[Joint House and Senate Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
TRANSPARENCY IN ENVIRONMENTAL PROTECTION AND CLIMATE CHANGE IN CHINA
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ROUNDTABLE
before the
CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
APRIL 1, 2010
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Printed for the use of the Congressional-Executive Commission on China
Available via the World Wide Web: http://www.cecc.gov
CO N T E N T S
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56-971 PDF WASHINGTON: 2010
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Page
Opening statement of Charlotte Oldham-Moore, Staff Director,
Congressional-Executive Commission on China.................... 1
Brettell, Anna, Senior Advisor, Congressional-Executive
Commission on China............................................ 3
Finamore, Barbara, Founder and Director, China Program, Natural
Resources Defense Council...................................... 4
Gordon, David, Executive Director, Pacific Environment........... 7
Seligsohn, Deborah, Senior Advisor, China Climate and Energy
Program and Advisor, Climate Change and Energy Network, World
Resources Institute............................................ 9
Wara, Michael, Assistant Professor, Stanford University Law
School......................................................... 11
APPENDIX
Prepared Statements
Finamore, Barbara................................................ 27
Gordon, David.................................................... 35
Seligsohn, Deborah............................................... 38
TRANSPARENCY IN ENVIRONMENTAL PROTECTION AND CLIMATE CHANGE IN CHINA
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THURSDAY, APRIL 1, 2010
Congressional-Executive
Commission on China,
Washington, DC.
The roundtable was convened, pursuant to notice, at 2:04
p.m., in room 628, Dirksen Senate Office Building, Charlotte
Oldham-Moore, Staff Director, presiding.
Also present: Anna Brettell, Senior Advisor, Congressional-
Executive Commission on China.
OPENING STATEMENT OF CHARLOTTE OLDHAM-MOORE, STAFF DIRECTOR,
CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA
Ms. Oldham-Moore. Welcome. I'm so pleased to see the
substantial crowd we have today.
Welcome to the Congressional-Executive Commission on
China's [CECC] panel on ``Transparency in Environmental
Protection and Climate Change.''
For those of you who have not been to our Web site, I
encourage you to visit it at www.cecc.gov. The Commission posts
daily analysis, and one can sign up to the Commission's
subscription list. The Commission releases a monthly brief on
rule of law and human rights developments in China and conducts
hearings and roundtables. The Commission also issues an annual
report on rule of law and human rights development in China,
which is released in October. So, please do visit our Web site.
The CECC, today, has convened a panel of experts who will
discuss government transparency in the areas of environmental
protection and climate change in China. China has stated
commitments to
improve access to environmental and climate change data. These
commitments include China's passage of the Open Government
Information regulations in 2008, its revision of the People's
Republic of China's statistics law in 2009, and its acceptance
of the Copenhagen Accord in December 2009.
The question before us is whether there are mechanisms in
place that encourage transparency so that one can determine
whether China is indeed meeting its stated commitments. Chinese
leaders have, since the 1990s, gradually increased the public
availability of a wide array of data in the environmental
protection sector.
Access to environmental data is a cornerstone of public
participation and for ensuring enforcement of environmental
laws. Public participation and demands for a cleaner
environment are important because they are typically necessary
for any country to achieve environmental protection goals.
China's environmental groups--some closer to the government
than others--have increased in numbers since the late 1990s and
have become more effective advocates and more active in using
the law to obtain environmental information, and they do this
with an eye toward improving enforcement of environmental laws
and promoting more progressive policies.
As citizens and environmental groups increase their
monitoring activities, access to information becomes
increasingly important. Questions remain, however, regarding
the information available to these groups and to ordinary
citizens in China, especially at the local levels.
In relation to climate change, China, among other promises,
has pledged to endeavor to ``lower its carbon dioxide emissions
per unit of GDP [gross domestic product] by 40-45 percent by
2020, compared to its 2005 levels.''
This pledge to cut China's carbon intensity is closely
related to its previous commitments to decrease its energy
intensity, and that's the amount of China's energy consumed per
unit of GDP. In China, energy accounts for 85 percent of
China's carbon emissions, so discussions about transparency in
measuring and reporting China's carbon emissions is largely,
although not solely, a discussion about transparency and energy
data.
Since concerns about the reliability of China's energy data
surfaced in the late 1990s and again in the early 2000s, China
has tried to improve its systems for energy and climate data
measurement, collection, and reporting. China also has agreed
to participate in several cooperative programs to establish
principles for improving data transparency and for developing a
system to measure and report on all of its greenhouse gas
emissions to the international community.
We are very fortunate to have a distinguished group of
panelists who will discuss transparency in the environmental
protection and climate change sectors from different
perspectives. Barbara Finamore will open with a general
overview of access to environmental information in China and
China's environmental Open Government Information efforts, and
discuss the relevance to implementation of China's climate and
other environmental targets.
David Gordon will discuss the role of environmental groups
in monitoring China's environmental performance and actions to
address climate change.
Debbie Seligsohn will briefly introduce China's systems for
measuring, monitoring, and reporting energy and climate data.
She will then discuss the implementation of these systems,
highlighting remaining gaps and foci of capacity-building
efforts.
And Michael Wara, who has traveled from the west coast to
the best coast, will discuss transparency issues in relation to
energy projects in China that generate carbon credits for
foreign investors. He will also discuss China's implementation
of international Clean Development Mechanism [CDM] guidelines.
We are grateful that all of you have been able to join us
today.
I want to briefly introduce Dr. Anna Brettell. She is our
senior advisor on these matters, and will introduce the
panelists with more detail.
Thank you.
STATEMENT OF ANNA BRETTELL, SENIOR ADVISOR, CONGRESSIONAL-
EXECUTIVE COMMISSION ON CHINA
Ms. Brettell. Great. I'd like to start with Barbara
Finamore. She's the Founder and Director of the China Program
at the Natural Resources Defense Council [NRDC]. She leads
NRDC's 25-member staff in Beijing, who work on a number of
projects that focus on climate change, energy efficiency, green
buildings, advanced energy technologies, open information,
environmental law, public participation, environmental health,
and responsible sourcing.
She has held several positions in the U.S. Government, and
also the United Nations' Environment Program. She has been the
president and chair of PACE [Professional Association for
China's Environment], and is the co-founder and president of
China-U.S.
Energy Efficiency Alliance, which is a nonprofit organization
that works on public-private partnership projects in China to
reduce its greenhouse gas emissions. Ms. Finamore has had over
20 years experience working on China's environmental issues.
David Gordon serves as the executive director of Pacific
Environment, an NGO that's based in California. They work with
grassroots organizations in China, Russia, Alaska, and
California. They help communities have a larger voice in
environmental decisionmaking.
Mr. Gordon has helped Pacific Environment partner with
Chinese groups since the mid-1990s. They have especially
supported groups across China--all across China--to address
issues of water pollution, environmental health, and marine
conservation.
Deborah Seligsohn is the senior advisor to the World
Resources Institute's [WRI] China Climate and Energy Program,
as well as the advisor to WRI's Climate and Energy Network,
chinafaq.org. Her focus is on deepening research collaboration
and the development of policy tools to address climate change
issues. She has also had experience in the U.S. State
Department, working in several countries including India,
Nepal, and New Zealand. Her most recent position was as the
Environment, Science Technology, and Health Counselor on
Beijing.
Michael Wara, or I should say Dr. Wara, is an Assistant
Professor at Stanford University Law School, where he teaches
environmental law and policy, and also international
environmental law and property. His research focuses on the
emerging global market for greenhouse gases in the post-Kyoto
regime for reducing their emissions.
His research includes a focus on the carbon credit market
in a number of countries, including China. He has testified
before a couple of House committees in the past about carbon
offsets.
So, I look forward to listening to everyone's testimony.
So, Barbara?
STATEMENT OF BARBARA FINAMORE, FOUNDER AND DIRECTOR, CHINA
PROGRAM, NATURAL RESOURCES DEFENSE COUNCIL
Ms. Finamore. Thank you very much, Charlotte, and thank
you, Anna. It's my pleasure and honor to be here with all of
you today. I'm delighted to see so many of you in the room to
discuss these very important issues, because my 20 years of
experience in China and 10 years before that in the United
States have convinced me of the fundamental importance of
public access to information on energy and environment as a key
method for improving environmental performance, whether it be
conventional pollutants, energy intensity, or climate change
reduction.
Like many other countries--like the United States in fact,
when I started doing environmental law in the United States--
China has begun to realize, in an ever-increasing manner, that
open access to environmental information is a way to bring in a
variety of stakeholders to help with the process of improving
enforcement of its
environmental laws and policies. Also, it's a way to relieve
the pressure on the already extended Ministry of Environmental
Protection [MEP] and local environmental protection bureaus,
and in fact to improve the quality of the information that is
available.
Of course, as you heard from Charlotte, the really key
development was in May 2008, when the State Council passed its
first equivalent freedom of information act, its Open
Government Information regulations.
Now, this came after about a decade of experimentation,
with everything from the Green Watch program, which I was able
to be involved in through PACE that had a color-coded method
for rating factories' environmental performance, to provisions
for allowing the public to comment on environmental impact
assets and appear at hearings on certain environmental impact
projects.
But this Open Government Information Regulation was really
sweeping, applying to every government agency. Every government
agency was, in turn, supposed to develop its own implementing
regulations. The Ministry of Environmental Protection was the
first out of the box. They came out with their own implementing
regulations almost immediately after the State Council issued
theirs.
Only a few other government agencies in China have followed
suit, so that's the first area I just wanted to mention. There
is room for improvement here for many other agencies to follow
the good example of the Ministry of Environmental Protection in
developing their implementing regulations. That's what I'm
going to focus on, just very briefly.
The Ministry of Environmental Protection regulations
require government environmental agencies, from the central
government down to the provincial and local levels, to
proactively provide all sorts of environmental information to
the public and to respond to requests for such information.
It ranges from everything from how many permits they've
issued, how many environmental impact assessments they have
issued, what the impacts are, environmental statistics,
environmental quality information, what letters of complaint or
requests for information they've received from the public, all
the way to information such as a list of violator companies
that are way above their emission standards, what lawsuits have
been brought for administrative penalties, and what have the
resolutions been.
There is a time limit on responding, but typically within
15 days. There are exceptions, just like in our Freedom of
Information Act, for things like state secrets, privacy, and
commercially sensitive information, and there is a provision
for appeal. This all is quite progressive, I think, and for
those who have been working in China a long time, quite a
surprise that this was implemented on a national level.
I'm sure you are all aware that information is at a premium
in China, to say the least, so this was a very important step
forward. But of course, the key is always: how are these
regulations being implemented, how are they being enforced,
what kind of information is being revealed?
NRDC, very soon after the Ministry of Environmental
Protection and the State Council issued their regulations and
measures, began a project with the Institute for Public and
Environmental Affairs, Ma Jun's organization, whom I'm sure
many of you know, to really track the progress at the municipal
level, and we'll continue to do so. What we found was,
basically, low levels of compliance overall, but very bright
spots in each of the eight key areas that we did measure.
