other hand, a new version of legislation is gaining some traction and the EPA has released its new rules for greenhouse gas emissions permits.

I hope you enjoy my academic musings...

“Compare the roles of China and the USA in the development of global climate policy”

I.    INTRODUCTION

The United States and China are consistently recognized as the world’s leading emitters of greenhouse gases. Thus, they will necessarily play an integral role in the success or failure of the development of any global climate policy efforts. However, a cursory inspection of either country’s economic, political, and social structures and issues will make it evident that for either country to successfully draft (and subsequently ratify and enact) a domestic climate change policy would be no small measure. Let alone the effort required to develop a useful global climate change policy that would simultaneously satisfy both countries and the rest of the world. Therefore, it should come as no surprise that attempts to do so have been fraught with difficulty.
This essay compares the roles that the People’s Republic of China (PRC) and the United States of America (US) have played and will likely play in the development of global climate change policies.

To do so coherently, the topic has been broken into a contextual section, a contemporary section, and a conclusion section. The contextual section looks at the internal structure of each country, the role that each country has played in the Kyoto Protocol process (from its initial agreement through to its implementation in 2005), and the issue of embodied emissions in international trade, which has been largely avoided in global climate negotiations to date. The contemporary section is split into two subsections. The first addresses the Asia-Pacific Partnership on Clean Development and Climate (APP) to which both countries have been active partners since its inception in 2006. The second focuses on the events leading up to and since the Copenhagen conference. Finally, the conclusion section briefly speculates on upcoming developments surrounding the US and China with regard to global climate change policies.

II.    CONTEXTUAL

1.    US INTERNAL CONSTRAINTS & INFRASTRUCTURE

Up until very recently the United States has long held the title of the world’s largest GHG emitter with net annual emissions well over 6 GT of CO2e with the vast majority (>85%) of emissions coming from the energy sector (UN FCCC 2008). This is not surprising based on the breakdown of primary energy sources in the US: petroleum 37.1%, natural gas 23.8%, and coal 22.5% (EIA 2008). Thus, any climate change policy developments must be designed to contend with a US infrastructure that is largely developed and reliant upon fossil fuels.

The structure of the US federal government, notably the separation of powers amongst the legislative, executive, and judicial branches, combined with the bipartisan nature of the American political system means that the negotiation, ratification, and ultimate implementation of any (global or domestic) climate change policy will necessarily be a difficult process. In the case of a global rather than a domestic policy, an extra layer of complication is introduced in that the President (or likely members of the State Department) is responsible for negotiating the policy, while the ratification of the policy (enacting it as law) is the responsibility of Congress, before responsibility is handed back to the executive branch (likely the Environmental Protection Agency and several other departments) for enforcement. All the while, other political discussions and quarrels in Congress have the potential (proven empirically time and again) to derail or delay meaningful action with regard to climate change policy.

While the US federal government has yet to enact any statutorily binding climate change policy (international or otherwise), it does offer a number of financial incentives that promote the implementation of renewable energy and energy-efficient technologies (e.g. incentives offered in the Energy Policy Act of 2005). Also, significant progress has been made on other levels (e.g. state, corporate, and NGO).

In fact, according to the U.S. DOE (2009), “24 states plus the District of Columbia that have [legally binding Renewable Portfolio Standards] policies in place”, which require renewable energy to account for 10-33% of the energy produced in the enacting state with deadlines ranging from 2015-2030. At a corporate level, the Chicago Climate Exchange (CCX) offers a legitimate GHG emissions trading forum for companies operating in North America (e.g. Ford Motor Company, Rolls-Royce, DuPont, and Sony Electronics, Inc.). The CCX members “make a voluntary but legally binding commitment to meet annual GHG emission reduction targets” (CCX 2007, quotation in original formatting). Furthermore, entire sectors in the US, notably that of higher education, have begun to champion the cause of stabilizing GHG emissions through their own actions without waiting for regulation. A prime example of this is the 675 higher education institutions that are signatories to the American College & University Presidents Climate Commitment, which obligates its members to establish a methodology and deadline for achieving climate neutral operations (ACUPCC 2010).

Thus, despite the United States’ apparent floundering in the international policy arena of climate change, the country is relatively well positioned to take action on the issue. However, without coherent federal leadership, the US will likely have a difficult time fostering the diplomatic prestige that the EU appears to have in the climate policy arena.

2.    CHINESE INTERNAL CONSTRAINTS & INFRASTRUCTURE

With estimates of the exact date varying, it is widely accepted that the People’s Republic of China has recently overtaken the US as the world’s largest emitter of greenhouse gases. The Pew Center on Global Climate Change (2007) estimates that China’s emissions have grown by about 80% since 1990. Similar to the US, this is not surprising considering that 65% of China’s energy consumption is met with coal (Pew 2007) and China is the second largest consumer of oil behind the US (EIA 2009). It is especially unastounding given China’s record economic growth over the past decade.

