On the Environment
Environmental Performance Measurement
Wednesday, November 23, 2011
By Guest Author, Rafael E. Torres, MBA ’13, Yale School of Management, MEM ’13 Yale School of Forestry & Environmental Studies
The selection of sustainability performance metrics in a company’s sustainability or corporate social responsibility (CSR) management system is dependent on the relevant issues facing that specific firm, the issues facing its stakeholders, and the context of the company’s industry. CSR metrics are crafted to report on performance in the environmental, social, and economic contexts. Since the issues underlying CSR are complex, selection of particular sustainability metrics involves value judgments about their importance and the measurement methodology to be used. I offer below some issues to consider in developing sustainability metrics and reporting systems. This is by no means an exhaustive list, but rather a menu of issues to think about that are relevant to CSR measurement systems.
First, one sound business philosophy that I learned a long time ago from a college professor was: “you get what you measure and reward.” This philosophy has rung true over the years and I’ve seen it play out at many different firms. Any metric that the firm sets out to produce and track should somehow be weaved into the performance management and bonus incentive scheme of the company in order for it to have the greatest impact. If employees are not trained to consider CSR metrics as part of the results they manage to, and if they are not somehow directly incentivized based on CSR performance, they will focus and prioritize other areas outside of these metrics. In such a case, improvement to areas tracked by the CSR metrics will likely be incremental or nonexistent altogether.
Second, practically every individual metric has benefits and drawbacks involving tradeoffs of incentives or measurement goals. It is easy to create perverse incentives one way or another with any given individual metric. For instance, using an energy intensity metric (energy usage/output or revenue) has the benefit of factoring in the effect of more production by the firm, but has the drawback that the company’s absolute energy usage—and thus its total impact—can be increasing, while being masked by the intensity metric. Using absolute energy usage has the opposite effect, as it masks improvements in efficiency when the firm’s growth outpaces the related efficiency gains. These optical effects make it difficult for either metric to provide an accurate picture on its own, and it can result in employees managing to one performance indicator at the expense of the other. Often, good metric systems are designed to use sets of counterbalancing metrics whose effects cancel each other out. This helps provide a balanced performance picture and reduces the possibility that employees or managers will have incentive to improve in one area at the expense of another.
Third, when working with any type of metric, it is very important to develop benchmarks against which to compare the results. Such benchmarks need to be relevant to the objectives of the CSR metric system. When the desired objective is improvement over a prior year, then the benchmark is simply the prior year quantity. However, how do we determine benchmarks to achieve sustainability? One vocal sustainability researcher and metrics expert, Mark McElroy, holds that many CSR metrics in use today are lacking because they do not have a benchmark measure to compare against that represents the truly “sustainable” level of use for that resource for that company. In other words, if a firm states that it used 1.0 million (M) gallons of water in the current year as compared to 1.1 M gallons in the previous year, we can only say that this was an improvement over the prior year. However, what does it say about whether the 1.0 M gallon result is “sustainable,” meaning a rate that doesn’t deplete the resource beyond its capacity to regenerate? To know if that firm’s water use is sustainable, a more detailed assessment would need to be made about water availability and use in the firm’s geographic region, and such an analysis would require allocations of the resource base amongst industries and companies. It is, to be sure, a formidable undertaking, but Mr. McElroy’s point is well taken that CSR metrics reported without context stand little chance of achieving their objective of reporting on sustainability, as defined.
Finally, for companies wishing to report sustainability metrics externally, there are additional considerations of how to frame and execute such external reporting. Currently, many companies use annual CSR reports as a primary vehicle to communicate their environmental, social and economic performance. Such CSR reports are often complemented by press releases and other ongoing external communications. Surely there are good reasons to adopt this approach to external reporting, but it is worth considering whether it is a good idea to separate the company’s CSR reporting from its financial reporting. A public company in the U.S. files annual financial reports (Form 10-K) and quarterly financial reports (Form 10-Q) with the Securities Exchange Commission (SEC), and those are very likely the reports that 99 percent of investors pay most attention to. In that context, do companies risk creating the perception that CSR reports are a side dish when they divorce sustainability metrics from financial ones? As companies refine their CSR measurement and reporting systems, they may want to consider ways of unifying communications so that users of reports are not left feeling like there are double standards.
Designing and implementing any form of performance measurement system is indeed a challenging task, and it is no less so for a CSR measurement system. Organizations need to make sure their metric systems are tailored to the challenges of sustainability measurement and are set up to succeed.
