Climate and Energy Program

June 2010
Summary: Although China is often blamed for the muddled outcome of the 2009 Copenhagen talks, its position on how to tackle climate change may not be so far from the West’s. Much reporting on Copenhagen portrayed China as being hostile to rules—considered essential by the West—that would hold it accountable through independent verification of its greenhouse gas emissions. In fact, China’s position on this issue and its opposition to legally binding targets should not be confused for a lack of political will or action to address climate change at home. U.S. action is essential for a legally binding climate agreement that includes all major economies, but it may not be sufficient: China will join such an agreement when the time is right for China. In the meantime, the United States and Europe must continue to pursue clean energy and climate cooperation in forums outside the UN and share their best practices on shifting to a low-carbon economy. China’s successes in this area must be recognized, encouraged, and replicated.

Policy Brief
Decoding China’s Climate and Energy Policy Post-Copenhagen
by Joanna I. Lewis
Six months after the December 2009 climate talks in Copenhagen, countries are still trying to draw lessons from the negotiations. Few countries have been the focus of as much scrutiny as China has; Chinese officials were widely accused by foreign governments and media of forcefully obstructing progress in reaching an agreement.1 Less attention, however, has been paid to what has been unfolding in Beijing since the December negotiations. While climate and energy legislation stalls in Washington, China has unrolled an impressive suite of potentially game-changing programs to regulate carbon emissions while continuing to promote energy efficiency and the increased use of clean energy technologies. The successful implementation of such domestic programs will help China reduce its carbon intensity (carbon emissions per unit of economic output) and increase its capacity to report its emissions to the international community, as it agreed to do in the Copenhagen Accord. Why, then, in the face of unambiguous unilateral action, is China still the subject of harsh international criticism? This paper describes how the positions of China and the West are closer than their respective negotiating stances indicate and recommends practical ways that the United States, Europe, and China can work more closely on shifting away from fossil fuels and toward clean energy technologies and tackling climate change.

The Politics of Emissions Data
Much of the coverage of the Copenhagen negotiations reported that the measurement, reporting, and verification of emissions was a key issue of disagreement — particularly between China and the United States.2 According to these accounts, the United States insisted that China’s mitigation measures be subject to independent verification, but China resisted anything that might be seen as interfering with its national sovereignty. Two-and-a-half years ago in Bali, countries called for MRV3 actions or commitments from both developed and developing countries, launching a discussion about what should be measured and reported, and when and how it should be verified. As countries

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1 See, for example, Lynas, Mark, “How do I know China wrecked the Copenhagen deal? I was in the room.” The Guardian, December 22, 2009.; Rapp, Tobias, Christian Schwägerl and Gerald Traufetter, “The Copenhagen Protocol: How China and India Sabotaged the UN Climate Summit,” Der Spiegel, May 5, 2010.,1518,692861-2,00.html 2 Broder, John M. and James Kanter. “China and U.S. Hit Strident Impasse at Climate Talks.” The New York Times, December 14, 2009.; Friedman, Lisa, “U.S., China may be near ‘transparency’ compromise,” E&E News, December 17, 2009. 3 The acronym “MRV” most commonly stands for “measurable, reportable, and verifiable” as referenced in the Bali Action Plan (UNFCCC Decision 1/CP.13, 2007). It is also used throughout this paper to refer to the general topic of emissions measurement, reporting and verification.

