Carbon Trading in China

Transcription

1 Carbon Trading in China

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3 Carbon Trading in China Environmental Discourse and Politics Alex Lo University of Hong Kong, Hong Kong

4 Alex Lo 2016 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act First published 2016 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Lo, Alex, 1981 author. Carbon trading in China: environmental discourse and politics / Alex Lo. pages cm Summary: Carbon trading has the potential to become the mainstream climate change policy approach, finding its way in China, the world s largest greenhouse gas emitter and second largest economy. Focusing on political dimensions, Alex Lo explores the discourse of carbon trading in this country. As a socialist market economy, China emerges as an exception, where liberal forms of political and market norms do not prevail. The author provides a review of the policy development process and institutional issues about the construction of carbon markets in China. He also presents a critique about the political origins and drivers of the national preference for market institutions, and narratives about the relationship between national power and climate change action. Provided by publisher. 1. Carbon offsetting China. 2. Emissions trading China. 3. Carbon dioxide mitigation Economic aspects China. 4. Environmental policy China. I. Title. HC430.P55L ' dc Typeset by MPS Limited, Chennai, India.

5 To Winnie Hui

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7 Contents List of Figures and Tables Preface Acknowledgements List of Abbreviations A Note on Chinese Names viii ix xii xiii xv 1 New Episode 1 2 Political Economy of Carbon Trading 13 3 Political and Policy Background 35 4 Who Is Leading? State or Finance? 51 5 Policy Change, Discourse, and Storyline 80 6 The Discourse of State Power, Sovereignty, and Carbon 97 7 Historical Parallels, Recurring Storylines The End of History? 134 Appendix 144 Notes 155 Bibliography 158 Index 167 vii

8 List of Figures and Tables Figures 1.1 World s top five greenhouse gas emitting countries (2012) Total CO 2 emissions from BRIC countries ( ) China s CO 2 emissions per GDP and capita ( ) Indicative estimates of the number of approved and registered Chinese CDM projects between 2005 and Trade prices of Certified Emission Reduction (CER) and important events affecting the prospects of emissions trading between 2010 and Schematic representation of the carbon trading discourse of China 112 Tables 3.1 Examples of sources and scales of climate financing in China Population, GDP, and assigned emissions reduction targets of the Chinese ETS pilot sites Status of the Chinese pilot ETSs Indicative list of carbon exchanges in China Sampling schema for discourse analysis 100 A1 Indicative list of carbon exchanges in China with details on shareholders identified 144 A2 Work schedule of the implementation plan of Guangdong ETS 151 A3 Sources of Chinese news articles cited 153 viii

9 Preface All climates are changing. When the first draft of this book was completed, a resounding video documentary about the dreadful air pollution in China came under public spotlight. The film is called Under the Dome ( 穹 頂 之 下 ), directed by Chai Jing, a former Chinese state television news anchor. Chai skilfully weaves personal experience with a widespread environmental threat in urban China, that is, smog, and unveils how environmental policies and regulations fail to protect the public from the deadly smog throughout Chinese cities. The informative and well- presented documentary triggered massive public attention from all levels of society and achieved phenomenal success in public debates. It attracted more than 100 million views across the country in just a few days and some 280 million posts on Weibo, a microblogging site. 1 The film is put on par with Rachel Carson s Silent Spring and Al Gore s Inconvenient Truth. Chai successfully interviewed a number of Chinese governmental officials and experts, including some high- ranked figures, who are not easily accessible to the public and journalists. She took a critical stance against current regulatory and institutional practices that are deeply influenced by vested interests. In China, critical reports of this kind are usually blocked by the government. Under the Dome is an exception, which has blessing from multiple government agencies. Some commentators believe that Chinese state leaders have sought to make use of this opportunity to clean up and restructure the poorly managed state- owned oil and energy monopolies, previously led by a very powerful man in Chinese politics now arrested for organised corruption. The political climate is changing. Fundamental changes in energy and environmental governance are also under way. Regulators gain power, polluters receive penalties, and market mechanisms are being introduced. The hands- off approach is set to go. All efforts are being made to protect the environment. The green light given to Chai signals that Chinese leadership is changing their mind about how the environment should be governed. Every now and then I come across people, both locals and expats, celebrating the great efforts China has done for the environment over the years. True, these efforts are commendable and unprecedented by virtue of the size of the nation. But very little in the official ideology and ix