Rafael is a 2nd-year MBA/MEM joint degree student focused on energy policy and strategy. Prior to Yale, Rafael worked almost 10 years as an external financial auditor, including as manager at Deloitte & Touche LLP. Rafael is a licensed Certified Public Accountant (CPA), and holds other financial certifications.
Friday, October 21, 2011
By Guest Author, Angel Hsu, PhD candidate, Yale School of Forestry and Environmental Studies
The news late last month from China’s environment ministry that it plans to bring one of the country’s most destructive and widespread pollutants – tiny particulates widely known as PM 2.5 – into national air quality standards suggests that attitudes to pollutant data, once deemed too politically sensitive to gather, may be shifting.
Air particulates with a diameter of 2.5 microns or less (hence “PM 2.5”) have serious health implications. Small enough to penetrate human lung tissue, they can cause asthma, lung cancer and cardiovascular disease. In most parts of China, PM 2.5 has beenfound to account for more than half of air particulate pollution. But despite these serious pollution levels and impacts, national air-quality standards in China have lacked requirements for monitoring PM 2.5, or specific reduction targets – until now.
Speaking at Seventh Environment and Development Forum on September 22, China’s pollution control secretary Zhao Hualin announced that the Ministry of Environmental Protection (MEP) intends to revise its national ambient air quality standards to include PM 2.5 measurements. Recognising the contribution of PM 2.5 pollution to poor visibility and air quality, Zhaotold the audience, “We have now started to address the haze problem, which is precisely a PM 2.5 problem”.
The idea is for China’s so-called “model cities” to pilot particulate measurement, themselves something of a shifting phenomenon. In late August, the MEP made revisions for the second time as to what criteria are necessary to qualify as a National Environmental Protection Model City – a title given to cities to reward special efforts in the green sphere – and PM 2.5 measurement is among the requirements.
Under these new standards, only 11 cities now qualify as model cities, vastly fewer than the 77 reported to have carried the title before the changes. They are: Wujiang, Liaocheng, Qingpu District of Shanghai, Linyi, Dongguan, Xuzhou, Yinchuan, Yichang, Linan, Huai’an and Foshan. Three more have undergone review and are in the process of being designated as model cities, while the remaining locations previously considered model cities are under review.
The strengthening of air quality metrics suggests that the political tides surrounding pollutant data may be changing. When the MEP released draft amendments to its Air Pollution Index (API) in late February of this year, the inclusion of PM 2.5 was notably absent, despite the addition of ozone and a number of other considerable improvements.
The omission was criticised as a political maneouvre rather than a decision stemming from a lack of technical capacity in Chinese cities to measure the pollutant. Ma Jun, who directs the Beijing-based Institute of Public and Environmental Affairs, told the Global Times, “Government agencies feel the [inclusion of PM 2.5 in the] index may hurt the image of many cities that want to attract investment or that they may not be able to improve PM 2.5 pollution in a short time.”
Secret US diplomatic cables, released by Wikileaks, further corroborated such suspicions, reporting research by local scientists that revealed PM 2.5 levels five to 10 times higher than World Health Organisation guidelines was deemed “too sensitive” for authorities and therefore not systematically measured in major Chinese cities. But just months after the release of draft API revisions and the diplomatic cables, secretary Zhao has claimed that measurement of PM 2.5 is “technically no longer a problem”. So, how big a step is this?
The first thing to make clear is that Zhao was most likely referring to the question of technical capability to measure PM 2.5, and questions remain as to whether political sensitivities around environmental data still exist. The memory of a failed attempt to quantify economic losses attributable to environmental harms is still fresh in the MEP’s memory. In 2007, the conclusions of China’s “Green GDP” project met stiff resistance from provincial leaders who feared yet another performance metric, and the results of the report were never officially released. The then-State Environmental Protection Agency and National Bureau of Statistics were left quibbling over data and methodology – a testament to how contentious attributing numbers to pollution can be.
However, recent signs that China is embracing a more transparent approach to its environmental challenges are evident. In early June, the MEP released a franker assessment of China’s environment than seen previously in the latest annual State of the Environment Report. Vice-minister Li Ganjie stated that while some aspects of the environment showed modest improvement, “the overall environmental situation is still very grave and is facing many difficulties and challenges”. Only 3.6% of the 471 cities monitored in the most recent report garnered top ratings for clean air.
Deborah Seligsohn, principal advisor to the World Resources Institute’s Climate and Energy Program, has also noted a dramatic shift in language since the 1990s when the annual reports claimed that China’s environmental situation was “basically good” or, later, “basically unchanged”. Not until the State Environmental Protection Agency achieved ministerial status in 2007 did the reports become more critical, describing the environment as “not inspiring”.