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announced targets in Copenhagen, discussions turned to how to quantify such targets and assess progress toward their achievement. Having a national emissions inventory system in place is a crucial step in enabling binding emissions reduction policies’ adoption and enforcement, whether enacted nationally or internationally. But, as most countries either have developed or are currently developing such an emissions inventory system, are the U.S. and Chinese positions really so far apart? Some of China’s hesitance to commit to an international MRV regime stems from reasonable concerns about energy data quality and transparency. In many developing countries, where resource constraints can result in poor data quality, inventories of national greenhouse gas emissions are notoriously inexact;4 problems with carbon emissions data quality in China have led to embarrassing confrontations in the past.5 Another reason for China’s hesitance stems from broader concerns about the role of international actors. China has long resisted foreign involvement in various sectors and activities, particularly those deemed to have an impact on national economic security.6 Rumors of facility-level inspections to monitor and verify emissions (akin to the UN nuclear inspections) certainly did not help to ease China’s concerns about international infringements on its sovereignty.7 But while some have claimed that negotiations almost collapsed because China didn’t want the world to “look at [their] books,”8 this theory is refuted by the fact that the United States and China had already signed an agreement calling for cooperation on the development of robust greenhouse gas inventories,9 and the fact that China is already moving ahead on developing a wide-reaching
U.S. General Accounting Office, “Selected Nations’ Reports on Greenhouse Gas emissions Varied in Their Adherence to Standards,” GAO-04-98, December 2003, http://www.; David G. Streets et al., “Recent Reductions in China’s Greenhouse Gas Emissions,” Science, November 30, 2001, pp. 1835–1837; Subodh Sharma, Sumana Bhattacharya, and Amit Garg, “Greenhouse Gas Emissions From India: A Perspective,” Current Science, February 10, 2006. feb102006/326.pdf. 5 For example, in 2007, when the Netherlands Environment Agency announced that its researchers had calculated that China was now the largest emitter of CO2, Chinese officials immediately responded that this was not true. They later realized that it was, quite likely, an accurate assessment. 6 Lewis, Joanna. “China’s Strategic Priorities in International Climate Change Negotiations.” The Washington Quarterly 31:1 pp. 155–174, winter 2007-2008. 7 Friedman, Lisa. “Copenhagen: U.S., China may be near ‘transparency’ compromise.” E&E News, Dec 17, 2009. 8 Lee, John. (2009). “How China Stiffed the World in Copenhagen. Why Beijing insists, “Don’t look at our books!” Foreign Policy, December 21, 2009. http://www.foreignpolicy. com/articles/2009/12/21/how_china_stiffed_the_world_in_copenhagen 9 Memorandum of Cooperation to Build Capacity to Address Climate Change between the U.S. EPA and China NDRC. November 2009 Press Release: ADMPRESS.NSF/d0cf6618525a9efb85257359003fb69d/d931638c50ae881e85257673006 47cf4!OpenDocument and text of agreement: china/2009-moc.pdf.

national scheme for measuring carbon emissions that builds upon its energy efficiency monitoring and verification programs. Despite the concerns mentioned above, the “MRV standoff ” in Copenhagen was likely more political than rational. When Secretary of State Hillary Clinton arrived in Copenhagen and announced that the United States was prepared to work with other countries to mobilize “$100 billion a year by 2020 to address the climate change needs of developing countries,”10 she said that the United States would contribute funds “in the context of a strong accord in which all major economies stand behind meaningful mitigation actions and provide full transparency as to their implementation.” This declaration directly tied the promise of climate financing to transparency, or “MRV,” in developing countries. China’s blocking of Secretary Clinton’s offer for climate financing would likely have angered other developing countries.11 In addition, China was now no longer able to use the lack of financing from developed countries as an excuse for its own inaction, and it had already agreed that internationally supported mitigation actions should indeed be subject to international MRV.12 Chinese negotiators felt that they were getting little in return for accepting Secretary Clinton’s transparency conditions since the United States had made it clear that this financing would not flow to China.13 The MRV issue came to be about much more than just data verification. It was also used as a possible means to break down the Kyoto “firewall” that set up very different expectations for developed and developing countries’ mitigation
10 Clinton, Hillary Rodham, “Remarks at the United Nations Framework Convention on Climate Change.” Copenhagen, Denmark, December 17, 2009. 11 Wilson, Peter, “Kevin Rudd holds out deal hope as Hillary Clinton offers to help poorer countries,” The Australian, December 18, 2009. kevin-rudd-vows-to-work-through-the-night-to-seal-climate-deal/story-e6frg6xf-1225811611620 12 “Premier Wen: China’s climate action not subject to international monitoring,” www., December 18, 2009. 13 There was a widely reported standoff between the United States and China in Copenhagen over the issue of finance. See, for example, Torello, Alessandro, “Envoy Says U.S. Won’t Pay China to Cut Emissions.” Wall Street Journal, December 10, 2009. http://online. COPENHAGEN_TIMELINE%26articleTabs%3Darticle; Ward, Andrew & Fiona Harvey, “US rules out climate aid for China,” Financial Times, December 9, 2009. s/0/e1b1f2e4-e4f7-11de-9a25-00144feab49a.html; Harvey, Fiona, “China signals climate funds shift,” Financial Times, December 13, 2009.; “Chinese side concedes assistance to help the poor countries reduce emissions (Zhong fang jiu jianpai yuan zhurang bu chengwei zhao gu qiong guo).” China News Net, December 16, 2009.


