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On the Environment

Tuesday, February 28, 2012
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What Jeremy Lin and US-China Cooperation on Climate Change Don’t (Yet) Have in Common

By Guest Author, Angel Hsu, PhD candidate, Yale School of Forestry and Environmental Studies

This article by Angel Hsu originally appeared on The Huffington Post.

It may not be coincidental that soon after NBA Knicks' Jeremy Lin dazzled the nation with a seemingly infallible jump-shot, China's vice president, heir apparent and avid basketball fan Xi Jinping made an official U.S. visit.

But while Lin -- a Harvard graduate raised with Chinese and American values by a "Tiger Mom" -- has proven remarkable on the court, China and the U.S. as players in the environmental arena have performed more like junior-varsity playground scrappers.

This year's Environmental Performance Index, produced with my colleagues at Yale and Columbia Universities, revealed the U.S. and China respectively ranked at 49th and 116th place out of 132 countries. The U.S. and China fare even worse if we look at their performance trend index numbers across the last decade: 77th and 100th, respectively. While both countries have made some progress in a few environmental categories, notably environmental health conditions, their showing on climate change - often considered one of the world's greatest environmental threats -- is paltry: Out of 132 countries, China ranks 93rd; the U.S. ranks 121st -- firmly in the bottom decile.

These are frightful scores for two countries that collectively emit more than 40 percent of the world's carbon dioxide. To make matters worse, any mention of climate change -- or, more broadly, environmental concerns in general -- was noticeably absent last week when Xi met with top U.S. officials in Washington D.C. to discuss a range of "greatest concerns" for both countries.

These are consequential omissions that could set the wrong precedent for China's leadership transition. Particularly at a time when U.S.-China cooperation on climate and energy under a new Xi leadership is uncertain, this recent trip missed an opportunity to set key messages for Xi to consider in the coming months.

One of the most straightforward aims must be U.S.-China cooperation on technology innovation. Although China's carbon intensity (emissions of CO2 per unit of GDP) decreased last year, its overall emissions increased. China was able to achieve easy efficiency gains in the last five-year policy period through elimination of small manufacturing facilities in energy-intensive sectors and by targeting its greatest energy consuming enterprises. For China to meet the carbon intensity reduction goals outlined in its next Five-Year Plan -- a national reduction of 16 percent -- will almost certainly demand research and development collaboration in emerging technologies like carbon capture and storage.

Xi's meeting with President Obama could have also advanced mutual understanding of domestic clean energy policies in both countries, helping to ease tensions over issues like subsidies - a sticking point offered small remedy last January when Presidents Obama and Hu Jintao met. In that meeting, President Hu agreed to end domestic subsidies for China's wind industry, a move seen by U.S. trade representatives as hugely progressive due to the controversial nature of China's seemingly protective domestic policies. The U.S. and China must continue to resolve differences in national economic policies that inhibit joint innovation and advancement of renewable energy technologies.

Finally, both countries must redefine their roles as leaders in global climate negotiations.

In light of its obstinacy this past December in Durban, the U.S. must act more aggressively and positively as a leader of climate change policy if it expects China to follow suit; U.S. stubbornness legitimizes the excuses of other countries that shy away from effective action. First and foremost, U.S. leadership must sidestep partisan politics on climate change and willingly contribute to a legally-binding deal to be decided by 2015. (Admittedly, we must wait until November to see whether we experience our own Executive transition.)

Regardless, weak U.S. leadership in global negotiations could tip China the same way under a new Xi presidency. Although China demonstrated new and considerable leadership in Durban last year, its recent opposition to the E.U. airline tax on carbon emissions demonstrates an uneasiness to fully accept the responsibilities implied in such a global leadership position. This slipperiness portends a China that, while more constructive than the U.S. in the global climate regime, still plays largely to its own domestic interests.

If China and the U.S. aim to bring their own version of "Linsanity" to climate and energy policy under new leadership, then both countries must pursue active and open dialogue and seek middle ground in the current race of self-interest.

Posted in: Environmental Performance Measurement
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The Next Global Debt Crisis

By Guest Author, P.J. Simmons, Chairman, Corporate Eco Forum

Today’s global sovereign debt crisis is keeping a lot of government and business leaders up at night. But another global debt crisis is brewing that, while invisible to most CFOs and finance ministers, threatens to unleash long-term economic hardships that make today’s recessionary worries seem trivial.

I’m referring to the economic collision course we’re on because of systemic, global patterns of over-borrowing from planet’s “natural capital” and asset base—a remarkably productive network of land and water systems that annually produce a staggering $33-$72 trillion worth of “free” goods and services that we depend on for a well-functioning global economy. Because these non-man-made benefits aren’t bartered and sold in the human marketplace, their value is exceedingly hard to monetize on corporate or government financial statements. So we generally don’t. But that shortcoming in accounting doesn’t make the value of these assets—or the cost of losing them—any less real: As we’ve seen with debacles like Enron and the derivatives meltdown, our imperfect accounting practices can sometimes get it dangerously wrong.

