Going clean: New research shows how China can adopt low-carbon growth

BEIJING, CHINA: Results released from a detailed economic study show that China may cut carbon emissions deeply and minimise the adverse effects on its economy over the next 40 years.

The report, Going Clean: the economics of China's low-carbon development, by the Chinese Economists 50 Forum and Stockholm Environment Institute, says that emission reductions up to 2050 can be made for example through:

- Energy efficiency gains through improved building design, standards for electrical appliances and the use of less energy-intensive materials.

- A massive shift towards the use of renewable energy such as wind and solar energy, municipal solid waste and biomass, and small hydropower.

- Electric vehicles for road transport.

- Using Carbon Capture and Storage technology in new coal-fired power plants.

- A better international cooperation mechanism that can channel more finance and technologies from developed countries.

The report by Chinese, Swedish, German, British and American experts says that these changes would also present opportunities for China to improve its energy security and move its economy higher up the international value chain.

"A low-carbon China is a country with a larger service sector, more advanced labour skills and less environmental degradation," said Dr FAN Gang, Director of the National Economic Research Institute in China, who led the research in China. "Such a transition would also be an essential part of China's development."

China is currently one of the 10 most carbon-intensive economies in the world, meaning that it has a high carbon footprint in relation to the level of economic activity.

"Avoiding dangerous climate change requires the world to act together to cut global emissions. Developed countries are largely responsible for the past build up in global green house gas emissions but future responsibility is shared by developed and developing countries alike," said Lord Nicholas Stern, report author and Professor at the London School of Economics.

"This important report demonstrates that China can take strong and decisive action to reduce its carbon emissions, whilst continuing its economic growth and delivering a prosperous and a harmonious society for its people."

"China will be one of the countries most adversely affected by dangerous climate change. Avoiding dangerous climate change is in the best interest of China," said Professor Ottmar Edenhofer, report author, deputy director and chief economist of the Potsdam Institute of Climate Impact Research. "The study demonstrates that China can combine a high economic growth path with ambitious emission reductions. This is the reason why China has the potential to become a role model for other economies in transition."

Going Clean recommends a phase-out of fossil fuel subsidies and for carbon to be priced more highly, either through a carbon tax or a global cap-and-trade system. "With today's low prices, the incentives for a low-carbon transition are not strong enough. But this can change," said Dr Fan Gang.

The report shows that it is technologically feasible for China to reach a 2 degrees pathway and estimates that the savings from lower energy use and other efficiencies will partly offset the costs of transformation.

"High-income countries account for a vast majority of global emissions to date and need to shoulder this responsibility through financial support to developing countries," said Professor Johan Rockstrom, Executive Director of the Stockholm Environment Institute. "To make this a reality, Going Clean proposes a new international finance mechanism - the Inter-country Joint Mitigation Plan - as a broader and more efficient way of financing technology transfers."

"Consumption and production patterns also need to be steered in a more resource- sustainable direction," said Klas Eklund, report author and Senior Economist at the Nordic bank SEB. "As the world's most populous country and the largest emitter of greenhouse gases, China's role is critical in combating global climate change. Thus, effective economic tools to curb emissions are necessary."

The shift to a low-carbon economy will hit coal-fired power and some heavy industries, but will also create new 'green jobs'. In the first half of 2009, China built more wind turbines than the US. Low-carbon transport is growing - there are currently over 50 million electric bikes and motorcycles in the country, and China is now leading the mass production of electric hybrid cars.

"Even in these difficult economic times, climate change action may present more opportunities than costs," said Professor Johan Rockstrom. "Such a transformation, for China and the rest of the world, will not be easy. But it is possible, necessary and worthwhile to pursue."

The Chinese 50 Economists Forum is a Beijing-based grouping of Chinese economists for collaborative research and public discussion of China's economy. The Stockholm Environment Institute is an independent, non-profit research organization bridging science and policy for sustainable development.