Can China move to a low-carbon economy?

Press release: 29 April 2011

A new book brings together analysis from top economists and climate and development experts on key issues for China’s economic future.

STOCKHOLM – China faces many modernisation challenges, and responding to climate change may be the most pressing. China must find a new economic growth model that is environmentally sustainable, doesn’t depend on fossil fuels, and can improve living standards for the population.

But what does such a model look like? And how can China best make the transition from its present macro-economic structure to a low-carbon future?

In a new book published by Earthscan, The Economics of Climate Change in China: Towards a Low-Carbon Economy, leading Chinese and international thinkers try to answer those questions, drawing on a groundbreaking study led by SEI and the Chinese Economists 50 Forum.

The authors map out a deep carbon reduction scenario, analyse economic policies that shift carbon use, and show how China can dramatically reduce its carbon emissions over the next 40 years while maintaining high economic growth and minimising adverse economic effects.

Transitioning to a low-carbon economy, the book argues, is an essential part of China’s development and modernization, and it would present opportunities for China to improve its energy security and move its economy higher up the international value chain.

A top-level collaboration

The project grew out of conversations in 2006-07 between Lailai Li, director of SEI’s Asia Centre, and a group of leading Chinese economists. Climate change was rising in prominence on the global agenda, and it was unclear how China should respond.

To address the emerging questions, they organised an informal, high-level forum for discussion and research, bringing together top economists from China, SEI researchers, and international leaders in environmental economics, including Lord Nicholas Stern.

“This is among the most important projects SEI has ever carried out in terms of the level and potential impact of the people involved,” says Karl Hallding, who heads SEI’s China Programme and was one of the authors and editors of the book.

The project addressed fundamental issues such as the how China’s emissions mitigation responsibility would vary under different notions of equity, as well as practical questions such as the technology options available to China and how far they could take the country in terms of reducing emissions to levels consistent with a 2°C pathway.

“The fact that we managed to agree on a remarkably constructive and ambitious view on what China could do, and the role of economics in doing so, is important in itself,” Hallding says. “It is rare to get this far on such politically sensitive issues in a truly joint publication.”

A wide range of innovations

The project was also remarkable for the scope of its innovations. For example, Dr. Li notes, it introduced the concept of consumption-based emissions in the Greenhouse Development Rights framework, showing the tight links between consumption and production, the key role of trade, and the need to connect domestic and international climate policies.

In addition, the study linked international mitigation targets with China’s energy intensity-based mitigation plan, projected its significant implications for China and the world, and showed the urgency of international collaboration to support the plan’s goals.

The project also looked at the flaws in the Clean Development Mechanism (CDM), the only mitigation mechanism involving both developing and developed countries. They found the CDM falls far short of the need for large-scale emission reduction, Dr. Li says, “which requires large financial investment, major technology progress, deployment and transfer,  infrastructure updating and enhancing the capacity of economic coordination in China.”

Note to Editors:

Participants in this project from SEI’s centres in Stockholm, Bangkok and Somerville, MA (U.S.) are available for interviews.

Related links:

More information about the book from Earthscan: http://www.earthscan.co.uk/?tabid=102386

More information about the SEI project: http://sei-international.org/projects?prid=1355

China Econmists 50 Forum (in Chinese):  http://www.50forum.org.cn/

Media contacts:

Ylva Rylander - SEI Head of Communications: +46 (0)73-150 33 84   ylva.rylander@sei.se

Marion Davis (U.S. only): +1 (617) 245-0895  marion.davis@sei-us.org

Stockholm Environment Institute is an independent international research institute. The Institute has established a reputation for rigorous and objective scientific analysis in the field of environment and development. SEI’s goal is to bring about change for sustainable development by bridging science and policy. Further information at www.sei-international.org

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