Unlike the multi-branch nature of the US federal government, the Chinese national governance of energy and climate policy has a complexity of its own variety. The National Development and Reform Commission (NDRC) of the PRC is at least ostensibly the primary controller of China’s climate change policies and published China’s National Climate Change Programme (NDRC 2007), which is a comprehensive overview of China’s national stance regarding and response to climate change issues.

However, Downs (2008) explains that policy direction from the NRDC by no means ensures action with interference from external and internal parties (e.g. private energy  industry companies and high-ranking members of the Chinese Communist Party respectively) being a regular occurrence. Furthermore, the introduction of the purportedly understaffed National Energy Administration (NEA) in the PRC government muddles the issue of responsibility regarding enacting and enforcing energy- and climate-related policies (Downs 2008).

NEA, which was established in March 2008, is now supposed to be responsible for key areas (e.g. development and planning, international cooperation, and general administration of energy policy) related to negotiating any international climate change policy. Yet, the NEA does not have the authority to adjust energy prices, an authority which is still held by the NRDC (Downs 2008). Thus, the PRC seems to be mired in bureaucratic turf battles that have an overall derailing and delaying effect that could be likened to the United States’ issues at the federal level.

Finally, it is important to note that as a non-Annex I country China has no formal obligation to reduce its emissions under the Kyoto Protocol to which it is a ratified signatory. However, in China’s National Climate Change Programme (CNCCP), the NRDC (2007) repeated refers to China as a country of responsibility, which means that it will work toward reducing the carbon intensity of its economy. In other words, China is actively attempting to increase its quantity of economic output measured in GDP per ton of CO2e emitted annually through a variety of energy, transportation, forestry, and industrial management schemes (Pew Center 2007). Also, the wording of the CNCCP makes it fairly clear that China expects much of its future mitigation to be driven by technological advancement rather than major economic shifts (NRDC 2007). Of course, with China’s economy growing at roughly 10 percent per annum over the past two decades with little signs of slowing, it is likely that China’s overall GHG emissions will continue to grow in spite of its efficiency efforts (Wang and Watson 2008).

3.    HISTORICAL (KYOTO – 2005)

For better or worse, the negotiation of global climate change policy over the past decade has been centered around the clarification and implementation of the Kyoto Protocol. The primary tenants of Kyoto involved securing reductions in greenhouse gas (GHG) emissions from Annex I countries (i.e. developed or industrialized nations) while allowing non-Annex I countries freedom to develop as a form of equity (Bolin 1998).

Since the initial agreement, virtually all of the roughly 200 nations that participated in the negotiations have ratified the Kyoto Protocol with the notable exception of the US. The protocol has spurred the EU to develop a mandatory GHG emissions trading scheme. It also fostered approximately 1400 cost-effective Clean Development Mechanism (CDM) projects to reduce GHG emissions in non-Annex I countries, of which half are hosted by China (Taplin and McGee 2010). Despite these generally encouraging successes, Kyoto has many criticisms.

As Bolin (1998) pointed out, the targets and timelines for action in the protocol were set out by the policymakers with a limited understanding of the inertia of the climate system; therefore, even in 1998 Bolin expected that additional international efforts would be required prior to 2010.
Instead of relying upon science for strict guidance, Kyoto was developed based largely around political feasibility and international acceptability. It offered generous allowances to the transitional economies (e.g. the former USSR) and offered special exceptions to Australia, Iceland, New Zealand, and Norway (Bolin 1998). Furthermore, Kellow (2010) explains that by choosing the 1990 baseline for emissions countries such as the United Kingdom and Germany were asked to make smaller commitments than might have otherwise been chosen, which were indirectly passed onto the rest of the EU under the European Burden Sharing Agreement.

Regardless of the merits and shortcomings of the Kyoto Protocol at the time of the signing, the end result is that neither the US nor China have realized any attributable, real reductions in GHG emissions due to the agreement. In 2001 the US under the Bush administration fully withdrew from its commitment to Kyoto, which was at least partly due to lack of reductions commitments from non-Annex I countries. Meanwhile, China, which was not required to make any GHG reduction commitments as a non-Annex I country, has only nominally participated in the agreement by participating in the CDM program, and it has been argued that much of China’s dubious CDM participation is likely not actually beneficial with regard to mitigating climate change (Kellow 2010).

