Chinese Coal Cuts

In the fight to limit global warming, no country matters more than China – a massive coal-dependent country, which is responsible for 30% of global carbon-dioxide emissions. Fortunately, it is moving to improve its environmental record. But is it doing enough?

If China could pursue only one goal, it should be cutting its reliance on coal energy. The country is home to one-sixth of the world’s people, yet it accounts for almost one-half of global coal consumption. If China does not reduce that share and cut its greenhouse-gas emissions, keeping global warming in check will prove impossible.

The good news is that coal use in China seems to have fallen slightly last year – a trend that is expected to continue. The Institute for Energy Economics and Financial Analysis estimates that the share of coal-generated electricity in China will decline from 72.5% in 2014 to 60% in 2020. While last year’s drop in coal use may have been a technical blip, Chinese coal consumption is expected to peak very soon – probably next year.

That means that CO2 emissions – the largest component of the greenhouse-gas emissions that cause global warming – will begin falling, too, enabling China to fulfill its pledge, made last November as part of a landmark climate agreement with the United States, that emissions would peak around 2030. In fact, if China’s leaders act boldly, the peak could be reached even sooner, in the early 2020s.

As China’s coal use begins to fall, its renewables sector is growing rapidly. Last year, China spent a massive $90 billion on renewable energy – far more than the $52 billion invested by the second-largest spender, the US. China now has the world’s largest installed base of wind power, and its solar power capacity is second only to Germany’s. From humble beginnings at the turn of the century, Chinese wind and solar companies have grown into some of the world’s largest and most efficient.

The government’s efforts to promote renewables are driven partly by growing pressure from middle-class Chinese, who are increasingly frustrated with pollution levels. Indeed, the environment is a hot topic in China today, exemplified by the response to the documentary film “Under the Dome,” which takes a critical look at air pollution and the role of the country’s coal and petrochemical companies. More than 300 million Chinese saw the film after its late-February release, which was timed to coincide with the annual meeting of China’s National People’s Congress in early March.

The 103-minute production, by the prominent journalist Chai Jing, highlights the health risks posed by the thick smog shrouding China’s most productive cities. The film begins with the story of Chai’s own newborn daughter being diagnosed with a benign tumor. Though Chai never directly links her daughter’s tumor to air pollution, “Under the Dome” delivers a compelling message.

The public reaction was overwhelming. The film even drew support from the incoming environment minister, Chen Jining, who compared it to Rachel Carson’s influential book Silent Spring. Despite – or perhaps because of – this response, “Under the Dome” and related commentary have been removed from China’s media.

But, though the government may not want not to draw attention to its pollution problem, it certainly is trying to address it. Its investments have already helped to lower global prices of renewables. Researchers at Harvard University and Tsinghua University say that wind power could, in theory, produce all of China’s electricity for the price of coal by 2030.

Still, China should be acting even more aggressively. The authorities should focus not only on producing renewable energy, but also on improving the energy efficiency of existing systems. As it stands, China’s economy is about three times as energy-intensive as America’s (a country that is not particularly energy-efficient itself).

As renewable energy becomes increasingly cost-competitive with fossil fuels and energy consumption becomes more efficient, China will become better able to reduce emissions without undermining economic growth. According to a recent study by the Tsinghua/MIT China Energy & Climate Project, a combination of carbon taxes – especially on coal – and continued support for renewable power would enable China to reach its carbon-emissions peak in the early to mid-2020s.

Such an outcome would bolster global emission-reduction efforts considerably. In fact, new data from the International Energy Agency show that, in 2014, global CO2 emissions did not rise, suggesting that efforts to mitigate climate change may already be having a more significant effect than previously thought. This is particularly notable because the recent pause in emissions growth, unlike the other three that have occurred in the last 40 years, occurred amid economic expansion at a respectable annual rate of 3%.

As greenhouse-gas emissions become decoupled from economic growth, the world’s chances of successfully mitigating climate change become much higher. As IEA Chief Economist (and future Executive Director) Fatih Birol put it, this development “provides much-needed momentum to negotiators preparing to forge a global climate deal in Paris in December.”

