China and Climate Change: Getting Real about Renewable Energy

Eddie O’Connor was kindly invited by the Dublin Chinese New Year Festival committee to provide a key-note address at Dublin’s Lord Major’s Mansion House in Dublin on Monday 15 February 2016.

Eddie’s Presentation Slides Chinese New Year

IMG_0082My Lord Mayor, Ladies and Gentlemen

I wish to thank you, Lord Mayor, and the Dublin Chinese New Year Festival Committee, for inviting me to give this Address on the theme of Climate Change and China.

It is a great honour to be invited to partake in the Chinese New Year Festival for the simple reason that the New Year is of such significance in the life of China, the largest country in the world and its oldest continuous civilisation.

I extend my best wishes to the Chinese people as they face into a new year, the year of the Monkey, and offer them my congratulations on their successes during the one that has just passed.

A Great Civilisation

By any standard, China is a great civilization.

In fact it is one of the greatest in history, certainly one of the oldest in terms of continuity, surely the most enduring in terms of language and culture

and, to my mind, one of the most innovative in science, engineering and technology.

Quite simply, in global and historical terms China’s civilisation is a phenomenon for which there is no parallel.

There are at least two defining characteristics at the root of this uniqueness.

Firstly, although it may seem strange to say it, until the arrival of modern transportation the Chinese were an island population

China was a land island: the great Pacific Ocean prevented access from the east, the trackless wastes of Siberia prevented access from the North or the West, while the Hindu Kush, the Kunlun Mountains and the Himalayas prevented access from the South.

Geographic isolation led to the peaceful evolution of an absolutely unique culture.

The Han people who arrived in southern China five to ten thousand years ago had this highly productive land all to themselves.

Being a homologous people with little biodiversity they gradually evolved a distinctive civilisation which has lasted for at least three millenia.  So, European society was being formed by a fusion of Middle Eastern God-based cultures with the intellectually-based culture of ancient Greece.  At the same time the Chinese followed a different evolutionary path.  They developed a completely individual culture which the West still finds hard to understand.

In its formative stages China didn’t have to fight off marauding tribesmen because they simply didn’t exist.  Neither could contending kingdoms get at them.

As a result, a civilization emerged based on social order, social cohesion, inclusiveness, respect for due authority with the family as the founding unit and a written code of social behaviour.

In a broad sense the stages of evolution that characterised European civilisation are by and large not found in China.  Religious contentions were unknown.  Slavery never existed in China.  Meritocracy, to which I’ll return later, became embedded in government and administration.  As Confucius said in one of his analects, “the class system is absent from the classroom”.

The brightest always ran China.

Population

Secondly, there is the sheer size and homogeneity of the population.

The Chinese population has always been large in proportion to the rest of the world.  It was about 25% of global population at the beginning of the Christian era and was bigger than the Roman Empire when at its peak in the second century.

Under the Ming dynasty in the late fourteenth century the population began to increase dramatically and it doubled to over four hundred million during the Qing dynasty at the end of the 18th century.

Today it is about 1.4 billion out of a global population of 7.4 billion, nearly 20% of the total.   Germany is the largest country by far in Europe but if it were a Chinese province it would only rank fourth in size, and we in Ireland would come last.

Interdependence

Governing a society of this size obviously poses specific challenges not faced elsewhere.  The response over the centuries led to the development of a particular set of values so that the society could not only survive but also thrive.

To me, the most distinctive of these values is the sense of inter-dependence which permeates Chines society; you might say that its evolution was a precondition for survival.

This sense of interdependence has been strengthened by the fact that the population is astonishingly homogenous: the Han people account for 91.5% of the population, making it by far the largest ethnic group in the world, indeed the largest ever ethnic group in history.

Because of its sheer numbers of people great emphasis is placed in Chinese culture on the preservation of order, on respect for others, on certain rules of social behaviour.  Above all, the Chinese fear disorder, chaos and anarchy, and for good reason as history testifies.

