Category Archives: Environment

China Reaffirms Its Arctic Ambition

Drift ice in the Arctic Ocean seen from the deck of the Chinese icebreaker Xue Long, 2010. Photo credit: Timo Palo. Licenced under Creative Commons

THIS BYSTANDER NOTED China’s Arctic ambition as long ago as 2010. Since then global warming has made northern shipping routes from Asia to Europe through the Arctic only more feasible as summer sea ice has further diminished.

In 2013, China acquired observer status at the Arctic Council, which comprises nations with an Arctic littoral (full members) or an interest in the region (observers). The previous year, the Ukraine-built diesel-powered Xue Long (Snow Dragon; seen above in 2010) then the world’s largest non-nuclear icebreaker, had made the first passage from China to Iceland through the far north.

It has been participating in Arctic research trips since 1999; China has had a research station on the Spitzbergen Archipelago since 2004. A larger and stronger indigenously designed version, the Xue Long 2, is due to come into service next year. It will be a hybrid research vessel-ice breaker that can carry up to 90 scientists and crew. Nuclear-powered icebreakers will follow. Development contracts were signed between the National Nuclear Corporation and State Shipbuilding Corporation in 2016.

Not only would a northern route through the Arctic lessen the costs and dangers of shipping Chinese goods to Europe via the traditional and lengthier sea routes through the Moluccan Straits, the Indian Ocean and the Horn of Africa, it would also make drilling for oil and gas a practical possibility. The region may hold up to a quarter of the world’s untapped fossil energy reserves.

On Friday, the State Council Information Office, the government information office directed towards foreign audiences, released an English-language white paper, China’s Arctic Policy, that sets out Beijing’s intentions towards the development (and conservation) of Arctic resources over the coming decades, in particular, shipping routes.

It manages to slip in the presumably intentionally eye-catching phrase, Polar Silk Road, there times but the document is mainly an affirmation of the long-standing position that China sees itself as having interests in the Arctic and intends to be active in the region’s economic development and governance.

Chinese mariners, fishermen, scientists, petroleum engineers and even tourists plying the increasingly less icy waters of the Arctic in ever more significant number, will concern Russia, for one. The United States will see yet more evidence of China’s asserting itself globally, notably when the white paper says responsibility for the region now goes beyond the eight nations, including Russia and the United States, with territorial sovereignty in the Arctic.

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Carbon Trading In China Is A Slow Burn

A coal-fired power plant in Shuozhou, Shanxi province, China. Licensed under the Creative Commons Attribution 3.0 Unported license. Photo credit: Kleinolive.CHINA, THE WORLD’S biggest polluter, is taking the slow road to market-based initiatives to tackle climate change.

As far back as June 2011, Wang Shu of the National Development Reform Commission (NRDC)’s Climate Change office said, “The initial plan is to establish carbon emissions trading schemes in some pilot regions, and try to establish a unified national system in 2015.”  By 2015, the deadline for a national carbon market had been pushed back to 2017, though pilot markets had started running in seven cities from 2013.

On December 19, the NRDC finally announced a nationwide carbon emission trading system. That sort of met the delayed deadline. But only sort of.  It will cover only the power generation industry — such as the coal-fired power-generation plant in Shuozhou seen above — and not the total of eight heavy industries originally proposed.

Also, implementation details are still to be worked out. The start of trading is probably at least a year away.

Nonetheless, the announcement marks a milestone on the way to establishing a what will be by some distance the world’s largest national carbon market. With more than 1,700 power-generating firms with aggregate carbon-dioxide emissions of 3.3 billion tonnes — about one-third of China’s greenhouse gas emission — the new market will surpass the EU’s Emissions Trading System (EU-ETS) in size to become the world’s largest.

By comparison, the seven pilot markets traded emission quotas covering 200 million tonnes of carbon dioxide (with a traded value of 4.6 billion yuan, or $700 million).

Both the EU and China’s are cap-and-trade markets. In these, governments set a cap on allowable emissions and then issue companies with emissions credits adding up to that cap. The market incentive is for companies to cut their emissions so they can sell unused allocations to corporate polluters who are exceeding their share of the cap; and for the heaviest polluters to reduce their emissions to cut their costs. In a perfect world, carbon pricing drives innovation in low-carbon technologies and promotes a shift to a clean energy economy.

Environmental economists have a rule of thumb that a price of at least $35 for a tonne of carbon is needed to make companies change their behaviour. In the EU-ETS, carbon is trading at around $7 a tonne and has done for several years.

