CHAPTER 7: CLIMATE CHANGE
195. China is the world's largest emitter of
greenhouse gases. In 2007, China was building the equivalent of
one 500 megawatt coal-fired power plant every two-and-a-half days.
Its participation in any global agreement to combat climate change
is therefore essential. China continues to see itself as a developing
country and is unwilling to compromise on economic growth to tackle
a problem it sees as having been caused by the western industrialised
countries. However, China has taken important steps to address
climate change in recent years with a predominant emphasis on
196. China and the EU cooperate widely on climate
change (DECC pp 249-50). The EU-China Partnership on Climate Change
was agreed at the 8th EU-China Summit in September 2005 under
the UK Presidency. It provides a high-level political framework
to strengthen cooperation by setting out new actions to tackle
climate change. The partnership complements the UN Framework Convention
on Climate Change and the Kyoto Protocol. It strengthens cooperation
and dialogue on climate change including clean energy, and will
promote sustainable development. It includes cooperation on the
development, deployment and transfer of low carbon technology,
including advanced near-zero-emissions coal technology through
carbon capture and storage.
China's role and approach
197. Despite its economic achievements, China
continues to see itself as a developing country which should not
have to sacrifice its economic growth to combat climate change.
China holds the developed world responsible for causing anthropogenic
climate change, and therefore believes that the developed world,
including the EU, should lead efforts to tackle it.
198. China is investing capital and building
infrastructure faster than any society ever has. Its estimate
of the investment needed in its energy infrastructure over the
next 12 years is in the order of US$2 trillion. Therefore it needs
to make a bigger and faster shift in its economic direction than
any other economy in order to achieve a successful global response
to climate change (John Ashton,
199. Nevertheless, China is taking action on
climate change. In November 2009, Premier Wen Jiabao stated China's
intention to reduce energy intensity (carbon dioxide emitted per
unit of economic output) by 40-45% by 2020 compared to 2005 levels.
In 2007 the Chinese government established a National Leading
Group on Climate Change, led by Premier Wen Jiabao and comprising
14 Ministries. China's National Climate Change Programme sets
out a number of substantial mitigation actions on energy efficiency,
renewables and reforestation. These include a programme to improve
energy efficiency in China's 1,000 largest enterprises, which
account for 37% of China's primary energy and 50% of industrial
energy consumption; retiring inefficient power and industrial
plants; energy efficiency standards for buildings; and vehicle
fuel consumption standards (DECC pp 250-1).
200. The Programme provides for the implementation
of a wide range of energy and industrial policies that, while
focused on energy security, contribute to emissions reductions.
The Chinese government estimates that these policies will result
in the mitigation of 1.85 billion tonnes of carbon dioxide over
2006-2010, which is equivalent to around 36% of total EU emissions
in 2006 (DECC p 250).
201. One impetus for action is that China is
itself vulnerable to climate change. According to the Intergovernmental
Panel on Climate Change (IPCC), currently observable effects include
increases in flooding in the north east and eastern regions of
China; an increase in the frequency of glacial lake outbursts
due to the retreat of glaciers in the Tibetan Plateau; and water
shortages. The IPCC has indicated that future temperature increases
in China are likely to be greater than the global average increases.
If emissions continued unabated, temperatures in China could rise
to about 2°C above pre-industrial levels by 2050, or 4°C
by 2100. An estimated one billion additional people would be at
risk from water stress by the end of the century (DECC p 250).
Much of the Chinese population lives on the eastern coast of China
and would be very vulnerable to an increase in sea level.
202. Ambassador Wu
underlined the importance of climate change in EU-China relations.
He thought that developed countries should find a formula to help
developing countries, including through the transfer of advanced
technologies which the Chinese could not afford. In contrast,
the EU Chamber of Commerce commented that China held US$ 2.4 trillion
in foreign exchange reserves which could be used to purchase such
203. Jiang Kejun
thought that China should set high targets for the reduction of
carbon emissions but this could not be achieved through targets
alone. There were many possibilities for international collaboration.
204. China is the world's largest emitter
of greenhouse gases. Nevertheless, its overriding concern is delivering
economic growth. The Chinese Communist Party sees continued economic
development across China as the basis of its legitimacy. All other
policy considerations, including climate change, take second place.
205. China has set a target for reduction
in energy intensity of 40-45 per cent by 2020 compared to 2005
levels. This is welcome. However, China's refusal to set targets
for emission reductions means there is no realistic prospect of
its transition to a low carbon economy, without which limiting
global average temperature increases to 2°C will become impossible.
The EU and China: partners in
addressing climate change?
206. John Ashton (the Foreign Secretary's Special
Representative on Climate Change) told us in April 2009 that the
EU, the world's largest single market, and China, the world's
fastest growing large economy, were "absolutely critical"
to achieving a low carbon global economy (Q 216). Nancy Kontou,
then head of cabinet to the Environment Commissioner, agreed that
the EU's relationship with China was one of the most important
in the context of the international climate change negotiations
207. John Ashton thought that it was difficult
for the Chinese to see how they could contribute to the global
response without adding to the existing risks to their own stability
and prosperity. The security and prosperity of the EU depended
on building a more transformational engagement with China. The
Obama administration had declared its interest in building a transformational
strategic relationship with China on energy and climate. The EU
should seek to do the same. However, the EU's record in engaging
China on climate change was drowned out by Member States competing
against each other for short-term, partly illusory, commercial
advantage (QQ 218-21)(see also Chapter 3).
