Global Warming and East Asia: The Domestic and International Politics of Climate Change

Global Warming and East Asia

Global Warming and East Asia analyses the domestic politics, foreign policy and international relations of climate change in East and Southeast Asia. The countries of this important region are often disproportionately affected by global warming and climate change, and as their economies grow they make these problems worse. The contributors investigate the increasingly widespread and disparate efforts to address global warming at international, national and local levels, and in so doing increase our understanding of a region vital to mitigating and coping with climate change. This unique volume includes in-depth studies of China and Japan, two of the most important countries in East Asia with regard to global warming, and examines the role of other East and Southeast Asian countries, such as Indonesia and the Philippines, in combating the problem. Paul G. Harris is an associate professor of politics at Lingnan University, Hong Kong, and director of the Project on Environmental Change and Foreign Policy.

Environmental politics/Routledge research in environmental politics Edited by Matthew Paterson Keele University

Graham Smith University of Southampton

Over recent years environmental politics has moved from a peripheral interest to a central concern within the discipline of politics. This series aims to reinforce this trend through the publication of books that investigate the nature of contemporary environmental politics and show the centrality of environmental politics to the study of politics per se. The series understands politics in a broad sense and books will focus on mainstream issues such as the policy process and new social movements as well as emerging areas such as cultural politics and political economy. Books in the series will analyse contemporary political practices with regard to the environment and/or explore possible future directions for the ‘greening’ of contemporary politics. The series will be of interest not only to academics and students working in the environmental field, but will also demand to be read within the broader discipline. The series consists of two strands: Environmental politics addresses the needs of students and teachers, and the titles will be published in paperback and hardback. Titles include: Global Warming and Global Politics Matthew Paterson Politics and the Environment James Connelly and Graham Smith International Relations Theory and Ecological Thought Towards Synthesis Edited by Eric Lafferi`ere and Peter Stoett Planning Sustainability Edited by Michael Kenny and James Meadowcroft Deliberative Democracy and the Environment Graham Smith

Routledge research in environmental politics presents innovative new research intended for high-level specialist readership. These titles are published in hardback only and include: 1 The Emergency of Ecological Modernisation Integrating the environment and the economy? Stephen C. Young 2 Ideas and Actions in the Green Movement Brian Doherty 3 Russia and the West Environmental cooperation and conflict Geir Hønneland 4 Global Warming and East Asia The domestic and international politics of climate change Edited by Paul G. Harris

Global Warming and East Asia The domestic and international politics of climate change Edited by Paul G. Harris

First published 2003 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2004. © 2003 editorial matter and selection, Paul G. Harris, individual chapters, the contributors All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Global Warming and East Asia: the domestic and international politics of climate change / edited by Paul G. Harris p. cm. Includes bibliographical references and index. 1. Climatic changes – Environmental aspects – East Asia. 2. Climatic changes – Environmental aspects – Asia, Southeastern. 3. Climatic changes – Government policy – East Asia. 4. Climatic changes – Government policy – Asia, Southeastern. I. Harris, Paul G. QC990.E18.G56 2003 363.738⬘74⬘095–dc21 ISBN 0-203-56340-9 Master e-book ISBN

ISBN 0-203-33848-0 (Adobe eReader Format) ISBN 0–415–31544–1 (Print Edition)

2003002204

Contents

List of illustrations List of contributors Preface Acknowledgments Abbreviations

ix xi xiii xv xvi

PART I

Perspectives on the politics of climate change in East Asia 1

Introduction: the politics and foreign policy of global warming in East Asia

1 3

PAUL G. HAR RIS

2

Climate change priorities for East Asia: socio-economic impacts and international justice

19

PAUL G. HAR RIS

PART II

China and the politics of climate change 3

Chinese politics, energy policy, and the international climate change negotiations

41 43

M I C H AE L T. H ATC H

4

The forces behind China’s climate change policy: interests, sovereignty, and prestige

66

Z H I HO N G Z HANG

5

Navigating between “luxury” and “survival” emissions: tensions in China’s multilateral and bilateral climate change diplomacy YUK A KO BAYA SHI

86

viii 6

Contents The Clean Development Mechanism and China’s energy sector: opportunities and barriers

109

A XE L M I C H AELOWA, SHO U C HUAN ( JU SEN) ASUKA - ZH A NG, K A R S T E N KRAU SE, BERNHARD G RIMM, AND TOBIA S KOCH

PART III

Formulating climate change policy in Japan 7

Climate change as Japanese foreign policy: from reactive to proactive

133 135

YA S UKO K AMEYAMA

8

Development assistance and Japan’s climate change diplomacy: priorities and future options

152

S H O UC HUAN ( JU SEN) ASU KA-Z HANG

9

Knowledge in the global atmospheric policy process: the case of Japan

167

AT S UKO S ATO

10 Beyond Kyoto: the formation of a Japanese climate change regime

187

DA NA R . F I SHER

PART IV

The costs and opportunities of climate change in Southeast Asia

207

11 The Philippines in the climate change arena

209

J OY V. GALVEZ

12 Cashing in on Kyoto?: lessons from Indonesia for emissions offset projects

221

F R AN K J OT Z O, AG U S P. SARI, AND O LIVIA TA NUJAYA

13 Climate change investment and technology transfer in Southeast Asia

237

TIM FORSYTH

Index

259

Illustrations

Figures 5.1 8.1 11.1 11.2 11.3 11.4 12.1 12.2 13.1

The Chinese approval process for AIJ projects in the power generation sector Carbon account and non-carbon account The Philippines’ GHG emissions The Philippines’ energy sector The Philippines’ agricultural sector The Philippines’ waste sector Effects of sinks in the CDM Effects of parallel demand for emission offset credits Southeast Asia: classification according to business and regulation structures for renewable energy investment

100 163 214 216 217 218 228 232 245

Tables 6.1 Primary energy use in China 6.2 China’s energy use and business-as-usual CO2 emissions 6.3 Installed electricity capacity in China 6.4 Electricity production in China 6.5 Size and origin of China’s generating units and their efficiency 6.6 Regional differences in efficiency of coal-fired power stations in China 6.7 Economic cost of acidification damage in China 6.8 Sizes of FDI power plants in China 6.9 Installed wind power in China 6.10 Comparison of energy consumption by industrial processes using furnaces in China and Japan 6.11 Potential for different CDM project types in China 8.1 Major Japanese governmental organizations and schemes related to international environmental cooperation 8.2 Japan’s environmental ODA

109 111 112 113 113 114 115 116 123 124 126 154 155

x

Illustrations

8.3 Japan’s bilateral ODA by environmental field 10.1 Emissions of CO2 for selected nations 11.1 Ways climate change can affect human health 12.1 Emission offset credits: results from a standard modeling scenario 13.1 Different investment niches for technology transfer

155 190 212 227 247

Boxes 13.1 13.2

Flexible mechanisms for climate change mitigation under the Kyoto Protocol Flexible mechanisms for climate technology transfer for potential adoption by CDM

241 254

Contributors

Shouchuan (Jusen) Asuka-Zhang is Associate Professor in the Center for North East Asian Studies at Tohuku University, Japan. Dana R. Fisher is Assistant Professor in the Department of Sociology and the Earth Institute at Columbia University, New York. Tim Forsyth is a Lecturer in the Development Studies Institute at the London School of Economics and Political Science. Joy V. Galvez is an Environmental Communications Specialist who has taught at the University of the Philippines. Bernhard Grimm is the Head of the Department of Carbon Management at the German certification company TUEV Sueddeutschland, Munich. Paul G. Harris is Associate Professor of Politics at Lingnan University, Hong Kong, and director of the Project on Environmental Change and Foreign Policy. Michael T. Hatch is Professor of Political Science and International Studies at the University of the Pacific, Stockton, California. Frank Jotzo is Research Associate with PELANGI Indonesia, Jakarta, and a doctoral candidate at the Australian National University. Yasuko Kameyama is Senior Researcher at the National Institute for Environmental Studies, Tsukuba, Japan. Yuka Kobayashi is a doctoral candidate at the University of Oxford, Oxford. Tobias Koch is the Head and Founder of the Steinbeis-Transfer-Zentrum for Emissions Trading and Climate Protection, Augsburg, Germany. Karsten Krause is an analyst with the Ministry of Research and Education, Hamburg State, Germany. Axel Michaelowa is the Head of the International Climate Policy Program at the Hamburg Institute of International Economics, Germany.

xii

Contributors

Agus P. Sari is the Executive-Director of PELANGI Indonesia, Jakarta, and a technical advisor to Indonesian delegations to the international climate change negotiations. Atsuko Sato teaches in the Department of Political Science at California State University, Los Angeles. Olivia Tanujaya is an Economist and a Researcher at PELANGI Indonesia, Jakarta. Zhihong Zhang is with the United Nations Industrial Development Organization as Chief Technical Advisor for a Global Environment Facilitys energy efficiency project in China.

Preface

This book is one in a series of volumes from the Project on Environmental Change and Foreign Policy, which I began in 1998 at London Metropolitan University (formerly London Guildhall University). For more than two years the project and I have been based at Lingnan University in Hong Kong. The goals of the project are to better understand the role of foreign policy, broadly defined, in efforts to preserve the environment and natural resources. More specifically, the project seeks to understand foreign policy processes in international efforts to address adverse environmental changes at the local, regional and global levels; to analyze the actors and institutions – both domestic and international, governmental and nongovernmental – that constrain and shape actions on environmental issues; to show how environmental changes influence foreign policy processes; and to critically assess environmental foreign policies. Other objectives of the project are to test the waters of research in this field; to showcase research that has not been forced into traditional empirical, epistemological or ontological boxes (in the expectation that by so doing new areas and issues will be illuminated); to give insight to governmental and nongovernmental practitioners and activists, which can help improve their understanding of environmental issues in foreign policy; to disseminate these ideas so that they might have some positive effect on policy making and scholarship; and to enlighten students and laypersons interested in environmental protection, sustainable development, international affairs and foreign policy. The first phase of the project examined the environmental foreign policy of the United States. Three books resulted from that phase: Climate Change and American Foreign Policy (St Martin’s Press 2000), The Environment, International Relations, and U.S. Foreign Policy (Georgetown University Press 2001), and International Equity and Global Environmental Politics: Power and Principles in US Foreign Policy (Ashgate 2001). The second phase of the project, of which this book is a part, has been dedicated to environmental change and foreign policy in East Asia. Two other books emanated from this phase: International Environmental Cooperation: Politics and Diplomacy in Pacific Asia (University Press of Colorado 2002) and Confronting Environmental Change in East Asia: International Politics, Foreign Policy, and Sustainable Development (Earthscan forthcoming 2003).

xiv

Preface

Over sixty scholars have contributed to the project. Many of them are internationally acclaimed and recognized. Others work in niches that deserve wider attention. I have tried to include researchers of varied institutional and national backgrounds. Doing so can help erode some of the intellectual and normative constraints that sometimes straightjacket work in global environmental politics and policy. Just as no single scholar will have the key to solving environmental problems, no single paradigm or theory is adequate to such a huge and important task. In this book, and in the larger project, we often apply similar theories in diverse ways, and we may interpret the same events differently. I welcome these disparate perspectives, and I hope readers also welcome them. Like Climate Change and American Foreign Policy, this book is dedicated to understanding the politics, foreign policy and international relations of global warming and resulting climate change, this time focusing on East Asia. Global warming and the environmental changes resulting from it are arguably the greatest threats facing humankind and the natural world, thus deserving such focused books. By thinking systematically about the issues addressed here, we are contributing to the burgeoning literature intended to help concerned people better understand how politics and people interact with the environment. As such, I trust that our work and this book will move the human world a tiny bit closer to a more harmonious relationship with the natural world on which all of us depend for our well being. I want to convey my thanks to people who have helped make this book possible. The anonymous referees provided valuable comments that have helped the contributors, including me, sharpen our thinking. Lingnan University’s Research and Postgraduate Studies Committee provided important support, and students in my Lingnan course on comparative environmental foreign policy offered valuable insight and forced me (and, through me, the contributors) to clarify several points. The many kind people at Routledge and Newgen Imaging Systems (P) Ltd have been helpful throughout the process of putting this volume together. I wish to especially thank the contributors for their dedication to the larger project and to this book. I am confident that readers will appreciate and learn from their hard work and important insights. Paul G. Harris Hong Kong, China

Acknowledgments

The editors and the publishers gratefully acknowledge permission to reproduce copyright material from the following: Belfer Centre, Harvard University for their permission to reprint Figure 5.1 which originally appeared in A Suggested Model for Implementing the Clean Development Mechanism by Chayes, A. (1998), Belfer Centre Discussion Paper, Harvard University. The Manila Observatory for permission to reprint Figures 11.1–11.4, which originally appeared in Greenhouse Gases from Local Communities (An Inventory Manual) (ed.) by Narisma et al., Quezon City, 2001. Earthscan and Royal Institute of International Affairs, for permission to reprint Figure 13.1, which originally appeared in International Investment and Climate Change: Energy Technologies for Developing Countries, London, 1999. Every attempt has been made to obtain permission to reproduce copyright material. If any proper acknowledgment has not been made, we would invite copyright holders to inform us of this oversight.

Abbreviations

ADB AGBM AGGG AIJ ANECs AOSIS BECON BOT BPPT CASE CCICED CCOL CCP CDM CERs CERUPT CFBC CFC CFL CH4 CHP CMA CO2 COP CTI CUCBM DENR DOE DOST DOTC

Asian Development Bank Ad Hoc Group on the Berlin Mandate Advisory Group on Greenhouse Gases Activities Implemented Jointly Affiliated Non-Conventional Centers (in renewable energy projects in the Philippines) Alliance of Small Island States Beijing Energy Efficiency Center build-operate-transfer Baden Pengkajian dan Penerapan Teknologi (Indonesian government agency for renewable and alternative energy) Australian Center for Application of Solar Energy China Council For International Cooperation on Environment and Development Coordinating Committee on the Ozone Layer Chinese Communist Party Clean Development Mechanism Certified Emission Reductions Certified Emission Reduction Purchase Tender circulating fluid-bed combustion chlorofluorocarbon compact fluorescent lamps methane combined heat and power China Meteorological Administration carbon dioxide Conference of the Parties Clean Technology Initiative China United Coal-bed Methane Corporation Department of Environment and Natural Resources Department of Energy Department of Science and Technology Department of Transportation and Communications

Abbreviations xvii EA EC ECs EIA EJ EP EPCSC ERUPT ESCO ESSC EST ET EU EVN FCCC FDI FEAR FPE G-7 G-77 GAP GDP GEF Gg GHG GREENTIE GSM GT GTZ GW GWh IACCC ICEE ICETT IEA IGCC IGES IMF INC IPCC ISD ISO JBIC JFMA

Environment Agency ( Japan) European Community electricity cooperatives Energy Information Administration exajoule environmental protection Environmental Protection Committee of the State Council Emissions Reduction Unit Purchase Tender energy service company Environmental Science for Social Change Environmentally Sound Technology emissions trading European Union Electricity of Vietnam UN Framework Convention on Climate Change foreign direct investment Forum on Environmental Administration Reform Foundation for the Philippine Environment Group of Seven industrialized countries Group of 77 developing countries Green Aid Plan gross domestic product Global Environment Facility gigagrams greenhouse gas Global Remedy for the Environment and Energy Use – Technology Information Exchange Guanghua School of Management gigatons German International Technical Cooperation gigawatt gigawatt hours Inter-Agency Committee on Climate Change Institute on Climate, Energy, and Environment International Center for Environmental Technology Transfer International Energy Agency integrated coal gasification Institute for Global Environmental Strategies International Monetary Fund Intergovernmental Negotiating Committee Intergovernmental Panel on Climate Change Initiative on Sustainable Development International Organization for Standardization Japan Bank of International Cooperation Japan Fluorocarbon Manufactures Association

xviii

Abbreviations

JI JUSCANZ JV LAP LNG MITI MOA MOE MOEP MOET MOF MOFA MOFTEC MOGMR MOP MOST MT MW N2O NAP NAS NASA NCCCG NCPCC NEDA NEDO NEPA NFFO NGO NOAA NREP NSS ODA OECD OECF PAGASA PC PEI PET PNCC PPM

Joint Implementation Japan, United States, Canada, Australia, and New Zealand joint venture Local Action Plan liquified natural gas Ministry of International Trade and Industry Ministry of Agriculture Ministry of Energy Ministry of Electric Power Ministry of Economics and Trade Ministry of Finance Ministry of Foreign Affairs Ministry of Foreign Trade and Economic Cooperation Ministry of Geology and Mineral Resources Meeting of the Parties to the Kyoto Protocol Ministry of Science and Technology megatons megawatt nitrous oxide National Action Plan National Science Academy National Aeronautics and Space Administration National Climate Change Coordination Group National Coordination Panel on Climate Change National Economic Development Authority New Energy and Industrial Technology Development Organization National Environmental Protection Agency Non-Fossil Fuel Obligation nongovernmental organization National Oceanic and Atmosphere Administration New and Renewable Energy Program of the Philippines National Strategy Study on the Clean Development Mechanism overseas/official development assistance Organization for Economic Cooperation and Development Overseas Economic Cooperation Fund Philippine Atmospheric, Geophysical and Astronomical Services Administration pulverized coal Preferred Energy Incorporated (the Philippines) Pelangi Emissions Trading model Philippine Network on Climate Change parts per million

Abbreviations xix PSKSK PURPA PV REPSO SAR SBSTA SDPC SEB SELF SEPA SEPC SETC SHS SMA SO2 SPC SPP SSTC TAR TWh TEI TERI UN UNCED UNCSD UNCTAD UNDP UNEP UNFCCC US USAID VAT VWU WMO WRI WWF

Pembangkit Skala Kecil dan Korporasi (small producer incentive scheme in Indonesia) Public Utilities Regulatory and Policies Act photovoltaics Renewable Energy Project Support Offices IPCC Second Assessment Report FCCC Subsidiary Body for Scientific and Technological Advice State Development and Planning Commission State Electricity Board Solar Electric Light Fund State Environmental Protection Administration/Agency State Environmental Protection Commission State Economic and Trade Commission Solar Heating Systems State Meteorological Administration/Agency sulfur dioxide State Planning Commission Small Producers Program State Science and Technology Commission IPCC Third Assessment Report terawatt hours Thailand Environment Institute Tata Energy Research Institute United Nations UN Conference on Environment Development UN Commission for Sustainable Development UN Commission on Trade and Development UN Development Program UN Environmental Program UN Framework Convention on Climate Change United States US Agency for International Development value added tax Vietnamese Women’s Union World Meteorological Organization World Resources Institute World Wide Fund for Nature

PART I

Perspectives on the politics of climate change in East Asia

1

Introduction The politics and foreign policy of global warming in East Asia Paul G. Harris

Introduction Governments of the world have been grappling with the problem of global warming for over two decades. Warming of the Earth’s atmosphere is being increased by human activities – particularly the burning of coal, oil, and other fossil fuels – resulting in the emissions of carbon dioxide and other harmful “greenhouse gases” (GHGs). Global warming in turn is causing climate change, which is manifested in rising sea levels, droughts and floods, damage to agriculture, and harm to natural ecosystems and species. (See Chapter 2 for a discussion of global warming and climate change science and predicted impacts.) As the potentially severe adverse consequences of climatic changes have become more apparent and better understood, the efforts of governments and, increasingly, nongovernmental actors to mitigate and adapt to these consequences have increased. A milestone in these efforts was reached with the signing of the United Nations (UN) Framework Convention on Climate Change (FCCC) at the 1992 UN Conference on Environment and Development (the Earth Summit). Subsequent international negotiations, notably those surrounding the 1997 Kyoto Protocol to the FCCC – which laid out a modest set of mandatory reductions in GHG emissions by developed countries – and subsequent deliberations on how to implement it, have been fraught with difficulties and differences among countries. The countries of East Asia (i.e. China, Northeast Asia, and Southeast Asia) have been intimately involved in these deliberations. Indeed, these countries are central to international efforts to address climate change. They include the world’s second largest emitter of GHGs – China – and other major developing-country contributors with growing emissions. East Asia also includes one of the world’s major economic powers and one of the largest donors of environmental aid to the developing world, particularly within the region: Japan. And East Asia contains many of the developing countries and vast populations that will be most affected by climate change. This book includes studies that examine the implications for East Asia of global warming and climate change, as well as the global regime that has emanated from the international climate negotiations, and shows how the countries of East Asia play important roles in the international politics of climate change and the

4

Paul G. Harris

increasingly widespread and disparate efforts to address it at international, national, and local levels. We pay particular attention to the domestic and foreign policies of China and Japan. These countries are arguably the most important players in East Asia, and they represent the two extremes of countries in the region. China is a developing country with the world’s largest population, many of them highly vulnerable to climate change, and it is second only to the United States in its total national emissions of GHGs. To a great extent, the future of the global atmosphere depends on the future of China. Japan is a highly industrialized country with membership in the club of the world’s most developed economies. It has major financial and technological resources that can be brought to bear on the problem of climate change, and it also makes a large contribution to GHG concentrations in the atmosphere. Having said this, we also look at countries in the region that are making a smaller contribution to the problem but which have a very large stake in its present and future impacts on their ecologies and socio-economic systems. The case studies in this book are important for a number of reasons. Many of the roots of the problem of global warming and climate change, as well as the available solutions to them, are firmly planted in East Asia. Much as the world needs the United States and other developed countries to reduce their extensive emissions of GHGs, if this problem is to be addressed with adequate vigor (at the time of this writing the prospect of this happening any time soon is rather bleak), the world must engage East Asian countries that contribute greatly to the problem through their own emissions. Just as important from the perspective of human well being, the vast populations of East Asia are particularly vulnerable to climate change. Their geographies and their often severe poverty mean that they will be greatly affected, usually in painful ways, and they will have difficulty coping with these effects. Thus, if we care about the problem of climate change, and if we care about the human suffering caused by it, we must seriously consider and understand the roles played by the countries of East Asia. Toward this end, this book brings together into one volume some of the important research and thinking on the domestic and international politics and political economy of climate change in East Asia. This kind of research is available elsewhere in individual book chapters and journal articles, of course – although much of the thinking found here is original. But there are far too few books that bring this kind of work together under a single title. As such, this book is intended to make knowledge on the politics of climate change in East Asia readily accessible to scholars, policymakers, environmental and economic stakeholders, and students of environmental politics and policy. In the process of doing this, I have purposely sought to combine the research and perspectives of Western scholars with that of people from the region. This is critical, I think, because people from (and in) the region will have different interpretations of which issues are important, what actions are necessary to address this problem, and precisely which forces and actors are involved in the policy-making processes of East Asian countries. Western scholars in turn bring their own perspectives, derived from their personal paradigms and their research in the region. Collectively, the perspectives of the

Introduction

5

contributors to this volume make important and unique additions to the socialscience literature on climate change.

Climate change and East Asia: domestic politics, foreign policy, and international relations Bearing in mind the importance of East Asia for efforts to address global warming and climate change, what general lessons can we draw from this book’s analyses of countries within the region? There are many, some rather broad and applicable to most countries and their relations with the world beyond their borders; others quite specific, often idiosyncratic, but which influence international relations in the region and beyond. From a broad perspective (which we might think of as systemic forces), we must be cognizant of the environmental processes and effects themselves: global warming, resulting climatic changes, and the effects of these changes on the countries and peoples of East Asia. That is, climate change itself affects all other forces influencing the domestic and international politics of climate change in East Asia. Furthermore, perceptions of how climatic changes will affect national interests like economic development and human wellbeing are drivers of policy. This highlights the important role played by science as the stimulus for political negotiations and policy responses, as well as the more general importance of knowledge and expertise (such as understandings of the economic impacts of climate change and possible responses to it) in shaping domestic and international policy. Thus, at least at an initial level of analysis, countries of East Asia most affected by climate change (e.g. the Philippines and Indonesia) can be expected to take a great interest in international negotiations and mitigation measures. However, there are other broad forces that influence political debates and policy processes. Among these are the disparities in wealth among countries, the different historical responsibilities for current atmospheric concentrations of GHGs, and associated considerations of international (in)justice and (in)equity. These are very important concerns for the countries of East Asia, and they can divert attention away from the actual and perceived impacts of climate change, in the process politicizing the international policy process. Questions of international justice and equity highlight the important role for international assistance between richer and poorer countries. For example, China has shown that it is possible to take concrete steps to address GHG emissions; its emissions, according to some new research, have not increased significantly in recent years, despite the rapid growth of its economy. Even if its actual emissions are growing, they are not increasing at anywhere near the rate of economic growth. To be sure, this can be explained in large part by China’s efforts at transition to less-polluting fuels for reasons that go beyond combating climate change. Nevertheless, China expects much more help from wealthier countries to help it use energy more efficiently and in cleaner forms, and it expects the developed countries to set an example before it takes even more action to specifically address atmospheric pollution related to climate change. Other developing countries in the region hold similar views.

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Much of the financial aid to support the kinds of development in East Asia that are less harmful to the global atmosphere is coming from within the region; Japan has provided major development assistance to its neighbors. But the motivation for Japan’s assistance is arguably not always, or even frequently, linked directly to global warming and climate change, let alone climate change justice. Instead, Japan’s policies are often associated more with the bureaucrats’ perceptions of national and industrial interests, or aid for sustainable development is viewed as a way to bolster Japan’s international standing. In addition to highlighting some of the nuances associated with North–South aid in the context of climate change, this shows that motivations for policies related to climate change are not as predictable and straightforward as cursory thinking would anticipate. Broad considerations regarding climate change – many largely unrelated – therefore influence national policies. Looking more closely at individual cases, further lessons can be learned. For example, what role does the desire among countries for international reputation and leadership play? Some countries, China and Japan for example, want to be and are international leaders in various issue areas. But their desire to lead has restrictions. China, for example, wants to lead the developing world, and in so doing it resists the demands of the industrialized countries to take on firm commitments to limit its GHG emissions, and it resists multilateral efforts to shape its emissions policies. It has, nevertheless, been successful in limiting its emissions voluntarily, and it readily joins with other countries (notably Japan) in bilateral efforts to move its economic development path in an environmentally sustainable direction. This is because it can control such efforts more readily, take advantage of international financing associated with climate change, and otherwise promote its particularistic national interests more easily. Japan wants to lead as well, and it clearly cares about its image globally. But its climate change diplomacy may not be motivated greatly by the problem of climate change per se, which helps explain why its desire to lead is partly directed at shaping its regional neighbors’ views of Japan and Japanese foreign policy. Other lessons come from the case studies that follow. History and environmental experiences are sometimes crucial in international cooperation and policy making in East Asia. (Such findings are not new, to be sure, but they have been given too little treatment in existing literature addressing environmental diplomacy and sustainable development in the region.) For example, the history of war and occupation, perhaps surprisingly, greatly impacts climate change policy in East and Southeast Asia. China remains weary of outside influences and pressures as a consequence of its domination by Western powers, particularly in the nineteenth century. This affects its willingness – or rather unwillingness – to be bound by environmental standards set by international organizations, even if it has a hand in shaping those policies, and even more so limits its willingness to allow outsiders to dictate and run development projects related to climate change. Furthermore, China and the countries of East Asia have not forgotten Japan’s occupations and atrocities in the last century. Consequently, they expect Japan to provide aid as a form of retribution, and Japan has agreed to do so, often in the context of

Introduction

7

development assistance to combat pollution contributing to global warming (among other, more clearly self-interested, rationales for its aid). Environmental history is also important. Japan has learned some important lessons from its national experiences with terrible environmental pollution, and this has affected its policies on climate change, both domestic and international. Thus it has had substantial success in addressing its environmental problems, although a fixation on domestic issues has often distracted it from taking on a more proactive role in dealing with global environmental problems. China’s experience with longstanding ecological scarcities and widespread environmental pollution is equally appalling, if not more so, especially considering the very large number of people adversely affected. This recent history, and its continuing manifestations, are pushing China toward much more action to combat the pollution that causes global warming, in so doing addressing some of the country’s worst national ecological issues. Other lessons that come from the research described in this book highlight the often highly pluralistic nature of climate change politics. In international forums, many actors are able to affect policy. The usual actors remain the most important, notably governments and their diplomatic representatives, as well as the international organizations and the officials working for them. But other actors are increasingly very important in international policy processes, notably international financial institutions, nongovernmental organizations, and commercial entities. Similarly, a host of actors are at work at national and local levels. These range from state-level officials, bureaucracies, and local politicians, to a variety of actors in civil society, such as scientists, environmental activists and transnational groups, international organizations, and the communities and individuals most affected by climate change at the local level. One interesting finding of some of the contributors to this volume is that the level of pluralism at the domestic level is not what it might at first appear to be. For example, Japanese democracy is shown to be often rather unresponsive to the interests of the Japanese people (that Japanese citizens have usually not tried harder to pressure government is of course an important consideration). Thus, Japanese policy on climate change is largely the result of bargaining among statelevel actors (i.e. bureaucrats and the ruling party) in association with Japanese industry. Perhaps surprisingly, however, China’s climate change policy process is quite pluralistic. A myriad of actors at all levels of society are involved. Communist Party officials are of course able to influence the shape of policy, but so too are scientists (many with conceptions of preferred policy derived from close contact with foreigners), bureaucrats of all stripes, local officials, and increasingly tolerated environmental activists – among many other actors. These cases show that an understanding of climate change politics in East Asia, and the resulting policies, require us to look inside the “black box” of domestic politics, and also to look at how what goes on there is influenced by forces from the outside. These are only some of the most obvious conclusions and lessons that can be drawn from the chapters that follow. What comes from them is a better understanding of East Asia’s important role in ongoing international efforts to limit

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global warming and manage its effects, as well as the importance of considering how decisions taken farther afield affect the region and its peoples. Hopefully they also raise new questions that will be explored by others, in so doing heightening awareness of how East Asia can and does contribute to this problem and, more importantly, to its solutions.

The case studies Many variables shape the policies and behaviors of governments toward one another and toward the problems they face. Indeed, with regard to global warming and resulting changes to climate, the variables are even more complex, disparate, and contentious than in most other areas of foreign policy and international relations. The case studies in this book examine many of those variables in the context of East Asia. Perspectives on the politics of climate change in East Asia In Chapter 2, Paul G. Harris presents a primer for the case studies that follow. He looks at two broad issues that permeate all debates about climate change policy and politics: (1) the anticipated and perceived ecological and especially socio-economic impacts of climate change for the countries of the region, which of course in large measure precede and dictate much of the subsequent negotiations, debates, and actions by individual countries and the international community; and (2) critical questions of international justice (i.e. equity or fairness) associated with global warming and efforts to deal with its consequences. These two broad issues are unavoidable considerations for efforts to address climate change, and they are central to helping us understand why and how countries respond to climate change at the national, regional, and international levels. The impacts of climate change drive cause concern among countries, although, importantly, they are not the only considerations. Demands for justice affect the willingness of countries to join and implement the FCCC and related international instruments, and the extent to which demands for international justice are fulfilled will often determine the capacity of many countries to take robust steps to limit global warming and deal with its adverse impacts. Harris summarizes some of the science and related reports on climate change and its potential impacts in East Asia. As the reports show, climate change presents the region with major challenges, most of them unwelcome. (Later chapters look in greater detail at impacts in particular countries.) Harris also briefly introduces some underlying ethical considerations with regard to climate change justice before summarizing how justice is part of the broader international politics of climate change. His conclusion suggests that impacts of climate change are not always the most important considerations for East Asian countries. Improved understanding of the expected consequences of climate change has of course raised awareness and concern among them. However, profound concerns about justice (not to mention other concerns, which are addressed in the subsequent chapters) can be obstacles

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to international cooperation and national action to deal with this problem. The countries of the region, even those that are highly developed, expect that the world’s more affluent countries should act first to reduce their own impacts on the global atmosphere, and that they must assist the world’s poorer countries – notably those of East Asia – if those countries are to take steps to limit their GHG emissions and cope with the inevitable consequences of climate change. Subsequent chapters are divided into three geographic sections. Combined, their case studies provide detailed analysis of the two most important countries in East Asia (from the perspective of climate change), while also showing how some other countries in the region perceive the problem and how they might be affected by it. Part II of the book, the first geographic section, is devoted to China, the world’s most populous country with a growing economy that will soon make it the largest source of climate change. Part III encompasses case studies of Japan, which is highly developed and one of the most important sources of international funding for East Asia’s efforts to address climate change. Part IV of the book endeavors to partially balance the first two parts by looking at climate change politics and policy in developing countries of Southeast Asia. This final section is particularly geared toward highlighting the implications of climate change and related international policies at the local and regional levels. China and the politics of climate change In the context of climate change, China is the most important country in East Asia and perhaps the world in the long term. It contributes massively (albeit not on a per capita basis) to the pollutants causing global warming and, on a human scale, it will experience some of the greatest resulting hardship. The role of Chinese domestic and energy politics in the international climate change negotiations is explored by Michael T. Hatch in Chapter 3. Hatch argues that in most of the developing world global warming often hardly makes a ripple on the domestic scene, with more urgent problems like widespread poverty and degradation of air and water resources pressing upon local populations. What has become clear, however, is the necessity of developing country involvement if the climate change regime is to be effective in the long term. As suggested above, China clearly matters in this respect. Without substantial efforts on the part of China to limit future carbon dioxide emissions, any measures undertaken by other countries to mitigate global warming will be much less effective. Hatch shows how international factors were critical in the early formulation of China’s strategy to address global warming. Most importantly, the domestic political process was driven by the necessity of responding to an international agenda pushed initially by transnational actors and international organizations. In the absence of pressures from abroad, according to Hatch, it is unlikely that China would have devoted much attention to the global warming question. In 1990, for example, China’s position was hammered out among various bureaucratic agencies. It emphasized, among other things, the preservation of China’s national sovereignty, the right to economic development, historical responsibility of industrialized countries in

10 Paul G. Harris addressing the problem, and the provision of new funding and technology to developing countries. These initial positions were not immovable, however. Once engaged in the international negotiating process, China found it necessary to compromise in several areas, and at times to change its position in order to preserve a unified position with other developing countries. At the same time, forces within the domestic political process placed constraints on Chinese participation, constraints related to the priority of economic development and its implications for energy policy. Most importantly, bureaucratic actors came to dominate the policy process, thereby limiting the influence of domestic interests favoring restructuring of the energy sector and GHG emissions limitations. Nonetheless, the relative influence of domestic actors was not immutable. Considerable fluidity exists in China’s domestic policy process and this was demonstrated by shifting its negotiating position on joint implementation (whereby polluters can avoid their own GHG emissions cuts by purchasing emissions reductions taken in other countries) and its more recent interest in the Kyoto Protocol’s Clean Development Mechanism (CDM), which was formulated to provide aid from developed to developing countries for GHG reduction projects. Indeed, there are ongoing struggles over the future direction of China’s energy policy, and therefore there are more potential changes to come. Hatch argues that outside actors may be able to influence the outcome of internal struggles through approaches that help reinforce the more environmentally proactive forces in the domestic policy process. In Chapter 4, Zhihong Zhang also examines forces behind China’s climate change policies. According to Zhang, the importance of China is usually understood in two ways. First, with a burgeoning economy and heavy reliance on coal for energy, China is expected to eventually overtake the United States as the world’s largest emitter of GHGs. Second, as the world’s largest developing country, China is a leader in the developing world, often “steering” international climate change negotiations. Its interests are not always the same as other developing countries, however, and it is not always able to persuade them to follow its lead. Nevertheless, its influence is great. For these reasons, China’s views on climate change will have far-reaching implications, and understanding the forces shaping its domestic and foreign policies is critically important. Zhang argues that China’s climate change policies have been driven by three complementary forces. First, China seeks to protect its economic interest and promote its economic development. Any climate change agreement that hinders these will likely be resisted by China. Consequently, Zhang believes that China’s sense of urgency to tackle climate change is not as strong as some other developing countries, and it is generally interested in taking on associated low-cost, “no regrets” commitments. Second, China seeks to protect and promote its sovereignty. As such, it resists international monitoring and enforcement, and it may fend off criticisms of its performance or turn away from major commitments. Having said this, China is amenable to more “positive” elements of “surrendering” some sovereignty to international regimes, notably through equality, mutual respect, and state capacity to enforce international regimes. Third, China is concerned about

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its international image. This concern may induce it to be more cooperative in the context of international climate change agreements and their implementation. Zhang argues that advancing one policy goal (e.g. international image) may be achieved at the minimum expense of other policy goals (e.g. economic development). Reinforcing one of the preceding chapter’s conclusions, Zhang finds that future Chinese policies on the implementation of the climate change regime are not unchangeable. By understanding the forces underlying China’s policies, and the potential for them to evolve still further, he believes that diplomats may be able to produce more productive international cooperation on climate change. In Chapter 5, Yuka Kobayashi examines tensions between “luxury” and “survival” emissions in China’s climate change diplomacy. Luxury emissions are many, most of those in the developed world resulting from affluent lifestyles; survival emissions are those frequently essential to survival in the developing world. As Kobayashi points out, while there are many studies in international relations on environmental regime formation, compliance, and effectiveness, there are relatively few that begin from China’s perspective. China is particularly concerned about climate change because implementing the related international regime is expensive, imposing broad constraints on its economy. In addition to posing difficulties for many developing countries, climate change is a controversial issue that involves North–South equity considerations (as elaborated in Chapter 2). This is exacerbated by China’s view of sustainable development as “sustained development,” and the country’s usual ranking of economic development and poverty alleviation above environmental protection. What is more, bearing in mind China’s history, its view of the climate change regime is often one of “imperial invasion, yet again.” As a consequence of these and other considerations, in multilateral negotiations China has generally opposed mechanisms such as joint implementation and the CDM. However, in bilateral, project-level negotiations, China has shown more flexibility by approving several joint implementation projects. Why does China take these differing stances in these two types of negotiations? How does this alter our understanding of Chinese responses to climate change? According to Kobayashi, at the multilateral level China has joined the developing world in international negotiations to maintain its partnership with them, but at the bilateral level its domestic interests prevail. These policies are influenced by the relative power of influential ministries, and by China’s desire to avoid losing control over joint implementation projects, which is more likely with multilateral programs. China took an accommodating stance on joint implementation projects in the bilateral relationship with Japan because doing so offered the best technology and gave China more control over the relationship. Kobayashi concludes that neorealist perspectives on international relations, which focus on the distribution of power among countries, help explain its multilateral stance, but that we should look at more detailed issues – such as relative power of bureaucratic and ministerial actors, or historical experiences – to fully explain many of China’s climate change policies resulting from bilateral negotiations. In Chapter 6, Axel Michaelowa, Jusen Asuka-Zhang, Karsten Krause, Bernhard Grimm, and Tobias Koch examine potential opportunities and barriers

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inherent in the Clean Development Mechanism for China’s energy sector. China’s GHG emissions are currently about half the global average, but most predictions see them as rising substantially as the economy grows and energy use increases (despite recent reductions from reduced coal burning as China switches to alternative fuels). In particular, electricity use is growing. The government envisions that an important share of investment in electricity supply expansion will be financed by foreign capital. Projects under the CDM can provide an opportunity to transfer highly efficient, low-GHG energy supplies and energy-use technologies to China, thus reducing the environmental impact of its economic growth. Michaelowa and his colleagues discuss the overall development of energy use and supply in China during the last decade, the move toward energy efficiency, and the relatively small impact of foreign investment in the power sector. Their analysis of Chinese climate policy shows that China has been reluctant to embrace the concept of the CDM despite intense persuasion and provision of funds. Building on conclusions in the other chapters on China, they argue that outsiders may be able to convince China to embrace the CDM mechanisms by showing how foreign investment can help to further upgrade China’s energy sector, benefit the economy, and bring local environmental benefits. As such, these investments could help the industrialized countries more efficiently fulfill their own GHG emission targets under the Kyoto Protocol. Formulating climate change policy in Japan The third part of the book focuses on the shaping of Japan’s climate change policies. Japan’s role was highlighted when it hosted the 1997 Kyoto conference, which resulted in the Kyoto Protocol to the FCCC. Looking at the evolution of Japan’s foreign policy on climate change over the last decade and a half, one can argue that it has moved from reacting to what other countries do to being much more proactive in trying to shape the climate change regime. As Yasuko Kameyama shows in Chapter 7, Japan was one of the last countries to enter the climate change debate, but now it continually submits proposals and stimulates international negotiation. However, behind Tokyo’s new unified international face lie disparate views and motivations. Different actors in Japan have interpreted climate change policies in various ways; some have considered it an environmental problem, others an integral part of energy policies. The upshot is that climate change as foreign policy has been the most influential driving force in Japan’s response to climate change. That is, being involved and even trying to lead the climate change debate has in some respects become Japan’s foreign policy, quite apart from global warming and climate change per se. To explain this phenomenon, Kameyama divides Japan’s response to the international climate change debate into five historical phases. The first phase went from 1985 to early 1989, when Japan was not interested in climate change. During this period, not many people in Japan were aware of the problem or recognized its political significance. The second phase lasted from late 1989 to May 1992, when climate change entered the political agenda and countries negotiated the

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FCCC. The third phase ran from 1992 to March 1995. There were no major events at the international level during this phase, but Japan’s ratification of the FCCC allowed it to build a fundamental policy basis at home and influenced its foreign policy, especially at the regional level. The fourth phase went from the first conference of the parties (COP1) to the FCCC in March and April 1995, to COP3 in December 1997, when the parties to the FCCC adopted the Kyoto Protocol. This phase included the process for negotiating the protocol. The fifth phase identified by Kameyama lasted from 1998 to 2001. During this phase Japan endeavored to influence the follow-up negotiations on implementing the Kyoto Protocol. Kameyama argues that the interface between international negotiations and domestic policies is where a variety of positions of subnational actors are consolidated into a country’s single policy. She examines this interface by reference to a “two-level game” analysis, which encompasses both international and domestic forces shaping policy. Kameyama finds that Japan’s shift from a reactive to a proactive climate change policy was related to shifts in its foreign policy process. Hosting COP3 in Kyoto had a significant effect in involving foreign policy perspectives in the Japanese climate change debate. Before the start of negotiations toward the Kyoto Protocol, Japan tended to consider climate change as only an environmental or energy issue. During the negotiations, however, it began to see climate change as a foreign policy matter related to broader Japanese interests in international affairs. This change influenced Japan’s position during and after the negotiation of the protocol. Kameyama argues that Japan’s position on climate change will continue to be influenced by the foreign policy process. Its greater willingness to be involved in the global climate change debate is likely to continue if its involvement at the international level remains as it has been in recent years. The converse is plausible, however, if its role at the international level changes. The priorities and future options for Japan’s climate change diplomacy are examined by Jusen Asuka-Zhang in Chapter 8. Asuka-Zhang describes the key elements of Japan’s environmental diplomacy in the field of climate change. One of these key elements is the use of official assistance to developing countries in the areas of environmental protection and energy efficiency. This assistance promotes Japan’s goals of improving environmental conservation and raising its stature in the international community (among other goals). The chapter looks at the roles of key governmental agencies involved in Japan’s environmental diplomacy, notably the Ministry of Foreign Affairs, the Ministry of Economy, Trade and Industry, and the Ministry of the Environment. Asuka-Zhang briefly analyzes Japan’s negotiating position at COP3 by focusing on the country’s unique position on the issue of new funds for the CDM. With this background in mind, the chapter analyzes future options for the Japanese government, including a recommendation to set up new institutions for official development assistance, particularly an Asian carbon fund and a debt–carbon swap. Asuka-Zhang maintains that for Japan to increase its leverage in the climate regime there will have to be cooperative efforts between relevant domestic actors (e.g. bureaucrats, politicians, corporate executives, engineers, academic experts in environmental economy, the public, nongovernmental organizations). They will

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have to target the realization of financial and technological transfers to developing countries that create “win-win-win situations” for Japan, recipients of its assistance, and the global environment. Japan sought to do this by hosting the Kyoto conference and by increasing its environmental aid. However, Japan’s position on some climate change issues has not been consistent from the perspective of environmental integrity. Japan also has no clear strategy for carbon–credit acquisitions from Asian countries. Therefore, to realize the “win-win-win situation” in Asia with proper use of public funds and without harming environmental integrity, while also promoting technology transfer, Asuka-Zhang considers several policy options. These include increasing funds for environmental assistance and making their provision more flexible. Japan could also benefit from combining construction of a common decision-making scheme for its international environmental policy with various other diplomatic and economic issues, such as energy and environmental security. Climate change is an issue that will largely affect Japan’s industrial structure (e.g. the tax system and its domestic emission trading scheme) and its society overall (e.g. consumption patterns). Thus a strategic governmental response, which links international and domestic mechanisms, will, in AsukaZhang’s view, be essential if Japan is to have a continuing constructive role in international efforts to address climate change. In Chapter 9, Atsuko Sato highlights various levels of international policy making. She does this by focusing on the role of knowledge in shaping Japan’s responses to stratospheric ozone depletion and climate change. Until recent decades, few people seriously considered the global atmosphere as an appropriate subject of international politics. Today, however, it is widely understood that the atmosphere is not only a part of the global commons, but that it is in danger of severe human-induced degradation. At the same time, however, global atmospheric science remains uncertain, and it is in the face of these uncertainties that international efforts to protect the ozone layer and to halt global warming have taken place. Adopting a social constructionist framework, which focuses on the interaction of knowledge and policy making, to examine the linkages between international and domestic political processes in Japan, Sato’s chapter looks at the manner in which the Japanese have interpreted developments in global atmospheric science and how this interpretation has shaped Japan’s foreign policy making and its participation in the development of international atmospheric regimes. Sato is concerned with why and when a particular understanding of the global atmospheric crises emerged and became politically relevant in Japan. To analyze Japan’s response to global atmospheric problems, Sato traces the development of knowledge in the process of science and policy construction. By tracing knowledge, the chapter illuminates a diverse group of factors, such as science, environmental values, apolitical interests, power, and disparate actors such as scientists and scientific communities, policymakers, the media, industries, environmental groups, other states, and international institutions. All of these actors are knowledge-constructors and/or knowledge-transmitters, and in the flow of knowledge they insert their political and environmental interests and values into the policy process. Three periods are studied in Sato’s chapter: (1) the

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initial stage of ozone science and politics in the 1970s; (2) the period leading to the Montreal Protocol on Substances that Deplete the Ozone Layer, which was agreed in 1987; and (3) the relationship between climate science and politics between 1988 and 1997, when Japan hosted COP3. Sato finds that, by themselves, scientific knowledge flows do not matter as much as we might expect. To have substantial impact, they must be accompanied by a broader shift in attitude, thinking, and perceptions – “discourse shift.” In Japan, a major discourse shift occurred between the 1970s, when the country was focused almost exclusively on domestic pollution problems, and the late 1980s, when international environmental issues grew in prominence. This is particularly significant given the uncertainty in atmospheric science. Japan’s more recent commitment to climate change politics should therefore be understood as an outgrowth of global environmental discourse and the adoption of the “precautionary principle” in Japanese society. In Chapter 10, Dana R. Fisher draws on extensive qualitative interviews to illuminate Japanese domestic responses to the issue of climate change, particularly since COP3 in 1997. She looks at various social actors involved in political decisions surrounding Japan’s response to potential international regulation in the context of climate change. She finds that civil society involvement has a “spatial” component. At the national level, Japan does not have a strong civil society addressing global issues like climate change. Her interviews revealed a consensus that there is an absence of citizen involvement in national debates about Japan’s role in mitigating climate change. However, civil society is nonetheless engaged at the local level, a phenomenon explained by the historical development of Japanese society. According to Fisher, different social actors in Japan have distinctive roles in shaping climate change policies. Government officials, working with industry, decide climate change policy. Citizens have a small role in formulating policy; their role is to be consumers. In other words, actors from science, industry, and the state lead the way in making environmental protection possible, including in cases of broader issues like climate change. Fisher’s findings challenge theories that say there must be significant social movements and a strong civil society before there can be “ecological modernization.” One possible interpretation of his research, she suggests, is that many past environmental mistakes in Japan created a political consensus at the level of the state to avoid them in the future. Despite her findings about the limited role of civil society in shaping Japan’s policies on climate change and its mitigation, Fisher believes that future policies may be subject to greater influence from this sector. So far, however, the state itself has developed a credible policy toward climate change, one that is arguably more proactive than many policies of countries where societal actors have much greater access to the policy-making process. The costs and opportunities of climate change in Southeast Asia Chapter 2 summarizes many of the broad anticipated effects of climate change. The second section of this book illuminates many of the concerns and policy-making

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challenges faced by the world’s largest developing country: China. In Chapter 11, Joy V. Galvez helps us appreciate the impacts of climate change – and their implications for policy making – in a much smaller and arguably even more vulnerable developing country of East Asia: the Philippines. Her summary of many key issues and concerns in the Philippines highlight some possible differences in perceived interests and strategies of the poorer countries in East Asia. As Galvez points out, the Philippines is a hot spot for natural hazards. As such, it is particularly vulnerable to climate change, and she describes in some detail many of those vulnerabilities first introduced in Chapter 2. The sectors in the Philippines projected to suffer the most from climate change-related impacts are water resources, agriculture, coastal resources, and human health. Galvez reminds us that these impacts worsen conditions in an already very underdeveloped country, and they will cause further suffering among a population that is already largely destitute. Galvez shows how government and private actors have worked together to assess the Philippines’ contributions to global warming and the implications of climate change for the country. At the international level, the Philippines was one of the first countries to discuss and develop positions on climate change. It aligned itself with other developing countries. At the national level, the government developed an interagency group, composed of national agencies, academic institutions, and civil society actors, that has contributed to scientific research related to climate change vulnerability of smaller countries like the Philippines, as well as to the strong legal position of developing countries in relation to the responsibilities and commitments of developed countries. But Galvez believes that these actions have been inadequate. Without a greater response from the national government, international organizations and the Filipino people, she says, the Philippines will suffer markedly from the projected impacts of climate change. Her chapter shows that if the Philippines is to cope with this problem, the government must develop programs for massive information campaigns, educating the populace about the issue and how they contribute to it; review existing national and local environmental laws based on their relationship and congruence with international environmental laws, particularly on biodiversity conservation and climate change; and impose stiffer penalties on violators of existing environmental laws (e.g. strengthening the country’s logging ban and clean air act) so as to curtail abuse and wanton environmental destruction. Having said this, the necessary resources to actualize Galvez’s recommendations are far too limited. Implementation of these strategies will require substantial additional assistance from the world’s developed countries. In Chapter 12, Frank Jotzo, Agus P. Sari, and Olivia Tanujaya use the case of Indonesia to demonstrate some possible fallacies in current thinking on international efforts to offset GHG emissions in developing countries. The Kyoto Protocol requires the developed industrialized countries to limit their GHG emissions as well as to enhance “sinks” for them (e.g. possibly including growing trees, which at least temporarily absorb carbon dioxide). One of the protocol’s unique characteristics is the provision for carbon emissions-offset mechanisms, where countries can trade emissions quota permits. At present, the CDM is the only

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mechanism for this that can include developing countries. The issues under negotiation include potential restrictions on buyers and sellers, and the inclusion of sink projects (largely forestry programs) under the CDM. Using a quantitative model developed specifically for policy issues in the implementation of the Kyoto Protocol (the Pelangi Emissions Trading model), Jotzo, Sari and Tanujaya analyze the implications of including sinks projects under the CDM. They find that assuming these projects will increase the volume of the CDM may be incorrect. This is because the increase in low-cost sinks projects leads to a fall in the price paid for emissions credits, which can outweigh the quantity gains, and lead to lower revenue and lower financial gains for developing countries. However, equity between countries and between regions within countries may be enhanced by the inclusion of sinks, as shown by the authors’ study of Indonesia. At the very least, their work shows that the “devil is in the details,” and that proposals for dealing with climate change absent detailed analyses of their impacts may have unforeseen implications for social and international equity, as well as for the practical goal of reducing climate-changing emissions. In the final chapter, Tim Forsyth discusses the implications of climate change investment and technology transfer for countries in Southeast Asia. He argues that technology transfer is crucial to international environmental agreements, and that it is viewed by many developing countries as a prerequisite for their adherence to treaties. Yet many investing countries see technology transfer as a lengthy and costly process that threatens intellectual property rights. Forsyth argues that such views need to be rethought. Technology transfer should instead be perceived in terms of so-called “horizontal” transfers (including long-term sharing of technological expertise) and “vertical” transfers (in which technologies are relocated without this long-term sharing). Forsyth illustrates how vertical transfer may occur, using evidence from Thailand, Vietnam, Indonesia, and the Philippines. His key argument is that integrating technology transfer with international investment offers a powerful way to overcome disagreements in the climate change negotiations. But, for this to happen technology transfer must be seen as a function of international investment and national and regional technology policy. If technology development is still seen in conventional terms as a linear process, to be controlled by indigenous companies, the prospect for enhancing international climate technology transfer is reduced because the process will be perceived as too costly and a risk to competitiveness. However, if it is seen as a chance to invite new technology investment from international companies that do not expect to give up intellectual property rights, it is possible to have a win-win situation in which environmentally sound technology is increased, local development is assisted through the introduction of new investments, and investors are allowed into new markets. Technology transfer can therefore fully complement both international environmental agreements and international private-sector investment. Redefining technology transfer away from the conventional view, which suggests that it can only assist potential economic competitors, has ensured that foreign policy objections have acted against moves to enhance technology transfer in the past. In contrast, viewing technology transfer in terms of “vertical transfer,” or

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the relocation of economic activity without the sharing of intellectual property rights, can lead to an integration of foreign policy objectives with activities to mitigate climate change. Seeing the relationship between technology transfer and other important aspects of foreign and economic policy may lead to more optimistic and successful negotiations under the FCCC. However, Forsyth cautions that there is a need for careful monitoring of all international investments under the CDM to ensure that new investments in technology actually reduce GHG emissions.