Including the politically sensitive PM 2.5 in air-quality standards signals a push for greater transparency in China’s environmental governance. Over the course of a few months the MEP has already taken significant strides to improve air quality measurements and standards. This will bring China’s policies closer to international best practices for air quality monitoring.
Piloting measurement in model cities makes political sense as a way of easing China into eventual binding PM 2.5 targets for all provinces – a mandate that will likely be included in the 13th Five-Year Plan. By first signaling that PM 2.5 is an aspiration for “model cities”, the government is taking an important step toward lessening political stigma surrounding the pollutant: instead of being punished, cities will be rewarded.
PM 2.5’s inclusion is also indicative of a broader trend: China’s transition to a political culture that is more open about environmental conditions. Importantly, if it continues, this openness will allow greater public access to data and information, in turn spurring better results for the environment.
Angel Hsu is a doctoral student at the Yale School of Forestry and Environmental Studies and project director for the 2012 Environmental Performance Index.
This piece was originally posted on the China Dialogue website on October 19th.
Monday, October 10, 2011
By Guest Author, Laura Johnson, MESc '13, Yale School of Forestry & Environmental Studies
In a recent Yale Environment 360 video, photographer Pete McBride navigates the Colorado River from its source in the Rocky Mountains to its historic mouth in Mexico. It’s a sobering account. The Colorado River, Pete says, has become a “dry river cemetery.”
Over 20 dams were installed along the Colorado River to divert water for industrial, agricultural, and urban life. These ever-increasing demands exceed the river’s capacity, and droughts are spreading throughout the basin. Similar water management problems exist worldwide, but another example close to home is California’s Klamath River. Officials recently announced that four of the major dams along the Klamath will be removed in the coming years – and the situation there may offer some hope for the Colorado.
In 1909, developers installed the first of four major dams on the Klamath River as part of the PacifiCorp Klamath River Hydroelectric Project. The installation of these hydroelectric dams had a number of negative effects: Coho salmon and steelhead trout populations throughout the Klamath River Basin declined, migratory salmon were kept from reaching spawning grounds up river, and algal blooms developed behind the dams, creating an additional source of stress for fish populations.
Stakeholders – including Indian tribes, the US Department of Interior, farmers, environmental groups, and private citizens – called for improved management strategies and, in 2003, the National Research Council (NRC) released a set of recommendations for overhauling the Klamath River, including a call for dam removal. The NRC based its decisions on data and risk analyses, and provided stakeholders the indicators they needed to analyze potential effects of various water management strategies.
The inclusion of indicator data allowed stakeholders to come to an eventual agreement on how to best manage the Klamath River’s water resources; the various groups signed the Klamath Restoration Agreement and Klamath Hydroelectric Settlement Agreement in 2010 and are waiting approval from Congress. The dam-removal project is expected to begin in 2020, allowing PacifiCorp time to raise money for the project without increasing power rates to its customers.
The Klamath River Restoration Agreement offers a successful example of social learning through adaptive management and stakeholder involvement – and it underscores the importance of metrics and data in environmental decisionmaking.
For more information on the Klamath River restoration visit http://klamathrestoration.org/
Monday, October 03, 2011
By Guest Author, Diana Connett, MEM '12, Yale School of Forestry & Environmental Studies
On September 26 and 27 experts from around the world gathered in New Haven to review the preliminary analysis on the 2012 Environmental Performance Index. Difficult questions about making data criteria more stringent, including time series analysis, and issues around aggregation were debated as investigators move the EPI into the next generation. As organizations and countries around the world construct environmental indicators and aggregate environmental data, the Yale Center for Environmental Law & Policy and Columbia’s Center for International Earth Science Information Network are continuing to innovate research and communication of policy-relevant environmental data at an international scale. Stay tuned for the release of the 2012 EPI in January 2012.
2010 Environmental Performance Index
Wednesday, August 31, 2011
By Guest Author, Angel Hsu, PhD candidate, Yale School of Forestry and Environmental Studies
In March, China released its 12th Five-Year Plan – a blueprint outlining the key economic and development targets for the country over the next few years. Unlike previous Plans, climate change and energy are featured prominently, and a strong emphasis is placed on a slower, more sustainable growth trajectory. Not only is the 12th Five-Year Plan the first to mention climate change, but it adopts as part of national, binding law the climate pledges China first made at the United Nations Framework Convention on Climate Change (UNFCCCC) Copenhagen climate summit in December 2009. Binding targets for a range of other environment and energy issues are also included in the Plan, including important air and water quality pollutants that were previously absent.
