The Strategic and Economic Dialogue and Energy and Climate

This post was originally published May 2, 2012, on ChinaFAQs.

The State of Play of Chinese Policy and Bilateral Issues

The Obama administration’s fourth major meeting with China, involving multiple Cabinet Secretaries and Chinese Ministers, the Strategic and Economic Dialogue (S&ED), will be held May 3 and 4 in Beijing. As usual, the U.S. delegation will be led by Secretaries Clinton and Geithner, and their Chinese hosts will be Vice Premier Wang Qishan (who focuses on economic policy) and State Councilor Dai Bingguo (responsible for foreign policy).

This S&ED comes at a time when there are particularly sensitive political and economic issues for the two countries to address, and many of these will obviously be the focus of the meetings. However, if past S&ED’s are any indication, we would expect at least some discussion of climate change, and climate and energy cooperation, despite areas of genuine difference, can be a positive and fruitful area of engagement. Moreover, several of the economic topics likely to be discussed are connected to climate and energy debates. With that in mind we preview some of the climate and energy issues.

Looking at domestic policy there have been a number of important recent developments:

1. Moves Toward Absolute Targets: the Coal Cap and Industrial Capacity Cuts

China’s 12^th Five Year Plan set overall national targets, including the 16% energy intensity and 17% carbon intensity (both per unit GDP) reduction targets that have been widely publicized. Implementation depends on sectoral and provincial level Five Year Plans that spell out more of the details. The intensity targets were distributed to the provinces last year, but one of the big open questions was whether China would also start to set some absolute limits. There had been considerable speculation of an overall energy cap, and while that has not emerged, one of the alternatives to a total energy cap was a total coal cap, and that has now appeared.

In the “12^th Five-Year Coal Plan”, released in April by the National Development and Reform Commission, coal production capacity is capped at 4.1 billion tons and an annual output target of 3.9 billion tons by 2015, which would limit coal production growth to about two percent per year, considerably lower than the 5-10% growth seen in recent years. While this type of guidance is not as binding as the overall intensity goal, it does give strong policy direction to controlling the share of coal in China’s overall energy mix.

In addition, the Ministry of Industry and Information Technology announced this past week a series of industrial capacity cuts that should also help to reduce energy consumption and carbon intensity. The Ministry plans to shut 7.8 million tons of steelmaking capacity, 700,000 tons of copper smelting capacity this year, 270,000 tons aluminum capacity, 10 million tons iron-making capacity, 320,000 tons zinc capacity and 1.15 million tons of lead capacity by the end of the year. Of these, only the copper target is higher than last year. The lower targets in part reflect the fact that many inefficient plants were closed during the previous Five Year Plan, and also the overall slowing of GDP and industrial growth, suggesting the market is already shifting somewhat from industry to services.

2. Seven Emissions Trading Pilot Programs:

China has continued preparation for the launch of seven carbon-trading pilots by next year and an eventual nationwide carbon-trading program in 2015. The emissions trading programs will be piloted in the cities of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen and the provinces of Hubei and Guangdong. These pilots will provide inputs into the design of the eventual nationwide program, and in large part will shape the future of carbon markets in China.

The specific design and implementation details for the pilots are still being worked out. We can expect that the caps will be closely tied to the energy intensity reduction goals specified in the NDRC’s “Energy Conservation and Emissions Reduction Comprehensive Workplan for the 12^th Five-Year Period (2011-2015)” (Chinese only). Each pilot is being designed separately, and as with earlier policy pilots, we’d expect the national government to compare the effectiveness of different approaches before designing a national program. Many of the details are still under discussion, but some cities such as Beijing have begun to discuss possible details. Beijing has announced that more than 600 companies with emissions exceeding 10,000 tons per year – likely industrial plants and utilities – will be included on a mandatory list for emissions limits. It is possible that other cities will choose to focus on specific sectors. While the national government has not formally committed to using absolute caps rather than intensity targets for the trading schemes, our understanding is that there is widespread recognition that for trading to be most effective there will need to be absolute caps for firms included in the trading itself, even if the cities overall do not have absolute caps. These caps can then be distributed by allocation or auction. While most economists see auction as more economically efficient, most countries find it difficult to begin that way – rather than with free allocation. Beijing indicated it might begin with 15% auctioned and the rest allocated.

For the pilot trading schemes to be successful, the select cities and provinces will need to build local capacity to accurately measure and account for greenhouse gas emissions, as well as ensure that the legal infrastructure can spell out clearly defined emission permits, allocation systems, trading rules, monitoring, and enforcement (See this report by the Stockholm Environment Institute for more details of these challenges).

Finally, while there was much discussion amongst Chinese officials about a likely carbon tax during this Five-Year Period, there is still a question as to whether a tax will be instituted and how it will relate to a nationwide emissions trading program. It is likely that the Chinese will begin with the emissions trading pilots first, and decide on how to integrate a carbon tax at a later point in time.

These programs are an effort over the medium term to move from targets and quotas to more market-based mechanisms. In the near-term they will contribute mainly to learning and policy development. The existing infrastructure of quotas and targets under the Five Year Plan will deliver most of China’s emissions control.