That is likely to be the initial price when China’s national market starts. The challenge will be to steer the market, so it gets the price to above $35 a tonne.

Plenty of details still have to be worked out.  National systems for reporting data, registration and trading will have to be set up. Once trading starts, there is also likely to be a phase of free trading so companies can get used to market. That could last as long as a year.

Only then will the market be able to be expanded beyond electricity generators. There are some 7,000 companies in industries from cement making to paper production that are likely eventually to be brought under the carbon market regime.

A successful cap-and-trade scheme relies on a strict but feasible cap that decreases emissions over time. China at least has a starting point in that regard. In its voluntary targets submitted to the UN’s climate talks in Paris in 2015, Beijing said it aimed to cut carbon dioxide emissions per unit of GDP by 60-65% from the 2005’s level by 2030, the year in which it is expected to hit peak emissions.

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China’s Plans For Neighbourhood Nuclear Heating

CHINA NATIONAL NUCLEAR CORP. (CNNC) has been experimenting with a neighbourhood nuclear power plant the size of an Olympic swimming pool designed to provide heating for about 200,000 homes.

A 400-megawatt low-pressure ‘Yanlong’ small modular reactor (SMR) has been heating CNNC’s buildings for about three years, and the state-owned company has just run a 168-hour trial of district heating in Beijing.

The mini-reactors will cost an estimated $225 million to build (a fraction of the cost of a full-scale plant, typically upwards of $10 billion) and can be fabricated off-site and delivered by lorry, cutting constructing to three years.

How readily citizens will accept that a swimming-pool-sized nuclear power plant in the backyard is safe is one key question. Another is the economics. Neighborhood nuclear could be cheaper than gas, but pricing nuclear is notoriously difficult to forecast.

If the cost and safety issues can be resolved, SMRs become an attractive alternative to fossil fuels for cities on clean energy and environmental grounds and would help China meet its goal of increasing its domestic nuclear capacity to 200 gigawatts by 2030, up from 35 gigawatts at the end of March.

Small-scale reactors such as the one CNNC is testing fit into a wider research drive to develop and commercialise SMRs not just for cities but also islands, ships and other forms of transport.

CNNC is testing a small-scale reactor dubbed Linglong or Nimble Dragon in Hainan, and reports in October said a prototype floating nuclear power plant would be deployed before 2020 at drilling platforms in the Bohai Sea. An offshore nuclear power plant programme had been confirmed in January.  The South China Sea is the likely destination for some of them.

Such small-scale reactors are potentially commercial lifelines for the nuclear industry worldwide, which has struggled since the 2011 meltdown at Japan’s Fukushima nuclear reactor. Beijing suspended nuclear development in the wake of the disaster and only cautiously resumed it in October 2012.

China is not alone in seeing a large global market for small-scale reactors; so, too, does Russia and the United States, both of which are working on designs for them. Meanwhile, China intends for its nuclear power industry to go global, and has ambitions to sell 30 of its third-generation large nuclear power unit, the Hualong or China Dragon, by 2030 to countries involved with the Belt and Road Initiative.

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China Will Rebalance The World’s Energy

Wind turbines in Xinjiang, 2005. Photo credit: Chris Lim. Licenced under Creative Commons

ACROSS THE MORE heavily industrialised provinces, factories and plants are being ordered to shut down or limit production during the winter months. This is both to curtail excess industrial production and also to curb seasonal smog, a byproduct of China being the world’s largest consumer of coal, which provides 65% of its energy.

The newly published annual outlook from the International Energy Agency (IEA) brings a glimmer of a silver lining to that particular dark cloud. China, it says, will remain a ‘towering presence’ in coal markets, but it believes coal use peaked in 2013 and is set to decline by almost 15% over the period to 2040.

China burnt 2.75 billion tonnes of coal in 2013, more than the rest of the world put together.

It is no secret that Beijing sees pollution as a potential political problem and that it is keen for China to go green. Lian Weiliang, deputy head of the National Development and Reform Commission, said earlier this week that the country was ahead of pace in its goal to cut coal capacity by 500 million tonnes within three to five years of 2016, while the Ministry of Industry and Information Technology forecast that environmental protection equipment manufacturing would be a 1 trillion-yuan ($150 billion) industry by 2020.