4.    EMBODIED EMISSIONS IN TRADE ISSUES

Though the topic of GHG emissions embodied in internationally traded goods has been generally avoided by policymakers and policy negotiators attempting to gain a consensus, it has received attention from the academic community (e.g. Wang and Watson 2007, 2008 and Peters and Hertwich 2008), and its inclusion in policy discussions has the potential to radically shift the tone of global climate change policy efforts. In fact, Peters and Hertwich (2008) suggest that international trade may be one of the most decisive issues in climate policy.

Furthermore, at least as far back as the Reagan administration in the 1980s, the US has put an emphasis on trade in its foreign policy by working with various degrees of alacrity to open up global and regional trade with partners in the Western hemisphere, the Pacific, and Asia through free trade agreements (Barfield 2009). Also, China’s net exports account for around 23% its total annual GHG emissions for 2004 (Wang and Watson 2007).

Thus, emissions embodied in trade seem to warrant special attention of its own, particularly in the context of US and Chinese influence on global climate policy. Unfortunately, with the US being a net importer (imports accounted for 7.3% of annual GHG emissions) and China being a net exporter (exports accounted for 17.8% of annual GHG emissions) of GHG emissions simultaneously (Peters and Hertwich 2008) it is likely that the two countries will disagree regarding whom should take responsibility for emissions: the producer or the consumer. Yet, Wang and Watson (2007) and Peters and Hertwich (2008) indicate that leaving the issue unresolved in global climate change negotiations will likely lead to an inefficient and/or ineffective  policy with the potential for “carbon leaking” (i.e. industries moving from regulated to unregulated, carbon-intensive economies). This outcome could be damaging to both the environment and economic stability in the long-term.

III.    CONTEMPORARY

1.    ASIA-PACIFIC PARTNERSHIP (2006 – PRESENT)

In July of 2005 Australia, India, Japan, the Republic of Korea, China, and the US, which were later joined by Canada in 2007, developed a vision statement for a non-binding partnership focused on promoting sustainable development and addressing climate change issues (Kellow 2010). The result was formation of the Asia-Pacific Partnership on Clean Development and Climate (APP) at a ministerial meeting in January of 2006 in Sydney (APP 2006a).

The APP (2006a) Charter describes an organization designed to share technical and policy information through public-private partnerships such that each of the member countries can build their own capacity to implement clean development technologies and environmental programs. The APP (2006b) Work Plan explains that the work of the APP will be done through industrial/governmental task forces that will research and explore bottom-up approaches. The task forces are divided into eight key sectors: (1) cleaner fossil energy; (2) renewable energy and distributed generation; (3) power generation and transmission; (4) steel; (5) aluminium; (6) cement; (7) coal mining; and (8) buildings and appliances (APP 2006b). The concept of task forces appears to be particularly novel to the APP in comparison to other international climate change policy alternatives, and its research and development focus has the potential to open up new connections between industry professionals and researchers in different countries (Aldy et al 2003).

Academically, there seem to be two primary schools of thought regarding the APP: those that see the APP as a distraction that detracts from the Kyoto Protocol (e.g. Taplin and McGee 2010) and those that see the APP as a useful alternative or supplement to the short-comings of the Kyoto Protocol (e.g. Kellow 2010). Taplin and McGee (2010) argue that – despite the clause inserted at the request of Japan within the APP Charter indicating otherwise – the structure of the APP is irreconcilable with one of the primary tenants of the UN FCCC (i.e. common but differentiated responsibilities) and is designed to undermine current climate governance. However, it could easily be argued that the APP was created due to the poor design of Kyoto.

Kellow (2010) believes that the APP is an excellent exercise in ‘mini-lateralism’ that avoids the least common denominator effect of global negotiations by limiting the discussion to a few key countries. Some of the least common denominator effects that the APP avoid include the lack of action by major developing nations and binding international commitments that are extremely difficult to enact and enforce (i.e. abutting against the infrastructural constraints described in the contextual section above).

While it is clear that the APP’s focus on improving carbon intensity rather than absolute GHG emission reductions is a weaker means of mitigating the causes of climate change (Taplin and McGee 2010), the APP by no means precludes – in fact it at least nominally encourages – nations to develop climate change policies that result in absolute reductions. Also, Taplin and McGee’s (2010) suggestion that the APP promotes a sense of inequity by forcing major developing nations (e.g. China) to take action now seems to be largely missing the point. This is especially the case considering China is voluntarily participating in the APP and the US federal government was able to address climate change through a back door during a time period when it was politically unfeasible to enter through the front. And, even though it was probably not designed with this in mind, the APP also allowed the US some freedom toward the end of the Bush administration when according to Barfield (2009) many political figures would not consent to any program associated with the out-going president.