Conclusion Understanding how and why governmental and nongovernmental actors cooperate at the international level and work at local and national levels to address global warming and climate change requires us to look at many actors and, ideally, to employ several levels of analysis. The environmental foreign policies of the countries of East Asia, and specifically the interactions between their domestic politics and policy-making processes, on one hand, and international relations on global warming and climate change, on the other, are explained by the perceptions and actions of, and deliberations among, many often disparate actors at the individual, national, international, and global levels. For example, powerful individuals in China can push policy in new directions; bureaucracies and industrial actors in Japan can shape regulations and policies on climate change; international cooperation can stimulate new actions at the national and local levels, or it can itself be shaped by actors at those levels; global forces, most notably the climate changes that now seem to be underway and the growing norm that countries ought to act to deal with them, are increasingly affecting the world’s and East Asia’s responses to global warming. The upshot is that we need to look within the countries of East Asia, while simultaneously looking at interactions among them and between them and countries and other actors beyond the region, to fully explain their policies and to comprehend sufficiently how to bring about needed policy changes. The chapters that follow should help, at least in a small way, to do this. If acted upon, the lessons from this book may help mitigate global warming in the long term and reduce the suffering that will result from the adverse impacts of climate change.

2

Climate change priorities for East Asia Socio-economic impacts and international justice Paul G. Harris

Introduction Many actors, institutions, and forces influence the foreign policies of governments and hence the course of international relations. This is as true of environmental issues as it is of other matters facing the international community. Indeed, with regard to global warming and resulting changes to the Earth’s climate, the variables are even more complex, disparate, and contentious than in many other areas of foreign policy. The chapters in this book examine many of those variables in the context of East Asia.1 This chapter serves as a primer for those studies by looking at two broad issues that permeate debates about climate change policy and politics: (1) the anticipated and perceived ecological and socio-economic impacts of climate change for the countries of the region, which of course in large measure precede and dictate much of the international negotiations and subsequent actions by individual countries (Harris 2000a: 4–18; 2001a); and (2) critical questions of international justice (what some prefer to call international equity or fairness) associated with global warming and efforts to deal with its consequences (see Harris 2001b: 1–88).2 These two broad issues are unavoidable considerations for efforts to address climate change, and they are central to helping us understand why and how countries respond to it at the national, regional, and international levels. The impacts of climate change drive concerns among countries, to be sure. But they are not the only considerations. Demands for justice affect the willingness of countries to join and implement the climate change regime, and the extent to which those demands are fulfilled will often determine the ability of many countries to undertake the measures that are necessary to limit global warming and to deal with the adverse consequences of resulting climate change. In this chapter I summarize reports on global warming and the potential impacts of climate change in China and East Asia. While these reports vary somewhat in their findings and their degree of certainty, the preponderance of evidence is clear: Climate change presents the region with major challenges, most of them unwelcome. Subsequent chapters look in greater detail at impacts in particular countries. I also briefly introduce some underlying ethical considerations with regard to climate change justice and equity before summarizing how justice is part of the broader international politics of climate change, the 1992 Framework Convention on Climate Change (FCCC), its 1997 Kyoto Protocol

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and the ongoing negotiations concerning how to implement it. While I introduce some normative considerations, the main concern here is on the more practical debates, their codification in international instruments, and the ways in which they are perceived by East Asian countries – and hence their impact on policy and behavior among them. I arrive at a rather unpleasant conclusion: Increasing knowledge of the uncertainty and adversity from climate change has raised awareness and concern among East Asian countries, but concerns about justice and equity (not to mention other considerations, which are taken up by other contributors to this book) mean that worries about climate change do not translate easily into national action.

Global warming and the impacts of climate change Particularly over the last decade, scientists have improved their understanding of the causes and consequence of global warming, which is the warming of the Earth from “greenhouse” gases (GHGs) trapped in the atmosphere (see Drake 2000).3 Many of these GHGs, such as carbon dioxide (CO2) and methane, while having natural sources, are also the products of human activities and industrialization. Carbon dioxide, which is the most influential GHG in aggregate, is created by the burning of fossil fuels (e.g. coal, oil, natural gas) for industry, transportation, and other purposes, and when trees are felled and subsequently decay or are burned. Other GHGs, such as methane, are the result of agriculture, and yet others (e.g. chlorofluorocarbons, which also deplete the stratospheric ozone layer) are released mostly by industrial activities. The Intergovernmental Panel on Climate Change (IPCC) has concluded that human activities are adding GHGs to the atmosphere, and that this additional contribution over natural sources is having a discernable impact by increasing global temperatures (Houghton et al. 1996; Albritton et al. 2001). Climate change refers to the climatic changes and their consequences resulting from global warming, with the FCCC including under this rubric atmospheric changes connected directly or indirectly to human activities. The impacts of climate change on natural ecosystems and on human society and economies are potentially severe, ranging from sea-level rise and melting ice at higher latitudes (the Artic and Antarctic) and altitudes (mountain glaciers), to changing weather patterns characterized by increasingly severe storms, floods and droughts, and the attendant impacts of these changes, such as the spread of pests to warmed areas. Some areas may experience positive effects of climate change (e.g. an extended growing season in high latitudes), but these will likely be accompanied by adverse impacts. Overall, predictions point to adverse impacts, particularly in parts of the world where geographic vulnerability and poverty make adaptation difficult or impossible (see Af DB et al. 2002). Much of East Asia falls into this latter area. Global warming: causes and resulting climate change The most authoritative reports on the causes and consequences of climate change come from the IPCC, particularly its 1995 Second Assessment Report (SAR)

Priorities for East Asia 21 (Bruce et al. 1996; Houghton et al. 1996; Watson et al. 1996) and its 2001 Third Assessment Report (TAR) (IPCC 2001; see Albritton et al. 2001; and IPCC Working Group II 2001). The latter report refined the findings of the first assessment, pointing out that climate change is likely to be worse and occur more rapidly than initially predicted (see National Research Council et al. 2002). Here I summarize the IPCC’s findings on global warming and the worldwide effects of climate change before pointing out some of the anticipated socio-economic impacts in East Asia. According to the IPCC’s TAR (Albritton et al. 2001), there is now a collective picture, derived from an increasing body of observations, of a warming world and other changes in the Earth’s climate system. The global average surface temperature increased during the twentieth century, with the 1990s and early 2000s the warmest on record (see also WMO 2003). Snow and ice cover have decreased, global average sea level has risen, and the heat content of the oceans has increased. Other aspects of climate have changed during the twentieth century, including changes in precipitation (e.g. increased heavy precipitation events) and cloud cover; fewer extreme low-temperature periods and more high-temperature periods; more frequent, persistent, and intense episodes of the El Niño ocean-warming event (and related adverse effects on weather in many areas); and an increase in areas experiencing drought and severe wet periods. Some climate related events, such as tornadoes or tropical storms, do not appear to have changed based on IPCC data, although the evidence is conflicting. The TAR also finds that emissions of GHGs from human activities are altering the atmosphere in ways that are expected to affect climate. Human activities have increased atmospheric concentrations of GHGs (e.g. CO2, methane, nitrous oxide, halocarbons) and their warming potential. According to the report, “atmospheric concentration of carbon dioxide (CO2) has increased 31 percent since 1750. The present CO2 concentration has not been exceeded during the past 420,000 years and likely not during the past 20 million years. The current rate of increase is unprecedented during at least the past 20,000 years” (Albritton et al. 2001: 7). Three-quarters of human-induced emissions of CO2 over the last two decades has come from the burning of fossil fuels (e.g. coal, oil, and natural gas), with most of the remainder the consequence of land-use changes, particularly deforestation. Natural causes of climate change have been relatively small. Furthermore, models for predicting future climate are increasingly accurate and precise. While uncertainties remain, understanding of climate processes and predicted effects has improved. According to the TAR, new and stronger evidence points to human activities as the sources of observed global warming over the last fifty years, further strengthening the SAR’s conclusion that the “balance of evidence suggests a discernible human influence on global climate” (IPCC 1995). Warming over the last 100 years is unlikely to have been natural, with studies showing that global warming, particularly during the last 35–50 years, most likely resulted from human activities. Thus, the TAR concludes: “In light of new evidence and taking into account the remaining uncertainties, most observed warming over the last fifty years is likely to have been due to the increase in GHG concentrations. Furthermore,

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it is very likely that the 20th century warming has contributed significantly to the observed sea level rise … and widespread loss of land ice” (Albritton et al. 2001: 10). Furthermore, the TAR determined that human activities will continue to shape the Earth’s atmosphere throughout this century and into the future, and average global temperatures and sea levels are projected to rise. Emissions from burning fossil fuels will be the dominant source of atmospheric CO2 during this century. These emissions and those of other GHGs would have to be reduced to “a very small fraction of current emissions” to stabilize climate (Albritton et al. 2001: 12). Global average temperature is projected by the IPCC to increase by 1.4–5.8 degrees Celsius during this century (more than anticipated in the SAR). This warming will occur at a rate faster than that observed in the twentieth century, “very likely to be without precedent during at least the last 10,000 years” (Albritton et al. 2001: 13). During this century, warming is expected to occur in most areas, but it should be particularly pronounced at northern high latitudes during winter. Global mean sea level is expected to rise 0.09–0.88 meters in this century, with other very likely changes to include higher maximum temperatures and more hot days over most land areas, higher minimum temperatures and fewer cold days over most land areas, more intense precipitation events over many areas, increased summertime continental drying and drought over mid-latitude continental interiors, and more severe storms over some areas.4 Ecological and socio-economic impacts of climate change The ecological and socio-economic impacts of climate change are likely to be very significant and often painful. The TAR’s findings on these impacts include the following (IPCC Working Group II 2001): Regional changes in climate have already affected many physical and biological systems, with temperature increases being the most proximate cause. Observed changes in regional climate have occurred in terrestrial, aquatic, and marine environments, and effects have included shrinking glaciers, thawing permafrost, reduced periods in which lakes and rivers are frozen, longer mid- and high-latitude growing seasons, shifts in animal and plant ranges to higher latitudes and altitudes, declines in populations of some animals and plants and reduced egg-laying in some birds, and insects populating new areas. It appears that some social and economic systems have already been affected by increased floods and drought, but separating these ecological events from socio-economic factors is difficult. The TAR shows that many human systems are sensitive to climate change, including water resources, agriculture, coastal zones and marine fisheries, settlements, energy, industry, financial services (e.g. insurance industries affected by increased claims), and human health. Adverse impacts of climate change include reduced crop yields in most tropical and sub-tropical regions; decreased water availability in many water-scarce areas, especially the sub-tropics; more people exposed to increased mortality from heat stress and vector-borne diseases like

Priorities for East Asia 23 cholera; widespread increase in flood risk from rising sea levels; and increasing demand for energy to cool areas affected by higher summer temperatures. Some impacts may be positive, such as increased crop yields in some mid-latitude areas; potentially more timber if forests are managed appropriately (although increased pests could more than offset this); increased water availability for some water scarce areas (e.g. Southeast Asia); lower winter mortality in traditionally cold areas; and reduced winter demand for energy due to higher winter temperatures. Many of the risks are unclear, and there is substantial potential for “large-scale and possibly irreversible impacts” from changing ocean currents, melting ice sheets, accelerated global warming due to atmospheric feedback effects, and so forth (IPCC Working Group II 2001: 4–5). In addition to efforts to mitigate climate change, the TAR argues that adaptation is a necessary strategy. However, those people and societies with the least resources are most vulnerable because they are least able to adapt. Projected warming may result in a mixture of economic gains and losses for developed countries, but developing countries can expect mostly losses: “The projected distribution of economic impacts is such that it would increase the disparity in well-being between developed countries and developing countries,” with the disparities increasing the greater the temperature increases (IPCC Working Group II 2001: 6). The upshot is that “More people are projected to be harmed than benefited by climate change,” even if temperature increases are limited (IPCC Working Group II 2001: 6). The TAR is not restricted to scientific and economic assessments. It argues that international justice and equity are important considerations when addressing climate change: “Inclusion of climatic risks in the design and implementation of national and international development initiatives can promote equity and development that is more sustainable and that reduces vulnerability to climate change” (IPCC Working Group II 2001: 6; see AfDB 2002). Global warming and climate change impacts in East Asia Clearly, the global effects of climate change are potentially major, and will likely lead to many adverse consequences, difficult choices, and expensive adaptation measures for much of the world’s population. The countries of East Asia will not be immune to these changes, and in most cases will be among the worst affected due to their vulnerable geographies and economies. Effects may not always be adverse, but even if they are not they will likely increase unpredictability and require adaptation. What are the expected impacts of climate change in East Asia? Several research reports have anticipated the effects of climate change for the region. Some of their findings are summarized here to convey the scale and nature of the potential changes, many of which are elaborated in later chapters of this book. According to a 1997 report from the IPCC on anticipated regional impacts of climate change (IPCC 1997),5 temperate Asia (including Japan, the Koreas, and most of China) has experienced an average annual temperature increase of more than 1 degree Celsius in the last century, mostly since the 1970s, with substantial

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warming expected in this century. Rainfall is expected to change in the area, with substantial declines expected in most of China (notably northern provinces). Permafrost in northeast China is expected to disappear (with release of methane, thus adding GHGs to the atmosphere) and glaciers will melt. Northern China is particularly vulnerable to expected changes in rainfall, exacerbating existing water shortages (see Nielson and McElroy 1998; Yin 2000). The area is likely to experience changing agricultural yields, with many crops likely to see reductions and a northward movement of crop zones and anticipated shortages of roundwood (partly due to increased demand). Delta coastlines in China “face severe problems” from sea-level rise, which will include salt water intrusion into aquifers. Japan will not be immune; already many parts of major coastal urban areas, with millions of residents, are below the mean high-water mark. Providing protection for only some of these cities will cost tens of billions of dollars. Japan’s beaches, which comprise about a quarter of its coastline, will be subject to erosion – and over half of existing beaches may disappear. Additionally, heat-related deaths throughout temperate Asia may increase sevenfold by the middle of this century. The potential effects of climate change for tropical Asia (encompassing Southeast Asia) are also described in the IPCC’s 1997 regional report. It points out that the region already suffers from increasing pollution, land degradation, and all manner of environmental problems resulting from rapid urbanization, industrialization, and economic development. Climate change will exacerbate these problems. In this area, mean temperatures have already gone up by 0.3–0.8 degrees Celsius over the last 100 years. Forest cover will change as a consequence, possibly increasing, and forest types may change. Changes in evaporation and rainfall are likely to have detrimental effects on freshwater wetlands. Coastal areas will be most greatly affected by sea-level rise and increased ocean temperatures (the latter possibly preventing coral reefs from keeping up with sea-level rise). Mangrove and tidal wetlands will have difficulty adapting due to bordering infrastructure and human activities. Greater erosion, coastal flooding, and salinization of fresh water sources are probable. Delta regions of Southeast Asian countries are particularly vulnerable, and throughout this area several million people could be displaced by sea-level rise (see Binnie 1998). The costs of responding to the impacts of rising seas, in the words of the IPCC, could be immense. Glaciers feeding the area’s rivers will melt, and there may be yearly reductions – albeit between seasonal flooding – in the flow of snow-fed rivers, adversely affecting agriculture, hydropower generation, and urban water supplies. Agriculture will probably suffer (despite CO2 fertilization) from temperature and moisture changes and possibly from increased pests, affecting, for example, wheat, rice, and sorghum crops (although much uncertainty, confounding planning, will obtain). According to the IPCC report, poor rural populations depending on traditional forms of agriculture or living on marginal lands are especially vulnerable. Increased vector-borne diseases such as dengue, malaria, and schistosomiasis will adversely affect human health in this area. A 1999 report on climate change impacts prepared by Britain’s Climatic Research Unit summarized many potential impacts for some of the countries of

Priorities for East Asia 25 East Asia (Hulme 1999). In China, temperature increases are predicted to be greatest over northern areas, with changes in precipitation and threats to biodiversity. In Indonesia, forest fires are predicted to increase and endangered species may be threatened. In Japan, heat waves will increase in frequency and intensity, coastlines and coastal infrastructure will be harmed, and reefs will be stressed. In the Philippines, rainfall will increase during the wet season and decrease during the dry season, reefs will suffer from warming water, and potentially millions of people will be threatened by sea-level rise. Von Hippel (1997: 8) has summarized a few of the possible impacts of climate change in Northeast Asia: pressure on agricultural resources and accelerated desertification leading to cross-border migrations, particularly from China to Russia; adverse climatic effects on North Korea’s food production, possibly increasing military pressure on South Korea and creating economic burdens for reunification; increased demand for air conditioning, leading to higher fuel consumption and hence more local and regional air pollution (and adding still further to GHG emissions); salinization of breeding grounds for fish from sea-level rise, leading to reduced fishery yields that could exacerbate conflicts over marine resources; additional oil pollution (from shipments of oil imports) that may strain relations among countries sharing marine resources and shipping lanes; and increased economic costs from natural disasters like catastrophic storms, straining emergency and disaster relief resources in the region. The 2001 TAR assessment of vulnerability in Asia shows that the region is potentially more susceptible to climate change than are some other regions of the world (IPCC Working Group II 2001; see also IPCC 1997).6 It concludes that the developing countries of Asia are highly vulnerable to climate change, and their adaptability is low. (Developed countries of the region (e.g. Japan) are of course less vulnerable because they are more able to adapt to climate change.) Floods, forest fires, cyclones, droughts and other extreme events have increased in temperate and tropical Asia. The TAR anticipates that while agricultural productivity could increase in northern parts of Asia, food security would suffer in arid, tropical, and temperate Asia due to reduced agricultural and aquaculture productivity from warmer water, sea-level rise, floods, droughts, and cyclones. Water availability may decrease in arid and semi-arid Asia and possibly increase in northern Asia, and increased incidence of vector-borne diseases and heat-stress will threaten human health. Temperate and tropical Asia should anticipate increased rainfall and floods, and sea-level rise and more intense storms could “displace tens of millions of people in low-lying coastal areas of temperate and tropical Asia” (IPCC Working Group II 2001: 16). Some parts of Asia will see climate change effects on transport, increased demand for energy, and adverse impacts on tourism. Land-use and land-cover changes will threaten biodiversity, and sea-level rise will adversely impact coral reefs and mangrove areas that are important for fisheries. What comes from these (and other) reports on the impacts of climate change in East Asia is that many of the effects will be felt most by – and be most painful for – the developing countries of the region. They are generally more vulnerable

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and least able to cope due to poverty and existing environmental problems and resource scarcities. A very large number of people throughout East Asia live in low-lying coastal regions, and they are threatened by sea-level rise, land subsidence, inundation of fresh water aquifers by salt water, and more frequent and violent storms from climate change. Island countries such as Indonesia and the Philippines are especially vulnerable to climate change effects. They can expect freshwater shortages and damage to coastal areas and adjacent infrastructure, with concomitant adverse effects on tourism. (Indeed, in extreme cases it may one day be necessary for some small-island states to abandon their territory altogether. Representatives from these countries have for some time argued that they are already feeling the effects of rising oceans (Kristoff 1997).) Other poorer countries in the region are vulnerable. For example, the World Bank reported that Chinese research has estimated that a 1-meter rise in sea level would inundate 92,000 square kilometers of China’s coast, displacing 67 million people (and more as population increases) (World Bank 1997). According to one assessment, future climate change will reduce soil moisture in China, particularly in the north, and this will increase the demand for agricultural irrigation, which will in turn add to existing severe water shortages. In short, “Possible impacts of climate change on Chinese agriculture could be highly disruptive …” (Nielson and McElroy 1998: 24). Already vulnerable, China may also see greater weather extremes, including droughts in the north and floods in the south, and heat stroke and death will increase, as may occurrences of malaria, dengue fever, and other diseases (Nielson and McElroy 1998: 24–25). An ever-growing body of research shows that climate change will (and probably has already) adversely affected human health, and this is particularly true of East Asia (see Martens 1998; Woodward et al. 1998). Southeast Asia is especially vulnerable to anticipated increasing incidence of vector-born diseases (Binnie 1998; Martens 1998: 54–61). Hotter weather will increase heat-related mortality in the region, as indicated by historical studies from China showing a strong correlation between peak summer temperatures and death rates (World Bank 1997). But even the developed countries and regions of East Asia are unlikely to avoid harm from climate change. For example, while Japan’s coastlines are not as vulnerable as those of China, the Philippines, and other countries, it is reasonable to expect that it will suffer costly damage from sea-level rise, associated storm surges, and adverse weather, and it has direct interests in the health of surrounding seas and indirect interest in what happens throughout the region. By way of example, recently reduced fish catches by Japanese fisherman have been attributed to changes in underwater currents triggered by global warming (Reuters 2001). And there will be adverse impacts for Japan’s biodiversity, forests, agriculture, wetlands, and water systems, as well as for infrastructure and human health (see Nishioka and Harasawa 1998). According to the government, climate change effects have already become visible in Japan ( Japan Times, April 27, 2001). For these and other reasons, Japan supports the climate change regime and the Kyoto Protocol (see Chapters 7–10 and Asakai 2001) – despite its greater ability to cope with climate change compared to its neighbors.

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Climate change and international justice Increasing understanding of the regional and local effects of climate change logically influence governments’ attitudes toward this problem, with the likelihood that improved understanding of adverse impacts will increase their willingness to do something about the problem (see Harris 2001a). Indeed, attitudes in China are changing as the potential adverse impacts from climate change become clearer, and China is arguably moving toward a less hostile stand on emissions targets for developing countries – and in the process may bring other developing countries along with it ( Johnston 1998: 585). However, domestic and international politics enter the picture, often obscuring scientific findings and perceptions of how to use them best to address this problem. One area of greatest contention among countries is that of international justice or equity. Concerns about international justice, particularly on the part of developing countries, cannot be avoided if all countries are to cooperate to tackle international environmental problems, particularly climate change (Harris 1996). Developing countries will be less willing (and less able) to address climate change if they believe that they are not being treated fairly in the context of the global climate change regime – despite the increasingly clear dangers they face from the problem. This is important if the global warming and climate change are to be dealt with effectively in East Asia. As suggested by the scientific findings summarized above, all countries could suffer from climate change, although it is likely that the poor countries of the world will suffer most due to their vulnerable geographies and economies. However, it is the economically developed countries of the global North that have generated the most GHGs since the Industrial Revolution, and they have thereby benefited from using the global atmosphere as a sink for the harmful byproducts of their economic development (Ponting 1991: 387–392, 405–406). During the negotiations for the FCCC, developing countries were unified in emphasizing the historical responsibility of developed countries for climate change. They agreed to participate in the climate negotiations only on the condition that they not be required to accept any substantial commitments of their own (Borione and Ripert 1994: 83–84). For almost all developing countries, this commitment remains sacrosanct (see Sagar and Banuri 1999). The Philippines, for example, despite its inordinate vulnerability to climate change from sea-level rise and other impacts (see Climatic Research Unit 1999) – and despite the fact that its economy is illequipped to cope with these impacts – has sided with China and other developing countries in opposing emissions commitments beyond the industrialized world (see Chapter 11). According to an official in the Philippines Ministry of the Environment, “We have supported them [China and India] for reasons of equity, and it is a sound thing to do [for short-term economic reasons]” (Antonio Gabriel LaVina, quoted in Gelbspan 1997: 117). Conceptions of international climate change justice How can we, and how do policymakers, conceive of international justice in the context of climate change? We can first think of international justice from largely

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philosophical perspectives. That is, philosophers can help us understand the meaning of international justice (and similar concepts, such as equity and fairness). Having said this, it is nearly impossible to state definitively what is a “just” or “equitable” distribution of the burdens associated with climate change.7 Many philosophers have endeavored to define what is just and equitable, both within and between countries, and the IPCC itself has grappled with the question in the context of climate change (see Bruce et al. 1996). Nevertheless, it seems unassailable that there ought to be at least a just and equitable distribution among countries of the benefits and burdens associated with climate change. One can say “unassailable” because it is difficult to envision any reasonable person or government arguing that there ought to be an unjust or inequitable (as opposed to possibly unequal) sharing of climate change burdens. People will of course disagree about the precise manner in which justice and equity are operationalized. Indeed, that is arguably much of what the continuing climate change negotiations are about. In simple terms, in this context justice (or equity) refers to the quality of being fair, impartial or even-handed in dealings with others. At the very least, as Shue (1995) argues, justice and equity mean doing no additional harm to other countries and other people, as well as ensuring an adequate minimum for vulnerable people. International negotiators are involved in arbitrating these and other various definitions of international equity in the context of climate change. In the final analysis, what constitutes a just and equitable sharing of climate change burdens will be the result of political bargaining among the governments and other influential actors, like corporations and nongovernmental organizations, involved. Among the many conceptions of international justice and equity, at least six can be applied to the issue of climate change: rights, causality, and responsibility, utilitarianism, Kantian ethics, Rawlsian justice, and impartiality (cf. Paterson 1996). From one perspective, individuals have inherent rights, such as minimum nutrition, freedom from torture, and so forth, simply because they are human beings. Shue (1996) argues that individuals have at least the right to subsistence, for without it no other rights can be exercised. Thus, if the burdens of climate change inhibit subsistence rights – as they will do for many if the scientists’ predictions about effects on ecosystems come true – the distribution of benefits and burdens is not just and equitable. Conceptions of justice and equity based on causality or responsibility assert, simply, that those responsible for causing harm are responsible for ending and ultimately righting that wrong. According to Shue, “the obligation to restore those whom one has harmed is acknowledged even by those who reject any general obligation to help strangers. … this is because one ought even more fundamentally to do no harm in the first place” (Shue 1995: 386).8 The United States and other developed countries acknowledged when they joined the FCCC that they deserve the bulk of the blame for climate change, and that they have a responsibility to aid other countries that will be affected by it. Alternatively, utilitarians argue that benefits and burdens should be distributed in such a way as to achieve the greatest good for the greatest number of individuals (cf. Warnock 1962; Bentham 1970). Thus, the burdens of climate change ought to be distributed in such a way as to maximize overall human happiness. With the vast majority of

Priorities for East Asia 29 people that will be adversely affected by climate change living in the world’s poorer countries, arguably a great deal ought to be done to reduce their suffering caused by this problem. From a Kantian perspective of equity and justice, people should not be treated as means to one’s own ends, but as ends in themselves (Kant 1948). It is unfair to exploit other people because they would not freely choose to be exploited. Thus, if the burdens of climate change are imposed on countries against their free will, that distribution is not just and equitable. A Rawlsian conception of what is a just and equitable distribution of burdens might derive from conceptions of self-interest decided in an “original position” behind a “veil of ignorance” (Rawls 1971). Inequalities in distribution are acceptable insofar as they benefit the least advantaged in society, because that is what those in the original position would choose. Applied to climate change, one might say that insofar as the requirements of the tiny, weak small-island states are seriously considered in the negotiations, then justice and equity are being furthered. (So far, their demands have resulted in little serious action by the developed countries.) A conception of justice and equity based on impartiality requires that we assess what is just and equitable based on what is reasonable (cf. Barry 1995). It is not reasonable to expect an equal relationship between, say, the United States and Papua New Guinea. The United States should aid Papua New Guinea to cope with climate change, using the words of Chris Brown in an analogous context, “not because it is in the United States’ interest to do so but because justice as impartiality suggests that the case for such aid cannot be reasonably denied” (Brown 1992: 181). But it is important to bear in mind that, while the largely philosophical conceptions of justice are important, and indeed they have informed the thinking of policymakers, they are often used instead to justify demands of countries that derive from practical considerations and genuine feelings of injustice on their part. In fact, what passes as justice in the climate change regime is what governments can agree that it means. This highlights the importance of different conceptions of what is just and unjust from the perspectives of the developed and developing countries. Common but differentiated responsibility International justice has been codified in recent years in a host of international environmental agreements, such as the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer (and its amendedments), the Convention on Biological Diversity, and the FCCC (Banuri et al. 1996: 87–91; Harris 1996, 1997). The overriding goal of the FCCC is “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system” (Article 2). The developed countries agreed in the FCCC to voluntarily reduce their emissions of GHGs to 1990 levels by 2000. (They did not meet this target.) As a framework agreement, the FCCC laid out several commitments and principles, but it did not address specific provisions for implementing its goals. That was left to subsequent negotiations,

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and the 1997 Kyoto Protocol to the FCCC was an important step in that process because it set binding targets and timetables for reductions of GHGs by developed countries. Among the key principles in the FCCC was that of “common but differentiated responsibility,” whereby industrialized developed countries would take the lead in addressing the climate change problem, specifically excluding developing countries from binding GHG emissions reductions (see Harris 1999). The developed countries are disproportionately responsible for historical GHG emissions, and they have the greatest capacity to act. As the FCCC points out, “the largest share of historical and current global emissions of greenhouse gases has originated in developed countries” (Preamble). Thus the Convention makes few demands on the much less responsible and usually much less capable developing countries. This exclusion of developing countries became one of the most contentious issue before and during the negotiations leading to the Kyoto Protocol – and remains so. The notion of common but differentiated responsibility did not originate with the FCCC; it evolved during the preceding years of international environmental negotiations. For example, Principle 23 of the 1972 Stockholm Declaration, stated that it was essential to consider “the extent of the applicability of standards which are valid for the most advanced countries but which may be inappropriate and of unwarranted social cost for developing countries,” and common but differentiated responsibility was described succinctly in Principle 7 of the 1992 Rio Declaration on Environment and Development: States shall cooperate in a spirit of global partnership to conserve, protect and restore the health and integrity of the Earth’s ecosystem. In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities. The developed countries acknowledge the responsibility that they bear in the international pursuit of sustainable development in view of the pressures their societies place on the global environment and of the technologies and financial resources they command. According to this conception, while all countries are responsible for global environmental problems, some countries are more responsible than others. This principle was implicit in many international agreements and undertakings.9 In this spirit, the first basic principle of the FCCC states that: “The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof ” (Article 3(1)). Thus, the convention recognizes that all countries are responsible for climate change, and all should endeavor to limit the pollution that causes it. But, following the common but differentiated responsibility principle, it does not require developing countries to reduce their GHGs. It instead requires the developed countries to take the “lead in modifying longer-term trends

Priorities for East Asia 31 in anthropogenic emissions [of GHGs] consistent with the objective of the Convention” (Article 4(2)(a)). Thus, the convention codifies the idea that it would be unfair to expect developing countries to limit their economic development when the wealthy countries of the world are most responsible for present concentrations of atmospheric GHGs and most of the expected consequences of this pollution for the global climate in the next century. The common but differentiated responsibility principle was reaffirmed in 1995 at the first conference of the FCCC parties in Berlin. Countries agreed to the “Berlin Mandate,” whereby developed countries pledged to act first to reduce their GHG emissions before requiring developing countries to do so. The Berlin Mandate declares that the process of implementing the FCCC should be guided by this principle, and it quotes Article 3(1) of the FCCC. The Berlin Mandate reminds parties to the convention that they are required to consider the special needs of the developing countries and “the fact that the largest share of historical and current global emissions of greenhouse gases has originated in developed countries, that the per capita emissions in developing countries are still relatively low and that the share of global emissions originating in developing countries will grow to meet their social and development needs” and “the fact that the global nature of climate change calls for the widest possible cooperation by all countries and their participation in an effective and appropriate international response, in accordance with their common but differentiated responsibilities and respective capabilities and their social and economic conditions.” Thus negotiations for the Kyoto Protocol were premised on the common but differentiated responsibility principle. The developed countries accepted this standard because they knew developing countries would not – and in many cases could not – join the climate regime and eventually limit their emissions otherwise (see G-7 1997: paras 14–17). Throughout the international negotiations on a protocol to the FCCC, developing countries, often led by China, consistently declared that they would not agree to any limitations (least of all reductions) in their GHG emissions until the developed countries substantially reduce theirs (see G-77 1997). For example, the Philippines’ first secretary to the United Nations for environmental affairs, Libran Cabactulan, summed up the developing countries’ attitude when he said, “What is needed is legally binding limits first for those countries that are responsible for the largest quantity of emissions” (Golden 1997). The determination of the developing countries was further demonstrated by a comment from one of their delegates at the October 1997 climate change talks in Bonn, made in response to President Bill Clinton’s announcement of the US position that same month (which called on developing countries to take on new commitments for reducing their GHGs): “no protocol is better than a protocol with new developing country commitments” (ENB 1997a). The developing countries acted on these sentiments in the Kyoto negotiations, vetoing any language in the protocol that would call on them to make even voluntary commitments to limit their emissions of GHGs (ENB 1997b). Accordingly, the Kyoto Protocol requires developed countries to reduce their overall emissions of GHGs by about 5 percent below 1990 levels by 2012.10

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Conforming to the FCCC’s provisions for common but differentiated responsibility, and specifically reaffirming the Berlin Mandate, the Kyoto Protocol does not require the developing countries to take on new commitments to limit their GHG emissions. Indeed, the Protocol is devoid of references to commitments of developing countries. Rather, all its provisions apply to the developed “Annex I” countries. In Article 10 the Protocol explicitly reaffirms common but differentiated responsibility when it states that all parties must take into account “their common but differentiated responsibilities and their specific national and regional development priorities, objectives and circumstances, without introducing any new commitments for Parties not included in Annex I [i.e. the developing countries].” Subsequent international negotiations have attempted to hammer out the details of implementing GHG emissions cuts mandated by the Kyoto Protocol. Those negotiations are ongoing, hampered by the decision of the US administration of George W. Bush to withdraw from the Kyoto Protocol. This Bush administration’s change in US policy is based in part on its insistence that developing countries, including China, take on new commitments. Importantly, at the 2002 Eighth Conference of the Parties to the FCCC, the developing countries, notably China and India, reaffirmed their outright opposition to reducing their GHG emissions. Indian Prime Minister Atal Bihari Vajpayee pointed out that per capita emissions from his country are an order of magnitude below those of the developed countries (Vajpayee 2002). He added that developing countries will continue to increase their emissions – and ought to so that millions of poor can be lifted out of poverty. The conference also asserted again that climate change is going to be painful, especially for developing countries, and – with support from the United States – that mitigating climate change (through major GHG emissions cuts) would be difficult or nigh impossible. Consequently, the conference focused on adaptation measures, through transfers of funds and technology to developing countries to help them cope with the effects of climate change.11 The result was a new alliance of sorts between the United States and some large developing countries. By shifting the focus of the climate talks to adaptation, and away from mitigation, both sides could avoid doing what they dread the most: reducing their GHG emissions. The poor countries could get more money and technology on preferential terms – assuming the agreements are carried through – and they would not be required to stop using cheap forms of energy as they develop. This seems a fair outcome because poor countries will be able to take advantage of new aid from the Global Environment Facility and other funding mechanisms set up under the climate change convention, as well as funding and technology transfers through the FCCC’s Clean Development Mechanism, which allows industry in developed countries to implement emissions cuts in developing countries. However, what seems unjust is that this arrangement allows the United States and other industrialized countries to continue doing very little to reduce their pollution of the atmosphere, and the most vulnerable nations, such as the poor coastal and island states, will be unlikely to get anywhere near the aid they will need to adapt – which is in any case impossible for many of them. No amount of

Priorities for East Asia 33 money will save some island states in the long term, and it would be unrealistic to expect the developed countries to, for example, pay the anticipated costs for Bangladesh of adapting to the inundation of the majority of its territory.12 As Dale Jamieson argues, unless the wealthy countries agree to a grand aid plan for “reducing the vulnerability of susceptible people to climate-related extremes” ( Jamieson 2002: 306) there is a moral risk that focusing on adaptation “is an expression of the ‘polluted pay’ principle rather than the ‘polluter pays’ principle” ( Jamieson 2002: 305). He adds that such a grand plan “would require a level of non-crisis-sustained commitment that most Western societies seem incapable of maintaining” ( Jamieson 2002: 306). The Europeans, clearly more sensitive to global equity and their obligations regarding this issue, have tried in international conferences to lay the groundwork for going beyond the Kyoto Protocol by starting negotiations on deeper cuts in GHG emissions. Demands for such cuts have gotten nowhere during recent climate conferences. Indeed, challenging all reasonable conceptions of fairness, President Bush and his government have labeled the Kyoto Protocol “unfair” because it does not place restrictions on energy use in poor countries. Given the highly competitive nature of the global economy, the continued refusal of the United States to reduce its GHG emissions may push the Europeans to reassess their own relatively strong and commendable support for international climate equity. While recent international deliberations have acknowledged again the vital need for developed countries to help the developing world cope with climate change, the new alliance between the United States and many big developing countries has set back efforts to take concerted action to reduce the pollutants causing global warming. There may be room for guarded optimism. Increasingly, Americans themselves are following the lead of many Europeans, recognizing that their pollution is having profound global impacts, and there is increasing pressure on the US government to change its position and do more to reduce American GHG emissions. This may gradually change US policies. But the question remains: Will Americans, the world’s wealthy, and the burgeoning number of people around the world adopting American lifestyles, change their ways? At present the answer is, at the very least, “not yet.” Thus, on one level, the battle for a fair and equitable sharing of the burdens of global warming and resulting climate change has been lost. But there is a glimmer of hope that this situation will at least be met with some efforts to institute international aid programs designed to help those who will suffer most adapt to the more dire climatic changes to come. The upshot is that global warming has not been prevented and climate change will bring the most suffering to those least responsible for it, many of them living in East Asia. The following chapters look at how details of related international negotiations and the manner in which they affect and are affected by the governments and people of China and East Asia. It is important to bear in mind that developing countries in East Asia have similar short-term economic concerns – and domestic interests lobbying governments – which opposed action on climate change (i.e. GHG emissions cuts) that are found in the developed countries. But in addition

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to these interests resisting more concerted action to reduce national greenhouse emissions, they have major concerns about justice and equity. Indeed, as Japan’s ambassador for international economic and global environmental affairs has argued, assertions by the United States and some other developed countries that implementing the Kyoto Protocol to the FCCC will be too costly for them “could lend weight to the argument advanced by some developing countries that they are too poor to take action” (Asakai 2001). All countries in the Asia-Pacific region have signed and ratified the FCCC. The convention calls on all of them, including the developing countries, to inventory their emissions, in addition to undertaking their “common” responsibility to work toward addressing climate change. In many ways the developing countries of East Asia are doing this, and they are becoming more energy efficient because in so doing they derive many domestic benefits (i.e. increased energy security, reduced local environmental pollution, etc.). However, they continue to have low per capita emissions relative to the developed countries, and most of them remain relatively poor. As a consequence, they continue to refuse mandatory emissions limitations, and certainly they will not accept mandatory emissions reductions. China’s concerns about injustices associated with climate change are indicative of the views of many developing countries, including those of East Asia. It wholeheartedly opposed new developing country commitments and continually demands greater action from the developed world. Even Japan supports the notion of common but differentiated responsibility because the developed countries have caused the problem, and because their per capita emissions are twenty times those of the poor countries. From the Japanese perspective, it is “not right to expect developing countries to assume the same level of obligation” (Asakai 2001). One practical manifestation of what the developing countries want, apart from not being required to reduce their GHG emissions, is increased development aid. Most countries of East Asia view the climate change regime as a potential source of funds and technology to assist with their sustainable development and to improve their energy security. International financial institutions, such as the World Bank, have many programs in place to assist the developing countries in the region with, for example, energy conservation and efficiency. Japan is important in this respect, for it is a source of much of the funding. It provides assistance to reduce emissions from energy production, which not only reduces GHGs but also reduces emissions that affect Japan directly (e.g. acid rain), and its bilateral assistance is viewed more broadly by the government as a way to engage countries of the region, to show its leadership among them, and to promote the interests of Japanese industry with facilities in the region or that wish to export their environmental technologies (see Asakai 2001). Among the countries of East Asia, China is the most important for efforts to address climate change. Its GHG emissions, particularly CO2, will increase in coming decades. Within about twenty-five years it will become the world’s largest producer (Marland et al. 1998; Logan et al. 1999: 2). This will add to atmospheric GHG concentrations and to the contributions of other countries. However, China has sought to reduce the increase in its emissions, and they are increasing

Priorities for East Asia 35 at half the level of economic growth (Logan et al. 1999: 3). In this respect, one could argue that China is an example of a developing country that is trying to take on some of its common (but differentiated) responsibility for climate change. And it is important to point out where most of the blame really lies: with the United States and other developed countries, whose per capita emissions far exceed those of China and other developing countries – and indeed all countries of East Asia.

Conclusion Increasing knowledge of the uncertainty and adversity that will result from global warming and the climate changes it causes has raised awareness and concern among East Asian countries. Climate change increases uncertainties about the future, and it poses challenges for economic development and will likely harm human and international security in the region. All things being equal, one would expect this knowledge to lead to a very concerted action by East Asian countries to do all that is possible to mitigate global warming and to address climate change. However, domestic and international politics intervene. Concerns about justice and equity (not to mention other considerations, which are taken up in subsequent chapters) often override or obscure the concerns and considerations regarding the likely dangers and difficulties posed for all countries in the region. Strong concerns about international justice and equity, issues that are inherent in climate change and related international politics, mean that worries about the impacts of climate change are not easily translated into national action by East Asian countries. Indeed, governments and even some peoples may be willing to endure the ravages of climate change rather than join in or succumb to what they perceive to be unjust international efforts to address climate change. In other words, without perceived (and possibly actual) justice, strong action within the region is much less likely. Thus, both the impacts of climate change and concerns about related questions of justice will continue to occupy policymakers in East Asia, and both will influence their attitudes toward the climate change regime and the degree to which it is implemented in the region. Those wishing to understand the problem and foster efforts to address it would do well to bear this in mind. Toward this end, the following chapters look at these considerations in further detail, and they raise many other issues that shape responses to climate change in East Asia.

Notes 1 For additional examinations of variables shaping environmental foreign policy, see the other books from the Project on Environmental Change and Foreign Policy (Harris 2000a, 2001b,c, 2002c and forthcoming 2003a). 2 Many of these arguments were first exercised in Harris (2001a, 2002b). 3 I have chosen not to enter the political debate about the science of global warming and climate change. While details remain debatable, most of the world has concluded that global warming and climate change are real problems, that humans contribute to

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5

6 7 8

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11 12

Paul G. Harris them, and that much needs to be done to address them (see Bard Center 2000: 7). This conclusion remains elusive in the United States, particularly at the level of the White House, for largely political reasons – an important consideration because the United States is the largest source of GHGs and the biggest potential source of money and technology needed to deal with climate change around the world (see Harris 2000a). At the time of this writing, preliminary assessments show that 2002 was the second warmest year on record (after 1998) and 2003 is expected to be the warmest (WMO 2003). Furthermore, scientists are becoming more forthright in declaring that humaninduced global warming is already having adverse climatic and ecological impacts (see Parmesan and Yohe 2003; Revkin 2003). Readers are referred to the original report for detailed results and comments on existing uncertainties. I summarize some of the most salient points as I see them, but I cannot give this or other reports cited here their due consideration. At the time of this writing, the IPCC has not produced a more recent report on regional impacts. The report does not distinguish East Asia. These findings are for Asia generally except where specified. I expand on this discussion in Harris (2000c), and I analyze conceptions of equity in global environmental politics generally in Harris (2001b). The developing countries of East Asia are in a paradoxical situation with regard to climate change. While the developed industrialized countries clearly bear a vastly larger historical share of the blame for pollution leading to global warming and climate change, they have only known about this responsibility for about one generation. In contrast, the developing countries already know that their increasing emissions will contribute to future global warming and climate change. Indeed, while global CO2 emissions were increasing by an average of about 1.5 percent per year between 1980 and 1992, emissions in the East Asia/Pacific region increased by 5.3 percent per year (World Bank 1997), and probably this disparity is even greater today. This suggests a difficult ethical situation, namely that developing countries may bear a moral burden to develop in a sustainable fashion insofar as they are able to do so (quite apart from the practical benefits for them of doing so). In addition to being part of the international agreements already mentioned, the principle of common but differentiated responsibility was acknowledged by, for example, the UN General Assembly (see GA Resolution 44/228 [1989]) and several climate related meetings, including the Second World Climate Conference, meetings of the Preparatory Committee of the UN Conference on Environment and Development, the Toronto Conference Statement, the Hague Declaration, the Noordwijk Declaration, and other declarations related to climate change. See Sands (1994) and Banuri et al. (1996). The United States agreed to reduce its emissions by 7 percent, the Europeans by 8 percent, and the Japanese by 6 percent. A handful of developed countries were allowed to increase their emissions. For comprehensive examinations of the Kyoto Protocol, see Grubb et al. (1999) and von Weizsacker (1999). I first commented on these developments in Harris (2002a; forthcoming 2003b). In 1998, over two-thirds of Bangladesh was flooded, affecting over 30 million people, resulting in nearly 1,000 deaths, and causing economic losses equal to 8 percent of its GDP (AfDB 2002: 5).