3. Higher Prices, But Energy Shortages Remain:

While China is working to curb energy demand, policy analysts still expect shortages this summer. The China Daily reported blackouts are likely, especially in Eastern and Southern China, as China Electricity Council estimates 30-40 million kW shortages during peak demand periods in the summer. These shortage levels are similar to last year and reflect the same mixture of weather (droughts have once again limited hydropower production) and policy choices. Many outside observers argue for market-based pricing, although many fail to note that Chinese electricity prices are not low – they are actually comparable to U.S. prices and in many cases higher. However, they do not vary with peak loads, as they do in the U.S. For example, electricity prices in China in March were 12.4 cents for commercial and industrial consumers and 8.4 cents for residential consumers. This compares to an average price in the U.S. in March of 9.6 cents, with industrial users paying the least – 6.6 cents – and residential consumers the most – 11.6 cents.¹ Thus on average Chinese industry pays considerably more for power than does U.S. industry. Since industry is the major user in China, and residential use is more substantial in the U.S., focusing higher charges on the larger group of consumers is more effective at providing a price signal to influence consumption.

While China has higher electricity prices, these prices vary far less than in the U.S., where rates vary not just state by state, but also with daily shifts in demand. This, in part, reflects different opportunities – commercial and residential demand is more variable, while China’s industrial demand is fairly constant. However, the blackouts in the summer are caused by peaking demand from residential and commercial consumers of air conditioning during particularly hot spells during the summer months. Variable pricing would enable the grid to more easily discourage other uses during these peak demand times. Instead, the grid generally deals with these shortfalls by cutting power to industries on a schedule.

Overall, industrial electricity prices having been rising steadily in China, up over 16% in the last 5 years. Coal prices, while fluctuating month to month, have more than doubled over the same period, with high quality coal for power plants now priced at over $120/ton, well above prices in much of the world. Chinese analysts do not expect to see prices fall. The much more rapid change in coal prices, compared to the regulated electricity price, provides an incentive for power producers to look at renewable energy.

Gasoline is also not inexpensive in China. The current price in Beijing is about $5/gallon, over $1 higher than the current U.S. average. Prices are regulated, so there is less fluctuation in China, but that has meant that they tend to hold steady or rise, and not fall, regardless of global market conditions.

In addition, the meeting may be a venue for discussing current multilateral and bilateral disputes:

1. Opposition to European Union’s Aviation Tax:

One area where the U.S. and China have aligned their positions, albeit in opposition to a climate change measure, is with regard to the European Union’s Aviation Tax. In early February, China banned its airlines from complying with the EU’s plan to include airline emissions in its Emissions Trading Scheme (ETS). The move would require airlines with flights originating in and leaving Europe to purchase carbon permits to cover excess emissions. China is not alone in opposing the move and is joined by the United States and India. China’s opposition was intensified when Beijing also suspended the purchase of $14 billion worth of aircraft jets from Airbus, a European manufacturer of long-haul carriers.

While the U.S. and China are essentially on the same page with respect to the E.U.’s plans, there is danger that such a strong stance and economic retaliation could stymie the progress of international climate talks. There are indications that the European Union might be backing down from its initial stance to allow another year for additional negotiation and possible compromise. Thus, there is an opportunity for the U.S. and China to engage in constructive dialogue with the E.U. so as to prevent a global carbon trade dispute and perhaps find a more constructive and climate-friendly approach for both the U.S. and China.

2. Trade Issues:

The most likely issues to appear in the S&ED plenary are issues more directly connected to economic concerns. Secretary Geithner has been quoted in the Chinese press naming key concerns as currency and intellectual property. Intellectual property concerns, while far broader than energy, are of great interest to the clean energy community.

Two other trade disputes might well be discussed. These are the anti-dumping case against Chinese solar panels and a World Trade Organization (WTO) case concerning rare earths. The Commerce Department made a preliminary decision in March to place a modest tariff on Chinese panels, and is reviewing that case until May 17. This gives time for both governments to discuss the issues. There have been growing calls in the U.S. not to impose high tariffs on Chinese goods. Editorials and news articles have argued that much of the U.S. solar industry actually benefits from these imports. Others have argued that fairness is also at stake, and that perhaps there is an opportunity to get Chinese manufacturers to shift some production to the U.S. One potential bright spot is that China’s current solar plan calls not just for increasing production, but also increasing installed capacity in the country and reducing the domestic price of solar power to encourage domestic use. ChinaFAQs has compiled a list of resources concerning the solar trade case here.

The U.S., Japan and the European Union also filed a WTO complaint against Chinese restrictions in the export of rare earths, minerals used in the production of many high-tech products. The rare earths issue is complicated, because China currently produces most of the world’s supply, but there are reserves elsewhere, including in the U.S. Moreover, part of China’s current dominance is fueled by poor environmental standards enabling cheaper production, and there has been an effort by the Chinese government to close down poor facilities, with limited success. The rare earths case is in many ways similar to a case decided against China last year, concerning other Chinese mineral exports. Given the number of disputes, and the risks of economic harm from a trade war, it will be worth watching this meeting to see if any agreements are worked out. In the past, the U.S. and China have often used these bilateral meetings to resolve such issues.

^{1. All U.S. prices from the Energy Information Agency. Chinese prices from the National Development and Reform Commission, the China Petroleum and Chemical Industry Association and DBCCA analysis, except for the price of gasoline, which is the observed retail price in late April.↑}

Angel Hsu is a doctoral student at the Yale School of Forestry and Environmental Studies and project manager of the 2012 Environmental Performance Index. Deborah Seligsohn serves as Principal Advisor to WRI’s climate and energy program on issues in China as well as to the ChinaFAQs China Climate and Energy Network.