At risk are critical life-support systems that are also the lifeblood of our global economy. These natural land and marine systems, thanks to more than four billion years of planetary R&D, far outcompete man-made technology in their capacity to churn out—at scale and affordably—vital goods and services we need for global economic stability and growth. Without charge, this living natural infrastructure works behind the scenes to purify massive amounts of precious drinking water and breathable air; generate abundant and stable supplies of raw materials and commodities integral to supply chains; replenish fertile soil and fish stocks needed to meet growing food demand; buffer people and businesses from the worst effects of floods, droughts, fires and extreme weather events; provide barriers to the spread of disease; maintain awe-inspiring destinations that fuel tourism; and house a treasure trove of biological information that propels scientific and medical breakthroughs.

In short, these assets are priceless. Literally. And that is the problem.

Having developed habits of taking “nature” for granted, we have collectively taken from it for free, drawing down Earth’s natural capital and mismanaging natural assets as if they were endlessly renewable. Yet even this planet’s remarkable natural systems—unique in the known universe and incredibly resilient—cannot sustain damage beyond certain thresholds. Eventually, they break down. Only then does the market begin to understand the full economic value of what we have lost, as what were once dismissed academically as “externalities” suddenly become real, costly burdens.

How much is our current mismanagement of natural assets costing the global economy today? The most recent U.N. estimates are around $6.6 trillion a year—the equivalent of 11% of global gross domestic product—through effects like contamination of water supplies, loss of fertile land through soil erosion and drought, and supply chain disruptions from deforestation and overfishing. The damage could skyrocket to $28 trillion by 2050 under business as usual, which would eclipse the economic damage expected from climate change. However sobering the numbers, in the abstract they are merely statistics affecting someone else and therefore still largely off of most government and business leaders’ valuation radar screens. But the costs hit home when ecosystem degradation translates into lost lives or illness, when scarcities bring supply chains to a grinding halt, when homes are destroyed or jobs lost, or when preventable damage from natural disasters overwhelms the budgets of insurers and governments.

Today’s more farsighted business leaders grasp what’s at stake. They know that investments in protecting and maintaining natural systems are mandatory to ensure continued opportunities and prosperity for businesses, communities, and even nations—not optional philanthropic acts. They understand that just as we invest in maintaining our critical human-built infrastructure, whether roads, bridges, power plants, or orbiting satellites, so too must we be vigilant in safeguarding natural infrastructure to avoid crippling costs down the road. They see the business logic in taking action today, to avert tomorrow’s balance sheet risks and even to seize new revenue opportunities as the demand for environmentally restorative solutions escalates.

Coca-Cola, for instance, is investing in preserving healthy watersheds to ensure the long-term availability of fresh water for its business and the communities in which it operates. Mars is investing tens of millions to advance sustainable cocoa farming practices to head off supply chain disruptions. Darden Restaurants (owner of Red Lobster) has made protecting healthy ocean systems a top business priority, acknowledging that “seafood sustainability is essential to the continued success of our business.” Weyerhaeuser now expressly manages forests for wood production but also for “the ecosystem services they provide.” In 2011, Puma became the first company to issue an “environmental P&L” statement, and Dow Chemical announced a $10 million collaboration with the Nature Conservancy to develop practical tools to help businesses better “assess the value of nature.”

These forward-thinking companies are among a growing list of those getting out ahead of governments in forging solutions to the accelerating “natural debt” crisis. To add to the momentum, the Corporate Eco Forum that I chair—a membership group of 80 large companies with combined revenues of over $3 trillion—announced a new initiative on the “Business Logic of Investing in Natural Infrastructure” at the Clinton Global Initiative in September. In the first half of 2012, we will work with our diverse membership to catalyze a new round of private sector-led commitments to safeguard natural assets, to be announced at the June 2012 Earth Summit, in Rio de Janeiro.

Turning around the brewing natural debt crisis will require broader participation from visionary business leaders, especially when the world’s governments are consumed by more urgent short-term economic challenges. But time and again, the private sector has shown its enormous capacity to innovate fast to solve big problems. Let’s hope this time is no exception.

A version of this article originally appeared on Forbes.com

Posted in: Innovation & Environment
Wednesday, February 22, 2012
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Chasing data in China’s provinces

By Guest Author, Angel Hsu, PhD candidate, Yale School of Forestry and Environmental Studies

The following post is republished from China Dialogue.

China’s environmental data has created many international headlines in recent months, particularly its controversial air-quality measurements. While Deng Xiaoping urged the Chinese citizenry to “seek truth from facts”, China is still a long way from providing the environmental data and information that allows for just that.