Meritocracy

To govern this huge society, wisely and well, the Chinese consciously developed a system of governance, which, as I mentioned earlier, is based on meritocracy.  It goes back not just for centuries but for over two millennia, and which has no historic or contemporary parallel elsewhere.

This meritocratic system explains the successful transformation of the Chinese economy over the past four decades, and gives every confidence it will be completed as planned by 2050.

I am neither naïve nor blind to Chinese failings, past or present.  It is part of the human condition to fail but it is less common to learn from mistakes: in management speak, to learn from feedback.

But that is what the Chinese have done over the centuries, to the great benefit of themselves, and the world.

In a previous lecture on the Twelfth Five Year Plan I examined the Chinese way of learning by doing: “to manage to cross the river by feeling the stones”,  as Deng Xiaoping put it.  He also advised that one should extract the truth from facts. Wise advice.

That is the Chinese way which is invaluable when it comes to tackling climate change by way of adaptation, mitigation and prevention.

You see, I am not only a believer in the greatness of China, as is obvious, but also a believer in the realty of global warming.

This is no longer a matter for debate, or doubt.  It is a scientific fact as real as the roundness of the earth.

Carbon Emissions

It is caused by the Green House Effect which was first discovered by the Irish scientist, John Tyndall, born in Leighlinbridge, County Carlow, the man who explained why the sky is blue, a scientific genius and one of the greatest men of science in the 19th century.

Thanks to him we now know that greenhouse gases absorb solar radiation.  He performed the first experiments on radiation absorption in 1861.   There was a natural balance of these greenhouse gases in the atmosphere prior to industrial times.  It is possible to conclude that a stable quantity of greenhouse gases was a condition that had to exist for our species to emerge.

Industrialization has lead to an explosive release of greenhouse gas emissions.  Carbon is the basis of almost all of our energy production whether it be in liquid form as oil, in solid form as coal or lignite, or in gaseous form as natural gas.  There has been a massive buildup of greenhouse gases in the atmosphere since the industrial revolution began in the mid 1700s. They capture radiation and warm the climate.  Many of these gases can remain in the atmosphere for tens to hundreds of years after being released.

The most prevalent is carbon dioxide, Carbon dioxide is constantly being exchanged among the atmosphere, ocean, and land surface as it is both produced and absorbed by many microorganisms, plants, and animals. However, emissions and removal of CO2 by these natural processes tend to balance.

These carbon emissions are primarily produced by burning fossil fuels, that is, coal, oil and gas used in the generation of electricity, for power, heating and cooling and, of course, in transportation.

Carbon dioxide accounts for about three quarters of total green house gas emissions but worryingly these emissions rose by 42% in the twenty years from 1990 to 2010.

The 2°C Limit

According to the US Environmental Protection Agency the total warming effect from greenhouse gases increased by 36% between 1990 and 2014.  The warming effect associated with carbon dioxide alone increased by 28%.

There is an overwhelmingly scientific consensus, such as in the findings of the Intergovernmental Panel on Climate Change, that the rise in global temperature must be kept below 2°C when compared to the pre-industrial era. Beyond that, there will be catastrophic and irreversible climate change.

It will lead to drought and desertification, storms and floods, rising sea levels, which will engulf coastal areas and threaten the world’s largest cities, like New York, the destruction of millions of species of flora and fauna, and, most ominously, a major reduction in the availability of arable land and the consequential decrease in agricultural output and food production.

What Has To Be Done

Scientists have put a number on what has to be done.  The pre-industrial level of CO2 concentration in the atmosphere has been estimated at 270 parts per million.  It is now over 400 and the red line is 450 parts per million, at which point the temperature increase will reach 2°C.

A World Bank Report of two years ago called “Turn Down the Heat” forecast that the temperature increase could be as high as 4 degrees, and in the worst case scenario could hit 6 degrees. These would be calamitous increases and were they to happen then human life as we know it would cease to exist.

That report was produced by the Potsdam Institute of Climate Change Impact which I visited two years ago in Berlin and at which I spoke on the Supergrid.

Some doubt the CO2 concentration could rise that far.  I don’t.