References African Development Bank (AfDB) et al. (2002), Poverty and Climate Change: Reducing the Vulnerability of the Poor, Consultation Draft (October), Washington, DC: World Bank, http://lnweb18.worldbank.org/ESSD/essdext.nsf/46DocByUnid/96392A075E965F5 585256C4D00682C93?Opendocument

Priorities for East Asia 37 Albritton, D. et al. (2001) Summary for Policymakers: A Report of Working Group I of the Intergovernmental Panel on Climate Change, Bonn: Intergovernmental Panel on Climate Change, http://www.ipcc.ch/ pub/sa(E).pdf Asakai, K. (2001) “Washington needs to be more serious about climate change,” International Herald Tribune (May 18). Banuri, T. et al. (1996) “Equity and social considerations,” in J. Bruce, H. Lee, and E. Haites (eds) Climate Change 1995: Economic and Social Dimensions of Climate Change, Cambridge: Cambridge University Press. Bard Center for Environmental Policy (2000) Climate Change: The Science and Politics – What do we Know and What are we Doing About it?, Annandale-on-Hudson: Bard College. Barry, B. (1995) Justice as Impartiality, Oxford: Oxford University Press. Bentham, J. (1970) An Introduction to the Principles of Morals and Legislation, J.H. Burns and H.L.A. Hart (trans.), London: Athlone Press. Binnie, C. (1998) “Possible effects of climate change on South-East Asia,” Hydrology in a Changing Environment 1: 125–131. Borione, D. and Ripert, J. (1994) “Exercising common but differentiated responsibility,” in I. Mintzer and J. Leonard (eds) Negotiating Climate Change, Cambridge: Cambridge University Press. Brown, C. (1992) International Relations Theory: New Normative Approaches, New York: Columbia University Press. Bruce, J., Lee, H., and Haites, E. (eds) (1996) Climate Change 1995: Economic and Social Dimensions of Climate Change, Cambridge: Cambridge University Press. Climatic Research Unit (1999) Climate Change Scenarios for the Philippines, http:// www.cru.uea.ac.uk/~mikeh/research/philippines.pdf Drake, F. (2000) Global Warming: The Science of Climate Change, New York: Oxford University Press. Earth Negotiations Bulletin (ENB) (1997a) Earth Negotiations Bulletin, 12, 60 (October 24). —— (1997b) “Report of the Third Conference of the Parties of the Framework Convention on Climate Change: 1–11 December 1997,” Summary Issue of Earth Negotiations Bulletin 12, 76 (December 13). Gelbspan, R. (1997) The Heat is On: The High Stakes Battle over Earth’s Threatened Climate, New York: Addison-Wesley. Group of Seven Industrialized Countries and Russia (G-7) (1997) Final Communiqué of the Denver Summit of the Eight, Denver, July 22. Group of 77 Developing Countries (G-77) (1997) “After Kyoto, new round of battle coming up,” Journal of the Group of 77 (September/November), http://www.g77.org/ Journal/sepnov97/06.htm Golden, M. (1997) “Climate treaty tough sell for Clinton at home and abroad,” Associated Press-Dow Jones News Service, October 14. Grubb, M., Vrolijk, C., and Brack, D. (1999) The Kyoto Protocol, London: Earthscan. Harris, P.G. (1996) “Considerations of equity and international environmental institutions,” Environmental Politics 5, 2 (Summer): 274–301. —— (1997) “Environment, history and international justice,” Journal of International Studies 40 ( July): 1–33. —— (1999) “Common but differentiated responsibility: the Kyoto Protocol and United States policy,” Environmental Law Journal 7, 1: 27–48. —— (ed.) (2000a) Climate Change and American Foreign Policy, New York: St Martin’s Press. Harris, P.G. (2000b) “Climate change and foreign policy: an introduction,” in P.G. Harris (ed.) Climate Change and American Foreign Policy, New York: St Martin’s Press.

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Harris, P.G. (2000c) “Climate change: is the United States sharing the burden?,” in P.G. Harris (ed.) Climate Change and American Foreign Policy, New York: St Martin’s Press. —— (2001a) “Assessing climate change: international cooperation and predictions of environmental change,” Politics 21, 1 (February): 11–21. —— (2001b) International Equity and Global Environmental Politics, Aldershot: Ashgate Press. —— (ed.) (2001c) The Environment, International Relations, and U.S. Foreign Policy, Washington: Georgetown University Press. —— (2002a) “A political setback in the war on global warming,” South China Morning Post (November 21): 18. —— (2002b) “Global warming in Asia-Pacific: environmental change vs. international justice,” Asia-Pacific Review 9, 2 (November): 130–149. —— (ed.) (2002c) International Environmental Cooperation: Politics and Diplomacy in Pacific Asia, Boulder: University Press of Colorado. —— (ed.) (Forthcoming 2003a) Confronting Environmental Change in East Asia: International Relations, Foreign Policy, and Sustainable Development, London: Earthscan. —— (Forthcoming 2003b) “Fairness in a warmer world,” Ethics and International Affairs. Houghton, J. et al. (eds) (1996) Climate Change 1995: The Science of Climate Change, New York: Cambridge University Press. Hulme, M. (1999) “Scenarios of global climate change impacts: background information,” Report prepared for the World Wildlife Fund by Climatic Research Unit, University of East Anglia, UK, http://www.panda.org/climate/pubs/ scenarios2a.cfm IPCC (1995), “Summary for policymakers: the science of climate change – IPCC working group I,” http://www.ipcc.ch/pub/sarsum1.htm#four —— (1997) The Regional Impacts of Climate Change, http://www.grida.no/climate/ipcc/ regional/260.htm —— (2001) Climate Change 2001 (3 vols), Cambridge: Cambridge University Press, http:// www.ipcc.ch/ IPCC Working Group II (2001) Summary for Policymakers, Climate Change 2001: Impacts, Adaptation, and Vulnerability, Geneva: IPCC Working Group II (February 19 draft). Jamieson, D. (2002) Morality’s Progress: Essays on Humans, Other Animals, and the Rest of Nature, Oxford: Oxford University Press. Johnston, A.I. (1998) “China and international environmental institutions: a decision rule analysis,” in M. McElroy, C. Nielson, and P. Lydon (eds) Energizing China: Reconciling Environmental Protection and Economic Growth, Cambridge, MA: Harvard University Press. Kant, I. (1948) The Moral Law, London: Hutchinson. Kristoff, N.D. (1997) “Global warming: around the globe, big worries and small signs of progress,” New York Times (December 1). Logan, J., Aaron, F., Feng, J., and Indu, J. (1999) Climate Action in the United States and China, Washington: Battelle Memorial Institute and Woodrow Wilson International Center for Scholars. Marland, G. et al. (1998) “Global, regional, and national CO2 emissions,” in Oak Ridge National Laboratory (ed.) Trends: A Compendium of Data on Global Change, Oak Ridge: Oak Ridge National Laboratory. Martens, P. (1998) Health and Climate Change, London: Earthscan Publications. National Research Council et al. (2002) Abrupt Climate Change: Inevitable Surprises, Washington, DC: National Academy Press. Nielson, C.P. and McElroy, M.B. (1998) “Introduction and overview,” in M. McElroy, C. Nielson, and P. Lydon (eds) Energizing China: Reconciling Environmental Protection and Economic Growth, Cambridge, MA: Harvard University Press.

Priorities for East Asia 39 Nishioka, S. and Harasawa, H. (eds) (1998) Global Warming: The Potential Impacts on Japan, Tokyo: Springer-Verlag. Parmesan, C. and Yohe, G. (2003) “A globally coherent fingerprint of climate change impacts across natural systems,” Nature 421 ( January): 37–42. Paterson, M. (1996) “International justice and global warming,” in B. Holden (ed.) The Ethical Dimensions of Global Change, London: Macmillan Press. Ponting, C. (1991) A Green History of the World, New York: St Martin’s Press. Rawls, J. (1971) A Theory of Justice, Cambridge, MA: Harvard University Press. Reuters (2001) “Scientists, fishermen fear Sea of Japan slowly dying,” March 28. Revkin, A.C. (2003) “Ecosystems shaken by worldwide warming,” International Herald Tribune ( January 3): 1, 5. Sagar, A.D. and Banuri T. (1999) “In fairness to current generations: lost voices in the climate debate,” Energy Policy 27: 509–514. Sands, P. (1994) “The ‘greening’ of international law: emerging principles and rules,” Global Legal Studies Journal 1, 2 (Spring). Shue, H. (1995) “Equity in an international agreement on climate change,” in R. Odingo et al. (eds) Equity and Social Considerations Related to Climate Change, Nairobi: ICIPE Science Press. Shue, H. (1996) Basic Rights, Princeton: Princeton University Press. Toth, F.L. (ed.) (1999) Fair Weather? Equity Concerns in Climate Change, London: Earthscan. Vajpayee, A.B. (2002) “Speech of Prime Minister Shri Atal Bihari Vajpayee at the High Level Segment of the Eighth Conference of the Parties to the UN Framework Convention on Climate Change, New Delhi, 30th October 2002,” http://unfccc.int/ cop8/index.html Von Hippel, D. (1997) Global Dimensions of Energy Growth Projections in Northeast Asia, Berkeley: Nautilus Institute. Von Weizsacker, E. (1999) The Kyoto Protocol, New York: Springer-Verlag. Warnock, M. (ed.) (1962) Mill: Utilitarianism and Other Writings, Glasgow: Collins. Watson, R.T., Zinyowera, M.C., and Moss, R.H. (1996) Climate Change 1995: Impacts, Adaptations and Mitigation of Climate Change – Scientific-Technical Analysis, New York: Cambridge University Press. Woodward, A., Hales, S., and Weinstein, P. (1998) “Climate change and human health in the Asia Pacific region: who will be most vulnerable?” Climate Research 11 (December): 31–38. World Bank (1997) “The World Bank and climate change: East Asia,” World Bank Group, http://www.worldbank.org/html/extdr/climchng/eapclim.htm World Meteorological Organization (WMO) (2003) “WMO statement on the status of global climate in 2002,” Press Release No. 684 (17 December), http://www.wmo.ch/ web/Press/Press.html#pr Yin, A. (2000) “Impact of global climate change on China’s water resources,” Environmental Monitoring and Assessment 61: 187–191.

PART II

China and the politics of climate change

3

Chinese politics, energy policy, and the international climate change negotiations Michael T. Hatch

Introduction Global warming, and the actions required to meet the potential threats from it, now occupy a prominent position on the political agenda of many nations. Yet, as the negotiations establishing the Framework Convention on Climate Change graphically demonstrate, the political salience of global warming varies. In most of the developing world, for example, the issue hardly makes a ripple on the domestic scene, with such problems as widespread poverty and degradation of air and water resources pressing upon local populations. What has become clear, however, is the necessity of developing-country support if an international agreement is to be effective over the longer term. In the years to come, the bulk of the new greenhouse gas (GHG) emissions are expected to come from the developing world as populations continue to grow and industrialization processes that rely on fossil fuels accelerate. China is one of the countries most often mentioned as being central to future international efforts aimed at controlling GHG emissions. This chapter attempts to assess the role of China in international efforts to mitigate climate change.

Domestic politics and international negotiations Any significant international agreement on global warming will have profound effects on a broad set of interests spanning society and, hence, have important ramifications for the domestic politics of any country. Given the potential impact on important constituencies, global warming negotiations have become a concern of bureaucratic interests as activities coming under their purview become subject to negotiations. One sees, for example, competing claims arising between the departments and agencies responsible for policies on economics, environment, energy and foreign affairs. In the case of China, however, there may be questions about the degree to which such interests can be played out in the domestic arena. The precise nature of the policy process, in other words, may have important implications for the politics of global warming. Whether implicit or explicit, analyses of Chinese politics make certain assumptions about the exact nature of its policy process. Among the competing models of policymaking found in the literature are the “power,” “policy” and “bureaucratic”

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or “fragmented authoritarianism” models (Lieberthal and Oksenberg 1988; Lieberthal and Lampton 1992). As characterized by Lieberthal and Oksenberg, the power model stresses the centrality of individual or factional power struggles among the top leaders of the Chinese Communist Party (CCP), with little attention paid to substantive issues. The policy model views policy as a product of reasoned debate over substantive issues among top leaders. The bureaucratic politics model treats the structure of the bureaucracy as a critical element of the policy process. Policy outcomes are largely the product of interagency competition rather than simply factional power struggles or reasoned debates. Given the relatively low salience of international environmental questions in domestic politics, the bureaucratic model would seem to provide the more fruitful approach to an analysis of China’s global warming policy. Generally speaking, the main bureaucratic elements shaping the policy process in China are the core group of 25–30 top leaders, liaison leadership groups (which include research centers and institutes), State Council commissions, and line ministries (Lieberthal and Oksenberg 1988: 22). In the case of climate change, the primary actors involved in formulating a policy response have been the State Planning Commission (SPC), the State Science and Technology Commission (SSTC; both the SPC and SSTC were reorganized into the State Development Planning Commission (SDPC) and the Ministry of Science and Technology in 1998), the inter-ministerial State Environmental Protection Committee (SEPC), the National Climate Change Coordination Group (NCCCG), various ministries that were at one time or another responsible for energy/coal policy, the State Economic and Trade Commission (SETC, responsible for energy conservation, renewables and short-term planning and monitoring of state companies), the Ministry of Foreign Affairs (MOFA), and the National Environmental Protection Agency (NEPA, changed in 1998 to State Environmental Protection Agency (SEPA)). Each actor brings to the table a set of concerns and priorities shaped by historical developments that in various ways impinge on the climate change question. The interaction of domestic politics and international negotiations emphasizes, at the national level, domestic interests pressing for policies conducive to their interests internationally. Government leaders, in turn, are constrained in international negotiations by the coalition of interests at home upon which they rely for support. At the international level, foreign governments and interests organized across state boundaries attempt to influence negotiating positions of national governments. International pressures and transnational forces may also strengthen the hand of groups competing in the domestic arena. In other words, the pattern of domestic and transnational alignments may be crucial in assessing the conditions under which a country will commit to international obligations. In this chapter, it will be argued that, while external pressures brought to bear through negotiations have pushed global warming on to the domestic agenda in China, the nature of the political process has set the general limits for Chinese participation in cooperative international arrangements to manage global warming. In making this argument, it will be necessary to look at developments in Chinese energy and environmental policy over the past several decades and the

Chinese politics, energy and climate negotiations 45 bureaucratic interests involved in those developments. Subsequent sections will be devoted specifically to the formation of China’s approach to the climate change negotiations and the prospects for a “no regrets” strategy that would address questions of higher priority to the Chinese leadership, but at the same time contribute to international efforts to mitigate climate change.

Chinese energy policy and its environmental implications The global warming issue in China has been intimately linked with efforts to modernize the economy and the energy strategy employed to fuel that modernization. With over 1.2 billion people, China is the most populous country in the world; it is also one of the poorest. Economic growth has been accelerating in recent decades, averaging over 9 percent annually since the early 1980s, raising per capita GDP to approximately $800 in 1999 (though enormous regional disparities persist). Energy use increased 208 percent between 1970 and 1990, with coal rising from 69.9 percent of total energy consumption in 1976 to 78 percent by 1995 (World Resources Institute 1994: 61, 66; World Bank 1997: 46), making China the single largest producer and consumer of coal in the world. Moreover, with further rises in population, greater urbanization, and sustained economic development, this trend is expected to continue (Summary Report 1994: 22). Translated into figures relevant to the global warming debate, China produced 13.4 percent of global carbon dioxide (CO2) emissions in 1994, making it the second largest emitter in the world; if levels increase as anticipated, China should surpass the United States by the year 2020 (Nielsen and McElroy 1998: 20–22). Thus, one must take into account the factors shaping China’s energy policy in order to better appreciate its approach to global warming. Energy policy in China Before the late 1970s, energy policy in China – to the extent that one existed – was dominated by production interests and focused almost exclusively on expanding supply. With the beginning of economic reforms, however, a reevaluation of the energy situation was initiated through a series of national symposia organized by the SSTC. These resulted in a report critical of past energy policies and brought to the attention of the leadership the serious energy shortages facing the country as a consequence of those policies (Lieberthal and Oksenberg 1988: 79; Lu 1993: 3–9). Concerned about the potential impact of such shortages on the economy, by the mid-1980s the SPC and SSTC created a number of research institutes to explore such issues as alternative energy sources, fuel-switching and energy conservation (Christoffersen 1992: 43). The ministries responsible for energy policy also went through a series of organizational reshuffles throughout the 1980s. Separate ministries responsible for coal, electric power, petroleum, the nuclear industry and hydroelectric power merged into the Ministry of Energy. In 1993, the Ministry of Energy was divided into the Ministry of Coal and the Ministry of Electric Power.

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While these institutional reforms had the effect of bringing new considerations into the policy process – for example, to restrain consumption as well as increase production – primary emphasis remained on the latter. As a consequence, China’s energy sector has continued to be defined by three troubling conditions: a heavy reliance on coal, its inefficient use and chronic energy shortages. The dominance of coal in China’s energy supply is largely a function of large indigenous deposits; estimates of coal reserves range from around 1,500 billion to 5 trillion tons, with 800 billion to 1 trillion tons considered “proven” (Brown and Brown 1992: 138; Zhou et al. 2000: 5). This means that at current and projected levels of consumption, ample supplies would be available well into the new millennium. But other factors related to the overriding priority given to economic development – and the specific policy choices that flowed from that – have played an important role in energy policy. As economic growth accelerated in the 1980s, getting power projects on line as quickly as possible was imperative. Coal was the energy of choice. Since capital and hard currency were in short supply, nuclear technology was less attractive, given that it is expensive, foreign and requires much of the capital outlays up front. For similar reasons, hydroelectric power was not a first choice for electric power officials either; thermal power plants cost less, could be built faster, and had greater reliability and controllability (Lieberthal and Oksenberg 1988: 102). Oil was a possible alternative to coal and China had begun to produce substantial amounts (around 2.5 million barrels per day by the late 1980s). However, the state adopted a policy to substitute coal for domestically produced oil – particularly in the power generation sector – to help generate hard currency earnings from the oil sales abroad, further reinforcing China’s reliance on coal (Locatelli 1989: 150). When it comes to energy use, China is one of the most profligate in the world, having a ratio of energy consumption to GDP five times Japan’s, two and one-half that of the United States, and almost twice India’s (Capannelli and Shrestha 1993: 7). Part of the explanation for this is related to the structure of the Chinese economy itself. The industrial sector has represented up to 60 percent of GDP, a much higher percentage than found in most developed and many developing countries. Adding to the energy-intensity of industrial production has been an emphasis on heavy industry. As a consequence, industrial production consumed around two-thirds of all commercial energy by 1990 (Smil 1992: 111). Several other factors, however, have contributed to the inefficient use of energy in China. One is the pattern of coal consumption. Coal use in the industrial sector has been very high, especially when compared to other major coal consuming countries, where electrical power generation usually consumes a greater share. In addition, direct combustion for residential use (heating and cooking) accounts for a significant share of coal consumption. Low levels of energy efficiency are prevalent throughout each sector; with over 330,000 industrial boilers, most of them small, the efficiency level is in the 50–60 percent range (and even less for small residential boilers) compared with up to 90 percent in developed countries; with more than 40 percent of electricity generated from plants smaller than 100 MW, thermal efficiency in the power sector is low (around 30 percent

Chinese politics, energy and climate negotiations 47 as opposed to 40 percent in the more developed economies); and the millions of coal-fired household stoves have a 10–15 percent efficiency rate, compared to 80–95 percent for natural gas (Mao 1991: 172; Smil 1992: 124; He et al. 1996: 250). A second factor is technology. Much of China’s industrial infrastructure is obsolete, since most technologies prior to 1978 were imported from the Soviet Union. Moreover, efficiencies gained through economies of scale were absent, in part because of the “Mass Movement” political line laid down by the CCP before 1980, which promoted small, backyard enterprises such as blast furnaces, fertilizer plants and refineries (Lu 1993: 25). A third factor is China’s coal pricing policy. A key element of the centrally planned economy was low energy prices. With coal priced well below production costs, there was little need for energy consumers to think about conservation (Lenssen 1993: 23–4). As economic growth surged in the 1980s, energy shortages became an increasingly serious problem. Most cities experienced episodic brownouts or rotating blackouts. More problematic for the economy, however, were interruptions in energy supplies that resulted in underutilized industrial capacity of 20 to 30 percent (Shen and Liu 1991: 320; Perlack et al. 1993: 96; Thomson 1996: 727). The aforementioned inefficiencies have been major contributors to the energy shortfalls, but other factors have played a role as well: losses in the power sector from unstable loads and transmission are high; the waste associated with coal mining are huge (less than one-half of the coal mined is recovered); bottlenecks and gridlock are endemic to the transport of coal by rail from the north and northwest sections of China to the major energy consumers in the south and eastern coastal regions (Brown and Brown 1992: 144; Qu 1992: 502; He et al. 1996). Environmental policy in China The cumulative effect of this resource-intensive growth strategy pursued in the decades after 1949 – and the increasing reliance on indigenous coal that this precipitated – had important environmental ramifications for China beyond those of global warming. China has experienced water shortages, exacerbated by extensive water pollution, and degraded land resources resulting from deforestation and soil erosion; but among the most serious environmental problems – and the one most directly related to China’s pattern of energy consumption – is atmospheric pollution. As a consequence of the millions of inefficient boilers, stoves and furnaces burning coal – approximately 80 percent of it unprocessed – air pollution in China’s urban areas now rivals the worst in the world, with the attendant increases in respiratory disease and lung cancer. In addition to the impact on human health, growing levels of acid rain from extensive coal use has resulted in serious damage to crops, forests and fisheries (World Bank 1997: 21–22; Nielsen and McElroy 1998: 12). Environmental concerns have been on China’s policy agenda since the early 1970s, largely as a consequence of her participation in the 1972 United Nations Conference on the Human Environment in Stockholm. Such concerns, however,

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were systematically ignored in a policy process dominated historically by state planners and production ministries, especially heavy industry (Ross 1992: 628). But with the political and economic reforms initiated in the late 1970s, the environmental implications of earlier development strategies began to receive greater attention. The State Council established the State Environmental Protection Commission in 1984 to serve as the leading decision-making body in China for environmental matters. The NEPA was created in 1988 and became the secretariat for the SEPC (Xian and Li 1988: 13–17; Wang and Blomquist 1992: 25–75; Ross 1988: 141–142). A fairly extensive body of environmental law also began to develop in the 1980s. Environmental goals were discussed for the first time in China’s formal planning process, beginning with the Sixth Five-Year Plan of 1981–1985. Nonetheless, efforts to halt deteriorating environmental conditions during the 1980s were largely unsuccessful. Part of the reason had to do with the nature of the environmental regulations themselves (they were generally weak and poorly defined), plus they were not enforced very effectively. The NEPA’s low status within the ministerial pecking order also may have played a role. The most important factor, however, was the continuing priority of economic development among Chinese policymakers. By the 1990s, worsening environmental conditions and growing public awareness domestically, combined with the increased saliency of environmental concerns in international diplomacy – and the anticipation that those concerns might be leveraged into financial and technological assistance from abroad – seemed to result in a modest shift in China’s approach to environmental protection. Environmental protection has been given greater prominence in the Eighth (1991–1995) and Ninth (1996–2000) Five-Year Plans, and the NEPA’s position within government was said to have improved with stronger backing from the SSTC and SPC (Ross 1992: 631). It is within the context of these developments that China’s approach to the international negotiations on climate change began to take shape.

International negotiations and politics of climate change in China Fairly early on in the process leading up to the climate change negotiations, China had begun to monitor developments in global warming, primarily as a consequence of the attention devoted to the climate change issue within the scientific community. In 1987, the SSTC established the National Climate Committee, with its secretariat located in the State Meteorological Administration (SMA). That same year the Chinese Academy of Sciences signed a collaborative research agreement with the US Department of Energy to study the effects of the increasing CO2 emissions on global, hemispheric, regional and local scales of climate change. Interdisciplinary studies on global climate change were also organized under the aegis of the Academy of Sciences and the SEPA. And as the UN’s Intergovernmental Panel on Climate Change (IPCC) got underway in the late 1980s, Chinese participation in the process was coordinated by the SMA. Out of

Chinese politics, energy and climate negotiations 49 these activities emerged a new awareness within the scientific community of the potential effects of global warming on China. Of special concern was the impact of climate change on agricultural production and the vulnerability of China’s low-lying coastal plains to sea-level rise (see Chapter 2). Whereas initial Chinese interest in the climate change issue was largely scientific, rapid movement toward international negotiations on a climate change convention in preparation for the 1992 UN Conference on Environment and Development (UNCED) soon pushed climate change onto the political agenda. In February 1990, the NCCCG was created by the State Environmental Commission of the State Council. Under the chairmanship and administration of the SSTC, four working groups were established. Three of these groups paralleled the organization of the IPCC: scientific assessment (with the SMA as the lead agency), impact assessment (NEPA), response strategies (SSTC). A fourth group focused on international climate change negotiations (led by MOFA). In spring 1990, the relevant bureaucratic actors met to hammer out China’s negotiating position in preparation for the Second World Climate Conference scheduled for that fall and the subsequent climate change negotiations to begin the following February. Each of these actors brought to the table its own set of priorities and preferences:1 ●

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NEPA was primarily responsible for domestic environmental issues and, as such, had been pushing for actions in the energy sector that would help redress China’s air pollution problems (e.g. it proposed a tax on sulfur dioxide emissions and supported the expansion of alternative energy sources and more efficient energy technologies). Translated into the issues informing the climate change debate, officials in the NEPA generally accorded some credence to the scientific claims about the potential threat of global warming and appeared more open to the possibility that actions might be needed to limit GHG emissions. From the perspective of the SPC, maximizing economic development was of highest priority. The concomitant to this was the rapid expansion of energy supplies, with an overwhelming reliance on coal. SPC officials generally expressed skepticism about the science of global warming and opposed any type of commitments that might impede economic growth. The Ministry of Energy saw as its primary task the expansion of energy supply to fuel economic growth. It wanted to preserve the dominant role coal played in China’s energy mix and, as such, opposed the NEPA’s efforts to limit energy development or restructure the energy sector. Similar to the SPC, Ministry officials professed skepticism about the science and rejected assuming any national obligations that might place constraints on China’s energy options. The MOFA was intent on ensuring China’s independence in its efforts to pursue rapid economic development. This meant, among other things, preserving the ability to increase energy consumption in China (and the developing world in general) to fuel economic development. Within the context of

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The SMA and SSTC, both primarily involved in the research on climate change and, in the case of the SSTC, response strategies, became increasingly marginalized in the internal climate change debate as the issue moved from the scientific to the political arena. This meant that the influence of actors potentially sympathetic to the more pro-active approach pushed by the NEPA was much diminished. By spring 1990, officials from the SPC and MOFA had come to dominate the policy process. With the SPC and MOFA traditionally being much more powerful institutions than the NEPA, only signals from the highest levels of the party and government supporting substantive commitments to energy restructuring and emissions limitations might have shifted the outcome of the deliberations. As it was, pronouncements from Deng Xioping and Li Peng during this period of time constantly emphasized the importance of rapid economic growth and consistently ignored environmental issues (Economy 1997: 29). Reenforced by the leadership’s concerns about continued economic development, the views of the SPC and MOFA came to shape the major features of China’s negotiating position going into international talks. Formal negotiations on a climate change convention began in February 1991 with the first meeting of the Intergovernmental Negotiating Committee (INC) at Chantilly, Virginia. Over the course of five negotiating sessions, a draft Framework Convention on Climate Change was hammered out. It was presented for signature at UNCED in June 1992. Among the specific issues negotiated were targets and timetables for GHG emissions, provisions for joint implementation ( JI), and commitments on financial resources and technology transfer. More general concerns pressed by developing countries during the negotiations were acceptance of responsibility by industrial countries for past GHG emissions and preservation of the principle of sovereignty. Core elements of China’s negotiating position included: ●

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an emphasis on the major scientific uncertainties that still surrounded the climate change debate; the preservation of national sovereignty, meaning, among other things, that developing countries have the need – and the right – to develop; as such, developing countries should neither be obligated to undertake measures that might hinder development nor be subject to conditions being placed on aid or development financing; industrial countries are responsible for the vast majority of GHG emissions over the past two centuries and therefore have historic responsibility for redressing the problem; and industrial countries should transfer new and additional funding and technology to developing countries to assist their participation in international efforts dealing with climate change.

Chinese politics, energy and climate negotiations 51 Having fashioned a unified negotiating position internally, efforts subsequently turned to forging a set of common principles to guide the developing world in the negotiations. Since China produced more CO2 emissions than any other country in the developing world, Chinese officials were especially concerned that they might come under undue pressure to reduce their emissions immediately – a concern perhaps heightened by the diplomatic isolation experienced in the aftermath of the 1989 Tiananmen Square crackdown (see Harrington 2003). In June 1991, China convened the Ministerial Conference on Environment and Development in Beijing, attended by delegates from over forty developing countries. At its conclusion, a ministerial declaration largely reflecting the principles enunciated earlier by China – differentiated responsibilities, obligations and capabilities, state sovereignty and equality, untied aid, preferential treatment – was approved unanimously. Though there were differences among the various bureaucratic actors involved in formulating China’s position in the climate change negotiations, the Chinese delegation presented a unified front to the outside world once negotiations began. This did not imply, however, that positions assumed by China remained unchanged. For example, at the first INC meeting in February 1991, Chinese representatives made clear their opposition to any initiative that would establish emissions ceilings for countries, regardless of whether they were developed or developing. Reflecting this position, China subsequently produced a text for a framework convention that set out general principles and obligations, but contained no substantive commitments. China’s initial opposition to this was due in large part to concerns that the developing, along with the developed, world would be obligated to a specific set of commitments, as was initially sought by developed countries. Once it was clear that this possibility was off the negotiating table, China accepted the position put forward in an Indian draft specifying that only developed nations would be bound by emissions targets. The importance attached to maintaining a unified front vis-à-vis the outside world also did not imply that the government was intractable in the negotiations. China views itself as a major world power, which means that it wants to be seen as a responsible and constructive international citizen (see Hao 1992: 159–161; Perlack et al. 1993: 86; Johnston 1998: 559, 563; Oksenberg and Economy 1999: 21). The climate change negotiations provided the Chinese government with an ideal opportunity to play such a role, especially in light of the setback to China’s international image that followed the Tiananmen incident. Accordingly, China was a moderating force during much of the negotiations (Chayes and Kim 1998: 515), seeking to temper the positions within the Group of 77 developing countries (G-77) when it appeared that they might block final agreement on a convention and pragmatically pursuing compromise where necessary. The UN Framework Convention on Climate Change (UNFCCC) signed at the Earth Summit in June 1992 reflected the compromises required between (and among) the most important developed and developing countries (INC 1992). China (and developing countries in general) were able to influence the shape of the climate change convention in several areas: industrial country responsibility for GHG emissions was acknowledged; developed and developing countries had

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differentiated (lesser) obligations; there was a commitment to provide new and additional resources to them; and there were some provisions for technology transfer. In order to reach an agreement, however, compromise was required in each area (see Bodansky 1993: 451–558): ●

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The developing countries were unable to get the principle of “main responsibility” on the part of developed countries for past GHG emissions included in the convention. Most developing countries, including China, had opposed JI arrangements between developed and developing countries that would allow the former to make emissions reductions abroad rather than domestically; in allowing “interested Parties” to participate in such arrangements, the convention endorsed the general concept of JI, though specific arrangements were to be decided later. In the area of financial commitments, developing countries prevailed in their efforts to have the convention require industrialized countries to provide financial assistance, but no specific level of funding was mandated, thereby avoiding open-ended obligations for developed countries. As indicated earlier, China and other developing countries initially wanted a commitment from industrialized countries to transfer technology on “concessional and preferential terms”; what they got was the obligation to take “all practicable steps to promote, facilitate and finance, as appropriate, the transfer of … technologies.”

China ratified the UNFCCC in November 1992. The SMA was put in charge of coordinating its implementation, perhaps emphasizing the technical nature of the commitments China assumed in ratifying the treaty. With the ink hardly dry on the convention, international initiatives were underway to supplement it with more binding arrangements that would take the contracting parties beyond the year 2000. At the heart of the debate was the question of whether the existing commitments contained in the convention were adequate to address the threats posed by climate change. A series of INC meetings were held in preparation for the First Conference of the Parties (COP1) to be held in Berlin in March/April 1995, where this question was to be taken up. From the perspective of several Parties, commitments contained in the FCCC were not adequate; COP1 was to provide the forum for more ambitious actions. Specific items on the agenda for COP1 were the adoption of binding targets and timetables designed to reduce emissions beyond the year 2000, the instruments allowed to achieve those targets, the GHGs to be included and, lurking in the background, the question about the role of developing countries in the agreement. In February 1995, during the final negotiating session (INC XI) leading up to COP1, China explicitly questioned the scientific conclusions of IPCC assessments that served as the basis for those arguing the inadequacy of existing commitments. At the same time, it opposed proposals for a protocol containing binding commitments to reduce GHG emissions, arguing that commitments already made must be

Chinese politics, energy and climate negotiations 53 fully implemented before further actions are taken (Chayes and Kim 1998: 504). This position signified a clear fissure in the coalition among developing countries, since the Alliance of Small Island States (AOSIS) was pushing for a protocol that would require developed countries to reduce their CO2 emissions 20 percent below 1990 levels by 2005.2 With the hard-line position staked out by China and many others within the G-77 threatening the cohesion of the group, as well as a breakdown in negotiations itself, India submitted a “Green Paper” at COP1 that provided the basis for a series of compromises that led to the “Berlin Mandate,” which included the following elements (Chayes and Kim 1998: 526–527): ● ●

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an acknowledgement that existing commitments were not adequate; COP1 would initiate a negotiating process that was to lead to a protocol (or other type of “legal instrument”); negotiations were to be completed, hopefully, by COP3 in 1997 and focus on developed country commitments; the protocol was to include quantified limitation and reduction objectives with specified time-frames and policies and measures for achieving them; no new commitments for developing countries were to be introduced.

China joined with most other developing countries in support of this compromise. While it addressed many of China’s concerns, the agreement also represented a significant reversal in its position going in to COP1.3 In December 1997, the parties to the UNFCCC met in Kyoto to negotiate the most contentious issues left unresolved from the preparatory meetings. As is often the case, compromises on most of the issues were reached at the last moment, with some elements left to be fleshed out in future meetings. For China, the primary issues and points of contention surrounding the 1997 Kyoto Protocol had to do with the “flexible mechanisms” (emissions trading, JI, and the Clean Development Mechanism (CDM)). As discussed earlier, the concept of joint implementation was endorsed in the FCCC. At an early stage in the negotiations, it appeared that China might support JI because it was likely to be a major recipient of projects that would transfer technology. After considerable pressure from developing countries in the G-77 caucus, however, the Chinese delegation dropped its support for JI ( Johnston 1998: 575). At COP1, the United States proposed the adoption of JI arrangements that would credit developed countries for emissions reductions resulting from projects undertaken in developing countries. The G-77 and China opposed the US proposal, basing their opposition on concerns about fairness (developed countries would be able to avoid domestic actions) and sovereignty (monitoring and verification of emissions in the host country would be required) (Nielsen and McElroy 1998: 39). With the support of the European Union, developing countries were able to have excluded any credits going to industrialized countries for joint projects with developing countries; to reinforce the fundamental change this brought to the concept, JI was replaced by the term “activities implemented jointly” (AIJ). For its part, China indicated some interest in exploring the potential for AIJ projects during this pilot phase (Chayes and Kim 1998: 522).

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In its general approach to the Kyoto Protocol, China has been concerned that the “flexibility” built into the agreement might allow industrialized countries to avoid meeting their obligations. From China’s perspective, developed nations have not lived up to the obligations they assumed in 1992 – for example, the additional funds and technology transfer stipulated at the UNCED failed to materialize. The use of flexible mechanisms, as proposed by the United States, would allow such countries to avoid undertaking domestic actions to redress a problem largely of their own making. Specifically, if the US proposal for no caps on the use of flexible mechanisms were adopted, industrialized countries could conceivably reach their targets solely through external measures: emissions trading (e.g. the purchase of emissions reductions from other industrialized countries that exceeded their national reduction targets), joint implementation (now defined as credits obtained by the investing country from projects in other industrialized countries – largely those in central and eastern Europe as well as the former Soviet Union), and the CDM (credits from projects undertaken in developing countries). All told, China has not supported the use of emissions trading and JI as conceived by the United States, but these issues have not been a high priority for the Chinese government either, given that developing countries are not involved. Debate over the CDM, however, has engaged Chinese representatives, since it involves the transfer of credits from countries like China that do not have abatement commitments. As defined in the Kyoto Protocol, the primary objectives of the CDM are to promote investments in projects that reduce GHG emissions and foster sustainable development in developing countries. Despite China’s earlier position on JI that contributed to the AIJ formula agreed to at COP1, senior Chinese officials were receptive to the concept of the CDM in the run-up to Kyoto and supported its inclusion in the protocol (Nielsen and McElroy 1998: 39). Clearly, Chinese representatives hope that the CDM will provide access to advanced technologies and additional funds. As reflected in the subsequent negotiations to flesh out its operative details, however, support for this mechanism has not been without reservation. At its core, China’s reservations are based on concerns that the CDM will only serve the interests of the industrialized world and that the least expensive reduction potentials will no longer be available if – or when – developing countries assume quantified obligations. In terms more specific to the negotiations, issues about the fungibility of the certified emission reductions (CERs) generated by CDM projects and institutional arrangements governing the CDM were of prime importance to China. Whereas the United States wanted the CERs to be treated as a commodity that could be traded, China wanted CERs to be used only once and only for complying with a portion of a developed country’s target.4 In terms of institutional arrangements, China wanted them to be bilateral and project-based rather than fund-based with multilateral financing, apparently because it was felt that the fund model weakens developing country negotiating leverage and, in addition, may evolve into a global emissions-trading system that attempts to bring developing countries into premature commitments on emissions caps (Xu Yugao: 10–11).

Chinese politics, energy and climate negotiations 55

A “no regrets” policy for China? In the negotiation of the Kyoto Protocol to the UNFCCC and the subsequent debate over its ratification, the extent of developing country involvement has been a major area of contention. Most prominent was the demand of the United States for the “meaningful participation of key developing countries.” What exactly would constitute “meaningful participation” was never clearly articulated by the Clinton administration; the Bush administration, for its part, has seemed more intent on using the absence of new commitments for developing countries as a pretext for withdrawal from the protocol. It is clear, however, that China is not willing to accept obligations that industrialized countries are subject to under the Kyoto Protocol. On the other hand, a “no regrets” strategy for China, perhaps assisted through the CDM, could make a valuable contribution in efforts to mitigate climate change (see Chapter 6). A “no regrets” policy implies actions that provide benefits to the country, regardless of whether the threat of global warming is real. For China, such an approach would take as a given that economic growth remains the top priority. Inadequate energy supplies, however, have threatened plans for economic expansion. At the same time, there are growing concerns among Chinese policymakers over atmospheric pollution; lung cancer and respiratory diseases have been increasing at alarming rates in urban areas, and acid rain and soil erosion have been found to reduce agricultural output (a troubling development in a country that has experienced widespread famine as recently as the late 1950s and early 1960s, when around 30 million people died). A World Bank study (1997: 21–22, 37, 104) estimates that urban air pollution causes $33 billion per year in damages, indoor air pollution results in approximately $10 billion in health damages yearly, acid rain is responsible for another $5 billion in damage and, if current trends continue, could damage more than 25 percent of China’s land and forests, with crop losses perhaps reaching $60–80 billion. The total cost of air pollution is estimated at around $50 billion a year, over 7 percent of China’s GDP in 1995. There are, in other words, sound economic reasons for the Chinese government to undertake measures to address the problems of environmental pollution. In doing so, however, the government walks a fine line. On the one hand, the necessary environmental reforms could affect the immediate economic interests of millions, thereby undermining support for a system whose political leaders are already concerned about the legitimacy accorded their rule by the populace – a legitimacy based largely on economic performance but undermined by the social dislocations brought by market reforms and rapid economic expansion. Alternatively, there have been increasing instances of public complaints about polluted air and water. Though China lacks a “civil society” that enables the efficient transmission of such concerns to policymakers, it appears that grassroot outcries over environmental pollution have been heeded (Ross and Silk 1986: 63–89; Hertsgaard 1997). Examples from Eastern Europe and the Soviet Union, where growing environmental discontent often served as a catalyst for broader opposition to the communist regimes, may also be instructive for Chinese officials (see Harrington 2003). In sum, there are

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political and economic reasons why it might be in the interest of the Chinese government to address these environmental problems while, at the same time, having the effect of limiting China’s GHG emissions. Among the policy measures often suggested for a “no regrets” strategy are afforestation, energy conservation, fuel switching, energy price reform and investment in energy-efficient technologies. China is reported to have increased its forested area from 8.6 percent to 13 percent between 1949 and 1991 (Capannelli and Shrestha 1993: 3). By the end of the 1990s, it planned to increase forest coverage to 16–17 percent. If successful, this program would help protect against soil erosion, provide a renewable source of fuel and provide a reservoir for CO2 emissions. This caveat may be quite significant, however, in light of questions about the effectiveness of earlier afforestation programs: according to one observer, onehalf of the reported afforestation claims were false and, because of an incentive system that emphasized quantity over quality, no more than 40 percent of the trees planted survived (Smil 1992: 59, 61). In the Eighth Five-Year Plan (1991–1995), a high priority was given to reducing the energy intensity of China’s economy. A central element of the strategy was energy conservation. When an official in the Ministry of Energy was asked the amount to be spent on conservation, however, the response was that it would be “foreign friends who would be willing to invest and provide technical assistance in China’s energy conservation program to control China’s contribution to global warming” (Christoffersen 1992: 49). Reflecting the absence of funds to invest in conservation, the types of measures adopted for this purpose included the establishment of energy conservation departments in government and in many largeand medium-sized businesses, dissemination of information on energy conservation, and incentive policies to reward conservation and punish waste (Perlack et al. 1993: 81). The Energy Conservation Law was enacted in 1998, but it is too early to tell whether it has any teeth. Despite the lack of resources to invest in energy conservation, there has been a steady decrease in the energy intensity of China’s economy: during 1980–1988 it declined by 5.6 percent; and by the mid- to late-1990s energy growth rate was approximately one-half the rate of economic growth (Wu and Wei 1991: 937; World Bank 1997: 47; Baumert et al. 1999: 10). Much of this is attributable to economic restructuring that promoted light over heavy industry (Locatelli 1989: 150; Smil 1992: 126), but the technological renovation that accompanied China’s rapid economic growth of recent years played an important part as well.5 Part of the government’s energy conservation strategy was fuel switching. According to government officials, coal use for electricity generation is to be reduced through increased investment in nuclear power and hydroelectric facilities (Qu 1992: 504). But to repeat a point made earlier, the high costs of both relative to coal-burning thermal plants make it unlikely that either represents a significant alternative. Nuclear power is estimated to be four times more costly than coalgenerated electricity; as of November 1997, there were three nuclear power plants in operation and four under construction (The Economist, June 10, 1998). The most prominent hydroelectric project – the controversial Three Gorges dam – may cost

Chinese politics, energy and climate negotiations 57 from $30 billion (official estimate) up to $100 billion before it is finished (Lenssen 1993: 24; The Economist, November 20, 1999), meaning that much of the funding for hydroelectric projects will be absorbed by the Three Gorges. Moreover, most of the remaining potential sites for hydroelectric power are located in the southwest, far from the eastern part of China where demand for electricity is greatest. Although plans to increase the use of other renewables, such as wind, solar, biomass, geothermal and ocean energy have been discussed – mostly within the context of collaboration with foreign companies and institutions – they too are unlikely to make much of a contribution to energy supply anytime soon. The areas that would have the greatest impact on coal burning and its environmental effects are industrial and residential sectors. As discussed earlier, direct residential burning of raw coal for heating and cooking is very inefficient and a major source of urban air pollution. Efforts are underway to encourage the use of coal briquettes and gas for domestic use. Each is cleaner and more efficient than the combustion of raw coal, but they too entail substantial investments in new delivery systems. Given the large share of raw coal burned directly, the simple practice of coal washing would raise thermal efficiencies and reduce pollution levels by removing such impurities as sulfur and ash. Indeed, between 1979 and 1993, the amount of coal washed increased from 116.1 million tons (mt) to 182.6 mt, but as a proportion of total output, it fell from 18.3 to 15.9 percent (Thomson 1996: 730). In the industrial sector, investment in more energy-efficient coal boilers, cogeneration and district heating offers huge improvements in efficiency and air quality. All of these technologies are currently available and the government has been investing in district heating. More extensive investment in improved industrial boilers and cogeneration has been discouraged, however, by delays in energy price reforms. With low coal prices, there was little incentive to buy the more expensive technology. Price reform has long been recommended by energy experts as one of the single most effective measures to encourage energy conservation. Again, an important element of China’s centrally planned economy was low energy prices. With an entire infrastructure based on low-cost energy, efforts to reform the price structure were sure to encounter opposition. Initial steps in this direction were taken in the mid-1980s. By 1988, however, price reforms stalled in the face of resistance from production ministries dependent on cheap energy and opposition from political conservatives concerned about growing inflation and erosion of Communist Party power (Ross 1992: 634). Yet, despite the resistance and setbacks, liberalization of energy prices resumed in the 1990s. Since the mid-1990s, coal prices have been determined largely by the market. Electricity prices in the coastal regions, where power production has expanded the fastest, are at levels approximating marginal costs; in the inland areas, where most of the power production was built before 1980, prices have remained low (World Bank 1997: 51–53). All told, China has reduced the energy intensity of its economy to a degree unprecedented for a developing country (World Bank 1997: 47) and, in so doing, limited substantially the country’s growth in CO2 emissions. Its GHG emissions declined 19 percent from 1997 to 1999 (Baumert and Kete 2001: 7).6 In the

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absence of the decoupling of energy consumption and economic growth, Chinese CO2 emissions would have been 50 percent higher in 1997 (Baumert et al. 1999: 4). In other words, contrary to the implications of the US demand for “meaningful participation” of key developing countries in the Kyoto Protocol, China has been doing a great deal to limit emissions, albeit for reasons other than climate change policy. The country, however, could do more with additional resources and proper incentives. At the same time, it is clear that these resources would have to come from the more affluent industrialized nations. But why would they make available these resources and, perhaps more importantly, what strategy might best induce China to undertake the desired policies? To the degree that leaders and citizens in the developed world are persuaded by the scientific evidence pointing to the potential of climate change, one reason for supporting further measures that would limit GHG emissions is the threat posed by climate change and the ability of future energy developments in China to overwhelm any efforts in the industrialized North to reduce their emissions. Additionally, China’s sulfur dioxide emissions have serious environmental effects beyond its borders, such as acid rain in Japan. Furthermore, the growing presence of China in the international oil markets has important implications for future oil prices and energy security.7 Injecting demands like “meaningful participation” into the negotiations over the Kyoto Protocol was counterproductive if the objective was to elicit cooperation from China in pursuit of climate change objectives. In contravening a central element of the compromise struck at Berlin that set the stage for Kyoto, as well as seeming to abrogate the basic principle of common but differentiated responsibilities contained in the Convention, such demands play into the more ideological elements of China’s negotiating position (e.g. primacy of national sovereignty; the historical responsibility of industrial countries), thereby strengthening the hand of those interests opposing a more proactive approach in the negotiations (see Chapter 4). Rather than pushing Chinese participation within the formal negotiating framework where the views of the MOFA and the SPC have dominated, it may be more fruitful to pursue cooperation through bilateral arrangements and other multilateral institutions such as the World Bank, UN Development Program (UNDP), Asian Development Bank, and Global Environmental Facility (GEF). According to some observers, past attention and support from such foreign institutions have elevated the bureaucratic status of the proactive forces in China and helped their efforts to advance energy efficiency and technical measures that contribute to limiting increases in the rate of CO2 emissions (Economy 1997: 36–37; Johnston 1998: 585).8 Developments in China’s energy sector over the past decade may make Chinese officials more receptive to assistance from foreign institutions and the conditions attached to that assistance. By the 1990s, electricity shortages, brownouts and rationing had become a common occurrence in China (Murray et al. 1998: 645), with attendant economic costs (e.g. $27.6 billion of industrial output was lost in 1993 because of power shortages (Blackman and Wu 1998: 4)). As a consequence, the government has placed a high priority on increasing power generation from coal. Estimates of yearly additions

Chinese politics, energy and climate negotiations 59 to generating capacity range from 15,000 megawatts (MW) to over 20,000 MW in the next decades; the cost for such expansion will exceed $200 billion by 2010 (The Economist, March 19, 1994; New York Times, November 7, 1994, February 21, 1995). With the ability to produce just 12,000 MW per year, however, domestic manufacturers do not have the capacity to meet projected demand. Moreover, according to Chinese officials, the government is able to finance only 70 percent of the total investment required to keep pace with energy demand (The Economist, March 19, 1994; New York Times, November 7, 1994, February 21, 1995). If these goals were to be achieved, the clear implication is that foreign investors would be needed to make up the difference in finance. China currently builds world-class pulverized coal power plants that are more efficient than earlier generations; nonetheless, the operating efficiencies in them are considerably lower than those in the industrialized world (on average 29–30 percent, compared to around 35 percent, although the most modern plants exceed 40 percent). To construct power plants that offer higher efficiency and lower emissions, more advanced coal-burning technologies would cost more and require technology transfer (Simbeck et al. 1994: 82; Murray et al. 1998: 650, 659–660). To help bridge the gap in financing and building capacity, China has sought joint ventures with foreign firms. Access to the huge Chinese market is attractive to these firms, but conflicts over the rate of return allowed to foreign investors has limited the number of projects approved in recent years (the 12–15 percent cap on the rate of return for foreign investment is well below the 20 percent Western firms say they need to compensate for the risks involved) (The Economist, October 28, 1995). In December 1995, the Electric Power Industry Law was enacted. In addition to codifying and extending the price reforms mentioned earlier, it included rules governing foreign direct investment. However, the uncertainties associated with the approval process continue (Blackman and Wu 1998; Murray et al. 1998; The Economist May 29, 1999).9 Explanations for the absence of a coherent policy framework focus on the conflicts within the central government and among various levels of government over control of energy policy (Murray et al. 1998: 675). Attempts to limit returns on foreign investment have pitted reformminded bureaucrats and provincial leaders wanting more electricity against central planners suspicious of foreign ownership and of arrangements that allow competitive rates of return (New York Times, November 7, 1994). China also has looked to multilateral institutions such as the World Bank, UNDP and Asian Development Bank, as well as bilateral arrangements, for outside funding. Loans from the World Bank have been a major source of foreign funds in the power sector; from 1984 through 1999, China borrowed approximately $7 billion for energy-related projects, the most by any country. Among the specific energy projects funded by the World Bank are coal power plants ($3.5 billion), hydroelectric power ($2.7 billion), energy efficiency ($430 million) and renewables ($100 million) (Martinot 2001: 581).10 China is also the single largest recipient of UNDP funding. The GEF, jointly administered by the World Bank, UN Environmental Program (UNEP) and UNDP, has been the primary funding mechanism for projects on global climate change. In contrast to many other developing countries, China has

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not been as opposed to the GEF serving as the financial mechanism for the UNFCCC, in large part because it has received a disproportionately large share of the resources dispersed by GEF in the past. The World Bank has leveraged $90 million in cofinancing from GEF for energy efficiency and renewable energy projects, and GEF has provided $38 million for energy efficiency and renewable energy projects through UNDP (Martinot 2001: 581). In terms of bilateral aid for China, Japan has been the largest donor (61.8 percent); since the late 1980s, the environment has been a major focus of Japanese assistance (Pharr and Wan 1998: 605). In recent years, Germany and the United States have also provided financing for clean air projects in China (New York Times, April 10, 1999). One should not exaggerate the influence bilateral or multilateral funding can have on a country the size of China. In 1996, China received around $2.5 billion in official assistance from bilateral and multilateral sources, compared to $40 billion from foreign investment (Esty and Chertow 1997: 12). At the same time, with growth expected to average about 7 percent a year over the next quarter century, 80 percent of China’s industrial production capacity is yet to be built (World Bank 1997: 57). Within this context, bilateral and multilateral funding could have an influence well beyond its numbers if it can help shape the incentives for private sector investment. Depending on its conditions, the CDM may provide an important source of foreign investment that links the interests of China, private companies and donor countries. Much depends on the Chinese government, where enforcement of environmental laws and regulations has been lax (see Chapter 2). Many foreign technologies and processes currently considered too expensive by Chinese officials would be more competitive if environmental standards were enforced ( Johnson 1999: 291). In the late 1990s, the electric power industry in China began to experience what is believed to be a short-term oversupply of electricity as the Asian financial crisis, serious flooding in several regions, and economic reforms slowed economic growth. In response, Chinese authorities began shutting down the relatively inefficient and dirty smaller power plants (25 MW or less), with a combined capacity of around 11,000 MW scheduled to be closed between 1998–2000.11 Greater efficiency and less pollution also has been encouraged by a policy that now requires new coal-fueled power plants to be 300 MW or larger (Zhou et al. 2000: 1, 4). Environmental benefits have resulted as well where power plants were built from foreign investment, since those firms tend to invest in more efficient technologies (Blackman and Wu 1998). Finally, Chinese leaders have decided to expand the use of natural gas from 2 to 6 percent of total energy use by 2010 (USEIA 1999; Christian Science Monitor, January 25, 2000), a step that would reduce air pollution, increase energy efficiency and cut CO2 emissions. Expanding natural gas use, however, requires substantial investment for exploration and development of new fields, pipelines, and facilities for imported liquefied natural gas. China has been seeking foreign partners for these projects (USEIA 1999; New York Times, April 10, 1999; The Economist, November 25, 2000). In 1990, Qu Geping, at the time director of NEPA, wrote: “Whether in terms of land area or population, China is a large country which has a definite impact

Chinese politics, energy and climate negotiations 61 on the world environment. If China’s environmental problems can be solved, it will represent a major contribution to improving the quality of the world environment” (Qu 1990: 108). As this statement suggests, the major contribution China can make to combating global warming is through addressing domestic environmental problems. It appears that the initial steps along this path are being taken. Whether China ultimately will be successful may hinge on her ability to effectively bridge the gap between the formulation and implementation of a “no regrets” policy at home and the willingness of industrialized countries to reenforce such a policy through financial support from abroad.