208. We are concerned that competition for
short-term commercial advantage between the Member States is undermining
EU engagement with China on climate change. We recommend that
the Member States put collective EU interests before short-term
commercial advantage in the area of climate change.
209. Michael Pulch
explained that the EU had invested a great deal in green technologies
and China was a growing market for EU goods. However, the EU should
be cautious about transferring technology to China because of
the limited usage of licensing in the Chinese system. At the EU-China
summit on 30 November 2009 the two sides had agreed to upgrade
the current EU-China Partnership on Climate Change.
210. The European Chamber of Commerce in China
told us that the Chinese system did not support green thinking
on climate change and the environment. A key issue was that China
was keeping electricity prices down through state subsidies. This
reduced price incentives to reduce energy usage.
211. The EU should raise the issue of state
subsidies for electricity with the Chinese government and highlight
that this practice creates a disincentive for energy efficiency.
Cooperation on energy and low
212. The EU-China Partnership on Climate Change
includes activities to reduce the cost of energy technologies
and promote their deployment and dissemination. In November 2007,
the European Investment Bank signed a Climate Change Framework
Loan of 500m to fund projects in China that contribute to
combating climate change. The China-EU Action Plan on Energy Efficiency
and Renewable Energies aims to enhance dialogue and promote industrial
cooperation, including through cooperation on energy markets;
security of supply; and protecting the global environment. The
Plan provides policy advice and capacity building to national
and local authorities, and promotes the deployment of technology.
The biennial EU-China energy conference brings together high-level
representatives from European and Chinese industries and governments.
213. The EU-China Clean Development Mechanism
(CDM) Facilitation Project
which ended in January 2010 provided assistance to China in strengthening
its policy and regulatory regime for CDM development. This has
facilitated China's participation in the carbon market and its
transition to a low carbon economy. However, project-based offsetting
mechanisms are limited in terms of their scale. DECC wrote: "Advanced
developing countries such as China need to build on their success
in attracting CDM investment by moving towards sectoral crediting
and trading mechanisms that will make a net contribution to emission
reductions and achieve financial flows and emission reductions
..." The Government supported the Council of Ministers Conclusions
of 2 March 2009, which included a proposal to "build, as
soon as practicable and preferably by no later than 2015, a robust
OECD-wide carbon market through the linking of cap-and-trade systems,
to be extended to economically more advanced developing countries
by 2020" (DECC pp 253-4).
214. One important area for practical cooperation
between the EU and China is clean coal technology. The UK-led
EU-China Near-Zero Emissions Coal (NZEC) initiative aims to build
demonstration plants in China to test the feasibility of Carbon
Capture and Storage (CCS) technology at the industrial scale.
CCS is the only set of technologies with the potential to
reduce emissions from coal-based power generation (DECC pp 252-3).
Jiang Kejun thought
that China should move to CCS by 2020 but there was strong resistance
from special interests in the Chinese industrial hierarchy who
feared that this would choke economic growth.
215. Nevertheless, Lord Hunt of Kings Heath,
Minister of State at the Department of Energy and Climate Change,
wrote that the initiative was making progress.
This cooperation was taking place under the EU-China Partnership.
Several UK-China and EU-China clean coal projects concluded in
- there was potential for CCS in China;
- once CCS was established, the cost of deployment
in China could be relatively cheap (approximately £25 per
tonne of carbon dioxide); and
- there may be significant storage in saline aquifers
though further assessment was needed.
According to Lord Hunt, these projects had built
a "significant amount of institutional capacity, expertise,
and business interest in CCS in China".
EU China CCS initiative: phases II & III
|Phase II of the initiative (2010-2012) will examine the site-specific requirements for and define in detail a demonstration plant and accompanying measures. Phase III for the construction and operation of a commercial-scale demonstration plant in China should commence after 2012.
Lord Hunt recognised that no funding had been found
for Phase III, apart from the Commission's contribution of 50
million. The Government's immediate objective was to find funding
for Phase II. They had pledged £6 million and the Commission
7 million, on the condition that other European countries
216. Although we strongly support the concept
of the EU-China Near-Zero Emissions Coal (NZEC) initiative, based
on Carbon Capture and Storage (CCS) technology, we are sceptical
that the current pace of development, and the lack of committed
funding, will lead to a successful and timely outcome. There needs
to be a much stronger determination by the UK, the EU and China
for this initiative to work.
The Copenhagen conference
217. The December 2009 Copenhagen conference
was "disappointing in a number of respects", according
to the Government.