The new era will be about energy policy where the focus is on electricity, natural gas and cleaner, high-efficiency and digital technologies, not an energy system dominated by coal and a legacy of serious environmental problems, giving rise to almost 2 million premature deaths each year from poor air quality.

The switch will also flow from rebalancing the economy from a development model based on heavy industry, infrastructure development and the export of manufactured goods to one driven by higher-value-added manufacturing, services and domestic consumption.

Signs of the new era are there to be seen. Energy demand growth slowed markedly from an average of 8% per year from 2000 to 2012 to less than 2% per year since 2012. Official plans call for it to slow further to an average of 1% per year to 2040.

Energy efficiency regulation is a large part of the explanation. Without new efficiency measures, the IEA reckons, end-use consumption in 2040 would be 40% higher.

Nonetheless, such is the compounding effect of economic growth that by 2040, per-capita energy consumption in China will exceed that of the European Union and electricity demand for cooling alone in China will exceed the total electricity demand of Japan today.

The IEA reckons that China will need to add the equivalent of today’s United States power system to its electricity infrastructure to meet the demand expected by 2040. Such will be the scale of China’s clean energy deployment, technology exports and outward investment that it will play a huge role in determining global energy trends and in particular provide the momentum behind the low-carbon transition.

“When China changes, everything changes”, as the IEA says.

The agency lays out the future thus:

One-third of the world’s new wind power and solar PV is installed in China … and China also accounts for more than 40% of global investment in electric vehicles. China provides a quarter of the projected rise in global gas demand and its projected imports of 280 billion cubic metres in 2040 are second only to those of the European Union, making China a lynchpin of global gas trade. China overtakes the United States as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day in 2040. But stringent fuel-efficiency measures for cars and trucks, and a shift which sees one-in-four cars being electric by 2040, means that China is no longer the main driving force behind global oil use – demand growth is larger in India post-2025.

China will also continue to lead a gradual rise in nuclear output, overtaking the United States by 2030 to become the largest producer of nuclear-based electricity.

The shift to a more services-oriented economy and a cleaner energy mix will take a decade to have its effects on the skies above. The IEA projects carbon dioxide emissions will plateau at only slightly above current level by 2030 before starting to fall back.

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Trump Hands Beijing Clear Skies For Global Climate Leadership

Air pollution at sunset, Shanghai, China, 2008

THE UNITED STATES’ withdrawal from the Paris climate accord, newly announced by US President Donald Trump, formally opens space for Chinese and European leadership on the issue that has been expanding ever since candidate Trump denounced climate change as a Chinese hoax designed to weaken US industry.

Having committed on the campaign trail to withdrawing the United States from the deal within 100 days of taking office, Trump now says he will make good on that promise and seek renegotiation of the accord on terms that are not as “draconian” for the United States.

The United States accounts for more than 15% of the world’s greenhouse gas emissions, a share exceeded only by China. Its withdrawal from an agreement that depends on the largest polluters making some of the deepest cuts to emissions inevitably weakens the accord’s chances of success.

During a trip to Germany, Prime Minister Li Keqiang reiterated ahead of Trump’s announcement Beijing’s commitment to the accord. China and the European Union are expected to issue a joint statement to bolster it  in the light of Trump’s abandonment (Update: they did). They are likely to reaffirm their joint commitment to cut back on fossil fuels, develop new green technologies and raise $100 billion a year by 2020 to help poorer countries cut their emissions.

Beijing’s position on climate change has swung through 180 degrees. Once considering international efforts to get it to limit carbon emissions to be an unwanted interference in its internal affairs, China has since become a strong proponent of efforts to halt global warming — and to develop global leadership in climate mitigation technologies.

Li will be familiar with the smog-choked skies above Beijing and a host of other cities (the picture above is of Shanghai). And also with the increasing popular unease at environmental degradation. He made a point of saying that the Paris accord was in China’s self-interest.  Certainly climate change constitutes not just a health challenge to authorities but also an economic and political threat to the Party.

However, it also offers Beijing a tremendous geopolitical opportunity. By not just rejecting the Paris accord but reneging on commitments, Trump hands China an opening to take on global leadership on what may well prove to be the defining issue of the century. Such an offer will not be refused.

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The Global Greening Of China

CHINA HAS THREE imperatives when it comes to climate change: to use the issue to cement its growing position as a world power; to deal with its domestic pollution problems so that they don’t become a political issue that could challenge the Party’s primacy; and to establish industrial leadership in ‘green’ technologies including renewable fuels.

