Needless to say, through this process, China required a new energy law that would help to define the framework of China’s energy future, and In the March edition of Asian Counsel, the Jeff Greene, Michael Chen, and Julie Tong article China’s Proposed Energy Law (PDF Download here) does a great service by explaining the law, its potential impact, and where opportunities for investors will present themselves.

It is an excellend guide for those looking to learn more about the framework, the agencies involved, and what opportunities will present themselves.

Jonathan Woetzel, director of McKinsey & Company’s Shanghai Office presented highlights from their recent report, “China’s Green Revolution,” and offered suggestions about where US and China could work together.

Woetzel said he thinks it’s possible that China’s economy will no longer depend on coal as its primary energy source by 2030 — with some combination of solar, wind, and nuclear energy, plus greater energy efficiency, displacing coal.

He also stressed the imperative of moving quickly: “A five year delay could reduce abatement potential by one-third.” Given the estimated number of factories, power plants, cars, homes, and office buildings that would be erected using old technologies in the meantime, he believes waiting 10 years would diminish savings by 60 percent.

As co-presenter David Moulton, director of Climate Policy and Conservation for the Wilderness Fund – and a longtime Washington veteran – noted: “The report deals with what is possible; it doesn’t really deal with what is likely.” He thought the report gave short shrift to “the behavioral and institutional barriers to realizing the technology’s full potential.”

Still, that was hardly a vote of confidence against the idea behind the report – sizing up the most effective strategies for China and the US to reduce emissions and attempting to bring discussions happening in Washington and Beijing closer together.

The Q & A afterwards was as interesting as the presentation itself, as a litmus test for what interested US Congressional staffers are thinking about China and climate change. Several questions began with an acknowledgment of the long-standing chicken & egg question – neither China nor the US wants to move first on commitments to carbon caps – and a desire to somehow move beyond the impasse.

One staffer, meanwhile, worried that if countries made unequal commitments on carbon targets, the result could be a carbon race-to-the-bottom: with enterprises relocating production facilities to nations or regions with the least stringent requirements. (That question, of course, assumes that low-carbon manufacturing will always be high-cost.)

Other questions concerned how US R & D priorities might be adjusted if collaboration with China (for instance, on developing electric car technology) was to become a priority.

Based on county-level data collected from a series of local public finance
statistics and the China 1990 and 2000 Population Censuses, we compare the performance of newly upgraded cities with their counterparts that remain to be counties using difference-in-differences and propensity-score matching methods.  Although fiscal revenue and the number of public employees increased more quickly in these newly established cities, the economic growth rates dropped from a high level to a normal level after upgrading. More importantly, these new cities did not perform any better than those non-upgraded counties in terms of educational achievement, public health outcomes, living conditions, and urban employment. In summary, the centralized system of city creation did not achieve the goal of
promoting urbanization. In large because of these problems, the policy of  county-to city upgrading” was called off in 1997. Since then, new cities only appear at the prefecture level and the total number of cities has remained rather stable (Figure 1).

In this paper, we argue that not only is the size of existing cities depressed by the centralized system of city creation, but also the number of potential cities. Without a viable way of creating cities, the urbanization process would be slowed down, even with the relaxation of migration policy.

An interesting hypothesis, and one I would say merits a lot of attention given the recent economic issues and the belief that many migrants workers  -the people who built the cities  – have occupied a second class seat all along.

a feeling that many believe, if left ignored, will impact the long term stability of China’s future megacities.

Key to the arguement, and to my discussions here on the ground, is the sense of secutriy that one must feel when “investing”.  not only does one need to feel that their economic rights will be protected in terms of preventing theft, but that access will be granted on fair terms. That, in the case of a migrant worker, they can bring their families to the city and put their kids into school, go to the hospital, and have an opportunity to sign a lease on a legal document.

These are issues that the cities are still grapling with, and as this paper shows, they are important issues that must be overcome before true economic gains can be made.. and sustained.. through urbanization.

The paper does a nice job of presenting the history of the Central Party’s actions to address environmental issues, and the complex structure of agencies that oversee these issues…

The three major focus areas that will guide improvements, as presented in the paper, are:

• energy efficiency
• renewable energy
• Industrial policies

Note: Perhaps missing would be consumer awareness and consumption?

to read the full report, you can download the PDF here.

For me, there are few issues more important than water in China.  It is a resource that is becoming scarce in the North, and for many, its contamination is an issue that threatens economic security and health.

to that end, I want to highlight the recently released World Bank report Water Pollution Emergencies In China, prevention and response (PDF Download here):

The purpose of this paper is to provide policy recommendations to assist the Government of China in improving environmental emergency prevention and response in the high risk industrial sector.

With each disaster ( Wuxi algae blooms, Qingdao blooms, Haierbin spills, and dozens of others), the pressure mounts on the central party to address the downside of hyperdevelopment… and to clean up.

to assist them in this, the WB report makes the following recomendations:

1) To Improve the Legislative and Regulatory Framework.
2) Improve Organizational Arrangements and Strengthen Coordination
3) To Establish Mechanisms for Incentives and Liabilities.
4) To Provide Funds through Proper Channels.
5) Strengthen Risk Assessment, Management and Planning.
6) To Improve Chemical Information Management.
7) To Build the Capacity of First Response.
To Strengthen Monitoring, Timely Reporting and Disclosure of Emergency Situations.
9) To Cleanup Pollutants Rapidly and Mitigate Impacts.
10) To Undertake Incident Investigation and Draw and Share Experiences/Lessons

Where I think these recommendations fall short, and recommendations I would make are:

1) Develop relationships and clear channels with environmental NGOs who would identify polluters and document damage in a non-confrontational manner

2) Promote environmental education and awareness programs within the educational system, and invest in ongoing public campaigns that heighten public awareness of the issues and how they themselves can improve conditions.

3) Begin tying the issues of water pollution to health through food quality, water quality, etc and through this foster consumer pressure on companies to improve their standards.

4) Get them early before they develop bad habits

More specifically:

The Chinese government said in a statement that in a preliminary step to tackle global warming emissions, the proposal seeks cuts of 25% to 40% by 2020 from 1990′s level

Surely, this is a step that is needed, but I would not limit this to developed economies like the US.  they more than other do need to change, but by diverting the attention towards them we are missing the better picture.

That we are all in this together.

Americans (I cannot speak for Europeans) have become quite gluttonous in their consumer habits, and there is no denying the role that has played on global warming.

For China’s part (and other developing nations), it has done a lot recently to invest in and promote clean energy as well, according to the recent article Tinge of green as China becomes top polluter

China is not alone in the developing world in seeking a more sustainable energy future. As a group, developing countries have more than 40 percent of the world’s renewable power capacity, over 70 percent of solar hot water capacity, and 45 percent of biofuels production. In China, wind power is the fastest expanding technology for generating electricity. With many onshore turbines working, the first offshore wind farm started in November.

but that should not excuse them from doing more.  Even if it must move another 400 million people into the cities.  It cannot simply wipe out the gains made by cutting in other countries… it must continue to show its own cuts that come through driving efficiency through its systems.

Where I think everyone can make strides is by working together to better manage food and water, but at the same time put pressure on industry to begin developing more sustainable processes, products, and values.

To reach the reduction levels that many say we need to, we need the developed and developing sides to do more.  Both have problems, both have made some progress, and both can educated and learn from each other.

We occupy the same orb and it is time we start acting like it.