Beijing flexes the green muscle, slows down “brown” growth

China is determined to become the world’s green superpower. Previews of China’s new 5-year plan to be endorsed in March 2011 by the People’s Congress show that Chinas ambitions to lead in green technologies will increase even further and that green growth strategies will move to the heart of Chinese politics.

“Green growth has been officially adopted to be the part of the core strategy for the coming decade. The 12th 5-year plan […]will put emphasis on economic and industrial restructuring towards greener, more efficient and lower carbon. Climate change is one of key drivers for China’s fundamental shift this decade”, Changhua Wu, Greater China Director of The Climate Group, says in an interview with www.greengrowthleaders.org.

The 5-year plan will include extraordinarily strong efforts within wind, solar, hydro, nuclear, electric cars, smart grid, infrastructure and high speed rail, continued efforts to increase energy efficiency, tough regulation and huge investments, leading international observers report.

Slowing down growth

After years of narrow focus on economic growth, the Chinese leadership will even aim to slow down economic growth as a consequence of concerns over the pressure on natural ressources.

”China is right in the middle of achieving its second quadruple of its economy between 2000 and 2020 (the first one was achieved between 1980 – 2000). The sustained rapid growth in the three decades has greatly relieved the pressure for the top leadership to pursue a continued high growth rather China could now slow the growth a little bit (though it will continue to be 7-8% annually), while paying more attention to quality of growth”, says Changhua Wu.

China will be “shifting from a focus on the quantity of growth to the quality of development” writes E3G, a leading british sustainability NGO in a new analysis released last week, commissioned by the EU.

“China will introduce innovative governance structures to help deliver these [environmental] targets. Firstly, its aim of integrating the economic, energy and climate agendas should help provide a stronger strategic impetus to deliver these outcomes, especially at the provincial level”, E3G writes, underlining that China usually are successful in fulfilling the objectives of 5-year plans.

Isabel Hilton, editor of www.chinadialogue.net and a long time observer of Chinese politics confirms the new move, but warns that “…success is not assured since many poorer provinces continue to regard headline GDP growth as more important than environmental protection”.

She also notes that the 5-year plan ”is less an acknowledgement of China’s global influence as a recognition that its domestic ecosystems are under severe pressure. The government also acknowledges that clean technologies offer China an opportunity to rebalance its economy”.

China’s scientific development

Under President Hu Jintao, Chinas strategies have been termed “scientific development”.  Hu, an engineer by training with a career in hydro power, continues to emphasize sustainability in his leadership.

 Chinas new plan means massive efforts to lead in sectors like wind, solar, hydro, nuclear, smart grid, and electric vehicles. Public spending in these sectors will be increased to 2-2.5% of GDP by 2015. China will e.g. install 10 million charge stations for electric cars by 2020. Renewable energy installed capacity will increase with 47% by 2020. China will invest €57 billion in grid infrastructure allocated to ultra high voltage (UHV) transmission lines by 2015, and more than €460 billion in “smart grids” in the next decade. Furthermore, observers expect the 5-year plan to introduce an emission trading scheme and a national resource tax. Experiments with ‘low carbon zones’ in 8 cities and 5 provinces, covering over 300 million people, have already been started.

The west is watching

The 5-year plan will also have huge implications outside The Peoples Republic.

Firstly, China is the worlds’ biggest energy consumer and emitter of CO2, and preventing dangerous global climate change is impossible without a monumental shift use of energy sources and increase in energy efficiency by the Chinese. In coming decades, emerging economies will be responsible for by far the largest share of global carbon emissions, and today Chinas energy mix is dominated by coal.

Secondly, Chinas green ambitions will most likely further accelerate the global clean tech race. European and US corporate and political leaders are watching closely every move by Beijing, and they will come under even greater pressure to deliver the most cost-efficient low carbon technologies faster. The plans put forward in Beijing will e.g. greatly influence the debate in Washington on the US position and ambitions in clean tech. The 5-year plan makes the “Sputnik”-metaphor used by the Obama administration the last few months very relevant and could play a role in President Obamas efforts to convince the congress and senate to back his clean energy policies.

At the end of the day, Beijings ambitions will raise the bar for any global competitor in clean tech. This could be the most important effect; No government or industry can ignore the developments.

Heavy pressure on natural ressources

Observers are impressed by the 5-year plan, but also wary. China is still fuelling a rapidly growing economy with mainly coal, and water and air quality is under heavy pressure. Seen in a historic perspective, however, it is probably unprecedented that a nation still striving to eradicate poverty among hundreds of millions of its citizens is willing to adopt strong environmental regulation, observes Hu Angang, economics professor at Tsinghua University and a consultant on the plan, in an interview with the british newspaper The Guardian.

He advised the government to set a cap on energy consumption, to influence when China’s emissions might peak. With existing targets, this is not likely before 2030, by when carbon dioxide output will have more than doubled. Hu Angang is pressing for more rapid reductions.

“For the first time, we will see a new model pioneered by a country that is not yet developed. This is a historical, critical change,” he said. “The new five-year plan is an opportunity for China to lead the green revolution, which will de-link growth and carbon dioxide emissions.”