Comments (0)

By Elizabeth M. Lynch, October 7, 2009

The U.N. Climate Change Conference in Copenhagen is exactly two months away but has China and the U.S. made any headway in coming to terms with their differences on the climate change front?  In a new article published in the Tsinghua China Law Review,  senior attorney at the U.S. Environmental Protection Agency (EPA) Steve Wolfson offers a positive outlook on negotiations with recommendations on how the U.S. and China can move forward to reach a meaningful climate change agreement.

In “Gathering Momentum for U.S.-China Cooperation on Climate Change”  Wolfson reviews the issues that have plagued climate change negotiations between the U.S. and China and the progress that has been made:

• A Developed Country or a Developing Country? – China puts itself squarely in the developing nation category.  Developing nations were exempt from greenhouse gas emission targets for the Kyoto Protocol and will likely be again for the Copenhagen agreement.  But is China a developing country in the way that Cambodia or Ghana is?  Arguably no and given the fact that China surpassed the U.S. in 2007 for greenhouse gas emissions, the U.S. and other developed countries should push China forward in agreeing to some type of targets.
• Historic Responsibilities of the Western World – China rightfully claims that the planet’s current climate change crisis is a result of the centuries of development in the Western world.  China’s current development over the past 20 years has not caused the current crisis.  But the Western countries argue that, unless it limits its greenhouse gas emissions and works on its energy efficiency, China’s future development is what will make the present crisis into a death sentence for the world.  However, as Wolfson points out, there has been some movement by the U.S.  When Secretary of State Hillary Clinton visited China in February, she acknowledged the special responsibility of the U.S. due to its role as the largest historic emitter of greenhouse gases.  In his speech before the U.N. two weeks ago, President Obama also admitted to the historic differences between the U.S. and China in terms of greenhouse gas emissions.
• China’s Positive Progress on Controlling Carbon Emissions – Wolfson analyzes the various laws that China has passed to curb its greenhouse gas emissions and increase its energy efficiency.  He also takes note of China’s various initiatives to restructure its economy to improve its efficiency and reduce its emissions.

While Wolfson’s article offers much hope for U.S.-China progress on the eve of Copenhagen, he concludes on a slightly somber note, remarking on China’s inability to implement many of its national laws on the local level.  This is a problem that permeates all of Chinese society: the the Sanlu milk powder scandal last year, the recent and wide-spread lead poisoning  of children in villages that boarder factories, the importation of toys laced with lead from China; school buildings that do not withstand an earthquake; these are all examples of a regulatory system that fails on the local level.

China is sincere in its desire to be a leader in clean technology and to clean up its environment.  But its problem now is implementing any agreement that comes out of Copenhagen, and this is not because China does not want to; it is because China does not know how.

We at China Law & Policy have recommended in past posts and continue to recommend that U.S. policy makers seize the opportunity that Copenhagen offers to assist China with its legal development in the regulatory field.  Copenhagen should not just be about agreeing to targets; an agreement from Copenhagen should also include the U.S.’ commitment to provide resources on implementation and governance, knowledge exchanges between U.S. environmental regulators and Chinese environmental regulators, and an open-mindedness that it is going to take China some time to establish an effective regulatory scheme.  By assisting China with its regulatory development, the U.S. will not only make headways in establishing a greater sense of rule of law but could potentially benefit the lives of 1.3 billion people in a very real and tangible way.  Wolfson’s article reminds us of this.

Click here to Read Steve Wolfson’s Gathering Momentum for U.S.-China Cooperation on Climate Change.

Comments (3)

By Elizabeth M. Lynch, September 24, 2009

This past week the U.N. General Assembly in New York was filled with wave after wave of speeches and meetings dedicated to limiting global climate change.  With the December Copenhagen conference less than three months away, the question remains – has there been any progress?

On Tuesday, September 22, both President Barack Obama and President Hu Jintao (pronounced Who Jin-Dao) separately addressed the General Assembly, each discussing their country’s commitment to a global climate change agreement.   Their rhetoric was considerably more conciliatory, signaling that perhaps the two largest polluters of greenhouse gases are finding common ground.  The substance of their speeches though, indicated that there still remains a large division between these two critical countries.

Conciliatory Rhetoric

This past summer saw many important countries digging in their heels on climate change.  In July and August, both China and India adamantly stated that they would not agree to any type of defined targets that would limit their greenhouse gas emissions.  In June, the U.S. House of Representatives narrowly passed a climate change bill which received notable criticism from both sides of the aisle upon its passage, questioning the bill’s ability to pass the Senate.