Part of the country’s ability to achieve these targets will be in its capacity to measure and track progress toward its goals. The Chinese government has pledged implementation of “well-equipped and statistical and monitoring systems” and “index evaluation systems” in the 12th Five Year Plan, indicating an increasing awareness of the importance of data, information and robust infrastructure to ensure targets are met. However, while there are signs of China’s move toward a more “data-driven” approach to decision-making in the formulation of the latest Plan, political sensitivities around pollution information still persist, meaning China may still confront challenges when trying to improve environmental conditions.
The 12th Five-Year Plan comes at a time of growing recognition from the Chinese government regarding the importance of information for environmental decision-making. In 2010 the Chinese government completed its first national census of pollution, requiring more than $100 million U.S. dollars, 570,000 staff and nearly two years to complete. The survey mapped more than 6 million sources of residential, industrial, and notably agricultural pollution, which had been previously absent from measures of water contamination. The survey found that previous measures of water pollution – specifically chemical oxygen demand – had neglected to include non-point agricultural sources of pollution, from fertilizer and pesticide effluent as well as landfill leakage. Including these non-point sources of discharge meant that prior measures of water pollution had been missing over half of the baseline data for chemical oxygen demand – from 13.8 million tons in 2007 to 30.3 million. At the time, Chinese officials noted that the targets would not be revised based on the new data, while still touting China’s success in meeting COD reduction targets in the 11th Five-Year Plan. However, the findings from the survey did lead to the adoption of a binding reduction target for a critical water pollutant – ammonia nitrogen – and continued reduction goals for Chemical Oxygen Demand (COD) in the 12th Five-Year Plan. The adoption of these new water pollution targets were largely due in part to the survey results, which allowed for the government to set new targets and refine previous ones based on this new information.
While this example speaks to the progress China is making in terms of measurement and performance tracking, political sensitivities surrounding other environmental data still prove to be barriers to policy changes. Earlier this year, the Chinese Ministry of Environmental Protection (MEP) released draft proposals to amend its Air Pollution Index (API)  to an Air Quality Index (AQI) that more closely resembles the U.S. version . While the proposed amendments include significant improvements – such as including ozone measurements, improved calculation methodologies, and standardizing color-coding schemes – PM 2.5  is notably absent.Experts, such as Ma Jun, Director of the Institute of Public and Environmental Affairs (IPE), a Beijing-based NGO, and former Yale World Fellow, have suggested that leaving out PM 2.5 is due to political rather than technical concerns. “Government agencies feel the index may hurt the image of many cities that want to attract investment or that they may not be able to improve PM 2.5 pollution in a short time,” Ma told the Global Times. U.S. diplomatic cables have also revealed that lack of measurement of PM 2.5 and other dangerous air pollutants could be due to fear of political consequences.
So while we can see evidence that China is embracing improved data-based decision-making, the results are mixed because political vulnerability toward environmental pollution is still a serious concern amongst Chinese leadership who fear citizen unrest and social instability. What China must realize are the benefits from knowing risks and exposures to environmental harms and pollutants, which is not possible without measurement. Failing to incorporate critical pollutants in national environmental policies only pushes serious concerns under the rug, in a type of “act now, apologize later” mentality that in many cases have led to dire political ramifications for Chinese government officials when harmful pollution disasters surface .
Therefore, while the 12th Five-Year Plan makes important inroads in establishing more comprehensive environment and energy-related targets, equal progress needs to be made in terms of data transparency and a shift toward a government culture that doesn’t fear data and numbers.Only then can the Chinese leadership expect to formulate sound policies and robust systems to drive environmental results.
 PM 2.5 refers to air particulates with a diameter of 2.5 microns or less; known to have serious health implications such as asthma, lung cancer, and cardiovascular disease, due to their ability to penetrate human lungs.
Wednesday, August 17, 2011
By Guest Author, Diana Connett, MEM '12, Yale School of Forestry & Environmental Studies, and Jay Emerson, Associate Professor of Statistics, Yale University
A basic part of research often taken for granted is the simple definition of a term. There is a global understanding of what is measured by GDP, for example. However, there are many terms for which there is no internationally accepted definition -- "environmental goods and services" is one of these because environmental impacts are highly context-specific. This poses difficulty and adds contextual nuance when undertaking a study such as ours on the linkages between trade and the environment.
The distinction between production and/or consumption poses particular difficulties with such research projects. For example, a bicycle manufacturer may spew noxious gases and deplete non-renewable minerals in the production process. However, the use of bicycles may reduce fossil fuel use by end-users as they bike rather than drive to work. These are just a few of the complexities that organizations like the WTO, the World Bank, the OECD, and others are trying to resolve so that trade statistics can inform more sustainable trade policies.