In fact, we discovered some really amazing, creative, and
innovative ways that certain cities were implementing certain
parts of these regulations, from searchable databases where
people could go online and pick a point source, a polluting
factory, and target and track its emissions, to things like
putting on the Web site hourly monitoring readings of pollution
levels. Other cities were very good at responding to requests
for information and others were very forthcoming to talk about
all the lawsuits and administrative proceedings that were being
brought. No one city did a very good job on everything.
But what we're trying to do is similar to something that
NRDC has been doing for many years in the United States. We
publish an annual report on the conditions of our nation's
beaches, in terms of certain pollutants. The first year we did
that report, it was very bad all across the board. But the name
and shame value was invaluable, and right away cities took
action, beach communities took action to improve their
performance for the next year because they wanted the tourists
to come back.
We're already seeing that happen in China. Cities are
looking at the performance of other cities and saying, ``I
didn't realize we had to do that,'' or ``I didn't realize we
could do that,'' or ``I'd better do that, and if I do it's
going to be safe, I'm not going to get into some kind of
political trouble.'' So we will continue to do this year after
year, and we are already getting inquiries from cities about
each other. We're bringing cities together to discuss China's
own best practices, and hope to foster them.
But there are obstacles to greater compliance. They're very
similar to what we see in many other instances on environmental
energy regulations: lack of capacity on the part of local
officials who don't understand what to do or how to do it; the
vagueness in the regulations.
Still, I'm happy to say that the Supreme Judicial People's
Court has issued a draft judicial interpretation to clarify how
these regulations should be followed, what is the scope, and
what is the scope of the exemptions. They even ask for public
comment on their draft judicial interpretations, so we hope
that will provide more clarity. Most important, how well are
local officials going to be held accountable for their failings
to comply with the regulations?
Just really briefly, I'd like to provide four suggestions
for ways in which the United States can help to promote China's
efforts toward greater transparency in this, and other, areas.
One--and this is already going on but it can be continued and
strengthened--exchanges on the issues relating to, how do you
set up the rules of the system, how do you refine the laws and
the rules for environmental information disclosure? The United
States has much depth of experience in this area that it can,
and is, and hopefully will continue to, share.
Number two, the United States and China, as I'm sure many
of you know, are already involved in a very large number of
international exchanges and partnerships on all kinds of
environmental and energy issues. One thing we hope will happen
going forward is an effort to build into these partnerships,
these projects, and these collaborations, efforts to ensure or
to improve the release of information that's generated through
these projects to the public, and also to develop the capacity
of the local officials to make that information available.
Third, given the interdependency of our two economies and
the increasing demand for information on the part of U.S.
consumers and businesses on the environmental impact of the
goods that they purchase, we think there is tremendous
opportunity here for collaboration on approaches to greening
the supply chain of U.S. industries. This benefits the
consumers, gives Chinese environmental authorities support of
powerful business allies, and ultimately helps to bring about a
cleaner environment.
Finally, as we begin to look at how China is going to meet
its climate commitments, we think there is tremendous room here
for technical, non-political exchange between the United States
and China on approaches on how to improve the methodologies
relating to greenhouse gas emissions monitoring and
verification. This is already going on: there is a memorandum
of understanding between the U.S. Environmental Protection
Agency and China's equivalent, Ministry of Environmental
Protection, which has been going on for years. But again, this
is an area we think is very fruitful and we hope it will be
continued and strengthened.
I'll stop there. I look forward to our discussion and your
questions. Thank you very much.
[The prepared statement of Ms. Finamore appears in the
appendix.]
Ms. Oldham-Moore. Thank you, Barbara.
Please, David.
STATEMENT OF DAVID GORDON, EXECUTIVE DIRECTOR, PACIFIC
ENVIRONMENT
Mr. Gordon. Thank you very much. Thank you for the
opportunity to provide comments to you today, and to the
Commission for organizing this wonderful discussion.
Pacific Environment has worked in China for over 15 years,
assisting local environmental organizations to grow a mature
environmental movement that is effective at working together
with the Chinese Government to address the most pressing
environmental issues affecting China's development path.
The majority of our work in China has focused on water
pollution issues and strengthening local non-governmental
organizations to effectively work with local government
agencies to address these critical issues. The lessons we've
learned through these efforts have relevance to questions of
transparency and environmental protection and can also help us
understand how to promote transparency in dealing with climate
change issues in China.
One of China's most critical environmental problems, as
probably most people in the room know, is water pollution. In
2005, Chinese governmental officials indicated that over 360
million rural Chinese lacked access to clean drinking water,
and over 70 percent of lakes and rivers are polluted. Major
pollution incidents happen on a near-daily basis.
Now, I do want to point out, this is not meant to single
out China for these problems. These are similar problems that
have been dealt with in other parts of the world, including
here in the United States, and that will be one of the key
points of my talk, is that, in fact, many of the challenges
that are being faced in China around transparency and around
environmental governance are the same challenges that we face
here in the States, and that offers some opportunities for
collaboration and learning from each other on these issues.
We believe that improvements on issues such as water
pollution will only be successful and sustainable if local,
regional, and national environmental groups are able to
establish themselves as strong watchdogs of, and advocates to,
the government and private business and partner with them to
find solutions.
Working with many partner and environmental groups across
China, we've reached out to local communities concerned about
water pollution, helping them to conduct public relations
campaigns, reach out to the media, reach out to the government
to find ways to make a difference. What's important to note is
that the Chinese Government has recognized the significant
nature and the severe nature of these issues.
There's been a noticeable shift in behavior by the Chinese
Government as it pertains to environmental issues, particularly
water pollution, as they've acknowledged that the environmental
crisis, particularly for water, is coming earlier than
expected. In this regard, they have looked to non-governmental
organizations [NGOs] at the local and regional levels to help
them address some of these issues.
Barbara did a wonderful job talking about the open
government regulations and the ways that environmental groups
are starting to use this transparency in environmental
information to understand how to gather information about water
pollution issues, so I'll skip over part of my testimony, with
one comment that again this is very similar to the experiences
that we have gone through here in the United States with the
development of the Freedom of Information Act.
In the United States, years of precedent-setting litigation
was
required to ensure quality implementation of the Freedom of
Information Act, and while we hope that a similar process is
not required in China, I think we need to recognize that it
will take time to build strong and transparent environmental
governance and that there are ways that we can work together to
do that to help ensure public trust in government information.
I'd like to comment on one important model where the
transparency of government information has been used to create
some very real environmental improvements. In this model, the
Institute of Public and Environmental Affairs [IPE] in China
has made great progress using open government data to publicize
pollution sources through a national water pollution map. IPE
then works collaboratively with business, government, and local
NGO representatives to encourage third-party audits of
polluting factories that can make recommendations for pollution
reduction.
This model demonstrates how Chinese civil society can use
publicly available information produced by the government to
achieve environmental progress. IPE has now expanded its model
to tackle air pollution issues, with evident applications
within a climate change context.
So one of the critical questions that we've been asking is:
how can the lessons learned from civil society's efforts
against water pollution in China also be applied to climate
change issues? We believe that public transparency of
environmental information is a critical underlying component to
appropriate and effective measurement, reporting, and
verification [MRV] of climate change mitigation efforts.
Just as in water pollution, the Chinese Government has made
a number of significant and encouraging statements about
reducing greenhouse gas emissions, and we've already heard
about some of these. A critical part of working with China on
climate change issues is empowering China's civil society and
environmental organizations. With the right information and
tools, communities throughout China can advocate for better
energy choices. Civil society organizations can encourage
provincial and industrial leaders to reduce greenhouse gas and
other pollutant emissions.
In the United States, we have seen similar actions at the
local and state levels that have been remarkably successful in
developing greenhouse gas emissions reduction strategies.
Indeed, the shift to local- and state-level strategies
represented an enormous breakthrough in the United States from
shifting awareness into action on climate change issues, and
we've seen some of the most innovative efforts developed at the
city and state levels. In China, provincial-level strategies
also have the potential to build local action around as yet
unimplemented central government policies.
During the Copenhagen negotiations in December, concerns
were raised about China's willingness to accept MRV
requirements suggested by developed countries, including the
United States. These concerns, I think we have to recognize,
came about as a result of a fundamental lack of trust in
official government statistics and action in China. These
concerns are real and we need to find ways to address those.
But China also raised a number of valid concerns in its own
right about how international MRV requirements can become an
intrusion on its own sovereign rights.
So I'd like to suggest that there could be other ways that
we can approach the MRV efforts, and that is to strengthen
multiple systems within China that will verify data and
information, and especially strengthen local systems within
China. If these are systems developed within China, then this
avoids the very tricky problem of intruding on sovereign
rights.
A critical component to a healthy MRV system anywhere in
the world, including here in the United States, is a healthy
and independent civil society sector. A healthy and independent
civil society sector can help ensure that the government
provides and acts upon accurate information, that the sector
can help partner with all levels of government to find
environmental solutions.
So in conclusion, I would just like to say that we've seen
a significant amount of progress in the last five years on
water pollution efforts within China. We've seen civil society
organizations, at the Beijing level and at the provincial
level, start to make real progress in working together with
local government agencies to shut down the most egregious
polluting factories and to improve quality and standards at
other factories. Over the long run, we'll see that this creates
a lot of very important public health benefits within China.
I think the question we can ask today is, how can we take
these lessons of how civil society organizations have helped to
engage productively within China to partner well with the
government, and how can we apply these lessons to climate
change issues? The conclusion I'd like to leave you with, is I
think there is a very large area for collaboration in
strengthening the civil society sector, which in turn will help
build an international public trust of government information
within China.
Thank you.
[The prepared statement of Mr. Gordon appears in the
appendix.]
Ms. Oldham-Moore. Thank you, David Gordon. We appreciate
your remarks.
Deborah Seligsohn, please.
STATEMENT OF DEBORAH SELIGSOHN, SENIOR ADVISOR, CHINA CLIMATE
AND ENERGY PROGRAM AND ADVISOR, CLIMATE CHANGE AND ENERGY
NETWORK, WORLD RESOURCES INSTITUTE
Ms. Seligsohn. Thank you very much, Charlotte. I'm
delighted to be here today to discuss China's efforts to
measure, monitor, and report on energy and climate data.
Over the last three decades, I've actually lived in China
for more than 16 years. I was first a Foreign Service Officer,
and then I'm now the Senior Advisor to the World Resources
Institute's China Climate and Energy Program.
Part of my work involves helping Chinese universities,
companies, and government agencies develop better ways of
collecting and analyzing energy and pollution statistics. I'd
like to outline just four main points right now. All of these
are covered in much more detail in my written testimony.
First, what the United States and other countries need to
assess the success of the Copenhagen Accord is national-level
information. We have that from China. In fact, China's overall
energy and environmental data are quite strong by developing
country standards. Over the last decade, the aggregated
national-level numbers have become increasingly dependable.
There are a couple of reasons for this. One, is that China does
a very good job in tracking big energy producers and users. It
pays close attention to companies like Huaneng, which is the
world's second largest power producer, and to the biggest coal,
steel, and petroleum companies.
Another reason is the majority of China's energy is
consumed in its developed eastern provinces. They import their
energy either from other provinces or internationally. Anything
that moves across a boundary in China is captured more
effectively in the statistics. These provinces have the money
and the manpower to maintain strong statistical information
systems. As a result, the provinces with the highest energy use
have the best data.