Global carbon emissions from fossil fuels rose from about 600 million metric tons in 1900 to over 6,000 million by 1990 and had shot to over 9,000 million metric tons in 2010.

These figures come from the US Department of Energy, Oak Ridge National Laboratory and can be taken as reliable.

In truth, Lord Mayor, Ladies and Gentlemen, carbon emissions at present levels pose a threat to our very existence as a species.

That is why we had the agreement at COP 21 in Paris last December.

COP 21

The Conference of the Parties to the UN Framework Convention on Climate Change met in its 21st session from 30 November to 11 December last year in Paris with 38,000 representatives from 195 countries.

It was one of the largest international gatherings in history and certainly the most momentous since the establishment of the United Nations itself in 1945.

Under the chairmanship of France, the conference agreed to hold the increase in global average temperature to “well below 2°C above pre-industrial levels” and to pursue efforts to limit the temperature increase to 1.5 degrees.

This is not only a historic but also a heroic ambition.

Paragraph 17 of the Agreement notes that much greater emission reductions will be required than those currently intended in order to hold the increase in the global average temperature to below 2 degrees.  Various measures were agreed among the parties to reduce carbon emissions to the levels necessary to keep global warming within a 1.5 degree limit.

Many people had doubted it, me included, if a global agreement of this sort was possible and some feared a repetition of the disaster at Copenhagen five years ago when nothing was agreed.  In the run up to Paris it was obvious that everything ultimately depended on China.

The Role of China

In a nutshell, China would make or break the agreement because a fractured European Union could not do it on its own, the United States was unwilling, or incapable, of taking the lead and the developing world was suspicious of measures that would impose costs they could not bear.

Without a Chinese initiative and political impetus there would have been no agreement in Paris.

China is seen by most developing nations as an honest broker.  It is seen as one of their own, a poor country that has got rid of the oppressor and has used it’s freedom to create a better life for it’s citizens.  It has never invaded other developing countries, and following it’s principle social and cultural construct of Mianzi it trades for the commodities it needs to grow it’s economy.

Deng Xiaoping had famously said, “Keep a cool head and maintain a low profile.  Never take the lead – but aim to do something big”.  However, economic success and the enhanced political prestige that goes with it have changed the geo-political context in which China operates.

In the five years between Copenhagen and Paris, China’s place in the world had changed dramatically.  While Europe and the US suffered from economic stagnation the Chinese economy grew by a factor of 2 in the past 8 years.  It has become the largest economy in the world when measured in purchasing power parity.

That brought responsibility.

Today’s China can no longer maintain a low profile.  At Paris it had to take the lead but in keeping with Deng’s advice China did aim to do something big, and, what is more, it succeeded.

China played a decisive role at COP21 in leading the global community to its historic agreement on combatting climate change.  At a crucial point in the lead up to the negotiations it committed itself to a major reduction in carbon emissions and set the bar so high that other countries were either inspired or shamed into following suit.

China also took the lead in financing the climate change actions of the poorest countries in the world, those most affected by drought, floods or rising sea levels.  This initiative, amounting to over €3 billion, smoothed the way for the global agreement and it is clear, to use a phrase of Karl Marx, that China was the midwife of history in Paris.

Prediction

China’s new leadership role did not come as a surprise to me, having long studied the culture and history of China and having done business there with Chinese companies for many years.

Indeed, for the past five years I have been predicting that this is precisely what would happen.

Having grown phenomenally over the past four decades China has restored its political prestige and resumed its role as a global economic player and at COP 21 it used that political influence and economic muscle to great effect.

It did so not only in creating a new international order based on cooperation and mutual respect but also in pursuit of its own national goals.

It so happens that the two coincide, for this reason.

The Unique Threat to China

China is a semi-desert and 60% of its landmass, mainly situated in the west of that vast sub-continent, has more evaporation than precipitation.  In contrast, the eastern and southern parts are incredibly fertile but depend on the great river systems comprising the Yangtze, the Pearl River and the Yellow River, to irrigate the vast plains of the south and east.