The symbolism of Presidents Xi Jinping and Barack Obama jointly ratifying the Paris climate change agreement (Cop 21) will not be lost domestically or internationally. Xi will take the opportunity of the G20 meeting in Hangzhou to reinforce that message that China is at the centre of world affairs and that, as state media put it, developed and emerging countries are “in the same boat, with China charting the course ahead this time”.

The move by the world’s two biggest polluters is clearly a significant step for the climate change deal, which needs 55 nations accounting for at least 55% of the world’s emissions for it to come into effect. China and the United States raise the percentage at a stroke to more than 40% from 1%. It just now needs the EU and a couple of other countries to follow suit to get the deal over the line.

Beijing’s Paris accord commitment is to cut its carbon emissions per unit of GDP by 60-65% from 2005 levels by 2030 and to increase non-fossil fuel sources in primary energy consumption to about 20%. While those targets don’t necessarily mean a cut in absolute emissions levels, it will slow their growth meaningfully. China committed at Paris that they would peak in ‘around 2030’.

The large steps China has taken in energy efficiency and the rebalancing of the economy away from industrialisation and towards more services will aid it in hitting those goals. Becoming more of a low-carbon economy will also help achieve its domestic goals of lessening pollution, a perpetual point of popular perturbation and protest. Environmental NGOs are kept on a short leash for fear they are a seed of political organisation.

At the same time, China has developed into the world’s largest market for hydropower, nuclear, wind and solar energy and increasingly aims to make those indigenous industries, serving both the ambitions of developing low-carbon urbanisation and bringing economic development to some of the poorest but also windiest and sunniest provinces. As relatively new industries, there is also more opportunity for China’s new found desire to be innovative to flourish, as well as for its manufacturers to find new export markets for wind turbines, solar panels and even nuclear reactors.

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China’s Pressing Need To Prevent Industrial Accidents

Landslide at industrial zone in Shenzhen, December 2015

The deadly landslide that engulfed part of the Hengtaiyu Industrial Park in Shenzhen was, on the basis of the early reports, a man-made disaster. It would appear that a mountain of mud composed of illegally dumped construction waste piled up over a quarry over the past two years became unstable. It then, in the parlance of civil engineers, ‘spilled over’.

A torrent of soil slammed into 33 industrial and dormitory buildings just before noon, and also ruptured the West-to-East natural gas pipeline causing an explosion. Some 900 people evacuated. Three are said to have been injured, but at least 91 were reported missing as of Monday morning, presumably buried under the mud that is estimated to cover more than 60,000 square meters to a depth of 6 meters (see photo above).

The attention the massive rescue effort is getting from the highest levels —  President Xi Jinping and Premier Li Keqiang have sent urgent instructions to provincial and local authorities — indicates the political threat such disasters potentially hold — and underlines the shortcomings in the approach to hazard management.

Complaints by residents about illegal dumping went unheard or were ignored by Shenzhen officials. Shoddy building compounded the damage. The two factors exacerbate a view that untrammeled economic development has been at the expense of citizen well-being.

That is not a view that the Party can tolerate. In this case, local officials will, no doubt, be found to take the blame. In the longer-term, industrial safety legislation will have to be enforced to prevent industrial accidents taking the toll they currently do.

The Shenzhen landslide was just as much a man-made disaster as the series of massive blasts at a hazardous-materials warehouse in Tianjin that killed more than 100 people in August or the explosion that ripped through a chemical factory in Changzhou in Jiangsu Province earlier in the month. Or the fireball at a petrochemical factory in Rizhao in Shandong Province the previous month. Or the succession of accidents in China’s mines stretching back. At least 750 people have died in industrial accidents in the construction, manufacturing and mining sectors this year.

Employers will always push the boundaries of health and safety legislation — of which China has plenty. But it requires diligent local officials to enforce those rules. Of those, China is lacking.

The most effective industrial safety policy is a preventative health and safety culture.  Good practice on work safety standardization is more prevalent than it was a  decade ago, but it remains the exception rather than the rule. And it requires resources and political will at the local level to enforce it. We wish the extraordinary rescue effort in Shenzhen every success, but residents would have been better served by it not being necessary in the first place.

Sadly, we fear we will be saying the same after the next large industrial accident, and repeating it until the political attitude changes to one that says the Party best shows that it is looking after citizens by preventing preventable industrial accidents in the first place rather than by rushing to clean up the mess afterwards.

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