Finally, the National Bureau of Statistics aggregates data
from companies and from local and provincial governments. This
allows the number-crunchers in Beijing to crosscheck and
correct their figures. It becomes pretty obvious, for example,
if power companies report burning more coal than the mining
companies say they produced.
The system is not perfect. There are still problems with
accuracy, timeliness, and transparency, but there is now a
standardized system for issuing corrections, as we also have in
the United States.
Here is an example of how this system works. In the early
part of this decade, the China Statistics Bureau noticed a deep
dip in coal consumption that did not align with other economic
indicators. They fixed that problem and then issued revisions
for prior years.
In 2007, we saw another example of this increased
reliability. International observers mistakenly thought the
Chinese had misreported a steep decline in electricity use
after the global financial crisis. In fact, the statistics were
right, as later confirmed by industrial output numbers.
This brings me into my second point. At the national level,
China's energy statistics are already a robust indicator of its
greenhouse gas emissions. Some three-quarters of China's
emissions come from energy use. This is important because
China's national commitment reported under the Copenhagen
Accord is to control energy-related carbon dioxide emissions.
So for the moment, we're not focusing on China's emissions from
farming or chemical processes or other complexities.
The bottom line is that we can be confident that we are
getting a good idea of how China's energy emissions are
changing just by looking at the overall numbers.
My third point is that China is spending a lot of time and
money to improve data collection systems. This will allow the
government to better understand how specific policies and
programs are affecting energy use and emissions. We know that
over the last four years China has improved its energy
intensity, in other words, the amount of energy used per unit
of economic output. We also know, from detailed program
evaluations, that almost two-thirds of those improvements came
from two major programs: One closed small and inefficient
industrial plants. The other targeted the thousand largest
industrial enterprises for big efficiency improvements.
What China needs for better program management, and is
developing now, is the same kind of data for smaller programs
and for local governments.
My fourth point is that China is also moving quickly to
improve its methods for collecting data on actual greenhouse
gas emissions, not just energy use. In 1994, China produced its
first national
inventory of emissions with the help of the U.S. Department of
Energy. Now it is working on its second inventory. And under
the Copenhagen Accord China has agreed to report its emissions
every two years. They are currently creating a system that will
allow for much easier updates than was the case under the first
national inventory.
Finally, I would like to note that moving from preparing
just national-level inventories to collecting firm-level
numbers is quite recent, even in the United States and other
developed nations. The European system is only one decade old
and the Unted States required firm-level reporting only last
year. In China, under the new 40-45 percent carbon intensity
target, we are likely to start seeing annual reporting from
local and provincial governments during the 12th five-year
plan, which begins next year in 2011.
In sum, China's national data is already good enough for us
to evaluate its commitments under the Copenhagen Accord. At the
same time, China is making significant efforts to improve the
quality and quantity of the data it collects on energy use and
greenhouse gas emissions.
With that, thank you very much.
[The prepared statement of Ms. Seligsohn appears in the
appendix.]
Ms. Oldham-Moore. Thank you, Deborah.
Professor Wara, please.
STATEMENT OF MICHAEL WARA, ASSISTANT PROFESSOR, STANFORD
UNIVERSITY LAW SCHOOL
Mr. Wara. Good afternoon. Thank you for inviting me to
testify before the Commission.
My testimony concerns the role that carbon markets, and in
particular the Clean Development Mechanism [CDM], have played
and can play in increasing transparency in energy and climate
governance in China.
The Clean Development Mechanism is a carbon offset market
created by the Kyoto Protocol. After the EU emissions trading
scheme, it's the largest carbon market ever created.
Approximately 12 million tons of carbon dioxide offset credits
are issued every month in the program, and it's estimated
roughly that around 800 million tons of offsets will be
generated prior to the expiration of the Kyoto Protocol at the
end of 2010.
Fifty-five percent, roughly speaking, of offset creation
occurs in China, and that's because rapid growth of emissions,
in practice, creates the best opportunities for emission
reduction opportunities. So, offsets tend to follow or to go
where there is emissions growth.
The CDM is widely considered to have increased transparency
in energy and climate governance in China, both in terms of
public knowledge of the detailed implementation of energy
policies by the NRDC, and in terms of firm-level greenhouse gas
emissions within China.
The CDM creates incentives for information disclosure. In
order to get credits, project applicants--either energy or
industrial facilities in China--need to show, need to prove
within the CDM regulatory process, both an estimate of baseline
emissions, i.e., the no carbon offset project emissions, and a
measurement of actual emissions by the project.
In practice, both estimates--one an estimate, another a
measurement--are checked by third party verifiers,
internationally certified under the Clean Development
Mechanism, and are checked again by the CDM's governing body,
the executive board, which meets regularly in Bonn.
Thus, transparency of information is necessary in order to
determine both whether a project is additional--that is whether
the credits being generated represent real change in behavior
from the baseline case. In order to know that, one needs to
know what the baseline case was for a particular powerplant or
industrial facility, and transparency is necessary in order to
determine the level of credit generation that should occur. In
order to measure the difference between actual emissions and
the estimate of the baseline.
Overall, the extent to which information disclosure
enhancing the transparency of the energy sector in China occurs
is largely a function of the sense that project developers,
carbon offset project developers, i.e., large electricity
generators such as Huaneng Power have, that they must disclose
this information in order to win approval of their project
applications under the CDM, and subsequently to generate
issuance of carbon credits once the projects have operated.
Thus, the extent to which projects are transparent and/or
render transparent aspects of the industry in which they
operate is largely a function of how stringent the third-party
verifiers--essentially the policemen, the enforcers--of the
Clean Development Mechanism are in enforcing the rules and in
checking claims made by project applicants.
This process of disclosure and review by third parties, in
practice, has worked modestly well. Many projects disclose
information that would otherwise be unavailable to the public.
A wonderful example of this has occurred in the renewable
energy sector, in particular in the wind sector in China,
where, prior to the CDM, the tariff rates allowed by NRDC for
particular wind farms were confidential business information.
That made it very difficult for new wind farms to understand
where their negotiating position should be relative to NRDC and
created uncertainty in the marketplace with respect to returns.
Subsequent to the CDM, because all project documents are
placed on the CDM Web site and are available globally, there is
much greater transparency information about business prospects
for wind within China. At the same time, a large amount of
information that would be pertinent to determining baselines,
to determining the business-as-usual case without carbon
offsets, changing incentives, has not been disclosed or has
been disclosed imperfectly.
I think the best example of this would be dispatch and
tariff policies for coal-fired powerplants, which really are at
the base case generation for much of China. In part, that
disclosure has not occurred because the third-party verifiers
and the CDM executive board have not asked for it.
Transparency of verification, transparency of the actual
measurement of emissions from projects has been much better. In
general, monitoring documents are available publicly on the
Web, and those documents provide a wealth of information that
would otherwise be unavailable with respect to the operation of
individual facilities within China.
The United States is not a participant in the Kyoto
Protocol and so has limited prospects for impacting the
operation of the Clean Development Mechanism. That being said,
there are a number of U.S. NGOs that are increasingly
participating in the process, along with a number of European,
and to a lesser extent developing country, environmental NGOs,
and attempting to serve a watchdog role, attempting to, by
commenting on their registration of projects, increase the
amount of disclosure that does occur within the CDM, in
particular with respect to baseline issues.
In order to increase scrutiny further, the United States is
likely going to have to become a major participant in global
carbon markets. Of course, that is a subject of substantial
debate within the United States at this point, and of
substantial uncertainty. However, were the United States to
become a major participant, there are a number of avenues that
might be pursued to increase the voluntary disclosure and
transparency that has been created by carbon markets.
Because of the need to prove a baseline case and the need
to measure emissions relative to that baseline case, there are
tremendous opportunities for increasing transparency, both for
citizens living within China and for the broader international
community with respect to both Chinese energy policies and to
the actual practice at the facility level of both operating
powerplants and measuring and monitoring greenhouse gas
emissions.
Thanks very much.
Ms. Oldham-Moore. Thank you, Dr. Wara.
Now we are going to turn to the second part of the event,
which is we'll open to questions from the audience. First we'll
start with Anna Brettell, and after Anna offers a question to
the panelists, we'll turn to the audience.
When you have a question, please raise your hand. Please
direct your question to one panelist.
So Anna, please begin.
Ms. Brettell. Great. My question is probably for David and
Barbara. I think David noted that there's been a shift in the
Chinese Government's attitudes toward environmental protection
over the last few years, but that to sustain the momentum
toward reaching China's environmental goals, more participation
by environmental groups are necessary in that process.
So I'm just curious. Besides the examples that you already
mentioned in your testimony, are there other examples of groups
that have been working in cooperation with the government to
improve the environment and monitor polluters? Are there any
stories where groups were able to make a difference in a policy
outcome or where you could see that there was better
enforcement and environmental quality improved?
Mr. Gordon. Thank you. Sure. Let me tell you about a couple
of examples. One thing I think that's important to point out,
is that when we talk about environmental groups in China I
think people recognize that the political space within China
for civil society is a little bit different than perhaps here
in the United States, and that's important to understand and
important to recognize.
The groups that we partner with have found ways to adapt
their approaches in a way that they can work cooperatively with
Chinese Government officials, and especially creating those
partnerships, creating those relationships at the regional
level, the provincial level, the municipal level has been one
element that we have seen as truly critical to their long-term
success and their ability to create real environmental
improvements.
In terms of the examples that you're asking for, I'll give
a couple of examples. One was an example in Anhui Province
recently, where three chemical factories were shut down. These
were chemical plants in what's commonly referred to as a
``cancer village'' along the Hui River that had been polluting
the waterway for quite some time, and community efforts to
raise these concerns to the local Environmental Protection
Bureau had largely gone unheeded for many years.
The partner organization that we worked with in that
province worked together with the local community members to
help find avenues to bring it to the attention both of the
regional Environmental Protection Bureau, as well as to the
national Ministry of Environmental Protection. They also worked
to get some media coverage of these issues.
Taken together, that helped lead the government to a
decision, in early 2008, to shut down those factories. There
was a period of time given for the relocation of those
factories. True to their word, at the end of 2008, the
government did follow through on its promise, which resulted in
some very significant public health benefits and environmental
benefits to the people living in that community directly.
Since that time, just to give another example from that
same province, the partner group that we worked with discovered
a polluting factory on Chao Lake, and just their work, together
with the regional Environmental Protection Bureau and the local
media, helped to get that factory to shut down as well because
of their pollution practices.
These were factories that were far out of compliance with
laws and norms within China, so, in fact, the relationships
that our partner organization developed with the government
have turned out to be very friendly because the government was
relying on our partners to help them carry out these objectives
of dealing with this level of pollution.
In one other example in Gansu Province, we have a partner
organization that was attempting to use the Open Government
Information laws and gain access to information. They
approached the Environmental Protection Bureau early last year,
in early 2009, at which point they were told that, well, with
the financial crisis, now is a bad time to ask companies to
provide more information.
However, even though they got an initial rejection in that
way--which I think Barbara talked about, the time it takes for
various government agencies to learn how to implement
transparency laws appropriately--the long-term result was
positive in that, as a result of that correspondence and that
engagement, our partner organization developed relationships
with that department, with that bureau that has since led to
the bureau inviting our partner organizations to assist them in
environmental monitoring efforts with regard to specific
factories.