2.    PRE/POST-COPENHAGEN

This section is designed to look at the adjustments, political wrangling, preparations, and fall out of the Copenhagen conference in December of 2009 and address the impacts that the US and China have had on the process and each other. It should be noted that due to the extremely recent nature of this topic the spread of academic literature to date is relatively sparse, and this section should be read as such.

Almost any sampling of national US press coverage in 2009 will likely make it clear that newly-seated President Obama was the center of attention. The lead up to the Copenhagen conference was hardly different though the president naturally shared the limelight with the Environmental Protection Agency (EPA), Congress, and surprisingly the US Supreme Court. In Congress, the Waxman-Markey bill, which is otherwise known as the American Clean Energy and Security Act and proposes a ‘cap-and-trade’ system along side a national 20% renewable energy standard, was introduced in the house in July of 2009 (Pelosi et al 2009).

Though the bill was not signed into law prior to the Copenhagen conference – and actually has yet to do so – the US federal government did begin to act to address climate change in 2009. This was made possible thanks to a finding by the EPA, in response to a 2007 ruling by the Supreme Court, that GHGs were a threat to public health and the environment and were therefore subject to regulation under the Clean Air Act, which was initially developed to combat the causes of acid rain and other types of air pollutants (EPA 2007). Unfortunately, this finding did not carry enough momentum to warrant a total shift in United States’ negotiating policy at Copenhagen or lead directly to setting GHG emissions reductions targets. However, the EPA (2007) does recognize it as a pivotal first step in forcing the US federal government to acknowledge and address climate change.

Since Copenhagen, the US news media have not focused significantly on developments in US climate change policy. Instead the primary focus has been on the reform of healthcare legislation, which has been championed by President Obama throughout the beginning of 2010. China on the other hand has been the center of attention with regard to climate change policy since Copenhagen.

Building upon its efforts in the run up to Copenhagen, such as the research, clean coal, and energy efficiency goals outlined in the joint statement by NEA and the IEA (2009), China has made the news for its climate policies a number of times since Copenhagen. The Associated Press (2010) reported in early March that China is in the process of drafting a 10 year green energy plan. The report included a goal of 15% renewable energy by 2020, similar to its earlier commitment in the NEA and IEA (2009) joint statement; however, the report cited an additional goal of decreasing the carbon intensity of the Chinese economy by 40-45% by 2020 (Associated Press 2010).

IV.    CONCLUSION

With the recent Chinese announcement about its forthcoming 10 year plan and recognition that China has overtaken the US as the world’s largest investor in renewable energies (van Loon 2010), the US is swiftly losing the arguments that led to the stagnation of the Kyoto Protocol. These developments could have a range of implications for United States climate and clean energy policies. Factor in the EPA ruling mentioned above, and it is likely that Congress will have little choice to act before the end of 2010. Otherwise, the EPA will be compelled to regulate GHG emissions without further guidance and even the most staunchly conservative Republicans may have difficulty explaining why China is taking the lead on global energy policy while the US is falling behind. At this point the main inhibitor to addressing climate change policy in the US may be the current political gridlock surrounding the national healthcare debate.

Once the US takes some domestic action, and assuming that the NEA and NRDC continue along their predetermined path, it is possible that the two countries that were previously doing the least to address climate change will end up doing the most even it is simply a matter of scale. China has been on a research and development dependent path even prior to the release of the CNCCP (NRDC 2007). The US has a smattering of potential advantages as outlined in the contextual section and is currently on a path toward some version of a Cap-and-Trade based system of governance (Pew Center 2010).

It seems that both countries could stand to benefit from additional emphasis on and funding toward the APP. If this occurs in combination with one (more likely the US) or both countries setting targets for actual GHG emissions reductions or even especially stringent measures to improve carbon intensity, the need for a global climate change policy may fall by the wayside much to the chagrin of EU leaders. Thus, the rest of the world would have to make due with the US and China doing something rather than everything promised in Kyoto and patch together several regionalized policies.

This vision may not sound like a global ideal, but it certainly does seem more reasonable and pragmatic given the current circumstances outlined throughout this essay. Furthermore, a regionalized approach and a breakdown of the post-Kyoto mindset may allow other issues such as emissions embodied in international trade to creep into the global climate policy forum. It certainly seems like such an issue is more pertinent to a global climate regime than universal (or OECD-based) emissions targets since it deals with the interplay between countries and cannot be built upon multiple domestic policies.

In summary, US and China have differing superficial needs, constraints, and goals in the climate policy realm, but ultimately their mutual drive for economic growth and current reliance on fossil fuels result in a similar set of policy aims. As such, it is likely that the US and China (and the competition and cooperation between them) will continue to push global climate change policy towards a more fragmented and regionalized system of governance in the near future.

For reference list please see the accompanying post.