But on Tuesday, President Barack Obama reinforced his Administration’s commitment to limit greenhouse gases, indicating his willingness to push his Democratic colleagues in the Senate to pass a climate change bill.  In response to the E.U.’s recent promise to assist developing nations both financially and technically in battling climate change, President Obama also committed the U.S. to help.

President Hu Jintao’s speech was heralded as a huge step forward for the Chinese.  President Hu affirmed his country’s

President Hu Jintao speaking to the U.N General Assembly on Tuesday, Sept 22, 2009

promise to tackle climate change and surprisingly mentioned China’s “mandatory national targets for reducing energy intensity and discharge of major pollutants…”

India also seems to be moving in the direction of targets.  In an interview with the Financial Times on Tuesday, India’s environment minister, Jairam Ramesh discussed the possibility that India could adopt legislation increasing its energy efficiency and thus having “implicit targets.”

Divisions That Could Hamper an Agreement in Copenhagen

Target: What is in a Word?
The press has largely been positive to President Hu’s discussion of “mandatory national targets for reducing energy intensity,” heralding such a step as China’s “first commitment to climate change targets” and that China “pledges to lead effort to combat climate change.”

While it is true that this is a step forward for the Chinese – never before have they used the word “target” in reference to climate change on the world stage – in no way is this a “carbon emissions target.”  In fact, China has been using “energy efficiency targets” domestically since 2005.  As John Romankiewicz explained on the Green Leap Forward, in China’s 11^th Five Year Plan passed in 2005, the Chinese government established a 20% reduction target in energy intensity from 2006 to 2010.  While this is a laudable goal, it still allows China to increase its carbon emissions since there is no cap – the calculation is relative to the percentage growth of GDP.

China’s goal is to cut energy intensity as a percentage of its GDP.  If GDP rises, a rise in energy use, as long as it is lower than the previous year, can still show a reduction in energy efficiency.  For example, China’s National Development & Reform Commission (NDRC) noted that a 4% rise in energy consumption in 2008, matched with a 9% increase in GDP for that year, resulted in a 4.2% decrease in energy intensity from the previous year (see Green Leap Forward).

Additionally, a focus on energy intensity only marginally impacts carbon emissions, a fact not lost on President Hu in his speech on Tuesday.  After committing China to set targets to reduce its energy intensity, President Hu vaguely addressed carbon emissions by noting that China will “endeavor to cut carbon dioxide emissions [inaudible in original speech but likely “as a percentage of”] GDP by a notable margin by 2020 from the 2005 level.”

China has certainly taken a step forward on approaching some form of targets.  Furthermore, by even mentioning targets, China implicitly commits to making those targets measurable and verifiable as Julian L. Wong from the Center for American Progress noted, something that China in the past was not willing to do.  So there has been progress which China should be rightly commended for.  But at this stage, to limit global warming to the U.N. target of 2º Celsius, the world community needs to push China to agree to carbon emissions targets.

Obama Adverse to China Being Defined as a Developing Nation?
Central to the requirement of carbon targets is the definition of “developing nation” and this was perhaps the greatest divide between the U.S. and China, and could possibly stall progress in Copenhagen.

For purposes of climate change negotiations, China has repeatedly portrayed itself as a developing country.  In his speech on Tuesday, President Hu dedicated around two-thirds of it to discussing the special circumstances of developing countries, implying that China is one such nation.

Under the previous international climate change treaty, the Kyoto Protocol of 1997, China was defined as a developing nation.  China is keen to keep this definition in Copenhagen for two reasons: (1) emission targets are not applicable to developing nations, and (2) developing nations can avail themselves of financial and technical aid provided by developed nations.

It is the second reason that appears to be more important to the Chinese.  In prior climate change negotiation simulations that global power participate in as practice for Copenhagen, the Chinese representatives do not budge unless there is an offer of technical or financial assistance from other countries like the U.S. or the E.U.  President Hu’s speech reiterated the importance of such assistance to the Chinese: “developed countries should take up their responsibility and provide new, additional, adequate and predictable financial support to developing countries…”

President Obama wholeheartedly agreed with President Hu’s sentiment to assist developing nations.  However, he

President Barack Obama before the U.N. General Assembly on Tuesday, Sept. 22, 2009

appeared to disagree with President Hu that China is such a country.  In his speech before the U.N., President Obama put China and the U.S. on the same level in assisting developing countries: “These [developing] nations do not have the same resources to combat climate change as countries like the United States or China do…” (emphasis added).