So they've been invited to join in on government-sponsored
monitoring efforts. They've tied that together with the work
that I mentioned in my testimony to conduct third-party audits
of factories. This has led to some specific improvements being
made in at least one biochemical plant in the region, improved
standards being applied there. So again, these are important
examples to understand in terms of how local organizations can
adapt some of these models to find ways to work effectively
within the system. Thank you.
Ms. Finamore. That's a very interesting question. In
addition to the examples that I gave in my written testimony,
I'd also like to highlight a couple of small, but very
promising developments in the use of the court system, both for
enforcement purposes and for open information, in particular,
development of a system--currently very tiny, but promising--
for public interest lawsuits.
Now, I'm sure many of you know that there have been many
years of lawsuits by groups like the Center for Legal
Assistance to Pollution Victims, including some class action
suits that have yielded damages for injured members of the
public, particularly farmers and fishermen whose livelihood has
been threatened by pollution.
But what has happened in the last year or so that's
different, is, number one, the development of 11 environmental
courts, mostly focused in three provinces, and interestingly
enough, located in places you may never have heard of or
wouldn't expect to see them. But these are areas where there
have been severe environmental problems, most often water-
related, and where there has been environmental unrest. This
indicates very clearly the role that the government sees for
environmental lawsuits as a way to help promote social
stability, because the alternative is often social unrest.
Even more exciting to me as an environmental lawyer, is
that two of the cases that have been resolved in these
environmental courts have actually been brought by an
environmental NGO, not on behalf of members of the public, but
on behalf of the public as a whole. This is the kind of lawsuit
that NRDC pioneered in the United States 40 years ago and the
potential, if this is continued and expanded, for improving
enforcement and environmental information cannot be overstated.
Now, I hasten to add that this environmental organization
is what is often referred to as a GONGO, a government-organized
NGO. It's the All China Environment Federation. This is a
publicly, government-approved NGO. So I think that's part of
the reason why these lawsuits were able to go forward.
One of them resulted in a settlement of a dispute that had
been ongoing for 15 years, so that shows the power of these
lawsuits. We believe that they set a precedent. Even though the
plaintiffs in these two cases were not the types of independent
NGOs that David was talking about, we think they set a
precedent that is going to make it possible for other NGOs to
bring cases in the future.
Ms. Oldham-Moore. Thank you.
Now we'll turn to the audience. Yes, please. Can you please
stand? Please state your name, but project your voice. Usually
we have microphones. Today we don't, so we've got to project.
Audience Participant. I thank all of you for a very
insightful set of discussions. Thank you. I'm (inaudible) with
(inaudible) Strategies. Rather than tracking absolute emissions
reduction, China wants to track emissions reductions through
energy intensity targets. In your opinion--maybe directed to
Debbie, but all of you could address this--will China really
get where it needs to be in terms of absolute reductions? Are
there any challenges with respect to the measurement,
reporting, and verification that this presents?
Ms. Oldham-Moore. Great question. Please, Debbie.
Ms. Seligsohn. Okay. So China's moving from energy
intensity to carbon intensity in the 12th five-year plan, so
both are intensity per unit GDP, but what they're measuring is
going to change. It's going to be energy-related carbon dioxide
emissions per unit GDP. So I think the reason the Chinese chose
to use this metric is because the other alternative that a lot
of developing countries have chosen to use is an offset from
business as usual [BAU]. That gets you immediately into a
lengthy and complicated discussion about what business as usual
is.
I think Michael illustrated, in his discussion of this on
the CDM market, that even in what is relatively simple and
small-scale at the project level, determining what the baseline
is and determining a BAU is very hard. So one of the tricks or
advantages of using a carbon intensity metric is it's
straightforward, it's CO2 per unit GDP, and you
don't have to worry about what the baseline is.
It's worth realizing, the CDM market is minuscule compared
to China's overall emissions, so the type of approach that he
talked about at the project level is not conceivably scalable,
even in a developed country like the United States, much less
in a developing country with resource constraints. So you need
something that's fairly straightforward, and that's why they
chose to go with this carbon intensity approach.
The reason you wouldn't use an absolute emissions approach
at this point is because China is still a developing country.
Remember, their per capita GDP is about $5,000 per capita,
compared to $45,000 in the United States. They are still in the
period of rapid build-out of infrastructure, rapid urbanization
as people choose on their own to move from rural areas to urban
areas seeking jobs, et cetera.
So I don't think there's any question among anyone who
observes developing country emissions that China's emissions
are going to continue to grow for quite some time, and there's
no one in the climate world who thinks that it would be
otherwise. So what you're looking for is a way to slow the rate
of that growth, and then hopefully reach a peak and then
hopefully find a way to get over to the other side and start
declining.
So you want something that is a control on growth rather
than seeking to decline from a baseline. That was recognized
all the way back in the U.N. Framework Convention in 1992, and
it's clearly recognized, first in the Bali Action Plan, and
then in the Copenhagen Accord. I think everybody understands
that. So that's why you would choose it.
I think the other part of your question is, is the way
China is going about this going to be sufficient? So when we
look at that question we're really looking at where we're
trying to get, both by 2020 and by 2050. The Chinese, for a lot
of reasons, have said they have agreed to the 2-degree goal, to
keep the global temperature within a maximum rise of 2 +C, but
they mostly wanted to talk about actual practical measures up
to 2020. I think that has a lot to do with being a rapidly
developing country, where it's hard to know what's going to be
going on beyond 10 years from now.
If we look at the International Energy Agency's [IEA]
scenario for what you would need to keep the world within 450
parts-per-million carbon dioxide equivalent, which is what is
hypothesized to be necessary to keep the world within 2 +C,
China's carbon intensity target is basically in line with what
they suggest would be needed under the 450 scenario up to 2020.
What the IEA's scenario does is stabilize global emissions by
2020, and then look for significant reductions after 2020.
Now, to stabilize by 2020, developed country emissions need
to be going down now. Remember, in the 1992 convention, what
all of us as developed countries agreed to was that we were
going to start reducing our emissions right away, and that was
18 years ago. So the IEA's scenario is basically all of the
developed countries would be reducing now, and then you would
have these various controls in developing countries trying to
control the rate of increase.
China's carbon intensity target, as long as average
economic growth does not go much above 8 percent over the next
decade, would be broadly in line with that. If economic growth
winds up being really high, I think they would need to re-look
at it. If you still have the same carbon intensity target, you
would definitely see much more rapid growth in emissions.
The U.S. target of 17 percent is a little shy of the IEA
450 scenario. It's close. For the United States, about 18
percent would fit the 450 scenario. I think the Chinese set
that 40-45-percent goal with some concern that growth might
actually be well less than 8 percent, and they're always pretty
cautious in their planning and their predictions, assuming a
somewhat lower growth rate than they actually wind up with.
There has been some disagreement among economists on where
China is going to go in the next 10 years in terms of growth,
but I think most people don't expect it to be much above 8
percent. There is a school of thought that thinks it will be
less. So to some extent we'll have to wait and see. They have
an opportunity, in the middle of the period, to reexamine and
adjust because they're going to incorporate this target in
their five-year plans, so they'll have two five-year plans to
work with.
Ms. Oldham-Moore. All right. Thank you.
Yes. The gentleman with the purple collar. Please.
Mr. Weis. Hi. Robert Weis with Global Resources Institute.
My question is for either (inaudible). You both spoke about
environmental protection and climate change as being basically
the same thing, or at least moving in the same direction. But
recent research indicates that they are separate (inaudible)
for example, sulfur dioxide and also CO2.
Sulfur dioxide actually has a net cooling effect. In fact,
our research indicates that aerosol (inaudible) sulfur dioxide
and organic (inaudible) so there is somehow some synergies
between (inaudible) and in some of them there is a (inaudible)
we've seen of (inaudible) environmental benefits, but also
considering climate considerations as well since (inaudible).
What are some of the steps that China can take (inaudible)?
Ms. Finamore. I would hate to think that China's main tool
for controlling its CO2 emissions was to increase
its sulfur dioxide emissions. I know what you're saying,
though. Research has shown a cooling effect on the
SO2 emissions. When I was saying they were going in
the same direction I was basically talking about the
transparency issue, not the actual levels of pollutants,
whether it be carbon or SO2. So to me, in finding
ways to reduce CO2 there are synergies, of course.
If it means using less coal you're going to reduce both and
you're going to improve the health and economy of China. To me,
that's the win-win situation.
One of the ways to do that is, of course, through renewable
energy. I was just in Beijing last week touring some of the
very exciting developments on solar power in China, including a
whole city called Solar City that's designed to promote the
solar hot water heaters that China leads the world in. But I
was struck by the fact there and at other solar facilities,
that the level of particulates in the air made it very
difficult for the solar radiation to reach these facilities.
So here's an area where reducing coal is going to have an
impact in several ways and it makes it more likely that solar
can increasingly substitute for coal. So to me, that's the way
to go rather than to say let's just focus on one pollutant and
try to reduce that. In fact, that's one of, I think, the areas
where China can improve its air pollution regulation.
In this current five-year plan it's focused so heavily on
reducing SO2, and it claims to have met its five-
year target a year ahead of schedule, what we're hearing is
that that focus on SO2 reduction has meant less
resources, less attention paid, less accountability for
reducing a number of other air pollutants, so we're hoping that
will change in the coming years.
But I think in general, my view is that a comprehensive
approach is needed for all pollutants. We have promoted this
four-pollutant strategy in the United States for many years. We
believe it's cheaper for powerplants, in particular, to
regulate SO2, CO2, NOx, and mercury all
at the same time rather than regulating them sequentially,
which is going to cost more money and therefore be less likely
to be implemented.
I would say also that the equipment that is often used to
monitor the SO2 in the powerplants can also be used
for CO2 reduction, another reason to put that
monitoring equipment in place that can be used to monitor more
than one type of pollutant. So in general, I think a
comprehensive approach is the way to go.
Ms. Oldham-Moore. Debbie, you wanted to say something?
Ms. Seligsohn. Yes. I, first of all, want to say that I
absolutely agree with Barbara. We're certainly not suggesting,
at the World Resources Institute, that we would use one
pollutant to counter another. In fact, a lot of our work, in
working at the company at the local level in terms of
greenhouse gas emissions accounting is specifically to help
companies and localities plan their energy efficiency moves in
the hope that it does yield those co-benefits on both local
pollution as well as on energy.
The other thing to note in addition to what you said, is
that in fact a number of provinces have used their experience
with continuous emissions monitoring of sulfur dioxide under
the 11th five-year plan to add continuous emissions monitoring
of NOx as well at their powerplants. There are now three or
four provinces that have mandated this, even though it's not
nationally mandated yet.
I think we are going to see that mandated in the next five-
year plan. It's with the monitoring of NOx where you actually
have to monitor an additional gas as a diluent, that you have
to choose either carbon dioxide or oxygen. And therefore most
places choose carbon dioxide. That's going to give you the
actual continuous emissions data on CO2 from
powerplants, and potentially from other big installations.
So while I completely agree with you that there was this
kind of mono-fixation on SO2 in this five-year plan,
some of the learning process from actually focusing on one
pollutant and making a big dent in those emissions, which I
think was the Ministry of Environmental Protection's philosophy
in choosing to do this, has actually helped provinces start to
think about other pollutants.