Data’s Power to Spur Environmental Progress

This post originally appeared on State of the Planet, the Earth Institute's blog.

In January, 132 countries received their environmental report cards. The Environmental Performance Index, released at the World Economic Forum in Davos, ranked countries on aspects of environmental impacts on human health and on ecosystems. The rankings were based on scores each country earned on 22 indicators dealing with environmental health, air pollution, water, biodiversity and habitat, agriculture, forests, fisheries, and climate change and energy.

Coming in at first place on the 2012 EPI is Switzerland, with Latvia, Norway, Luxembourg, and Costa Rica rounding out the top five. The U.S is ranked 49th and Iraq is in last place.

The EPI and its precursor, the Environmental Sustainability Index, were developed by the Yale Center for Environmental Law & Policy and the Earth Institute’s Center for International Earth Science Information Network in 1999. Since 2006, the EPI has been released every two years. In addition, this year’s new Pilot Trend Environmental Performance Index ranks countries according to how much progress they have made over the last decade.

The EPI’s importance lies in its ability to goad leaders into action by letting them see their countries’ strengths and weaknesses compared to other countries, and to enable those that want to do better to dig into the data and identify the best practices of countries with higher scores.

In addition, the Pilot Trend Environmental Performance Index will be helpful for the private sector, allowing companies to see which countries take sustainability seriously, and thus might offer better business prospects.

“Most of the smaller Asian countries are very concerned if they don’t do well and track these findings closely,” said Alex de Sherbinin, senior research associate at the Center for International Earth Science Information Network. He added that countries in every region are competitive.

Seoul pollution in 2005. Photo credit: Craig Nagy

A good example of the EPI’s power to drive change is South Korea’s progress on air quality. In the 2002 Environmental Sustainability Index, South Korea came in 135th out of 142 countries; in reducing air pollution, it was 139th. Troubled by its standing, South Korea brought together various ministries, non-governmental environmental organizations and automakers to address the issue of air quality, mainly Seoul’s.

Air quality is often determined by measuring particulate matter in the air (produced by dust, the burning of fossil fuels, and power plants) that is smaller than 10 micrometers, or PM10. Because of their small size, these particles can enter the lungs and cause serious respiratory problems. The World Health Organization’s PM10 target guideline is 20 micrograms per cubic meter as an annual average.

In, 2002, South Korea started a special program to improve urban air quality aimed at significantly reducing PM10 and the pollutant nitrogen oxide, produced during combustion. The government’s plan to improve air quality involved tightening discharge allowances for vehicles, promoting low-emission vehicles and emission-reducing devices, and the early retirement of old vehicles. It also raised fuel quality standards and intensified vehicle inspections.

To reduce industrial pollution, large industries were given total discharge allowances. Buses running on cleaner compressed natural gas were introduced in 2001; by 2010 there were estimated to be 23,000 in use; a bus rapid transit system and congestion fees at tunnels were also established. The government is planning to increase the number of hybrid and electric vehicles; and parkland will be expanded by 2020, with five new parks and the conversion of a landfill into a park. In addition, South Korea is preparing to begin trading carbon emissions in 2015.

Restoration of the Cheonggyecheon Stream in Seoul helped reduce small particle air pollution. Photo credit: Kaizer Rangwala

As a result of the measures taken since the 2002 EPI, South Korea’s ranking rose to 43rd in 2012; it came in 51st for air effects on human health. The Pilot Trend EPI, measuring progress, ranked South Korea 13th. South Korea’s move up 51 places from its 2010 EPI ranking is touted on the Ministry of the Environment’s website.

In contrast, China, with its poor 2012 EPI ranking of 116th, air effects on human health rank of 128th and air ecosystem effects rank of 114th, has not reacted publicly to its scores; but nevertheless, it has been pressured into improving air quality by activists and bloggers fired up over air quality data released by the U.S. Embassy in Beijing.

Photo credit: urbangarden

Beijing’s particulate levels fell by almost a third from 2006 to 2009 in the run-up to the 2008 Olympics, but have been climbing ever since. The country’s Pilot Trend EPI ranking of 100th means that its performance has actually declined over the decade. And indeed, China’s pollution, stemming largely from coal-fired power plants and mounting numbers of cars, has made headlines recently. In December, pollution in Beijing shut down highways and grounded almost 700 flights. The deputy director of the Beijing Health Bureau reported that although smoking rates in Beijing have not increased in the past decade, the lung cancer rate rose 60 percent, likely as a result of air pollution.

Until last month, Beijing’s air quality monitoring reported only PM10 levels. But according to Angel Hsu, project manager for the 2012 EPI and a Yale doctoral candidate, fine particles that measure less than 2.5 micrometers in diameter (about 1/30 the width of a human hair), or PM2.5, constitute 50 percent of the particulate matter of China’s air. PM2.5 is produced by dust and combustion (from vehicle exhaust, coal-fired power plants, wood burning). Because of their tiny size, PM2.5 are thought to pose the most severe health risks since they can lodge deep in the lungs and enter the bloodstream, increasing the risks of lung cancer, and cardiovascular and respiratory disease.

Beijing traffic.

