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Crisis won't deter fight against climate change

By Fu Jing (China Daily)
Updated: 2008-10-30 10:44

As the US financial tsunami unfolds and an extended period of recession in developed countries looms, China made a strong gesture yesterday on battling climate change.

The Chinese government yesterday published its white paper on climate change, signaling that the severest economic crisis since the Great Depression will not weaken China's determination of bringing economic growth on sustainable track.

The white paper signals its determination to bring a global deal on climate change to replace Kyoto Protocol as the world is now in the middle of the two-year journey from Bali, where negotiation were launched, to Copenhagen which hosts the crucial meeting of the United Nations Framework Convention on Climate Change (UNFCCC) at the end of next year when the world must craft and clinch the deal.

It also repeatedly stresses that the Chinese government has been poised to fulfill its promises on sustainable development though the worsening global economic situation makes it difficult for China to predict its growth for next year.

In some way, it was relatively easy for China to make the policy shift to increase investment in sustainable development as the central government's determination in this regard was shown even when there was no financial crisis. And now the financial crisis will propel the government to expand spending and help strengthen its determination to promote growth that can be sustained.

Still it is uncertain how fast China's economy will grow next year, Liu He, deputy director of the Office of the Central Leading Group on Finance and Economy Work, pointed out last Friday that economic slowdown can work as an opportunity to restructure its economy, which has relied heavily on government investment, foreign trade and low-cost technology over the past years.

When the economy is experiencing fast growth, companies are unwilling to upgrade their technologies but the slowdown gives such firms the opportunity to enhance their competitive edge through better technologies.

For him, this is an opportunity for China to embark on low-carbon path, which means China will implement tougher measures to save energy, control pollutant emissions and promote responsible ways of investment.

Nicholas Stern, former UK government advisor famous for his climate report, said a low-carbon infrastructure also represents huge investment opportunities. The International Energy Agency estimates that world energy infrastructure investments are likely to be around $1 trillion every year over the next two decades.

"If the majority of this is low carbon, it will be an outstanding source of investment demand," said Stern. "That's an opportunity both for China and the rest of the world."

How to turn the investment potential into reality? Chinese companies should set up "joint ventures" with technology groups in developed nations to pursue its aim of developing a "low-carbon" economy, Stern suggested, despite the fact that under the Kyoto Protocol and the United Nations Framework Convention on Climate Change, developed countries are obliged to provide financial support and transfer technology to developing countries on favorable terms.

But the developed countries, which have held more than 90 percent of the advanced technology related to climate change, are reluctant to provide it to developing countries out of concern for losing their competitiveness.

And many developed countries are blamed for failing to deliver on commitments made on funding and technology transfer to help developing countries combat global warming.

Currently, many developing countries, including China, have reached the consensus to develop their economy by using low-carbon technologies but the developed countries have required high transfer fees. And the high technology transfer fees have blocked many countries from using the advanced technologies.

Meanwhile, the weekly average oil prices of the Organization of Petroleum Exporting Countries (OPEC) dropped to $61.53 per barrel last week, the lowest price since the end of March 2007.

This may decrease incentives for the oil users to take measures to save energy and dampen the industry's enthusiasm in investing in developing renewable energy, which may not become cost-competitive and economical.

Facing the new changes, it will become a demanding negotiation between developing countries, including China, and rich countries, to set up an effective mechanism to facilitate technology transfer from industrialized countries.

At the strategic level, the gesture China made yesterday is vital. But from the point view of its implementation, more efforts and negotiations are along the way.