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actions.14 U.S. negotiators pressed China to agree to international verification so Congress could be reassured that China would be held accountable if it did not deliver on its commitment to reduce its emissions intensity. In doing so, the United States also wanted to eliminate the differentiation between verification procedures for developed and developing countries. Developing country negotiators feared that this threatened the 1992 UN Framework Convention on Climate Change principle, commonly invoked by Chinese negotiators, that countries should participate in an international climate regime “in accordance with their common but differentiated responsibilities and respective capabilities and their social and economic conditions.”15 In response, developing countries ensured that the final text agreed upon in the Copenhagen Accord does include a clear differentiation between the MRV requirements for the developed and developing countries.16 The targets that the United States and China had announced prior to their arrivals in Copenhagen were the important backdrop for all of these discussions. The United States pledged to meet an absolute emissions target that was arguably more stringent than China’s target in terms of emissions reductions, but which hinged on uncertain congressional action. While China’s target would be voluntary and indexed to economic growth, it would be backed by China’s Five-Year Plan and unprecedented levels of government resources. Since each target would be implemented domestically, international verification of nationally reported progress toward meeting the target was a way to link domestic actions to the international regime. negotiations should not be confused for a lack of political will in addressing climate change domestically. China’s energy efficiency and renewable energy achievements have been well documented. Few of the programs at the center of China’s greenhouse gas mitigation strategy, however, were motivated purely by the potential for carbon emission reductions. The ability to produce more economic output with less energy helps make China more energy secure and saves money, while the dissemination of locally manufactured clean energy technologies helps promote industrial development and provides vast export opportunities. Thus, promoting energy efficiency and renewable energy have become a fundamental part of China’s national development strategy. From 2002-2005, China’s energy intensity grew sharply for the first time in decades due to a resurgence in heavy industry, industrial energy consumption, and coal use. Rapid energy growth during this period threw off all projections of China’s emissions trajectory and resulted in China’s emissions surpassing those of the United States two decades ahead of schedule.17 A suite of energy efficiency and other programs, however, have driven China’s energy intensity down for the last four years. One of the core elements of China’s current Five-Year Plan period, spanning 2006-2010, is to lower national energy intensity by 20 percent. China’s National Development and Reform Commission reported a 14 percent drop in energy intensity so far, and additional measures are being implemented in a final effort to meet the target by the end of this year.18 While industrial energy consumption in China is increasing, it has been offset considerably by energy efficiency improvements.19 China’s Top 1000 Program has helped to cut energy use among China’s biggest energyconsuming enterprises (representing 33 percent of China’s
Lewis, Joanna and Kelly Sims Gallagher, “Energy and Environment in China: Achievements and Enduring Challenges” in The Global Environment: Institutions, Law and Policy (Third Edition), edited by Stacy VanDeveer and Regina Alexrod, CQ Press, March 2010, p. 272. 18 Chen Chao, “Shanxi leads China in saving energy,”, March 10, 2010. http://; Seligsohn, Deborah, “China in Major Push to Meet 20% Energy Intensity Target,” World Resources Institute, April 30, 2010. 19 Mark Levine and Lynn Price, “Assessment of China’s Energy-Saving and Emission-Reduction Accomplishments and Opportunities during the 11th Five-Year Plan,” Lawrence Berkeley National Laboratory Report, December 2009. h%20FYP%20Presentation%20for%20WRI%20Dec%202.2009.pdf