Ms. Oldham-Moore. Yes, please.
Audience Participant. Hi. My name is (inaudible). I have a
question for Debbie (inaudible) about the majority of power use
(inaudible). I wonder if any--we talked about (inaudible)
energy sources (inaudible) of energy (inaudible) different as
we see more development (inaudible)?
Ms. Seligsohn. I mean, I don't know that it's going to
change the ratio, at least in the short to medium term, because
the efforts to develop the west have been longstanding, and the
east has continued to boom. What I think we've seen over time,
is there's a learning curve on environmental issues where
innovations tend to happen on the east coast.
Once provinces get wealthy, the governments get more
focused on it and they get a lot more pressure from their
citizens. As these lessons get developed, they get picked up
sometimes directly by other provinces, but often by the
national government that then decides to make them national
policy. So while there has been this tendency globally for each
country to have to go through its own mistakes and then learn
from them, that seems unfortunate. It would be better if we
could all learn from each other's mistakes.
Within China, there does seem to be sort of a learning
curve from one place to the other, so that hopefully the
lessons learned on the east coast can be transmitted to the
west. But I think in each province, there's going to be sort of
a period where there has to be some effort and some pressure
from the center and from others to improve data, et cetera. But
as what western provinces do becomes more a part of the
national economy, that data gets picked up better by national
recordkeeping mechanisms.
Audience Participant. Do you have any examples of
(inaudible) that are (inaudible)?
Ms. Oldham-Moore. Examples of western cities that are
leapfrogging----
Audience Participant. Or any examples of (inaudible) and
implementing (inaudible).
Ms. Oldham-Moore. Western cities that are making greater
progress than anticipated, learning from eastern cities.
Ms. Seligsohn. I have to admit that most of the cities that
I know of that are working are in the east or in the center.
There are some in the center that are really focusing on it,
like Baoding, which is not a wealthy city but has decided it
wants to be like a low-carbon leader. But I don't actually know
of any sort of far-west cities. I don't know if Barbara's
survey has some.
Ms. Finamore. Well, in answer to your first question, two
trends that I see of interest are, one, China's very heavy
investment in what they call a strong, smart grid. A lot of
that investment is emphasis on the strong. It's building the
transmission lines that are going to help connect the renewable
energy resources in the west to the sources of demand in the
east. But the lessons to be learned from within China are how
to connect the renewable resources to the grid. That's been a
real problem, not just in China, but also in the United States.
This is another area where I think there's tremendous interest
and potential for collaboration.
The other area I note is that China's target for non-fossil
energy of 15 percent by 2020 relies heavily on large hydro, a
lot of which is planned or being constructed in the west and
other parts of China. But what we're seeing and hearing is a
lot of increasing concern within China based on all the
droughts that are going on right now, and concern that even
with the dams that they are planning to build, if they build
them, there's not going to be the water in there to be able to
generate the electricity at the high rates that are being
planned. So these are two things to watch.
Ms. Oldham-Moore. Yes, sir. Please. In the back.
Audience Participant. I have a question for Barbara and
Deborah. So what lessons has the United States learned from
China in terms of data collection and data reporting process
for energy (inaudible)? And a second question. What can you
tell us about the progress in China in the second national
communication in terms of factory inventory?
Ms. Oldham-Moore. In terms of the inventory? Okay. Great.
Of greenhouse gases. Thank you.
Ms. Finamore. Well, maybe I'll address the first question
and Deborah can address the second.
I don't necessarily think this is an area where the United
States can learn from China; I don't think it would work in our
system. But I think it's important for people to realize that a
new approach that China is taking to improve accountability,
and therefore transparency and enforcement, is the job
performance rating system of provincial governors and the heads
of the large enterprises. Just for an example, the
SO2 target in the current five-year plan. There was
a similar target, actually much larger, a 20-percent reduction
target, in the 10th five-year plan that was just not even close
to being reached. Rather than going down 20 percent,
SO2 emissions went up about 27 percent in the period
2000 to 2005. What changed between the 10th five-year plan and
the current one to enable China to meet that SO2
reduction target? I think one of the main factors was the
adoption of this new job performance rating system in which
provincial governors and other leaders are rated not just by
how well they grow their GDP, but by how well they meet the
SO2, the COD, and the energy intensity targets.
There's actually a very complex system, a scorecard that
the government at the central level has put in place and that
applies to every province and local government that rates these
officials and determines what their career path is going to be,
whether they'll get a bonus, whether they'll be transferred to
Beijing for a higher level position, or perhaps even lose their
job. This is almost unheard of; if you think of President Obama
telling state governors that they're going to be rated on how
well they meet certain of his environmental targets.
But China has a different political system and they are
finding that this is a way of really motivating the local
governments in a way that's never been seen before. So we hear
that the carbon intensity targets will probably be added to
that job performance rating system in the next five-year plan,
and also several other air and water pollutants. Again, I'm not
going to say this is something we should adopt in the United
States, but people need to realize the power of this important
new tool.
Ms. Oldham-Moore. Thank you.
Anybody else? Debbie?
Ms. Seligsohn. Actually, I think there may well be some
lessons, whether they're going to be for the United States or
whether they're useful for other developing countries, because
in certain areas China is innovating lower-cost ways to do
things that we're doing. For example, the continuous emissions
monitoring equipment that they're using, they've installed it
in a way that's much less expensive than in the United States,
and U.S. EPA is working with them on it. So if it turns out
that it gets you as good data, or close enough to as good data,
it would mean it would become much more useful not only in
China, but elsewhere in the developing world.
The Chinese have already shown that they can produce
scrubbers for powerplants that are slightly less effective than
those that are used in the United States and Europe for
radically less cost, and that may be an excellent trade-off for
developing countries, or certainly in the short- to medium-
term. So there are a lot of innovations there where I think
there's a lot of cost-saving lessons that people are going to
be able to take away.
On the inventories, we know they're actively developing
them. They launched this project more than two years ago now.
They have that new memorandum of cooperation with the U.S. EPA
that they signed during President Obama's visit last October.
It is specifically working on developing these systems so that
the inventory is not a one-off exercise, but actually becomes
something that can be updated every two years.
Because the big issue--and this was in all developing
countries--was the way the first set of inventories were done
in the 1990s, the first set of national communications, is that
countries got some project financing and they did it once, and
then they had no system for regular updating. So only one
developing country has submitted a third national communication
and less than a dozen have submitted two, so this is sort of a
global issue. Again, hopefully some of the lessons that the
Chinese and EPA, together, learn on how to get these systems
set up for regular updating will be useful to other developing
countries as well.
Ms. Oldham-Moore. Thank you.
Will? Please.
Mr. Chester. Will Chester--Commission. My question is for
Mr. Wara and Mr. Gordon. I think in the past, China has taken a
few different approaches to a lot of environmental issues and
pollution controls. There's the 2006 Green GDP (inaudible)
sensitive (inaudible), and then recently in February, the
Pollution Census was
released. My question is, the Pollution Census, which was a
large undertaking, that took two years, reported much higher
rates of pollution than official numbers had shown currently.
My question is why there was such a discrepancy in the
first place, if these figures are going to be reconciled going
forward, and is there any acknowledgement by the government
that there might be some discrepancies as to the current
system?
Ms. Oldham-Moore. Great. Thank you. Great question. Mr.
Wara?
Mr. Wara. Well, my understanding of the cause of the
discrepancies--and I will confess to not knowing all of the
detail on this issue, is that the more recent estimates
included agricultural inputs to water, like non-point source
biological oxygen demand, whereas the earlier estimates did
not.
In a context where the price of fertilizer is heavily
subsidized, and it's a known issue that there's substantial
over-fertilization, over-use of fertilizer in agricultural
settings, it's not surprising that the numbers that include
that input would be much higher. That may not be the whole
story, but that's a piece of the story that I have heard.
Ms. Oldham-Moore. Great. I'm sorry. Will, did you direct
your question to somebody else?
Mr. Chester. To Mr. Gordon.
Ms. Oldham-Moore. Oh. Excuse me.
Mr. Gordon. I would just add that I think the point I take
from this is that it's an iterative process. I do expect there
to be further versions of this, whether it be a new version of
the Pollution Census or some further approach that is taken.
Again, this is very similar to the kinds of processes we've
seen work here in the United States, that not all the
information is going to be accurate the first time around and
it's impossible to expect that.
However, the more you have multiple systems of reporting
the more you're able to verify, you're able to check between
them. If those multiple systems are transparent, then you have
plenty of options for raising some of the questions like you're
raising now to try to refine those systems over time. I believe
there's a very strong commitment coming from government levels,
especially the central government within China, to do that.
Ms. Seligsohn. May I?
Ms. Oldham-Moore. Yes. Absolutely.
Ms. Seligsohn. The extraordinary thing about the Pollution
Census was getting the active cooperation of the Ministry of
Agriculture and getting the Ministry of Agriculture actually at
that table announcing those results. I think that was a
deliberate effort by the State Council, China's highest
governing body, to get that part of the pollution picture that
they've very much known is a big part of the picture, but
getting different ministries working together and making it
happen is always a difficult political process. I think the
census was actually a major step forward and I think we'll
start to see more collaborative action on agricultural
pollutants, which of course are a major issue in the United
States and every other agricultural country as well.
Ms. Oldham-Moore. Great. Yes, sir?
Audience Participant. I'm (inaudible) and I am a student at
the University of Maryland School of Law (inaudible). My
question relates to what you mentioned earlier that two of
these cases have been brought by citizen environmental groups.
Did the local rules that were passed extend to environmental
groups based in the United States?
My question is two-part. First, is this the kind of
(inaudible) you talked about earlier in terms of further
(inaudible)? And second, is this kind of (inaudible) problem
for the cooperation (inaudible) in terms of (inaudible)?
Ms. Oldham-Moore. That's a fascinating question.
Ms. Finamore. Guiyang is one of the sites of the
environmental courts. We've been working closely with them on
these regulations. I did not mean to suggest that the window
would open for NGOs based outside of China to bring lawsuits, I
meant NGOs within China. NRDC, for example, has no plans or
interest in bringing that kind of litigation within China, but
we do think there is certainly a role for the many NGOs,
especially in the local areas, that are concerned about their
local sources of pollution, to take action on behalf of the
community as a whole.
One problem I would mention that means this whole process
is going to move slowly is that, even though these courts have
been set up under some basic laws in China that allow local
courts to be established, there is still no specific
regulations or judicial interpretations in China that allow for
the types of regulations that you're talking about. So we're
now working with the higher level courts to try and get them to
put these court experiments, such as they are, on a more legal
footing. I think that has to be the next step.
Ms. Oldham-Moore. Great. Thank you.
Anybody else? Oh, I'm sorry. David, are you going to
respond? Oh, great. Terrific.
Mr. Gordon. Since some of the question was, I guess,
addressed toward how will this affect our local partners, first
of all, I very much agree with what Barbara said. Just to be on
the record, Pacific Environment also would have no plans to
start any lawsuits in China. It's not our role.
Now, it is a standard practice for legal systems, including
the U.S. legal system, to have standards whereby a foreign NGO
could, under appropriate circumstances, bring a lawsuit here in
the United States. In fact, there are some efforts under way
where that's being tried.
