Globalist Perspective

Green China — Part IV: A Model for the World?

Can China’s new green industrial system help avert the worst consequences of climate change?

Credit: Arkadymar/Shutterstock.com

Takeaways


  • The Chinese are becoming big believers in the tenets of the market economy: It is right to see the victors take big profits, while the losers face bankruptcy.
  • With its attributes of scale, financial and technological sophistication and innovativeness, the United States ought to "own" the green development process.
  • The U.S. Congress has provided, at best, fitful and episodic support for renewables, while refusing to dismantle fossil fuel subsidies.
  • It would be an act of monumental folly to allow vested interests to block the transition that is under way to a greener economy and industrial system.
  • The world will have to wait a several more years until China's carbon emissions begin to decline. But that is assuredly what will happen.

When it comes to raising the profile of green development from a curiosity to a globally competitive new industry, China is game changer. It is proof that this new industry is capable of powering a giant economy along a development trajectory that will “scale” to needed dimensions — without costing the earth.

The only question is whether China — along with Brazil, India and other developing countries — can adopt the green development model comprehensively enough to keep carbon emissions and resource spoliation within acceptable limits.

Nevertheless, the green development model is an emergent entity whose character is best discerned in the strategies and initiatives being taken in China.

The model is “emergent” in the sense that its outlines are becoming clear, but its actual implementation is clouded by policies that favor fossil fuels and nuclear power, either through vested interests or through fresh initiatives mandated by these interests.

While state-owned corporations remain the bedrock of the Chinese energy system, new privately-funded corporations are being allowed to operate in the coal, oil, gas and electric power generation sectors.

They bring their entrepreneurial acumen to the renewables sector. As a result, we can witness hundreds of companies eagerly piling into the new wind power, solar photovoltaic and solar thermal sectors, as well as various forms of bio-energy and alternative fuels.

Just as elsewhere, they too can fail. The Chinese, after all, are becoming big believers in the tenets of the market economy. As a top policymaker has remarked, it is right to see the victors in the race take big profits — while the losers may face bankruptcy.

China’s approach thus provides the best means by far of dealing with the threat of global warming — especially in light of the failure of international efforts, such as the Kyoto Protocol, to impose limits.

China, like the United States, was vilified for not adopting such limits. (As is the case with the United States, China still clings to a very strong sense of its own sovereignty.) However, unlike the United States, China has been seriously building the renewables sector as the only known means of reducing — really reducing — carbon emissions.

True, the world will have to wait a several more years until China’s carbon emissions plateau and begin to decline. But — barring catastrophe — that is assuredly what will happen.

Advanced countries are already paying China the compliment of emulating its approach to seriously building up its renewable energy industries.

Germany was the first, announcing in June 2011 an astonishing about-face with regard to its reliance on nuclear power, which had been retarding the renewable energy option for decades. (Germany’s action was triggered by Japan’s Fukushima disaster.) Its initial announcement was followed up by successive announcements of plans to build up its renewables industries.

Thus, Germany moves on from its heavy promotion of renewables markets, via its feed-in tariff system embodied in the Renewable Energy Sources Law of 2000 (and earlier incarnations), to the far more significant promotion of renewables industries themselves.

That is exactly what China has done. German wind power systems and solar PV systems, as well as German backing for desert-based concentrated solar power systems in North Africa (such as the ambitious Desertec project), can all be expected to become stronger and offer real competition for the Chinese industries.

These far-reaching efforts are given a strong boost by China and Germany quietly agreeing to become “strategic partners.” Like Germany, Korea has moved recently to adopt a “whole of government” approach to pursuing a green growth strategy.

The U.S. could own the process

So an alternative pathway has to be found — and such a pathway is being developed, through a series of far-sighted innovations in the energy sector (renewable sources and smart distribution grid), the resources and commodities sector (circular economy initiatives), and the finance sector (eco-finance and green investment banks).

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These are still on a relatively small scale, as China powers ahead with an interim fossil fuel strategy (although that strategy is clearly designed to diminish as the green pathway picks up industrial momentum).

Unfortunately, such a story cannot be told for the United States. With its attributes in scale, financial and technological sophistication, and innovativeness, the United States ought to “own” this entire process. Instead, the country is now counting the costs of a “lost decade” after the events of September 11, 2001.

Rather than providing the cause for a radical rethink, 9/11 caused the United States to return to the core tenet by which its foreign policy has been shaped by oil ever since its domestic supplies peaked — in 1970.

Yes, the country has put in place ever more ambitious plans for securing and protecting oil supply lines, which were first formulated in the 1990s, then put into effect under the Bush Administration from 2000 to 2008.

Meanwhile, the U.S. Congress has provided, at best, fitful and episodic support for renewables, while refusing to dismantle fossil fuel subsidies.

In its anti-modernist, retro spirit, the U.S. Congress can also be relied upon to frustrate efforts to develop meaningful cap-and-trade schemes for reining in carbon emissions (which would also have provided incentives for renewables).

Now, U.S. policymakers and their PR flacks in industry, consulting firms and think tanks feel vindicated. They hail the advent of a new era of “cheap oil.” This oil is extracted from unconventional sources such as shale and tar sands, as well as from drilling in deepwater offshore sites and in hostile environments like the Arctic.

Far from being a reprieve, these are the last gasps of a bankrupt fossil-fuelled industrial system. Just read how the Club of Rome’s Ian Johnson captured the argument in a September article on “new oil” on The Globalist.

The new kind of model that is emerging — and being driven by China and others like Germany — is one that can offer realistic prospects of holding back and actually diminishing carbon emissions, while reducing the throughput of resources via circular economy initiatives and policies.

This new model is being driven not by Kyoto-style rhetorical statements as to anticipated carbon emission reductions (statements that are worthless in practice) or by professed concern for the future of industrial civilization.

Rather, it is being driven by national self-interest and a long-term view of state initiative and competitive dynamics in a sustainable industrial system.

Of course, success in this vast experiment is far from guaranteed. The forces of industrial inertia or of “carbon lock-in” may well prevail and obstruct further greening initiatives. China may suffer a huge economic setback at some point and allow a less farsighted leadership to take over, scaling back investments in renewables and the circular economy.

Similar scenarios and processes might unfold in Brazil and India, or in Germany and Japan, bringing these countries to compete directly with the United States in the quest for more access to fossil fuels. If this were to come to pass, they would be drawn into uncontrollable resource wars in the Persian Gulf, the Caspian Sea basin and other fossil fuel theatres.

So, in the end, the alarmists may have it right. We may experience the calamitous “swallowing” of the planet through reckless resource exploitation, as well as the literal “cooking'” of the planet through global warming.

Things may get out of hand — and plunge our industrial civilization into a series of environmental disasters, wars and revolutions that will kill off the “green shoots” that have been so painfully nurtured. All this is possible.

But to paraphrase the Australian environmentalist Paul Gilding, we may be slow, but we’re not stupid. It would be an act of monumental folly to allow vested interests to block the transition that is under way to a greener economy and industrial system.

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About John Mathews

John Mathews holds the Chair of Strategy at the Macquarie Graduate School of Management at Macquarie University, Sydney.

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