A dragon and its cave: China's environmental policy

Before I start, an important notice to my more regular readers: you might notice a drop in activity the next two months or so. This due to the holidays, examination period and preparation for my paper. The past two weeks I have been writing some scraps that can be turned into articles with ease. Just to make sure that, even without much time, I never run out of interesting material to post.

Now, after monetary and economic policy, this final post in the 'dragon nation' series will focus on China's environmental policies. China is often portrayed as a big polluter who doesn't want to see its economic growth constrained. The People's Republic is indeed the biggest carbon emitter in absolute numbers. When emissions are however expressed in terms relative to say population or wealth, the West still does a lot worse. Additionally, the United States and Western Europe pollute a lot more than their own ecology can cope with. Thus an 'ecological debt' is created to countries who's environment is polluted by the excess of the West.

The per capita carbon emissions from various countries. Just compare India and China (left) to Belgium or the States.

The ecological debt surely puts things in perspective; industrialized and industrializing countries suffer the same ailments. The question now is whether China undertakes efforts to mitigate its impact. In its most recent five-year plan, the Chinese Communist Party emphasized energy efficiency and laid out a strategy for cleaning the air. A lot of uncertainty remains, but the Chinese government is working on market-based mechanisms to combat climate change. An emissions-trading system and green taxes are among the favored techniques. The national strategy in the making draws upon regional experiments with carbon-trading and petroleum taxes.

China profits from betting on sustainability. It already is
the leading producer of solar panels and CF light bulbs.

Now why does China seek to implement this shift? One thing most debaters agree upon is that economic motives are driving the process. China is the leading manufacturer of compact-fluorescent light bulbs and solar panels already. Its industries profit from energy-efficiency goals. Yet the so-called green technologies might cause ecological stress in their production and disposal processes, a factor too often ignored. Another motive for China is that it needs to crick up its credibility if it wants to keep enjoying cash inflows from the Clean Development Mechanism. This tool, created under the Kyoto Protocol, allows industrialized countries to invest in carbon-reducing initiatives abroad. The emission reduction then goes on account of the investor. China received a lot of such funding in the past but its biggest investor, the European Union, wants to revise its policy before 2013.

As always, the picture looks more complex upon careful examination. China isn't the environmental boogieman we often blame it too be. Though its efforts are economically motived, I for one expect China to do a lot in the future.