Another major hurdle for the integration of environmental concerns into trade policy is the accounting of the environmental impact embodied in trade in the modern global economy. One of the best-known examples on the world stage is the carbon content of trade: how much carbon dioxide is emitted in the manufacturing of a product that is consumed abroad? And is it fair only to include that in the accounting of the country in which it was manufactured? Several research institutions are working to develop comprehensive input-output tables that account for environmental impacts and resource use; however, none are yet sufficiently adequate accounting tools.
While there is neither a clear definition of environmental goods and services nor a sufficient accounting tool for environmental trade impacts, empirical analysis, such as that in our "Exploring Trade and the Environment" report, offers some insight into the complexities of the relationship between trade and the environment.
Friday, July 22, 2011
By Guest Author, Diana Connett, MEM '12, Yale School of Forestry & Environmental Studies, and Jay Emerson, Associate Professor of Statistics, Yale University
Some of the most influential institutions in the international trade realm are integrating environmental concerns into their trade-related work. Groups such as the WTO, World Bank, United Nations, OECD, and various multilateral trade groups, have convened workgroups to flesh-out definitions of ‘environmental goods and services.’ The challenge, as is usually the case with environmental data, is how best to quantify the associations between trade and environmental conditions.
This is a difficult challenge. The world of environmental metrics is young and evolving (unlike the longstanding world of more traditional trade statistics). And connecting quantifiable environmental values to quantifiable economic values (or the narrower subset of quantifiable trade values), and vice versa, is particularly problematic. There is, for instance, currently no internationally recognized system of environmental accounts. There is also no universally-agreed-upon environmental equivalent to GDP, or the stock market, and so different organizations have developed their own frameworks for assessing relationships between environmental conditions and trade.
Our latest report, “Exploring Trade and the Environment,” is one attempt to connect quantifiable environmental values to quantifiable economic values. Building on eleven years of research in environmental metrics, and the resulting Environmental Performance Index, the report explores ways of assessing quantifiable associations between environmental factors and trade statistics. One of its more straightforward, yet still significant, findings is a strong correlation between high levels of trade and low environmental impacts on human health (see the ENVHEALTH category in the figure below).
Bivariate associations of environmental performance, trade flows, and GDP per capita. Scatterplots of each pair of variables appear above the diagonal; associated correlations and a record of missingness appear below the diagonal, with shading indicating the sign and strength of the correlation.
To appreciate what this really means, it’s important to understand the data underlying the terminology we use. ‘Environmental impacts on human health’ comes from the World Health Organization’s ‘Disability-Adjusted Life Years’ (DALYs) measure, and ‘levels of trade’ refers to the percent of a country’s GDP that is generated by imports and exports. The DALY metric is composed of, among other things, measures of infrastructure, such as access to improved drinking water and sanitation sources. The variable itself has a strong correlation with GDP. The finding of a ‘strong association between trade levels and environmental impacts on human health’ is thus hardly surprising: countries with more robust trade also typically have better water and sanitation infrastructure.
On a deeper level, perhaps what is most interesting about this finding is that it demonstrates the interconnectedness of policy problems and solutions. For policymakers in the developing world, for instance, our analysis suggests that improving human health means not only the obvious actions of increased water and sanitation infrastructure investments, but it also means putting in place policies that increase overall national trade levels.
Wednesday, June 15, 2011
By Guest Author, Ainsley Lloyd, Research Assistant, Yale Center for Environmental Law & Policy
In a recent study on trade and the environment, the Yale Center for Environmental Law & Policy conducted a pilot time trend analysis, painting a clearer picture of the complex relationship between country-level CO2emissions and trade intensity. The analysis examines changes in trade intensity (as seen through trade as a percent of GDP) alongside two measures of CO2 emissions—CO2 per capita and CO2 per GDP. The former CO2 measure indicates emissions intensity per person, while the latter indicates the emissions intensity of the economy.
Time trends show that the most common phenomenon is a decline in emissions per GDP with increasing trade intensity, an indication that economies become more carbon efficient as trade becomes a greater portion of GDP. However, the data also reveal a troubling trend among countries: emissions per capita most commonly increase with increasing trade, an indication that trade might be harmful in terms of emissions.
The exciting news—at least for those interested in trade and environmental quality—is that this trend is by no means universal. Many countries have managed decreasing emissions per capita with increases in trade intensity. This elite group includes many European nations—Germany, France, the UK, Sweden and Denmark—as well as several countries in the Americas—Belize, Colombia, and Cuba.
