3E Intelligence

One of the tragedies of our times is that countries which are lifting themselves out of poverty are doing this by making exactly the same mistakes Western economies made in the past. For all the talk in political circles of our current development not being sustainable, nobody really seems to give a shit. Like lemmings we keep running to the edge of the cliff.

One of the best examples of this economic growth tragedy takes place in China as testified in a recent article by Dale Wen published in the scientific magazine Development. In the article “Too Much Growth, Too Little Development: The”reality behind China’s economic miracle“, Wen demonstrates that China’s economic miracle is largely built on liquidation of social and natural capital.

More on China’s environmental crisis can be found in an excellent article by the Council on Foreign Relations. Foreign Affairs also covered China’’s eco-problems under the title “The great leap backward?”.

The New York Times has a good article on the difficulties for green energy in China.

In a recent post, I questioned the rationale of starting from national greenhouse gas emission figures in international climate change negotiations. The reason for my scepticism is, of course, the fact that in a globalised trade-centered world, CO2 emissions from one country can be caused by export demands from other countries.

The UK’s Tyndall  Centre for Climate Change Research has now confirmed this in a new briefing note “Who owns China’s carbon emissions?“. Here are some of the main conclusions of the Tyndall study:

• 23% of China’s CO2 emissions in 2004 were due to demand from the West for manufacturing products made in the new economic giant. This 23% is as much as the combined emissions from Germany and Australia and more than twice the national emissions of the UK.
• The study ” lends further weight to the view that OECD countries should take the lead in reducing emissions. Their historical responsibility for the majority of the carbon emissions is joined by some responsibility for more recent emissions growth in the developing world“.
• The analysis also highlights “the imperfections of an approach which focuses on emissions within national borders. Whilst the nation state is at the heart of most international negotiations and treaties such as those for combating climate change, global trade means that a country’s carbon footprint is open to some interpretation. Should countries be concerned with emissions within their borders (as is currently the case), or should they also be responsible for emissions due to the production of goods and services they consume?“

The Energy Bulletin ran an excellent blog post on Tuesday which raised my eyebrows. I hope that some of our EU China connaisseurs would react to it.

The post written by David DuByne, who teaches business English in China, states that the Chinese government is preparing to shift from being an export-driven economy to becoming a regional trade powerhouse as the coming “energy crunch” (or as others call it, “peak oil”) will roll back globalisation and trade.

What this will mean for Western investments in China, is one of the most scary conclusions of the article:

“The Great 100 Year Plan: The Chinese Government must be seeing parallels between the astonishing growth of its economy and the creation of Hong Kong. You build it, we keep it. You have set up our economy with your generous investments, built factories for us, given us your technology and knowhow to produce goods, and tutored us on oil refining and coal technologies plus solar and wind-power generation. You can go now. Thanks for coming, but we will keep the factories.”

• Finland is the world’s greenest country and Swedisch capital Stockholm the best city to live in, according to a study by environmental economist Matthew Kahn published in Readers’ Digest. The study is based on data from two original sources: the UN 2006 Human Development Index and the 2005 Environmental Sustainability Index. Measuring welfare beyond GDP seems to be back on the political agenda. The EU is organising a special conference “Beyond GDP” on 19-20 November 2007. The EnviroStats blog has more on this story. It is interesting to see that the greenest countries are also the ones who since years are on top of most economic competitiveness rankings.
• Since Saturday 6th October and for the rest of 2007, the world is living beyond its means. This is the main message of the Ecological Debt Day press release issued by the Global Footprint Network last week. Our economy needs natural resources provided by nature (ecological capital) and since some years we consume more of those resources than nature is able to regenerate. This situation of “ecological overshoot” is not sustainable. Since 1987, Ecological Debt Day has come earlier in the year, meaning we are getting further and further away from sustainability.
• The absurdity of setting national CO2 targets to deal with climate change has been put into question again by a new report published by the New Economics Foundation. The “Chinadependence” report shows that a big part of greenhouse gases attributed to China are the result of products that are made for our Western consumers market. So, in fact, these CO2 emissions should be included in our own greenhouse stats.

I am a bit surprised today to see WWF taking the side of globalisation champion Peter Mandelson, as the European Commission decided to retain its duties on energy-efficient light bulbs imported from China for one more year. The Commission decided to give in to its Vice-President, Günther Verheugen, who had been defending the anti-dumping duties to protect German business interests (Osram). Peter Mandelson and WWF wanted to abolish the duties. See the Commission’s press release.

WWF’s press release reads as follows (extract only):

“WWF, the global conservation organisation, considers this proposal disappointing, unfair and seriously inconsistent with the ambitious EU targets to improve energy efficiency in Europe and to curb climate change.

“This is narrowly protectionist and sends a regressive message to developing country producers that they will be excluded from markets for cleaner products created by the higher environmental standards expected by European consumers”, says Eivind Hoff, WWF Trade and Investment Advisor. “This case shows a severe contradiction in EU policies: on the one hand, Europe has committed to an ambitious energy efficiency objective and on the other hand it continues to impose taxes on imports of green products such as the energy-efficient light bulbs from China”.

