Being the World's fastest growing economy as well as the highest user of energy means that delivering a sustainable platform will be challenging for China as E&T discovers.
When the COP17 meeting in Copenhagen a year ago broke up without a binding agreement on legislation to replace the Kyoto treaty, there was a great deal of finger pointing, primarily focussed at the emerging nations - Brazil, Russia, India and more importantly China - for thwarting the drive to curb climate change. The briefings issued by Barak Obama's PR machine were quick to heap the blame on the emerging powerhouse of China as the intransigent party that failed to fall in line preventing a binding deal, but that assertion falls very wide of the mark and bears all the hallmarks of a nation attempting to throw the focus of its own sustainability shortcomings.
Despite the consensus among the mainstream Western press anyone who studies the facts can be under no illusions that China is serious about sustainability. It comes out favourably when compared to most other countries in terms of concrete actions. Radical parallel reforms and rapid change is the order of the day: while developed economies tend to fix individual problems while protecting existing infrastructure, societal structures and positions.
While aiming for continued growth towards 2020 in the range of ten per cent, China is embarking on a series of major changes and social reforms with a very serious aim to develop in a sustainable way. But you only have to look at the recently launched World Energy Outlook (WEO) from the International Energy Agency (IEA) to realise the fundamental challenges that China faces. According to the WEO China became the world's largest energy user, despite its low per capita energy use as well as contributing 36 per cent to the projected growth in global energy use. "It is hard to overstate the growing importance of China in global energy," Nobua Tanaka, executive director of the IEA says. "How the country responds to the threats to global energy security and climate posed by rising fossil-fuel use will have far-reaching consequences for the rest of the world."
One company at the heart of the sustainability drive in China is Det Norske Veritas (DNV) better known as a marine standards and classification society. They have had a presence in China for over a century, and for almost two years have been advising the Chinese Government. The man leading the DNV sustainability office in Beijing is Per Marius Berrefjord. "For everybody who believes that it is really urgent to act now on the sustainability issues it is imperative to support significant actions in China, India, Europe and the US," he says. "This is where the frameworks are defined and where a significant part of the implementation must take place in order to generate global impact.
Compared to a business as usual scenario China has targeted removing carbon emissions in the order of the total current carbon emissions from energy production in China within 2020. The reform also targets radical reduction of the dependence on oil within 2020 and on natural gas and coal in the longer term.
"If you look at the figures they are approximately going to take from a business as usual scenario they are looking to significantly reduce CO2 emission by 2020. They are not going to give up on the economic growth so they are going to grow even more in that respect."
The target is derived from a general goal of between 40 - 45 per cent CO2 intensity per GDP unit improvement by 2020, using 2005 as the base line. The current goal also states that minimum 15 per cent of the total energy production in 2020 shall be from renewable energy sources.
According to Berrefjord the goals will probably be made more, rather than less ambitious, towards 2020, assuming that energy carrier costs will tend to increase and technology costs decrease more than predicted today while the impacts of climate change will be judged as increasingly severe.
Size and scope
"You have to realise that China has around 1.3 billion people, and the whole active economy it is around 1 billion," he continues. "This is not continuous development this is a leap change. There are around 32 provinces in China, it is like a federal system and the best way to understand the scope of that is to imagine 32 Frances. Then, of course, you have the fact that the provinces are not identical: you will see that the economic development is moving more inwards now. That means that, for example, the simple manufacturing industry is moving inland to try and find cheaper labour.
The entire approach to reform is different in China. Aggressive reform across multiple areas is the order of the day in China while a developed economy normally will aim to fix individual problems while maintaining and defending existing infrastructure, public functions and positions."
Berrefjord argues that this fundamental difference, which is enhanced further by cultural and political differences, makes it difficult to agree politically on a shared approach. "This does not prevent local actions and pragmatic co-operation on individual issues, which represents a fully acceptable way forward if the resulting speed and direction is right," he adds.