Conclusion In a provocative Foreign Affairs article, Gerald Segal questioned whether China merited the weight and attention ceded it in international affairs. In so doing, he focused on the more traditional areas of world politics, arguing that China was, at best, a minor part of the global economy and only a medium-rank military power (Segal 1999: 25, 35). If one acknowledges the growing salience of environmental issues in international affairs, however, this assessment appears ripe for revision. China clearly matters when it comes to climate change. Without substantial efforts on the part of China to limit future CO2 emissions, any measures undertaken by other countries to address the climate change question will have much less impact. Hence, China’s approach to climate change and its role in international negotiations are very important. International factors were critical in the early formulation of China’s strategy to address global warming. Most importantly, the domestic political process was driven by the necessity of responding to an international agenda pushed initially by transnational actors and international organizations. In the absence of pressures from abroad, it is unlikely that China would have devoted much attention to the global warming question. With the approach of the Second World Climate Conference in fall 1990 and the climate change negotiations scheduled to begin the following February, a negotiating position was hammered out among various bureaucratic actors in the spring of 1990. This initial position, however, was not written in stone. Once engaged in international negotiations, China found it necessary to compromise in several areas, as reflected in many elements of the UNFCCC, which it signed. At times China changed its position in order to preserve a unified position within the G-77 and to maintain an influential presence within the negotiations (e.g. its position opposing emissions ceilings for developed as well as developing countries in the early negotiations and its opposition to a protocol containing binding targets and timetables going into COP1). At the same time, forces within the domestic political process placed constraints on Chinese participation, constraints related to the priority of economic development and its implications for energy policy. Most importantly, the SPC and MOFA came to dominate the policy process leading to China’s participation in the negotiations, thereby limiting the influence of domestic interests that favored emissions limitations and restructuring of the energy sector. Nonetheless, the relative influence of

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domestic actors is not immutable. As demonstrated by shifts in China’s position on joint implementation during the negotiations and its more recent interest in the CDM, considerable fluidity exists in the domestic policy process. As the discussion of a no regrets policy for China also suggests, there are ongoing struggles over the future direction of China’s energy policy; the outcome of those internal struggles holds important implications for global efforts to combat the threat of climate change. Outside actors may be able to influence the outcome of those internal struggles through approaches that help reenforce the more proactive forces in the domestic policy process.

Notes 1 The domestic policy process in China is far from transparent. To date, the best effort in sorting out the internal dynamics of the political process is that of Elizabeth Economy (1994; 1997). This section relies heavily on her analysis. 2 According to Johnston (1998: 575), the Chinese probably saw this as a step ultimately leading to pressures on China to accept binding emissions ceilings. 3 How one explains this reversal in positions is open to speculation. Chayes and Kim (1998: 528–529) suggest several possibilities: subtle shifts in the dynamics of domestic politics, internal G-77 politics, negotiating tactics, authentic evolution in policy thinking, or some combination. 4 China’s opposition to the sale of CERs to third parties seems to be based on the belief that this will increase the number of CDM projects (Tangen et al. 2001: 242). 5 Personal communication, Susan McDade, United Nations Development Program, March 1997. 6 There have been questions raised about the accuracy of the data upon which several studies reporting dramatic reductions in China’s CO2 emissions have been based (Pomfret 2001: A16). 7 China became a net oil importer in 1993. According to International Energy Agency estimates, China could account for 23 percent of the total increase in world oil demand by 2020 (Agence France Presse, March 20, 2000). For discussions of these developments, see Calder (1996) and Walker (1996). 8 Recent domestic organizational reforms may also help strengthen proactive forces in the policymaking process. As mentioned earlier, NEPA was elevated to ministerial status in 1998; the authority of the SPC was reduced and reorganized into the State Development Planning Commission; the SSTC was downgraded to ministerial status; and the Ministry of Electric Power was abolished. The upgrading of SEPA, combined with the downgrading of the SPC/SDPC, may give it more leverage in its interaction with other governmental agencies in climate change policy; on the other hand, responsibility for the formulation and implementation of climate change policy was transferred from the SMA to SDPC. 9 In recent years, there have been reports by some foreign investors that the Purchasing Power Agreement was not being honored by Chinese utilities (Zhou et al. 2000: 16). 10 This pattern of lending has been criticized for its emphasis on production at the expense of demand-side management and its support for “dirty” coal-fueled power plants. However, it is unlikely that the World Bank could dissuade China from using coal. Moreover, as suggested in a review of World Bank energy-related projects in China, Bank financing has accelerated the development of large-scale efficient coal power plants and promoted the use of high-efficiency electrostatic precipitators that has led to a reduction in particulate emissions (Martinot 2001: 583–587).

Chinese politics, energy and climate negotiations 63 11 There has been some question about the ability of the central authorities to enforce this order since the majority of these smaller plants are cheap to run and they are owned by municipal governments (Martinot 2001: 587).

References Baumert, K.A., Bhandari, R. and Kete, N. (1999) “What might a developing country climate commitment look like?,” World Resources Institute, Climate Notes May: wri.org/wri/ climate/develp.html Baumert, K.A. and Kete, N. (2001) “The US, developing countries, and climate protection: leadership or stalemate,” World Resources Institute, Climate Issue Brief June. Blackman, A. and Wu, X. (1998) “Foreign direct investment in China’s power sector: trends, benefits and barriers,” Resources for the Future Discussion Paper 98, September: 50. Bodansky, D. (1993) “The United Nations Framework Convention on Climate Change: a commentary,” Yale Journal of International Law 18: 451–558. Brown, N.L. and Brown, J.W. (1992) “Energy and pollution in China: a national and international responsibility,” in T.W. Robinson (ed.) The Foreign Relations of China’s Environmental Policy, Washington, DC: The American Enterprise Institute for Public Policy Research. Calder, K.E. (1996) “Asia’s empty tank,” Foreign Affairs 75(2): 55–69. Capannelli, E. and Shrestha, O.L. (1993) Environmental Challenges in the People’s Republic of China and Scope for Bank Assistance, Asian Development Bank. Chayes, A. and Kim, C.J. (1998) “China and the United Nations Framework Convention on Climate Change” in M.B. McElroy, C.P. Nielsen and P. Lydon (eds) (1998) Energizing China: Reconciling Environmental Protection and Economic Growth, Newton, MA: Harvard University Press. Christoffersen, G. (1992) “China’s ‘Comprehensive’ Energy Policy,” in T.W. Robinson (ed.) The Foreign Relations of China’s Environmental Policy, Washington, DC: The American Enterprise Institute for Public Policy Research. —— (1994) Negotiating the Terrain of Global Climate Change Policy in the Soviet Union and China: Linking International and Domestic Pathways, PhD. Dissertation, University of Michigan. —— (1997) “Chinese policy-making and global climate change: two-front diplomacy and the international community,” in M.A. Schreurs and E. Economy (eds) The Internationalization of Environmental Protection, Cambridge: Cambridge University Press. Economy, E. and Oksenberg, M. (eds) (1999) China Joins the World: Progress and Prospects, New York: Council on Foreign Relations. Esty, D.C. and Chertow, M.R. (1997) “Thinking ecologically: an introduction” in M.R. Chertow and D.C. Esty (eds) Thinking Ecologically: The Next Generation of Environmental Policy, New Haven: Yale University Press. Harrington, J. (2003) “ ‘Panda Diplomacy’: State Environmentalism, International Relations and Chinese Foreign Policy,” in P.G. Harris (ed.) Confronting Environmental Change in East Asia: International Politics, Foreign Policy, and Sustainable Development, London: Earthscan. Hao, Y. (1992) “Environmental protection in Chinese foreign policy,” Journal of Northeast Asian Studies 11(3): 25–46. He, J., Zhang, A. and Je, Y. (1996) “Technology options for CO2 mitigation in China,” Ambio 25(4): 249–253. Hertsgaard, M. (1997) “Our real China problem,” Atlantic Monthly November: 96–114.

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Intergovernmental Negotiating Committee (INC) (1992) Report of the Intergovernmental Negotiating Committee for a Framework Convention on Climate Change on the work of the Second Part of its Fifth Session, 9 May, Document A/AC.273/18 (Part II), New York. Johnston, A.I. (1998) “China and International Environmental Institutions: a decision rule analysis,” in M.B. McElroy, C.P. Nielsen and P. Lydon (eds) Energizing China: Reconciling Environmental Protection and Economic Growth, Newton, MA: Harvard University Press. Johnson, T.M. (1999) “Foreign Involvement in China’s energy sector,” in E. Economy and M. Oksenberg (eds) China Joins the World: Progress and Prospects, New York: Council on Foreign Relations. Lenssen, N. (1993) “All the coal in China,” World Watch 6(2): 22–29. Lieberthal, K. and Oksenberg, M. (1988) Policymaking in China: Leaders, Structures, and Processes, Princeton, N.J.: Princeton University Press. Lieberthal, K.G. and Lampton, D.M. (eds) (1992) Bureaucracy, Politics, and Decision Making in Post-Mao China, Berkeley, Los Angeles and Oxford: University of California Press. Lin, G. (1997) “Energy Development and Environmental Constraints in China,” CICERO Working Paper, 1997: 4. Locatelli, C. (1989) “China’s energy policy: energy and economic development,” Energy Studies Review 1(2): 144–158. Lu, G. and Walsh, K.A. (1992) “The foreign relations of China’s environmental policy,” in T.W. Robinson (ed.) (1992) The Foreign Relations of China’s Environmental Policy, Washington, DC: The American Enterprise Institute for Public Policy Research. Lu, Y. (1993) Fueling One Billion: An Insider’s Story of Chinese Energy Policy Development, Washington, DC: Washington Institute Press. Mao, J. (1991) “Environmental problems caused by coal production in China and the countermeasures for reducing the effects,” 13th Annual International Scientific Forum on Energy. Martinot, E. (2001) “World Bank energy projects in China: influences on environmental protection,” Energy Policy 29: 581–594. Murray, F.E., Reinhardt, F. and Vietor, R. (1998) “Foreign firms in the Chinese power sector” in M.B. McElroy, C.P. Nielsen and P. Lydon (eds) Energizing China: Reconciling Environmental Protection and Economic Growth, Newton, MA: Harvard University Press. Nielsen, C.P. and McElroy, M.B. (1998) “Introduction and overview,” in M.B. McElroy, C.P. Nielsen and P. Lydon (eds) Energizing China: Reconciling Environmental Protection and Economic Growth, Newton, MA: Harvard University Press. Oksenberg, M. and Economy, E. (1999) “Introduction: China joins the world” in E. Economy and M. Oksenberg (eds) China Joins the World: Progress and Prospects, New York: Council on Foreign Relations. Perlack, R.D., Russell, M. and Shen, Z. (1993) “Reducing greenhouse gas emissions in China: institutional, legal and cultural constraints and opportunities,” Global Environmental Change 3, 1, March: 78–100. Pharr, S.J. and Wan, M. (1998) “Yen for the earth: Japan’s pro-active china environment policy,” in M.B. McElroy, C.P. Nielsen and P. Lydon (eds) Energizing China: Reconciling Environmental Protection and Economic Growth, Newton, MA: Harvard University Press. Pomfret, J. (2001) “Research casts doubt on China’s pollution claims,” Washington Post 15 August. Qu, G. (1992) “China’s dual thrust energy strategy: economic development and environmental protection,” Energy Policy 20(6): 500–506. —— (1990) “China’s environmental policy and world environmental problems,” International Environmental Affairs 2: 103–108. Robinson, T.W. (ed.) (1992) The Foreign Relations of China’s Environmental Policy, Washington, DC: The American Enterprise Institute for Public Policy Research.

Chinese politics, energy and climate negotiations 65 Ross, L. (1988) Environmental Policy in China, Bloomington and Indianapolis: Indiana University Press. —— (1992) “The politics of environmental policy in the People’s Republic of China,” Policy Studies Journal 20(4): 628–642. Ross, L. and Silk, M.A. (1986) “Post-Mao China and environmental protection: the effects of legal and politico-economic reform,” Pacific Basin Law Journal 4: 63–89. Segal, G. (1999) “Does China matter?,” Foreign Affairs 78(5): 24–36. Shen, L. and Liu, L. (1991) “Energy development and environmental protection: dual challenges for China,” Energy and Environment 2(4): 316–326. Simbeck, D.R., Dickenson, R.L. and Carter, L.D. (1994) “China’s coal use,” Independent Energy 24(6): 80–86. Smil, V. (1992) China’s Environmental Crisis: And Inquiry Into The Limits Of National Development, New York: East Gate Book. Summary Report prepared by a joint study team from NEPA, SPC, UNDP, and World Bank. (1994) China: Issues and Options in Greenhouse Gas Emissions Control, Washington, DC: World Bank. Tangen, K., Heggelund, G. and Buen, J. (2001) “China’s climate change positions: at a turning point?,” Energy & Environment 12(2&3): 237–252. Thomson, Elspeth (1996) “Reforming China’s coal industry,” The China Quarterly No. 47, September. US Energy Information Administration (USEIA) (1999) China Country Analysis Brief, eia.doe.gov/emeu/cabs/china.html Walker, M. (1996) “China and the new era of resource scarcity,” World Policy Journal XIII, (1): 8–14. Wang, X. and Blomquist, R.F. (1992) “The developing environmental law and policy of the People’s Republic of China: an introduction and appraisal,” Georgetown International Environmental Law Review 5(1): 25–75. World Bank (1997) Clear Water, Blue Skies: China’s Environment in the New Century, Washington, DC: World Bank. World Resources Institute (1994) World Resources 1994–95, New York and Oxford: Oxford University Press. Wu, Z. and Wei, Z. (1991) “Policies to promote energy conservation in China,” Energy Policy 19: 934–939. Xian, A. and Li, B. (1988) “Development of environmental legislation,” Environmental Policy and Law 18(1–2): 13–17. Xu, Y. (No date) Different Perspectives Between The North And The South On CDM: Viewpoints, Modalities, And Implications, Beijing: Development Research Academy for the 21st Century, Tsinghua University. Zhou, D., Guo, Y., Shi, Y., Chandler, W. and Logan, J. (2000) Electric Power Options in China, Arlington, VA: Pew Center on Global Climate Change.

4

The forces behind China’s climate change policy Interests, sovereignty, and prestige Zhihong Zhang

Introduction The importance of China in setting the global climate change policy agenda is usually understood in two ways. First, China currently ranks second in the world in greenhouse gas (GHG) emissions. With a burgeoning economy and heavy reliance on coal use, China is expected to take over the United States as the world’s largest emitter of GHGs in the next twenty years or so. Second, as the world’s largest developing country with an influential voice at the United Nations (UN), China is anticipated to play a leading role among developing countries in steering international climate change negotiations. Accordingly, China’s climate change policy will have far-reaching global implications, and understanding the driving forces behind China’s climate change policy is of critical importance. In this chapter, I will examine the formulation of China’s climate change policy and the driving forces behind it. My main contention is that China’s climate change policy, under the influence of foreign policy considerations, has been driven by three principal forces, namely promoting national interest, protecting state sovereignty, and enhancing international image. I will analyze China’s stance on climate change at various stages of international negotiations and policy formulation. I will also explore these questions: What is China’s national interest vis-à-vis climate change? What does sovereignty signify to Chinese policymakers? How has China advanced its international stature through climate change diplomacy? I conclude that China’s climate change policy is grounded in protecting its national interest and state sovereignty and in enhancing its international image. These policy objectives tend to complement one another. Although some pundits have regarded China’s policy on climate change as inflexible and uncompromising, an in-depth analysis of the Chinese policy considerations and recent developments suggests that, notwithstanding its established principled stance, China’s position on the implementation of the climate change treaty is not immutable; it has been evolving over time. A better understanding of the driving forces behind China’s climate policy will likely lead to more fruitful international negotiations and cooperation.

China’s position on climate change On May 13, 1998, at a hearing before the US House of Representatives’ Committee on International Relations entitled “The Kyoto Protocol: Problems

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with US Sovereignty and the Lack of Developing Country Participation,” Benjamin Gilman, chairman of the committee, characterized China’s position on climate change at the Kyoto Conference as “a policy of ‘Three Nos’: no obligations on China, no voluntary commitments by China, and no future negotiations to bind China” (US House 1998). Despite its political overtone, this characterization was not far from China’s stance conveyed at the Third Conference of the Parties (COP3) to the UN Framework Convention on Climate Change (FCCC). Indeed, in his statement to COP3 Chen Yaobang, head of the Chinese delegation, adamantly opposed any attempt to impose new obligations on developing countries and declined to make any commitment for reducing GHG emissions in China before it had reached a middle-income level of development. He also rejected emissions trading and joint implementation schemes, insisting that these approaches were “unacceptable” because they would allow developed countries to shirk their responsibilities of emissions reduction at home while “disregarding the living environment of people in other countries” (People’s Daily 1997). The Chinese delegation supported the adoption of an agreement or a legally binding document consistent with the FCCC and the Berlin Mandate,1 while opposing any attempt to launch negotiations that would impose new obligations on developing countries. China’s position on climate change was not formulated overnight. In fact, China began to coordinate policy on climate change in 1988 through the creation of an inter-agency group, and has since actively participated in all the negotiations of the FCCC and the subsequent COP sessions. In 1990, China established a National Coordination Panel on Climate Change (NCPCC) under the State Council’s State Environmental Protection Commission. NCPCC in turn set up four sub-groups on scientific assessment, environmental impact and response assessment, socioeconomic impact assessment, and convention negotiation. By the inception of the UN-sponsored Intergovernmental Negotiating Committee (INC) in early 1991, China had formulated guiding principles for its official position on climate change issues. In 1992, Chinese Premier Li Peng led a delegation to attend the UN Conference on Environment and Development (UNCED) in Rio de Janeiro. Li expounded China’s views on the environment–development nexus in the international context as follows (Zhang 1997): ● ●

●

●

●

Economic development must be harmonized with environmental protection. Protecting the environment is a common task of humanity, but economically developed nations should take greater responsibilities. International cooperation should be strengthened on the basis of respecting national sovereignty. Environmental protection and development cannot succeed without world peace and stability. Environmental problems should be tackled in view of the present, practical interests of different nations as well as the long-term interests of the world.

Although these points were broad in scope, they set the tone for China’s policy framework on climate change issues.

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The official Chinese position on climate change has revolved around four themes. First, China is a victim of global climate change. China maintains that just like other developing countries, China suffers from the adverse effects of global climate change. The Chinese government thus attaches great importance to the climate change issue. This is evidenced by the fact that China was among the first ten countries to ratify the FCCC. In addition, China formulated its national Agenda 21 soon after UNCED, and it has undertaken many measures in promoting sustainable development, such as curbing population growth, improving energy efficiency, disseminating renewable energy technologies, and supporting afforestation and ecological agriculture. Second, developed countries are the principal emitters of GHGs and therefore should bear the primary responsibility in addressing the climate change problem. Per capita GHG emissions of developed countries are about four times the level of developing countries, while China’s per capita emissions are only one-seventh those of developed countries. The current atmospheric concentrations of GHGs have come largely from historical emissions of developed countries during their industrialization. Given their financial and technological capabilities, they should take the lead in addressing the problem. Third, in light of their current and historical responsibilities and respective capabilities, developed countries should undertake transfers of advanced, environmentally friendly technologies and provide financial assistance to developing countries in combating climate change while meeting the needs of sustainable development. Such assistance should be new and additional to the existing development assistance programs. Fourth, China’s overriding priority is poverty eradication and economic development. As a low-income developing country with a large population, China’s per capita energy use and GHG emissions are only a fraction of developed countries, while tens of millions of people still live in abject poverty and do not have access to electricity. Therefore, China’s main concern is to improve the livelihood of its citizens and develop its national economy. Economic conditions have constrained China from making greater contributions than it has already made to address climate change. These perspectives are consistent with those of other developing countries, and by and large are embodied in the FCCC. Article 3.1 of the FCCC states that “the Parties should protect the climate system … on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof ” (United Nations 1992).2 Article 4.3 stipulates that developed countries “shall provide new and additional financial resources to meet the agreed full costs incurred by developing country Parties in complying with their obligations [of national communications]. They shall also provide such financial resources, including for the transfer of technology, needed by the developing country Parties to meet the agreed full incremental costs of implementing measures … .” Furthermore, Article 4.7 stresses that “The extent to which developing country Parties will effectively implement their commitments under the Convention will depend on the effective

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implementation by developed country Parties of their commitments under the Convention related to financial resources and transfer of technology and will take fully into account that economic and social development and poverty eradication are the first and overriding priorities of the developing country Parties.” At the Fifth Conference of the Parties (COP5) to the Convention held in Bonn in 1999, the Chinese delegation headed by Liu Jiang reiterated the basic positions that China had expounded at COP3. On the issue of China’s commitment to limiting GHG emissions, Liu underscored that “it is impossible for the Chinese government to undertake any obligation of greenhouse gas emissions reduction before China attains the level of a medium-developed country” (Liu 1999). However, he went on to say that “China will continue striving to abate the growth of greenhouse gas emissions in line with her own sustainable development strategy, and will continue actively promoting and participating in international cooperation.” The tone of the Chinese statement at COP5 was less aggressive than the one delivered at COP3. China did not raise objections to the “flexibility mechanisms” (i.e. emissions trading, joint implementation, and the Clean Development Mechanism (CDM)), but expressed concerns that some developed countries had attempted to set up new conditions for ratifying the Kyoto Protocol and to steer away from the established principles by obscuring the different natures and scopes of the three mechanisms.3 Similar concerns were expressed by China at COP6. It also cautioned consideration of carbon sinks. However, China spoke in more favorable terms of the three flexibility mechanisms authorized by the Kyoto Protocol, and called the CDM a “win-win” mechanism for developed and developing countries alike (Liu 2000). By COP7, China unequivocally supported the flexibility mechanisms and even called for accelerating the launching of the CDM (Liu 2001) (see Chapter 6).

Analysis of Chinese perspectives The context of climate change policymaking China is a major contributor to, and by many accounts a major victim of, global climate change. At present, China ranks second in the world, only after the United States, in terms of total GHG emissions. On a per capita basis, however, China’s emissions are only a fraction of developed countries’ and are even lower than the average of developing countries. Rapid economic growth in China during the past two decades has been associated with rapid increases in fossil fuel use, the primary source of GHG emissions. Coal, in particular, dominates China’s energy structure, making up about two-thirds of the total primary energy consumption (see Chapter 3). The Chinese economy is projected to grow at 7–8 percent a year during the first decade of the twenty-first century, and this growth will continue to be associated with increased energy use and GHG emissions. Coal will contribute to most of China’s energy needs in the foreseeable future (an unexpected decline in the late 1990s notwithstanding). Any drastic action to control GHG emissions will likely require curbing energy consumption and perhaps lead to a slowdown of economic growth.

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As a result of rapid economic growth and heavy reliance on coal use, environmental conditions in China have been worsening at an alarming rate. Widespread water pollution and urban air pollution have taken a heavy toll on the human health, the ecological system, and the economy. According to an estimate by the World Bank (1997), the damage of air pollution alone cost China 4 –8 percent of its gross domestic product (GDP) in 1995. Other studies conducted by both Chinese and international researchers have placed the cost of environmental damage in China at as high as 18 percent of its GDP (US Embassy Beijing 2000). Although uncertainties abound with these estimates, few would question the deterioration of environmental quality in China. Environmental issues have also generated growing public concerns and outcries, as the government begins to integrate environmental considerations into economic policymaking. In the early 1990s, the Chinese government formulated a National Environmental Action Plan (NEPA) (1991–2000), which identified seven priority areas of major environmental concern, including water pollution, urban air pollution, industrial toxic wastes, water shortages, soil erosion, deforestation and grassland degradation, and reduction of ecosystems and biodiversity (NEPA and SPC (n.d.)). No mention was made of climate change or other global environmental issues. Indeed, traditional environmental problems, such as air and water pollution, are of much more pressing concern for China than global climate change, since local environmental pollution poses more immediate, direct threats to the health of the citizens and their living environment. Therefore, China’s environmental policy has almost exclusively focused on local environmental problems. Thus, national environmental policy and climate change policy have been two largely separate tracks of policymaking, involving distinct objectives, processes, institutions, and analytic frameworks. In fact, the agency responsible for coordinating China’s climate change negotiations is the Ministry of Foreign Affairs. Other agencies, including the State Development Planning Commission (SDPC), the Ministry of Science and Technology (MOST), the State Meteorological Administration (SMA), and the State Environmental Protection Administration (SEPA), are charged with developing scientific assessments and response measures. While domestic environmental policy is increasingly integrated into the national economic policy framework, the formulation of international environmental policy, particularly in the area of climate change, has been strongly influenced by foreign policy considerations. In the following discussion, I will focus on three considerations particularly pertinent to Chinese foreign policy: national interest, state sovereignty, and international image.

National interest National interest in this context is narrowly defined in economic terms. There are two aspects of economic interest at stake vis-à-vis global climate change. The first aspect involves the impact of climate change on China; the second has to do with the costs and benefits of taking domestic actions to limit GHG emissions and of participating in international cooperation on climate change.

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VULNERABILITY TO CLIMATE CHANGE

How vulnerable is China to global climate change? Does China stand to gain or lose in a warming climate? According to the Intergovernmental Panel on Climate Change (IPCC), China is judged to be one of the countries most susceptible to climate change. The direct effects of climate change include adverse effects on hydrology, water resources, and natural terrestrial ecosystems, while the indirect socioeconomic impact includes effects on agriculture, forestry, and human settlement. Sea-level rise would result in large amounts of farmland losses in China’s coastal regions and increase the risk of flooding, soil erosion, salinization of farmland, and the loss of water for irrigation (IPCC 1997). The latest IPCC assessment of vulnerability concludes that climate change may seriously exacerbate the current water shortage in northern China and “would cause economic losses of $50–800 million (constant 1999 values) in a normal year and $230–2,270 million in a very dry year” (IPCC 2001). The impacts on agricultural yield by 2050 are projected to be 78 to 15 percent for rice, 21 to 55 percent for wheat, and 19 to 5 percent for maize (see Chapter 2). The scientific community in China has not spoken with a unanimous voice on the issue of climate change and its impacts on China. Economy (1997) cited the views of a number of Chinese researchers from various scientific disciplines. Some from the Chinese Academy of Science concluded that historical evidence in China was insufficient to link the climate variations with GHG emissions. Those from the SMA suggested that the impacts of climate change on China remained uncertain. Some experts even argued that global warming might bring benefits to China, because the prevailing westerly summer wind coming off the ocean will bring higher rainfall, thus benefiting areas where drought is a problem (Zhou 1997). The most “proactive” of the Chinese expert community, according to Economy (1997), “emerged among those who focused on specific aspects of the impact that climate change might have on society and the environment and those who had more contact with Western experts.” They tended to point to the adverse effects of global warming on China’s coastal areas, agricultural productivity, and natural disasters. With mounting scientific information over time, the majority of the Chinese scientific community and the government have come to accept the validity of the climate change theory and are concerned about the potential adverse impacts of climate change on China, although their conclusions are generally less pessimistic than IPCC assessments. In recent years, there seem to be growing concerns from China over the negative effects of climate change on Chinese economy and society. In January 2001, China played host in Shanghai to a major UN-sponsored conference on climate change, which issued an IPCC report giving the most forceful warning yet on the threat of climate change. The Chinese co-chair of the conference, Ding Yihui, clearly sided with the IPCC. Although he acknowledges that Chinese researchers forecast smaller temperature rises in coming decades than other scientists, Ding maintains that China is already feeling the adverse impact of a warming climate and that its future impact on grassland, forest, and farmland will be tremendous (Associated Press 2001). Given its potential

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vulnerability, it is undoubtedly in China’s national interest to reduce the threat of global climate change. BENEFITS OF LIMITING GHG EMISSIONS

The second set of questions related to national interest involves the costs and benefits of taking domestic actions to limit GHG emissions and of engaging in international cooperation, irrespective of the effects of climate change on China. Will limiting GHG emissions slow down China’s economic growth? Does China stand to gain or lose from participating in international cooperation on climate change? To probe these questions, a brief review is in order of the past trends and future prospects of China’s economic growth, patterns of energy use, and the associated GHG emissions. During the past two decades, the Chinese economy has been growing on average at almost 10 percent a year. This growth has been associated with increased energy use, mostly coal, but the growth of energy use has been only half the rate of economic growth. In other words, unlike most developing countries, China has partly decoupled energy use from economic growth. Such decoupling has been achieved as a result of economic reforms and through a combination of measures, including promulgation of energy conservation laws and regulations, investments in energy-efficient technologies, a shift to less energy-intensive activities, and gradual removal of energy subsidies. Since more than 80 percent of China’s GHG emissions are related to energy use ( Johnson et al. 1996), energy efficiency improvements have significantly dampened the growth of GHG emissions. To be sure, China did not launch energy conservation programs to combat global climate change; rather, those efforts were motivated by shortages of energy that plagued the Chinese economy in the early 1980s. More recently, growing concerns over environmental damage associated with energy production and use have given an added impetus for energy conservation. Overall, China’s achievements in curbing the growth of GHG emissions have been realized through “no regrets” strategies. Will China continue its efforts to limit GHG emissions, through investments in advanced energy technologies, structural adjustments, and other programs such as afforestation and substitution of low-carbon fuels? The answer is generally affirmative. China will continue to pursue many of the “no regrets” policies regardless of climate change. According to a World Bank study ( Johnson et al. 1996), there is tremendous scope for China to reduce its energy intensity through technical efficiency improvements and economic structural change. “No regrets” options (i.e. negative incremental cost net of incremental benefit) for limiting GHG emissions range from classic energy conservation to improved cattle production (aimed at reducing methane emissions) to industrial restructuring to fuelwood plantations to coal-bed methane recovery to commercial timber plantations. Projects that have positive net incremental costs include mostly applications of alternative energy, such as wind electricity, incremental hydropower, nuclear power, and solar photovoltaics. China is reluctant to implement these

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projects unless other incentives such as external funding are available or other non-market benefits such as reduction in health and environmental damage are factored into the cost–benefit calculation. However, even in the absence of cost–benefit analysis, growing concerns over environmental pollution and degradation are moving China gradually away from coal to cleaner fuels and renewable sources of energy, thereby lowering the carbon intensity of the Chinese economy. China’s move to a less carbon-intensive economy has also been bolstered by its active participation in international environmental cooperation, which has generated both tangible and intangible benefits for China. Tangible benefits include external financial and technical assistance, transfer of advanced, environmentally friendly technologies, foreign investments, and management know-how. Intangible benefits are likely to be just as important: China can boost its image as an environmentally responsible nation and use climate change to further its foreign policy goals. (The image-enhancing effects will be discussed later.) Indeed, China’s environmental diplomacy has borne plenty of fruit. By the end of 1998, China had received $3.34 billion in loans and $420 million in grants from overseas for environmental projects (People’s Daily 2000). China is a major recipient of environmental funds from the World Bank, the Asian Development Bank, and other donor agencies. Specific to the climate change regime, China’s involvement has been motivated by the availability of funding from such sources as the Global Environment Facility (GEF) and the prospect of technology transfer and provision of financial assistance promised by the CDM under the Kyoto Protocol. Launched in 1991, the GEF is perhaps the most important multilateral funding mechanism that has a climate change focus. China became of a member of the GEF in May 1994, and has been a major beneficiary since. Up to June 2002 China received GEF funding for 40 projects ( plus 12 regional and global projects involving China), totaling more than $360 million. About 77 percent of the GEF projects in China are in the climate change area for energy efficiency and renewable energy development. The grants earmarked for China represent about 9 percent of the total GEF grants approved during the 1991–2002 period and more than 17 percent of the total funding for climate change. China is expected to continue its cooperation with the GEF. Another potentially important funding mechanism addressing climate change is the CDM, which is intended to assist developed countries in achieving compliance with their obligations under the Kyoto Protocol and developing countries in acquiring environmentally sound technologies and financial assistance for sustainable development. The financial flow to developing countries involving the CDM can be quite substantial, perhaps amounting to billions of dollars, and China is poised to benefit from it. According to one conservative estimate, the value of the CDM market will be anywhere between $457 million and $4.5 billion in 2010 under various trading scenarios, and China alone will capture 60 percent of the CDM market (Zhang 2000). China certainly has no shortage of CDM projects. Many studies have been conducted on the potential abatement strategies and

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detailed cost–benefit analysis at both the sectoral and the project level (Zou and Li 2000). Once details of the CDM structure are resolved, China will likely be among the first countries to benefit. China’s reaction to the range of flexibility mechanisms – from joint implementation ( JI) under the FCCC to activities implemented jointly (AIJ) authorized at COP1 to the CDM under the Kyoto Protocol adopted at COP3 – can be characterized by a gradual shift from flat rejection to cautious acceptance to enthusiastic support. In the run-up to COP1 through COP3, China was adamantly opposed to JI and considered it as an unethical attempt by certain developed countries to shift their responsibilities of emissions reduction to other countries. At COP3, as discussed earlier, the Chinese delegation delivered a terse statement, rejecting the use of JI and emissions trading by developed countries to comply with their emissions control obligations. Although the rejection may have been politically motivated, the lack of clear conceptualization of JI and the confusion over JI and AIJ (not necessarily on the part of China) also did not help in dissuading China’s opposition. According to Article 4.2 (a) of the FCCC, “the developed country Parties and other Parties included in Annex I [may] implement [climate change mitigation] policies and measures jointly with other Parties and may assist other Parties in contributing to the achievement of the objective of the Convention ….” (United Nations 1992). At the tenth plenary meeting of COP1, a pilot phase of AIJ was established among Annex I Parties with non-Annex I Parties on a voluntary basis. Although many till this day continue to use the term JI when referring to AIJ or to use JI and AIJ interchangeably, the Group of 77 (G-77) and China consider the two mechanisms to be distinctly different. According to a statement by the G-77 and China, to these countries “the concept of Joint Implementation under the Convention only applied to activities undertaken by Parties which are bound by article 4.2 (a), in other words Annex I [developing country] Parties. It does not apply to activities undertaken between Annex I and Non-Annex I Parties” (G-77 and China 1997). AIJ, on the other hand, applies to all Parties, including developing country Parties, who wish to participate on a voluntary basis. The G-77 and China also stress that AIJ should be regarded as a supplemental means of achieving the objectives of the Convention and should never be made a condition for technology transfer. The initial rejection of JI and skepticism of AIJ by China and other developing countries should be viewed in light of these different interpretations and expectations, as well as what they consider as intentional misinterpretations by certain developed countries. Indeed, one group of analysts from China, mindful of the potential gains and pitfalls of AIJ, advised the government prior to COP3 to consider getting involved in AIJ, with the prerequisite that the arrangements be equitable to China and suitable to the Chinese conditions (GSM 1997). Moreover, some members of the Chinese delegation were interested in the “practical” aspects of JI in terms of transfer of technology and financial resources (Chayes and Kim 1998). Although concerns over the ramifications of the flexibility mechanisms under the Kyoto Protocol remain, China has become less skeptical and more receptive as the structure of the mechanisms evolves and as understanding of the mechanisms

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and their potential benefits to China becomes clearer. The principal concern appears to revolve around the possible imposition of emissions targets or other additional obligations on China. Nonetheless, China has come to view the CDM in a more favorable light. China’s acquiescence to the CDM has been reflected in its deliberations at COP sessions. After the collapse of COP6 in November 2000, the Chinese Foreign Ministry expressed “deep regret” and blamed certain developed nations for being “not willing to perform their duties” (Xinhua 2000a). Meanwhile, the Foreign Ministry called for unremitting efforts to combat climate change by adhering to the established principles and goals, and implied that China would welcome an agreement on the implementation of the Kyoto mechanisms.

State sovereignty SOVEREIGNTY AND ENVIRONMENT

The sovereignty–environment nexus has attracted a growing volume of scholarship in recent years. Two divergent theories have been put forward, namely the erosion-of-sovereignty thesis and the fortification-of-sovereignty thesis. Many scholars have pointed to the incompatibility between state sovereignty and environmental integrity since environmental problems are often trans-boundary and efforts to tackle these problems inevitably challenge the nation–state system and territorial exclusivity. Thus, according to the erosion-of-sovereignty thesis, global ecological interdependence has rendered state sovereign claims outmoded, and the demise of the state system will be, or ought to be, replaced by some supranationalism. Conversely, other scholars argue that state sovereignty constitutes the foundation for enhancing state capacity to protect the environment: Only the state possesses sufficient authority, legitimacy, resources, and territorial control to enforce environmental rules and norms. The negotiation, implementation, and enforcement of environmental treaties are largely in the hands of states. A decline of sovereignty might even undermine the ability of the state to comply with international obligations and actually protect the environment. Indeed, since state sovereignty can function as a bulwark against opportunistic economic forces, some environmental regimes have sought to enhance state capacity, particularly in developing countries. (Litfin 1998: 4) Both the erosion-of-sovereignty and the fortification-of-sovereignty thesis seem to rely on a monolithic, unidirectional conceptualization of sovereignty and fail to recognize the complex interplay between sovereignty claims and global as well as domestic environmental politics. Instead, Litfin (1998) suggests that sovereignty can be understood “as a socially constructed institution that varies across space and time, with multiple meanings and practices that are not set in stone.” The definition of sovereignty, therefore, should be unbundled into overlapping, socially constructed elements such as territory, autonomy, non-intervention, recognition,

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authority, and popular sovereignty. Such a conceptualization is useful in understanding the sovereignty–environment nexus and is particularly pertinent in analyzing China’s sovereignty concerns and its invocation of sovereignty over a wide range of foreign policy issue areas, including climate change. The issue of state sovereignty was raised at the 1972 UN Conference on the Human Environment in Stockholm. Principle 21 of the Stockholm Declaration proclaims that states have “the sovereign right to exploit their own resources pursuant to their own environmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction” (Hunter et al. 1998). Principle 24 further states that international environmental cooperation “should be handled in a cooperative spirit by all countries, big and small, on an equal footing [and should be conducted] in such a way that due account is taken of the sovereignty and interests of all States.” Twenty years later, the Rio Declaration, adopted at UNCED, reiterated states’ sovereign rights.4 Specific to the climate change regime, the FCCC recalls Principle 2 of the Rio Declaration and reaffirms “the principle of sovereignty of States in international cooperation to address climate change” (United Nations 1992). In these contexts, sovereignty more than anything else involves autonomy, control, and authority – a tripartite division of sovereignty proposed by Litfin (1998). The sovereign principle, enshrined in the Stockholm and Rio Declarations and the FCCC, reflects concerns, especially of developing countries, over sovereign equality and sovereign right to formulate development and environmental policies as they see fit, without pressure and interference from outside forces. SOVEREIGNTY IN CHINESE CLIMATE CHANGE POLICY

Apprehension over interference by other countries with China’s internal affairs is deeply rooted in the Chinese foreign policy community. In participating in the climate change regime, China has been mindful and vigilant to safeguard its sovereignty and ensure that its policy agenda is not to be dictated by other countries or multilateral agencies. Climate change negotiators from China have resisted any attempt to impose new obligations on developing countries beyond the FCCC and the Kyoto Protocol, such as subjecting developing countries to emissions targets. China is even apprehensive about proposals of voluntary commitments by a few developing countries, for fear that they would undermine the unity of the developing countries and that China will be pressured to follow suit. As the Chinese delegation has repeatedly stated at COP sessions, China is willing to participate in the climate change regime and will continue to make efforts to limit GHG emissions, but will only do so according to its own policy agenda. The timetable that China has set for itself is such that it will not take on emissions reduction obligations until the Chinese economy and standard of living are comparable to that of mid-level developed countries (Liu 2000). Like other international environmental treaties, the FCCC entails commitments by its signatories, including both developed and developing countries,

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based on the principle of “common but differentiated responsibilities” (see Chapter 2). Some of these commitments may be construed as an erosion of sovereignty. Article 12 of the FCCC, for example, requires that all parties submit information related to their GHG emissions and implementation of the Convention. The review process of the national communications may be perceived as intrusive, possibly resulting in infringement of state sovereignty.5 At the final session of negotiations leading to COP1, while criticizing the initial communications submitted by developed countries for lacking consistency, comparability, and adequacy especially with regard to new and additional financial resources, technology transfer, and capacity building, China expressed lack of enthusiasm about any meaningful, rigorous review process for the future (Chayes and Kim 1998). Along with other developing countries, China raised objection to the possibility of country visits, the composition of review teams, and the establishment of a systematic, intensive reporting and review process. One explanation for China’s objection is that although such in-depth reviews of national communications initially applied to only Annex I (developed country) parties, China “foresaw that the review process approved for Annex I countries would set a precedent for future reviews of developing country communications when they came due” (Chayes and Kim 1998: 518). The objection to the review process by the Chinese delegation might have stemmed from concerns over erosion of sovereignty, but nonetheless China’s defense of possible erosion of sovereignty in this instance did not appear to be vigorous. In fact, despite its critical rhetoric, China was actually developing projects with the FCCC Secretariat involving GHG emissions inventories and had undertaken a number of bilateral and multilateral studies on the sources of China’s GHG emissions and mitigation strategies. Apparently China felt less susceptible to this kind of sovereignty erosion and decided that it could live and deal with the “intrusion” involved. Furthermore, as Chayes and Kim (1998) note, Chinese reactions to the reporting and review became mostly positive once it had been invited to participate in the in-depth reviews of some Annex I countries. Indeed, engaging China in the process is essential in building an effective climate change regime. It contributes to confidence building and creates “a sense of ‘ownership’ that would help legitimize intrusive international regulation” (Chayes and Kim 1998: 519). In doing so, it induces China to become a willing and active participant in the regime. Thus, erosion of sovereignty and international cooperation are not inherently contradictory for China; being treated respectfully as an equal partner is just as important. China is willing to “play the game” as long as it is involved in making the rules. With regard to the conceptualization of sovereignty, this points to a positive aspect of sovereignty related to non-intervention. That is, as an element of “unbundled” sovereignty as suggested by Litfin (1998), non-intervention can be further unbundled to include not only negative elements such as non-interference but also positive elements such as mutual respect and equality in conducting international relations. The interplay between the positive and negative elements of sovereignty in Chinese climate change policy and foreign policy is an interesting subject that warrants further investigation.