10 x Preface power relations that define Chinese politics is intrinsically ecological. China has no politics of the environment, but only one of economic and social development that has environmental implications, such as what Under the Dome has uncovered. Most environmental protests and debates in China are essentially a reaction to a pressing social or political issue, for example, public health, livelihood, housing, income inequalities, territorial and diplomatic disputes, and so on. These fierce protests and debates are rarely led by environmentalists, who tend to avoid confrontation. The environment per se is not always the main issue of concern. Behind the veil of environmental policy lies different forms of social, economic, and political struggles confronting the people and the country. The critical research orientation goes well beyond my university training in business and finance. Since I started investigating China s climate change politics, I have found a strong interest in linking it to wider issues such as nationalism and social capital. Within the Chinese academia, there are all sorts of disincentives, restrictions, and taboos preventing critical analyses and theoretical innovations. New ideas came to my mind not when I lived in Hong Kong, now part of the People s Republic of China, but when I felt lost during my time in Canberra. Nonetheless I gained food for thought from my advisors in Canberra. Professor Clive Spash, now in Vienna, brought me to the world of ecological economics and the politics of carbon trading both the knowledge and a political event he personally experienced. Professor John Dryzek at the University of Canberra showed me a new way of thinking about politics and public policy, on which my current research approach is based. I am always thankful for their mentoring and support both in the past and present. Without them, my academic life would have been entirely different. My academic journey began in Hong Kong nearly a decade ago. I am especially grateful to Professor C. Y. Jim at the University of Hong Kong for his advice and help over these years. I would also like to express my gratitude to Professor Brendan Mackey, Director of the Griffith Climate Change Response Program at Griffith University. The generous support and seed funding offered by Brendan and his programme crucially contributed to my research and this book project. I also appreciate the encouragement and support from my former colleagues at Griffith University, including Jason Byrne, Michael Howes, Paul Burton, Aysin Dedekorkut- Howes, Caryl Bosman, Zsuzsa Banhalmi- Zakar, Johanna Nalau, and Merrill Bowers. Special thanks go to Michael Howes for allowing me to include our co- authored papers in this book.

11 Preface xi Part of the research leading to this book was completed with assistance provided by Bixia Xu, to whom I am indebted. I am also grateful to all those who helped my fieldwork in China, especially Yu Xiang, Zheng Yan, and Xie Xinlu in Beijing, and the finance executives we interviewed as part of the fieldwork. The project was funded by research grants offered by the Chinese Academy of Social Sciences and the Academy of the Social Sciences in Australia under the Australia China Joint Action Program, and the Regional Studies Association under the Early Career Grant Scheme. No-one has been more important during this process than my wife Winnie Hui. Her encouragement, patience and care helped me get through many ups and downs during the months leading up to the completion of this book. I decided to move back to Hong Kong after six years in Australia not an easy choice for us. Her understanding and unreserved support helped us overcome all the difficulties involved in this transition. This book is dedicated to her. China s 1.3 billion people deserve respect and recognition, not only because of their stunning economic achievements but also the increasingly humane ways of dealing with nature. The nation has made great progress on this front, but the climate has little time to wait.

12 Acknowledgements I gratefully acknowledge permission to reproduce copyright materials for Chapters 4, 6, and 8 from the following publishers, respectively: Taylor and Francis Ltd for their permission to reprint the article titled Powered by the state or finance? The organization of China s carbon markets, which originally appeared in Eurasian Geography and Economics, 54 (4), by Alex Lo and Michael Howes, and to re-use sessions of the article titled Challenges to the development of carbon markets in China, which originally appeared in Climate Policy, DOI: / , by Alex Lo. MIT Press for their permission to reprint the article titled Power and carbon sovereignty in a non- traditional capitalist state: Discourses of carbon trading in China, which originally appeared in Global Environmental Politics, 15 (1), by Alex Lo and Michael Howes. xii

13 List of Abbreviations APEC BP CBEEX CCX CDM CEF CER CME CNKI COP CPC CPRS DNA EC ETS EU FYP GDP GHG IEA IPCC LME MEP MOF NAP NCGCC NCGCCS Asia Pacific Economic Cooperation British Petroleum China Beijing Environment Exchange Chicago Climate Exchange Clean Development Mechanism Clean Energy Future Certified Emission Reduction Coordinated market economy China National Knowledge Infrastructure Conference of Parties Communist Party of China Carbon Pollution Reduction Scheme Designated National Authority European Commission emissions trading scheme European Union Five- Year Plan for National Economic and Social Development gross domestic product greenhouse gas International Energy Agency Intergovernmental Panel on Climate Change liberal market economy Ministry of Environmental Protection Ministry of Finance national allocation plan National Coordination Group of Climate Change National Coordination Group on Climate Change Strategy xiii

14 xiv List of Abbreviations NDRC NGO NPC OECD PES PRC RGGI SEPA SOE UN UNFCCC WCI WWF National Development and Reform Commission Non- governmental organisation National People s Congress Organisation for Economic Co- operation and Development payment for environmental services People s Republic of China Regional Greenhouse Gas Initiative State Environmental Protection Administration State- owned enterprise United Nations United Nations Framework Convention on Climate Change Western Climate Initiative World Wide Fund for Nature

15 A Note on Chinese Names In this book, when referring to Chinese personal names in the main text, I have followed the convention of listing the family name first, followed by the given name, for example, Lo Alex. Chinese names in the bibliography are listed alphabetically by family name, that is, Lo, Alex. xv