My colleagues and I recently released a study that provides a detailed analysis of provincial-level environmental data in China. We introduced a model framework for environmental performance indicators to assist the Chinese government in tracking progress toward policy goals, as well as recommendations for how the Chinese government can apply more aggressive performance metrics to environmental decision-making. 

In total, we looked at 32 indicators in 12 environmental policy categories (among them air pollution, water quality, climate change, biodiversity, agriculture and forestry). The data we reviewed and used to construct these indicators were all derived from official Chinese statistics.

We concluded that the lack of clear policy targets for many environmental metrics in China, as well as concerns over data sources and transparency, hamper the government’s ability to effectively address pressing environmental issues at the provincial level. While the report elaborates these challenges in detail, a few of the main findings are summarised below.

First, the existence of baseline environmental data is highly uneven. To develop performance indicators that evaluate the efficacy of environmental policies, baseline data are necessary to benchmark performance. Less than half the indicators evaluated had this. Baseline data were most prevalent for economic sustainability indicators (68%) and least prevalent for ecosystem vitality indicators (20%), while environmental health indicators were in the middle (42%). This pattern reflects the priorities of Chinese environmental policymaking in the past decade, which has emphasised pollution control and resource efficiency in the industrial sector. 

Second, difficulties in accessing raw data hinder data quality evaluation. Our report provides pilot indicators based on official statistics; however, we did not have the ability to independently evaluate those statistics. We found that official statistics for most indicators lack detailed information on data collection methods and monitoring systems, and in no instance were we able to obtain raw data from monitoring stations. Nor were we able to obtain data from third parties that might have been used to corroborate official statistics.

For all these reasons, it proved difficult to assess the validity and reliability of the official statistics. These difficulties gave us concerns about how much the official statistics reflect the reality of on-the-ground conditions.

Third, ongoing measurement systems are also highly uneven. Consistent measures, produced on a regular basis, following established methodologies, in a transparent and verifiable manner, are critical for environmental performance monitoring. In China, the measurement systems related to industrial efficiency are exemplary models. In this area, the published data meet the foundational requirements and, as a result, permit operational use of performance indicators in the five-year plans.

The other measures generally fall short. For example, methodologies for ecosystem measures tend to change over time, making comparison problematic, and the metrics used to measure air and water quality are transformed in ways that make tracking performance difficult.

And fourth, policy targets for the vast majority of candidate indicators are not easily identified. Overall, we were able to establish a basis for constructing a policy target for 21 of the 33 indicators we included in our framework — eight in the environmental health objective, seven in the ecosystem vitality objective and six in the economic sustainability objective. We considered 50 additional indicators but did not include them because of the lack of clear policy targets by which to gauge performance. However, the lack of properly specified policy targets is not unique to China. Similar challenges around goal-setting exist in many countries, especially in the developing world.

A major theme underpinning all of these conclusions is the need for greater data and information transparency. Even though laws on the disclosure of environmental information came into effect on May 1, 2008, China still has a long way to go in terms of providing environmental data transparently.

Researchers at Chinese NGO the Institute of Public and Environmental Affairs and the US-based Natural Resources Defense Council found that most big cities in China failed to publish adequate pollution information in 2011 in the third edition of the Pollution Information Transparency Index (PITI), released last month. Only 19 out of 113 cities received passing scores for information transparency. The authors concluded that environmental information disclosure is an “innovative system” in China that does not, so far, go beyond the initial stages.

It is our belief that the value of both the PITI and our report, “Towards an Environmental Performance Index in China”, lies in being able to provide transparency to environmental data and results in China. Transparency and access to information are fundamental tenets of sound environmental policymaking. Greater transparency can stimulate research and policy for developing innovations that can only help China navigate the difficult path of sustainable development.

Angel Hsu is a doctoral student at the Yale School of Forestry and Environmental Studies and project director for the 2012 Environmental Performance Index.

Posted in:
Wednesday, February 01, 2012
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Exploring Canada’s Climate Perspectives: Dr. Shi-Ling Hsu on Canadian Climate Policy

By Guest Author, Erin Burns Gill, Yale School of Forestry & Environmental Studies, MEM '12

In January’s Climate Change Solutions: Frontline Perspectives from Around the Globe webinar, Dr. Shi-Ling Hsu, law professor at the University of British Columbia and author of the new book The Case for a Carbon Tax: Getting Past Our Hang-Ups to Effective Climate Policy, joined the Yale Center for Environmental Law & Policy to discuss climate policy from Canada's perspective. His presentation, “Climate Policy in Canada: (Snow)Boots on the Ground,” explained the nuances of Canadian policy that outsiders may miss by focusing only on the similarities between Canada and the United States. 