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International image Enhancing China’s international image and elevating its international stature are important goals of Chinese foreign policy. On one hand, Chinese foreign policy is premised on independent policymaking and refrains from entering into alliances or strategic relations with any big power or group of nations. On the other hand, China traditionally considers solidarity with developing countries as fundamentally important. The climate change issue has provided an unprecedented opportunity for China to boost its prestige and shore up support from developing countries. Moreover, China has used climate change to enhance its relationship with developed countries. In analyzing China’s environmental diplomacy, Johnson (1998) draws parallels between China’s multilateral cooperation in arms control and its participation in international environmental regimes. He believes that China generally applies the same decision rules across all international issue areas.6 He argues that international image plays an important role in China’s decision to participate in arms control negations and cooperation because Chinese leaders “are concerned to project an image of an responsible major power” ( Johnson 1998: 560). Compared with most countries, China is particularly sensitive to external criticisms of its policy and behavior in international regimes, and would go out of its way to avoid diplomatic isolation and international censure. The image effect – for fear of opprobrium – can lead to more cooperative behavior. According to Johnson (1998: 559), China’s concern to preserve a favorable international image as a responsible major power is a critical variable determining the cost–benefit analysis behind international cooperation. All things being equal, the greater the image costs of unilateral or low-commitment strategies, the more likely China will take incrementally cooperative measures. Variation in image costs, in turn, is a function of the size and nature of the “audience” in which China places value. That is, the more international criticism China meets or is likely to meet on some issue of international cooperation the more likely it will try to find ways to minimize this criticism through incrementally substantive cooperative commitments. While preserving an image of “a responsible major power” befits the arms control regime, in the climate change regime China has attempted to project itself as a nation that upholds international justice and abides by the rules and principles established by the international environmental regimes. Of course, the image that China wishes to project is not necessarily the one that others identify with, and whether an image is favorable or not may also lie in the eyes of the beholder. Pundits from the West often characterize China as a recalcitrant, non-cooperative actor in the climate change regime (see Chapter 5). Some even view China as an “environmental bully” (Lawrence 2001). Such criticisms seem to have stemmed from frustration that China sometimes held out during the negotiations on certain issues, especially related to obligations of developing countries. Some of the finger

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pointing (e.g. at the US House hearing cited earlier) has also been politically motivated, perhaps for domestic consumption. However, the image of China being an environmental villain does not appear to be widely shared in the international community, particularly among developing countries. On the contrary, China enjoys wide support from developing countries, and from early on has successfully built strong solidarity with them together to advance their positions and interests. Indeed, the coalition of “the G-77 and China” was established in March 1991 in the run-up to the UNCED, and has since become one of the principal climate change negotiating blocs. As the largest developing country and a permanent member of the UN Security Council, China is well positioned to play a leadership role among developing countries in global environmental politics. Indeed, China asserted its leadership in June 1991 by hosting a Ministerial Conference of Developing Countries on Environment and Development in Beijing. Attended by delegates from fortyone developing countries, the conference adopted the Beijing Declaration, which expounded developing countries’ perspectives on development and environment (Beijing Declaration 1991). The Beijing Declaration also “foreshadows some of the North–South debates in the FCCC context” (Chayes and Kim 1998), including technology transfer and provision of new and additional financial resources. The conference was a major achievement for China in unifying the stance of developing countries and in formulating the general principles and strategies for the UNCED and climate change negotiations. Despite its recognized importance in the climate change debate, China tends to avoid placing itself alone at the center of confrontation. During the negotiations of the FCCC and the subsequent COP sessions, China united with G-77 in pressing their demands. Debates over many issues have been along the traditional North–South line, rather than between China and other countries or blocs. China always insists that it is a developing country and frequently speaks in terms of defending the interests of developing countries. China maintains that developed countries are the major culprits while developing countries the major victims of global climate change. Although Chinese assessment of its vulnerability to a warming climate is generally less pessimistic than IPCC assessments, in official deliberations China invariably claims that it is a major victim of global climate change. It is conceivable that China makes such claims also for tactical reasons; claiming that it is a victim legitimizes demands for compensation and validates purported concerns over the climate change issue. Throughout the negotiations of the FCCC, China called for an “equitable” Convention and a “pragmatic” attitude (Chayes and Kim 1998). Along with other developing countries, it often frames its arguments on ethical grounds. Given the current and historical patterns of GHG emissions and the respective capabilities of developed and developing countries, even many in the developed world agree that it is only fair that developed countries take the lead in combating climate change and provide financial assistance to developing countries (see Chapter 2). So when JI was first proposed as a mechanism to implement the Convention, China reacted unfavorably, calling it an unethical attempt by developed countries

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to shift their responsibilities onto others instead of reducing emissions at home. Since such sentiment was widely shared among developing countries, China’s initial opposition to JI can be seen as an effort to maintain solidarity with other developing countries in striving for an equitable climate change treaty. Furthermore, to project an image of fair play, China makes frequent references to the FCCC and the Kyoto Protocol and calls upon developed countries to adhere to established principles. At recent COP sessions, China seemed to have made a conscious effort to project an image of cooperation and earnestness. While still pressing for its traditional demands, China pleaded for “sincerity and good faith” on the part of developed countries in implementing the Convention (Liu 2000) and urged all countries to “join hands” and “broaden the vision to explore various means of addressing climate change in light of country-specific conditions” (Liu 1999). In a television address to commemorate the World Environment Day 2000, Chinese Premier Zhu Rongji pledged support for international environmental cooperation, implementation of international environmental treaties, and active participation in solving global environmental problems (Xinhua 2000b). China has successfully boosted its image by announcing its approval of the Kyoto Protocol and by hosting the Second GEF Assembly in Beijing in October 2002. Interestingly, albeit largely unintentional, China’s efforts in limiting GHG emissions have been highly acclaimed in recent years by some public officials and environmental groups from developed countries. At COP5, Danish Environment Minister, Svend Auken, commended China enthusiastically for its energy and development policy: “China is showing the way. Despite her huge population and strong economic development China has managed to reduce its annual use of coal from 1.4 billion tons to 1.1 billion tons … . The Chinese policy is one of energy efficiency and alternative sources of energy” (Auken 1999). With an implicit reference to the United States, he went on to observe that “Too long have negative politicians and industrialists been using a false picture of China and other big developing economies to justify their own lack of political will and decisiveness.” Similarly some prominent environmental groups in the United States have praised China while pushing their own government to ratify the Kyoto Protocol. Kevin Baumert of the World Resources Institute pronounced that China’s substantial contribution to limiting GHG emissions has been “perhaps more than any industrialized country” (Lawrence 2001). Worthy or not, China surely welcomes the praise and the favorable image. In addition to building solidarity with developing countries, China wishes to enhance its relations with developed countries and elevate its prestige in the international community through the climate change issue. China has made conscious efforts to conduct climate change diplomacy with developed countries. In September 1997, China joined Italy and Spain to voice support for Australia’s position of “differentiation” when Australia was facing fierce opposition from the European Union, which pushed for the adoption of uniform emissions reduction among developed countries (Pitcher 1997). China’s support of Australia’s position was presumably intended to build rapport with Australia. This seems to be evidenced by the words of Australia’s then Acting Prime Minister, Tim Fischer: “I was

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happily able to persuade in a few seconds flat China to be very supportive of our position. China’s chief economic minister Zhu Rongji found himself much attracted to our realistic, achievable targets process” (Pitcher 1997). Besides Australia, environment and climate change issues have played an important role in Sino-US bilateral relations (see Harris 2002). Environment is one of the areas where the two countries have found common ground for cooperation. Energy and environment cooperation figured prominently in the Sino-US joint statement issued during President Jiang Zemin’s state visit to the United States in October 1997. Early that year the two countries established the US–China Forum on Environment and Development, which has been convened annually and attended by senior policymakers, scientists, and business leaders. China has also participated in the US Country Studies Program and prepared reports on GHG inventories, vulnerabilities to climate change, mitigation strategies, and national action plans. Moreover, China used climate change as a vehicle to strengthen bilateral ties with Canada. When Canadian Prime Minister Jean Chretien led a delegation comprising 600 business people to China in 2001, climate change topped the list of areas in which the two countries agreed to cooperate (Xinhua 2001). Thus, China has consciously and often effectively used the climate change issue to enhance its international image and advance its foreign policy goals. Johnson’s discussion of the image effect focused on the negative dimension of avoiding criticism. That is, concerns over international censure tend to induce cooperative behavior on the part of China in international regimes. The image effects also have a positive dimension. Just as it makes every effort to avoid negative images, China is more likely than other countries to seek positive images. The positive dimension can equally induce cooperative behavior. Acclaims and compliments effectively set high standards. For China to acknowledge these standards, it may also feel obligated to live up to them. Thus, both the negative and the positive dimension of the image effect may induce efforts from China to participate in climate change cooperation. However, unlike the arms control regime, the positive dimension of the image effect associated with seeking bilateral and multilateral cooperation often brings tangible economic benefits that China is attracted to. Thus, international image as a driving force of China’s climate change policy should be understood in conjunction with other motivating factors that complement one another. Finally, the image effect may conversely constrain China from making bolder, unilateral commitments. It is conceivable that concerns over solidarity with developing countries in particular may inhibit China from taking or supporting certain initiatives that deviate from their established common positions.

Conclusion China’s principled position on climate change has consistently revolved around the themes of “common but differentiated responsibilities” and transfer of technology and financial resources from developed to developing countries. China also maintains that it is a victim of global climate change while its overriding priority is poverty eradication and economic development. This stance is common

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among developing countries and is reflected in the FCCC and other UN platforms on environment and development (see Chapter 2). In line with the established principles of the FCCC and the Kyoto Protocol, China has resisted committing itself to any legally binding or voluntary targets of GHG emissions. Three driving forces behind China’s climate change policy have been identified and analyzed. Protecting China’s economic interest and promoting economic development are the first and foremost consideration of Chinese policymakers. Any climate change initiative that harms the economy or hampers economic growth is likely to be vigorously resisted by China. Despite its claim as a victim of global climate change, China’s sense of urgency to tackle the problem is perhaps less strong than other, more vulnerable developing countries. China’s decision to participate in the climate change regime stems from not only concerns over the harms that climate change may bring it but also potential economic gains and opportunities to advance its foreign policy goals, including safeguarding national sovereignty and elevating China’s prestige in the international community. Concerns over national economic interest generally motivate China to participate in the climate change regime with low-cost commitments. Although China is unlikely to assume obligations harmful to its economy, it will continue to pursue “no regrets” climate change mitigation strategies especially if external financial assistance is available. Sovereignty is often considered a serious obstacle to global environmental cooperation, as countries fight to preserve their autonomy and control, while the prerogatives of national sovereignty tend to impede efforts of international monitoring and enforcement (Susskind 1994). Sovereignty may also be used as grounds to fend off criticisms or turn away from commitments. Despite the unfavorable light in which sovereignty is cast, countries sensitive to sovereignty concerns such as China often take part in international cooperation. They do so by choice, effectively surrendering some of their sovereignty. The narrow conceptualization of sovereignty needs to be broadened, however. Nonintervention should incorporate such positive elements as equality, mutual respect, and state capacity to enforce international regimes. China tends to hold out against negative aspects of sovereignty but respond favorably to positive ones. A broader understanding of sovereignty is needed to foster China’s cooperation in the climate change regime. Finally, China’s concerns over its international image generally induce cooperative behavior and contribute to international cooperation. Among the three driving forces discussed, economic interest tends to figure most prominently in guiding the direction of China’s climate change policy, while sovereignty and image concerns complement economic considerations. Under given circumstances, however, advancing one policy goal may be achieved at the minimum expense of other policy goals.

Notes 1 The Berlin Mandate was adopted at the First Conference of the Parties (COP1) to the FCCC in April 1995. Among other things, the Berlin Mandate specifies that the process for the implementation of the FCCC beyond 2000 will “not introduce any new commitments” for developing countries (United Nations 1995).

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2 The notion of “common but differentiated responsibilities” was also affirmed in Principle 7 of the Rio Declaration issued at the UNCED: “In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities. The developed countries acknowledge the responsibility that they bear in the international pursuit of sustainable development in view of the pressures their societies place on the global environment and of the technologies and resources they command” (Hunter et al. 1998). 3 Similar concerns were raised by other developing countries prior to the adoption of the Kyoto Protocol. In a position paper submitted to the FCCC Subsidiary Body for Scientific and Technological Advice (SBSTA) in August 1997, the G-77 and China cautioned the attempts being made “to confuse the nature of AIJ [activities implemented jointly] in the pilot phase with JI [ joint implementation] and to link it – implicitly or explicitly – with existing obligations such as the transfer of technology, the provision of new and additional financial assistance, and particularly to issues related to the protocol or other legal instruments to the Convention” (G-77 and China 1997). 4 Principle 2 of the Rio Declaration repeats Principle 21 of the Stockholm Declaration almost verbatim. 5 It should be pointed out that developing countries are not alone in raising sovereignty concerns over international environmental regimes, although the nature of concerns between developing and developed countries is not entirely the same. For example, the US House of Representatives held a hearing in 1998 specifically to examine the impact of the Kyoto Protocol on US sovereignty (US House Committee 1998). Interested readers can refer to works by Rabkin 1998 and 2000. 6 Johnson (1998) discusses five decision rules that characterize China’s arms control policy and extrapolates them to China’s international environmental policy: (1) maximize material capabilities above all; (2) avoid high cost commitments; (3) if avoidance incurs image costs, then avoid high cost commitments but join low cost and high profile activities; (4) if the opportunities to puruse material gains unilaterally are closed off, try to build coalitions to weaken commitments; and (5) if unilateral opportunities to maximize material gains are closed off, coalition building is unsuccessful, then choose the least constraining options.

References The Associated Press (2001) “Scientists working on comprehensive climate survey,” January 20. Auken, S. (1999) “Statement by Denmark at COP5,” Bonn, November 2. Beijing Declaration (1991) Beijing Review, July 8–14: 10–14. Chayes, A. and Kim, C. (1998) “China and the United Nations Framework Convention on Climate Change,” in M.B. McElroy, C.P. Nielsen, and P. Lydon (eds) Energizing China: Reconciling Environmental Protection and Economic Growth, Cambridge, MA: Harvard University Press, pp. 503–540. Economy, E. (1997) “Chinese policy-making and global climate change: two-front diplomacy and the international community,” in M.A. Schreurs and E. Economy (eds) The Internationalization of Environmental Protection, Cambridge: Cambridge University Press, pp. 19–41. Group of 77 and China (1997) “The G-77 and China on Activities Implemented Jointly,” FCCC Subsidiary Body for Scientific and Technological Advice, Sixth Session, Bonn, July 27–August 7, Item 8 of the Provisional Agenda. Guanghua School of Management (GSM), Peking University (1997) “China’s Strategies for Implementation of Activities Implemented Jointly: Analysis on Advantages and Disadvantages,” Beijing, September.

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Harris, P.G. (2002) “Environmental security, international cooperation, and US foreign policy toward Northeast Asia,” in P.G. Harris (ed.) International Environmental Cooperation: Politics and Diplomacy in Pacific Asia, Boulder: University Press of Colorado, pp. 53–81. Hunter, D., Salzman, J., and Zaelke, D. (1998) International Environmental Law and Policy (Treaty Supplement), New York: Foundation Press. Intergovernmental Panel on Climate Change (IPCC) (1997) The Regional Impacts of Climate Change: An Assessment of Vulnerability (Summary for Policymakers), A Special Report of IPCC Working Group II, R.T. Watson et al. (eds) November, http://www.ipcc.ch/pub/ reports.htm —— (2001) IPCC Special Report on the Regional Impacts of Climate Change: An Assessment of Vulnerability, http://www.grida.no/climate/ipcc/regional/index.htm Johnson, A.I. (1998) “China and international environmental institutions: a decision rule analysis,” in M.B. McElroy, C.P. Nielsen, and P. Lydon (eds) Energizing China: Reconciling Environmental Protection and Economic Growth, Cambridge, MA: Harvard University Press, pp. 555–599. Johnson, T.M., Li, J., Jiang, Z., and Taylor, R.P. (eds) (1996) China: Issues and Options in Greenhouse Gas Emissions Control, World Bank Discussion Paper No. 330, Washington, DC: The World Bank. Lawrence, S.V. (2001) “Global warming: a blustering giant turns oddly coy,” Far Eastern Economic Review, March 1. Litfin, K.T. (1998) “The greening of sovereignty: an introduction,” in K.T. Litfin (ed.) The Greening of Sovereignty in World Politics, Cambridge, MA: The MIT Press, pp. 1–27. Liu, J. (1999) “Statement by China at COP5,” Bonn, November 2. —— (2000) “Statement by China at COP6,” The Hague, November 21. —— (2001) “Statement by China at COP7,” Marrakech, November. National Environmental Protection Agency (NEPA) and State Planning Commission (SPC), China (n.d.) Environmental Action Plan of China, 1991–2000, Beijing. People’s Daily (Overseas Edition) (1997) “Head of Chinese delegation expounds stance on global climate change at COP3,” (in Chinese), December 9. —— (2000) “China’s achievements in ‘environmental diplomacy’ remarkable,” (in Chinese), June 7. Pitcher, M. (1997) “China, Italy, Spain support Australia climate position,” http://www.weathervane.rff.org/negtable/statchinasupport.html Rabkin, J. (1998) Why Sovereignty Matters, Washington, DC: AEI Press. —— (2000) “The value of sovereignty and the costs of global environmentalism,” in T.L. Anderson and H.I. Miller (eds) The Greening of US Foreign Policy, Stanford: Hoover Institution Press, pp. 1–30. Susskind, L.E. (1994) Environmental Diplomacy: Negotiating More Effective Global Agreements, New York: Oxford University Press. United Nations (1992) “United Nations framework convention on climate change,” http://www.FCCC.de/resource/conv/index.html —— (1995) “The Berlin Mandate,” FCCC/CP/1995/7/Add.1, 6 June, http:// www.FCCC.de/resource/cop1.html#repcop1 US Embassy Beijing (2000) “The cost of environmental degradation in China,” http://www.usembassy-china.org.cn/english/sandt/CostofPollution-web.html US House Committee on International Relations (1998) The Kyoto Protocol: Problems with US Sovereignty and the Lack of Developing Country Participation, Hearing before the Committee on International Relations, House of Representatives, One Hundred Fifth Congress, Second Session, May 13.

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World Bank (1997) Clear Water, Blue Skies: China’s Environment in the New Century, Washington, DC: The World Bank. Xinhua News Agency (2000a) “China calls for joint efforts to combat climate change: fm spokeswoman,” November 28. —— (2000b) “Premier Zhu delivers a television speech on the World Environment Day,” (in Chinese), June 5. —— (2001) “Canadian PM reaffirms strong, enduring ties with China,” February 12. Zhang, Zhihong (1997) “The Evolution of Environmental Policymaking in China,” Paper prepared for the 26th Annual Meeting of the Mid-Atlantic Region Association for Asian Studies, West Chester University, West Chester, PA, October 24–26. Zhang, Zhongxiang (2000) “Estimating the size of the potential market for the Kyoto flexibility mechanisms,” Environmental Economics Working Paper Series, January 19, http:// www.ssrn.com/update/ern/ern_enviro.html Zhou, X. (1997) “Advantage of climate change to warm,” Beijing Review 40, 23 ( June 9–15): 18–19. Zou, J. and Li, J. (2000) China: CDM Opportunities and Benefits, Washington, DC: World Resources Institute.

5

Navigating between “luxury” and “survival” emissions Tensions in China’s multilateral and bilateral climate change diplomacy Yuka Kobayashi

Introduction With the emergence of global environmental problems (e.g. ozone, climate change and bio-diversity) in the 1980s, and the introduction of the concept of “sustainable development” by the 1987 Brundtland Report, Our Common Future, the environment has become an important area of international focus (WCED 1987). While there are many studies in international relations and in law on the formation, compliance and effectiveness of global environmental regimes, there are relatively few on developing countries such as China. Moreover, China’s environmental cooperation has received much less attention compared to those of security and economic cooperation. This may, however, be a key oversight. As reported by The New York Times the ability of the world to “head off ” global warming “may depend on China” (Boffey 1993). Indeed, how China manages the tension between maximizing growth and sustainable development will have major effects on the global environment. In 1991, China contributed 11 percent of the world’s total carbon dioxide (CO2) emissions and is currently the world’s second largest emitter after the United States (Ohshita 1998: 19). It has, in fact, been argued that China could surpass the United States and become the number one emitter of CO2 by 2020 (Smil 1991: 61). China’s participation and cooperation in the climate change regime is particularly important for two reasons. First, China’s impact on climate change is forecasted to be enormous: China’s large population, rapid economic growth and heavy reliance on fossil fuels collectively imply large increases in CO2 emissions and thereby a disproportionate influence on climate change. Seventy-five percent of China’s power comes from coal, which emits twice as much CO2 as natural gas and oil. This makes China’s influence over the climate change issue much greater than in other global warming issues like ozone or chlorofluorocarbons. Second, since China pursues a policy of rapid economic growth, any financial constraints, such as changing the composition of energy resources, is resisted (see Chapter 3). Compared to biological diversity, in which China takes a more cooperative stance, the climate change regime is expensive, imposing broad constraints on the economy. Climate change is also a controversial issue that involves North–South equity problems, and is one which is difficult for a developing country like China to participate

“Luxury” versus “survival” emissions 87 in because it views sustainable development as “sustained development” and puts economic development and alleviation of poverty before the environment (Economy 1998: 281). This is represented in the Chinese government’s view of the climate change regime being “imperial invasion, yet again,”1 and the Chinese saying “one should not give up eating for the fear of choking” (Sun 1996: 1049). This is the placard under which China, along with India, leads the developing country coalition – the so-called “Group of 77 (G-77) and China” in the international climate change negotiations.2 In this chapter, I explore China’s cooperative behavior in the climate change regime. I begin with neorealist assumptions and take an empirical approach to explaining Chinese behavior in climate change. Although there are global trends leaning towards liberalism, the majority of the authors in China and the West have reached the conclusion that the Chinese behavior fits quite closely with the neorealist school of thought.3 According to this school, states are unitary, rational actors influenced by the structure of the international system. A state’s primary goals are power and security. It is usually believed that one state’s gain is necessarily at the expense of another state (i.e. zero sum game/relative gains concerns). Thus, cooperation can only occur when there is an overlap of interests, and is restricted by sovereignty issues such as fear and vulnerability to the “control” of foreigners. Epistemic communities (specialist communities that often form international networks on a certain issue or type of knowledge), and international institutions (such as international legal regimes, the United Nations and the World Bank), are viewed as too weak to facilitate cooperation (Hurrell 1995: 134). In this chapter, I focus on bilateral and multilateral negotiations under the United Nations (UN) Framework Convention on Climate Change (FCCC), adopted at the 1992 UN Conference on Environment and Development (UNCED) in Rio de Janeiro. In general, China has proven to be far more cooperative at the bilateral level (i.e. Activities Implemented Jointly (AIJ) project level) than it has been at the multilateral level. China is a “laggard” in multilateral negotiations (Haas et al. 1993: 16–17),4 and has requested that the developed countries take more action to address climate change on behalf of developing countries. It has been opposing mechanisms such as joint implementation ( JI), the Clean Development Mechanism (CDM) and AIJ in the multilateral negotiations.5 However, in bilateral project-level negotiations, China has shown more flexibility by approving five AIJ projects, while the other leader of developing countries, India, has approved only one. Why does China take such differing stances at the two different levels? How does this alter our understanding of China’s response to climate change?

China and multilateral negotiations on climate change China was a participant in the negotiations for the FCCC from it preliminary stages. The FCCC is a framework convention that provides for general cooperation in climate change, with the anticipation of subsequent agreements establishing more concrete obligations. These have been discussed at the Conference of

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Parties (COP) and Meetings of Parties. The FCCC’s objectives are to protect the world’s climate system against the effects of anthropogenic greenhouse gases (GHGs), most notably CO2, and their adverse climatic warming effects (FCCC, Article 2). The parties to the convention can be roughly grouped into two categories: Annex I countries of the developed world (i.e. the Organization for Economic Cooperation and Development and former East bloc countries) and non-Annex I developing countries. The G-77 and the China group, led by China and India comprises about 90 percent of the developing country parties to the FCCC (Bartsch and Mueller 2000: 246). The Convention sets commitments for developed countries to return to their 1990 emissions levels. In 1997, the Kyoto Protocol set specific emissions targets. Annex I countries are required to submit national emissions inventories and to describe steps they have taken toward meeting their emission abatement requirements (FCCC, Article 12). Under Article 4, developed countries also have to provide financial and technical assistance to the developing countries, following the principle of “common but differentiated responsibilities” (Article 3.1).6 Conversely, developing countries have no concrete abatement commitments. In keeping with the principle of “respective capabilities” as elucidated in Article 4, they are required to establish national emissions inventories, report on national programs and promote cooperation, sustainable development and information exchange. When Intergovernmental Negotiating Committee (INC) meetings in preparation for the FCCC began, China argued for equity on historical grounds, placing the blame primarily on the North (Dasgupta 1994: 133; see Chapter 2). China believed that developed countries should historically take responsibility for environmental protection and allow the developing countries the opportunity to develop as much as the developed countries were able to. From June 1991 China aligned itself closely with India, and pushed for a fair convention arguing that the South had no responsibility but, rather, that the per capita emissions of the North and the “opulent lifestyles” of the people there were the primary causes for climate change (Hyder 1994: 133). The G-77 and China stressed that under “common but differentiated responsibility” the South did not need to take action unless the North would finance it, and the appropriate measure for adopting concrete objectives should be at “an appropriate level of development.” Negotiation for the specifics of the FCCC, after it came into effect in March 1994, continued along the same lines, but with a more pronounced North–South divide. The South incessantly referred to articles in the FCCC that called upon the North to initiate the first steps in CO2 reduction. China became the leader of developing countries in climate change in order to assert its legitimacy, and to concurrently gain support for its position. By consolidating a coalition around itself, China could assure that its interests would be better supported, and that it would gain international prestige in being proactive in environmental protection (see Chapter 4).7 Thus China, with other developing countries, declared adamant opposition to “joint implementation.” Chinese diplomats presented three conditions for joint implementation to ensure developing country interests were guaranteed: implementation only within Annex I countries,

“Luxury” versus “survival” emissions 89 developing country initiatives should only be voluntary and JI should exclude the idea of giving credit for reduced emissions. The second and third conditions hinted that the Chinese were not completely adverse to joint implementation, and some members of Chinese delegations even expressed interest in technological transfer and aid (Chayes and Kim 1998: 522). However, the Chinese opposed a new protocol on the grounds of scientific uncertainty, saying that more research would be needed before further steps could be discussed. The Chinese delegation stated that “the Convention is like a big pie, if you try to swallow the whole pie in one gulp, you will choke,” and warned against “more haste, less speed,” calling for “first steps first” (Chayes and Kim 1998: 523). The Berlin Mandate of the UNFCCC was an agreement reached at COP1 that called on Annex I countries to establish specific targets and to curb their GHG emissions. At COP1 (1995), China also adopted the “Green Paper,” proposed by India, which effectively exempted themselves and other non-Annex I Parties from commitments to establishing specific binding reductions (Cooper 1999: 412). Then at COP2 (1996), it was agreed that concrete steps were needed to prevent global warming. However, the G-77 and China continued to refer to the Green Paper and avoided binding commitments to curb GHG emission. This discussion was carried through to COP3 (1997), where there was much heated debate between the United States and China. In December 1997, prior to COP3, President Clinton made a speech in Washington, stating that global warming “must have a global solution that cannot come without China’s participation,” and called for “meaningful participation” by China and the rest of the G-77 in exchange for expanded US commitments to binding emissions targets (ENB 1997). While China consulted closely with India and opposed quantitative limits on developing countries, the United States thought Chinese participation was important for the agreement. Vice President Al Gore flew in to Kyoto and met Chinese President Jiang Zemin in an unsuccessful attempt to get China to agree to “eventually” reduce its emissions in exchange for “generous US funding” (Cooper 1999: 415). China refused to be bound by new commitments, reiterating the principle of “common but differentiated” responsibility. Li Peng explained that “all countries should take action appropriate to their own conditions” (Bolands 1997). Ministry of Foreign Affairs (MOFA) spokesman, Tang Guoqiang, made clear that China would “shoot down any treaty that would hamper developing countries’ hopes and prosperity” and said that the Kyoto Protocol should be “limited to developed countries” (South China Morning Post 1997). Gore said that the United States would “walk away” from a deal that did not include “meaningful participation by key developing countries” (Tacey 1997). However, Zhong Shukong, special advisor to MOFA and senior negotiator at Kyoto, criticized industrialized nations for failing to cut energy consumption while asking China to make sacrifices: “Ours are survival emissions. Theirs are luxury emissions” (Boulton 1997). He further commented that: “In the developed world, only two people ride in a car, and you want us to give up riding a bus” (Duffy 1997). China and India rejected New Zealand’s proposal to require developing countries

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to cut emissions by 2014, and even refused to accept voluntary targets or set a date for the creation of targets (Duffy 1997). China would not even assume binding emissions in the fifty or more years when it would presumably reach the status of a medium-sized developed country ( Japan Economic Newswire 1997). At COP3, China led the developing country opposition to FCCC mechanisms on the grounds that it would export emissions across boundaries and violate human rights and international equity. The heated debate at COP3 made the conference chairman, Ambassador Raul Estrada fear that the entire negotiations would “blow apart” (ENB 1997). China finally signed the Kyoto Protocol on May 29, 1998 only after statements from the developed world seemed to accept the Chinese view. For example, Gore said that “we understand your first priority is to lift your citizens from poverty … this is your right: it will not be denied” (South China Morning Post 1997a). However, the mechanisms and developing country responsibilities remain a contested topic, and the Chinese still adhere to their principle that developed countries’ hold the responsibility for cutting their “luxury emissions.”

Explaining China’s negotiating position Advocating equity and the historical responsibility of the developed countries, China has resisted any commitment that would limit its ability to develop the economy. China’s chief objective has been to avoid “eco-colonialism” and any impingement on its sovereignty (Eastbrook and Palmer 1997; see Chapter 4). Chinese officials have summarized China’s objectives in environmental diplomacy as follows (Cao et al. 1998: 171–189): 1 2 3 4 5 6 7

Gain international status. Develop environmental industries. Advance sustainable development. Obtain aid and technological transfer. Increase national security. Push for fair and equitable treatment of developing countries by developed countries. Exercise leverage over the United States.

Although China’s geographic constraints, demographic makeup and the historical legacies make environmental protection particularly difficult, environmental diplomacy has started to receive attention within the government due in large part to these objectives (Kobayashi forthcoming). This movement has, in turn, led domestic scholars to call for further research on how environmental diplomacy can be utilized to China’s best interests (Cao et al. 1998: 171–189; Zhao and Li 1998: 195–199). Now the question becomes, if there does appear to be a consensus within China on the value of addressing climate change, why has China often been uncooperative in the international negotiations, at least at the multilateral level?

“Luxury” versus “survival” emissions 91 International factors After the Chinese government’s response to democracy supporters in Tiananmen Square, China was diplomatically isolated and internationally condemned. Furthermore, most of its aid was temporarily cut off. Aid and loans from the IMF and World Bank were suspended for a year, and there was a sharp deterioration in Sino-US relations (Smith 1994: 103). The climate change issue came into focus at the same time, thereby serving as an ideal tool for China to regain its international position. To achieve this aim, China was in 1994 one of the first countries to formulate a domestic “Agenda 21,” mirroring the UNCED program of action on sustainable development. China also established the China Council for International Cooperation on Environment and Development in 1992 and passed the Air Pollution Law in 1996 (see Chapter 2), accounting for provisions in the FCCC. The FCCC negotiations were high profile negotiations, putting China in the spotlight whenever it took the initiative. Its officials stated that China was a constructive player, citing afforestation and population growth controls as China’s contributions to the FCCC effort (China Daily 1997; Xinhua News Agency 1997). China also pushed its newly formulated policy as a model for the developing countries’ coalition. It sought to gain support for its own policy while ensuring a greater chance of having its interests reflected in the regime. China, the number one GHG emitter among developing countries, could prevent itself from being singled out and pressured into taking immediate action by allying itself with the second biggest emitter, India (Economy 1994: 189). As a result, China’s actions in negotiations were dictated by image consciousness vis-à-vis the developing countries, aligning itself with the majority in the G-77 and China. Sometimes China sacrifices its short-term interests, such as technological transfer and aid, for longterm interests of gaining developing countries’ support. By forming such a coalition to support its interests, it hoped to have leverage in future negotiations vis-à-vis the developed countries, and at the same time provide supportive backing in case it were to come under international criticism (as happened after Tiananmen). These long-term considerations of surrounding itself with a developing world coalition prevented China from taking a more cooperative stance in multilateral negotiations for climate change.

Domestic factors8 There are serious domestic constraints to international cooperation. First, China’s economy continues to be powered by its outdated, coal-dominated energy production (see Chapter 3). Second, China lags behind in the developed world in scientific know-how. According to a Chinese diplomat who was involved in the climate change process from the beginning, language difficulties and low levels of scientific expertise made it difficult for the Chinese to contribute to the early negotiations.9 China’s response to climate change derived from external influence, and it had no set policy until the 1990s. The scientifically advanced countries of the North led negotiations before the UNCED, while the developing countries such

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as China were busy catching up and were reliant on the North for scientific information and data. In the spring of 1990, China held a domestic-level meeting before the Second World Climate Conference to consolidate its negotiation position. Domestically, there was a gap between the more conservative ministries who put economic development and the use of coal before environmental protection (MOFA, State Planning Commission (SPC), Ministry of Energy (MOE)), and the more environmentally proactive (National Environmental Protection Agency [NEPA] and State Science and Technology Commission (SSTC) (Ministry of Science and Technology from 1998)) agencies (see Chapters 2–4). Once the basis for negotiation had been formulated domestically, China took on leadership in climate change and became more active. In January 1991, Li Xue, deputy director of the Environmental Protection Commission of the State Council, publicly stated that China’s position could become the developing countries’ model (Xinhua 1991). Following his proposal, forty-one developing countries were invited to China for the “Beijing Ministerial Conference of Developing Countries on Environment and Development,” June 14–19, 1991, to develop a united bargaining position for the UNCED. The product, the “Beijing Declaration,” was a reiteration of Chinese principles formulated in the domestic meeting the previous year, which itself asserted the historical responsibility of the North and called for equity, more aid and technological transfer, and respect for sovereignty, while reiterating opposition to emissions ceilings (Economy 1994). In 1992, the State Council’s Commission on Environmental Protection issued a document titled “Our country’s fundamental policy towards global environmental problems.”10 This document was the result of extensive domestic reforms in response to climate change and showed that the negotiations had become a highly centralized and important policy area. However, the Chinese lacked institutional capacity and their efforts to address climate change were rather uncoordinated. In order to remedy this problem, the multiagency National Coordination Panel on Climate Change (NCPCC) was established in 1990, and responsibilities for negotiations were split between the SSTC, NEPA, MOE, State Meteorological Administration (SMA) and MOFA, with the SMA taking the lead. The environmentally proactive Song Jian (head of SSTC), Qu Geping (head of NEPA) and Zou Jingmen (head of SMA and previously head of the UN’s World Meteorological Organizations) were central members in the negotiations before the UNCED. This allowed greater international influence as well as empowerment of epistemic communities (the scientific and environmental leadership) (Xinhua 1989; Xinhua Domestic Service 1990). However, by the time of the UNCED, the SPC joined the NCPCC and primary responsibility for the climate negotiations was given to the MOFA, which, at the time of writing, it continues to retain. With the MOFA in charge of negotiations, there has been much Chinese rhetoric not conducive to cooperation. The MOFA weighs economic benefits over the environment, and does not have epistemic ties with the United States. The MOFA was also in charge of foreign relations during the Tiananmen crisis, making its anti-US sentiment much stronger, and thus enabling charismatic characters like Zhong Shukong to be influential.11 Although

“Luxury” versus “survival” emissions 93 other agencies were still involved, the influence of the scientific and specialist components of Chinese delegations were significantly diminished. Moreover, high-ranking officials still considered environmental protection secondary, and climate change was subordinate to local pollution. The efforts of more proactive leaders in climate change were frustrated while top leaders, such as Jiang Zemin and Li Peng, still stressed development of the economy over the environment. In 1998, the NCPCC was moved to the SPC’s Climate Change Policy Coordination Office in an attempt to better coordinate climate change policies. The extensive reforms addressing bureaucratic inefficiency, decentralization and policy-making allowed a better response to climate change. However, considerable problems in implementation remain. China could not take a more proactive stance in the discussion of JI, AIJ and CDM, even if it wanted to, since the decentralized structure of China’s economy made it very difficult for the center to monitor implementation in the provinces. This was compounded by the proliferation of Township Village Enterprises (TVEs), which are under the responsibility of the local provinces. With this development and the liberalization of the economy, the central government was increasingly losing its control. However, some ministries, such as the State Environmental Protection Administration (SEPA) and SSTC, argue against taking a hard line in international climate change negotiations because AIJ and CDM promise to bring new resources and technology to China (Evans 1999: 5).

Bilateral cooperative frameworks within a multilateral convention China leads the developing countries in climate change negotiations, voicing their interests against the developed countries. This often sees China being pulled into the North–South ideological battle, sometimes being more recalcitrant in multilateral negotiations than it would actually like to be. As a result, nongovernmental organizations (NGOs) and Northern governments characterize China as a problematic actor in the FCCC negotiations. Domestically, there is increasing recognition that climate change needs to be addressed. However Chinese support for the climate change regime cannot translate into more cooperativeness at the multilateral level, due to domestic institutional constraints and the Chinese strategy of forming a coalition with developing countries. Criticisms from the North and NGOs that China is an obstructive, uncooperative actor in the climate change regime is not entirely valid when Chinese behavior is examined in the domestic and bilateral contexts. Examining China’s proactiveness at the bilateral level can sharpen our understanding of Chinese behavior in climate change. This is particularly true when one considers that China has approved of five activities implemented jointly, while the other leader of developing countries, India, has approved only one. In a global perspective, the bilateral activities of China are actually not particularly impressive; China pales in front of the more proactive Latin American countries like Costa Rica, which attract most of the US AIJ efforts. Domestic institutional constraints restrict China

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from being very proactive. However, it is worthwhile considering why the two leaders of the G-77 and China group, India and China, which follow similar tactics at the multilateral negotiations (including flexibility mechanisms like AIJ), react differently to bilateral AIJ. Joint implementation, the CDM, and emissions trading are all flexibility mechanisms to ease the burden of Annex I countries’ emissions reductions and to promote energy efficiency and reduction of GHG emissions on a global scale. Annex I countries are to be assigned an “emissions budget,” reduced over time to create a market for emissions credits that could be traded between parties through a formal trading market (Cooper 1999: 422–423). The FCCC states that “efforts to address climate change may be carried out cooperatively by interested Parties” (Article 3-3) and Parties may “implement such policies and measures jointly with other Parties” (Article 4-2(a)). The Norwegian government thus proposed the JI at Rio, which was followed by Brazil’s proposal of CDM at COP3, accommodating to some extent the concerns developing countries have for such mechanisms. Therefore, after COP3 there were two types of mechanisms for project-level cooperation in emissions abatement between two countries: CDM between Annex I and non-Annex I countries, and JI between Annex I countries. Although technical differences do exist between “joint implementation,” JI and CDM, they are essentially project-level bilateral cooperative frameworks in emissions reduction schemes between two countries, and are under trial in the AIJ pilot program (McElroy et al. 1998: 39).12 Thus, in the following, JI, CDM and AIJ are all discussed at the same level. Annex I countries such as the United States, Japan, Norway, the Netherlands, Germany and Canada have traditionally supported such mechanisms since they want to meet their emissions targets efficiently. In AIJ, the benefits for the investor country are (1) increase in cost-effective emissions mitigation options including “the potential future value of the offsets if they become credits,” (2) provision of a “platform for business development activity,” (3) an opportunity for “direct involvement in policy making” and (4) significant public relations gains (Forsheit 1997: 702). Some developing countries like Costa Rica and Chile supported AIJ, as they have much to gain from the investment that could be attracted through such mechanisms. However, most developing countries opposed AIJs on the grounds of equity, since it leaves fewer options to decrease their own emissions. Chinese officials were especially vocal in expressing these concerns claiming that “concepts such as emissions banking, emissions permits and AIJ are attempts to stray from commitments” (ENB 1996a), and would “shift the responsibility for action from rich to poor nations and encourage industrialized states – historically responsible for the bulk of greenhouse emissions – to continue polluting the atmosphere while hindering development of the Southern hemisphere” (Makabenta 1995). China as a host country for these projects would gain (1) foreign capital, (2) transfer of modern, clean technologies and their ancillary economic benefits, (3) creation of local environmental and social benefits and capacity building and (4) mutual benefit in the export of clean commodities (Forsheit 1997: 703). Moreover, taking proactive measures in AIJ would enhance China’s international

“Luxury” versus “survival” emissions 95 image to the governments of the North and NGOs. However, this has to be balanced with other developing countries, since China’s multilateral negotiations dictate that they have to stay within the G-77 and China coalition parameters in order to retain maximum bargaining power in negotiations. China also has reservations about AIJ/CDM, which was voiced as the G-77 and China. The majority of the South did not understand the concept very well, and developing countries were uncertain about the intentions of the North. At an October 1996 UNEP Conference on AIJ held in San Jose, California, some Southern government participants expressed concerns about AIJ. They feared it would be a loophole for the North’s commitments, especially in the light of the FCCC stipulation that Annex I countries reduce emissions domestically. The South generally believed that the North would carry out a form of ecocolonialism. First, AIJ would weaken technological innovation native to developing countries and “encourage the dumping of obsolete or socially and environmentally harmful technologies in recipient countries” (ENB 1996b). Second, non-Annex I countries feared that inexperience in negotiating fair contracts would lead to their exploitation, and impede economic growth, causing the North to exploit the resources and cheap labor in the South (Kuik and Gupta n.d.). The “ecological debt” that the South felt was owed would be further lessened as the northern governments would redefine official development assistance (ODA) and move it to AIJ/CDM projects, reducing overall ODA – even though “additionality” was a requirement for AIJ/CDMs (Goldberg and Glenn 1998: 408). Other than psychological reservations, the South had material concerns. When the developing countries would be required to reduce emissions, all low-cost abatement options would be used up due to AIJs, leaving only high-cost ones. Sovereignty was also an issue, which the Chinese were especially sensitive about due to their experience of being a semi-colony (see Chapter 4). Since these projects would allow donor governments to “interfere in internal affairs” and particularly to wield influence over a host government’s environmental policies, the AIJs were far from ideal arrangements for China (Zhang 1999: 2). Joint implementation finally became a consensus policy at COP1 (March–April 1995), and a decision was finally reached on the AIJ in its pilot phase to clarify methods for measuring and verification of emissions.13 There were three objectives required for AIJ projects: (1) they should bring about real and long-term environmental benefits related to the mitigation of climate change that would not have occurred in the absence of such activities, (2) they should be compatible with and supportive of national environmental and development priorities and (3) they should be cost effective in achieving their goal benefits (Goldberg and Glenn 1998: 408). To reach a compromise between the developed and developing countries, it was decided that, during the pilot phase, there would be no crediting of emissions reduction (Berlin Mandate, Paras. 1(a), 1(f )). This was a victory for the G-77 and China, showing the strength of the developing countries’ coalition. Annex I countries were obliged to achieve their commitments to lower their emissions to 1990 levels through domestic measures alone (Berlin Mandate, Preamble).

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Bilateral cooperation and China’s AIJ projects As a non-Annex I country, China is not obliged to take part in any AIJ projects. However, as is apparent with its five projects, it is not opposed to the mechanism. Although their rhetoric (together with the G-77) at the multilateral level showed opposition to these mechanisms, China’s AIJ project efforts show that Beijing was not as reluctant to participate as its multilateral stance suggested. China has three official AIJ projects with Japan that are registered with the FCCC secretariat. Two others (with Japan and Norway) have been given governmental approval, although they have not been registered with the FCCC (NEDO 1998a: 9). The AIJ projects approved by China are as follows (Evans 1999: 6; NEDO 2002: 5–24): AIJ projects with Japan 1 2 3 4

Shougang Steel Plant Waste Heat Recovery (approved 1997, $30 million subsidy, 68,000 tons per year [t/y] CO2 emissions reduction). Liaoyang Ferroalloy Group Efficiency Improvement (approved 1998, $14 million subsidy, 21,000 t/y CO2 emissions reduction). Harbin Municipal Incineration Plant (approved 1998, $16 million subsidy, 22,000 t/y CO2 emissions reductions). Dalian Boiler Conversion Project (Pending AIJ approval) (approved 1998, subsidy amount not applicable yet, 169,140 t/y CO2 emissions reduction).

AIJ project with Norway (pending) 1

Shangqiu Cogeneration Plant (approved 1998, 5 million subsidy, 87,5000 t/y CO2 emissions reduction).

China has much promise as a future market for environmentally sound technologies due to its population and geographic size, and it has ample opportunities for introducing low-cost reduction projects, making it attractive for AIJ. As a result, China has no problem receiving proposals. In addition to the five AIJs that have received official recognition by the Chinese government, there have been many other AIJ proposals from Japan (5), Norway (5), the Netherlands (1) and the United States (3) (NEDO 1998a: 151–152; NEDO 1999a: 56). The amount of proposals China has received is significant to start with, and is higher in number when compared with those of other developing countries that take a more cautious approach to AIJ. However, this does not explain why China has approved so many AIJs. AIJs do not have any crediting arrangements, and China has nothing to lose by these arrangements. All the above projects have been in energy efficiency and provide China with low-cost energy. Moreover, the mechanisms such as JI, CDM and AIJ, presented China with additional sources of aid. Climate Change also presented opportunities for new sources of bilateral aid with joint programs on

“Luxury” versus “survival” emissions 97 GHGs totaling $10 million, with the US Environmental Protection Agency and $184 million in Japan’s Green Aid Plan (Ministry of International Trade and Industry (MITI)) (Cooper 1999: 411). However, they were pilot schemes and primarily intended to explore the difficulties of implementing CDM in the future. By taking part in AIJ, the low-cost emissions projects would all be taken up, leaving only the expensive ones for China when it may have commitments in the future. As a result, China is foregoing future emissions reduction possibilities for present technology and lower cost energy. Whatever the motivation is on the part of the Chinese government, AIJ is serving as a special vehicle for bilateral cooperation, promoting energy-efficient private investment in China, capacity building, and transferring financial and technological resources (Chayes and Kim 1998: 522).

Comparing multilateral and bilateral negotiations Although both China and India have rhetorically opposed the AIJ/CDM concepts on the grounds that the North first needs to address its responsibilities before the South, there is a difference in their activity on AIJs: China has five AIJ projects whereas India has just one. However, it may be considered that part of the difference can be accounted for by China’s greater economic appeal and specifically (in this context) an edge in attracting environmentally sound technologies. But what else accounts for the difference between China and India at the bilateral level? First, it is important to consider the overall differences between multilateral and bilateral negotiations. Multilateral negotiations are generally more difficult since it is at these venues that new concepts and ideas are first discussed. Since the negotiations for the bilateral cooperative framework (AIJ/CDM) were done at the multilateral level, the difficulties have already been addressed. In the case of AIJ, many of the conflicting debates are discussed at the multilateral level, and thus the bilateral level negotiations are about the specifics of the project. Because the developing countries’ coalition of the G-77 and China was victorious in setting some of the key rules at the multilateral level, the AIJ bilateral negotiations start from a base more favorable for the South. In explaining China’s differing behavior at the multilateral and bilateral levels, three factors can be emphasized: difference in strategy at the two levels, domestic factors, and the “Japan factor.” Strategy The literature on Chinese cooperative behavior suggests that China is a pragmatic actor, and a practitioner of realpolitik. In this vein, it adopts the best strategy to maximize its gains, and adopts different tactics at the multilateral and bilateral levels of international negotiation. Self-interest drives China to adopt the G-77 and China coalition approach at the multilateral level. China will sacrifice shortterm interest in aid and technological transfer through AIJ and CDM for image vis-à-vis the developing countries, which still takes an anti-North approach in climate change politics. Similar to the tactics it takes in other issue areas such as

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human rights and arms control, China, as well as the other developing countries, has a long-term interest in ensuring that North–South equity is preserved and that environmental regimes do not impose constraints on growth. Moreover, its experience after Tiananmen has made China cautious of being isolated again, and MOFA utilizes climate change as a political tool to unite an increasingly fragmenting China in the developing countries’ struggle against the North. By keeping in step with the most powerful majority in the G-77, China can ensure that its interests as a developing country are free from interference by the developed countries. By surrounding itself with a powerful developing countries’ coalition, China obtains better leverage over developed countries, and can ensure that its long-term interests are secured. For example, China had to back down from support for US proposals on joint implementation during INC XI (1995).14 Due to pressure from the developing countries, China had to refrain from supporting the US proposal, although this had the potential of bringing business opportunities to China. Another example, also at the INC XI, was China’s willingness to sacrifice its support for the OPEC countries (which were advocating more research into the uncertainties of the science of climate change), for the small island states’ stance (opposite to the OPEC stance), when the majority of the G-77 and China coalition shifted to support the position of the small island states. Another case of this kind of behavior is where China, which was originally opposed to the negotiation of a new protocol, shifted its position to support the majority stance in G-77 and China that supported a compromise protocol after India released its “Green Paper” (see discussion earlier). All of these actions show that at the multilateral level China does, in the end, conform to the most powerful position in the G-77 and China group. This is particularly constraining for AIJ/CDM projects, since the majority of the developing countries are opposed to the flexibility mechanisms ( Johnston 1998). At the bilateral level, China is less concerned with its image vis-à-vis the other developing countries. At this level, it pays more attention to its own interests, namely by seeking aid and technological transfer. China spends only 1.3–1.5 percent of its gross domestic product on environmental projects, and relies on external aid for 80 percent of its environmental protection budget (NEDO 1998b: 94; Economy 1998: 278).15 Moreover, China is still developing its economy at an annual rate of nearly 10 percent, and energy efficiency is important for both economic growth and environmental protection. Thus, AIJ becomes beneficial to China in addressing energy issues, as long as it is not used by the developed countries to interfere in its internal affairs or to touch on the issue of “national sovereignty” by influencing domestic policies. China has traditionally preferred bilateral relationships, which allow for more “control” over its relationships.16 This illustrates how the Chinese tend to adopt a pragmatic foreign policy stance when they are not constrained by the G-77 and China coalition’s multilateral interests. The flexibility towards AIJ might also be due to China’s realization that further commitment on the part of developing countries is needed, and in such a case it wants to be the one to “set the rules” of the game. Since AIJ is a pilot program

“Luxury” versus “survival” emissions 99 that devises rules and procedures for CDM and JI, through it China can be actively setting the rules for them. Through past experience in environmental regimes, China has learned not to be a latecomer to a regime where other parties have already set the rules. In contrast to the ozone negotiations where the North set the agenda and China later then fought to secure its interests, China ensured it participated in climate change from the very beginning. Due to China’s proactiveness, there has been much exchange on AIJ between Chinese and international specialist communities. After the UNCED in 1992, the United States, Norway, Germany and Japan established cooperative dialogues with China to discuss JI and AIJ projects.17 China also took part in the Asia-Pacific Economic Cooperation Sectoral Ministerial meetings on Sustainable Development held in 1994 ( Vancouver) and 1997 (Toronto). During the 1997 meeting, China actively supported AIJ, and elucidated its criteria for approval (NEDO 1998a). The China Council for International Cooperation on Environment and Development (CCICED), which provides the Chinese government with advice on environmental policy, holds annual conferences with both international and domestic participants on China’s environmental problems (NEDO 1998a: 59). In the October 1997 conference of the CCICED, discussion centered on AIJ, and positive participation was encouraged for China (NEDO 1998a: 74). Domestic factors One domestic factor promoting AIJ approval is the environmentally oriented SSTC, which has acted as the gateway for bilateral negotiations. The SSTC is headed by leading figures in the Chinese environmental movement, Song Jian and Deng Nan (Deng Xiaoping’s daughter). Deng Nan once remarked that “if environmental problems are ignored in the process of development, economic development will be seriously hampered. We should extensively launch international cooperation” (Economy 1998: 276). AIJs are first approved by the SSTC, and then are referred to the State Planning Commission to be delegated to the respective ministries and provincial governments (Chayes 1998: 29). The SSTC and SEPA were the more environmentally proactive actors, and advocated a more accommodating stance for AIJ and CDM since they saw benefits for technological transfer and environmental protection. This is in contrast to multilateral negotiations, which are conducted through the more conservative and politically oriented MOFA. The multilateral–bilateral disparity in behavior was also due to the presence of an influential, rhetorically anti-Western government official, namely Zhong Shukong, special advisor to the MOFA. Prior to his death in 2000, Zhong was a senior professor of the Foreign Affairs College, which is affiliated with the MOFA. As one EU negotiator commented, “Zhong has a harsh way of obstructing negotiations, and uses the fora as a platform to lecture on his own ideological thoughts.”18 Professor Zhong sees climate change negotiations as “bullying behavior” by the United States, and he uses such negotiations as a tool to educate the young Chinese population on the past impositions of foreign states. In the capacity of special

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advisor to the MOFA and senior negotiator to the climate change negotiations, Zhong held enormous power. This is because the Chinese civil service system works on seniority, and the MOFA has had leadership in the FCCC negotiations since 1991. However, AIJs are negotiated with the SSTC, which represents a different part of the Chinese bureaucracy (see Figure 5.1). With the SSTC in charge, the MOFA’s interests in exercising leverage over the United States and pursuing China’s economic or security interests through climate change do not have much influence at the AIJ project level. As of the writing of this chapter, there have been

Project proposals from an investor country at national (central) level

State Science and Technology Commission (Ministry of Science and Technology from 1998)

State Planning Commission

Ministry for Economics and Trade

Ministry for Electric Power

State Power Corporation

National Environment Protection Agency

State Power Investment Corporation

Ministry for Foreign Economic Relations and Trade

Pr ovincial governments Department of Development and Industry Department of Economics (Treasury) Environment Protection Bureau Department of Power industry

Ministry of Foreign Affairs (Current FCCC Contact Point)

Local governments or municipal governments (depending on where the project is undertaken)

Project approval

Department of Development and Industry Department of Economics (Treasury) Environment Protection Bureau Bureau overseeing power tariffs and generation

Figure 5.1 The Chinese approval process for AIJ projects in the power generation sector. Source: Abram Chayes, “A suggested model for implementing the clean development mechanism,” Belfer Center Discussion paper (Cambridge, MA: Harvard University, 1998), p. 35.

