Is China Now the Climate Change Good Guy?

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A resident rides a motorbike past the Helanshan Wind Power Plant in Ningxia province on Sept. 23, 2009

The U.S. entered this week's round of climate negotiations as the global bad guy, a holdover from eight years of barely veiled contempt for the process from former President George W. Bush's Administration. But China wasn't far behind. The world's biggest country is now its biggest carbon emitter, and its sheer rate of economic expansion — fueled chiefly by polluting coal — ensures China won't lose that spot anytime soon. While the U.S. earned the world's antipathy for refusing to sign on to the Kyoto Protocol, China, as a developing nation, had no requirements under that pact — and rarely seemed interested in stepping up to its responsibilities within the U.N. climate-change process. While the standoff between the U.S. and China — over who needed to cut carbon emissions and who needed to pay for it — has been the main reason for the deadlock in global climate negotiations over the past few years, both countries deserved blame for failing to take the lead internationally.

The world knew the U.S. would change when President Barack Obama took office, given the importance he placed on climate change during his campaign. But coming out of the U.N.'s high-level meeting on climate change on Sept. 22, it is China that has managed to seize the moral high ground — fairly or not. President Hu Jintao told the U.N. that by 2020 China would increase the share of renewable and nuclear power in its energy supply to 15%, plant 40 million hectares of forest, increase investment in a greener economy and reduce its carbon intensity — the amount of economic value it gets per unit of power — by a "notable margin." Many of those domestic goals had already been announced, but the tone of Hu's speech made an impact on his audience. "I think China has provided impressive leadership," said Al Gore after Hu's talk.

Now the world's fastest growing big economy is ready to move into one of the world's fastest growing financial markets: carbon-trading. The China-Beijing Environmental Exchange (CBEEX) and the French emissions exchange BlueNext announced on Sept. 23 that they were putting together a carbon market standard for China. Although details at the announcement were fuzzy — aside from the fact that it would be called the Panda Standard — the move is an early step toward creating a voluntary carbon-trading system in China. Although China is still very far from accepting the mandatory carbon caps used by countries covered by the Kyoto Protocol — Hu emphasized the importance of economic development first in his speech — the Panda Standard is a sign that China could see a stake in the creation of a global carbon market. "Any carbon market inside China has the potential to be a game changer," says David Yarnold, the executive director of the Environmental Defense Fund (EDF).

China is already involved in the emerging global carbon market — companies in the developed world can sponsor carbon-cutting projects in China under the Kyoto Protocol to earn offsets. But the CBEEX-BlueNext collaboration could allow Chinese companies themselves to begin to get involved in the offset market, just as voluntary markets in the U.S. have done for American companies. For now, the standard will focus on agriculture and forestry projects, with expectations that it will grow to cover Chinese transportation, power and manufacturing. "We think that Chinese companies are very aware of their greenhouse-gas emissions and climate change and that they're keen to support a voluntary carbon-reduction initiative in China," says David Ralpin, a BlueNext official.

The key word is voluntary — China is a long way from accepting the need to put an absolute cap on its carbon emissions. Hu didn't promise to actually reduce Chinese carbon emissions, but simply for China to become more energy efficient — something it needs to do anyway. "China knows that if it continues consuming and developing the way it has been, the machine will collapse," said Yvo de Boer, the head of the United Nations Framework on Climate Change. But China hasn't even said how much it will improve its carbon intensity. Xie Zhenhua, China's top environmental official, told reporters only that "we are studying this issue, and we should be able to announce a target soon."

Still, it's a notable change for a country that's been playing its cards tightly on the diplomatic stage. The U.S., after all, has yet to say for sure how much it is willing to cut its own carbon emissions, thanks to the slow movement of the Senate, which still has yet to fully take up a cap-and-trade bill. Both countries will need to do more — much more — if the U.N. climate-change summit in Copenhagen is to be a success, and they'll need to be more straightforward. But as the EDF's Yarnold said in a speech today, "China is no laggard in the race to develop clean energy and reduce global- warming pollution. In fact, it is moving ahead." If the U.S. isn't careful, it might get lapped.