The key, however, to exerting influence in China is to become part of the process: to become involved in partnerships and co-operations rather than come in and attempt to dictate what needs to be done. "In China no party, whether domestic or international, can expect to be seen as useful or attractive unless it demonstrates that it understands the overall intentions of very complex reforms and contributes with simplification and solutions which are useful in the bigger picture," he says.
But China's sustainability drive is not all about reducing carbon emissions; it is a far more holistic approach. "What they are looking for is a valid range of reforms across the whole society," Berrefjord adds. "We are talking about a better life, and a better future, and that includes the economy development, the education, the healthcare, the environment, and security for access to resources.
"They define it very widely. From their point of view you may actually find that aggressive reform is the order of the day, so you never change one thing at a time; you change everything. "
What the Chinese don't want to do is just copy something from the US, UK or Norway and they know that the key to this working is the ability to localise it. "The Chinese will tell you that what good is it for a farmer having the cleanest air to breath if his son is sick and he is bankrupt. It works in the opposite scenario as well, what good is it having the world's best healthcare if you air is so polluted that everyone gets so sick that they die from it. You can't isolate all of the components; you have to look at it in an integrated way."
Berrefjord is adamant however that many western companies and organisations have fundamentally the wrong approach when it comes to doing business in China. "You see foreign companies coming over to China with their own technologies, whether it is a wind turbine, something renewable or something to strengthen the electric grid, they don't see the big picture," he explains. "This means they are not thought of as useful because the will not be able to address the real problems in China."
The political system in China has often been mooted as a roadblock to change but that perception would appear to be far from the reality. "The interesting thing is that when you talk to high-level politicians in China you will realise that aggressive reform is the order of the day," Berrefjord adds. "If you were to have a high-level politician who had a ‘hold your horses' approach and tried the stop the reform for two years to consolidate, he would be considered as a radical and most probably thrown out immediately.
"I actually think they have ever more difficulty in deciding on what to do, in which sequence and with what priorities. Of course though, when it has comes to the point where a decision has been made then it would mean a much more forceful implementation stage with possibly fewer obstacles."
Working with the government is setting the framework, but of course implementation is to a large extent delivered through the companies. When you look at the companies in China there are approximately 100 large state-owned companies and they are run through separate ministers, accounting for around 40-50 per cent of the GDP. Then you have the smaller SOE's that are governed by the politicians on a province or city level and then you have the banking system which is always structured in the same way with big decisions discussed on a national level and filtering down. There also beginning to be more and more private companies. All of these are working side by side in a mixed economy in China, which is a very complex system.
Success to date
The industrial landscape in China has been based on the rapid growth of a lot of power intensive industries. "The SOE's who are into power intensive industries have worked hard on getting this power intensity lower, Berrefjord says. "For example they are doing a lot on LNG at the moment; they are trying to go from 4-5 per cent of the energy demand to beyond 20 per cent. They have started investing a lot in wind and solar power, although more in wind power at the moment. And something I don't think many people realise is that hydro power is much bigger in China. Every year they are installing new capacity equal to half the whole capacity of hydro power in Norway."
Al that growth in power generation is putting great pressure on the transmission system and there is no doubt that in the next five years they are going to have to do something fundamentally with their transmission systems. "That has not really been started yet, but within the next year they are going over transportation costs, transmission systems and to start ensuring their buildings are energy efficient. This does not cover all of the things they are going to be doing, and they are constantly adding on new projects to work on.
"In China, they do not work as we may do. We would try to come up with solution A and solution B, and then decide which of those would be best before spending a lot of money on that one solution. China undertakes a lot of pilot projects and if there is something that maybe doesn't need deciding straight away then they will delay it until then need to make that decision."
If the past decade has been exciting for those studying the Chinese Industrial revolution the coming decade promises even more intrigue. But one thing for sure is that China will emerge as the industrial powerhouse, and in so doing could also become an unlikely champion of sustainable living.