“Luxury” versus “survival” emissions 101 no charismatic characters such as Zhong Shukong; the bilateral level negotiations are lower in profile and do not provide much publicity. As a result, there are no opportunities for the bilateral negotiations to be utilized as a lecture theater for domestic or international audiences. Thus, there is more possibility for cooperative relationships working to be formulated at the bilateral level than one would expect from the MOFA’s negative rhetoric in multilateral negotiations. The “Japan factor” AIJ project approval is also helped by the fact that China and Japan have a long history of cooperation regarding the environment and technology. While the United States is barred from giving aid to communist regimes, Japan is presently the number one donor to China totaling $102 million in environmental assistance from 1993 to1996 (UNDP 1996: 50). This relationship was strengthened at the UNCED where then Prime Minister Ryutaro Hashimoto pledged to increase ODA between $9 billion and $10 billion in the span of five years ( JMOFA 1997: 24, 25; Yamamoto 1999: 83). In 1992, Japan’s MITI initiated the Green Aid Plan (GAP) which today has thirty-nine energy related projects in China (NEDO 2002: 5). At COP3, the Japanese government declared the “Kyoto Initiative,” where a low-return, long-term loan was specifically designated for the purposes of climate change.19 In 1997, the Japanese government twice lowered the interest rate for loans to China, first from 4 to 2.5 percent and then to 1.8 percent, for terms of twenty-five years with seven-years interest free for environmental projects (Yamamoto 1999: 84). Grant aid was also given in 1992 for the establishment of the China–Japan Friendship Environmental Protection Center, which commenced operations in 1996 (Zhang and Ma). These measures have increased the level of trust between China and Japan. The Japanese AIJ projects were first negotiated as the MITI’s GAP projects, then elevated to AIJ status. These are projects on transfer of renewable technology, environmental protection technology and energy conservation in six Asian countries (NEDO 1998a: 37; NEDO 1998b: 72). The New Energy and Industrial Technology Development Organization (NEDO), which was established under the MITI to deal with energy related domestic and international issues, became the implementing agency for GAP. Although it took time, the Japanese were quite successful in getting AIJ approval, since MITI had regular contact and dialogue with the Chinese. While other countries had to initiate programs for AIJ specifically, Japan already had GAP in place, and Japan’s cooperative frameworks with China were far more developed than those of the other Annex I countries. China’s deeper environmental relationship with Japan (as reflected most clearly in the AIJ projects) is based on China’s belief that it has more control over Japan compared to other countries (Kreisberg 1994: 472). Historically, the Japanese bureaucratic environment vis-à-vis China has tended to accommodate and cede to Chinese terms in light of Japan’s responsibility for its wartime aggression against China.20 There is a mutual understanding between the two governments that financial and technological aid is “post-war compensation” (Asuka 2000: 18). This leverage exercised by China has reduced its worry of interference in

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internal affairs by the AIJ investor country, and, thus, Japan is the forerunner in AIJ projects with China. The similar negotiating styles of China and Japan can also explain the extent for their AIJ bilateral relationship. The negotiations with the Chinese government take time and patience. According to a Japanese member of the negotiating committee for the Shougang Steel Plant Waste Heat Recovery project and the Dalian Boiler Conversion Project, the patience of Chinese and Japanese negotiators was the key to the success in getting the AIJ approval.21 The negotiations for the first project took a year and a half, and the second lasted over five years. Major impediments to approval were decentralization and lack of knowledge on the part of the Chinese government. One Japanese negotiator commented, “in the initial stages of negotiation, some Chinese delegates did not even understand the term AIJ.”22 A NEDO official saw the reason for Japan’s success in the “Asian way” of negotiating; a patient and slow process starting with broad agreements, followed up by detailed ones.23 This kind of approach and developing guanxi [relations] is often regarded as a particular characteristic to Asian culture, and something with which China and Japan are well acquainted. In contrast to Japan, US initiatives in China only started with the Clinton administration in the 1990s, making Washington a latecomer to Chinese environmental projects. Being a highly legalistic country, the United States sought to define things in detail from the beginning, and therefore has a markedly different negotiating approach from that of China.24 Thus, the United States has been both historically and culturally disadvantaged in establishing cooperative frameworks with China compared to Japan. Norway’s approach contrasts with that of the United States. If China, Norway and the United States were put on a continuum of negotiating styles, Norway would belong in the middle. Thus it has been more successful in negotiating AIJ with the Chinese than the United States. Relatively smoother negotiations between China and Japan does not imply that there were no impediments for bilateral negotiations between China and Japan. As was evident in the long protracted negotiations processes with NEDO/MITI and the Chinese government, decentralization and lack of communication between the localities and central government posed serious problems. A Japanese governmental report on the lessons learned from AIJ also stated that there were serious impediments to implementation because the Chinese lacked the capacity to host AIJ projects. The Chinese were notably weak in technical capability to measure and collect data (NEDO 1998b). This has been exacerbated by China’s historical experiences as a semi-colony, which have made it particularly wary of any arrangements permitting potential foreign interference in their domestic affairs.

Conclusion AIJ projects are intended for technological transfer and aid. These objectives overlap greatly with China’s and the South’s position in international climate change negotiations. However, in multilateral rhetoric, the developing countries stress that AIJ could be harmful in the long term, since low-cost abatement would

“Luxury” versus “survival” emissions 103 be taken away and there would be an export of pollution from the North to the South. China was thus often pressured into taking the developing countries’ stance in spite of its own short-term interests of technological transfer and aid. China takes the G-77 and China approach mainly in multilateral negotiations, and bilaterally it pays more attention to its domestic needs. This is partly helped by the ministry in charge of the AIJ approval, the SSTC, which pays more attention to the scientific and technology concerns of China than does MOFA. It has also historically been the norm for China to handle issues bilaterally, rather than multilaterally – where control is sometimes lost. This does not mean that the developing countries’ interests are totally disregarded at the bilateral level, since after AIJs receive SSTC approval, the MOFA becomes involved in international deliberations. However, the MOFA plays only a limited role in bilateral projectlevel negotiations. Thus, the developing countries’ coalition becomes secondary to the outcome (Chayes 1998: 35; NEDO 1998a: 37). Neorealism provides us with a general guide to Chinese behavior. However, it fails to explain why China chooses to cooperate more closely with Japan. China’s proactiveness at the bilateral level has much to do with the Japan factor, which only surfaces when one delves into the domestic politics. China takes a more accommodating stance in AIJ with Japan because it offers the best technology and gives it more control over the relationship due to the historical debt Japan is said to owe China for its wartime policies. Also, China’s CO2 emissions mean that sulfur emissions are carried into Japanese territory bringing with them acid rain. Japan thus has been proactive in engaging China in environmental cooperation. This cooperation has given Japan a chance to repay its debts and at the same time obtain an edge over other countries wanting to enter the Chinese environmental market. Norway has also been accommodated, since it is more neutral and sympathetic to G-77 and China’s views. The lack of US projects (despite Washington’s promotion of them) and Zhu Rongji’s refusal of two CDM proposals on his visit to the United States in April 1999 show that China’s cooperation in AIJ is selective according to the partners and the balance of costs and benefits (Evans 1999: 7). Since climate change is also seen as a political tool, some parts of the Chinese government, especially old factions within MOFA, utilized it to lecture anti-US sentiments to the young. This analysis of Chinese behavior in climate change suggests that neorealism is helpful in understanding the general attributes of Chinese behavior. However, while neorealism provides us with a simplified explanation, domestic and historical interpretations are needed to supply a full explanation of China’s behavior in climate change. The developing countries’ coalition represents important bargaining leverage in the multilateral negotiations, allowing China to negotiate a general agreement that it can live with. At the bilateral level, these general agreements become more specific and here the choice of partner becomes crucial. Japan is a partner that China believes it can control to some degree, whereas the United States is not. China also benefits from its proximity to Japan, both geographically and culturally. Japan is not only affected by high levels of China’s pollution, but is also technologically advanced and owes China a debt from its

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wartime policies. With particular regard to AIJ, the historical and cultural reasons that make Japan the ideal partner, and the roles of the more sympathetic ministries in the negotiations, resulted in China’s greater enthusiasm for cooperating on climate change at the bilateral level.

Notes 1 This is the perception of the Chinese State Council’s Office of Climate Change. Interview with advisor to the Chinese government on environmental issues, Beijing, Summer 1999. 2 China is not formally a member of the G-77, but has observer status, and whenever China wants to be included in the caucusing group, as in climate change, they are called “G-77 and China.” 3 See Wang Yizhou, an acclaimed liberal scholar in China, cited in Deng 1998: 323; Wang 1994: 8; Feinerman 1995: 189. 4 National policy responses can be categorized into the following four categories: “Laggards,” which (1) avoid international obligations or (2) accept obligations but fail to comply with them, and “leaders,” which (3) comply with such obligations or (4) lead others to exceed such obligations and assume additional obligations. 5 The pre-Kyoto ( pre-1997) JI, which includes projects between and within Annex I and Annex II countries, and the post-Kyoto (after 1997) JI, which is only for projects between Annex I, and the CDM represent project-level cooperative frameworks under the FCCC that allow for states to cooperate in meeting emissions reductions targets. AIJ is the pilot program for these mechanisms. 6 The principle of “common and differentiated responsibility” acknowledges the common responsibility of states for global environmental protection, but takes into account different circumstances of a state and its contribution to environmental degradation. See CISL Legal Brief. Available http://www.ciscl.org/brief_common.pdf 7 For a rich detailed account of the Chinese response pre-UNCED see Economy 1994. 8 This section is based on a series of interviews the author conducted with Chinese delegation members at COP6 (November 2000) and via telephone and email (1998–2000). 9 Unattributable interview with Chinese delegation member, COP6, Hague, November 2000. 10 “Woguo guanyu qianqiu wentide yuanze lichang” (limited Chinese governmental document in the author’s possession). 11 With Professor Zhong’s death in summer 2000, many negotiators at COP6 commented that the Chinese were much easier to get along with. Unattributable interviews with diplomats from Japan, the United Kingdom, and the Association of Small Island States. 12 It is appreciated that joint implementation pre-Kyoto and JI post-Kyoto differ in definition, and there is a slight receptivity for CDM than JI, but for the simplicity in argument, the distinction is not drawn here. 13 The Berlin Mandate adopted at COP1 defined the objectives of the AIJ, and set the time span until December 1999. 14 For a good analysis of the Chinese delegation’s negotiating behavior at INC XI, see Johnston 1998. 15 China increased its expenditure for the environment in its Eighth Five-Year Plan (1991–1995) from 0.8 percent GDP to 1.3–1.5 percent. However, it is estimated that at least 3 percent of GDP would need to be spent in order for environmental protection to be adequately addressed. 16 Interviews with British and Japanese officials involved in diplomatic negotiations (in environment, trade, and human rights) with China from 1985 to 2000.

“Luxury” versus “survival” emissions 105 17 Email correspondence with former SEPA official, October 1999. The US effort on JI began in October 1993 under Clinton Administration’s Climate Change Action Plan. Japan started its AIJ program in November 1995 after COP1 (NEDO 1999b: 10). 18 Unattributable interview with EU officials close to the climate change negotiations, November 1999. 19 The special loan for climate change was for 40 years at 0.75 percent interest with 10 years interest free. JMOFA webpage www.mofa.go.jp 20 Unattributable interview with Japanese government official, and conversation with Japanese international relations specialist, March 2000. 21 Interviews with NEDO, Japan’s Ministry of Foreign Affairs and Environmental Protection Agency officials, December 1999a. 22 Interview with NEDO official, January 2000. 23 Interview with NEDO official, January 2000. 24 It is appreciated that there are more similarities between the Chinese and American in the younger generation. However, governmental ministries tend to be still dominated by the “old” school of negotiation (see Solomon 1999).

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Duffy, A. (1997) “Emissions Treaty in Peril as Rich Nations Demand Concession from Poor,” Ottawa Citizen (December 7, 1997) Available on Lexis-Nexis online. Earth Negotiations Bulletin (ENB) (1996a) Report of the Meetings of the Subsidiary Bodies of the UN Framework Convention on Climate Change. Available: http:// www.iisd.ca/voltoc.html —— (1996b) 1996 Year-End Update. Available: http:// www.iisd.ca/voltoc.html —— (1997) “COP3 Report,” Earth Negotiations Bulletin, 12 (76), http://www.iisd.ca/ voltoc.html1999/200 Eastbrook, G. and Palmer, B. (1997). “Greenhouse common sense: why global warming economics matters more than science,” US News & World Report (December 1,1997). Economy, E. (1994) “Negotiating the Terrain of Global Climate Change Policy in the Soviet Union and China: Linking International and Domestic Decision-making Pathways,” PhD Thesis, Michigan, University of Michigan. —— (1998) “China’s Environmental Diplomacy,” in S.S. Kim (ed.) China and the World: Chinese Foreign Policy Faces the New Millennium, Boulder: Westview 264–283. Evans, P. (1999) “China’s Climate Change Policies: Signs of Flexibility Behind Rhetoric?” Cambridge Energy Research Associates Private Report. Feinerman, J. (1995) “Chinese Participation in International Legal Order: Rogue Elephant or Team Player?” China Quarterly 141: 186–210. Forsheit, T. (1997) “International Emissions Trading: Equity Issues in the Search for Market-Based Solutions to Global Environmental Degradation,” University of Pennsylvania Journal of International Economic Law 18: 689–729. Goldberg, D.M. and Glenn, W.M. (1998) “Rethinking the Pilot Phase: A Call for Independent Evaluation and a Legal Framework,” Widner Law Symposium Journal 3, Fall: 385. Haas, P., Keohane, R. and Levy, M. (1993) Institutions for the Earth: Sources of Effective International Environmental Protection, Cambridge, Mass and London: MIT Press. Hurrell, Andrew (1995) “International Political Theory and the Global Environment,” in Ken Booth and Steve Smith (eds) International Relations Theory Today, Cambridge: Polity Press. Hyder, T.O. (1994) “Looking Back to See Forward,” in I. Mintzer and J. Leonard (eds) Negotiating Climate Change: The inside Story of the Rio Convention, Cambridge: Cambridge University Press. Japan Economic Newswire (1997) “China Not to Limit Gas Emissions for 50 More Years” (December 11, 1997) Available on Lexis-Nexis online. Japanese Foreign Affairs Ministry ( JMOFA) (1997) Waga kunino seifukaihatsuennj yo [Our Country’s Overseas Development Aid] Tokyo:MOFA. Japanese Foreign Affairs Ministry ( JMOFA webpage) “Japan Fund for Global Environment,” in ODA section of JMOFA webpage. Available: http://www.mofa.go.jp last visited January 2003. Johnston, A.I. (1998) “China and International Environmental Institutions a Decision Rule Analysis,” Energizing China-Reconciling Environmental Protection and Economic Growth, Newton: Harvard University Press. Kobayashi, Y. (forthcoming) “The ‘Troubled Modernizer’: Three Decades of Chinese Environmental Policy and Diplomacy” in P.G. Harris (ed.) Confronting Environmental Change in East Asia, London: Earthscan. Kreisberg, P. (1994) “China’s Negotiation Behaviour” in T.W. Robinson and D.L. Shambaugh (eds) Chinese Foreign Policy: Theory and Practice, Oxford: Oxford University Press. Kuik, O. and Gupta, J. (n.d.) Joint Implementation: Political and Practical Aspects with Special Reference to Africa, International Utility Efficiency Partnerships, Inc Paper.

“Luxury” versus “survival” emissions 107 Makabenta, L. (1995) “Environment: New North-South Rift Feared over Climate Change,” Inter Press Service (March 8, 1995). McElroy, M.B., Nielsen, C.P. and Lydon, P. (1998) Energizing China : Reconciling Environmental Protection and Economic Growth, Cambridge, Mass.: Harvard University Committee on Environment. New Energy and Industrial Technology Development Organisation (NEDO) (1998a) Technology Transfer in Asia (in Japanese), Tokyo: NEDO. NEDO (1998b) Technological Transfer in Asia (in Japanese), Tokyo: NEDO. —— (1999a) AIJ in China (in Japanese), Tokyo: NEDO. —— (1999b) International Cooperation Centre, Tokyo: NEDO. —— (2002) Projects of the New Energy and Industrial Technology Development Organisation, Asia Region (in Japanese), NEDO: Tokyo. Ohshita, S. (1998) “Japan’s Role in International Environmental Protection: Clean Coal Technology Transfer to China” PhD Proposal, Stanford University. Smil, V. (1991) “China’s Emissions of Greenhouse Gases: Status and Prospects,” in T.W. Robinson (ed.) Joint AEI-Johnson Foundation Conference, Racine: AEI. Smith, R. (1994) “China’s Attitude Towards United Nations Dispute Settlement in the Post-Mao Era,” MPhil Thesis, University of Oxford. Solomon, R. (1999) Chinese Negotiating Behaviour Pursuing Interest through Old Friends. Washington, DC: United States Institute of Peace Press. South China Morning Post (1997) “Greenhouse Treaty Fight” (November 30, 1997) Available on Lexis-Nexis online. —— (1997a) “Poorer Nations See Solution to Gas Curbs More “ (December 9, 1997) Available on Lexis-Nexis online. State Council’s Commission on Environmental Protection (1992) “Woguo guanyu qianqiu wentide yuanze lichang” (limited Chinese governmental document in the author’s possession). Tacey, E. (1997) “Greenhouse Treaty in Balance as China-US Row Comes to a Head,” South China Morning Post (December 8, 1997) Available on Lexis-Nexis online. Sun, H. (1996) “Controlling the Environmental Consequences of Power Development in the People’s Republic of China,” Michigan Journal of International Law 17: 1015–1049. UNDP (ed.)(1996) China Environment and Sustainable Development Resource Book II: A Compendium of Donor Activities, Beijing: UNDP. UN Framework Convention on Climate Change (FCCC) Available http://unfccc.int/ resources/conv/convkp.html ( January 1, 2003). Wang, J. (1994) “International Relations Theory and the study of Chinese Foreign Policy: A Chinese perspective,” in T.W. Robinson and D.L.Shambaugh (eds) Chinese Foreign Policy: Theory and Practice, Oxford: Oxford University Press. World Commission on Environment and Development (WCED) (1987) Our Common Future, Oxford: Oxford University Press. Xinhua (1989) “PRC Plans Countermeasures to ‘Greenhouse Effect’ ” (May 3, 1989) Available on Lexis-Nexis online. Xinhua Domestic Service (1990) “Song Jian Discusses Environmental Protection,” (December 24, 1990) Available on Lexis-Nexis online. Xinhua (1991) “Official on Solving Environmental Problems” ( January 15, 1991) Available on Lexis-Nexis online. Xinhua News Agency (1997) “Chinese Representative Explains Policy on Climate Change” (December 8, 1997) Available on Lexis-Nexis online.

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Yamamoto, A. (1999) “Chikyuondanka to wagakunino ODA [Climate Change and Our Country’s ODA]”, IDC J Forum, No.19, 3. Zhang, K. and Ma, J. “Chinese Environmental Protection and International Cooperation,” unpublished manuscript on file with author. Zhang, Z. (1999) “Towards a Sustainable Development of the Chinese Economy: Accomplishments and Challenges in Limiting Greenhouse Gas Emissions,” in Intergovernmental Panel on Climate Change Working Group III (ed.) Economic Impacts of Annex I Mitigation Policies on Non-Annex I Countries. Zhao, F. and Li, L. (1998) “Guanyu kongzhi quanqiubiannuan de zaicikao” (Rethought about the trend of Global Warming), in Zhang, Kun (ed.) Huanjing yu ke chixu fazhan- xu: Zhongri youhao hungjing baohu zhongxin 1998 nian lunwenji (Environment and Sustainable Development (Sequel): 1998 Paper Collection of the Sino-Japan Friendship Centre for Environmental Protection), (in Chinese), Beijing: Chixiang Chubanshe, pp. 195–199.

6

The Clean Development Mechanism and China’s energy sector Opportunities and barriers Axel Michaelowa, Shouchuan ( Jusen) Asuka-Zhang, Karsten Krause, Bernhard Grimm, and Tobias Koch

Introduction At 2.2 tons per capita, Chinese emissions of carbon dioxide (CO2) amount to about 50 percent of the global average – and only 20 percent of the German average. From the beginning of economic reforms in 1979 until 1997, the rapid growth of the Chinese economy led to a strongly increasing demand for energy with an associated rapid increase of CO2 emissions (see Chapter 3). This trend is forecast to continue (see Table 6.2). Thus, official plans envisaged expanding electricity generation capacity from 235 GW in 1996 to 530 GW in 2010 and 800 GW in 2020 (Blackman and Wu 1997).1 However, after 1996 reported energy use fell (see Table 6.1). Coal use is reported to have declined by 22 percent. The reasons for this precipitous decline are unclear and it is possible that the decline is overstated due to underreporting of production from small, officially closed mines (Logan 2000). However, electricity use continues to grow and overall energy consumption has started to grow again. Current forecasts see an increase from 300 GW in 2000 to 370 GW in 2005 (Anonymous 2001). China’s Ninth Five-Year Plan for 1996–2000 envisaged that an important share of investments for the 70 GW electricity supply expansion program would be financed by foreign capital. While the planned capacity was reached, only a small share of the expansion was financed by foreign investors. Projects under the Clean Development Mechanism (CDM) of the Kyoto Protocol can provide an opportunity to transfer highly efficient, low greenhouse gas (GHG) energy supply and energy use technologies to China and thus stabilize the environmental impact of its economic growth at a relatively low level. This Table 6.1 Primary energy use in China (billion tce) 1981 1986 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Energy use 0.59 0.81 1.04 1.09 1.16 1.23 1.31 1.39 1.38 1.32 1.22 1.23 Source: Wiesegart (1998: 41), Ögütçü (1999: 8), Sathaye (1992), Logan (2000).

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chapter assesses the potential for CDM projects in the Chinese energy sector and explores ways to tap it. We first discuss the overall development of energy use and supply in China during the last decade, the development of energy efficiency, and the relatively small impact of foreign investment in the power sector. An analysis of Chinese climate policy follows. It shows that until recently China was reluctant to embrace the concept of CDM despite intense persuasion and provision of funds by the United States and Japan. Still, China expects to reap a major share of the emissions credits generated by CDM projects, which is unlikely given the competitive situation on the CDM market. We then assess the potential of different CDM project types – efficiency improvement of power stations, fuel switching, renewable energy, energy-efficient lighting and industrial machinery. We conclude with an assessment of how an internationally coordinated CDM strategy can help to upgrade the Chinese energy sector and reap local environmental benefits. Such a strategy would also help industrialized countries efficiently fulfill their GHG emissions targets.

China: the energy giant Energy use From 1979 to 1997 economic reforms led to a sharp and sustained increase in energy consumption levels in China (see Table 6.1). Growth in energy demand was accompanied by an over-proportional increase in electricity demand, which led to frequent shortages in power supply, particularly in urban areas. Still, over 100 million rural Chinese have no access to electricity. In the early 1990s, demand surplus was estimated at 15–20 percent and forecasts expected that by 2015 the gap could increase by 150 percent (European Parliament (EP) 1996: 37). Demand was projected to increase by 280 percent between 1994 and 2010 (US Embassy 1997). However, the consequences of the Asian financial crisis of 1997 show that an extrapolation of past economic and energy demand growth rates for several decades may lead to gross overestimates. China’s coal and electricity sectors became rapidly oversupplied beginning in 1997. Coal use plummeted while electricity use continued to grow, but slowly (see Table 6.4). Besides the decrease of exports due to the Asian crisis, this surprising swing was caused by dismantling of energy subsidies, which kept fuel prices well below world market prices. Coal subsidies were reduced from 37 percent in 1984 to 29 percent in 1995, and fully dismantled in 1997. Petroleum subsidies were reduced from 55 percent in 1990 to 2 percent in 1995 (Wu and Logan 1997). Coal and oil prices have been liberalized countrywide – they fell by 15 percent in 1998 – as have electricity prices in the coastal provinces. Mathai (1997) shows that even state-owned enterprises react to these increases – the price elasticities he found are comparable to industrialized countries. Nevertheless, delivered heat and residential fuels continue to be heavily subsidized (Martinot et al. 1997: 385). Table 6.2 shows that the overall impact of the surprising stagnation of energy use on GHG emissions is staggering if the data are correct. Year 2000

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Table 6.2 China’s energy use and business-as-usual CO2 emissions, 2000 and 2020 2000 Coal

2020 Total

Energy use (million tce) Average of six forecastsa 1,119 1,535 Estimate using reported 2000 valuesb 863 1,312 Percentage 77.1 85.5 CO2 emissions (billion tons) Average of six forecastsa 3.48 Estimate using reported 2000 valuesb 2.83 Percentage 81

Coal

Total

1,943 1,441 74.2

2,912 2,521 86.6

6.10 5.14 84

Source: Logan (2000) and authors’ calculations. Notes a Asian Development Bank, World Bank, UNEP, China Climate Change Study, Asian Least Cost Greenhouse Gas Abatement Study, Energy Information Administration; published between 1994 and 2000. b The 2020 estimate uses the same growth rates as the China Climate Change Study and assumes natural gas use according to the latest government plans.

CO2 emissions are 650 million tons below the forecast. This is equivalent to the emissions of the United Kingdom and amounts to 2.5 percent of world emissions. Nevertheless, the low efficiency of Chinese energy consumption is still significant. The average intensity per unit of GDP lies eight times above the Japanese average. Corrected by purchasing power it still remains four times higher. However, in the last two decades, Chinese energy efficiency has improved markedly. While it declined between 1950 and 1980, it rose by 3.6 percent per year in the 1980s and by almost 6 percent per year in the 1990s (Zhang 1995). The lion’s share of the efficiency increase is due to a comprehensive set of policy directives, procedures, regulations, technical assistance programs, and project financing initiatives to promote energy efficiency (see Sinton et al. 1998).2 Companies were assigned energy use quotas. If they exceeded their quota, they had to pay substantially higher energy prices (up to 200 percent more). In addition, an extensive network of energy conservation offices was established throughout the country. Moreover, subsidized loans were provided. In some provinces, companies had to invest 20 percent of depreciation funds in energy conservation. China is one of the few developing countries that introduced building energy standards. These are modeled on the 1989 standards of the American Society of Heating, Refrigeration, and Air-Conditioning Engineers (Duffy 1996: 11). It also has, since 1989, had standards for all relevant domestic appliances and industrial motors and boilers (Duffy 1996: 24f ). Chinese refrigerator standards are 5 percent below comparable Mexican standards and 10 percent below Swiss ones while air conditioner standards are 8–24 percent below comparable Japanese standards. However, it is unclear whether the standards are actually enforced. There has

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been success in the sale of efficient biomass/coal stoves in rural areas. The central and local government subsidized promotion and training and selected pilot areas (Qiu et al. 1996). In the last decade 120 million stoves were sold that doubled efficiency and thus save 22 million ton coal equivalent (tce) per year. The target was to provide each rural household with such a stove by 2000 (US Embassy 1997). Rumsey and Flanigan (1995: 31) evaluate China’s programs as “by far Asia’s most successful in achieving actual energy savings, both in gross amount and in percentage savings.” With deregulation of energy prices and the growing share of private companies, however, the impact of the programs is reduced. Government support for energy conservation offices is shrinking (Martinot et al. 1997: 389) even though the government states that efficiency improvement is a priority (Li 1997) and enacted an energy efficiency law in 1997. However, many of the provisions in the energy conservation regulations are extremely vague or soft, “encouraging” certain actions, “supporting” others, and using broad language with multiple possible meanings. Even where more concrete duties are listed (e.g. to create a set of standards) very little guidance is provided in the regulations as to how extensive the regulations should be or what goals/values they should achieve. It is unclear, in many cases, what behavior would constitute a violation of the provisions (Wang 1999). Electricity production China’s electricity production has been very low historically – just 1.85 GW electric power plant capacity was installed in 1949 – less than two current nuclear power stations. Only in the last four decades has energy production started to grow. Its rise was not steady but rather erratic and subject to several strong shocks, such as the catastrophic Great Leap Forward and the Cultural Revolution. In the 1990s, growth of electric power capacity reached 15 GW per year (see Table 6.3). The bulk is coal-fired. Power production increased by 75 TWh per annum until the hiatus 1996–1999 (see Table 6.4). The latest official forecast for 2005 is 1650 TWh, an increase by 35 percent (Anonymous 2001). Despite the low age of the bulk of Chinese thermal power plants, their average efficiency is below 30 percent compared to 35–40 percent in industrialized countries. This efficiency gap is due to several factors. Compared to industrialized Table 6.3 Installed electricity capacity in China (GW) 1971 1976 1981 Thermal 18.5 Hydro 7.5

32.5 14.7

47.2 21.9

1986 1991 66.3 27.5

1996

1997 1998 1999 2000

113.5 178.9 192.0 210 37.9 55.6 59.7 64

223 71

237 80

Source: EP (1996), Logan and Zhang (1998), Wiesegart (1998: 20ff ), Logan (2000), PNL (2000a).

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Table 6.4 Electricity production in China (TWh)

Thermal Hydro Nuclear Renewable Total

1981

1986

1991

1996

1997

1998

1999

2000

2001

243.7 65.6 — n.a. 309.3

355.2 94.4 — n.a 449.6

552.7 124.7 — 0.1 677.5

878.1 912.6 929 998 186.7 184.7 195 225 12.8 14.1 14.1 7 0.2 0.2 0.3 n.a. 1,079.4 1,117.6 1,140 1,230

1,075 222 16 n.a. 1,313

1,164 235 18 n.a. 1,421

Source: Zhang (1995), Wiesegart (1998: 20f), Ögütçü (1999: 8), Logan (2000), PNL (2000b), and Becon (2002).

Table 6.5 Size and origin of China’s generating units (1995) and their efficiency (1988) Capacity MW

No. of units

Installed capacity (GW)

% of total (1995)

299 200–299 100–199 50–99 25–49 12–24 6–11 0–5 Total

147 202 318 402 577 955 1,575 n.a. n.a.

51.9 41.8 36.8 22.2 16.3 12.5 11.5 24.2 217.2

24 19 17 10 8 6 5 11 100

% of total (1990) 38.8 19.7 41.5

Efficiency ( Japanese average  100)

% of units imported a

87 83 n.a. 77

38 13 13 22 25 21 37 n.a. 24

65

100

42 82.2

Source: Electric Power Publishing House of China (1995); Sathaye (1992), and Zhang (1995). Note a The high import share of extremely small units can be explained through the prevalence of imported diesel generators.

countries, the average size of the thermal power plants is very small (see Table 6.5). China currently is not able to produce generators larger than 350 MW (Blackman and Wu 1997: 5), but it overcomes this handicap with capital costs of $600/kW, a third lower than in industrialized countries (Logan and Zhang 1998: 13). Domestic 600 MW units are expected soon (Zhou et al. 2000). Small power stations with outdated technologies are used beyond their usual lifetime, lowering average efficiency (Table 6.5). However, the recent emergence of oversupply allowed China to avoid building 4 GW of small, inefficient plants planned for between the years 1998 and 2000 (Logan and Luo 1999); in January 1999 China’s State Electric Power Corporation announced a three-year ban on the construction of new conventional thermal power stations. Moreover, 11 GW of small diesel or coal-fired plants, which were opened by provincial or municipal governments in the 1980s, were to be closed (Zhou et al. 2000). Official data state closure of 3.1 GW in 2000, reaching a total of 14 GW in 2003 (Anonymous 2001).

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Table 6.6 Regional differences in efficiency of coal-fired power stations in China Region

North

Northeast East

g CO2/ 1,048 1,024 kWh Own 8.4 7.5 use (%)

Central Northwest Shandong Fujian

Guangxi

Sichuan Guizhou Yunnan China

1,005 1,075

1,085

1,029

1,240

1,053

1,123

1,171

1,248

1,051

6.7

6.1

6.9

3.0

3.9

6.7

5.8

3.8

6.7

5.8

Source: Wiesegart (1998) and authors’ calculations using emission factors from Vernon (1999).

Fuel quality, especially of coal, is low; only 20–25 percent of coal is washed (Vernon 1999: 10). However, quality is said to have improved considerably in recent years (Logan 2000). Considerable management problems also lower efficiency by 2–4 percent. Despite of a 230 percent increase in capacity between 1980 and 1995, average efficiency rose only by 3 percent, of which 1 percent was achieved between 1990 and 1995 (Blackman and Wu 1997). High regional differences can also be observed. Average efficiency varies by over 10 percent between regions (Table 6.6). The share of hydropower reached a high of almost 25 percent in the early 1980s and has been falling since. However, strong development of hydropower resources, the largest being the Three Gorges Dam at the Changjiang river – which will be the biggest hydropower station in the world (18 GW) – or the Xilodu project with 11 GW begun in 1997, will end this trend. So far only 10 percent of China’s hydro potential has been tapped (Blackman and Wu 1997). However, due to negative ecological side effects, it is doubtful whether the full potential should be exploited. Moreover, recently new big hydropower stations have suffered from the electricity supply surplus, as their generation costs are higher than those of small coal-fired plants. The 3.3 GW Ertan station was reported to run at half capacity and lose about $125 million in 1999 (Anonymous 1999a). An official order has been given to the provinces to give priority to the acquisition of electricity from the Three Gorges Dam and not to buy electricity from small thermal plants “scheduled for termination or already closed by the government” (Anonymous 2000b). Li Peng stressed nuclear expansion in his 1997 energy policy program speech, while also stating that renewable energy “should not be ignored.” He saw renewables as local solutions to local problems, but they did not even warrant their own paragraph in his speech. Their major role was to free oil to alleviate projected oil shortages. Both the renewables and nuclear programs run far behind schedule. Local environmental damage from energy production and consumption Increasing energy consumption causes striking damage to the local environment in China (Dasgupta et al. 1997). Serious air pollution, causing respiratory diseases, has become the most common cause of deaths in urban areas. The benefits of the reduction of 1 ton of sulfur dioxide (SO2) in big Chinese cities are calculated by

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Table 6.7 Economic cost of acidification damage in China (billion $) Damages

1995

2000

Agricultural products Health Forestry Total Damages $/t SO2

2.6 2.1 9.3 14.0 595

3.4 2.4 15.5 21.3 778

Source: Lao (1998).

Dasgupta et al. (1997: 35) to be above $50. Chinese studies calculating total damages from SO2 even come to figures of an order of magnitude higher (Table 6.7). Aunan et al. (2000) estimate local environmental co-benefits from the reduction of 1 ton of CO2 through coal-related measures in Shanxi at $18–$81. Township and village enterprises, which account for 50 percent of China’s industrial production, are major polluters and extremely inefficient. This is mainly due to lack of credit (Martinot et al. 1997: 389). The effectiveness of some recent national programs on SO2 reduction is doubtful, as central government control over the actions of provinces and municipalities has weakened in recent years. Thus, environmental policy implementation differs strongly between provinces. While Guangdong has enacted implementation in some sectors, inland provinces lag behind (Dasgupta et al. 1997). A 2020 scenario without SO2 mitigation sees levels of acid deposition three times higher than the worst ever recorded in the infamous “black triangle” of Central Europe (IIASA 1998).

Foreign direct investment in China’s energy supply sector According to Shin (1999), 99 percent of the power plants constructed in the 1990s are independent power producers. From 1978 to 1993, overseas sources invested approximately $14.3 billion in the Chinese power sector, approximately 10 percent of total investment during that period. These funds were used in sixty-three large- and medium-scale projects that have a combined capacity of 40 GW, mostly hydro. Eighty-five percent of the foreign funds were provided by publicsector sources – foreign governments and multilateral lending institutions like the World Bank and Asian Development Bank. Foreign direct investment (FDI) played a very minor role (Blackman and Wu 1997). As the Chinese government recognized FDI’s crucial role, it introduced policy changes from 1994. The 1995 Law on Electric Power included explicit rules for foreign investment in the power sector. At the same time, the China Power Investment Corporation was created to raise international capital for power projects. Despite these efforts, only about 10 GW was added through FDI by 2000. Twenty-five projects were financed from

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the United States, four from the United Kingdom, three from France, two from Germany, and one each by companies from Japan and Taiwan (Blackman and Wu 1999: 701). These projects are concentrated in the coastal provinces. The share of coal is even higher than in the Chinese average: 90.7 percent of installed power, whereas gas has 6.1 percent, oil 1.9 percent, diesel 0.8 percent and hydro 0.5 percent. The reason for this low activity is that investors so far have encountered several important institutional barriers. These include ownership restrictions, rate-ofreturn regulation, exchange-rate risks, uncertainty governing laws and regulations that create financial risks, the risk that power purchase contracts will not be honored, and delays in approval that lower return on investment. The 1994 rules stipulated that Chinese partners in non-Build Operate Transfer joint ventures maintain a controlling interest in plants with a unit capacity larger than 299 MW or a total capacity larger than 599 MW. Foreign entities were not permitted to own more than 30 percent of existing plants. Because of low activity, the rules were eased in 1996. Foreign partners in joint ventures are now allowed to have a controlling interest in all types of plants except nuclear plants and hydro plants larger than 250 MW. The central government feared that foreign investors would be able to negotiate extremely favorable terms with local governments faced with chronic power shortages, especially if local governments were given the opportunity to become partners in a joint venture. By stiff rate-of-return regulation it tried to prevent such “exploitation.” Although not officially documented, there is general agreement that beginning in 1993, the State Planning Commission, which must approve all projects costing more than $30 million, stopped approving all FDI power projects with projected rates of return in excess of 12 percent. This cap was set at an unusually low level given the risks involved. In other Asian countries, rates of return in excess of 20 percent are the norm. In 1996, the rate was raised to 15 percent after tax. After the financial crisis the cap was de facto abolished (Blackman and Wu 1999: 703). Due to these return thresholds, investment in relatively less efficient small-scale plant that are less regulated and generally less risky than large investments became attractive (see Table 6.8). Thirty percent of the implemented projects remained below the $30 million cap. Especially striking was the initial prevalence of diesel-fired plants, despite a professed preference for other types of plants (Blackman and Wu 1997: 29). Import tariffs for power plants below 350 MW

Table 6.8 Sizes of FDI power plants in China (MW) Total 300 MW 200–299 MW 100–199 MW number

50–99 MW

25–49 MW

12–24 MW

12 MW

36

9

6

3

1

8

3

6

Source: Blackman and Wu (1999: 702) and authors’ calculations.

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are 38 percent (Zhou et al. 2000: 13), which is a strong incentive to use less efficient domestic technology. For bigger units, tariffs amount to 6 percent. Blackman and Wu (1999: 706ff.) tentatively conclude that the efficiency of the FDI plants is higher than comparable new Chinese and US plants, but could have been better in a less regulated environment. A survey by Blackman and Wu (1997: 25) showed that majority control of a non-BOT cooperative joint venture with a local governmental organization was the most popular institutional arrangement for FDI in the power sector. Foreign direct investors have a controlling interest in fully three quarters of the joint ventures. Martinot et al. (1997: 386ff ) explains the prevalence of joint ventures as the need for local partners with knowledge of the regulatory and bureaucratic system. Perhaps the most serious risk run by FDI power plants is that the power purchaser will not buy the contracted electricity. Such default is reported to have occurred since 1997 (Zhou et al. 2000: 14). The Chinese legal system is not accustomed to enforcing power purchase contracts. Exacerbating the problem is the fact that joint venture plants often include power purchasers as partners, an arrangement that enables foreign investors to obtain favorable contract terms but limits legal recourse in case of contract default.

China’s climate change policy and CDM projects Chinese climate policy It is clear that Chinese environmental policy priorities are at the local and regional level (Information Office of the State Council 1996). Thus, GHG reduction is only attractive if it includes direct or indirect reduction of local pollutants (see Chapter 4). Domestically, climate policy objectives were included in China’s Agenda 21 adopted 1994. Interestingly, a paragraph states that China “will actively seek investment from the international community for projects which assist in the slowing of climate change. These include projects for coal-fired power plants, hydroelectric power stations, coal gas projects, coal methane utilization and tree planting” (EP 1996: 87). Despite not being mentioned, energy saving measures have actually been at the forefront of domestic activities (see Section “Energy demand”). China’s institutional structure for climate policy is very complex and still evolving (see Chapters 2–5). Members from the Foreign Ministry are in charge of international matters such as negotiation as well as Activity Implemented Jointly (AIJ) project proposals. China has been very cautious in the international climate negotiations and has tried to prevent any decisions that might lead to emission constraints for developing countries (see Chapters 4–5). Its resistance was crucial for the deletion of a draft Kyoto Protocol paragraph that allowed non-Annex-I developing countries to set voluntary emission targets (Hogue 1997). In the same spirit, it was very critical of emissions trading and Joint Implementation ( JI), as these instruments were seen to pave the way for commitments of developing countries.

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In early 1999, the State Development Planning Commission (SDPC) published a major study on China’s future energy policy. It views climate policy as a very serious means for reaching goals for the energy supply sector in 2050 (US Embassy 2000). The study frankly argues that China must halve its dependence on coal while sharply boosting natural gas production and oil and LNG imports to meet eventual climate change treaty commitments. The share of coal should be 35 percent of Chinese energy consumption in 2050, with oil and natural gas accounting for 40–50 percent and primary energy sources such as nuclear, hydro, solar, and wind power accounting for 15–20 percent. Interim targets for 2020–2030 would be 50 percent coal and 35 percent gas. Climate cooperation: JI, AIJ, and CDM The idea of JI was based on Article 4.2a of the 1992 UN Framework Convention on Climate Change (FCCC). It was refined in Articles 6 and 12 of the 1997 Kyoto Protocol to the FCCC. Industrialized countries with legally binding emission targets may achieve their target not only through domestic measures, but also through activities in other countries with targets (Kyoto Protocol 1997: Article 6). The Clean Development Mechanism (CDM) (Kyoto Protocol 1997: Article 12) is used with countries without emission targets. In this way, industrialized countries can use international low-cost emissions reductions while transferring financial resources and know-how to developing countries. China is the ideal country for large-scale GHG reduction projects. Thus, the United States, Japan, and other industrialized countries have been eager to start projects and have aided capacity building since 1995. Nevertheless, for a long time China and other developing countries were strictly opposed to JI because they feared that participation in JI would be the first step towards a commitment to climate protection measures. Thus, the Berlin conference in March 1995 decided to test JI under the new term “Activities Implemented Jointly” (AIJ) in a pilot phase until 1999, where no crediting of reductions was allowed. The criticism of JI did not prevent Chinese officials from discussing AIJ issues with the Norwegians, Dutch, and Japanese (EP 1996: 98). It seems that there were inter-ministerial differences concerning the attitude towards AIJ. While the National Environmental Protection Agency and the State Environmental Protection Commission were favorable, the Foreign Ministry remained skeptical – and the latter has often dominated China’s negotiating position. Regardless, in spring 1997, parts of the Chinese government started promoting participation in the AIJ pilot phase (Wu and Liu 1997). The reason for this reorientation was the realization that China would not receive intensive transfers of technology by pure grants as originally envisaged. Bilateral climate policy cooperation The United States By the late 1970s, the United States was promoting clean-coal technologies in China, and a joint research program on CO2 and climate change was agreed in 1987 (Price 1998). After ratification of the FCCC in 1994, the collaboration

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deepened considerably. The US provided funding for energy efficiency studies (DOE-OIT 1997a) and the US Ex-Im Bank set up $50 million in export credits for renewable energy and energy efficiency projects (Anonymous 1997b). In the context of the 1997 Technology Cooperation Agreement Pilot Project, China identified twenty projects that would reduce carbon emissions, were financially viable, and for which US investment would be welcome. However, no US–Chinese AIJ project could be agreed. In 1999, a $100 million fund for technology transfer in the field of energy conservation and power generation from the United States to China was established. After president Bush’s announcement to withdraw from the Kyoto Protocol, new efforts have been reduced to a minimum, although programs that had been started were continued. The European Union In recent years, the European Union has called for more energy cooperation with China. The 1996 “Europe-Asia cooperation strategy for energy” set these climate-related priorities: modernizing the electricity sector, raising energy efficiency, enhancing rural energy supply through use of renewables, and the promotion of natural gas. Interestingly, nuclear and hydropower were not mentioned. There is no treaty for EU energy or environmental cooperation that concentrates on China. Compared to US companies, EU companies have been less active in energy-related FDI in China, even though EU member states pursue a policy of strongly subsidizing procurement of Chinese orders. Japan Until recently, Japan was by far China’s biggest donor of development assistance. Thus, it is not surprising that Japan was the first country that managed to get approval for an AIJ project in China in 1997 (see Asuka-Zhang 1999 and Chapter 8). For example, dry fire-extinguishing facilities for coke at a large steel plant in Beijing ensure more effective use of heat energy and reduce 86,900 tons of CO2 per year (Anonymous 1997c). In the context of this project it became apparent that such cooperation will not run without problems. Various issues relating to the estimation of GHG emissions reductions cost and the amount of reductions led to tough negotiations between the Chinese and Japanese. For example, the Japanese wanted the Chinese to lower the reduction costs by monetary valuation of the local emissions reductions effect of SO2, but the Chinese refused.