The EU did not achieve its objectives. However, in the margins
of the conference, 49 developed and developing countries, including
China, adopted a "Copenhagen Accord", which:
- Endorses the limit of 2°C of warming as
the benchmark for global progress on climate change; developed
and leading developing countries agreed to make specific commitments
to tackle emissions, to be lodged in the agreement by 31 January
- Contains commitments by developed countries to
provide finance for developing countries, such as $10bn of fast-start
finance a year by 2012 and specific support to tackle deforestation;
- Refers to the measurement, reporting and verification
In February 2010, China confirmed its voluntary commitments
under the Copenhagen Accord. These are to: endeavour to lower
its carbon dioxide emissions per unit of GDP by 40-45% by 2020
compared to the 2005 level; increase the share of non-fossil fuels
in primary energy consumption to around 15% by 2020; and increase
forest coverage by 40 million hectares and forest stock volume
by 1.3 billion cubic metres by 2020 from 2005 levels.
218. Based on the internationally-agreed principle
that countries have common but differentiated responsibilities
to fight climate change, the EU had not been seeking a commitment
by China to cut its emissions in absolute terms. The EU did, however,
want China to commit to capping the growth of its emissions to
between 15 and 30 per cent below "business as usual"i.e.
the current rate of increaseby 2020. This figure was based
on the objective of keeping the rise of global average temperatures
to 2°C above pre-industrial levels (Nancy Kontou, Q 441).
219. The Government (in their 5 January statement)
recognised how far major developing countries such as China had
come, but noted the need to allay their concerns that they would
be constrained from growth and development by the demands of a
legally-binding treaty. In an attempt to present the outcome of
the conference positively, the Government stated that "every
major economy of the world now has domestic policy goals and commitments
to limit their greenhouse gas emissions: the US, China, Japan,
Russia, Brazil, India, Indonesia, South Korea, Mexico, South Africa,
and of course the EU. Throughout the world, policy is now set
to improve energy efficiency, to increase investment in low-carbon
power, to develop hybrid and electric vehicles and smart grids
and to reduce deforestation".
220. We are deeply concerned about the failure
of the Copenhagen conference on climate change in December 2009.
The EU made a concerted effort to achieve agreement on a legally-binding
treaty on climate change in the negotiations leading up to the
conference. However, China and other developing countries were
successful in opposing this.
221. The adoption by some participants of
a Copenhagen Accord outside the UN framework is a positive first
step but falls short of the EU's objectives.
222. Copenhagen illustrated a marginalisation
of the EU, even when united; the Chinese leadership of the developing
world; and its direct challenge to the United States as an equal.
223. The EU should be prepared to set an example
on carbon emission cuts which is in the interests of the Member
States and the world. It must reassess its negotiating strategy
prior to the UN meetings in Bonn and Mexico City in order to re-enter
the negotiations as a player rather than as a spectator. The Government
should consider whether a new approach by the EU towards China
and other major developing countries is needed. All options should
be included in this review. In particular a major effort should
be made by the EU to convince China of the need for a fully effective
international system of verification and monitoring of commitments
224. Despite Copenhagen, bilateral climate
change cooperation between the EU and China is achieving practical
results. The UK played a leading role in this respect, including
by achieving agreement on the EU-China Partnership on Climate
Change during its presidency of the EU in 2005.
225. The EU-China high-level dialogue should
include the issues that arise from industrial pollution and its
effect on the Chinese and wider environment.
86 Communication from the Commission to the European
Parliament and the Council-Demonstrating Carbon Capture and Geological
Storage (CCS) in emerging developing countries: financing the
EU-China Near-Zero Emissions Coal Plant project. Ref. 11488/09,
COM(2009) 284 final, Brussels 26 June 2009. Back
The Foreign Secretary's Special Representative on Climate Change. Back
Meeting with Ambassador Wu, Beijing, Appendix 4. Back
Appendix 4. Back
Meeting with Jiang Kejun, Roundtable on EU/China climate change
cooperation, Beijing, Appendix 4. Back
Meeting with Michael Pulch, of the then Commission delegation
to China, Beijing, Appendix 4, p.2. Back
Joint statement of the EU-China summit: http://www.delchn.ec.europa.eu/?item=news_view&nid=665# Back
Meeting with the European Chamber of Commerce in China, Beijing,
Appendix 4. Back
The Clean Development Mechanism (CDM) is a market-based mechanism
established by the Kyoto Protocol to the UN Framework Convention
on Climate Change (UNFCCC) to enhance cooperation between developed
and developing countries on carbon emission reductions. The EU-China
CDM facilitation project, which started in February 2007, aims
to strengthen the role of the CDM to help China's path to sustainable
development. It is being implemented by Chinese and European partners,
supported by grants from the European Commission. Through a series
of activities including policy research, capacity building and
training programmes, the project focuses on China's policy and
regulatory regime for CDM development and will provide policy
recommendations to CDM policy-makers in Europe and China. It brings
together a range of public and private sector stakeholders involved
in CDM projects. Back
Meeting with Jiang Kejun, Roundtable on EU/China climate change
cooperation, Beijing, Appendix 4. Back
Appendix 5, letter from Lord Hunt to Lord Roper dated 2 December
We have already commented publicly on this point ("Lords
EU Committee criticise Government and European Commission's slow
progress on Carbon Capture and Storage Project", press statement
dated 20 October 2009). Back
HL Statement 5 January 2010, col 49-50. Back