This division between the two countries regarding the developmental status of China could do one of two things: (a) completely derail any agreement in Copenhagen that includes both the U.S. and China, or (b) provide the compromise necessary to have the two largest emitters of greenhouse gases agree to a climate change agreement.  U.S. policy makers should look to the latter.  Agreeing to provide financial and technical assistance to China might just be the push necessary to get it to agree to carbon emission targets, a necessary goal to limit global climate change.

For a transcript of President Barack Obama’s address to the U.N., click here.

For a transcript of President Hu Jintao’s address to the U.N., click here.

Comments (0)

By Elizabeth M. Lynch, September 11, 2009

France's President, Nicolas Sarkozy

Does France’s president Nicolas Sarkozy read China Law & Policy?  Sure looks that way.  In an effort to promote carbon caps domestically, Sarkozy also called for any international climate change agreement to include a carbon tax on imports into Europe from countries that do not impose carbon emission caps.

In response, many economists argued that Sarkozy’s push for a carbon tax on imports could lead to alienating China from agreeing to any sort of emission caps in Copenhagen.  This is the same criticism lodged against the tariff provisions in the U.S. House of Representatives’ Climate Change Bill.

There is a real risk that these economists are right; China will begin to feel bullied and, for its domestic audience’s consumption, walk away from an international climate change agreement.  Although the Chinese government enjoys one-party rule in an authoritarian state, it is still susceptible to domestic public opinion, especially given the fact that nationalism runs very high.

But at least our European allies realize that any international agreement is a give and take; there are carrots and sticks.  On the same day that Sarkozy called for carbon tariffs, the European Union’s (E.U.) environment chief, Stavros Dimas, announced that the European Commission would pledge $3 billion per year to developing countries, including China, to assist with capping emissions and developing clean technologies.

A key issue for China in its lead up to Copenhagen has been financial and technological assistance from developed countries in implementing carbon emission caps or clean technology.  China has repeatedly stated that they will not be able to meet the requirements of an international treaty unless there is assistance from developed countries.

The E.U.’s pledge is the carrot in this situation.  It is agreeing to a term that China has said is necessary for it to consent to any international climate change treaty.   So even in light of Sarkozy’s call for carbon tariffs, the Chinese government can turn to its people and show that it was not bullied.  Instead, China received the one element that it considered indispensible.

The U.S. unfortunately has only been providing sticks.  There is evidence that the tariff provisions provide some leverage against a country like China, but without providing some sort of bargaining chip, China will likely not respond positively to the U.S.’ hard-line tariff provisions.  Instead, the U.S. should learn for the E.U. and look to see where it can find common ground with China.  Without this common ground, it starts to look a lot like bullying.

Comments (1)

By Elizabeth M. Lynch, September 10, 2009

An Expert Weighs In

On Monday, we ran a piece on the international trade implications of the border adjustment measures of the House’s climate change bill.  The article ends with a section questioning the legality of the tariff provision under WTO rules.

China Law & Policy was fortunate to have Henry Gao, Associate Professor of Law at the Singapore Management

Prof. Henry Gao

University and expert on WTO law comment on our analysis.  In his comments below, he questions whether the provisions would in fact violate WTO rules.

If I understand it correctly, this means that the carbon tariff provision is in violation of the national treatment obligation under the WTO. However, this seems to be rather unlikely. The national treatment obligation only applies with regard to domestic taxes and other regulations. The carbon tariff, by definition, is not a domestic tax. Instead, it is a tariff that will be applied before the goods enter the border. Thus, for me, it appears that it’s more accurate to say that this is a violation of the MFN clause (given the assumptions in your article that some foreign firms will qualify while others don’t), or possibly the tariff binding obligation under GATT Article II, assuming that the US might exceed its bound tariff levels by imposing the extra tariff.

Also, legally speaking, while the US will surely have to fight hard to defend its case if the issue is really referred to the WTO, it’s less than certain that the US will win.  Indeed, in the very first case that went before the WTO Appellate Body (AB), the US-Gasoline case, the WTO has, contrary to popular belief, affirmed the right for WTO members to take actions to conserve exhaustible natural resources, which has been explicitly interpreted by the AB to include clean air. Of course, this doesn’t give countries an open license to do whatever they want. They will need to demonstrate first, that are no less trade-restrictive measures; second, that their measures do not constitute arbitrary or unjustifiable discrimination. To sum up, it’s OK to take actions to control climate change, but the legality of the measure would depend on how you structure your package. The devil, as always, is in the details.