Domestic Energy and Climate Action in China
China’s unwillingness to commit to legally binding targets and its pushback on MRV in the international climate
14 The Kyoto Protocol has explicit requirements for Annex I (developed countries) countries, while it precludes any new commitments for non-Annex I (developing) countries. See Kyoto Protocol (1997) article 3 and article 10. kyoto_protocol/items/1678.php 15 UNFCCC, preamble, 1992 items/1349.php 16 The Copenhagen Accord states that the “Delivery of reductions and financing by developed countries will be measured, reported, and verified in accordance with existing and any further guidelines adopted by the Conference of the Parties, and will ensure that accounting of such targets and finance is rigorous, robust, and transparent.” It goes on to say that “Mitigation actions taken by Non-Annex I Parties will be subject to their domestic measurement, reporting and verification the result of which will be reported through their national communications every two years,” and that “Non-Annex I Parties will communicate information on the implementation of their actions through National Communications, with provisions for international consultations and analysis under clearly defined guidelines that will ensure that national sovereignty is respected.” Decision 2/CP.15, Copenhagen Accord. Available at: pdf#page=4


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overall energy consumption, 47 percent of industrial energy consumption, and 43 percent of China’s carbon dioxide emissions).20 The 10 Key Projects Program provides financial support for implementing energy efficient technology and proving results. In addition, many inefficient power and industrial plants have been targeted for closure.21 While China built a reported 89.7 gigawatts of new power plant capacity in 2009, it also shut down 26.2 gigawatts of small, inefficient fossil fuel power stations.22 Thus, one-third of China’s new power plant growth last year was offset by old plant closures — a significant share of the nation’s annual capacity additions. The government has also strengthened local accountability for meeting targets by intensifying oversight and inspection. China’s 2007 Energy Conservation Law requires local governments to collect and report energy statistics and requires companies to measure and record energy use. In addition, each province and provincial-level city is required to help meet China’s goal to cut energy intensity by 20 percent (with targets ranging from 12 to 30 percent). Governors and mayors are held accountable to their targets, and experts from Beijing conduct annual site visits of facilities in each province to assess their progress. The 10 Key Projects Program requires selected enterprises to undergo comprehensive energy audits, and offers financial rewards based on actual energy saved. The audits follow detailed government monitoring guidelines and must be independently validated. These and other programs in China offer evidence that the country is making a good faith effort to strengthen the accountability of local governments and enterprises and improve the reporting accuracy in the power and industrial sectors. In late 2009 China announced that its 12th Five-Year Plan (2011-2015) will include a carbon intensity target in addi20 Price, Lynn; Wang, Xuejun; Jiang, Yun. “China’s Top-1000 Energy-Consuming Enterprises Program: Reducing Energy Consumption of the 1000 Largest Industrial Enterprises in China,” Lawrence Berkeley National Laboratory Report (LBNL-519E), 2008. http://ies.lbl. gov/iespubs/LBNL-519E.pdf 21 All coal plants with capacity under 50 megawatts (MW) and any 100 MW generators that have been in operation for 20 years or more have been ordered to close by 2010. All cement plants with annual capacity of less than 200,000 tons were ordered to be closed by the end of 2008, with a total of 250 million tons of outdated cement capacity to be eliminated by 2010. In the steel sector, outdated pig iron capacity is to be reduced by 100 million tons, and steel capacity by 55 million tons, by 2010. 22 “Report on the Work of the Government,” delivered at the Third Session of the Eleventh National People’s Congress, March 5, 2010, by Wen Jiabao, Premier of the State Council, People’s Republic of China. content_19613822.htm