Beijing and other Chinese cities began monitoring PM2.5 and ozone a few years ago, but did not release their findings to the public. In 2008, the U.S. Embassy in Beijing began measuring and reporting PM2.5 levels via Twitter, and found that over 80 percent of days exceeded American standards for safe levels of air pollution. The readings were in stark contrast to Beijing’s official air quality reporting (of only PM10) which often concluded that the air was safe. The capital’s annual average PM2.5 concentration has been approximately 100 micrograms per cubic meter, while the proposed yearly standard is 35 micrograms per cubic meter. Roused by the embassy’s reports, citizens began putting intense pressure on the government to publicly report PM2.5 levels.

On Jan. 26 as the Year of the Dragon began, Beijing acceded and began publishing hourly PM2.5 readings from one monitoring station. It now plans to establish 35 PM2.5 monitoring stations throughout all districts and counties of the city by the end of 2012. (By international standards, monitors should be 50 meters from pollution sources; the U.S. Embassy monitor is only 15 meters from a large ring road, which may account for continued discrepancies in readings.)

According to China Radio International, a newly announced air pollution control program for Beijing aims to reduce PM2.5 levels 30 percent by 2020. In addition to the new PM2.5 monitoring stations, a satellite remote sensing system will oversee overall air quality.

By 2020, the plan also aims to:

- Get 1.6 million cars with outdated emissions standards off the road

-  Reduce the city’s annual total consumption of coal 62 percent below 2015 levels

- Close all cement plants run for profit in Beijing

- Ban heavy industry from opening new facilities or expanding in the city

- Expand forest area in the city by 133,000 hectares (328,650 acres) and water surface by 2,000 hectares (almost 5,000 acres)

By 2015, 1,200 asphalt, glass and ceramic factories will have to leave the city.

The Chinese government has ordered 30 major cities to begin monitoring PM2.5 this year, and 80 more next year. China Daily reported that China aims to reduce its pollutant emissions 30 to 40 percent by 2015 in accordance with its 12th Five-Year Plan (2010-2015) for environmental protection. The plan calls for an investment of 3.4 trillion yuan ($539 billion) in environmental protection efforts.

If China can realize these ambitious plans, it will significantly improve its air quality, but getting air pollution under control will be an ongoing challenge.

“Without effective monitoring, tracking and transparency, you don’t know where you stand, and the potential for collaborative problem-solving involving a strengthened civil society and citizens is reduced. Researchers, academics and NGOs need the data,” said de Sherbinin. “Indicators alone won’t solve the problems, but they are guideposts to help you get where you want to go.”

It will be interesting to see how China fares on the 2014 EPI.

Renee Cho is a staff blogger for Columbia University's Earth Institute and a freelance environmental writer.

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

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.

Seeking the Signal in the Noise of Environmental Performance Metrics

This week CIESIN released, with its colleagues at Yale University, the 2012 Environmental Performance Index (EPI).  Wherever possible we collected and processed data in time series, to permit not merely comparisons across countries but also consistent comparisons over time. This has made the EPI a much more powerful diagnostic tool because trends are often much more revealing than static patterns.

To take one illustration, consider overfishing. Globally, the picture is not pretty. On our 0-100 scale, the world average went from 34 in 2000 to 29 in 2010—twice as many countries got worse than got better.

One of the real pleasures of producing the EPI is the chance to work with fellow data geeks who help guide us to the most suitable information and help us structure it into meaningful indicators. For overfishing we turn to the Sea Around Us group at the University of British Columbia, led by Daniel Pauly and backed by a talented, hard-working team. They have done incredible work collecting all the available fishery statistics, uncovering and correcting major errors, making the numbers as comparable as possible, and putting together compelling, informative time series that reveal where overfishing is running rampant and where it is under control.

Map of waters of Namibia. The top two panels show landings by species; the bottom two panels show stock status (click to enlarge). Source: Sea Around Us Project

I asked the people at Sea Around Us where these numbers show meaningful success brought about by deliberate policy efforts. They pointed to Namibia as a clear example. In our 2000-2010 trend analysis, Namibia’s score rises 34 percent. The policy success is even more dramatic when looking at the full time series assembled by Sea Around Us, which reveals that things were extremely bad in the early 1990s, with about 80 percent of the stocks in a collapsed state. By 2000 they had already improved considerably, and that improvement has continued to the present. A major driver of this change has been the elimination of foreign fishing fleets from the Namibian EEZ. Until Namibia established its EEZ in 1990, South African, Russian, Spanish, and Ukrainian vessels took the bulk of the catch (see figure, top). After 1990, Namibia restricted the access to its EEZ (NMFS, 2009), and was able to enforce restrictions.  Consequently the catches of horse mackerel, chub mackerel, hake, anchovy, and monkfish declined briefly and can be attributed to the dramatic decrease in fishing effort expended in the Namibian EEZ by foreign fleets, rather than an actual decrease in the biomass of these species (see figure, second from top).

Being able to see such trends and link them to policy efforts makes possible the identification of leaders and laggards and holds open the promise of accountability and progress.

Marc A. Levy is deputy director of the Center for International Earth Science Information Network (CIESIN), a research and data center of the Earth Institute of Columbia University. He is one of the authors of the 2012 Environmental Performance Index. This post originally appeared on State of the Planet, the Earth Institute's blogspot.

2012: The International Year of Sustainable Energy for All

The United Nations has named 2012 the “International Year of Sustainable Energy for All,” setting three goals: ensuring universal access to modern energy services, doubling the rate of improvement in energy efficiency, and doubling the share of renewable energy in the global energy mix.