Options for combining the CDM with commercial activities Energy supply Upgrading existing and new coal-fired power stations An especially interesting CDM option is the substitution of small-scale, extremely old, and inefficient plants with larger, more efficient ones. Whereas in the past

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small plants had to remain operative because of the demand surplus, China has stated its intention to progressively shut down these plants (Anonymous 1998a). However, even if larger units are built, this will not necessarily entail use of advanced technology such as integrated coal gasification (IGCC) due to the price differential. Internationally, the cost of building an IGCC plant was $1450/kW in 1997, while pulverized coal (PC) plants cost $1150/kW. The cost disadvantage is substantially greater in China, where the capital cost of building a PC plant has been, in some cases, less than $500/kW; the average cost of well-designed plants (including desulfurization) is about $880/kW (Nautilus Institute 1999). Even “normal” supercritical units with efficiencies of 40 percent are not necessarily the default option; currently only 6 GW are operating in China ( Vernon 1999: 16). There is thus a wide range for CDM projects. Another option is to upgrade old facilities. For example, a plant improvement study of the Banshan Power Station, Hangzhou, supported by the Australian Government, recommended the following activities to improve efficiency and reliability (Anonymous 1998b): complete turbine upgrade; reinstatement of sootblowers and burner tilts; reduction in excess oxygen levels and unburned carbon losses through furnace modeling and improvements to mill maintenance; air heater upgrades to improve thermal efficiency; and upgrading the boiler airflow and draft control system. The expected benefits from these upgrades, with a gross investment of about $3.5 million, were an improvement in plant relative thermal efficiency of 7.2 percent and an increase in the maximum output of 6.4 percent to 133 MW. The impact on CO2 emissions would be a reduction of about 94 kt per year. The payback time for the proposed improvements would be four years, making the project profitable. The plant operator has now decided to proceed with the turbine upgrade, which in itself will reduce CO2 emissions per kWh by 5.1 percent. Moreover, switching from local coal to imported coal with a lower ash content and higher specific energy would reduce coal consumption by 27 percent for the same output. Modeling indicated that switching would improve boiler efficiency 86.6–87.9 percent, so that 1.3 percent less fuel energy would be required. This would result in a 6 percent reduction in specific CO2 emissions from 1211 g/kWh to 1137 g/kWh. The plant operator planned replacing or blending existing coals with higher quality imported coal (Vernon 1999: 14f ). It is debatable whether this project be attractive as CDM project. Rules may decide that profitable projects are not eligible for the CDM. However, the investor could argue that in the Chinese context barriers have to be overcome. This is shown by the fact that only the turbine upgrade is done autonomously. Due to the reduction of SO2 by 1,720 tons per year, local benefits would amount to 90,000 to $1.3 million. Use of imported coal may be difficult due to foreign exchange restraints. The project is easily replicable as Zhejiang province has nineteen power stations of the same design. Liu (1999) made a feasibility study of cogeneration (CHP) and circulating fluidbed combustion (CFBC) power stations. CHP and CFBC reduce energy consumption as well as air pollutants. There are currently 285 MW of CFBC operating in China (Vernon 1999). The baseline scenario in this case study was

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the conventional low-efficient industrial boiler in a specific city of Henan province. According to its incremental cost calculation, the emission reduction cost was US$ 6.4/ton CO2. Japan recently funded a 100 MW combined heat and power plant in Hangzhou that is reported to save 200,000 tons of coal per year (Anonymous 1999b). Fuel switching to natural gas General coal-to-gas conversion yields enormous GHG benefits, although this is difficult due to the need for major infrastructure investment. Nevertheless, the need to reduce local pollution has led to the first initiatives in this respect. The city of Beijing is currently converting all central heating boilers from coal to gas. Logan and Luo (1999: 12ff ) roughly calculate that a CDM credit valued between $5 and $10/ton CO2 would lead to equal power prices from coal and gas fired power plants over much of China. Due to high coal transport costs, already gas would now be the cheapest option in southern coastal provinces. After long hesitation, in early 2000, there was a strong policy shift concerning natural gas exploration and infrastructure. Foreigners were encouraged to invest, have controlling shares, and manage related projects in the building of a 4,200 km, $4 billion gas pipeline from Xinjiang to Shanghai, to be completed by 2007. Its capacity is scheduled at 20 billion m3 of gas (0.8 EJ) annually (Anonymous 2000a). Using a rough estimate for coal-to gas conversion carbon credits would amount to 2.5 million tons of CO2/billion m3 (i.e. 50 million tons CO2 per year). Capture of coal-bed methane All coalmines, especially underground ones, emit methane that has to be collected and ventilated to guarantee safety. Captured coal-bed methane can be used like natural gas. The reserves of coal-bed methane in China are estimated at 30–55 trillion m3 (Anonymous 1998c), 25–40 times its natural gas reserves (BP Amoco 1999). In January 1998, Texaco contracted with the China United Coalbed Methane Corporation (CUCBM) to capture 0.5 billion m3 per year in Anhui province (Logan and Zhang 1998: 16) – about 2 percent of Chinese natural gas production. The project became operational in 2001 with seven wells (CBM Alert 2002). Ten other contracts with US companies followed, of which two are operational (Zhao 2000; CBM Alert 2002). Overall CUCBM capacity for 2010 is planned to reach 10 billion m3. Credits could then reach 25 million tons of CO2 per year. Wei and Chen (1998: 48) calculate a cost of $16/ton CO2 (they do not calculate the methane reduction, but instead compare CO2 emissions from burning of coal and burning of methane). Electricity and natural gas import from Russia The vast energy resources of Eastern Siberia are situated in relative geographic proximity to China. This invites speculation on large-scale export of electricity

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and natural gas from Russia to energy-hungry China. Even if Russia will not need CDM investments due to its negative emissions targets (its emissions are already below the Kyoto Protocol base year), it might be interested to sell CDM emission credits achieved through projects in China to other industrialized countries. Russia has a relatively low CO2 intensity for power production (approximately 500 g CO2 per kWh). Due to the shutdown of heavy industry there is a power oversupply in most regions of Siberia. Most of that energy is hydropower. Recent improvement in power transmission technology makes power export from Russia a realistic option. Concrete plans have already been developed by the utility Irkutskenergo, which calculates the costs for a long-distance line that would allow export of 18 TWh per annum to China at $1.5 billion (Ziener 1998). As Irkutskenergo generates more than two-thirds of its electricity by hydropower, the CO2 content per kWh would be less than a third of the Chinese average. A rough, but cautious, calculation, using a difference of 500 g CO2/kWh, gives a potential CO2 credit of 9 million tons per year. In 1997, China signed a memorandum of understanding with Russia to build a $12 billion pipeline system from Siberia to China’s Pacific coast. The distance from Russia’s Irkutsk Basin gas fields to China’s eastern coast is comparable to the distance covered by the existing pipelines from Western Siberia to Western Europe. Two versions of pipelines are considered by the Russian gas monopolist GAZPROM as feasible, one 3,000 km and another 4,580 km in length, a capacity of 30 billion m3 per year and projected capital expenses between $3.5 billion (Ministry of Fuel and Energy of the Russian Federation 1999) and $7 billion (Logan and Chandler 1998). Annual CDM credits could amount to 25–75 million tons of CO2. However, in the current state of Russian economy, financing large-scale electricity and natural gas export from Russia to China is not possible. Only the involvement of international banks and foreign investors could overcome this barrier. Therefore power and gas export from Russia could prove its financial additionality and qualify for CDM. Renewable energy China has a technical wind potential of 250 GW. It is a promising field for small-scale CDM projects (see Lin 1998). By 1997, there were 140,000 small (50–300 W), locally manufactured turbines in rural China providing electricity for lighting, radios, televisions, and small appliances. Most are located in Inner Mongolia due to favorable policies by the regional government, such as revolving accounts started already in the early 1980s. About 35 percent of the non-gridconnected population there is now electrified in this manner, reaching 90 percent in some areas (for a detailed description of the situation see Zhang et al. 1999 and Lew 2000). These small turbines contributed about 19 MW to installed capacity. The best sites with a potential of 1 GW in Inner Mongolia have average annual wind speeds of 9 m/s (Zhou et al. 1997:19ff; Lew 2000). To close the cost gap to coal, Zhou et al. recommended the setting up of domestic turbine manufacturing that could lower costs by around 40 percent (Lew 2000). If the official fixed

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Table 6.9 Installed wind power in China

MW

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

5

13

31

n.a.

57

70

224

260

345

404

Source: Sinton (1996), Lindley (1999), Gipe (2000), and New Energy (2002).

buy-back rate for wind power, set by the State Planning Commission for each province, were actually paid, wind power development would be profitable. The 1996 buy-back rates ranged from a low in Inner Mongolia of 6.5–7.6 US cents/kWh and 7.8–8.4 US cents/kWh in Nan’ao Island, to a high of 10.5 US cents/kWh in the far western region of Xinjiang (Lew et al 1996: 3). However, despite the major potential, installed large-scale wind power has grown irregularly and much less than in other countries (Table 6.9). In this regard, “China continues to prove a great disappointment” (Gipe 2000: 138). Biogas is also a relevant option for many rural areas. In Guangdong province alone, 160,000 biogas household digesters had been constructed up to 1996, while nineteen larger projects provided 110 MWh of electricity (Anonymous, 1997c). Overall biomass electricity capacity was expected to reach 50 MW by 2000. The same target was set for geothermal electricity generation. Tidal power (6 MW installed in 1996) had a target of 50 MW for 2000 and 300 MW for 2010. Solar thermal power was to reach 1.5 million tons of coal equivalent (US Embassy 1997). However, all these targets were not reached and ample space remains for CDM projects. Nevertheless, the installed thermal collector area equaled the European level by 1997 (Chun and Ruhdorfer 1997). Energy demand As Chinese energy prices reach those of the world market, efficiency projects on the energy demand side become interesting for commercial investors (see Table 6.10). For the time being, they are still only done if additional foreign funds can be obtained. Despite the achievements in energy efficiency improvement since 1980 outlined above, the Beijing Center for Energy Efficiency (BECon) ( partly funded by the United States and the World Wildlife Fund) still estimated the no-regret potential at over 30 percent in the early 1990s (BECon 1995: 2). The Global Environment Facility (GEF) plays a pioneering role in this respect. It financed the upgrading of industrial boilers with $32.8 million. The average efficiency of the 430,000 Chinese industrial boilers is 65 percent, whereas industrialized countries attain 80 percent. The corresponding upgrade would save 1.7 Exajoules, or 160 million tons of CO2 (part of the difference is due to low coal quality) (BECon 1995). In 1996, a big GEF project started to set up three energy service companies (ESCOs) in Beijing, Liaoning, and Shandong. Funding entailed a $35 million grant from the GEF, $4.5 million from the European Union, a $65 million loan

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China

Japan

China : Japan

Steel Coarse copper Cement clinker Liquid glass

29 50 5.6 88

18 41 2.9 41 (UK)

1.6 1.2 1.9 2.1 (UK)

Source: BECon (1995: 8).

from the World Bank and about $100 million of domestic funds (Anonymous, 1997a). At a payback period of 1–3 years, the efficiency projects should be profitable after initial hurdles have been overcome. In a second stage, started in 1999, ESCOs are being established countrywide using a $120 million venture capital investment fund. Zhou et al. (1997: 17) estimated the carbon reduction at 5.5 million tons per year for a ten-year period. According to the World Bank (1994), internal rates of return for typical industrial energy efficiency projects ranged from 20 to 100 percent. Why has this potential only been tapped to a small extent so far? One main reason is the “expansion drive” (BECon 1995: 21). It is a legacy of the centrally planned period with high production targets. Government officials and managers still tend to stress expanding production by increasing inputs while neglecting to raise internal efficiency. Those managers who are willing to invest in energy efficiency are often unable to obtain a loan because the government pressures banks to direct their limited financial resources to capital construction projects, leaving very little for energy conservation. Unclear ownership rights also affect efficiency. Managers still do not own their enterprises and are often transferred between different enterprises. Therefore, they have no stake in the firm’s long-term success or failure. In order to get a good performance review and be promoted to manager of a bigger plant, the manager must produce more output value, more profits, and more benefits for workers. This emphasis on short-term results discourages investment in energy efficiency. “Forced substitution” refers to the involuntary use of inappropriate inputs due to shortages, a common phenomenon in planned economies. For example, due to scarcity, most Chinese enterprises use coal rather than oil or gas, and they often use low-quality coal that is not suitable for their equipment, both of which lead to lower efficiency. Corruption is another contributing factor. For example, low efficiency, substandard products can easily be sold on “commission” or through “connections” while highly efficient products are unable to compete. China’s lighting is a major area for efficiency improvement as it is currently responsible for 15 percent of electricity use. Lighting levels are set to increase sharply because until recently recommended light intensities were only 20–40 percent of industrialized countries’ values (Min et al. 1997). Chinese companies produced 300 million compact fluorescent lamps (CFLs) in 1996, 80 percent of which

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were exported. The quality of the CFLs sold on the domestic market is low: studies showed that the average lifetime is below 1,000 hours while the international average is 10,000 (Zhou et al. 1997). Their efficiency is also only 50 percent of international average (Min et al. 1997: 80). (National standards for CFLs aim to increase their reliability.) Shandong province has differentiated electricity tariffs and a diffusion program for CFLs, which led to sales of over 10 million lamps in 1996. Thus, energy savings of 400 MW peak load – 7 percent of total electricity use – were reached in 1996. In the city of Waifang alone the sale of 4 million CFLs led to a decrease of power cuts by 89 percent. Nevertheless, evaluation showed significant take-back effects – that is, increase in energy use due to spending of the savings achieved through the CFLs – of over 50 percent and high failure rates for CFLs (Zhou et al. 1997; Anonymous 1997d). The target of the government’s China Green Lights five-year dissemination project was to save 7.2 GW peak load by 2000 by distribution of 200 million CFLs and 100 million efficient tubes – an annual emission reduction of 27 million tons of CO2 (Zhou et al. 1997: 5f). In 1999, a $40 million project was launched to promote widespread use of energy efficient CFC-free refrigerators. The project is expected to cut energy consumption by refrigerators in the coming fifteen years in China by an average of 20 percent, saving at least $1.2 billion and reducing CO2 by 100 million tons (Anonymous 1999c). Overarching programs The World Bank has started a Clean Coal Program in China that includes coal mining, transportation, and utilization. Because the low efficiency of coal-power stations is partly due to the lack of coal processing, coal washing could increase efficiency by more than 1 percent (Zhang 1997: 291). Domestic and industrial coal use can be reduced by 20 percent if briquette use is introduced everywhere. A study in Henan province estimated that replacing coal use in households with briquette use eliminated 25 million tons of CO2 during 1997–2020, at a cost of $15/t CO2, and doing likewise in industry eliminated 70 million tons of CO2, at a cost of $25/t CO2 (Zhang 1997). Accelerated retirement of small, inefficient power plants could eliminate 33 million tons of CO2 at a cost of $25/t CO2. On the other hand, highly advanced technology such as IGCC removed only 15 million tons of CO2 at a cost of $260/t CO2.

Conclusion The preceding discussion has shown that there is a wealth of possible CDM projects in the Chinese energy sector, including projects of widely different scale. Table 6.11 summarizes the options and gives a rough estimate of the order of magnitude. It shows that a coordinated Chinese CDM strategy could provide more than 2 billion tons of CO2 emissions credits to the industrialized countries by 2012. This would cover 20–40 percent of the emissions permit demand of

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Table 6.11 Potential for different CDM project types in China, 2000–2008 Project type

Energy efficiency Fuel switching

Abatement costs

Maximum magnitude (million tons CO2/year)

Low

30a

Medium

Efficient new coal power Upgrade of coal power Coalbed methane

Low

12b 36c 40d

Negative

25

Industrial equipment

Negative-medium

130e

Lighting and domestic appliances

Negative-medium

50

Renewables Biomass

Medium

Wind

Medium

14f

Solar thermal

Medium

2

Photovoltaics

Very high

Geothermal Import from Russia

Medium Medium

16 9

Other Nuclear

High

14g

Total

3

1

Barriers and risks

Allocation of infrastructure expenses Domestic technology requirements Additionality determination Bundling of small-scale projects Bundling of small-scale projects Bundling of small-scale projects Distance to electricity users Bundling of small-scale projects Bundling of small-scale projects Energy security De facto excluded from CDM

~350

Notes a Fifty percent of Xinjiang and Russian pipeline financed as CDM, implemented by 2004. b Assuming current 36 percent efficiency coal plant as baseline, 38 percent plant as CDM project for 15 GW expansion annually. c Same as (a) but CDM plant with 41 percent efficiency. d Linear extrapolation of Banshan example reaching 100 percent of current coal fired power stations in 2008, baseline current efficiency. e Assuming 50 percent of the potential listed for 2010 in Zou and Li (2000: 41). f Addition of 0.5 GW per year during eight years, 36 percent efficiency coal as baseline. g Average of 2 GW new generation throughout the period, 36 percent efficiency coal as baseline.

Organization for Economic Cooperation and Development (OECD) countries. However, China still thinks it can keep a substantial share of the emissions credits generated by CDM projects. The huge Chinese CDM potential can only be tapped if political insecurities that have led to sluggish and distorted FDI in the energy sector can be overcome.

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The energy market is still highly regulated, and changes of the political framework could occur overnight, without warning. Decentralization leads to higher barriers of penetration to efficient technologies (Martinot et al. 1997: 389). The following prerequisites for successful CDM investment have to be fulfilled in the Chinese context (DOE-OIT 1997b): transparency (i.e. how can companies identify the public institutions with authority to implement contracts and projects); security (i.e. how can repayment be guaranteed and how can financial security be provided); and initial project support (i.e. how can companies find sources of support for feasibility studies and other initial project costs). All of these conditions so far are not fulfilled in the Chinese context. The entry of China in the World Trade Organization helps to provide more transparency. Financial security can be enhanced by a more active involvement of export credit guarantees by OECD countries. Initial project support could come from national CDM programs in industrialized countries, such as the Japanese financing of feasibility studies. However, such financing would need to be tied to a project follow-up to avoid a subsidization of pure consulting activities as happened in Japan. OECD countries should develop a concerted CDM strategy in China. They should avoid a bilateral approach, as in the past, because this allows China to play one country against another (see Chapter 5). Here, foreign policy will play a major role. The Chinese fear of a covert introduction of emissions targets should also be taken seriously. An OECD declaration that there will be no emissions targets for China before it has reached a per capita GDP comparable to the newly industrialized countries would certainly be helpful. Moreover, the fact that CDM projects help to improve the Chinese local environment should be actively conveyed to local and provincial authorities. The OECD strategy should also try to strengthen energy interests in the Chinese bureaucracy vis-à-vis the Foreign Ministry in order to achieve an efficient CDM approval structure.

Notes 1 Concerning interpretation of Chinese statistical data, one has to be very cautious. Often data calculated by different agencies differ by a factor of two, and data are only partially collected. Sun (1996: 838) estimates rural household energy use to be 2–4 times the official value. Surprises, such as those encountered after the demise of socialism in Eastern Europe, cannot be ruled out. Even the highest politicians have to rely on anecdotal evidence for policy decisions (see Studwell (1997) for a detailed discussion). Thus, all data presented here must be considered tentative. 2 However, some analysts think that a considerable share of the efficiency improvement is fictitious and due to the progressive inclusion of the informal sector in the calculation of GDP.

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Ziener, M. (1998) “Kooperation mit China soll Stromabsatz stabilisieren,” Handelsblatt August 11: 8. Zou, J. and Li, J. (2000) “China: CDM opportunities and benefits,” in World Resources Institute (ed.) Financing Sustainable Development with the Clean Development Mechanism, Washington DC: World Resources Institute: 31–49.

PART III

Formulating climate change policy in Japan

7

Climate change as Japanese foreign policy From reactive to proactive Yasuko Kameyama

Introduction The purpose of this chapter is to examine Japanese decision-making on climate change and related multilateral agreements. Climate change is a global environmental problem that has gained political significance in the last fifteen years. During that time, Japan’s interest in the issue has increased rapidly. It was one of the last countries to enter the climate change debate, but today it continually submits proposals and stimulates international negotiation on the issue. Behind an apparently unified international face lie different Japanese views. In Japan, different actors have interpreted climate change policies in various ways. Some have considered it an environmental problem, others an integral part of energy policies. However, climate change as foreign policy has been the most influential driving force in shaping Japan’s response to climate change. In this chapter, Japan’s response to the climate change debate in the last fifteen years is divided into five phases. The first phase was from 1985 to early 1989, when Japan was not interested in climate change. Not many people in Japan were aware of the problem or recognized its political significance. The second phase was from late 1989 to May 1992, when climate change entered the political agenda and countries negotiated the United Nations Framework Convention on Climate Change (FCCC). The third phase was from 1992 to March 1995. There were no major events in this phase at the international level; this was when countries prepared to ratify the FCCC. Ratification allowed Japan to build a fundamental policy basis at home and influenced Japan’s foreign policy, especially at the regional level. The fourth phase was from the First Conference of the Parties to the FCCC (COP1) in March and April 1995 to COP3 in December 1997, when the parties to the FCCC adopted the Kyoto Protocol. This phase involved the negotiation process for the Protocol. The fifth phase which is examined lasted from 1998 to 2002 (the time of this writing). This chapter considers foreign policy as one of many policies that are planned and implemented by governments, including financial, economic, and environmental policies. Many of these policies have both domestic and international domains. The international domain of each policy is unarguably affected by foreign policy. A country’s decision-making during negotiations at a World Trade

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Organization meeting will reflect economic, agricultural, labor, and environmental policies in addition to foreign policy. Decision-making on climate change negotiation will do the same. An interface between international negotiation and domestic policies is a point where a variety of positions of sub-national actors are consolidated as a country’s single decision. Many studies have been interested in “levels of analysis” debate. This is the difference between analyses of countries’ behavior at the international level and that at the domestic level. Among the best-known literature on domestic factors is that of Allison. He used three models to explain the United State’s decisionmaking process during the Cuban missile crisis, and emphasized the importance of looking at domestic politics to elaborate a country’s behavior, saying that “it is necessary to open the black box and look within the state actor to its disaggregated moving parts” (Allison 1971: 404). In contrast to Allison, Keohane put more weight on analysis at the international level, arguing that “an international-level analysis … is a precondition for effective comparative analysis [of domestic politics]” (Keohane 1984: 16). These works focus on the influence of one level of policymaking on a country’s decisions. In contrast, “two-level” game analysis is interested in a plausible set of agreements resulting from interaction between the domestic and international levels of analysis. Accordingly, Putnam “decompose[d] the negotiating process into two stages: (1) bargaining between the negotiators, leading to a tentative agreement, call that Level I; and, (2) separate discussions within each group of constituents about whether to ratify the agreement, call that Level II” (Putnam 1988: 436). He defined a “win-set” as “the set of all possible Level I agreements that would gain the necessary majority among the constituents” for given Level II constituents (Putnam 1988: 437). An international agreement is accepted if it falls within a win-set. Two-level games assume that negotiators’ decisions are limited by what would be accepted at both international and domestic levels. However, the levels are not independent of each other. Over time, domestic actors are influenced by what they see at the international level. They may learn from what is being done in other countries. Activities at the international level also change through the participation of various countries and individuals. The boundary between the two levels evolves as interaction between the levels intensifies. As Gourevitch concluded after dealing with the causal relationship between the two levels, “the international system is not only a consequence of domestic politics and structures but a cause of them” (Gourevitch 1978: 911). A sequential observation is therefore necessary to explore how win-sets are developed, to seek the possibilities for agreement, and to offer ideas for improvements. Hence, for each phase, this chapter elaborates the international and domestic levels of Japan’s response to climate change policies. The chapter concludes that Japan’s response to climate change policy has gradually turned from reactive to proactive, and that this change is related to changes in Japanese foreign policy. Hosting COP3 in Kyoto had a significant effect in involving foreign policy perspective in the climate change debate. Before negotiations for the Kyoto Protocol started, Japan tended to consider climate change

Climate change as Japanese foreign policy 137 as an environmental or energy issue. During the negotiations, however, Japan began to see climate change as a foreign policy matter. This change influenced Japan’s positions during and after the negotiation on the Protocol. Japan’s position on climate change will continue to be influenced by foreign policy process. Its greater willingness to be involved in the international debate is likely to continue if its involvement at the international level remains the same as it is today. The converse is plausible, however, if its role at the international level changes.

Japan’s decision-making on the climate change debate Phase 1 (1985–1989): before dawn Not many Japanese people, either policymakers or the public, were aware of climate change during this period. Some Japanese scientists were engaged in research on climate change, but most were studying the mechanism and impact of climate change, not policies to prevent or mitigate it. Scientists made little effort to motivate Japanese policymakers (see Chapter 9). However, at the international level, researchers gradually started to press policymakers to act. Scientists and policymakers convened in Villach, Austria, in 1980, 1983, 1985, and 1987, and in Bellagio, Italy, in 1987 ( Jäger and O’Riordan 1996: 12–21). These conferences bore fruit in June 1988, when the World Conference on Changing Atmosphere was held in Toronto, Canada. The Conference called on all developed countries to cut their Carbon dioxide (CO2) emissions by 20 percent from 1987 levels by 2005. A very large group of scientists, the Intergovernmental Panel on Climate Change, was established a few months after the Toronto Conference. Japanese scientific experts who attended or heard of the meeting became aware that climate change was likely to become a political issue before long. Similar awareness was raised in Japan’s prime minister: During the Toronto Summit Conference in June 1988, Prime Minister Noboru Takeshita was said to have been surprised to find other participants discussing global environmental issues.1 The Summit’s economic statement mentioned climate change and the establishment of the Intergovernmental Panel on Climate Change. After the Summit meeting, the Japanese government started to gather information on the climate change debate. An increasing number of meetings and workshops on climate change were held at the international level in 1989. After the Hague Conference in March and the Arch Summit Conference in July, the first ministerial conference on climate change was held in Noordwijk, the Netherlands, in November (Brenton 1994: 171). Many developed countries, such as Sweden and the Netherlands, proposed starting negotiations to agree on a strict emission reduction target such as “10 percent reduction from 1990 levels by 2000.” Japan, being one of the most energy-efficient developed countries, already had a lower CO2 emission per capita and per gross domestic product (GDP) than many other industrialized countries.2 This meant that a common emission reduction target for all countries was a disadvantage for

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Japan. Along with the United States and the Soviet Union, Japan therefore insisted that negotiation on a common numerical target for emission reduction was inappropriate at this stage. The statement that was finally agreed on at the Conference stated that many (but not all) industrialized countries recognized that stabilization of CO2 emissions at current levels should be achieved by 2000 at the latest. Phase 2 (1989–1992): recognition of climate change as a political issue Japan’s opposition to emission reduction targets at the Noordwijk Conference was taken up as a front-page article in Japanese newspapers. Citizens who were becoming aware of global environmental problems criticized the government’s behavior at the meeting. Some Diet members claimed that Japan should take the lead in tackling global environmental problems (Ohta, Hiroshi 2000: 104). The governmental officials who attended the Noordwijk Conference were pressured by Diet members to change the Japanese position. In 1990, the Japanese government started to consider setting a national emission target, after the Netherlands, Germany, and the United Kingdom announced their own national goals to reduce CO2 emissions.3 Discussions on a target took place exclusively inside the central government, mainly among the Environment Agency (EA), the Ministry of International Trade and Industry (MITI), and the Natural Resources and Energy Agency (part of MITI). Although the Japanese people were more informed about climate change by then, there was no pressure from environmental nongovernmental organizations (NGOs) to set stringent targets for emission reduction. The three organizations discussed the target during summer, but their views differed. The EA insisted that emission stabilization by 2000 at 1990 levels was necessary to mitigate climate change. The Natural Resources and Energy Agency and MITI commented that energy consumption was expected to increase, and thus stabilization of CO2 emissions was impossible. The gap between the two positions was mediated by members of the Liberal Democratic Party (Takemoto 1991). In those days, the Japanese population was expected to grow by around 6 percent between 1990 and 2000, and CO2 emissions were anticipated to increase at nearly the same rate, even with emission policies (Schreurs 1996). The three ministries agreed to a two-step proposal: (1) The CO2 emission levels should be stabilized on a per-capita basis by 2000 and maintained thereafter at 1990 levels. (2) Efforts should be made to stabilize the total amount of CO2 emissions by 2000 and maintain it thereafter at 1990 levels through the development of new energy sources and innovative technologies (Government of Japan 1990). An “Action Plan to Arrest Global Warming” was officially announced in October 1990 at the Ministerial Council on Global Environmental Protection. Soon after Japan announced its emission target, the Second World Climate Conference was held, at which countries agreed to start negotiating an international treaty on climate change. A series of meetings, dubbed the Intergovernmental Negotiating Committee (INC), started in early 1991. Countries met four times in

Climate change as Japanese foreign policy 139 1991 and a fifth time in February 1992. They could not come to a consensus on many articles, especially on emission targets for industrialized countries. The fifth INC was postponed and reconvened in May. The FCCC was finally adopted in May 1992 (Borione and Ripert 1994). During this negotiation process, Japan was willing to mediate. Because Japan had set its own national emission target, it was generally supportive of setting a target in the FCCC. It was willing to take action on climate change also because of a key phrase in government at the time: “kokusai koken” (international contribution). Japan had been an economic superpower since the late 1980s. Political pressure at the international level held that Japan should play its part in solving international issues, such as regional conflict and economic development. Japanese policymakers chose global environmental problems as an area where Japan could contribute most, because of its clean image and relevant technology (Akao 1993: 274–284). But Japan believed that the FCCC must have the participation of the United States. The United States alone emitted nearly a quarter of the world’s CO2 emissions. Japan thought that the FCCC would not be effective if the United States did not commit itself to emission targets. Japanese industry also opposed any commitment without the participation of the United States, as American industry was their largest competitor. At the second INC, Japan proposed a “pledge and review” process. This process requested each country to pledge a set of national strategies and response measures to limit greenhouse gas (GHG) emissions, and emission goals that the strategies were expected to achieve. Each country’s progress in fulfilling its pledge would be periodically evaluated by an international expert team. Japan explained that this would be a good compromise between European countries, which were willing to set emission reduction targets, and the United States, which was reluctant to do so. However, the proposal was criticized as a means to avoid committing to a strict emission reduction target. Japan maintained its hope to take the mediator’s role during the negotiation, but it was the United Kingdom that finally drafted the compromise wording on emission targets (Bodansky 1993: 491). Phase 3 (1992–1995): foreign policy and the global environment Little movement was observed at the international level after the 1992 United Nations Conference on Environment and Development (UNCED), where the FCCC was signed. Government officials went back to their countries and concentrated on domestic processes necessary for ratification of the FCCC. While climate change politics remained silent at the international level, Japan turned to environmental problems in the Asia and Pacific regions. Through Japanese initiative, many environmental organizations were established in the region during this period. The Asia–Pacific Seminar on Climate Change was established in 1991 and has been convened every year since. The objectives of the seminar are to support regional efforts to address climate change, to promote awareness and

140 Yasuko Kameyama exchange experiences on the issue, and to facilitate steps to address climate change in the region (Environment Agency of Japan 1996). The Environmental Congress for Asia and the Pacific was established in 1992. It is an annual conference at the ministerial level to discuss environmental topics. Ministerial meetings among China, Korea, and Japan have also been held since 1992. These exchanges of views have not resulted in further concrete cooperation, but they have been considered an initial step to ensure the integrity of the region (Environment Agency of Japan 1998). At the domestic level, people in Japan became familiar with climate change and other global environmental issues. The Basic Law for Environmental Pollution Control and the Nature Conservation Law were enacted in 1967 and in 1972, respectively, to minimize the destruction of outstanding features of the natural environment. These laws were drafted when Japan was suffering from local pollution and natural destruction. In 1993, the two laws were integrated into the Basic Environment Law. The new law also targets the global environment, including climate change. Slowly, Japan began to act toward mitigation of climate change, at both the international and domestic levels (Morishima 1996). Phase 4 (1995–1997): negotiation for the Kyoto Protocol At COP1 in 1995, the then Japanese Environment Minister, Sohei Miyashita, stated that the Japanese government was willing to host COP3. Why did Japan want to host such a complex meeting? Different ministries had different reasons. The EA wanted to host COP3 because it would help raise public awareness in Japan of environmental problems. Such awareness was important also for MITI to get public support for policies to improve energy efficiency and for increasing the proportion of nuclear-generated electricity in Japan. For the Ministry of Foreign Affairs (MOFA), hosting COP3 was Japan’s contribution to international affairs. Some MOFA officials expected to get support from other countries for Japan to obtain permanent membership at United Nations Security Council.4 During the negotiating process of the FCCC’s Ad Hoc Group on the Berlin Mandate (AGBM),5 Japan’s behavior was not easy to understand because of different factors at the domestic and international levels that affected Japan’s decision-making. The first factor was Japan’s use of energy. Japan has been demanding throughout the climate change negotiations that emission targets ought to consider efforts in the past to improve energy efficiency. Thus, Japan insisted on having differentiated targets for each Party according to criteria such as CO2 emissions per capita or per GDP. On the other hand, Japan considered that it had to take a leading role in achieving an agreement at COP3, as it was the host country. Especially for the people engaged in foreign affairs, Japan had to commit to a certain reduction target not to lose face as the host. Governmental officials who were engaged in environmental policy also supported emission reduction targets. Japan considered that emissions should be reduced both inside and outside of the country to promote climate policies. It also thought of the United States as an important partner at

Climate change as Japanese foreign policy 141 the negotiation. To secure support from the United States, Japan’s proposals were often in line with American proposals, even if those proposals did not offer any advantage to Japan. An example was a proposal to demand meaningful participation by developing countries. Japan initially did not have any intention to propose additional commitments for developing countries. After the United States started to consider it as an important issue, however, Japan supported those countries that proposed emission targets for developing countries (Park 2000: 83–84). Negotiation at the international level became intense in 1997. At AGBM6 in March, the European Union (EU) countries announced their negotiating position: the Annex I Parties (industrialized countries and countries with economies in transition) would, by 2010, reduce their emissions of three types of GHG (CO2, methane (CH4), and nitrous oxide (N2O)) by 15 percent from 1990 levels. Non-EU developed countries opposed this position, saying the reduction rate of 15 percent was unrealistic, and that it was inconsistent in the matter of differentiation, as emission targets varied among EU countries.6 In June 1997, a Special Session of the United Nations General Assembly was held in New York. At that session, Prime Minister Ryutaro Hashimoto announced Japan’s plan for future international assistance, the “Initiative for Sustainable Development toward the 21st Century.” It was a plan to shift Japan’s official development assistance (ODA) to environmentally sound projects, in accordance with three principles: human security, efforts by recipient countries, and sustainable development. With this announcement, Japan incorporated global environmental issues in its foreign policy, at least on matters related to development assistance. Compared with the FCCC negotiating process in the early 1990s, there were more domestic actors in 1997 influencing Japan’s decision-making. The response of Japanese industry during FCCC negotiation was limited at most. Industry groups were opposed to regulations and additional taxes such as a carbon tax, but they were also trying to maintain an image of being environmentally friendly firms. For example, in April 1991, the Keidanren (an umbrella organization of Japanese industry groups) adopted the Global Environment Charter, a voluntary commitment of major industries to the principle that they had to consider the effects of their activities on the global environment. After the adoption of the Berlin Mandate in 1995, however, industry’s concern started to expand. Industry was worried that, with Japan hosting COP3, the government might impose regulations or taxes to reduce energy consumption so as to take the lead in the AGBM negotiations. The bubble economy was over, and Japanese industry was suffering from long stagnation. The Keidanren announced the “Keidanren Environmental Voluntary Action Plan” in June 1997 (Ohta, Hajime 2000). It was a voluntary commitment to limiting or reducing CO2 emission, but it was also a means to reject any governmental regulations (Keidanren 1997). The government invited some industry executives to become members of the Joint Meeting of Related Committees, which was held from August 1997. The meeting allowed discussions among government, industry, environmental NGOs, and experts on emission targets. Industry representatives insisted on the difficulty of reducing CO2 emissions.

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The timing of action taken by environmental NGOs was similar to that of action by industry. There was almost no movement during FCCC negotiations, but there was more during the AGBM process. Some NGOs established the Kiko (climate) Forum in December 1996 to strengthen their influence on governmental decision-making on the Kyoto Protocol (Asaoka 1998). The group drafted its own proposal for emission reduction and presented it to the government. It was also active in informing the public of the significance of COP3 in Kyoto (Kawashima 2000). During AGBM7, Japan had informal consultations with other industrialized countries on its emissions reductions proposal from AGBM5. The EU countries, however, did not support any proposal less stringent than stabilization. Consultation with the United States was also not satisfactory, and the Japanese government had to withdraw the idea (Tanabe 1998: 116–121). In September, meetings were held among the directors-general of related ministries and agencies. The EA suggested a 6–7 percent reduction while MITI insisted on stabilization. MOFA considered that at least 5 percent would be necessary for Japan to play the role of host. They agreed only to a basic common understanding, that the Japanese proposal should: ●

● ● ●

suggest emission targets of around a 5 percent reduction from 1990 levels for the total Annex I countries’ emissions; set a target year of within five years of 2010; include not only CO2 but also CH4, and N2O; agree to emissions trading on the condition that the trade would be “clearly verified” (Hattori 2000).

The 5 percent figure was supported within the government mainly for two reasons. First, high-level officials who exchanged views with the EU had an impression that targets of less than 5 percent would not be acceptable to the European Union. Second, Japan thought that the United States might be able to agree if the reduction rate was small. The Cabinet Secretariat promoted an exchange of views to merge the different positions of the three ministries and came up with a compromise (Hattori 2000). That compromise was submitted to the FCCC Secretariat as the Japanese proposal on emission targets: As the President-designate of the COP3, the Government of Japan proposes 5 percent as a base reduction rate for deciding a reduction target for each country … . Countries with the following conditions may apply any one of the following Alternative Reduction Rates: (a) For a country of which emissions per GDP in 1990 (A) are less than the emission per GDP of all Annex I countries in 1990 (B): alternative reduction rate (percent)  5 percent  (A/B). (b) For a country of which emissions per capita in 1990 (C) are less than the emission per capita of all Annex I countries in 1990 (D): alternative reduction rate (percent)  5 percent  (C/D).

Climate change as Japanese foreign policy 143 (c) For a country of which population growth from 1990 to 1995 exceeds the population growth of all Annex I countries for the same period, the higher growth of population should be considered in deciding the target of the country. Concrete formulation of this alternative reduction rate is to be developed (United Nations 1997). Japan expected to benefit by either option (a) or (b), but option (c) was incorporated just to get support from the United States. Population was expected to grow faster in the United States than the average for Organization for Economic Cooperation and Development countries, and emissions would increase as a population grows. Option (c) was included to show Japan’s understanding of the US situation (Takeuchi 1998). At COP3 in December 1997, Japan’s proposal and those of others became less important, as various conditions for the calculation of emissions changed during the negotiations (Oberthür and Ott 1999; Grubb et al. 1999). Sequestration through carbon sinks (e.g. forests) was included in the calculation. Emission trading and project-type mechanisms were also elaborated.7 Not only CO2 but five other GHGs were also targeted. Negotiation among the United States, Japan, and the European Union on emission targets was highly politicized, ignoring technical matters. When the European Union and the United States admitted their 6 percent emission reduction target, Japan, as the host of COP3, felt it could not reject it. Just before adoption of the Kyoto Protocol, Japan demanded to insert the last sentence in Article 3.4, which reads, “A Party may choose to apply such a decision on these additional human-induced activities for its first commitment period, provided that activities have taken place since 1990.” Japan had to rely on additional sequestration to be able to agree to a 6 percent reduction target. Japan joined other non-EU developed countries to propose the participation of the main developing countries and the establishment of the flexible “Kyoto mechanisms” (e.g. emissions trading; see next section) for emissions reductions, more to harmonize with other non-EU developed countries, especially the United States, than for Japan’s own benefit or for environmental reasons. To not lose their support, Japan also gave great consideration to developing countries. It announced the Kyoto Initiative, which offered assistance to projects that would contribute to mitigation of climate change. When Prime Minister Hashimoto visited China before Kyoto in 1997, he emphasized Japan’s willingness to cooperate with China to solve environmental problems there. He announced a commitment of the Japanese government, called “Sino-Japan Environmental Cooperation in the 21st Century,” which consisted of two main principles. The first was an “Environmental Information Network Plan” that aimed to set up computers in one hundred cities in China to facilitate dissemination of information on environmental issues in China. The second was the “Sino-Japan Environmental Development Model for Urban Planning,” which chose three cities – Dalian, Chongqing, and Guiyang – as model cities in which to implement comprehensive urban policies to establish environmentally sound economic development. In 1997, Japanese grants to China totaled $3,012 million, and loans totaled $309 million, of which around

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15 percent were for environmental purposes. This rate was expected to increase, although the total amount of ODA would decline due to domestic economic depression in Japan (MOFA 1998). Phase 5 (1998–2002): after Kyoto Soon after COP3, the Japanese government began implementing the Kyoto Protocol. Ways by which the 6 percent reduction target was to be achieved had to follow exactly what had been agreed on among ministries and agencies within the government. Agreement within the government required two things to be agreed on at the international level (Matsumura 2000: 21). First, additional sequestration by land use, land-use change and forestry, referred to in Article 3.4, had to be agreed on to give Japan a 3.7 percent reduction from 1990 levels by sinks (Hakamata et al. 2000). Most afforestation in Japan was done after the Second World War and before 1990. It was not considered under Article 3.3, which dealt only with certain forestry activities since 1990. Second, rules for the Kyoto mechanisms had to be agreed. The Kyoto mechanisms included joint implementation ( JI) under Article 6, a clean development mechanism (CDM) under Article 12, and emission trading (ET) under Article 17 of the Kyoto Protocol. These mechanisms enabled Parties to increase their emissions by acquiring emission permits from other countries. Agreeing on principles, methods, rules, and guidelines for the mechanisms was necessary before actually utilizing them. For the two years between COP4 in 1998 and during COP6 in 2000, Japan was fully involved in negotiations. In most cases, it was aligned with a group of non-EU developed countries plus Russia and Ukraine, informally called the “Umbrella Group.” This group emphasized that there should be no limitation to what proportion of the assigned reduction targets could be acquired by each of the three Kyoto mechanisms, as the amount would be determined by the market. Japan, United States, and Canada submitted a proposal to count additional sequestration by forests. But the European Union opposed the Umbrella Group’s proposals. It said that emission reduction should be achieved mainly by domestic action, and thus the proportion of the assigned targets that could be acquired by the Kyoto mechanisms should be limited. It also said that counting additional sequestration may allow countries to emit more than what had been agreed to at COP3 (Sugiyama 2000). A concern for Japan was the compliance procedure. Japan was against setting strict punishment for countries that did not meet the emission target in the 2008–2012 target period agreed at Kyoto, saying many countries (including Japan) that have difficulty meeting the target would lose the incentive to ratify the Kyoto Protocol. The debate was not concluded at COP6 in the Hague in November 2000. The European Union strongly opposed all of the proposals put forward by Japan, which included counting additional sinks, giving full trading opportunities under the Kyoto mechanisms, and non-punitive compliance procedures. In 2001, the United States, under the new Bush administration, announced that the United States did not consider the Kyoto Protocol as the right way to

Climate change as Japanese foreign policy 145 tackle climate change. Both the European Union and Japan criticized this position, but the United States did not change it in the resumed COP6 (2001) and in COP7 (the same year). Within Japan, there were some who believed that Japan should follow the United States and leave the Kyoto process because not doing so would make the Japanese industry less competitive than the American industry, and because the European Union was likely to meet its own emission target thanks to special circumstances of Germany and the United Kingdom. There were, however, stronger voices that supported the Kyoto Protocol, and Japan decided that it would not follow the United States on condition that Japan’s positions on additional sequestration under Article 3.4, rules for the Kyoto mechanisms, and compliance procedures were accepted. The European Union, afraid of losing Japan, made concessions, and Japan’s ideas were accepted. Satisfied with the resulting COP7 agreement, the Marrakesh Accords, Japan ratified the Kyoto Protocol in June 2002. From COP4 to COP7, actors at the domestic level submitted ideas to the government. Industry was concerned that the government would want to control its activities and was opposed to the setting of emission caps for each industry in Japan. Industry was also against any carbon tax to reduce emissions. It encouraged the government to stick to its proposal on additional sinks. On the other hand, environmental NGOs were strongly against allowing any additional sequestration or accepting a full emissions trading scheme under the Kyoto mechanisms. They also said that a 6 percent reduction target could be achieved only through domestic action.

Two-level game analysis In this section, the five phases of Japan’s decision-making on climate change are reviewed from the viewpoint of two-level game analysis. Phase 1 (1985–1989) Discussions on and actions against climate change occurred only at the international level. After climate change was taken up at international political meetings, Japan learned the political significance of the problem. Policymakers and experts in energy were the first in Japan to sense the implications of the climate change debate. Their involvement influenced Japan’s position. Japan’s argument at international meetings in those days was based on its achievements in energy efficiency and on its energy mix in electricity generation. Its position was clear at the Noordwijk Conference in 1989. Japan’s argument was not that countries should not start taking action, but that Japan should be allowed to commit to relatively less emission reduction than other countries because of its efforts in the past in improving energy efficiency. There was little scientific discussion within Japan on questions such as whether climate change was real, what would happen if it occurred, and what action was necessary to mitigate it. There was almost no discussion of how Japan could be a leader at the international level on this issue.

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Phase 2 (1989–1992) After the Noordwijk Conference, Japan’s basic stance on climate change began to incorporate the environment. There was pressure at the domestic level that Japan should contribute to protecting the global environment. Some Diet members were especially eager to be seen as “green.” They demanded a national emission target for Japan. The process of agreement on a target revealed a conflict between those who saw climate change from an environmental perspective and those who saw it from an energy perspective. At the beginning of international negotiations on the FCCC, a third perspective was added: foreign policy. In practice, proponents of both the energy and environment views acquired an international perspective. Japanese policymakers were considering the new role for Japan in international society. European countries pressured Japan to take stronger action to reduce CO2, so that they could convince the United States of the need. Non-European industrialized countries insisted that Japan should be realistic and not follow European proposals on emission reduction targets. Developing countries pressured Japan and other developed countries to increase financial assistance and technology transfer to promote measures to mitigate climate change and prevent adverse effects of climate change. Japan was willing to respond positively to those demands. The policymakers, however, interpreted the foreign pressures differently from each other. Those who were engaged in environmental problems supported emission reduction targets. This was important to the existence of the EA. Since its establishment in 1971, the EA’s scope of authority was limited to local pollution. These problems were overcome by the early 1980s, so the EA needed a new reason for its continued existence. Many developing countries were suffering from local environmental problems in the 1990s. Many emission reduction policies, such as improvements in coal-burning facilities, are effective for mitigation of both climate change and local air pollution. The rise of global environmental problems and environmental problems in developing countries gave EA its new role. Its role in establishing the Asia–Pacific Seminar on Climate Change in 1991, for example, is explained by this circumstance. Those who were involved in energy policy also believed that Japan should take the lead in the climate change debate at the international level, but for another reason. Energy demand in Asia was expected to grow rapidly in the near future. Assisting Asian countries to achieve better energy use would help not only those countries but also the energy security of Asia as a whole. Pressure from European countries to reduce CO2 emissions encouraged popular support for the use of nuclear power in Japan. As a result, pressures and demands from outside Japan influenced Japan’s energy and environmental policies, which affected its response to climate change negotiation.

Phase 3 (1992–1995) Following the adoption of the FCCC in May 1992 and the UNCED meeting in June 1992, foreign-policymakers became aware of global environmental issues, as

Climate change as Japanese foreign policy 147 indicated by several observations. First, a Japanese ambassador for global environmental affairs had been appointed in MOFA just before the INC was established to negotiate the FCCC. He and other negotiators realized that global environmental problems were going to be more important in the future (Akao 1993). Second, policymakers from MOFA actually started to get involved in the decision-making process on climate change policies. In 1990, it was only the EA and MITI that discussed a national emission target for Japan. On the other hand, it was the EA, MITI, and MOFA that discussed the Japanese proposals for an emission target in 1997. Another important aspect of Japanese diplomacy was the relationship between Japan and its neighbors in Asia. The historical legacy of the Second World War had adversely affected political relations in the region. Major interaction between the countries in the region gradually increased only after their political relations were normalized in the early 1970s. However, the speed of improvement had been slow. Financial and technological assistance to developing countries in Asia on climate change and other global environmental problems was expected to improve Japan’s political image. Phase 4 (1995–1997) This was the period when the linkage between the international and domestic levels was most diversely interpreted. The Kyoto Protocol was the first international agreement on climate change that included legally binding commitments. Such an agreement would affect energy use in all sectors. Thus, various administrations had stakes in the negotiations. In addition, Japan was the host of COP3. This gave it a special role at the international level. Japanese policymakers believed that Japan should think about not only its own interests, but also those of other countries, to make COP3 successful. The intention of environmental policymakers was consistent from Phase 2. They hoped that the Kyoto Protocol would stimulate the Japanese people’s support for environmentally friendly policies. Environmental NGOs in Japan supported the EU’s proposal to reduce emissions by 15 percent from 1990 levels. Many of those who were engaged in environmental policies considered 15 percent to be too difficult to achieve in Japan, proposing instead a reduction target in the range of 6–10 percent. On the other hand, energy-policymakers and industry continued to refer to Japan’s relative disadvantage in setting a flat emission target owing to its already high energy efficiency. They insisted that an emission reduction target should be realistic, and that it should be differentiated among developed countries depending on each country’s energy efficiency. Such a condition, however, would be disadvantageous to the United States, Japan’s largest trading partner. The worst case for Japanese energy-related policymakers and industry would be where Japan committed to an emission target, flat rate or differentiated, without the United State’s participation. Thus, they informally asked the United States to come up with a proposal for loose emission targets. The foreign policy aspect changed the most in this phase compared to previous phases. From a diplomatic point of view, COP3 was a critical issue that could not

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be allowed to fail. For those engaged in foreign policy, success meant the adoption of the Kyoto Protocol, not gaining an advantage over other countries on emission reduction targets. Even if Japan had to commit to a stringent reduction target that affected domestic activities, Japanese diplomacy would gain if all major countries supported the Protocol. Japan sought to play the role of intermediary between EU and non-EU developed countries. While Japanese foreign-policymakers considered global environmental problems as a means to improve relations with developing countries in Asia in Phases 2 and 3, they were more concerned with relations with developed countries in Phase 4. Although they still highlighted the importance of assistance to developing countries, they supported the United State’s proposal to set emission targets for emissions from major developing countries too. The different interpretations of requirements at the domestic and international levels caused serious conflict in Japan when it had to reach a single national position. The position of environmental policymakers was closer to the EU position, which called for a relatively large emission reduction rate for Annex I countries. The energy-related policymakers’ position was that Japan just could not reduce GHG emissions and thus was supportive of the United States. Foreignpolicymakers were concerned about the “success” of COP3, and the “success” in this case meant to secure participation of the United States. The majority ruled. Japan supported the United State’s position to not commit to stringent reduction targets, to demand that developing countries commit to emission targets, and to facilitate the use of emission trading and other flexible mechanisms such as JI and the CDM. Phase 5 (1998–2002) In this phase, all aspects of Japan’s policymaking shared a common intention, namely that Japan should work hard to bring the Kyoto Protocol into force as soon as possible. Failure to implement the Protocol meant the failure of environmental policy in the next decade. For energy policy, the Kyoto Protocol had to be ratified by major industrialized countries to convince Japanese industry to reduce its CO2 emissions. For foreign affairs, having the Protocol enter into force was indispensable to make COP3 a success. The Kyoto Protocol was successfully adopted at COP3, but the real proof of its success would come only after its ratification by major countries. If it took a long time for it to enter into force, this would mean that Japan’s diplomatic skill was low, at least from Japan’s point of view.8 Although there were different motivations, all actors in Japanese domestic politics agreed that the ratification of the Kyoto Protocol was a priority. To achieve that goal, Japan went for negotiation to set rules for including sequestration by sinks, for the Kyoto flexible mechanisms, and for compliance procedures. In this phase, there has been less demand on Japan at the international level. This is the first phase in which Japan has made requests by itself in the international negotiations, rather than being asked to do something. Some of Japan’s proposals have been criticized internationally. For example, additional counting of sequestration

Climate change as Japanese foreign policy 149 by forests has brought opposition from environmental NGOs. Japan has also been criticized by NGOs for proposing facilitative, not punitive, procedures for compliance. These proposals run the risk of loosening commitments agreed to at COP3. However, Japan is giving priority to ratifying the Kyoto Protocol rather than to the Protocol’s influence over mitigation of climate change itself.