On the surface, many of Canada’s climate actions appear to parallel those of the United States: Canada’s recent withdrawal from the Kyoto Protocol or its acceptance of the Copenhagen Accord might be seen as Canada simply following the U.S. lead in international policy, and Canada’s efforts to impose federal command-and-control policies for greenhouse gases might look similar to President Obama’s efforts to regulate carbon under the Clean Air Act. However, there are several subtle but important distinctions between the two neighbors’ attitudes toward climate policy, Hsu said.

He outlined four “puzzles” that, when explained, reveal differences between the United States and Canada:

  1. Why is Canada’s conservative and market-savvy federal government embracing command-and-control climate policy, rather than a market-based approach?
  2. Why is British Columbia—the only province in North America to have accepted a carbon tax—so far ahead of the country and the continent?
  3. Why are four important Canadian provinces still participating in the Western Climate Initiative, when all U.S. states except California have abandoned the program?
  4. What explains Alberta’s voluntary adoption of carbon policy when its economy and policies are so tightly linked with oil & gas extraction?

 

To explain these puzzles Hsu identified four unique Canadian qualities:

  1. Trade Dependence. Canada places a strong emphasis on maintaining healthy trade relationships with the U.S., Europe, and (more and more) China.
  2. Conciliatory Attitudes. Canadian political leaders often value consensus and conciliation over confrontation and conflict.
  3.  Federalism. Canada is a very federalist country—the jurisdiction of Canadian provinces is much broader than that of U.S. States. Provincial responsibility for action on climate change is well recognized, and passing federal climate policies can be very challenging.
  4. Strong Executives. Canada’s executives (the Prime Minister and provincial Premiers) can be very powerful if backed by a legislative majority. Additionally, Canadian courts are highly deferential to executive branch action or inaction. Unlike in the U.S., if an executive agency makes a decision, Canadian courts are unlikely to question or overturn that decision.

 

Hsu then explained how these four Canadian qualities—unique compared to the U.S.—explain the four “puzzles” of Canadian climate policy:

  1. Trade Dependency and Federalism explain Canada’s command-and-control approach to carbon regulation. To avoid trade tariffs and to otherwise remain competitive in a global marketplace, Canadian companies want to show that they operate under similar regulatory conditions as other countries. Additionally, command-and-control regulation is one of the few carbon policies that the federal government is positioned to impose; the federal government does not have constitutional authority to implement a cap-and-trade program. Hsu notes, however, that the proposed means of achieving federal command-and-control may be a tough sell: the government has defined greenhouse gases as toxic substances, and thus plans to regulate emissions under criminal law. 
  2. The Strong Executive role of British Columbia’s Premier Gordon Campbell explains why the province succeeded in passing a carbon tax. Premier Campbell was politically and intellectually interested in a carbon tax policy, and in 2008 he faced ideal political conditions to lead parliament in adopting the legislation. Interestingly, Campbell’s political party was the less liberal of the province’s two parties; by taking leadership on carbon, Premier Campbell won support from environmentalists who were traditionally more supportive of his opponents.  
  3. Federalism explains why the provinces of British Columbia, Manitoba, Quebec, and Ontario remain in the Western Climate Initiative when all U.S. states (except California) have dropped out. Because there is no expectation of leadership from the federal government, Canadian constituencies demand and expect action from their provincial leadership; thus, participation in the Western Climate Initiative is well supported.
  4. Trade Dependence, Conciliatory Attitudes, and Federalism explain why the fossil fuel-dependent province of Alberta has taken voluntary (albeit tepid) action on climate. Oil and gas production accounts for 25 percent of GDP, 75 percent of exports, and 35 percent of government revenue in Alberta. This dependence on fossil fuel trading motivates Alberta to remain an attractive trade partner to countries that more and more prefer climate-friendly suppliers; Alberta’s climate policy is a sign to trading partners that the province is doing something to address climate change. Additionally, a general inclination to remain conciliatory with neighboring Canadian provinces likely motivated Alberta to pursue some degree of voluntary action. Finally, Canadian federalism means that Alberta’s voluntary action may also prove strategic: by having a climate policy in place, Alberta makes it more difficult for the federal government to impose top-down (and potentially more impactful) legislation.

 

To conclude, Hsu predicted climate action will continue to come from Canadian provinces, rather than from Canada’s federal government. He recognized that, despite the unique qualities of Canadian politics, action from the United States would likely motivate action from Canada. In the perhaps more likely case that the U.S. fails to pass significant climate legislation in the short term, there is still potential that Canada might show leadership by adopting a carbon tax.

Such a tax, Hsu said, could be significant even if it’s not very steep. Even a slight price on carbon could guide upcoming capital decisions (regarding the construction of new power plants, for example) toward less carbon-intensive paths.

A full recording of Dr. Hsu’s presentation, along with recordings of all the other webinars in the Climate Change Solutions series, is available at http://yaleenvirocenter.webex.com.

Posted in: Energy & Climate

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