Possibly the greatest area of opportunity for achieving these goals is the developing world, where low electrification rates mean great potential for improving access, efficiency gains from switching to modern energy from traditional fuels can be significant, and expanding populations and standards of living drive demand for new generation facilities, which can take advantage of recent advances in renewable energy technology.

The aforementioned goals are driven not just by environmental sustainability targets, but also by recognition of the significant negative impact that energy poverty has on billions of lives. While a majority of earth’s population lives with critical goods just out of reach—poverty that frequently takes the form of a lack of food, clothing or shelter—a lack of these goods insufficiently describes the full spectrum of poverty that these individuals endure. Many throughout the developing world also experience energy poverty, lacking access to electricity and the light it provides.

According to the IEA, 1.3 billion people lack access to electricity, and 2.7 billion to clean cooking facilities, mostly in rural areas in sub-Saharan Africa and developing Asia. For these populations, productive activity is limited by available energy sources: many clinics close at sundown, vaccinations cannot be refrigerated, and children study by the light of kerosene lanterns. Electrification can improve lives and promote environmental sustainability here not just by providing light and power for a greater range of activities, but also by encouraging a shift away from the traditional energy sources thatcontribute to millions of deaths annually via indoor air pollution.

To provide modern energy, many countries have invested in large-scale primary generation facilities—hydroelectric dams, for example. But the infrastructure necessary to deliver electricity to the entire population is frequently lacking. It’s too expensive to build when the customer base is diffuse and much of the population served cannot afford to pay unsubsidized prices for electricity.

In the coming years, forward-thinking countries will explore strategies to increase renewable primary energy generation in order to provide modern energy access while protecting the shared environment for increasing populations with climbing standards of living. In addition, decentralized electricity generation and transmission—in the form of community mini-grids, for example—can help overcome cost issues in traditional grid expansion and provide modern energy access to alleviate energy poverty. By developing strategies to increase electrification rates efficiently and expandingrenewable energy, countries can both pursue reductions in energy poverty and work toward environmental performance goals.

China’s Long March Towards Better Environmental Conditions

This post originally appeared on Columbia University's Earth Institute blog, State of the Planet.

Given its burgeoning economic growth, its rapidly expanding industries, large population, and growing consumer class, many in the environmental field have an intense interest in how China will address its environmental problems.  The country has made some impressive energy and resource efficiency gains, and environmental issues are an important part of the government’s efforts to build a “harmonious society.”  Yet, as evidenced by the recent air pollution events in Beijing, there is a lot of progress to be made, and the government has yet to fulfill its commitment to data transparency.  China’s Regulation on Environmental Information Disclosure, which took effect in May 2008, represents a major step forward, but implementation is still at early stages and much remains to be accomplished to tap the full power of public participation in environmental protection as embodied in the Aarhus Convention, the US government’s Right to Know provisions, and the recently developed Access for All initiative.

It is in this context that a team of researchers (myself among them), jointly led by CIESIN at Columbia University and Yale University, have released the report, Towards a China Environmental Performance Index, that takes a first cut at assessing China’s environmental management and performance at the provincial level. Working closely with colleagues at the Chinese Academy for Environmental Planning (an arm of the Ministry of Environmental Protection) and City University of Hong Kong, we held three expert workshops over the course of two years, analyzed China’s environmental laws, and compiled the best available data. In the end, we determined that it was not possible to produce an aggregate index by province – but the process revealed the steps that would be necessary to fulfill that vision.  The bulk of the report provides a component-by-component analysis of China’s policies and measurement practices. Charts and maps illustrate the issues for 33 indicators, relying entirely on official provincial statistics.

Our decision to stop short of producing an aggregate index was based on concerns over data quality (to use statistical parlance – we had concerns over validity and reliability) and a lack of official policy targets for a number of the indicators we developed. Although we could have proposed interim targets, the crux of the matter was that we could not access raw monitoring station data that would have helped to assess data quality.  This led us to have concerns about how much the official statistics reflected on the ground realities. For our global work (see the 2010 Environmental Performance Index (EPI) and the forthcoming 2012 EPI) it is true that we were unable to validate all data sources (especially those derived from official UN publications – which are becoming fewer in number); but in our recent work with countries we have sought to achieve a higher standard.

What we did produce is 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. China is making good faith efforts to raise environmental standards, partly due to the outcry of its increasingly affluent citizens for better air quality.  Yet the government is also seeking to lift millions more out of poverty, and to do so at a pace that has rarely been witnessed. It seems clear, however, that China’s quest for economic development at all costs will create a legacy of environmental damage that will be costly to repair – unless action is taken now. To avoid the worst impacts, the government needs to have policy tools that are adequate for guiding and prioritizing action, and that is what an EPI would provide.

The report is available in English here; a Chinese version will be available shortly. For more information, visit the Yale Center for Environmental Law & Policy website.

Bridging Gaps in Durban: What Can China do?

The following post is republished from China FAQs: The Network for Climate and Energy Information.

One of the most persistent themes so far at Durban has been how to bridge gaps - the divide between the developed and developing countries, many of whom disagree about whether the Kyoto Protocol should be extended into a second commitment period; the hole in climate finance pledges from developed countries; and the ambition or emissions gap between the Copenhagen pledges and the stabilization of global temperatures below a 2 degrees Celsius increase from pre-industrial levels.