With a rapid switch to more efficient lamps, 23 million tonnes of CO2 could be saved per year, equivalent to 0.5% of EU greenhouse gas emissions.”

I certainly do not agree with the short-term nationalistic motivation of Verheugen in this dossier but there are some arguments based on sustainability criteria which WWF seems to be (partially) overlooking.

First, what are the environmental costs (not only the explicit ones, but also the hidden costs) of importing these light bulbs from China? The Chinese light bulbs are only so much cheaper because the transport costs for this kind of trade are way too low. WWF seems to have foreseen this question in its press release as they write: “Production and transport account for less than one per cent of the total global warming impact through the life cycle of a CFL-i used in Europe, regardless of whether it is produced in China or in Europe“. Where does WWF get this information from? I hope not from the Osram lobbying papers.

Secondly, as WWF admits itself, Chinese CFL-i lamps have a shorter life span and carry more mercury than European-made ones. I agree with the green organisation that this should be solved by using more stringent minimul requirements, but as these do not yet exist, what about disencouraging their coming on our markets for now?

Last but not least, China remains unwilling to start reducing its carbon emissions pointing to the US’ bad example and the “historical responsibility” of the West. Some greens have rightly so defended trade-related sanctions for big emitters who are unwilling to do their bit to protect our climate. Why should China be left off the hook?

The light bulb debate seems to have become one of those political symbol dossiers which politicians are able to sell to the public as proof of their good intentions to “tackle the problem” without having to understand all the complexities of the issue (a bit like the “roaming dossier”  in telecommunications policy should prove that the EU is good for consumers).

China’s reaction to the news that is has become the world’s biggest greenhouse gas emitter underlines that in a globalised world without borders it is a an absurdity to blame individual countries for their share of emissions.

According to Associated Press, the Chinese government criticised developed countries for being “hypocritical” when they criticise China’s greenhouse gas emissions while buying products from its booming manufacturing industry. A spokesperson for the Chinese Foreign Ministry pointed out that the West has outsourced a lot of its manufacturing to China and that therefore the emissions are produced to make products for European and American citizens. He also underlined again that a Chinese citizen emits less than one quarter of an American.

The Chinese are of course absolutely right. In a world that has become “one spaceship”, we all emit not only for ourselves but also for others. The sooner we understand this, the sooner we will be able to move from a world economy based on competing countries to one “spaceship earth economy” where competitiveness will have been replaced by interdependent cooperation. But what stands in the way of this vision are political and international governance structures which were built in the age of national sovereignty.

• According to the Netherlands Environmental Assessment Agency, China has become the world’s biggest CO2 emitter in 2006, overtaking the US. China is building not one but two coal power plants per day. Read also The Guardian. BBC News this morning asked the question all Western confused consumers are posing themselves: why should we turn off our standby’s or buy expensive energy-efficient lamps when China’s economic development will lead to climate disaster anyway? Maybe we should just start dancing on our Titanic?
• Climate Counts is a new web site measuring the performance of companies on tackling climate change in their operations. Joel Makower has this in-depth story about the non-profit initiative.

Danish Mogens Peter Carl, the boss of the Commission’s Environment Directorate-General is said to be an excellent manager and a tough negotiator. But there are two things which he is certainly not as we were able to see during the closing session of Green Week.

First, he is not a good communicator. The way he presented his conclusions on Friday was so dull and monotone that most of the listeners in the audience nearly fell asleep. The fact that he also spoke for around 20 minutes, whereas the moderator had clearly said that all speakers would have ten minutes to make their case, added to the impression that the environment chief has all but given up on the chance of saving the environment.

Secondly and more important is that Mr Carl seems to know remarkably litte about nature.

When he was asked by some smartass in the audience, whether the EU should tackle “over-consumption”, the dull Dane came up with the following sublime metaphor: “Let me be very blunt. I will not try to roll back the waves”, implying that tackling “consumerism” is an impossible mission. This revelation came about ten minutes after he had mentioned that the upcoming EU communication of sustainable production and consumption will be something to look forward to.

Does Mr Carl not know that small waves can sometimes turn into big destructive tsunamis? Does the environment boss really believe the Chinese, Indians and all other citizens of the new economic tigers can have the same level of material lifestyle as we have here in the West without destroying the world’s last remaining natural capital? Well, in that case, dear Commission chief, you better start building your dykes!

For all the rhetoric of reconciling ecology and economy, the economic development in China shows that things are often much more complex and difficult. As Reuters reported on 22  May 2007, pollution and loss of biodiversity are worsening as a result of the country’s spectacular economic growth.
Further reading on Chinese environmental policy:

• Seed: The China Experiment (1 May 2007)
• WorldWatch Institute: China Watch