Taking charge makes energy savings easier
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The cleanup job won't be cheap: He Ping, chairman of the Washington-based Interna-tional Fund for China's Environment, estimates 2 percent of GDP or 680 billion yuan ($102 billion) per year.
China has implemented penalty-loaded policy reforms to accelerate its efforts and outline its seriousness. Few countries, developed and developing alike, are doing the same.
As evidence, China's National Energy Administration has already closed 14GW of smaller, thermal power plants to date, exceeding Premier Wen Jiabao's target of 10GW for 2010; this compares to the 26GW worth of subscale, thermal plant closures in 2009.
In August 2010, the Ministry of Industry and Information Technology published a list of 2,087 plants across 18 industries that it deemed to be outdated and inefficient, and were forced to close by September.
Obviously, these reforms won't come without an immediate cost to the Chinese economy. USforecasts that plant closures will cost 2 percent of GDP growth in the second half of 2010.
What particularly convinces me these actions are more than mere window-dressing of the Five-Year Plan targets is a directive from the National Development and Reform Committee (NDRC) in June.
The NDRC is de-emphasizing its traditional system of GDP-driven targets for a broader set of 47 indices - half based on green-oriented criteria such as water and clean coal consumption - that reward provincial officials on sustainability-loaded factors such as mitigation of greenhouse gas emissions.
In short, the Chinese authoritarian flavor of environmentalism may be the kick start that developed countries need to enact more ambitious objectives around emissions reductions and energy efficiency.
The author is fund manager of GLG Partners. forum@ globaltimes.com.cn