China still has a long way to go. But its recent progress in reducing emissions shows that, with the right combination of government policies, corporate initiatives, and public pressure, even the largest and most polluted countries can clean up their economies and help fight global warming.

Originally published in Project Syndicate. Can be accessed here

Green Buildings’ Bottom Line

HONG KONG – Killer typhoons in Taiwan and China. A failed monsoon in India. The United Nations Secretary General in the Arctic pleading for action on climate change, while politicians bicker over who will bear the costs.

But, instead of letting that debate rage while the planet heats up, policymakers should embrace one of the cheapest ways of cutting the air pollution that lies at the root of the problem: making buildings more efficient.

Surprisingly, buildings account for about one-third of global energy use. Transportation, mostly cars, accounts for roughly another one-third. Factories and mines make up the rest. A lot of attention has gone into making cars and factories more efficient since the first global energy shocks of the 1970’s. Yet most buildings are bigger energy hogs than a fleet of SUVs. Given advances in technology in everything from window glass to air conditioners, change can come for no net cost.

The World Business Council for Sustainable Development, which produced a landmark study on the topic, contends that buildings should put back into the system at least as much energy as they take out. The consultancy McKinsey & Company notes that a number of key energy efficiency technologies for buildings offer payback periods of less than a year and could have a dramatic impact on greenhouse-gas emissions.

But governments must act. Building codes already guard against dangers like fire and earthquakes. Far-sighted governments in places as different as Germany and Singapore are now mandating green buildings. Policymakers there know that governments have a role in mandating regulations to create a level playing field and helping build industry capacity. California’s latest building and appliance standards are expected to avoid the need for five large power plants in the next 10 years.

Buildings last for decades, so decisions made today have a long-term impact on our energy consumption. Efficient buildings enable countries to produce and consume less energy, which supports economic development, because money is freed up for other projects, while promoting energy security and environmental sustainability.

All of this can be done without hurting economic growth. The average US refrigerator uses only one-quarter of the electricity of its counterpart of 30 years ago, despite being larger and offering more features.

Greener buildings are particularly important for Asia, home to the world’s most rapid economic growth – now and probably for decades to come. Asia’s share of global energy consumption has doubled in the past 30 years, and its buildings’ share of energy use is growing at similar rates, with China and India alone constructing more than half of all the world’s new floor space. Without well-designed policy measures, improvements in the energy efficiency of buildings and appliances will continue at a relatively slow pace in Asia.

If Asia pursues a business-as-usual policy, it will burn money on energy that could be put to other uses. Energy-hungry China builds the equivalent of two to four 500-megawatt power plants every week. Each year, it adds more new energy generation capacity than the installed base of the United Kingdom. No one can ask China to slow its development. But if China can improve its energy efficiency, it will save money and strengthen its energy security. Indeed, Chinese government sources estimate that an efficient building is five to six times cheaper than an inefficient building to heat, cool, and light.

Before change can come, some old myths need to be demolished.

Myth 1: Green buildings cost a lot more to build. Initially, there may be higher costs, usually 3% to 10%, though this figure tends to fall quickly, as everyone from architects to construction workers becomes more familiar with new ways. Moreover, suppliers re-tool to manufacture more energy-efficient products, causing prices to fall. But even higher upfront costs are quickly paid for with cheaper utility bills.

Myth 2:  Energy-efficient buildings are uncomfortable. The idea that energy-efficiency means sitting in the dark, shivering in the winter and sweating in the summer is nonsense. Repeated studies have shown that well-designed buildings are more comfortable. Green offices have lower employee turnover and fewer sick days. Green buildings increasingly show higher capital values.

Myth 3: If energy efficiency worked, everyone would have done it already. This is like the joke about the two economists who ignore a $100 bill they see lying on the street, figuring that if the money were real someone would have picked it up. Building developers often don’t want the extra cost or extra hassle of breaking old habits. And why should they? After all, they either sell the property or pass on the higher utility costs to tenants.

Nothing stands in the way of change except the unwillingness to change old patterns. Governments need to set standards that become progressively tighter over time. Everyone in the building and construction industry needs to be more creative. Tenants need to take the same care with buildings that they do with cars. The net result of a series of small changes would be a dramatic reduction in energy consumption.

Originally published in Project Syndicate. Can be accessed here.