They emanate from the Himalayas and elevated areas adjacent to Tibet. This ecosystem makes China particularly vulnerable to climate change because the hot moisture laden winds from the Indian Ocean travel in a north easterly direction and deposit the bulk of their precipitation in the great mountain ranges, which include the Himalayas.

Here they are formed into glaciers, which themselves are the source of the three great rivers – and herein lies the threat from global warming, which could trigger the following chain reaction.

Global warming is interfering with the accumulation of glaciers on the Tibetan Himalayas and Kunlun Mountains. The temperature rise in these mountains is six times higher than it is in the plains below.

Glaciers are beginning to melt and retreat.

This could affect their ability to irrigate the lands of the south and east of the Chinese sub-continent and this is the core of the threat to the very foundation of Chinese civilisation because most of China’s population derives its protein from vegetables and fruit.  These amount to some 56 percent of the daily protein intake.

Vegetables alone make up 39 percent of consumption.

So any threat to the irrigation system which produces this protein has the potential to reduce China’s ability to feed itself and so undermine the very foundations of a civilisation over three thousand years old.

This is why the Chinese government has got real about climate change.

Arguably it is the country most under threat from climate change and the government has responded with intelligence and decisiveness.  A 900 page report published around the time of COP 21 showed that temperatures in China had already increased by 1.5°C and that explains the Chinese zeal to find an international solution and to devise a domestic response to global warming.

The ETS Response

The intentions of the State Council, the Communist Party and the Peoples’ Congress were outlined in the Eleventh Five Plan, and elaborated in the Twelfth Five Year Plan, on which I lectured in the Institute of International and European Affairs some five years ago.

The plans indicated that China would do something that had so far evaded the European Union or the United States, and that was to introduce an effective Emissions Trading System and thereby put a price on carbon.

A carbon price that truly reflects the environmental damage caused by burning fossil fuels would be a game changer by progressively pricing coal, oil and gas out of the market and replacing them with renewable energy.

That is why the Emissions Trading Scheme was so vigorously contested in the European Union by the coal lobby and Big Oil.  That is why carbon pricing is detested by the coal lobby in the US, led by Koch Brothers who fund the biggest of the Super Pacs and thereby finance candidates opposed to restrictions on the use of coal.

And, of course, Big Oil is even more powerful in the States than it is in Europe.

Now it is well known that coal plays a predominant role in the production of electricity and cement in China. As a result, China is the world’s largest emitter of carbon.  According to a recent study, reported in the journal Nature, about three quarters of the growth in its global emissions of carbon between 2010 and 2012 came from the burning of fossil fuels and cement production.

China’s response prior to COP 21 was a pledge to peak emissions by 2030 and to curb carbon intensity by between 60 and 65% below the 2005 level.

 This was a credible undertaking because as early as 2011 China had set up pilot carbon trading schemes in seven cities, following Deng’s dictum of learning by doing.  Based on the experience of these experiments, which started in Shenzen with 640 companies, a national emissions trading scheme will be implemented next year.

As I said, the aim is to have emissions peak in 2030 but many observers believe it will achieve this goal earlier, perhaps even before 2025.  Indeed, a new alliance of pioneer cities was announced last September, which intend to peak earlier than the national goal.

So, there can be no doubt that China is on track to launch its national carbon market in 2017, which will be the largest in the world. The market will use a cap-and-trade system, with eight industries obliged to either reduce emissions themselves or buy credits from others who do.

The petrochemical, power, chemical, construction material, nonferrous metal, steel, paper and aviation sectors will all be covered by the market.

Companies within these sectors that consumed at least 10,000 metric tons of coal per year (between 2013 and 2015) will be given mandatory emissions reduction targets. Specific quotas will be issued later this year.

Carbon Pricing

The success of the scheme will, of course, depend on the cap to be placed annually on emissions. If these are too lenient there will be insufficient downward pressure on emission levels and the carbon price will be too low.

To be effective I estimate it will have to be about $20 per tonne, compared to around $30 per tonne in Europe.  I believe the Chinese will succeed in doing it simply because their meritocratic bureaucracy is professionally equipped to devise an effective scheme and because policy decisions of this magnitude are obeyed and implemented.