These three major gaps must be addressed in Durban. One major question will be whether developing and some developed countries, Europe in particular, can work together to find a solution that enables the Kyoto Protocol to be extended. When it comes to money, there are questions about where some $2 billion USD out of the $30 billion promised to developing countries at Copenhagen and Cancun to assist them in mitigation and adaptation efforts will come from.

Perhaps the most prominent issue being discussed in Durban is the emissions or ambition gap between Copenhagen emission reduction pledges and the goal to limit global temperature rise to 2 degrees Celsius. To help facilitate the negotiations, the United Nations Environment Programme (UNEP) released a report Bridging the Emissions Gap which concludes that even if countries fully implement their Copenhagen commitments, the world would only be about halfway towards the emission reductions necessary to ensure global temperatures do not warm more than 2 degrees Celsius. However, the good news is that we have the technological and financial capacity now to achieve the emissions reductions necessary to avoid such an increase. Focusing on projections of global greenhouse gas emissions in the year 2020, the report looks at the “emissions gap” between:

1. the level of emissions needed to ensure an average global temperature increase below 2 degrees C; and
2. the level of global emissions in 2020 we’re likely to see given the voluntary emission reduction pledges in the Copenhagen Accord.

The report finds that even if all Copenhagen reduction pledges are met, total emissions would still exceed the level necessary to prevent a 2-degree increase by 6 to 11 gigatonnes. This is about 1 gigatonne greater than last year’s gap, an increase brought about by some countries such as Australia and Brazil having clarified how they calculate the baseline emissions from which their reductions would be made - effectively weakening their Copenhagen pledges.

But on the bright side, the full implementation of current technologies could more than make up for the gap, and at an economically feasible price. Existing energy efficiency technologies, renewable energy sources, and agricultural practices will be enough to put us back on the right track. In other words, we no longer need to wait for the next great technological breakthrough, just the next great policies to deploy the technology we have now. The report also emphasizes the need to improve measurement and accounting for market-based incentives such as the carbon reduction projects through the Clean Development Mechanism and from land-use, land-use change and forestry (LULUCF).

Negotiators here in Durban have been actively discussing the report and referencing the emissions scenarios that show global emissions must peak sometime before 2020 if temperature rise is to be contained below 2 degrees C. Delegates have been referring to the 6-11 gigatonne gap on the plenary floors and in the working groups over the last week.

We had the opportunity to speak with Dr. Kejun Jiang of China’s Energy Research Institute and a lead author of the UNEP report, about their analysis and what China can do here in Durban to help bridge the gap.

The Gap

Q: The UNEP report concludes that global emissions will need to peak before 2020 if the “emissions gap” is to be closed. How likely do you think it will be for countries to agree on this here in Durban and what about the time frame for when China’s emissions will peak?

A: It’s necessary for the world to see emissions peak by 2020. We can get there supposing China’s emissions peak in 2025, and developed countries will have significantly reduced emissions by 2025. This way, it’s still possible to control global average temperature rise below 2 degrees Celsius. It’s not quite possible to observe the global peak before 2015. For China, emissions are expected to peak around 2030. However, if we look at clean tech development in China now, the speed is very fast and it’s still possible to see major changes coming from China in 3 to 4 years to help close the gap.

Q: So is China’s Copenhagen pledge to reduce carbon intensity 40-45 percent enough to help bridge the emissions gap?

A: Actually, the 12th-Five Year Plan was made according to a target of 45 percent carbon intensity reduction. There are a lot of policies and actions in the plan on energy efficiency and non-fossil fuel energy. If all this work could be done well, it is possible for China to do better than the target.

Clean Tech

Q: Technology transfer continues to be a very hot-button issue in the UN climate negotiations. Will China be pushing for technology transfer to contribute to their ability to help close the emissions gap?

A: There is much capital from China looking for investment opportunities, however domestic investment has been pretty much saturated, and they are now looking at overseas investments. Clean tech investment is a good choice because China has the most competitive technologies that can bring down the cost of wind and solar power. So this is what we want to convey here in Durban: it’s not just emission reductions, it’s also about the country’s future competitiveness in the clean tech sector.

China will have a lot of capital in the future, like I just said, and China is not really in need of CDM money, which is only a tiny little part of GDP. What China needs is high-end technology.

The Durban Agenda

Q: What do you think can be accomplished here in Durban?

A: So here are my suggestions for us observers this time in COP-17. First, we want to leave some more room for the negotiators. Copenhagen was about debating; Cancun was about moving forward, and Durban is a working conference where countries don’t really want to fight each other but to finish the “homework” left from Copenhagen and Cancun. Also, countries in Durban want to nail down some technical details. For example, the EU wants to promote a “road-map” this time, and countries like China are waiting for that proposal to see how much it can be promoted. If Durban fails again, then countries will start to doubt UN’s capability.

Also China is changing very fast, and the negotiators need time to follow up. For example, China expected financial support in Copenhagen, but this time, this is not a major issue for China.

Q: If Parties fail to decide on a second commitment period before the Kyoto Protocol expires next year, what do you think China’s response will be?

A: I think this [failure to agree on the Kyoto Protocol] would be unimaginable. Without the KP - the minimum-level of agreement - it would be a mess. Ideally, we should have an improved KP, both considering the needs from G77+China and developed countries. China can also compromise on some issues here in Durban.