Henry Gao
Professor of Law
Singapore Management University
Editor, WTO & China Blog

As Prof. Gao notes, the devil is most certainly in the details.  As of yet, the House bill does not clearly spell out how exactly these tariffs will be applied.  Because of this, experts fall on both sides of this issue.  Paul Krugman of the New York Times expressed the opinion that the tariff provisions would like be okay under WTO rules.  However, attorneys at Akin Gump’s Climate Change practice disagree and offer their assessment that the provisions are a violation of WTO rules.

While there is a call by some moderate Democrats and many Republicans in the Senate to make the provisions stronger, expect at the very least for the provisions to be made a bit clearer.

Comments (1)

By Elizabeth M. Lynch, July 22, 2009

It’s 2015.  The immediate danger of climate change is apparent; rising sea levels in some countries, drought in others; countries on the brink of war due to shortage of food; governments that have existed for more than five centuries are toppling.  In this scenario, how would leaders in the United States, India and China respond?

This is no longer a theoretical question.  In testimony Tuesday before Congress on “Climate Change and Global Security,” Sharon E. Burke of the Center for a New American Security (CNAS), reported on a recent “climate change war game” that CNAS sponsored and which included representatives from the U.S., Europe, China and India.  Similar to war game simulations that countries’ militaries periodically organize, CNAS set up a dire climate change simulation to see how these countries would respond.  Ms. Burke testified that the responses in their simulation have thus far been accurately reflected in the current stalemate among the U.S., China and India.  In CNAS’ climate change game, India staunchly refused to agree to specific targets to carbon emissions, a sentiment that was recently shared with Secretary of State Clinton on her trip to India.  However, the CNAS simulation found that India was willing to negotiate on other issues.  Because they perceived their country as vulnerable to natural disasters, India was willing to concede certain things.  Ms. Burke also commented that the climate change game also showed that concessions made by the U.S., although provide the U.S. greater credibility, were not as important to other countries as the behavior of China.  However, in the simulation, China was not willing to concede to anything unless more developed countries financially supported their efforts.

While the countries in the CNAS climate change game were unable to reach an agreement, Ms. Burke was not willing to give up all hope.  Instead, she urged that the CNAS simulation be used to alter the current negotiations, negotiations that are obviously going nowhere.  The past has shown that the U.S. and China can reach agreement on issues even more complex than climate change (e.g. thermo-nuclear war) but policy makers need to find the commonalities between the two countries.  For China, climate change is a national security issue – currently there is great unrest in China due to environmental damage so they have as much of an interest as the U.S. in reducing the threat of climate change.  In a follow up with Ms. Burke after the hearing, she maintained that negotiators need to find a Plan B; we cannot continue with the current dialogue.  And although Ms. Burke thought that perhaps Plan B will not emerge until after the U.N. Climate Change Conference in Copenhagen, many policy makers have begun to realize that a Plan B is necessary.

To watch a full video of the hearing, please click here (starts at 30 minutes, 22 seconds in).

Comments (1)

By Elizabeth M. Lynch, July 19, 2009

Last week, U.S. Secretary of Energy Steven Chu and U.S. Secretary of Commerce Gary Locke visited Beijing.  Much of their discussion with Chinese officials, as well as the focus of Secretary Chu’s speech at Tsinghua University, revolved around climate change and preparation for the U.N. Climate Change Conference in Copenhagen this December.  Both the NY Times and the Associated Press

Secretaries Steven Chu and Gary Locke in Beijing

reported on Chu and Locke’s visit.  During their visit, the U.S. and China agreed to jointly fund the Clean Energy Joint Research Center, with $15 million provided up front.

While the Clean Energy Joint Research Center is certainly a step in the right direction, especially in light of the technical capacity issues that China currently faces in curbing greenhouse gas emissions, talks between China and the U.S. on a potential agreement on climate change have still not progressed forward.  Copenhagen is less than five months away and it appears that the U.S. and China, the world’s two largest emitters of greenhouse gases, have made little progress in coming to any agreement.  China still continues to maintain trade barriers to U.S. clean energy companies, shielding their own nascent clean energy industry from global competition, and potentially hindering its own technological capacity.  However, with the new tariff provision in the House’s Clean Energy Bill, the U.S. has less standing to argue against China’s protectionist policies.

In similarly frustrating turn of events, Indian officials, in an unexpected statement to U.S. Secretary of State Hillary Clinton during her visit to India, announced today that they remain opposed to any binding requirements on developing nations to reduce their carbon dioxide emissions.

Have climate change talks stalled?