While considerable work is still needed help deepen understanding of the complicated relationships between trade and the environment and while the statistical findings do not support drawing conclusions about causation, it is interesting to pose the question - what are these nations doing differently?
Data (Beta Version).
Friday, June 10, 2011
Did you know that June 8th was World Oceans Day? Keep your eyes peeled next February for the release of the world's first Ocean Health Index, put together by Conservation International, the National Geographic Society, and the New England Aquarium.
The Index's goals are much the same as our land-based Environmental Performance Index - to develop an analytically rigorous and data-driven approach to assessing the health and well-being of the world's oceans, to track and measure ecosystem vitality and public health, and to better inform policymakers. Check out more about the Index at http://bit.ly/crmTyl and check out our Q&A session with Steve Katona, Managing Director of the project.
Thursday, May 05, 2011
Sleek and simple new Life Cycle Assessment (LCA) calculator makes it simple for all levels of business to calculate their environmental impact – from cradle to grave.
Wednesday, March 30, 2011
As oil prices increase and energy security becomes a concern in the US, more is being done to explore cleaner burning fuels such as natural gas. Natural gas has seen big increases in the number of wells and total production as shale gas extraction, in particular, intensifies. The EPA projects that 20% of US gas supply will come from shale gas by 2020.
An EPA report in 2004 found that "there was little to no risk of fracturing fluid contaminating underground sources of drinking water during hydraulic fracturing of coalbed methane production wells." But public concern over the process by which shale gas is extracted known as hydraulic fracturing, or "fracking," has escalated with the growing number of wells. Each well requires the pumping of tremendous amounts of fracking fluid into the earth and, according to the EPA's 2004 report, "[t]here is very little documented research on the environmental impacts that result from the injection and migration of these fluids into subsurface formations, soils, and USDWs." Until last year (when the EPA called for the voluntary reporting of chemicals used in fracking fluids), many of the chemicals used in fracking were unknown. Chemicals now known to sometimes be involved in the process include: diesel fuel (which contains benzene and other toxic chemicals), polycyclic aromatic hydrocarbons, methanol, formaldehyde, ethylene glycol, hydrochloric acid, and sodium hydroxide. Given this situation, the EPA has announced another study to examine the effects of hydraulic fracturing on drinking water and groundwater. The EPA aims to issue preliminary findings in 2012 and a full report in 2014. The draft study plan is available at here.
Monday, June 14, 2010
See how countries would fare in the 2010 Green World Cup
Monday, April 19, 2010
On April 8, I was invited to testify before the U.S.-China Economic and Security Review Commission (USCC) on China’s green energy and environmental policies. The purpose of the USCC is to “monitor, investigate, and submit to Congress an annual report on the national security implications” of the U.S.-China relationship and to “provide recommendations where appropriate, to Congress for legislative and administrative action.” This particular hearing was divided into four sessions, drawing upon perspectives from the administration, implications of China’s domestic and international policies, and industry.
I was in the esteemed company of Dr. Elizabeth Economy, C.V. Starr Senior Fellow and Director of Asia Studies at the Council of Foreign Relations, and Rob Bradley, Director of the International Climate Policy objective in the Climate Change and Energy Program at the World Resources Institute (and my former colleague). The Commission specifically asked me to talk about China’s role in the UN Climate Change Change conference in Copenhagen last December, and the implications of China’s actions for the United States and developing countries.
Given the heat China came under immediately following Copenhagen for supposedly “wrecking” the Copenhagen deal, this was an important opportunity to move past the “sound and fury” (to quote my co-panelist Rob Bradley) of the negotiations in December to provide insights and recommendations as to how the U.S. can work constructively with China in the months leading up to Cancun.
In my written testimony, I made several points that I then reiterated to the Commissioners during the hearing. These were:
China is acting on climate change, and they’re acting because they want to. Questioning the motivations of the Chinese toward climate change was a key aim of the Commission. If precedent has shown anything, it’s that China engages internationally on global issues where it perceives an alignment with domestic interests. In the case of climate change, China has adopted a similar “scientific outlook” with respect to climate change and the negotiations themselves, bringing an army of academics, scientists, and technocrats who have all probably read the IPCC reports (as opposed to the U.S. delegation, whose roster consisted primarily of political representatives). National concerns over energy and food security, drought, changing monsoon patterns, rising sea levels, and social stability – the consequences of climate change – resonate with both the Chinese leadership and increasingly the Chinese public. Therefore, China has made significant commitments to address their current and growing contribution to global climate change, most notably a pledge to reduce carbon intensity 40 to 45 percent from 2005 levels by 2020. And since Copenhagen, China has shown that they are not backing down from this pledge either.