Q: If a new agreement can only be made for 2020, do you think that would be too late?

A: Certainly too late. There is possibility for some countries to make new adjustments to their 2020 emission goals. So I think countries should start to make targets for 2025 and 2030. If those targets are made very clear, then we can start to place less emphasis on emission targets for 2020.

Angel Hsu is a PhD candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Propelling the Durban climate talks - China announces willingness to consider legally binding commit

The following post is republished from China FAQs: The Network for Climate and Energy Information.

When China launched its first official pavilion at a UN climate conference last week, UN Framework Convention on Climate Change (UNFCCC) Secretariat Cristiana Figueres was there alongside China’s NDRC Vice Minister Xie Zhenhua to cut the ribbon. Swarmed by journalists in the standing-room only conference center of the China pavilion in Durban, Figueres applauded China for being a “trend-setter” in global renewable energy, resonating around the world and during the first week of climate negotiations in Durban.

“As I look at what has happened here at Durban in the negotiations this past week, what I see is a sailboat that has been sailing over very difficult waters, but with the wind blowing the right direction. And now that you have arrived, that boat now has a powerful motor behind it,” she said. The motor propelling talks forward into the second and final week of negotiations here in Durban may be developments in China’s negotiation position that emerged last week. An announcement that made waves was with regards to China’s willingness to consider signing on to a legally-binding agreement with binding climate targets after 2020 for the country.

Lead Chinese negotiator Su Wei told media last Friday that, “We do not rule out the possibility of legally binding. It is possible for us, but it depends on the negotiations,” Su is quoted as speaking in English rather than Chinese, presumably to make his point clear.

Although China made similar noises in Cancun, Su’s statement is the first time in the international climate negotiations that China has made this type of overture so clear with regards to a willingness to consider placing its post-2020 action into a legally binding instrument. This willingness to discuss the legal nature of post-2020 targets comes directly counter to the United States’ position put forth in Durban last week in which Jonathan Pershing, Deputy Envoy for Climate Change, said that a legally binding post-2020 agreement would be unacceptable unless other major economies also agree to be legally bound. Indeed it would seem to fulfill one of the US’ main conditions for moving forward.

If China is indeed open to placing its post-2020 commitment into an internationally legally binding instrument, it has just opened a pathway forward to both securing the Kyoto Protocol for the post-2012 period and building a bridge, with all Parties, to a legally binding regime in the near future. The impact of this is not to be underestimated.

Vice Minister Xie Zhenhua confirmed China’s stance when he spoke at a briefing for international NGOs immediately following the China Pavilion’s launch. “We can start the process for a legally-binding framework for issues after 2020,” Xie said, clarifying five conditions that must be met before China can make its commitments legally binding in an international agreement. These conditions are:

1. Parties must continue the Kyoto Protocol through a second commitment period;
2. Developed countries must meet financial commitments to provide developing countries $30 billion in fast-start financing and $100 billion per year by 2020 through the Green Climate Fund;
3. Institutionalization of consensus on finance, technology transfer, REDD+, adaptation, and transparency measures;
4. Commitment to completion of the review of adequacy of long-term goals scheduled to take place between 2013 and 2015.
5. Define a framework for a post-2020 agreement that upholds common but differentiated responsibilities, equity, respective capacities, and environmental integrity.

If all conditions are met, Xie says, “We are open to the process.”

Implications – Will China’s move bolster the EU mandate?

The question remains as to whether these major developments in China’s position here in Durban will have a significant impact on the negotiations in Durban. The European Union has stated its openness to placing its 2020 targets into the legally binding Kyoto Protocol if it is part of a package. The package includes a roadmap that would clearly show the way forward for all major economies to be in a binding regime in the post-2020 time period, the negotiations for which would end in 2015. China’s statements agreeing to internationally-binding emissions limits in a post-2020 framework might galvanize other major emerging economies such as India and Brazil to do the same.

Jennifer Morgan, the Climate and Energy Program Director at the World Resources Institute, explained the significance of China’s new posture:

“If China is indeed open to placing its post-2020 commitment into an internationally legally binding instrument, Europe and the most vulnerable countries are now its key allies. If these Parties can work together this week, Durban has a good chance of success,” Morgan added.

It is not yet clear what kind of commitment China would be willing to bind, and that level of specificity does not appear to be part of the current discussion.

Jonathan Smith (JD‘12/MEM’12) and Max Song (MEM’12) contributed to this piece.

Angel Hsu is a Phd candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Chinese experts discuss absolute emissions limits in Durban

The following post is republished from China FAQs: The Network for Climate and Energy Information.

The idea of a total cap on energy consumption in China, first suggested last March before the National People’s Congress, has reemerged in Durban -- and surprisingly there are now suggestions that China might consider some kind of a cap on carbon emissions. This has been suggested apparently as part of domestic policy rather than as a negotiating position, but details are very sketchy.

Over the last week, we have been witnessing an active debate amongst Chinese academics and researchers on energy and carbon caps, although these discussions have taken place separately, from outside the plenary floor and in the multitude of side events the Chinese delegation has been hosting. Chinese negotiators have been careful to not muddy the waters in Durban, especially after making such a loud splash late the first week of negotiations by supporting a legally-binding treaty after 2020. Read more.

