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China can lead the way to new style of growth
By Nicholas Stern |
December 1, 2010, Wednesday
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EDITOR'S note:
This is the third and last part of the author's lengthy speech delivered during the World Expo in Shanghai last month.
China is implementing policies on renewables, through the recent green stimulus, by developing more modern power grids, high-speed rail, hybrid and electric cars, and by afforestation.
The planned investment in low-carbon vehicles alone is around US$45 billion over the next five years. The National Development and Reform Commission estimates that 3 million hybrid and 1.5 million electric vehicles will be on the road in China by 2015.
This action could be supported by stronger taxes on resources such as coal, oil, and gas. One policy that could provide the right incentives, raise revenue to fund the low-carbon transition, and demonstrate China's commitment and action, would be to introduce a tax on coal.
A 50 percent coal tax (equivalent to around US$20 per ton of CO2), with consumption of coal in China around 3 billion ton per annum, would raise around 1.2 trillion yuan per year (US$180 billion) or around 3 percent of GDP.
Strong policy action in cities will also be vital if we are to manage climate change effectively and deliver an improved quality of life to the hundreds of millions of people who currently live in cities or who will move to cities in coming decades.
These policies have many dimensions and include planning for infrastructure, land use, climate change adaptation, and energy and waste reduction. Cities can lead on R&D, as they provide knowledge clusters to spur innovation, with high densities of research institutions.
Shanghai announced plans in September to invest 20 billion yuan in the electric vehicle sector by 2012, including 25,000 charging stations and plans to produce up to 100,000 electric/hybrid vehicles annually by 2012.
Cities can also lead on market-based trading mechanisms. Shanghai, Beijing and Tianjin have established voluntary environmental exchanges. Other cities in the region have already established mandatory city-wide cap-and-trade schemes (e.g. Tokyo in April 2010), ahead of national actions.
China's commitment to a low-carbon economy has been very much under-appreciated around the world. The green stimulus of 2008/2009, strong investment in rail transport, regulation of vehicle emissions, rapid growth in production and use of renewables, reforestation, and strong emission intensity targets, are all evidence of this commitment.
Arguments about low-carbon growth are taking place in most countries around the world. The argument that low-carbon growth is not just the only possible future, but also very attractive, must be won, both because it is correct and because the alternative path is so dangerous for the world as a whole.
There is no country more important than China in leading the way to a radically different, more dynamic, and much more attractive form of growth.
(The author is I.G. Patel Professor of Economics & Government and Chair of the Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science. Shanghai Daily condensed the article.)
This is the third and last part of the author's lengthy speech delivered during the World Expo in Shanghai last month.
China is implementing policies on renewables, through the recent green stimulus, by developing more modern power grids, high-speed rail, hybrid and electric cars, and by afforestation.
The planned investment in low-carbon vehicles alone is around US$45 billion over the next five years. The National Development and Reform Commission estimates that 3 million hybrid and 1.5 million electric vehicles will be on the road in China by 2015.
This action could be supported by stronger taxes on resources such as coal, oil, and gas. One policy that could provide the right incentives, raise revenue to fund the low-carbon transition, and demonstrate China's commitment and action, would be to introduce a tax on coal.
A 50 percent coal tax (equivalent to around US$20 per ton of CO2), with consumption of coal in China around 3 billion ton per annum, would raise around 1.2 trillion yuan per year (US$180 billion) or around 3 percent of GDP.
Strong policy action in cities will also be vital if we are to manage climate change effectively and deliver an improved quality of life to the hundreds of millions of people who currently live in cities or who will move to cities in coming decades.
These policies have many dimensions and include planning for infrastructure, land use, climate change adaptation, and energy and waste reduction. Cities can lead on R&D, as they provide knowledge clusters to spur innovation, with high densities of research institutions.
Shanghai announced plans in September to invest 20 billion yuan in the electric vehicle sector by 2012, including 25,000 charging stations and plans to produce up to 100,000 electric/hybrid vehicles annually by 2012.
Cities can also lead on market-based trading mechanisms. Shanghai, Beijing and Tianjin have established voluntary environmental exchanges. Other cities in the region have already established mandatory city-wide cap-and-trade schemes (e.g. Tokyo in April 2010), ahead of national actions.
China's commitment to a low-carbon economy has been very much under-appreciated around the world. The green stimulus of 2008/2009, strong investment in rail transport, regulation of vehicle emissions, rapid growth in production and use of renewables, reforestation, and strong emission intensity targets, are all evidence of this commitment.
Arguments about low-carbon growth are taking place in most countries around the world. The argument that low-carbon growth is not just the only possible future, but also very attractive, must be won, both because it is correct and because the alternative path is so dangerous for the world as a whole.
There is no country more important than China in leading the way to a radically different, more dynamic, and much more attractive form of growth.
(The author is I.G. Patel Professor of Economics & Government and Chair of the Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science. Shanghai Daily condensed the article.)
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