China’s New Climate Change Law: The pathway to a low carbon economy?

19th November 2012

“China’s New Climate Change Law: The pathway to a low carbon economy?” was the eleventh in the China Low Carbon Leadership Network 2011-2012 event series jointly organized by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and China Carbon Forum (CCF). 80 representatives of government, NGOs, business and media joined GIZ and CCF to discuss climate change legislation and China’s proposed climate change law.

China considers passing climate change law in a global context where some developed countries have found this difficult to achieve. China’s draft climate change law has been carefully designed for assessment by China’s climate change policy makers. Climate change is not just an environmental challenge, but also a developmental challenge – while climate change law is an important instrument for a nation’s climate change action, the relative success of shifting a nation to a low carbon economy will ultimately depend on the surrounding political, economic, and institutional setting. China will move to low carbon development, step by step. China could consider a number of different development models to accelerate the shift to low carbon economy, whilst improving the efficiency and productivity of the economy. Under such development models, the effectiveness of climate change legislation could be further enhanced.

• China agreed to develop climate change law in August 2009. Think tanks and academic institutions undertook intensive research and eventually proposed numerous draft versions of the law. Following assessment by government, the final draft was released for public discussion in March 2012.

• There are a number of challenges to consider in the design of China’s climate change law, including: 1) developing the ‘space’ for climate law, due to the overlap with other laws (i.e. renewable, environmental protection, energy conservation); 2) balancing mitigation and adaptation; 3) China’s regional differences (i.e. industry mix, economic development, and physical geography); 4) the relationship between the domestic and international law.

• The development of China‘s pilot ETSs was seen as a specific legal challenge, especially in the absence of reliable MRV systems, and absolute emissions caps.

• Sometimes, when laws are passed, they don’t always work as intended. The alignment between public and private interests is a key factor.

• Often laws don’t match reality – for instance climate law hasn’t worked at the international level the way we thought it was going to. Kyoto’s aim to essentially cap all nations via a global allocation has not come to fruition – the dynamics of the world have shifted considerably since its establishment. United States is finding it difficult to pass climate change law, yet emerging markets (i.e. China) consider passing climate change law.

• How to become more efficient with food and fuel? Carbon comes from the way produce and use energy and food. 75% of global emissions come from energy use, and 25% from land use and land use change. Prices are rising because a growing middle class is increasing demand.  To change our patterns of production, the capital base must also be changed. Growing efficiently is a question of how we invest.

• China’s climate change legislation could aim for sustainable development, not just climate change action. Some felt that if China didn’t move slowly on climate change, then some would be made worse off due to costs of compliance.

• However, when there is a conflict between climate change and development, development wins. If we think of climate change as a burden to be imposed upon growth, it won’t be solved. All nations must be more conscious about real resource prices, and where those prices are going.

• China could invest in an energy infrastructure not where prices are now, but where they will be for the life of those assets. China could then begin to take its investment structure in a direction which would see increased price efficiency, increased productivity, be less capital intensive. In this context, effective climate laws could be created.

• How should we think about climate change? Is it an environmental issue? One view is that it could be considered an environmental law, regulated under air pollution law, using a market mechanism.

• The development of China’s climate law should not be rushed, and shouldn’t be too conservative. China’s law could accommodate the practices forecast 3 to 5 years into the future. Input on the draft law by all stakeholder groups was welcomed.

• The law must enable adequate information to be provided to the public. For instance, farmers and industry need real time information to help adapt to and manage climate change. If we start from an expansive view of climate change, then this means a climate change law may have more impact.

• What about climate change law in other countries? U.S emissions will be flat or declining for the next 15 years, because of price relations with unconventional gas (Shale gas). Production is so large; coal is being displaced on the load curve. It was therefore suggested that the US wouldn’t be a major player in climate change action. There will be some gains in automobile efficiency, and the US will meet some pledges.

• Would mandatory disclosure of emissions data be considered in China’s climate change law? There seemed widespread agreement that this would be the case, however, the quality of national inventory and third party data must continue to improve.

• The world is currently on a pathway to 7 degrees of climate change. This could be brought down to 3 degrees by growing efficiently, through appropriate investments.