tion to an energy intensity target. This first-ever carbon target for China will require an important change in the country’s data collection and transparency practices. China has not publicly released any official carbon dioxide emissions inventories that date past 1994. The national carbon intensity target will be allocated across each province, municipality, and economic sector and enforced with new monitoring rules. In addition, the government will conduct a national inventory of greenhouse gas emissions for 2005 and put in place a statistical monitoring and assessment system to ensure greenhouse gas emissions goals are met.23 In Copenhagen, China agreed to publically report its emissions every two years, and if these recently announced programs are carried out domestically, it is very likely that China will be able to follow through on this agreement.24 Implementation of China’s national carbon intensity target across all sectors and regions of the country is being supported by government-funded analysis led by China’s leading academic and research institutions. While there is some debate over whether a carbon intensity target will do much in the way of reducing China’s greenhouse gas emissions trajectory,25 there is no question that improving China’s capacity to quantify its emissions is a fundamental first step to achieving this target as well as more ambitious targets in the future. A carbon intensity target will not only accelerate the energy efficiency improvements already taking place in response to the energy intensity target, but will also further promote the development of low-carbon energy sources like nuclear, hydropower, and renewables.

Dim Prospects for a New Climate Treaty
It is unlikely that countries will have dramatically shifted their negotiating positions by the November 2010 climate conference in Cancun, Mexico. The legally binding climate treaty that was unachievable in Copenhagen will likely
23 Buckley, Chris, “China says moving to enforce greenhouse gas goals,” Reuters, February 28, 2010. 24 Copenhagen Accord “Mitigation actions taken by Non-Annex I Parties will be subject to their domestic measurement, reporting and verification the result of which will be reported through their national communications every two years.” docs/2009/cop15/eng/l07.pdf 25 See, e.g. Finamore, Barbara, “China’s Carbon Intensity Target,” NRDC, November 27, 2009,; and Levi, Michael, “Assessing China’s Carbon-Cutting Proposal,” Council on Foreign Relations, November 30, 2009.


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remain elusive in Cancun — and potentially for many years to come. Yet, it is unfair to blame China alone. The Copenhagen Accord would not have gained the support of more than 100 countries representing over 80 percent of global greenhouse gas emissions had the United States not played such an important role in its formation. While the United States could be a leader in ongoing multilateral discussions to ensure that the Copenhagen Accord’s goals are implemented, following through on the Accord’s provisions will not be an easy feat, and U.S. inaction could severely impede its future. International goodwill toward the U.S. conditional target is unlikely to persist if that target is not further legitimized through domestic legislation. Moreover, without such legislation, the United States is unlikely to be able to push for a binding international climate treaty. If the United States were to take on a credible international climate change commitment — one backed by ambitious domestic legislation — China would certainly face renewed pressure to revisit its delay tactics. Yet, while U.S. climate action is surely a necessary condition for reaching a legally binding agreement that includes all major economies, it is likely not a sufficient one. China will join such an agreement when the time is right for China. This time will come when several preconditions are met, including that China has the ability to accurately measure, monitor, and project emissions, and that it has developed a policy roadmap detailing how it can decarbonize its economy while maintaining a secure energy supply. Such achievements would help to establish the confidence that China’s leadership will need to take on international mitigation commitments. While China must do much more to cut its rapidly increasing emissions if the world is to avoid dangerous climate impacts, China’s leaders know that such reductions will not come easily nor cheaply. Since about 80 percent of China’s electricity needs and 68 percent of its total primary energy demand are met by coal, a real decoupling of energy growth from greenhouse gas emissions will require a calculated move toward a low-carbon economy. The beneficial impacts of China’s policies to deploy renewable energy technology domestically and develop leading clean manufacturing sectors are finally coming to fruition — China installed more wind turbines than any other country in 2009, and Chinese-owned companies manufactured about 5 80 percent of them. But progress is still inadequate as less than 1 percent of China’s electricity today comes from wind power. Until all the major developed countries are willing to take on binding international commitments, it is not a realistic yardstick for China, and is an increasingly unrealistic expectation for the international negotiations to deliver in the near term. This makes other forums for pushing international climate action all the more crucial.

