“China is on the right track”

How has the country’s low-carbon path developed – and what lies in its future? chinadialogue spoke to Wu Changhua, director for Greater China at the Climate Group.

Wu Changhua is Greater China director at the Climate Group, leading their operations and strategic development across the region. She was previously the executive director of China operations for environmental consultants ENSR, where she worked closely with multinational corporations to support their business development in China and their compliance with Chinese regulations.

Wu directed the programme for China studies at the World Resources Institute in Washington, DC. She has also consulted for transnational organisations, such as the World Bank, the United Nations Environment Programme and United Nations Development Programme. She has been a fellow of World Press Institute and fellow of the Temple Law School’s US-China roundtable on environmental law and policy. Wu holds two graduate degrees, one in law from Chinese Academy of Social Sciences and the other in environmental policy from University of Maryland.

chinadialogue (cd): The Climate Group’s two annual China’s Clean Revolution reports have described great successes and a bright future for China’s low-carbon economy. However, many believe that China’s low-carbon economy faces a difficult future. How do you reconcile these standpoints?

Wu Changhua (WC): I think the prospects are good. There is an international trend towards low-carbon development, so we are on the right track. Despite the economic crisis, China is sticking to its policy of developing the low-carbon economy – and you have to acknowledge the wisdom of China’s policy-makers there.

China’s new energy sector has recently shown some signs of over-expansion, such as duplicated investment, and there has been controversy over this. But we should look past those questions and ask why this is happening. For example, both China and the United States view solar cell technology as crucial. In the US, the government funds just a few companies: the clear leaders in the field. But in China, local interests mean funding is spread across many local firms; hence there is the repeated development of low-end technology. That has led to great losses and left some investors stumped. But the solution here is for the government to put things in order, not just to slam on the brakes.

In fact, our research uncovered a number of problems at Chinese firms. But we concluded that the overall trend, at home and abroad, has not changed. As the problems increase in number and size, so do the opportunities for development. These issues urgently need solving: there’s a huge potential market for Chinese firms there.

These issues are a reminder to policy-makers and to others. Even if we become a global leader, China’s low-carbon development will not be quick – and we are unlikely to lead on the world stage if we do not solve the many issues within our own borders. That reminder is a good thing, although we should not be overly cautious.

China’s circumstances mean that our foundations are not great; these issues are part of an inevitable process of exploration. Sometimes you need to knock into some walls before you find your way.

cd: During the low-carbon cities project, which the Climate Group organised this year, what was the attitude of local government and businesses towards the development of the low-carbon economy?

WC: We chose six Chinese cities in which to run demonstration projects aimed at solving local issues. The solar-powered LED lighting project in Guiyang, in Guizhou province, is underway. When Tony Blair and Jet Li visited in August it was already operating at scale. Preparations are underway for electric vehicle and green building projects in nine cities.

We were very encouraged by positive attitudes to low-carbon cities, both from local government and businesses. They are aware of energy-saving and emissions-reduction issues, and they proposed a lot of good measures. But sometimes they are a bit over-enthusiastic: some see excellent prospects for new energy and want to develop in this direction, so they fund projects blindly, regardless of whether the research-and-development capability or core technologies are in place. One energy-saving lighting company was somehow invited to install lighting for eight streets, but no data was gathered, the quality was not checked and once they were installed they were just left there. Ma Lun of Beijing Vantone Real Estate is another example: he is very keen on green issues and used lots of foreign environmental technology in his buildings, but it became over-complicated, and the residents don’t actually know how to use it.

It is still a step forward – the importance of low-carbon development is being recognised; they are very quickly learning how to research markets and make improvements. Shanghai has been working on a new energy plan for the twelfth Five-Year Plan, and they’ve realised that they need to focus their efforts on areas where they have an advantage, and there is a huge emphasis on proprietary innovation.

cd: What are the differences in awareness and action across different types of businesses?

WC: There’s no absolute way to classify this, but broadly speaking, the large, state-owned enterprises are already operating in international markets, so they are further ahead in terms of awareness on carbon emissions. Although China hasn’t yet committed to absolute reductions, these firms have made the necessary preparations – although they don’t publicise it at home.

We have also seen more carbon-aware entrepreneurs come out of the private sector in recent years. They may not be completely aware of the policy environment at home and abroad, but they give some thought to their low-carbon development strategy. Some of these are low-carbon firms: Broad Air, Suntech and Goldwind, for example – and they are proactive in pushing forward national low-carbon strategy and lobbying for policy support. Some property firms, such as China Vanke and Vantone, also promote green building, but China’s policies and standards aren’t yet in place.

Big purchasers, such as Walmart, have also started to play an incredibly important role in China’s low-carbon development. Some firms in their supply chains have already started to take action, but it’s hard to do that across the whole supply chain. Local governments want to provide jobs and increase GDP, so they sometimes use a light hand in supervision.

Unfortunately, some multinationals make use of China’s weak legislation and regulations to do as little as possible in this area, often operating double standards. The overall direction of low-carbon development among Chinese firms is excellent, but we need to know what our limitations are.

cd: What expectations do you have for climate-change conference in Copenhagen? What impact will there be on China?

WC: There’s not much chance of a miracle. US president Barack Obama’s administration is under pressure; he has little political capital left. They are unlikely to take the risk of concrete commitments at Copenhagen.

Personally, considering what is actually feasible, I think an agreement is possible. It should include several mechanisms: in particular, a financial mechanism – this is key. It is hard to say on technology transfer: I hope to see some feasible operating mechanisms come out of that. As for adaptation funds, the developed nations must make quantified commitments.

China has already done much more on climate change than the international community expected, and they can relax in the run-up to, and during, the Copenhagen meeting. All it has to do is explain what it has already done.

The real pressure on China is what to do after Copenhagen. Whatever agreement is reached, we still need to come back home and solve some real problems – area by area, company by company, as we map out a low-carbon path for China.

Homepage image from World Economic Forum