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Consumer mind-set key to success of China’s green policies

by Takashi Kitazume

China has set ambitious goals to deal with its energy and environmental problems, but the challenge lies in their implementation, and that will require not just government policy decisions but changes in consumer awareness and behavior, said Zha Daojiong, a professor at Peking University’s School of International Studies.

Despite all the rosy numbers on its spectacular growth, “China is a very weak country . . . full of vulnerable points,” Zha told the March 24 symposium.

China achieved 11.4 percent growth in its gross domestic product in 2007, but Zha said people should look at what contributed to this rapid growth.

In 2007, steel production increased 17 percent, copper output by 28 percent and aluminum production by 28 percent, and these heavy industries account for about 40 percent of China’s energy consumption.

“We know where to target” because these industrial sectors have the greatest potential for energy saving, he said.

China’s energy consumption in 2007 fell by 3.27 percent from the previous year to 2.65 billion tons of coal equivalent. One big problem, Zha said, was the 14 percent rise in electricity consumption because it meant more use of coal.

Zha said coal will continue to be China’s primary source of energy because the country has sufficient domestic supplies. The question, he added, is whether reliance on coal is environmentally sustainable.

He also cited the safety problems in China’s coal mining industry, where the death toll hit 6,000 in 2007. “China had about the highest death rate of coal mining per tonnage,” he noted, adding that a majority of the country’s mining companies are small operators that do not invest in even basic safety standards.

The Chinese leadership considers environmental problems as one of the major challenges facing the country.

The government has adopted some basic policy instruments, including mandates with specific targets, for example, to cut energy intensity by 20 percent and increase alternative energy use by 10 percent, Zha noted. The problem, he said, is that “often these mandates are not backed by financial support from the central government.”

One reason corruption is so rampant in China, Zha noted, is that the country has so many government agencies that are not funded by the central government. “The fundamental problem is that we have mandates and targets, and the central government would demand that the local governments do this and that, but it does not follow these demands with finance,” he said.

On energy saving, China has a goal of saving 240 million tons of coal equivalent in the five years to 2010 compared with the 2001-2005 period. “The issue is we need to have effective policy schemes” to achieve the goals, Zha said.

The professor said he believes that at the central government level, China has “pursued nearly all policy options available” so far to increase energy efficiency and reduce pollution. “It’s a matter of adaptation.”

One basic problem, he said, is that China’s end-use energy price is too cheap.

Air pollution from vehicle exhaust has become a serious problem in many big Chinese cities. Automobiles in China were responsible for 70 percent of the country’s refined oil consumption in 2007 as 8.6 million new vehicles were on the road in that year alone, Zha said.

“How do you get automobiles off the road? You make it more expensive to drive,” he said. However, debate in China for introduction of a fuel tax — as a price signal of the need for energy conservation — has dragged on for 14 years, due not only to resistance from vested interests but to “the general public inertia that equates good life to low price,” he added.

“The truly difficult job is to get our consumers to pay” — to find the right policy mix to have consumers, including industrial consumers, pay for more efficient energy and a cleaner environment, he said.