Finding Common Ground among the United States, Europe, and China
The longer the United States waits to act on climate change, the more it is sacrificing its international credibility on the issue. U.S. commentators tend to criticize the ambition of China’s climate actions while simultaneously fearing its superiority in clean energy development. As tensions escalate, cooperation to accelerate the transition to a lowcarbon global economy is increasingly important. In November 2009, the United States and China launched a collection of bilateral clean energy agreements, providing a strong foundation for enhanced cooperation on renewable energy, energy efficiency, clean coal, and low-carbon vehicles.26 The EU and China have launched joint initiatives in many of these areas as well — for example, the agreement on Near-Zero Emissions Power Generation Technology through Carbon Capture and Storage and the SinoDanish Renewable Energy Development Program. If the United States in particular fails to follow through on its clean energy agreements with China, it will not only miss a huge opportunity to increase cooperation on key technologies to help address climate change but will also undermine China’s trust as it enters a challenging period in Sino-U.S. relations. Although bilateral cooperation between the United States and China alone cannot solve the global climate challenge, it is essential to working out key differences, facilitating dialogue among business and policy leaders, and implementing workable solutions to climate change in incremental but concrete steps.

26 U.S. Department of Energy, 2009. “U.S.-China Clean Energy Announcements,” November 17 Press Release.

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It is imperative that the United States take its clean energy cooperation with China seriously and devote substantial financial and human resources to its side of the effort. It is important for EU member states to convey to China their key models for success in transitioning to a low-carbon economy. Moreover, it is essential that all UNFCCC countries work out the details of the MRV regimes put forth in the Copenhagen Accord so that increased transparency begins right away. Furthermore, it is critical that China’s energy efficiency and renewable energy successes be recognized, encouraged, and replicated wherever possible. China has made some impressive accomplishments to date, and is poised to pursue even more aggressive plans to curb emissions growth and promote clean energy use. China is taking these actions in response to worrisome growth in energy consumption and emissions, and its efforts were implemented rapidly and — for the most part — effectively. The Chinese have displayed foresight in thwarting coming crises related to wasteful energy consumption, persistence in their drive to improve the effectiveness of implementation, and flexibility in rising to the demands of the international community in taking the first important steps to increase transparency in measuring, reporting and verifying its emissions. So, while the next five years will no doubt be ones of continued rapid energy consumption driven by economic expansion, the Chinese leadership’s high-level attention to energy efficiency, energy conservation, and the development of low-carbon energy technologies has already placed the country on a different emissions trajectory than the one it was on a decade ago.
Joanna I. Lewis, Assistant Professor, Georgetown University’s Edmund A. Walsh School of Foreign Service
Joanna Lewis is an assistant professor of Science, Technology and International Affairs (STIA) at Georgetown University’s Edmund A. Walsh School of Foreign Service. Her research focuses on renewable energy industry and policy development, mechanisms for low-carbon technology transfer in the developing world, and expanding options for multilateral engagement in a post-2012 international climate change agreement. Most of Professor Lewis’ research is based in China. Current projects include studies of China’s wind power industry development, the security implications of climate change impacts for China, and the future of the bilateral relationship between the United States and China on energy and climate change. Dr. Lewis serves as an international advisor to the Energy Foundation China Sustainable Energy Program in Beijing. She is a member of the National Academies Committee on U.S.-China Cooperation on Electricity from Renewables, the Advisory Board of the Asia Society’s Center on U.S.-China Relations, and the Strategic Advisory Board of the American Council on Renewable Energy (ACORE)’s U.S.China Program. She is a Lead Author on the forthcoming Intergovernmental Panel on Climate Change Fifth Assessment Report.

About GMF
The German Marshall Fund of the United States (GMF) is a nonpartisan American public policy and grantmaking institution dedicated to promoting greater cooperation and understanding between North America and Europe. GMF does this by supporting individuals and institutions working on transatlantic issues, by convening leaders to discuss the most pressing transatlantic themes, and by examining ways in which transatlantic cooperation can address a variety of global policy challenges. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany on the 25th anniversary of the Marshall Plan as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has seven offices in Europe: Berlin, Bratislava, Paris, Brussels, Belgrade, Ankara, and Bucharest.

About the Transatlantic Climate Bridge
This paper would not have been possible without funding from the Transatlantic Climate Bridge, an initiative jointly launched by the German Federal Foreign Office and the German Federal Environment Ministry to connect and support those working to address the challenges of climate change, energy security, and economic growth at the local, the state, and the federal level in the United States and Germany.


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