I would just comment that really the development of these
public interest lawsuits and litigation practices in China are
very important and they're part of the solution for local
capacity and building local solutions to these problems.
The key point here is helping people within China to have
standing, to have access to the courts, to have access to all
of the legal ways to resolve any conflicts or differences so
that the rule of law becomes the mechanisms that they use to
resolve key pollution issues.
Ms. Oldham-Moore. One final question and then we'll close.
Please, sir. Actually, we have two questions. How about both of
you ask a question, but just very quickly, please.
Mr. Little. Maybe someone on the panel can respond to this,
and that would be great. My name is Mark Little, House
Regulatory Affairs. (inaudible) natural resources (inaudible)
outside of China, so I was wondering, is there any interest by
the Chinese Government to buy loans, maybe by Chinese banks, to
get (inaudible) in Southeast Asia and in Africa on board with
some of these kinds of----
Ms. Oldham-Moore. That's a great question. External
migration of good practices. Is that happening?
Ms. Seligsohn. Actually, the Export-Import Bank of China
came out with its first set of principles on that about two
years ago. It's an area where I think there's a lot more work
that everybody wants to see done. It's an area where even some
of the Chinese local NGOs have been talking to various
ministries, including the Ministry of Commerce, about how to
set up good practices for companies moving outside of China.
The Ministry of Commerce has set some up on forestry, actually.
It is an area that we are working on in terms of working with
the IFIs [international financial institutions] and with other
Export-Import Banks to try to work globally on this question,
so I think it is a developing area.
I don't think it's going to be an easy one, necessarily,
for China, as it has not been easy for other countries. I think
people often overestimate how much knowledge the Chinese
Government has of what its companies are doing when they go
abroad, and there's an awful lot that is going on that involves
small, private Chinese investors that the government may have
no knowledge of. So it's definitely a work in progress, but
it's something that is increasingly on their radar screen.
Ms. Oldham-Moore. Thank you.
And sir--oh, excuse me. Did you want to say something?
Mr. Gordon. Just quickly, to add to that, that's all very
much a work in progress and it's very good that the Export-
Import Bank of China regulations were mentioned. It's an area
that is getting a lot of attention right now. One important
area worth mentioning is the Chinese Government has adopted
rules to try to prevent financing of egregious polluters within
China, and that's been an effective tool used to try to control
pollution domestically. Many of the NGOs see an opportunity to
take that over into the international arena and educate the
Export-Import Bank of China, and others, about that. It is
going to be a long process but I think it's a very worthwhile
one.
Ms. Oldham-Moore. I cut you off. Please, young man. Thank
you.
Mr. Coates. My name is David Coates. I'm with the Natural
Resources Defense Council. This is a question for Michael Wara.
Dr. Wara, I was wondering whether you could share with us
some lessons from (inaudible) regarding the concept of business
as usual, or a baseline. This is something that's much more a
mainstream question following China's announcement of its
decision to reduce carbon intensity in the lead-up to the
December Copenhagen Conference. What's tricky is kind of the
lack of standard methodologies or accepted principles
(inaudible). I was wondering whether the (inaudible) experience
might (inaudible).
Ms. Oldham-Moore. You have the last word.
Mr. Wara. I would tend to agree with what Debbie said
earlier. To the extent that it's possible, baseline setting is
an approach where we try to project far into the future some
business-as-usual baseline. It's one that we should be very
cautious about.
The CDM to this day struggles with this issue and it leads
to some of the most difficult and controversial decisions that
the executive board has to make. There are no signs that that
problem is going away, is going to get any easier anytime soon.
The same problem is likely to bedevil red programs, if and when
they are implemented at scale. I think we saw some of the same
issues coming up in Copenhagen with respect to base years from
which to judge emissions reductions.
So it's a problematic concept because we do not know the
future terribly well, especially projecting out 10 to 20 years.
So I would just say that if there's one lesson the CDM teaches
with respect to baselines, it's be careful, be cautious, and
recognize the uncertainty that's inherent in an unobservable.
Ms. Oldham-Moore. I want to thank the panelists for an
absolutely fascinating discussion today. Thank you for
traveling and being with us today.
Thank you to Anna Brettell for pulling this event together.
You did a terrific job.
Have a great afternoon. Thanks.
[Whereupon, at 3:34 p.m., the roundtable was adjourned.]
A P P E N D I X
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Prepared Statements
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[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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Prepared Statement of David Gordon
April 1, 2010
Thank you for the opportunity to provide testimony to you today on
the subject of transparency in environmental protection and climate
change in China.
Pacific Environment is a U.S.-based NGO that protects the living
environment of the Pacific Rim by promoting grassroots activism,
strengthening communities, and reforming international policies. Our
successes over the past 20-plus years stem from a deep and abiding
trust that local people, armed with the right tools and solid support,
are the best hope for protecting the world's environment. As such, we
support the development of grassroots organizations, prioritize
community-based advocacy, and leverage international resources in
service of our local partners. Together with these grassroots
advocates, we have protected tens of millions of acres of wilderness,
spearheaded campaigns to protect endangered species, launched efforts
to fight water pollution, reformed environmental and social standards
for export credit agencies, and publicized critical environmental
issues around the Pacific Rim. We support communities in China, Russia,
Alaska and California to have a larger voice on the critical
environmental issues that affect them, including climate change which
increasingly impacts their livelihoods.
Pacific Environment has worked in China for over 15 years,
assisting local environmental organizations to grow a mature
environmental movement that is effective at working together with the
Chinese government to address the most pressing environmental issues
affecting China's development path.
The majority of our work in China focuses on strengthening Chinese
non-governmental organizations to address water pollution issues. The
lessons we learned through these efforts have relevance to questions of
transparency in environmental protection, and can also help us
understand how to promote transparency in dealing with climate change
issues in China.
One of China's most critical environmental problems is water
pollution; In 2005, top Chinese governmental officials indicated that
over 360 million rural Chinese lack access to clean drinking water;
over 70 percent of lakes and rivers are polluted; and major pollution
incidents happen on a near daily basis.
Water pollution not only strains the environment, but also severely
impacts public health. Today, China has an alarmingly growing cancer
rate, with hundreds of ``cancer villages'' sprouting up near polluted
water sources. The World Health Organization recently estimated that
nearly 100,000 people die annually from water pollution-related
illnesses in China, and 75 percent of disease comes from water quality
issues.
China's water pollution crisis made international headlines
following a 2005 petro-chemical plant explosion which released 100 tons
of benzene into the Songhua River, a major waterway in Heilongjiang
Province and a water source for millions of people. Such spills are not
rare in China, yet the accident and ensuing cover-up opened a new space
for encouraging the Chinese government to change its approach to water
pollution, specifically as it relates to public access to information,
enforcement of pollution laws and accountability, and international
information-sharing and cooperation.
Over the past several years, there has been a noticeable shift in
behavior by the Chinese government as it pertains to environmental
issues, particularly water pollution. Pan Yue, a Vice Minister of
China's Ministry of Environmental Protection (MEP), openly acknowledged
that ``the environmental crisis, particularly for water, is coming to
China earlier than expected.''
Pacific Environment believes that improvements will only be
successful and sustainable if local, regional and national
environmental groups are able to establish themselves as stronger
watchdogs of, and advocates to, the government and private industries.
Working with many partner environmental groups across China,
Pacific Environment is reaching out to local communities concerned
about water pollution and helping them to conduct legal, public
relations, and advocacy campaigns to reduce the impacts of water
pollution on public health and the local environment. Through these
actions, our partners are playing a pivotal role to ensure clean water
for China's future.
Just as in the United States, China's decades of economic and
industrial growth have brought major environmental challenges,
including pollution, deforestation, biodiversity loss, and
desertification. In response to these ecological challenges, a public
environmental movement has emerged and grown.
China's water crisis includes overall ecosystem degeneration and a
lack of public access to clean drinking water. Despite strong national
policies to address water pollution, lax implementation of these laws
inhibits local progress. These policies can become successful and
sustainable, however, especially if NGOs can establish themselves as
resources and experts that assist regional environmental protection
bureaus to monitor and report on water pollution. The time is
especially ripe for this type of public involvement in the wake of the
implementation of China's environmental information disclosure law--a
powerful tool for environmental groups to
assist their communities in accessing information on polluting
enterprises and to ensure public participation in environmental
decision making.
Using China's new Public Disclosure of Environmental Information
law, groups can request pollution information from local enterprises
and governments and achieve water quality improvements at the local
level by using this information to ensure that polluters are
accountable to the law and to local communities. This strategy helps
communities to understand issues related to water pollution and engages
them in local environmental issues. It also ensures that those working
for
pollution reductions are involved directly in local ecological and
public health
improvements and that they are accountable to local communities. Over
time, increased public participation in pollution monitoring will
result in governmental action to enforce pollution control and improve
water quality.
The Public Disclosure of Environmental Information Law is, in many
ways, similar to the U.S. Freedom of Information Act. Just like the
Freedom of Information Act, it will take time for Chinese government
agencies to learn how to fully implement the law. Last year, when a
partner organization in China requested information from a local
environmental protection bureau, they were told that the time was not
right to provide information due to the economic crisis. However our
partner used the opportunity to build closer relations with the local
government agency and since has been invited by local government
officials to participate in pollution monitoring.
In the United States, years of precedent-setting litigation was
required to ensure quality implementation of the Freedom of Information
Act. While our partners hope that litigation is not required within
China, they recognize that it will take time and patience to encourage
the release of environmentally relevant information to the public. We
are already seeing progress. Public transparency of environmental
information within China is a critical step toward ensuring public
trust in government information.
In one important model, the Institute of Public and Environmental
Affairs (IPE) in China has made great progress using open government
data to publicize pollution sources through a National Water Pollution
Map. IPE then works collaboratively with business, government, and
local NGO representatives to encourage third-party audits of polluting
factories that can make recommendations for pollution reduction. This
model demonstrates how Chinese civil society can use publicly available
information produced by the government to achieve environmental
progress. IPE has now expanded its model to tackle air pollution, with
evident applications within a climate change context.
How can the lessons learned from civil society's efforts against
water pollution in China be applied to climate change issues? We
believe that public transparency of environmental information is a
critical underlying component to appropriate and effective measurement,
reporting, and verification of climate change mitigation efforts.
Just like the United States, China has the potential to either make
the climate crisis more severe, or lead the world in finding solutions.
As in the United States, climate change is impacting the people of
China with increasingly erratic and severe weather patterns that create
environmental and economic damage and reduce the amount of arable land.
A significant portion of China's greenhouse gas emissions comes from
major industrial development, which in turn pollutes waterways, dirties
the air, and ruins ecosystems; these externalities are ultimately being
paid by Chinese citizens.
China's central government has made encouraging statements about
reducing greenhouse gas emissions. The National Development and Reform
Commission stated that China aims to ``integrate energy conservation,
environmental protection, and control of greenhouse gas emissions into
regional economic development.'' Despite such central government
commitments, valid concerns remain about what actions are being taken
at the local level to address climate change. To be effective, measures
to reduce greenhouse gas emissions must be implemented both centrally
and provincially.