How can we believe the Chinese are making real progress in their mitigation actions? Multiple on-the-ground government, non-government, academic, and industry partners are working with Chinese partners to build capacity to measure, report, and verify energy and climate data in China. Within China, there is strong evidence that the high-level messages voiced are being echoed on the ground. While the central government has been investing huge amounts Lawrence Berkeley National Laboratory (LBNL) has been partnering with Tsinghua University to evaluate many of China’s energy conservation programs. A Chinese NGO called the Innovation Center for the Environment and Transportation (iCET) is partnering with the U.S.-based Climate Registry to create China’s first voluntary emissions registry. The World Resources Institute is training Chinese companies to use internationally standardized greenhouse gas accounting tools and methods. My colleagues and I at the Yale Center for Environmental Law and Policy have been working for the past two years with the Chinese government to systematically measure environmental performance in all 31 Chinese provinces.
The U.S. is falling behind in terms of mobilizing clean energy and technology partnerships with China. The U.S is poised at a critical juncture to break the “suicide pact” with China and to capitalize on opportunities to cooperate together on climate change. Unfortunately, the United States is already late in coming to the game with respect to green energy and environmental cooperation with China. The Chinese already have longstanding partnerships with E.U. nations, several developing countries, and others. For example, China and Japan also announced before Copenhagen a suite of 42 projects in clean energy and environmental cooperation as part of a decade-long partnership on these issues. In relation to developing countries, last November China pledged $10 billion worth of aid to Africa, which includes construction of 100 clean energy projects. Fortunately, while the U.S. may have shown up late to the game, it’s not over yet. All the pieces are in place for the United States and China to work together on clean energy research, energy efficiency, renewable energy, clean coal and carbon capture and sequestration projects, and clean vehicle technology through mechanisms such as the ten-year Strategic and Economic Dialogue (S&ED), the Ten Year Energy and Environment Framework, and the U.S.-China Clean Energy Research Center formed last July.
The Commission followed the testimonies with some thoughtful questions that reflected their particular interest in some of the economic and trade implications of China’s climate policies. A line of rhetoric that has become pervasive in the media and throughout Capitol Hill of late is the notion that China is somehow beating the U.S. in terms of clean energy and technology and that we’re losing jobs to China as a result. While it’s true that China is putting more than the U.S. in clean energy investments ($34.6 billion versus the U.S.’s $18.6 billion, according to this recent report by Pew), this does not necessarily mean that China is winning the race yet nor is it necessarily constructive to speak singularly in these terms. However, after hearing from several staffers on Capitol Hill, it seems that this sound byte is what spurs Senators and Representatives these days. My argument to the USCC was that we need to move past this idea of who’s winning what and figure out where we can run the race together. As the old adage goes, if you can’t beat ‘em, join ‘em?
One of the Commissioners also brought up border-tax adjustment policies, which are increasingly being debated on Capitol Hill as a provision in an energy or climate bill, to address competitiveness concerns of U.S. businesses who fear economic losses specifically to countries like China if the U.S. takes on significant climate actions and China does not. This was an issue Todd Stern, U.S. Special Envoy on Climate Change, brought up in Copenhagen and received a vitriolic response from the Chinese, who remarked that China would not tolerate such trade measures because they violate WTO regulations (although the jury is still out as to whether border-tax adjustment policies do actually violate WTO rules). Both Rob Bradley and I cautioned the Commission in their recommendations to Congress that they should tread carefully in these waters because carbon taxation could go both ways. The Chinese have been considering taxing importers of energy and carbon-intensive goods, which could hurt the U.S. (take a look at these import/export figures of U.S.-China trade). Furthermore, I argued to the USCC that a border-tax adjustment policy by the U.S. toward China might not produce the intended policy changes or environmental effects in China, given the source of much of Chinese emissions. My former colleagues at WRI in conjunction with the Peterson Institute for International Economics produced a fascinating analysis of competitiveness issues between the U.S. and China, looking at energy and carbon intensive sectors such as iron, steel, copper, aluminum, cement, glass, paper, and basic chemicals – all of which represent the biggest sources of Chinese emissions. What they found is that China’s exports of these carbon-intensive goods to the U.S. are relatively small. I made the point to the USCC that most of Chinese cement, which accounts for over half of China’s CO2 emissions, is consumed domestically. Therefore, as the study concludes, such policies could actually sour U.S.-China cooperation on climate change and not produce the desired results:
“[...] unilateral efforts like trade measures that attempt to impose comparable costs on carbon-intensive imports may not have the desired effects, and could threaten international cooperation on climate change. Many of the trade-specific measures are intended to bring China to the climate negotiating table. However, China’s exports of carbon-intense goods to the U.S. are relatively small. Therefore, trade measures aimed at leveraging China to adopt stricter emissions regulations domestically would, in fact, provide little incentive and could sour the prospects for international cooperation.”
