Transcript Catching Up, Falling Behind: China`s Green Growth Strategy and the

Catching Up, Falling Behind: China’s
Green Growth Strategy and the U.S.
Michael T Rock
Samuel and Etta Wexler Professor of
Economic History
Bryn Mawr College
Global Climate Change Negotiations
• Stuck on a stark trade-off between climate
mitigation and growth foregone
• Inability to come to agreement on system of
burden sharing, measured in growth foregone,
make it impossible to conclude climate treay
Wrong Model: Not Consistent with
CO2 Mitigation Experience in
Northeast Asia
Japan, Korea, and China all view energy
efficiency and energy security in stridently
nationalistic terms
CO2 intensity falling rapidly in all three
Total CO2 emissions stabilizing in Japan and Korea
CO2 Intensity: China and the U.S.
Figure 1
CO2 Intensity of GDP in China and the U.S.
(Kilograms of CO2 per Constant $ PPP of GDP)
Kilograms of CO2 Per Real $ GDP (in PPP)
2.4
2.0
1.6
CO2GDP_CHINA
CO2GDP_US
1.2
0.8
.66 kg CO2 /$PPP GDP
0.4
1960
.47 kg CO2/PPP$ GDP
1965
1970
1975
1980
1985
Year
1990
1995
2000
2005
Total CO2 Emissions Japan
Figure 2
CO2 Emissions in Japan
(Kilotons)
1,400,000
CO2 Emissions (Kilotons)
1,200,000
1,000,000
800,000
CO2_JAPAN
Predicted CO2_JAPAN
600,000
400,000
200,000
0
-200,000
1960
1965
1970
1975
1980
1985
Year
1990
1995
2000
2005
China, Korea and Japan Groping
Toward a Green Growth
Industrial Development Strategy
Need Different Conceptual Framework
for Climate Mitigation: One that
Focuses on Industrial and Technology
Policy
China’s Emerging Green Growth
Strategy: Rooted in Model of
Technological Catch Up with West
Policy elements include:
1. Openness to trade and investment and
domestic market liberalization
2. Promotion of small number of large leading
firms in critical sectors
3. Promote import, adoption, and adaptation of
OECD technologies—some imitative, some
innovative
Technological Catch up and CO2
Savings in Cement
Eve of reform (1977) 2/3 cement output (50
MMT) by small scale cement plants
1995 cement output 400 MMT—85% by small
Plants
Small plants: low quality cement, economically
inefficient, produce 1 MT CO2 per MT of cement
Technological Catch Up Policies in
Cement
Open sector to trade and investment, liberalize
domestic market
Close small plants
Shift production to large scale rotary plants
Invest in energy efficiency
Chinese Vertical Shaft Kiln
Rotary Kiln
Cement Production and CO2 from Cement in
2008: Saved 520 MMT CO2 by 2008, 720
MMT CO2 by 2030
Figure 3
China
Cement Production and CO2 Emissions from Cement
(Million Metric Tons)
Cement Production and CO2 Emissions
2,000
1,600
1,200
Cement production
CO2 emissions
800
400
0
50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25 30
Year
Iron and Steel
Baosteel, national steel champion:
Built two state of the art Corex process plants
for making iron—cooperative project with
Siemans AG—project reduces CO2 by 30%
Expensive joint R&D venture Baosteel, Siemans and
POSCO, pioneering breakthrough technologies for
making steel
Baosteel
Corex C-3000 Ironmaking Plant,
Baosteel, China
Electric Vehicles
Transport sector dominated by vehicles
consume 35% oil imports, could rise to 55% by
2030
If 30% vehicles on road in 2030 are electric, save
700 million barrels of oil (301 MMT of CO2)
MOST allocating 60% research budget to
commercialization of electric vehicles
Electric Vehicles
300, 000 electric vehicles on the road
State Electricity Grid building 75 re-charging
stations in 27 cities
Several companies produce electric vehicles,
Some in joint ventures with OECD firms, one
expects to export them to California in 2010
Electric Power: Renewables Supply
15% Electricity by 2020
Wind energy supported by reduction VAT,
concessions model, and power company buy
provisions
Solar—China pioneers solar water heaters on
roofs—save 84 MMT CO2 in 2010
Applied Materials, major American solar panel R&D and
producing firm from Silicon Valley moves to China to be
near market
China's Potent Wind Potential
Wind power plants in Xinjiang, China.
Credit: Chris Lim; Monday, September 14, 2009
China: Solar Water Heaters
An Applied Materials research lab in Xi’an, China. The Santa Clara, Calif.,
company is the largest supplier of the equipment used to make
semiconductors, solar panels and flat-panel displays (Source NYT March 17,
2010)
Green Industry Model
• Looks similar to industrial and technology
policies followed by Japan, Korea and Taiwan
• Polices are selective (industry and sector
specific)
• Tied to technological catch up and energy
independence
Green Industry Model
• Guided by industry/sector specific technology
support institutions
• Political elite policy champions
• Quantitative improvement goals from national
to local level, monitored and tracked
• Use local experimentation; drop those that
fail; scale up those that succeed
Criticisms of China’s Green Growth
Strategy
• Many serious technological, engineering and economic
problems to overcome given China’s weak R&D base
• Hard to pick winners
• Is this sufficient to mitigate climate change
• Administrative decentralization and overlapping
bureaucratic jurisdictions result in excessive bargaining re
policies
• Strategy of nurturing large lead firms not totally successful
How Might the U.S. Respond?
Use explicit industrial and technology polices
to promote energy independence by 2035
Man on the moon project
Defense Department
How Might U.S. Respond?
Stabilize the Price of Oil
Real Price of Crude Oil
($ per barrel inthe US)
70
60
Real $ Per Barrel
50
40
30
20
10
0
60
65
70
75
80
85
Year
90
95
00
05
Put a Low Price (Tax) on Carbon
and Raise It Incrementally Over
Time