Climate Change and the Globalisation
– China’s Emissions and Trade
Dr Tao Wang and Dr Jim Watson
Tyndall Centre for Climate Change Research
Sussex Energy Group, SPRU, University of Sussex
CARIS and WB conference on Regional Integration
University of Sussex, 14-15th September 2009
Sussex Energy Group
SPRU - Science and Technology Policy Research
Climate Change: Developed Countries and
Developing Countries’ perspectives
• Developed countries have the most responsibility as well as
ability (political and economic), should take lead in reducing
emissions, and help developing countries to transit to low
carbon growth
• Developing countries are the most vulnerable to the
consequences of climate change, yet will have the most
contribution of the increase of carbon emission
• Is there a low carbon development path or society that
successfully decarbonise in its development?
• How much the developed countries should be held responsible
for the rise of carbon emission in developing countries?
Sussex Energy Group
SPRU - Science and Technology Policy Research
China’s position
As an emerging economy and trade power, China stands at
very forefront of this debate

quickly moves on a road of high growth and high emission since 2000

long way to go for development and poverty eradication

environmental pollution threaten further development

58% of China's total export in 2006 is from the foreign venture industries in
China, and 70% FDI in China in 2006 goes to manufacturing

looking for alternative development path but cautious to potential risk
Sussex Energy Group
SPRU - Science and Technology Policy Research
Carbon embodied in Trade
• China has emerged as a
major trading economy –
with a rapidly growing trade
surplus with the developed
world, US and EU
• How much of China’s
carbon footprint is due to its
exports?
The Emma Maersk
• The extent to which carbon
emissions in China should
be ‘owned’ by China has
been the subject of much
debate
Sussex Energy Group
SPRU - Science and Technology Policy Research
2000
1800
1600
1400
1200
1000
800
600
400
200
0
1400
1200
1000
800
600
400
200
0
1990
1995
2000
Carbon emissions
Sussex Energy Group
SPRU - Science and Technology Policy Research
2005
Exports
Export value ($bn)
m tonnes of carbon (mtC)
Take-offs of China’s export and
emission
Who owns China’s emissions?
• Headline results:
– Emissions from exports in 2004 :1490 million tonnes of CO2
– Emissions avoided due to imports: 381 million tonnes of CO2
– 23% of China’s emissions due to net exports
• One reason is large (& growing) trade surplus: tripled between
2004 and 2005 to $102bn, rose again to $177 bn in 2006, and
over $250bn in 2007
• Another reason is relatively high carbon intensity of Chinese
economy. In 2000, the US produced 0.5 kg CO2 per dollar of
economic activity whereas China produced 2.76kg per dollar
Sussex Energy Group
SPRU - Science and Technology Policy Research
Potential inaccuracies
1. using national average CO2 emission intensity of GDP neglects
the difference in emission intensities of different goods
2. neglect the life cycle effects of producing and consumption of
goods and focus only on that happened at the custom
3. difficult to trace the trade via intermediate ports e.g. Hong
Kong and Singapore
4. processing trade, particularly within Asia
Sussex Energy Group
SPRU - Science and Technology Policy Research
In a worldwide context
7000
6000
CO2 emission (Mt)
5000
US
China's total
4000
3000
2000
China's Net
Export
Japan
Germany
1000
UK
Australia
0
2004
Sussex Energy Group
SPRU - Science and Technology Policy Research
It is only slightly less
than the total
emissions from Japan
in 2004, almost
Germany and Australia
combined, and more
than twice of the UK
emissions.
The main categories of China’s trade
• First, low value-added, low energy and labour intensive goods
 textile, machinery & electronics, footwear etc
 major exporting sectors
 major source of trade surplus as well as embodied CO2
• Second, energy and resource intensive products
 base metals and related products
 similar high volumes for both exports and imports
 modest net import, substantial pollution and energy consumption,
large carbon exporter
Sussex Energy Group
SPRU - Science and Technology Policy Research
The main players of China’s trade
• Third, high-tech and high value-added products
 chemical, transport and optical/precision equipment
 net import
 export largely stems from multinational companies’ plant in China
 China still lack ability and capacity