The Chinese way of doing things will ensure that the Emissions Trading Scheme will work.  Its success will encourage other countries to follow suit and will, as I have argued these past three years, lead to a global emissions trading system, even including the United States.

Renewables

It follows that if the use of fossil fuels is progressively reduced that renewable energy has to be expanded at the same pace.  The Chinese plan is to have 15% of its energy from non-fossil fuels by 2020 and 20% by 2025.

As an integral part of its “get real” approach to renewables, China is introducing a green dispatch approach in the power sector based on guidelines which will require grid operators to turn first to the least polluting source of power, such as solar and wind.

These two technologies are mature by now and are cheaper than coal.  My company, for example, is building solar and wind plants in South Africa that are cheaper than new indigenous coal and you can take it that the same situation applies in China.

It is important in this context to note that China has the world’s largest installations of wind and solar.  By the end of 2015, China had 120 gigawatts of wind power and 43 gigawatts of solar, along with 320 gigawatts of hydro.  According to the Global Wind Energy Council it now accounts for about one third of the world’s installed wind energy capacity.

And according to Bloomberg News this year alone China will install 20 gigawatts of wind and 15 gigawatts of solar, i.e. 20,000 MW of wind, 15,000 MW of solar in one year.

This is a phenomenal amount of new energy.  To put it in context, the total installed capacity in Ireland is about 8,500 megawatts and last year we only managed to install 224 MW of wind.

Transportation

It’s obvious that the transition to a low carbon economy must include the decarbonisation of transport and here China has led the way, becoming the world’s biggest producer and consumer of electric vehicles.  EV sales in China are set to top 220,000 units this year, with the US market at 180,000 and worldwide sales at 600,000.

China is promoting the use of electric vehicles through a combination of free parking and registration, insurance subsidies, carpool lanes and access to highways on days when pollution is so bad that other vehicles are heavily restricted.

EVs only make sense from a green perspective if they are powered by electricity generated from renewables and here they play a dual role in not just reducing emissions but in acting as a giant storage system.   Storage is key to the future because solar is self-evidently restricted to the hours of sunshine whereas wind power is variable.  A back-up technology is needed.

So the challenge ahead is to devise cost effective storage systems in order to ensure continuity of supply.  EVs have a role to play because when the cars are not in use they can be plugged into the grid not just to be charged but to store electricity and feed it back to the grid when needed.

This will be a feature of so-called smart-grids whereby all electric devices are linked together in real time so as to balance supply and demand.  China is developing smart grid technology, as well as the Supergrid based on High Voltage Direct Current – to my mind the indispensable component of a renewable power system.

The transformation of the power system is well under way.  Fossil fuels will be phased out as planned and renewables will become the only source of power.

Conclusion

Let me conclude, Lord Mayor, Ladies and Gentlemen.

By now it is obvious that China has restored itself to the place to which it is entitled in the great scheme of things.  It is now a global player politically and will be by far the world’s largest economy in mid century.

It faces a unique threat, however, from global warming.  The eco-system that has sustained the civilization for millennia is endangered by a consistent rise in global temperature that is particularly severe in the Himalayas, the source of its great river systems and the basis of its food production.

China’s response to this threat has been in keeping with its long established system of government based on a meritocracy. It plans to phase out the use of fossil fuels and replace them with renewable energy backed up by measures to increase energy efficiency and the reorganisation of the economy.

It has every chance of success because of its meritocracy.

There is a huge intelligence about those who ran the country at national, provincial and city levels.   This intelligence is superbly organized, and managed. It is the great comparative advantage which China has created for itself, and which no other nation, big or small, has been able to accomplish.

I believe that China will succeed in the task it has set itself, both to the benefit of its 1.4 billion inhabitants and to the rest of the global population.

It has got real about renewable energy because it had to, because there is no alternative to the transformation to a low carbon society.  We either succeed or perish.

I believe we will succeed, and that China will lead the way in saving the planet and its peoples.

Thank you for listening.

 

 

 

 

, , , , , ,

Comments are closed.