Pacific Environment believes that a critical part of working with
China on climate change issues is empowering China's civil society and
environmental organizations. With the right information and tools,
communities throughout China can advocate for better energy choices.
Civil society organizations can encourage provincial and industrial
leaders to reduce greenhouse gas and other pollutant emissions.
In the United States, actions at the local and state levels have
been remarkably successful in developing greenhouse gas emissions
reduction strategies. Indeed, the shift toward local and state-level
strategies represented an enormous break-through in the United States
from shifting awareness to action on climate change issues. In China,
provincial-level strategies also have the potential to build local
action around as-yet unimplemented central government policies.
During the Copenhagen negotiations in December 2009, concerns were
raised about China's willingness to accept measurement, reporting, and
verification (MRV) requirements suggested by developed countries,
including the United States. These concerns were raised out of a
fundamental lack of trust in official government statistics and action
in China. These concerns are real and must be addressed. However, China
also raised valid concerns about how international MRV requirements can
become an intrusion on its own sovereign rights.
A different approach to MRV is to strengthen multiple systems
within China that will verify data and information. A critical
component to a healthy MRV system anywhere in the world is a healthy
and independent civil society sector. A healthy and independent civil
society sector can help ensure that the government provides and acts
upon accurate information. A healthy and independent civil society
sector within China is compatible with China's sovereign interests;
indeed, the organizations with which we partner are very interested in
collaborating with all levels of government to find environmental
solutions.
Historically, both the United States and China have lacked
credibility in international climate change negotiations. However, it
is clear that we can make the most progress in mitigating climate
change if both the United States and China lead by example within their
own countries to set a high standard that other countries can meet.
This can help build each country's international credibility and
together we can work to save our planet from the climate crisis.
As we have heard today, China is emerging as a leader in clean
energy production. China also needs to voluntarily ramp up its coal
reduction measures and
address short-lived climate forcers, if it is to both provide
significant health and economic benefits to its population and combat
climate change.
The key to mitigating the threat of climate change in China and
around the world is to help China develop an independent civil society
that will support the government in MRV, ensure that national
environmental regulations are implemented locally, and improve the
availability, credibility, and transparency of environmental
information overall.
Thank you for the opportunity to address you on the important
subject of transparency in environmental protection and climate change
in China.
______
Prepared Statement of Deborah Seligsohn
April 1, 2010
Thank you for the opportunity to contribute to the deliberations of
this Commission. My name is Deborah Seligsohn, and I am Senior Advisor
to the China Climate and Energy Program at the World Resources
Institute. The World Resources Institute is a non-profit, non-partisan
environmental think tank that goes beyond research to provide practical
solutions to the world's most urgent environment and
development challenges. We work in partnership with scientists,
businesses, governments, and non-governmental organizations in more
than 70 countries to provide
information, tools and analysis to address problems like climate
change, the degradation of ecosystems and their capacity to provide for
human well-being.
I am delighted to speak with you today about China's systems for
measuring, monitoring, and reporting energy and climate data, how these
systems have been implemented and the opportunities for continuing to
build capacity and improve these systems.
Measurement and reporting systems provide information for a number
of different purposes. It is important to distinguish the functions we
expect the system to provide--both in the development of the system
itself, and in the evaluation of the
system's effectiveness and utility. Energy and climate data can be
collected or disseminated for three purposes:
1. Measuring overall progress through national-level data.
This is the essential level for evaluating any country's
commitments to any international climate regime. It is the
level at which we compare country commitments. It is also
essential for the country's own purposes in considering energy
and climate policy in the context ofoverall macro-economic
policy.
2. Measuring the impact of specific programs or players--in
other words the data needed for energy and climate policymakers
to track progress toward specific policy goals. This includes
measuring at the sub-national level since China allocates
provincial and local quotas. It would include sectoral or
company-level reporting to enforcement bodies (to the extent
that enforcement is at those levels). Finally, it includes
programmatic data--metrics collected to assess the progress of
specific energy or climate programs.
3. Providing data that civil society can access (public
transparency). The transparency function can occur at all
levels from national to the local.
It is important to distinguish these three functions and the types
of data needed to meet each goal, as well as the separate history of
each type of data collection and dissemination in the international
sphere.
1. national level data
In contrast to traditional environmental pollutants, where in the
developed world there is now a 40-year history of collection and
dissemination of all three types of data listed above, in the energy
area until very recently data collection has focused mainly on the
first area--the development of national-level, aggregated data sets.
China's history with collecting and producing energy data for an
international as well as domestic audience is much lengthier than its
focus on environmental issues. If one goes to the website of the
National Bureau of Statistics (NBS) of China, one can find production
data from 1952 and consumption data, starting in 1957. Over the years
this data becomes substantially more sophisticated. Energy data in this
regard is collected as part of overall national accounts data
collection, an area that China has focused on during the past 30 years.
National-level energy data is relatively easy to collect--there are
relatively few major suppliers and some very large demand centers--and
production (from the major energy suppliers, coal and oil companies)
and consumption data (power plants, major industry, transportation
information) can be cross-checked. The consensus of scholars we have
interviewed as part of our ChinaFAQs program both in the United States
and China is that (1) it is unlikely that energy data will depart from
reality for long before the gap between supply and demand numbers,
which are collected through separate networks, becomes very clear and
requires a correction, and (2) the best way to track Chinese data is to
observe the trend rather than focus on an specific short-term result.
The most recent data may well need to be corrected in the normal cycle
(as is true in other countries, as well), and especially in China there
are some rapid fluctuations (such as the precipitous rate at which
electricity demand dropped immediately after the 2007 Financial Crisis)
that really need more time and context to analyze.
Both of these points are illustrated in the most commonly raised
concern about the quality of China's national energy data, a period
between 1998 and 2001, where the Chinese National Bureau of Statistics
(NBS) substantially underreported Chinese energy data, primarily
because of an underreporting of coal production and use. By 2002 data
collection had improved sufficiently so that what had previously looked
like a trend toward rapidly improving energy intensity instead looked
like a peculiar dip followed by a rapid rise in consumption. NBS
recognized the aberration, and published a correction, along with a
revision to national accounts data in 2005. This incident shows the
need to look at long-term trends and not rely on single year data, to
recognize the ability of the Chinese system to self-correct, and the
formal systems enabling such self-corrections to occur predictably. In
2005, NBS initiated a new program of 5-year economic censuses,
specifically to assess and revise economic data.
It is worth noting that since the early 2000s there has not been a
similar period of apparent drift in Chinese energy statistics and the
variability in energy intensity improvements have been much more easily
explained in terms of current policy or global economic conditions than
was the case in the late 1990s. Moreover, the last period when Chinese
energy and indeed GDP statistics were questioned by international
analysts--directly after the global financial crisis in 2007--it turned
out that China's statistics reflected the unusual way the crisis played
out in China, with a rapid drop in heavy industrial demand that led to
a short-term and dramatic drop in electricity generation, followed by a
much more rapid and robust overall GDP rebound than in any other
country.
These statistics can thus act as a reasonably reliable guide to
national energy accounts and conditions, ones that can be used both by
the Chinese national government in making policy decisions and by other
countries looking to see how China is implementing its energy
efficiency and renewable energy programs.
There is no doubt data could be improved. While NBS has become much
more willing to revise its data sets--a practice standard in other
countries, as well, (for example, US GDP figures have a cycle with
three revisions)--Chinese revisions of recent-year data do not always
include revisions of prior-year data, making time series analysis
difficult.
In contrast to energy data, China has substantially less experience
collecting and reporting greenhouse gas emissions data. China produced
one Greenhouse Gas Inventory of its 1994 emissions, which it submitted
in its First National Communication to the United Nations Framework
Convention on Climate Change (UNFCCC) Secretariat in 2004. This work
was done with assistance from the U.S. government during the 1990s.
China is currently in the process of preparing its Second National
Communication, including a new inventory. During President Obama's
visit to Beijing in October 2009, the United States Environmental
Protection Agency (EPA) signed a Memorandum of Cooperation (MOC) with
the Chinese National Development and Reform Commission (NDRC) for
capacity building in preparing this inventory. Our understanding of the
capacity building needs as perceived by both sides is that it is not in
the area of data collection per se, but rather in data analysis, and in
creating a replicable and updatable system, so that China can update
and submit an inventory every two years as provided by the Copenhagen
Accord.
One of the issues with national inventories not just in China, but
in most developing countries, is that the first versions, conducted
with project support from organizations like the Global Environmental
Facility (GEF), were conducted as one-off exercises, rather than
conducted with systems creation in mind.\1\ As a result few developing
countries that conducted these first inventories in the 1990s found
them easy to repeat. Needless to say, there are other issues involved,
including negotiating issues about who pays for inventories, but as a
practical matter the first inventory exercises did not leave in place
easily replicable systems.
Since China has not conducted regular inventories since 1994, its
own GHG emissions figures that it uses for internal policy purposes are
based on estimates. Since China's current national policy as reported
to the Copenhagen Accord relates only to energ-yrelated CO2 emissions,
it can make reasonably good estimates based on its energy data. From
interviews with Chinese energy researchers, we understand that the
Chinese government has a complete set of local emissions factors (the
amount of CO2 emitted per unit energy, differentiated by type of energy
and type of technology used to consume it) with which they use
internally to make these estimates.\2\ Its next inventory, currently
underway, should enable it to assess the accuracy of overall GHG
emissions estimates. It is not clear whether China will be
publishing a new inventory in 2010 or 2011, but in the Copenhagen
Accord it agreed to every two years.
2. tracking sub-national governments, companies and programs
China can assess overall progress toward meeting its energy
intensity, renewable energy and carbon intensity goals by looking at
national-level data; however, to manage targets and influence the
behavior of sub-national governments and firms, the Chinese government
requires more detailed data. Over the last several years, the Chinese
government has developed its energy information systems to track this
data in a more detailed manner than was previously the case. Changes
include more frequent reporting--up to twice a year for China's largest
companies--as well as detailed auditing procedures.
