Is China Winning the Energy Race?

If the energy bill dies in 2010 -- as it almost certainly will -- climate change reform enters an indefinite purgatory, and the United States' broken energy policy rolls along, fuming all the way.

When I expressed sadness at the prospect of the American Power Act's death, commenters noted that we can't expect to reduce global emissions without getting big countries like China on board. They're right. It made me wonder whether China might be "on board" with green tech and carbon pricing already.

To know more, I spoke with Julian Wong, an expert in Chinese energy policy at the Center for American Progress. An edited version of our conversation follows:

My readers are always asking how climate change legislation in the U.S. could impact China's energy policy. In broad strokes, how is China moving on green energy already?

It's across the board. In China they have for several years already realized that their direction is not sustainable. They have undertaken some of the most ambitious programs in energy efficiency and renewable energy deployment in the world. They've created medium and long term plans and set national numerical targets, such as producing 100 to 150 Gigawatts of wind energy by 2020. There is a national goal of reducing energy consumption per unit of GDP over the 2005 to 2010 term by 20 percent. In the run-up to Copenhagen they promised to achieve a 40 percent reduction in carbon intensity.

Have they kept up with their promises in the last few years?

Well, we saw great progress between 2006 and 2008. But the financial crisis forced them to respond with a stimulus package that allocated a lot of money to infrastructure projects that had the result of stimulating heavy industry. That caused energy efficiency to decrease. But the central government has taken that setback very seriously.

We're having trouble convincing lawmakers to pass significant energy legislation in the States because many of them don't see an upside in aggressive legislation. What good does China see in all these energy plans?

Five things. The number one concern is energy security. China is already a net importer of coal, despite conventional wisdom that they have abundant coal resources. That's because a lot of the supply is in remote areas while the demand is more on the coast, and there's inadequate logistics capacity to move the coal around. Also, they already import 50% of their oil. Their auto market is the biggest in the world, yet it's just getting started. Car penetration rates are a fraction of the U.S. As it continues to grow, China will see increased demand for petroleum products.

Second, pollution is a factor. Local pollution incidents create social disruption that has led to citizens' unrest. This is important because the Chinese' mandate in power is predicated on social stability. Three, China sees the investment in green tech as a driver of innovation and economic growth. They need to conserve resources and are looking for less resource intensive sources. Fourth, tech innovation will create jobs and lift the nation. Fifth, they feel international pressure to start acting on mitigating climate change and they want to be seen as a partner in this field.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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