• Fourth, natural resources and minerals
 mineral, plastic and rubber
 70% from mineral imports is crude oil
 very large net import
Sussex Energy Group
SPRU - Science and Technology Policy Research
Source : WWF (2008)
Sussex Energy Group
SPRU - Science and Technology Policy Research
Imbalance of Carbon in Trade in 2001
Source : Peters and Hertwich (2008)
Sussex Energy Group
SPRU - Science and Technology Policy Research
Different Strategic Positions in World
Trade
Balance of Embodied Emission
3.5
Emission
Intensive Export
South Africa
emission imbalance in trade (kg CO2 / 2000 US$))
3
2.5
Sweden
Japan
Russia
Germany
2
China 2004
China
United Kingdom
United States
Canada
1.5
Brazil
Poland
India
1
Australia
Poland
0.5
India
Australia
Russia
China
-600
-400
United States
Import
Brazil
0
Canada
UK
-200
0
200
Sweden
Germany
-0.5
Japan
Emission
South Africa
China 2004
400
600
Intensive Import
-1
Total CO2 emission in trade (Mt)
Sussex Energy Group
SPRU - Science and Technology Policy Research
800
1000
Export
1200
Other similar researches
sources: Wang and Watson (2008)
Sussex Energy Group
SPRU - Science and Technology Policy Research
A heavier and heavier burden to
China
• China is a resource scarce country (1/3 in land, 1/4 in water)
• Heavy industrialisation and manufacturing already made China
resource scarce, and spurred severe social and environmental
problems
• Cheap products export driven economy is not sustainable nor
stable
• Trade conflicts with other trade partners and fuels protectionism
in the West
Sussex Energy Group
SPRU - Science and Technology Policy Research
Low Carbon Society, or just Business
as Before?
• China repeating old business: UK (19th Century), US (1st half 20th
Century), Japan & Germany (1960s) and the Asian Tigers (1980s).
Latest wave of industrial relocation is also emerging
• Economic growth driven by consuming, particularly relies on pulls of
rich country’s over consumption, has to be changed
• Consumerism doesn’t increase welfare, over-debt the public in
developed countries, create economic cycles, but appropriate
resources needed for the poor’s development needs
• Challenges of Climate Change and Sustainable Development calls for
a service based, not resource/material based economy
Sussex Energy Group
SPRU - Science and Technology Policy Research
Short-term solutions to address the
problem
• Consumption based emission accounting
–
–
–
–
significant data requirements and lagging
very much rely on international agreement and collaboration
inconsistent to mainstream accounting system
business greening up its supply chain is a good start
• Sectoral approach for key sectors
–
–
–
–
–
rely on international collaboration and agreement
difficult to agree on benchmark standards
technology and finance support for developing countries’ industries
complementary not substitution
China’s embodied emission mainly from low emission sectors
Sussex Energy Group
SPRU - Science and Technology Policy Research
How to address the problem?
• Border carbon tariff or allowance
–
–
–
–
conflict with “common but differentiated responsibility” and WTO rules
inefficient, huge administrative burden and not address carbon leakage
ineffective, won’t change price and advantages of Chinese goods
lobbied by heavy industries that China exports little or net-imports
• Low carbon technology transfer and diffusion
–
–
–
–
Use trade to promote low carbon products, technologies and services
Carbon market and CDM to be scaled up
Capacity building in developing countries
Leverage from other sectors such as power
Sussex Energy Group
SPRU - Science and Technology Policy Research
Trade and climate policy to facilitate
low carbon transition
•
China’s heavy industry and export led economy need to be changed,
unsustainable both for China and its trade partners, both for global
environment and finance system
•
An even more critical issue in today’s economic slowdown

Pressure for exporting countries to comprise environmental standards

Adverse impacts on consumers’ environment preference

Short term economic stimulation conflict with long term climate efforts
•
Proactively pursue to harmonising the international trade and climate
policies
•
Addressing the global economy driven by material-consumerism is a
must and a long term target that needs global efforts
Sussex Energy Group
SPRU - Science and Technology Policy Research
Thank You!
tao.wang@sussex.ac.uk (valid till Oct 2010)
tao.wang.2006@163.com
Sussex Energy Group
SPRU - Science and Technology Policy Research