China's programs for promoting energy intensity and the greater use
of renewable energy are complex and to some extent overlap. For
example, a program to improve industrial boiler efficiency will assist
some companies in the 1000 Enterprise Program, but might also assist
smaller companies outside the scope of that program, and both programs
serve the overall energy intensity goal. At the level of the national
targets these do not cause double-counting, but tracking individual
programs is more complex. Table 1 below details some of the major
programs that contribute to controlling carbon dioxide emissions. There
are dozens of other programs. Some of the successful national programs
have been replicated at the provincial level, and there are also
separate provincially-initiated programs, making a comprehensive list
almost impossible to compile.\3\
----------------------------------------------------------------------------------------------------------------
Reporting Assessment
NAMA Scope Metric Mechanism Mechanism Time Frame
----------------------------------------------------------------------------------------------------------------
Five-Year Plan National Qualitative Annual work Monitored and New targets
comprehensive evaluation of report by assessed by set every
planning policy Premier and standing five years
document implementatio by each committee of
n Ministry National
People's
Congress
----------------------------------------------------------------------------------------------------------------
Energy National, with Energy used Calculated by Collected from Five year
Intensity targets given (MTCE/Unit NBS and multiple goal. Many
to each GDP) published in sources to data are
province, a semi-annual ensure cross- tabulated
locality and statistics checking monthly.
stateowned bulletin Provinces are
enterprise required to
report semi-
annually
----------------------------------------------------------------------------------------------------------------
Renewable Energy National, with Renewable Energy Bureau Internal data Goals to year
targets given energy aggregates quality 2010 and
to provinces portfolio data from assurance 2020,
and power standard NBS, various system within calculated
generation (specified Ministries various annually
companies percentage of and Ministries
renewable in industrial and cross-
total output) associations checking
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Reporting Assessment
NAMA Scope Metric Mechanism Mechanism Time Frame
----------------------------------------------------------------------------------------------------------------
The Thousand Enterprise Program National, Energy Enterprise to NDRC 5-year program
targeted at Intensity per local DRC to inspection with annual
1,000 largest unit output NDRC teams targets;
enterprises progress
reports twice
a year
----------------------------------------------------------------------------------------------------------------
Individual Set by Sector Intensity per Industrial Aggregated Annual and 5-
Industrial Energy unit physical association data from year
Sector Targets output to NBS/NDRC individual reporting
companies
----------------------------------------------------------------------------------------------------------------
Program to Close Small National, GW capacity Provincial NDRC conducts 5-year
Enterprises specified for power, government onsite targets,
closures in tons of and related verification annual
electricity production enterprises progress
and other capacity in reporting to reports
sectors industry national NDRC
----------------------------------------------------------------------------------------------------------------
Much of the effort in the 11th Five Year Plan (2006-2010) was
focused on the large programs that would yield the energy intensity
improvements needed to meet the national targets, in particular the
1000 Enterprise Program, whose enterprises use one-third of China's
primary energy, and the closure of small and inefficient enterprises.
From our own work with local researchers and an upcoming assessment of
the 11th Five Year Plan by the China Energy Group at Lawrence Berkeley
National Laboratory, it is clear that the data from these programs is
significantly better than that related to other programs. For these
programs not only can specific program-related targets, such as setting
up energy plans, or closing specific units be tracked, but they can
also be related to a specific amount of energy savings. While for other
programs, the specific program elements might be tracked (for example,
number of compact fluorescent light bulbs distributed), they might not
be linked back to the actual amount of energy saved. The challenge is
that programs were established without necessarily being linked to the
metrics collection needed to assess program outcomes in terms of energy
use. The programs that have the best metrics used fairly labor-
intensive evaluation techniques, in particular regular inspections.
Table 2 below provides the evaluation metric used by inspectors to
firms in the 1000 Enterprise Program and shows the level of detail
national officials could focus on for such large energy users. The
State Statistical Bureau is focused on improving statistical
approaches, which would be beneficial.
------------------------------------------------------------------------
------------------------------------------------------------------------
Energy conservation target (40 points 100 percent of target
maximum) achieved: 40 points;
90 percent achieved: 35;
80 percent achieved: 30;
70 percent achieved: 25;
60 percent achieved: 20;
50 percent achieved: 0
------------------------------------------------------------------------
Energy conservation measures (60 points Energy conservation leading
maximum) group: 3 points
Energy conservation
management department: 2
Decomposition of target to
unit and person 3
Assessment of energy
conservation target 3
Reward and punishment system
4
Energy efficiency
performance in 1000
enterprises: 10 for top 10
percent and 5 for top 50
percent
Energy conservation R&D fund
4
Annual energy conservation
plan 4
Closure of backward
equipment 7
Retirement of outdated
equipment
Implementation of local
regulation 2
Implementation of energy
consumption norm 4
Norm management for energy
consuming equipments 2
Implementation of energy
conservation design 2
Energy audit and monitoring
system 2
Energy statistics manger and
account 3
Energy monitoring appliance
3
Energy conservation training
2
------------------------------------------------------------------------
Further developing these program evaluation approaches might help
China in addressing its future carbon mitigation targets and programs.
As it moves from energy to carbon targets, there will be a need for
integrated carbon accounting at the enterprise and possibly at the
municipal and provincial level. The World Resources Institute has been
working with Chinese partners on enterprise-level greenhouse gas
accounting for four years. We have focused mainly in heavy industries,
and our standards have been adapted for the cement and petroleum and
petrochemicals sectors and are now being adapted for the power sector.
These types of tools will enable Chinese enterprises and the Chinese
government to better track their greenhouse gas emissions.
It is also likely that the Chinese government will assign carbon
dioxide intensity targets to provincial and local governments. The
current energy intensity target is distributed to each of the
provinces. The challenge for provinces is tracking all the economic
activity within their boundaries, a much more difficult task in all
countries than tracking national data, since provinces do not have
enforced borders, control of a currency or customs agents. Current
provincial energy data actually derives in part from bottom-up data
from localities and local enterprises, but also top-down data from the
central government, which receives data directly from many national-
level companies.
This complexity will continue to exist with the move to carbon
intensity. Calculating CO2 emissions at the sub-national level is more
difficult that accounting at either the national or the firm level,
because the ``boundaries'' of the organization are not so clear. A
program like the European Union Emissions Trading System (EU ETS), for
example, accounts at the national and the firm level. Because of the
need in China, a number of international groups are working in this
area. We at WRI are currently examining the existing tools available
internationally, including the French Ministry of Environment's Bilan
Carbone (Carbon Balance), and a tool produced by Local Governments for
Sustainability (or ICLEI) to provide advise on how to best address this
need.
NBS is actively developing its carbon dioxide reporting
requirements for China. These are not yet public, but from
presentations at various conferences it seems clear that they are
carefully studying the European system as well as the EPA's GHG
reporting rules. One area in which they seem to be looking closely at
the EPA's rules is in monitoring CO2 from coal-fired power plants. The
EU system is an estimation system, based on energy use and emissions
factors. EPA requires continuous emissions monitoring on coal-fired
power plants, because of difficulties in measuring coal input as well
as variation in the coal itself. While we do not yet know what China
will choose to do, we know that researchers have been considering the
costs and complexity of adopting the U.S. approach. In the last two
years China has required continuous emissions monitoring for SO2 from
coal-fired power plants, and now a few provinces have introduced
monitoring for NOx. The equipment that monitors NOx also measures CO2,
but as yet it is limited to a few provinces. US EPA has provided some
assistance to Chinese localities in areas such as calibrating SO2
monitors. If China were to rapidly deploy NOx/CO2monitors, more
technical assistance of this sort might help the program significantly.
What types of metrics China will need for domestic implementation,
as opposed to overall national accounts described above, in the future
will be determined in part by the types of mechanisms it chooses to
use. In our current research with Tsinghua University we are looking at
the different requirements needed if China were to choose at some point
to use a cap and trade system, a carbon tax or additional emissions
standards, in contrast or in addition to the current emphasis on
quotas. While both cap and trade and carbon tax require regular
monitoring and reporting, a carbon tax, for example, offers the choice
of imposing it upstream or downstream in the energy production chain.
These two would both require more facility-level verification--at
whatever level the allotments or tax is being imposed. In contrast,
standards will require separate systems for different types of
standards verification, a seemingly more complex option, but one where
China already has significant experience.
3. providing data to the public (transparency)
Traditionally energy data is treated quite differently from
environmental data. Energy agencies like the U.S. Energy Information
Administration aggregate data, and the public are unable to see
specific firm-level or facility-level information. Firms have
traditionally viewed this data as confidential business information,
which they give to governments, but governments then protect.
Aggregated data is widely available and used, and in the energy area
this aggregation was never considered a barrier to transparency.
In recent years there has been a movement for transparency in
climate data, which WRI supports. Transparency is a principle of our
Greenhouse Gas Protocol, which we began to develop with the World
Business Council on Sustainable Development in 1998.\4\ The earliest
public mandate to provide facility-level climate data is within the
European Emissions Trading, a system only established in the past
decade.\5\ The U.S. EPA GHG reporting rule went into effect only in
2009. With an EPA requirement, this information is now public, but as
you can see, this is very new.
Private groups have also promoted the idea of carbon transparency.
In particular, the Carbon Disclosure Project (CDP) surveys companies
listed in 29 stock indices around the world. 2009 marked its seventh
annual report.\6\ Participation rates range from 8 percent in Central
and Eastern Europe to 95 percent among the UK's FTSE 100.\7\ The China
100\8\ reported 10 firms or 10 percent reporting in 2009, double the
number in 2008. While China's number was quite low, it reflected a
broader trend, with Russia and India also both below 20 percent; even
Japan had only a 37 percent reporting rate. The idea of GHG
transparency in the Asian region is clearly just beginning.
The general argument for making pollution data available is so the
public can know the risks they are exposed to. Since climate change has
global impacts, global totals are the best indicator of the public's
risks, and national-level data the best indicator of how each country
is contributing to mitigating the risk. However, CDP's argument is that
investors need to know a company's climate change risk (including both
risks from dependence on GHG-generating energy and processes and from
impacts) as part of the transparent information needed for a healthy
market.
Transparency can also facilitate better analysis and can actually
help promote innovation in GHG mitigation. As noted above China has an
uneven record with program assessment. Freely available data sets that
enabled academics and others to develop new approaches to assessing and
evaluating data would assist national and local level policymakers. At
present much of the information needed for companies to make
independent assessments, such as access to the actual emissions factors
the government uses, are also difficult to access.
Greater access to disaggregated data could thus facilitate investor
and others' evaluations of specific companies, innovation in the use of
the data and tools, and the companies' own efforts to manage their GHG
emissions. This issue is not directly related to national-level
accounting for inventory purposes, where national-level energy data can
be used to calculate energy-related CO2 emissions, but rather is
related to program assessment and once sub-national targets are
assigned to target enforcement.
In summary, there is a difference between calculating energy and
emissions data at the national level to track how a country is doing
overall and the country's own needs domestically for implementing,
assessing and enforcing specific domestic programs and mandates.
China has a long history of national-level energy accounting, and
the reliability of this data has increased significantly, especially in
recent years, when new systems were put in place to implement the
energy intensity target under the 11th Five Year Plan (2006-2010). GHG
Emissions accounting is relatively newer, going back to 1994, but China
is actively involved in improving its systems in this regard, and
because its international commitments are for energy-related CO2
emissions, it will be able to fully use the dataimprovements in its
energy information systems to support its GHG data collection and
analysis.
__________
\1\ Taryn Fransen, ``Working Paper: Enhancing Today's MRV Framework
to Meet Tomorrow's Needs: The Role of National Communications and
Inventories,'' The World Resources Institute, June 2009.
\2\ From interviews with the Energy Research Institute we
understand these emissions factors to be more technology specific and
less aggregated than the type that would generally be released to
assist companies in making their own accounting.
\3\ This information and the table are drawn from, Fei Teng, et al
``Working Paper: Mitigation Actions in China: Measurement, Reporting
and Verification,'' the World Resources Institute, June 2009.
\4\ See www.ghgprotocol.org for details on the program.
\5\ Information on the EU ETS is available on the web at http://
ec.europa.eu/environment/climat/emission/index--en.htm
\6\ Carbon Disclosure Project 2009: Global 500 Report.
www.cdproject.net
\7\ The CEP is a voluntary report and the level of participation
varies with many companies submitting full GDP accounting, while others
provide only much more general information.
\8\ This appears to be CDP's own selection of 100 top companies. It
is not one of the standard stock indices, in contrast to the others in
CDP's compilation.