What senior government researchers have been suggesting, however, is that China is considering an absolute rather than an intensity-based emissions target that is more restrictive after 2020. Statements by senior researchers from the Energy Research Institute - a high-level government think tank associated with the National Development and Reform Commission (NDRC) - are the first time that China has suggested they might soon be ready to set a timetable and limit for its emissions, at least in the context of domestic policy.

This idea first emerged prior to the March release of the Five-Year Plan. Senior representatives of the Chinese government suggested that an energy consumption cap of 4.1 billion tons coal equivalent might be included in the Plan. Since then we understand the question of a total energy cap has been hotly debated within the Chinese government. Now its advocates are speaking fairly forcefully in Durban and going beyond the energy cap to suggest a carbon cap as well.

At a side event on local pilot carbon trading schemes on Dec. 1 organized by Tsinghua University and the Institute for Global Environmental Strategies, the debate of absolute versus intensity emissions targets was prominently mentioned. Tsinghua University professor Teng Fei emphasized that whether these preliminary carbon-trading schemes will cap emissions on an absolute or an intensity basis is the biggest issue for government leaders in deciding how to roll out these programs to the four cities and two provinces selected as pilots. Lead Chinese negotiator Su Wei was also present and added, “It’s very clear in China’s Five-Year Plan that it’s our objective to gradually establish a national system on carbon emissions trading. Certainly the pilot system is still in the design stage but we have more or less set the direction of piloting market mechanisms.” It certainly could be the case that experience with regards to the design of caps (i.e. sectoral or provincial basis; baseline calculations, etc.) in these local pilot projects may eventually inform a national level cap on emissions.

One reason for a possible shift to an absolute target is because an emissions cap may spur growth in alternative energy sectors – such as natural gas, renewables and nuclear – according to Yang Fuqiang, Senior Advisor on Energy, Environment, and Climate Change for the Natural Resources Defense Council.

While Chinese experts and delegates have not suggested what kind of carbon number they are considering, Jiang Kejun of NDRC’s Energy Research Institute noted, “If you add up the coal consumption cap, the target for non-fossil energy consumption, and the natural gas target, you can basically calculate what an emissions limit for China might be.”

At this point this discussion mainly concerns domestic policy, but its active airing in Durban suggests the scope for Chinese policy development in the next several years.

Angel Hsu is a Phd candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Demystifying China’s Controversial Air Quality Measurements

Beijing’s air quality dominated international headlines when discrepancies arose last month between official monitoring data and U.S. Embassy measurements.

Pictures of stifling haze and smog posted and circulated online by netizens depicted extreme pollution. The U.S. Embassy’s monitor indicated that the air quality was “hazardous” and “beyond index, but “the Chinese government’s official Air Pollution Index indicated that the air was only “slightly polluted.[1]”

Why the inconsistency? To start, the U.S. Embassy’s monitor, which was originally put in place in 2008 to record air quality during the Olympics, measures finer particulate matter with a diameter of 2.5 micrometers or less (PM 2.5) and ozone. These particulates are more relevant for human health because of their ability to penetrate human lung tissue and lead to asthma, lung cancer, and cardiovascular disease. The Beijing measurements, however, don’t include these pollutants and instead take an average of measurements from monitoring stations from around the city. 

Many people are asking which measure is more accurate. This is a difficult question to answer because it’s almost like comparing apples and oranges. The two systems are measuring different pollutants, and the U.S. monitor is only looking at one point source compared with Beijing’s 27 monitoring stations. The accuracy the U.S. Embassy’s monitor – and how often the instruments are calibrated – is also unclear. Granted, Beijing’s system has its flaws, which the government has acknowledged and is working to improve. As a sign of good faith, the Beijing Environmental Protection Bureau announced that it would allow public tours of its air monitoring facilities to show that they aren’t trying to hide behind the data.

These efforts come in conjunction with several important policy developments regarding air quality in China.  Last month I wrote about new efforts to pilot PM 2.5 measurement in model environmental protection cities in China. Last week, the Chinese government announced new ambient air quality standards for PM 2.5 and ozone levels (link available in Chinese only). While still slightly below WHO recommendations, these new standards are a significant step in the right direction, particularly when diplomatic cables suggested that PM 2.5 data were deemed too politically sensitive to measure and report. These new standards will likely not take effect nationally until 2016; however, major cities like Beijing and Shanghai, which already measure PM 2.5 but do not publicly release the data, likely will roll them out sooner. Officials from the Ministry of Environmental Protection have already noted that there will likely be a binding national target for PM 2.5 in the next Five-Year Plan.

LinkAsia recently asked me to discuss Beijing’s controversial air quality data and some of the measures the government is taking to address citizen concerns over poor air quality. You can view the interview here: http://www.linktv.org/linkasia/linkasia2011111119/understanding-chinas-deadly-air.

Metrics and Measurement of Sustainability Performance

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.

Clearing the haze

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.

The Klamath River: How the 100-Year Old Crisis is Finally Coming to an End

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/

The Environmental Performance Index Enters the Next Generation

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.

Related Links:
2010 Environmental Performance Index

China’s 12th Five-Year Plan Lays Out Ambitious Blueprint, but Data Challenges Remain

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.[1]  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”[2] 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.[3]  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.[4] 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) [5] to an Air Quality Index (AQI) that more closely resembles the U.S. version [6]. While the proposed amendments include significant improvements – such as including ozone measurements, improved calculation methodologies, and standardizing color-coding schemes – PM 2.5 [7] 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 [8].

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.