WRI established its China office in 2007. We work with leaders in business, government, and civil society to address climate change, transport, and water risk issues. Learn more about our work in China. Visit our WRI China website.
China launched its first pilot emission trading program this past June. This development is potentially a major marker in the country’s efforts to reduce greenhouse gas (GHG) emissions.
The Shenzhen Emissions Trading Scheme (ETS) program will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot GHG cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year.[^1]
In 2010, these 635 industrial companies emitted 31.7 million tons of carbon dioxide and contributed 59 percent of the Industrial Added Value (gross domestic product (GDP) due to industry) and 26 percent of Shenzhen’s GDP.
To maintain its economic growth and provide for its massive population, China must reconcile two powerful, converging trends: energy demand and resource scarcity. One prime example of this tension is the country’s coal use and water supply.
Being "thrifty" means spending one cent as if you have only half a cent. This is an old Chinese saying to warn people to handle affluence without forgetting about a potential crisis. Underlying this common sense is an ethic rooted in Chinese culture: wasting is bad.
President Xi Jinping has urged Chinese people to "build a thrifty society", because if we persist with our business-as-usual production and consumption pattern we would invite a resource and environmental crisis.
One "inconvenient truth" is that China uses about 20 percent of the total global energy to produce about 12 percent of the world GDP. The country's energy consumption per unit of GDP is 2.2 times that of the world average. A similar pattern is seen in the consumption of other resources such as steel, cement and other raw materials, as highlighted by State leaders and experts at the International Forum on Building Ecological Civilization hold in Guiyang, Guizhou province, last month. In doing so, the leaders indicated that huge amounts of energy could be saved in China by improving efficiency.
China makes and uses almost half of the cement in the world. Between now and
2030, some estimates are that China will erect half of all buildings expected to be
constructed in the world. Cement is an energy intensive and polluting business
currently responsible for 15% of China’s emissions of carbon dioxide.
Working with China’s National Development and Reform Commission (NDRC)
and the China Building Materials Academy, WRI is providing greenhouse
gas (GHG) accounting tools and training to help cement companies
measure GHG emissions and better understand their energy needs.
It’s a critical step in helping a booming industry meet government
mandated energy reduction goals.
The GHG Protocol (developed by WRI and the World Business
Council on Sustainable Development) is the basis for the
program. It has been adopted by China’s NDRC as a standard
in its efforts to lead national programs to address global
warming. Our aim is to work with the NDRC to expand use
of the GHG Protocol into other energy- and GHG-intensive
industries (oil and gas, petrochemical, chemical, power
generation, and iron and steel).
WRI’s New Ventures project identifies, mentors, and provides small and
medium-sized enterprises (SMEs) with access to investment. New Ventures
operates in six of the world’s most vibrant emerging economies – Brazil, China,
Colombia, India, Indonesia, and Mexico – where the environment and
development decisions being made today will impact the entire world, and
where the private sector, particularly SMEs, is driving economic growth.
This year, the full New Ventures portfolio grew to 180 enterprises and facilitated
the transfer of $158 million from angel investors, banks, green funds, venture
capital funds, and development banks to SMEs that are protecting the
environment and delivering economic growth.
One shining example is Beijing Shenwu, a manufacturer of energy efficient
industrial furnaces that uses a new recycled combustion air technology to reduce
energy consumption by as much as 60% and decrease CO2 emissions
by at least 30%. Deployment of the system in the Chinese steel industry has
reduced that country’s annual industrial energy consumption by the equivalent
of 2.09 million tons of coal, thus cutting CO2 emissions by over 11.72 million
metric tons a year. It is a critical feat given that China and the U.S. are the
world’s top greenhouse gas emitters.
This has been a big week for U.S.-China collaboration on climate change. Yesterday the U.S.-China Climate Change Working Group (CCWG), which was established in April by the Joint Statement on Climate Change, presented their report on bilateral cooperation between the two countries. Not only does it lay out actions to reduce greenhouse gas emissions, a close reading sheds light on important themes for the future of U.S.-China collaboration on climate change.
The report centers on five separate “action initiatives.” to address key drivers of greenhouse gas emissions in both countries. The U.S. and China make up more than 40 percent of global CO2 emissions, so significant collaboration between the countries is absolutely essential to addressing the problem. The five areas that the report singles out include: vehicle emissions; smart grids; carbon capture, utilization and storage; greenhouse gas data collection and management; and building and industry energy efficiency.
Although the report is built around these five initiatives, four big themes can also be seen:
Few countries are unaffected by China’s overseas investments. The country’s outward foreign direct investments (OFDI) have grownfrom $29 billion in 2002 to more than $424 billion in 2011. While these investments can bring economic opportunities to recipient countries, they also have the potential to create negative economic, social, and environmental impacts and spur tension with local communities.
To address these risks, China’s Ministry of Commerce (MOFCOM) and Ministry of Environment (MEP)—with support from several think tanks—recently issued Guidelines on Environmental Protection and Cooperation. These Guidelines are the first-ever to establish criteria for Chinese companies’ behaviors when doing business overseas—including their environmental impact. But what exactly do the Guidelines cover, and how effective will they be? Here, we’ll answer these questions and more.
By 2030, 221 Chinese cities will have at least one million residents. These fast-growing urban areas present an unprecedented opportunity to create global models for the sustainable, low carbon cities of tomorrow.
China’s 12th Five-Year Plan strongly promotes sustainable cities, and the coastal city of Qingdao is leading the way in translating this principle into action on the ground. WRI helped generate Qingdao’s blueprint for sustainable development, and brought its pioneering efforts to national attention.
Sustainable City Blueprint
In developing their growing city, Qingdao’s leaders sought to pursue economic growth while avoiding urban sprawl and the environmental problems such as air and water pollution that have plagued many Chinese cities.
The city government has developed a low-carbon strategy that includes more efficient energy and waste water use, transport systems that reduce congestion, and sustainable urban design. The blueprint lays the foundation for Qingdao to meet its target of reducing carbon intensity by 45% by 2020. To guide development, the city government has set specific emission reduction targets for each energy-intensive sector.
Qingdao has signed an agreement with French company Suez to upgrade its inefficient waste water system and with China Everbright Bank to improve Qingdao Harbor’s energy efficiency. The U.S. company, AECOM, is set to invest in developing a sustainable design blueprint for the city.
In December 2012, Qingdao was selected as a National Low-carbon Pilot City, which is initiated by the National Development and Reform Commission (NDRC); and National Low-carbon Transport Pilot City, initiated by the Ministry of Transport (MOT).
Making Change Happen: WRI’s Role
WRI’s work in China focuses strongly on low carbon cities. We work with China’s NDRC, MOT, Ministry of Housing and Urban-Rural Development, Ministry of Industry and Information Technology, and Ministry of Environmental Protection to design models that focus on efficient energy and land use, sustainable transport, and reliable, clean water supply.
In Qingdao, along with partners including the Asian Development Bank (ADB), we played a critical role in helping the city prioritize low-carbon development. Specifically, we generated an inventory of the city’s energy use, collected traffic data, developed sector scenarios, drew a technology roadmap, and recommended policies that the authorities adopted.
We also introduced Qingdao’s Development and Reform Commission (DRC) to the major companies now helping develop the city. In addition, WRI’s close ties with NDRC and other ministries helped bring Qingdao’s pioneering efforts to central government attention.
WRI will use the city’s lessons learned and best practices in seeking to scale up sustainable urbanization both in Chinese cities and other emerging countries.
A growing number of countries and companies now measure and manage their emissions through greenhouse gas (GHG) inventories. Cities, however, lack a common framework for tracking their own emissions—until now.