A full transcript of the hearing, including the Q&A will be available on the USCC’s website soon. When it becomes available, I’ll let you know so you can read about how I gave my speech using an Apple iPad©, encountered a technical snafu, and was called an “early adopter” by the Commissioners. It was a good icebreaker, but then I was confused when they proceeded to ask me all about the iPad, and not China …
Monday, February 01, 2010
A guest post by Jacob Meyer, Research Assistant, Yale Center for Environmental Law & Policy
In the 2010 EPI, the relationship between Environmental Health and log GDP per capita typifies a logistic function, colloquially known as an S-curve. The S-curve is a well-known relationship that can be found across disciplines. Chemistry, physics, biology, linguistics, statistics, and economics all find evidence of behaviors that follow the S-curve model. In economics, it is typically employed to describe the pace of technology adoption or innovation. There is often a slow start, followed by a period of rapid advancement, which tapers to slower ending. That the Environmental Health scores follow this pattern is not surprising; public health has always been a major concern of policymakers.
What is perhaps more surprising is that the scores for Ecosystem Vitality do not follow the same pattern. Part of this can be explained by the fact that industrialization has historically required enormous consumption of fossil fuels. However, the data are widely dispersed, and the regressed relationship does not appear to be very strong. This implies that the measures that make up the Ecosystem Vitality score have not received the attention that policymakers have given Environmental Health indicators in the developed world. The data calls for more research – better understanding the relationship between ecosystem protection and economic development could help rapidly developing countries avoid the past environmental errors of the developed world.
Thursday, January 28, 2010
By Dan Esty
The latest Environmental
Performance Index (EPI), produced by the Yale Center for Environmental Law and
Policy and by the Center for International Earth Science Information Network at
Columbia University, was released this week, identifying Iceland as the world
leader in addressing pollution control and natural resource management
challenges. The rankings cover 25 metrics aggregated into ten categories
including: air pollution, water resource management, forestry, biodiversity and
habitat, and climate change. Iceland is followed in the rankings by
Switzerland, Costa Rica, Sweden, and Norway, each having a broad-based
commitment to environmental protection. The countries found at the bottom of
the rankings are mainly from the African continent. Their low ranks are based
on very weak results in terms of environmental health measures, as they lack
basic amenities such as clean water and sanitation.
The latest rankings, made public
in a session at the World Economic Forum in Davos this week, again show a
number of European countries at the higher end of the spectrum, though there
were a number of surprises. For one, Costa Rica is ranked third, reflecting its
substantial efforts towards environmental protection, while building its
economy and strengthening its national identity. Meanwhile, the U.S. ranks 61st
globally, which is a reflection of weak performance on greenhouse gas emissions
and air pollution. However, since the data is mainly from 2007 and 2008, the
results do not reflect the Obama Administration’s environmental efforts, but
rather represent the years of environmental neglect that preceded his
The 2010 EPI provides a pilot experiment of looking at trend
data. The rankings provide an interesting way to see, on an issue-by-issue
basis, who has succeeded and who has fallen short in terms of policy
performance. Collecting such information makes it easier to both identify best
policy practices, and to disseminate such information. However, efforts to
collate “Change EPI index” – that is data that helps us to understand
who is making progress, and who is stagnant or declining – has proven to be
The 2010 EPI also enables one to identify drivers of policy success, using a variety of tools. The EPI shows
that the most important determinants for success are the level of GDP and the
scale of investments directed toward environmental protection. Yet at every
level of development some countries perform better than anticipated, while
others lag behind.
The EPI continues to be limited
by available data. In many cases, there is not comprehensively collected or
methodologically consistent data on important issues. A significant number of
countries failed to report data in some key areas. The importance of sound data
emerged as a major theme at Copenhagen, and it is of upmost importance that we
invest in better environmental metrics and in the external verification of the
The EPI shows the importance of
using quantitative tools in the decisionmaking progress, as it enables
policymakers to benchmark progress. It demonstrates the value of being able to
understand the strengths and weaknesses of existing policy and strengthen those
that work. The full results and accompanying analysis are available at