Conclusion Japan’s decision-making was developed by interactions among policymakers with various perceptions of the climate change problem. There is a difference between the basic theory of two-level games and what is observed here. Putnam concluded that “the two-level approach recognizes that central decision-makers strive to reconcile domestic and international imperatives simultaneously” (Putnam 1988: 460). This conclusion holds true in countries where few decision-makers have relatively strong power to make decisions. In the case of Japan, however, decisions were made by many policymakers who have relatively weak decision-making power. A different win-set between the international and domestic levels was created by each policymaker. Only after those win-sets were defined could policymakers agree on a common win-set for Japan. This common win-set changed when the foreign policy sub-win-set became involved in the decision-making process. Because Japan’s common win-set is a compromise of different sub-win-sets, its position became clear only when all sub-win-sets converged. Phase 5 is a typical example of such a situation. The gap between the theory of two-level games and what is described in this chapter is derived from differences in countries’ political systems and procedures for decision-making. Many current theories of international relations and foreign policy are based on decision-making in the United States and other Western countries, where the central bureaucracy holds relatively weak decision-making power. Such theories may not apply in other parts of the world where different organizations make decisions by different procedures. In Japan’s case, the two-level game by each stakeholder in the government was a reflection of the decisionmaking procedure itself. Until Japan restructures its fundamental political system, its decision-making on climate change negotiation will continue to be shaped by a number of subwin-sets. Thus, Japan’s position on climate change negotiation in the future can be predicted by forecasting each sub-win-set in the future. For example, new scientific findings may change people’s perceptions of the climate change problem. With greater awareness and concern, the environmental sub-win-set may overcome other sub-win-sets. Technology innovation may change the concept of energy use, which may lead to changes in the energy-policy sub-win-set. Unless its fundamental political system changes, Japan’s positions are most likely to evolve when its position on foreign policy evolves. Japan’s position will continue to be heavily influenced by the position of the United States. Relations between Japan and the United States will affect the degree to which Japan wishes to support the United States, Japan’s ratification of the Kyoto Protocol notwithstanding.

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Relations between Japan and other countries in the Asia–Pacific region will affect the degree to which Japan wants to support those countries. As many developing countries become economically more competitive, Japan may become less willing to act as a leader in the region. Climate change policy requires a long-term strategy. Japan’s success in climate change negotiation will depend on whether it can continue to find benefit in terms of foreign policy from international climate change politics.

Notes 1 Personal communication with author. 2 For example, in case of CO2 emissions from industrial processes, Japan’s emission per capita in 1989 was 8.46 tons, while that of the United States was 19.68 tons, and of West Germany 10.48 tons (WRI 1992). 3 The Netherlands announced that it would aim for a 3–5 percent reduction in CO2 emissions from 1989–1990 levels by 2000. Germany committed to a 25–30 percent reduction from 1987 levels by 2005. The United Kingdom first set a target of stabilization at 1990 levels by 2005, and later changed the target year to 2000. 4 Personal communication with author. 5 The Berlin Mandate was agreed at COP1 in 1995. See Chapter 2 for a description of the mandate. 6 Portugal was allowed to increase its emissions by 40 percent; Luxembourg was to reduce its by 30 percent. 7 These are projects between Annex I countries that are allowed under Article 6, and CDM projects are allowed under Article 12. 8 As of January 2003, 100 countries had ratified the Kyoto Protocol. Russia’s ratification would bring it into force.

References Akao, N. (1993) Chikyuu wa Uttaeru (Cry of the Earth), Tokyo: Sekai no Ugoki Sha. Allison, G. (1971) Essence of Decision, Boston: Little Brown. Asaoka, M. (1998) “Kyoto kaigini okeru NGO no yakuwari to kongo no torikumi (outcome of the COP3 and expected role of NGOs),” Kankyo Kenkyuu 111: 77–82. Bodansky, D. (1993) “The United Nations Framework Convention on Climate Change: a commentary”, Yale Journal of International Law 18: 451–558. Borione, D. and Ripert, J. (1994) “Exercising common but differentiated responsibility”, in I. Mintzer and J.A. Leonard (eds) Negotiating Climate Change, Cambridge: Cambridge University Press, pp. 77–96. Brenton, T. (1994) The Greening of Machiavelli, London: Earthscan. Environment Agency of Japan (1996) Proceedings of the Sixth Asia-Pacific Seminar on Climate Change, Tokyo: Government of Japan. —— (1998) Kankyo Hakusho (Environment White Paper), Tokyo: Government of Japan. Gourevitch, P. (1978) “The second image reversed: the international sources of domestic politics,” International Organization 32(4): 881–913. Government of Japan (1990) Action Plan to Arrest Global Warming, Tokyo: Government of Japan. Grubb, M., Vrolijk, C. and Brack, D. (1999) The Kyoto Protocol: A Guide and Assessment, London: Royal Institute for International Affairs. Hakamata, T., Hatano, R., Kimura, M., Takahashi, M. and Sakamoto, K. (2000) “Chikyuu ondanka gasu no dojouseitaikei tono kakawari (interaction between greenhouse gases and soil ecosystem),” NihonDojou Hiryogaku Zasshi 71(2): 263–274.

Climate change as Japanese foreign policy 151 Hattori, T. (2000) International Environmental Negotiation and Domestic Institution: A Study on the Japanese Decision-Making Process for the Kyoto Protocol of the United Nations Framework Convention on Climate Change. Dissertation for doctoral degree, Tokyo Institute of Technology. Jäger, J. and O’Riordan, T. (1996) “The History of Climate Change Science and Politics,” in T. O’Riordan and J. Jäger (eds) Politics of Climate Change, London: Routledge, pp. 1–31. Kawashima, Y. (2000) “Japan’s decision-making about climate change problems: comparative study of decisions in 1990 and in 1997,” Environmental Economics and Policy Studies 3(1): 29–57. Keidanren (1997) Home page for Environmental Voluntary Action Plan: http:// www.keidanren.or.jp/english/policy/pol058/index.html Keohane, R. (1984) “The World Political Economy and the Crisis of Embedded Liberalism,” in J. Goldthorpe (ed.) Order and Conflict in Contemporary Capitalism, Oxford: Clarendon Press. Matsumura, H. (2000) Japan and the Kyoto Protocol – Conditions for Ratification, London: The Royal Institute of International Affairs. MOFA (1998) The ODA White Paper for 1998, Tokyo: Government of Japan. Morishima, A. (1996) “Wagakunino kankyo seisaku (environmental policies in Japan),” Kankyo Joho Kagaku 25(1): 7–9. Oberthür, S. and Ott, H. (1999) The Kyoto Protocol: International Climate Policy for the 21st Century, Berlin: Springer. Ohta, Hajime (2000) “Sangyokai ni okeru jishuteki torikumi no suishin (industry’s effort in promoting voluntary action),” Kankyo Kenkyu 117: 42–48. Ohta, Hiroshi (2000) “Japanese environmental foreign policy,” in T. Inoguchi and J. Purnendra (eds) Japanese Foreign Policy Today, New York: Palgrave, pp. 96–121. Park, J. (2000) “Governing climate change policy: from scientific obscurity to foreign policy prominence,” in P.G. Harris (ed.) Climate Change and American Foreign Policy, New York: St Martin’s Press, pp. 73–87. Putnam, R. (1988) “Diplomacy and domestic politics: the logic of two-level games,” International Organization 42(3 Summer): 427–460. Schreurs, M. (1996) Domestic Institutions, International Agendas, and Global Environmental Protection in Japan and Germany, Dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy at the University of Michigan. Sugiyama, T. (2000) COP6 Paato 1 Hokoku (COP1 Part 1 Report), Denryoku Chuuou Kenkyujo Kenkyu Chousa Shiryou (Central Research Institute of Electric Power Industry Research Survey Material) Y00917. Takemoto, K. (1991) Japan’s Initiatives on Global Warming, Washington DC: World Bank. Takeuchi, K. (1998) Chikyuu Ondanka no Seijigaku (Politics of Global Warming), Tokyo: Asahi Sensho. Tanabe, T. (1998) Chikyuu Ondanka to Kankyo Gaiko (Global Warming and Environmental Diplomacy), Tokyo: Jiji Tsushinsha. United Nations (1996) Document FCCC/AGBM/1996/Misc.2, Bonn: UNFCCC Secretariat. —— (1997) Document FCCC/AGBM/1997/Misc.1/Add.6, Bonn: UNFCCC Secretariat. WRI (1992) World Resources 1992–93, New York: Oxford University Press.

8

Development assistance and Japan’s climate change diplomacy Priorities and future options Shouchuan ( Jusen) Asuka-Zhang

Introduction In this chapter I discuss the key elements of Japan’s environmental diplomacy in the field of climate change. First, I focus on the role of each key governmental agency in main environmental diplomacy activities. Second, I briefly analyze the negotiation position taken by the Japanese government at the Third and Sixth Conferences of Parties (COP3 and COP6) of the United Nations Framework Convention on Climate Change (FCCC). I also examine Japan’s unique position on the use of official development assistance (ODA) (i.e. financial additionality) for the Clean Development Mechanism (CDM). Third, I suggest future options for the Japanese government, such as setting up new institutions for its ODA baseline, an Asian Carbon Fund and a carbon credit purchase tender scheme. Assistance to developing countries in the area of the environment and energy constitutes a part of Japan’s dual goals of promoting environmental conservation and its international diplomacy. On the policy side, for example, Japan volunteered to serve as the Country-Chair of the COP3, held in Kyoto in December 1997. In addition, prior to this conference, the Japanese government presented a set of proposals on international cooperation in the field of climate change – the Kyoto Initiative – which included plans for capacity building and for offering low-interest loans to developing countries. Indeed, Japan places a high priority on environmental cooperation for several political, ethical, and economic reasons (Asuka 1999: 553–554): 1

2

In environmental cooperation and other relatively new areas of international diplomacy, which differ from conventional power politics, Japan may be able to fulfill the role of a technological and political leader in the international community. Even under domestic pressure to revise both the quantity and quality of ODA (due to recent financial stringency), environmental cooperation is a topic that leads to fewer debates on its legitimacy than in other fields because of its “clean” and “soft” image.

Reprinted, by permission, from Transaction Publishers, “Greening and Decarbonizing: Japan’s Development Assistance” by Asuka-Zhang Shouchuan, 18(2). Copyright@2000 by Transaction Publishers.

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4

5 6

7

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The needs of countries hosting projects for environmental protection have increased, and it is clear that Japan’s highly developed technology and expertise in this field have a huge potential to aid pollution abatement. Quite a few Japanese who know about severe past pollution think that Japan has a moral obligation to let the world know of the Japanese experience and to head off repetition of Japan’s tragedies in developing countries. Pollution abatement in neighboring countries may mitigate trans-boundary pollution that affects many Asian countries – including Japan. Efforts to promote technology transfer to developing countries foster the development of Japan’s own environmental industries as well as its industries in general. Investment, including technology transfer, may provide carbon credits that have a monetary value by reducing greenhouse gas (GHG) emissions in developing countries. This may also reduce Japan’s compliance cost for the quantified emission reduction commitments decided at COP3. Technology transfer contributes to the establishment of an energy and environmental security regime in Asia by reducing energy demand, promoting interdependency, and consolidating mutual trust.

It is difficult and probably meaningless to prioritize these factors because of their complexity, interdependence, and unquantifiable nature. However, various public opinion polls indicate that the general public both in Japan and other countries in principle welcomes environmental cooperation through Japan’s ODA (Overseas Economic Cooperation Fund (OECF) 1998). Along with the acceleration of globalization and deterioration of the global ecosystem, environmental cooperation will continue to play a key role in Japan’s diplomacy. A new variable emerged in October 1999 when the Japan Export and Import Bank merged with the OECF, which had been in charge of grants and loans for the biggest ODA budget of all industrialized countries. The new entity is called the Japan Bank of International Cooperation ( JBIC). It has an annual budget of approximately US$30 billion, which roughly equals that of the World Bank. As such, JBIC policy is very critical to development assistance in global society as a whole. There have been analyses of Japan’s environmental cooperation from the “strategic tool” perspective of international diplomacy (Yasumoto 1986; Orr 1990). In addition, some analyses have been done on the issue of Japan’s environmental cooperation (Yonemoto and Trindel 1998; Asuka 1999). Going further, this chapter discusses the current situation and future challenges facing Japan’s environmental cooperation and climate change diplomacy. The overall objectives of the discussion are to (1) describe the main policymaking organizations and schemes, (2) analyze negotiation priorities, and (3) provide insight for future policy decision-making.

Japan’s environmental assistance: actors and activities Various Japanese organizations and activities are involved in environmental cooperation, especially in the field of climate change. Table 8.1 lists Japan’s three main

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Shouchuan (Jusen) Asuka-Zhang Table 8.1 Major Japanese governmental organizations and schemes related to international environmental cooperation Ministry of Foreign Affairs Environmental ODA Policy dialogue Ministry of Economy, Trade and Industry Green Aid Plan Trade insurance Information network Subsidies for AIJ/JI/CDM feasibility studies Ministry of Environment Joint R&D Regional forums Monitoring network Subsidies for AIJ/JI/CDM feasibility studies Tripartite Environment Ministers Meeting (China, Japan, and South Korea)

governmental policymaking organizations and related policy schemes in this area. They include the Ministry of Foreign Affairs (MOFA), the Ministry of Economy, Trade and Industry (METI), and the Ministry of the Environment (MOE) (which changed its status from agency to ministry under the January 2001 restructuring of Japan’s bureaucratic system). Examples of their activities include grants, loans, trade insurance, policy dialogue, regional forums, joint research and development (R&D), subsidies for activities implemented jointly (AIJ)/joint implementation ( JI)/ CDM feasibility studies, networking, and information transfers and exchanges. This following sections detail how these agencies are involved in using these schemes to work with developing countries, especially in the field of the climate change. Ministry of Foreign Affairs MOFA is the ministry that controls more than half of the ODA budget. It often acts as a representative of the Japanese government in the environmental diplomacy arena and generally acts as a mediator for METI and the MOE. However, its knowledge on climate change issues is rather limited compared to that of METI and MOE. Concerning ODA, the Japanese government announced at the 1992 United Nations Conference on Environment and Development (UNCED) its intention to expand and strengthen environmental ODA, aiming to give between 900 billion and 1 trillion yen over five years beginning in fiscal year 1992. Expenditures between 1992 and 1995 reached about 980 billion yen, basically attaining the targeted amount one year ahead of schedule. The amount of environmental ODA has increased since 1993 (see Table 8.2). Approximately 50 percent of Japan’s environmental ODA has been offered as a form of low-interest financial assistance such as yen loans. The residential sector, which includes water supply and sewerage projects, accounted for 60 percent of total bilateral environmental ODA, while industrial pollution control measures accounted for less than 20 percent (see Table 8.3).

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Table 8.2 Japan’s environmental ODA (billion yen) Year

Grant aid

Loan assistance

Technical cooperation

Multilateral assistance

Total

1993 1994 1995 1996 1997 1998 1999 2000

37.7 (29.6) 41.4 (33.6) 42.8 (33.5) 36.1 (27.8) 36.5 (27.8) 28.9 (25.9) 29.3 (25.2) 24.4 (22.5)

152.7 (15.3) 105.5 (12.4) 170.8 (15.3) 386.5 (29.7) 162.3 (15.3) 328.1 (29.0) 464.4 (44.9) 386.0 (44.5)

21.4 (16.3) 21.9 (15.9) 22.3 (15.8) 25.3 (16.9) 30.1 (19.2) 30.4 (19.3) 28.3 (19.0) 28.4 (18.2)

16.2 (4.4) 25.3 (6.5) 40.0 (10.2) 15.4 (11.3) 15.8 (4.6) 26.3 (10.2) 13.6 (4.5) 13.6 (4.7)

228.0 (12.8) 194.1 (14.1) 276.0 (19.9) 463.2 (27.0) 244.7 (14.5) 413.8 (24.5) 535.7 (33.5) 452.5 (31.8)

Source: Website of the Government of Japan, http://www.eic.or.jp/eanet/coop/coop/p18.html Note Figures in parentheses other than those in the “Total” column represent the share ( percent) of each type of aid in that particular year. The “Grant aid” column refers to the percentage of general grant aid extended that year (not including debt relief, non-project grants tied to structural adjustments, or grant aid for grassroots projects). The “Loan assistance” column shows percentages of the total (excluding debt relief ) in project and non-project loan assistance (e.g. commodity loan assistance and structural adjustment lending). The parenthetical figures in the “Total” column represent the share of the environmental ODA in the total ODA committed that year.

Table 8.3 Japan’s bilateral ODA by environmental field (billion yen) Year

Residential infrastructure

Forest preservation

Anti-pollution measures

Disaster prevention

Other sectors

1993 1994 1995 1996 1997 1998 1999 2000

137 (60.3) 113 (66.9) 130 (54.9) 280 (62.6) 99 (43.4) 54 (13.9) 130 (25.0) 103 (23.4)

17 (7.4) 9 (5.2) 25 (10.7) 37 (8.3) 22 (9.8) 8.2 (2.1) 8.9 (1.7) 16.8 (3.8)

39 (17.2) 36 (21.5) 18 (7.7) 61 (13.6) 35 (15.1) 235 (60.7) 209 (40.0) 61 (13.9)

14 (6.0) 6 (3.4) 45 (19.2) 43 (9.6) 38 (16.8) 22.6 (5.8) 65.6 (12.6) 42.1 (9.6)

5 (2.0) 5 (3.1) 18 (7.5) 27 (5.9) 34 (14.9) 67 (17.4) 108 (20.7) 217 (49.5)

Source: Website of the Government of Japan, http://www.eic.or.jp/eanet/coop/coop/p18.html Note Figures include aid to Eastern Europe. Figures are total loan assistance, grant aid, and technical cooperation. Multilateral assistance is not included. Percentages in parentheses represent the share of total ODA in the environmental field for that year. “Other sectors” include nature conservation, environmental administration, and seawater pollution. “Other sectors” for 2000 includes climate change.

At the June 1997 Special Session of the United Nations General Assembly on Environment and Development, Prime Minister Ryutaro Hashimoto announced Japan’s comprehensive medium- to long-term plan for environmental cooperation. This plan, called the “Initiatives for Sustainable Development Toward the 21st Century” (ISD), indicated how Japan would support programs in developing countries to address a wide variety of environmental problems including global warming, air and water pollution, waste disposal, deforestation, and loss of

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marine and terrestrial biodiversity. As the host of the Kyoto COP3, Japan accordingly presented “The Kyoto Initiative,” consisting of strengthened environmental support within the ISD policy framework, which focuses on assistance to developing countries’ fight against global warming. The Kyoto Initiative, like ISD, has been implemented mainly through Japan’s ODA program. The Kyoto Initiative included the following components (MOFA 1997): 1

2

3

Cooperation in capacity development. In five years beginning in FY 1998, Japan has been offering training for 3,000 people in developing countries in the following fields: air pollution, waste disposal, energy-saving technologies, forest conservation, and afforestation. ODA loans at the most concessional terms. Japan will grant ODA loans under the most concessional terms available internationally (0.75 percent interest rate, forty-year repayment period) to actively promote cooperation in the following fields: energy-saving technologies, new and renewable energy sources, forest conservation and afforestation. Transfer and dissemination of Japanese technology and know-how. Using technology and know-how acquired through the process of its own efforts to deal with pollution and energy problems, Japan will do the following: (a) send teams to diagnose global warming prevention measures in manufacturing plants; (b) set up information networks related to global warming prevention technologies; (c) develop and transfer technology suited to developing countries’ needs; and (d) hold workshops on global warming prevention.

According to Japanese government figures, since COP3 Japan has, in order to implement the Kyoto Initiative, provided enhanced support for capacity building in many areas related to climate change, including the energy, industry, and forestry sectors. Over 2,800 people from developing countries have received climate change-related training under the Kyoto Initiative. In addition, in order to enable developing countries to implement the provisions of the Convention, Japan has implemented various cooperative activities and programs under the Kyoto Initiative. Japan also provided about 480 billion yen in highly concessional loans for projects related to global warming prevention in developing counties from December 1997 to March 2000 (Asakai 2000). MOFA has also promoted policy dialogues with developing countries. The China–Japan Comprehensive Forum on Environmental Cooperation, which was established in 1996, provides opportunities for policy dialogue with China and includes all parties concerned with environmental protection assistance to China. Along with the forum, the Japan–China Model City Plan was established in 1997 to create success stories through the implementation of measures in three model cities in China (Dalian, Chongqing, and Guiyang), which will encourage the extension of conservation efforts and wider adoption of environmental policies throughout China. Since it is difficult to implement development assistance effectively in a big and diverse country such as China, the establishment of the Japan–China Model City Plan was meant to avoid spreading Japan’s contribution

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in resources and efforts too thinly. An expert committee has examined various candidate projects in which the climate change issue is specifically mentioned. The priorities of the projects are (MOFA 1999): a b c

Measures against air pollution (acid rain): establishment of effective regulations and provision of intensive funding to reduce pollution from industries. Establishing recycling-oriented industries and social systems: utilization of byproducts, such as fertilizer or gypsum. Measures against global warming: improvement of energy efficiency.

Ministry of Economy, Trade and Industry METI is the former Ministry of Trade and Industry (MITI) and the ministry that directs Japan’s industrial and energy policies. Since it controls energy policy, its influence on climate change policy is for all practical purposes bigger than that of other ministries and agencies. To promote Japan’s environmental industry and domestic industry in general, METI has also made several influential diplomatic efforts in recent years. METI’s principal and independent technology transfer effort is its Green Aid Plan. The Green Aid Plan was initiated in 1992 as an international cooperation program (mostly outside the framework and budget of ODA, that is, “additional” to ODA) to provide technological and financial support to address energy-related environmental problems in developing countries, especially in Asia. The Green Aid Plan targets six Asian countries: China, Thailand, Indonesia, the Philippines, Malaysia, and India. Its budget for fiscal year 1999 was 19.7 billion yen. Almost 20 percent of that amount was for energy and environmental technology cooperation, and about 80 percent went toward the investigation and demonstration of technologies. At present, over fifty projects, mainly technology transfer demonstrations, are either ongoing or completed. Projects in China account for more than half the total budget of the Green Aid Plan. The Model Project of Energy Conservation is one of the Green Aid Plan’s principal programs. Its aim is to rationalize energy use with an emphasis on conducting “joint work” with local people in developing countries. A major goal is to adapt proven Japanese technologies to the actual conditions of recipient countries. Japan’s first “activity implemented jointly (AIJ)” project under the FCCC was a coke dry-quenching project in Beijing, which was originally planned as a model project under the Green Aid Plan (AIJ projects are GHG emission reduction projects through international cooperation without credit as defined in 1995 under the FCCC). In fact, all AIJ projects that have been approved by recipient countries so far fall under METI’s Green Aid Plan (thus one might consider it to be the “recapping” of existing aid money flow from Japan to the developing countries). In 1998, METI created an arrangement to provide subsidies for feasibility studies on possible AIJ/JI/CDM projects in developing countries, and in the first year forty project proposals were selected as those having potential for future implementation. Each proposal received around US$0.4 million for a feasibility study.

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In 2000, the number of the feasibility study projects subsidized increased to around eighty as other governmental agencies including MOE created similar subsidy schemes. However, as of October 2002, no projects under the scheme have been implemented as AIJ/JI/CDM. To support “direct and hard” aspects of environmental cooperation, such as private entities’ overseas direct investment in developing countries, METI also offers “indirect and soft” support through many programs. For example, METI’s trade insurance program is designed to offer governmental guarantees for the following activities: (1) plant exports by private entities in the petrochemical, power generation, and steel industries (i.e. ensuring the cash flow generated by the export of technologies required to build a whole manufacturing facility); (2) loans for projects in developing countries; and (3) insurance on direct investments. Ministry of Environment The Environment Agency of Japan, MOE’s predecessor, was established to address serious pollution issues Japan faced in the 1960s. Since MOE’s budget for international cooperation is smaller than those of MOFA and METI, its main activities center on administering a program of international meetings, conducting joint research with other countries, and establishing monitoring networks. For example, in order to offer Japan’s experience and promote cooperation, MOE has hosted the Asia-Pacific Environmental Summit (Eco-Asia) yearly since 1991. Its objective is to provide a forum for the free and open exchange of views among environmental ministries in Asia and the Pacific region. Since 1990, MOE has also been helping enhancement of research and technology transfer. An important part of the activity involves conducting joint studies and exchanges with research institutes and researchers from other countries, especially those in developing countries of the Asia–Pacific region. The joint research activities with developing countries include basic studies such as technology application studies geared toward the transfer of technology and the use of comprehensive models to assess measures to mitigate global warming. As one example, since 1994 the MOE grant program has supported research on the production and use of bio-briquettes in the Chinese city of Chongqing. Bio-briquettes are a residential fuel produced by solidifying a mixture of biomass and coal powders to improve their combustion efficiencies and mitigate air pollution, resulting in the reduction of GHG emissions. MOE is also involved in the United Nation’s efforts to form three regional monitoring networks covering North and South America, Europe/Africa, and the Asia–Pacific. MOE has acted as the secretariat for the Asia–Pacific Network on Global Change Monitoring, which supports joint study activities within the region. As of October 2002, twenty-one countries were officially participating in the Asia–Pacific Monitoring Network. One of the network’s joint study activities involved organizing a workshop in Beijing to train Chinese researchers and regulators on the utilization of a comprehensive assessment model for global warming mitigation, namely the Asia–Pacific Integrated Model (AIM) developed by the

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National Environment Research Institute of Japan. The AIM model helps researchers determine the best national energy mix and technology options for the global warming mitigation measures in each country. In addition, the environment ministers of the three countries ( Japan, China, Korea) met in Seoul in January 1999 for an open exchange of views on regional as well as global environmental issues and, among other things, signed a joint communiqué that called for strengthening environmental cooperation. It was a first opportunity for the region to have such a high-level meeting with such open and frank discussion to facilitate further cooperation activities. Since forums such as Eco-Asia often lack decision-making capacity, due to their non-official nature, the tripartite meeting may pave the way to more concrete agreements through a “top down” arrangement by ministers, which could cut the decision-making process short. MOE also followed METI in setting up a subsidy scheme for feasibility studies on possible AIJ/JI/CDM projects in 1999, and ten projects mainly in the field of carbon sequestration have obtained subsidies. Although MOE’s number of employees has shown no significant increase after elevation to a “ministry” from an “agency” in January 2001, it did gain a highranking ministerial post dealing mainly with global environmental problems. It is certain that MOE will seek to play a bigger role in the environmental diplomacy arena.

Brief analysis of the Japanese negotiating position Priorities The FCCC’s COP3 in 1997, as well as COP6 in 2000, were important conferences for global society and for Japan because (1) at COP3 quantitative emission reduction targets and a flexible mechanism for carbon emissions trading were introduced, (2) Japan hosted COP3 to show its leadership in climate change diplomacy, and (3) COP6 was supposed to arrive at an agreement on the details of the Kyoto Protocol. Accordingly, this section briefly describes the Japanese government’s priorities at COP3 and COP6. The priorities of the Japanese government at COP3 can be summarized as follows: Adoption of the Kyoto Protocol. The worst scenario for Japan, having proposed chairing COP3, was that the negotiations would become too complicated to reach a final agreement (adoption) on the Protocol during COP3. Therefore, Japan tried to become a bridge between the EU and the US, and to “die” with the US – give up on the adoption of the Protocol – would never be an acceptable option for Japan. But despite informing the US from the outset that Japan would not give up on negotiations even if the US did, the message was nothing more than an understanding between bureaucrats that formed the main body of negotiators. Therefore Japan’s actions throughout the negotiation process were inevitably close to that of the US.

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Setting Japan’s quantitative target at around 0 percent. The central argument advanced mainly by economy-related ministries and agencies was that the quantitative target of about 0 percent, which would hold energy-related carbon dioxide emissions to 1990 levels, would be tolerable in consideration of the target set by Japanese industries for their efforts, and in consideration of the quantitative target expected from the US. Therefore, this 0 percent target was a practical consensus among Japanese negotiators (Tanabe 1999: 125–126). Differentiation of quantitative targets. Carbon dioxide emissions per capita and per unit of GDP were comparatively lower in Japan than in other developed countries, especially in the US and EU. Thus, up to the very end of the negotiations, Japan’s government strongly maintained the claim for a quantitative target different from those of the US and EU because it would be “unfair” not to reward Japan for its past energy conservation efforts (Tanabe 1999: 181–182). At the end of COP3, the quantitative emission reduction targets (against the 1990 level) were US 7 percent, EU 8 percent, Japan 6 percent, Russia 0 percent, and Central and Eastern European countries 6 percent to 8 percent. Judging by these targets, the US, Russia, and the EU were clearly “winners.” With the inclusion of flexible mechanisms such as emission trading in the Protocol, the US would be able to avoid unpopular domestic measures, such as a carbon tax, thereby decreasing its economic burden. Russia was not only awarded a lenient target (one that would be attainable without special efforts), but it was also allowed to sell any excess reduction (“hot air”) to other countries through emission trading, which would provide cash income. The EU was able to lead the conference as emission reduction activists, and moreover to get the EU “bubble” (i.e. a single EU target with different targets for each member states) recognized with drawing along Japan and the US in quantitative targets. Japan achieved a measure of success by serving as chair country, as well as realizing differentiated quantitative targets, although it had to commit to a number far greater than anticipated before the conference, and its profile was not very high in the conference (Oberthur and Ott 1999: 77–79). However, it would not be easy to judge the significance of Japan’s winning differentiated targets because the negotiation positions did not necessarily match the economic and political values of negotiation results. For instance, when the business as usual scenario predicts that US emissions will increase by approximately 20 percent by 2010, while Japan’s will rise by about 10 percent, then assuming that emissions trading will certainly be instituted leads one to ask how much economic rationality – in terms of a gap in international competitiveness – would be produced by the 1 percent difference between quantitative targets (6 percent for Japan and 7 percent for the US). Moreover, would it make political sense for Japan to agree to a compromise at the very end (giving up the 1 percent difference), and let the international and domestic communities reassess Japan’s position of emphasizing global environmental integrity as its government regularly campaigned? The answer is not simple. With Japanese society having been impacted significantly by the ongoing recession, dominant arguments were not so supportive to the drastic measures.

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Environmental NGOs have been unable to advance persuasive counterarguments. Furthermore, at the COP3 negotiations the Japanese proposed 75 percent as the threshold percentage of Annex I Party CO2 emissions required for the entry into force of the Kyoto Protocol. At the beginning of negotiations, this proposition had faced strong opposition from the EU, developing countries, and COP3 Chairman Raul Estrada. Therefore, Japan and Canada proposed 55 percent as an alternative and it was finally adopted (Depledge 2000: 93–95). This 55 percent rule has resulted in giving Russia the decisive role for the entry into force of the Kyoto Protocol, considering that US Senate ratification in near future is unlikely. Therefore, it can be said that the Japanese government itself helped to install an automatic self-destruct apparatus in the Kyoto Protocol. At COP6 in November 2000, the general position of the Japanese government could be described as a faithful member of the so-called Umbrella group (USA, Japan, Russia, Ukraine, Norway, Canada, Australia, and New Zealand) that would try to realize cheap carbon credits and a soft compliance regime. On top of that, the Japanese government advocated that nuclear power and carbon sink projects be eligible for the CDM. Moreover, Japan took a unique stand by strongly demanding that ODA money should be allowed to finance CDM projects (Government of Japan 2000). The use of public funds such as ODA may have a significant influence on the compliance costs of Kyoto targets, as well as the overall diplomacy regarding climate change and development assistance. The background of this uniquely Japanese position on so-called “financial additionality” is discussed in the next section, which is followed by a proposal for additional options for Japan. Financial additionality There are several points of significance related to the issue of financial additionality: 1

2

In the case of AIJ (a pilot phase for JI/CDM), the Berlin Mandate of 1995 clearly stipulated the additionality to ODA. Considering this situation and past history, CDM was defined at the Kyoto Conference as, and some even interpreted it as, “the texts relevant to CDM in the Kyoto Protocol might indicate an even more stringent additionality definition than the case of AIJ under the Berlin Mandate” (UNCTAD 1998: 7). Therefore, the unconditional ODA applicability upheld by Japan may be construed as the redefining or reinterpreting of additionality for more “relaxed” applications, which may lead to the overall reduction of the developed world’s commitment for GHG emission reductions, in comparison with the previous mainstream definition and interpretation of additionality. Global warming mitigation projects have comparatively lower priority in developing countries’ aid requirements. Yet, it is quite likely that if Japan’s unconditional ODA applicability (i.e. a relaxed additionality definition) is allowed, the capital flow for other types of aid projects from developed countries to developing countries may dwindle.

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Shouchuan (Jusen) Asuka-Zhang Using public funds, such as ODA, for CDM projects may cause disputes with respect to the tying of aid and trade subsidies to the promotion of exports (Forsyth 1999: 250–251; Oberheitman 2000: 7).

The hidden intention of MOFA seems to be to stop the shrinking of Japan’s ODA budget by making the use of ODA money possible for the CDM. This is because recently there has been very strong domestic pressure to reduce ODA funds, and this pressure has been induced by the economic recession and a governmental failure to inform the public properly about the use of ODA. However, this is purely domestic reasoning that is not convincing to the international community.

Options for the Japanese government Use of public funds Following is a list of possible options for the Japanese government on the use of public funds for the CDM (Asuka 2000). 1 2

3

4

Keep claiming that ODA should be used for the CDM unconditionally. It is not easy to convince the international community to do this given the foregoing arguments. Use public funds by setting up an additional fund for the CDM and propose an ODA baseline such as ratio to GDP for the additional funds (see ASUKA 2000: 6). The point here is that the funding source for CDM projects one wants to implement must be certified to be additional to current ODA flow. Actually, there was a proposition by some Nordic countries that the ODA baseline can be 0.7 percent of the GDP, which means that the excess amount of ODA money can be used to finance CDM if total ODA amount is higher than 0.7 percent of the GDP (Nordic Council 1997: 68). The Japanese government would then be able to establish a new fund (carbon account) for Certified Emission Reduction (CER) acquisition, similar to the Dutch government’s Emission Reduction Unit Purchase Tender (ERUPT), a system for the governmental buy-out of credits (Figure 8.1). Adjustment may not be easy for this option, but it will have higher acceptance and appeal to the international community. Fund sources can be transferred from former Export/Import Bank funds, corporate contributions, carbon taxes, penalties on GHG emissions exceeding the quota, and so forth. Strengthening governmental warranty/insurance. Reduce ordinary risks such as project risks, market risks, technology risks, policy risks, country risks, and CERs-specific risks such as validation risks in case that the issuance of the CERs were not certain. Provision of funds gratis for capacity building. Such funds will function in practice as subsidies for Japanese entities in acquiring CERs, since they will reduce transaction costs (Figure 8.2). This option can be considered as an extension of the current Green Aid Plan, subsidies for AIJ/JI/CDM feasibility studies, technological cooperation funds within the ODA framework, and so forth. However, it may be problematic if the fund is to support individual projects.

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Objectives: Maximize the amount of the CER with the minimum cost

Capacity building

Objectives: Protection of the global environment and the host country’s environment

Figure 8.1 Carbon account and non-carbon account.

New institutions Japan’s government can consider the following options to establish institutions for achieving the Kyoto mechanisms.

1

2

Establishment of a multiple-effect strategy. As a main element of energy/ environment-related cooperation, including the CDM, clear aid concepts should be established, such as an emphasis on the local environmental improvement of a developing country and the eradication of poverty. In this process, it is necessary to identify and attain both economic effectiveness (profits) and environmental effectiveness in the recipient country, which is generally described as a “win–win strategy.” In the long term, it should also be possible to connect the institution building for global warming with the institution building for the acid rain, which is also an urgent issue in Asia. For example, inter-gas emission trading of carbon dioxide and sulfur dioxide can be considered as a future option. Enhancement of capacity building prior to the implementation of a project, and of monitoring, operational management, and promotion after implementation. In order to reduce transaction costs, various system designs will be required for information sharing, cooperative research efforts, risk dispersion, and local network development. GHG emission reduction projects will also require continuous monitoring of the emission quantities. It is therefore vital that comprehensive operational management systems, including financial schemes be created (e.g. those for the collection of electric power fees and reinvestment of the collected funds). It is also desirable that policies be developed with an eye to the extensive use of technologies in various regions for broader scope, as this may be the greatest concern in a developing country (e.g. assistance for the establishment of joint ventures). Systematic approaches to these issues will aid in the development of Japanese operational entities that validate carbon credits.

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Establishment of a flexible financial scheme. Various financial schemes, such as insurance, guarantees, syndicated loans, two-step loans, revolving funds to ensure profitability, and assistance with micro credits, should be more actively utilized. Examples of these schemes are a small-scale and flexible loan system for capacity building and a loan scheme that can provide additional funds relatively easily based on project performance. At the same time, it is important to combine preferential interest systems, an insurance/guarantee system, and technical cooperation, and to differentiate accounts by type, objective, and the profitability of projects.

Establishment of a carbon fund and carbon credit purchase scheme On the certified emission reductions supply side, the Japanese government can actively manage and operate CDM projects by establishing a carbon fund like the World Bank’s Prototype Carbon Fund, the European Bank for Reconstruction and Development’s Energy Efficiency Fund, and the carbon credit purchase tender scheme of the Dutch Certified ERUPT in cooperation with the Asian Development Bank (ADB). It is quite beneficial for Japan to make use of the ADB’s know-how, its network, and its CDM projects in the pipeline, and this kind of institution (e.g. the Asian Carbon Fund) certainly reduces the risk and transaction costs for Japanese companies, which would be the main buyers in Asia. As part of a carbon credit purchase tender scheme, the Japanese government can offer the same price for credits from the CDM, JI, Russian surplus “hot air” and domestic projects (unilateral JI). Although immediate establishment of a carbon fund in Asia may be difficult due to the lack of a carbon tax system that provide the main financial resources, there is considerable significance in examining such possibility so as to (1) realize economic efficiency, (2) open communication and deepen mutual trust, (3) buy credit with reasonable prices and good quality in early stage, (4) enhance domestic measures, and (5) strengthen energy and environmental security. Linkage to the Asian Monetary Fund (AMF), which is under consideration for the economic security of the region, is also a possible option. Debt–carbon swap Given plans by many developed countries to forgive debt held by poor countries, implementing swaps of CDM projects for ODA debt could be considered instead of unconditionally assigning ODA funds for them. Countries with heavy debt may also propose this scheme to Japan. In such a case, under an agreement between Japan and the debtor country, it may be possible to establish an eco-fund that will allocate a designated share, for instance 50 percent, of the overall fund to CDM projects, and the remaining 50 percent to other environmental conservation measures. This swap scheme can be considered for former Export/Import Bank loans as well. In this case, it would be necessary to expand the range of recipient

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countries further than for ODA loans (including Russia and India, for example). However, the debt–carbon swap scheme does not perfectly solve the previously mentioned financial additionality issues. Therefore, this scheme should be used cautiously and in a transparent way.

Conclusion Climate change policies will be effective only when there are cooperative efforts between the relevant parties (e.g. bureaucrats, politicians, corporate executives, engineers, academic experts in environmental economy, the general public, and NGOs), targeting the realization of technology, capital, and credit transfers that can create “win–win–win situations” where all parties (i.e. donor, recipient, and the global environment) benefit. Japan has endeavored to play a bigger role in the field of the environmental cooperation to realize this ideal situation, such as by hosting COP3, increasing environmental ODA, and proposing the Kyoto Initiative. Since COP3, it has become clear that (1) Japan will be the biggest buyer of the carbon credit in Asia, (2) Asian countries will be the big suppliers of the credit, (3) energy and environmental issues will be the restraining factors for sustainable development in almost all Asian countries, (4) risk sharing between the Japanese government and businesses is necessary considering the amount of the uncertainty entailed by the Kyoto Protocol, (5) it is important to collaborate internationally to reduce transaction costs and to minimize Japan’s costs of complying with the Kyoto Protocol, and (6) usage of public funds by Japan will have a big impact on global society due to its volume and Japan’s responsible role in terms of development aid. However, Japan’s position on some climate change issues has not been consistent from the perspective of environmental integrity. Japan also has no clear strategy for carbon credit acquisitions from Asian countries. Therefore, to realize a “win–win–win situation” in Asia with proper use of public funds and without harming environmental integrity, while also promoting technology transfer, the following steps are important: (1) to set up carbon accounts for the use of public funds to finance CDM projects; (2) to define the ODA baseline to show that the carbon account is additional to the current flow of ODA; (3) to enhance project financing using various financial schemes; and (4) to increase the mobility and flexibility of public funds by setting up institutions like the Asian Carbon Fund and the carbon credit purchase tender scheme. At any rate, the construction of a common decision-making scheme for an international environmental policy that is based on economic rationality can be linked to various diplomatic and economic issues, such as energy and environmental security. Moreover, climate change is an issue that will affect Japan’s industrial structure (e.g. the tax system and domestic emissions trading scheme) and its society overall (e.g. consumption patterns). Therefore, tackling climate change will require a simultaneous building of both international and domestic mechanisms with due consideration of various issue linkages. There may be strong expectations for a

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strategic government response that will link such international and domestic mechanisms.

References Asakai, K. (2000) “Japan’s opening statement to COP6,” November 13, http:// www.mofa.go.jp/policy/global/environment/warm/cop/cop6_9.html Asuka, J. (1999) “Transfer of environmentally sound technologies from Japan to China,” Environmental Impact Assessment Review 19: 553–567. —— (2000) “How to make CDM additional to ODA,” Joint Implementation Quarterly 6(3): 8. Depledge, J. (2000) Tracing the Origins of the Kyoto Protocol: An Article-by-Article Textual History, Technical paper prepared under contract to FCCC, August 1999/August 2000, FCCC/TP/2000/2, November 25. Forsyth, T. (1999) International Investment Climate Change Energy Technology for Developing Countries, The Royal Institute of International Studies. London: Earthscan. Government of Japan (2000) Japan’s Comment on ‘Financial Additionality’ on CDM, Mechanisms Pursuant to Articles 6, 12 and 17 of the Kyoto Protocol Principles, modalities, rules and guidelines for the mechanisms under Articles 6, 12 and 17 of the Kyoto Protocol Additional Submissions from Parties. Note by the secretariat. Addendum. FCCC/SB/2000/MISC.4/Add.2. No. 8, Japan. Ministry of Foreign Affairs (MOFA) (1997) “Initiatives for sustainable development toward the 21st century, the Kyoto Initiative, assistance to developing countries for combating global warming summary,” http://www.mofa.go.jp/policy/global/environment/ warm/kyoto_init/kyoto_sum.html —— (1999) “Joint Communiqué of the Government of Japan and the Government of the People’s Republic of China on Environmental Cooperation for the 21st Century,” Available at http: //www.eic.or.jp/eanet/coop/coop/p04_bi.html Nordic Council (1997) Criteria and Perspective for Joint Implementation: Ten Nordic Projects in Eastern Europe, Helsinki: TemaNord Energy. Oberheitmann, A. (2000) “Possible conflicts of AIJ, JI and CDM Projects with provision governed by the WTO,” Joint Implementation Quarterly, April. Oberthur, S. and Ott. E.H. (1999) The Kyoto Protocol: International Climate Policy for the 21st Century, Berlin: Springer. Orr, M. R. (1990) The Emergence of Japan’s Foreign Aid Power, New York: Columbia University Press. Overseas Economic Cooperation Fund (OECF) (1998) “Public opinion on environmental cooperation,” (in Japanese), OECF News letter 60, Tokyo: OECF. Tanabe, T. (1999) Global Warming and Environmental Diplomacy: Battle at Kyoto Conference and development after (in Japanese), Tokyo: JiJi tsushinsya. UNCTAD (1998) Concept paper prepared by UNCTAD secretariat for the ad hoc international working group on the CDM organized by UNCTAD and UNEP. Yasutomo, D.T. (1986) The Manner of Giving: Strategic Aid and Japanese Foreign Policy, Washington, DC: Heath and Company. Yonemoto, S. and Trindel, R. (1998) “Environmental diplomacy, regional security, and the limits of ‘green aid’,” Asia–Pacific Review Fall/Winter 5(2): 55–74.

9

Knowledge in the global atmospheric policy process The case of Japan Atsuko Sato

Introduction For a long time, the global atmosphere was strictly a subject of the meteorological sciences. Until the 1960s, in fact, few people seriously considered the seemingly boundless and indestructible nature of the global atmosphere as an appropriate subject of politics. Today, however, it is widely understood that the atmosphere is not only a part of the global commons, but that it is in danger of severe humaninduced degradation. Yet, global atmospheric science remains full of uncertainties, and it is in the face of these uncertainties that international efforts to protect the ozone layer and to halt global warming have taken place. This chapter examines these two most prominent efforts to protect the global atmosphere. I will do so by (1) adopting a social constructionist framework that focuses on the interaction of knowledge and policy making, and (2) examining the linkage between international and domestic political processes in a generally understudied, but quite important case: Japan. This chapter addresses a central question: How have the Japanese interpreted developments in global atmospheric science, and how has this shaped Japan’s foreign policy making and its participation in the development of international atmospheric regimes? In this regard, I am concerned with why and when a particular understanding of the global atmospheric crises emerged and became politically relevant in Japan. In the following section, I briefly review the existing frameworks of analysis for international environmental issues. I then specify the framework of analysis used in this chapter. Following this, I discuss the cases of ozone layer depletion and climate change policy in Japan. Finally, I provide an analysis of Japan’s policy changes on global atmospheric issues in relation to the transformation of environmental discourse.

Analytical framework Since the late 1980s, there has been a proliferation of studies on the politics of global atmospheric issues. Until recently, however, the conventional or rationalist literature has focused on the formation of international regimes (Rowlands 1995; Benedick 1998) and on the effectiveness of institutions (Haas et al. 1995; Victor et al. 1998; Miles et al. 2002). More recent studies, however, have begun to

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take a very different stance. Scholars arguing from a critical perspective, for example, focus less on the question of regimes and institutions, and more on the question of the intersubjective nature of the relationship between science and policy (Liftin 1994; Boehmer-Christiansen 1994a,b; Hajer 1995; Shackley and Wynne 1996). This new brand of scholarship – what Keohane (1988) broadly classifies as a reflectivist approach – is premised on a social constructionist view of the relationship between knowledge and power. This study draws on the contributions made by both rationalist and reflectivist scholars. Of course, these are tremendous epistemological disagreements between these two approaches, but both agree on one key point: the importance of scientific knowledge in the study of global environmental politics.1 This study, therefore, puts knowledge in the center of analysis. In particular, I adopt a reflectivist understanding of knowledge with respect to global atmospheric issues. This is not new. Studies by Liftin (1994), Boehmer-Christiansen (1994a,b, 1996), and Wynne (1994) all examine the relationship between atmospheric science and politics. All of these studies, however, focus on knowledge construction in the politics at the international level. This study shifts the focus from the international to the linkage between the international and domestic. Of course, there are studies that examine the linkage between the international and domestic, but their empirical focus has generally been on Western countries. Some of the more significant of these are: Hajer (1995), who examines the politics of acid rain in the United Kingdom and the Netherlands; O’Riordan and Rowbotham (1996), Sydnes (1996), Marchetti (1996), and Beuermann and Jager (1996). These latter studies examine national responses to climate change in the United Kingdom, Norway, Italy, and Germany respectively. In the case of Japan, Shreurs (1994, 1996) examines Japan’s response to the politics of atmospheric issues, including acid rain, ozone layer depletion, and climate change. Japan’s involvement in climate politics has also been scrutinized in a series of recent publications – largely due to the country’s active role in reaching the Kyoto Protocol. These include studies by Hattori (1999, 2000), Kawashima (1997a,b), Takeuchi (1998), and Tanabe (1999). Although no one disagrees that knowledge plays an important role in policy making on atmospheric issues, for Japan, few analyses are available in relation to knowledge construction and the impact of discourse on Japan’s policy making. This study attempts to fill this gap. This study, in particular, examines changes in Japan’s bureaucratic, scientific, and societal responses to global-scale problems in relation to knowledge construction by treating the cases of ozone layer depletion and climate change as part of the continuing line of atmospheric issues.

Knowledge and ozone policy Discovery and uncertainty in ozone science By the late 1950s, scientists discovered that the ozone layer was significantly thinner than anyone had expected. This finding raised an important question: how

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did depletion of the ozone layer occur? Since the answer was not obvious, scientists began to work on identifying those factors that led to the depletion of the ozone layer. In 1974, a major discovery was made: the so-called Molina and Rowland theory, which revealed that chlorofluorocarbons (CFCs) were a major cause of ozone layer depletion. Molina and Rowland argued that CFCs would not only destroy the ozone layer, but that this would result in ultraviolet rays eventually causing severe damage to the biosphere (Molina and Rowland 1974). The CFC–ozone depletion theory created a huge controversy among scientists, environmentalists (most noticeably the Natural Resources Defense Council), and the CFC industry (mainly Du Pont). In response to Molina and Rowland’s theory, the ozone layer and CFCs issue became the subject of larger-scale research among atmospheric scientists. Major organizations dealing with the atmosphere, such as the World Meteorological Organization (WMO), the National Aeronautics and Space Administration (NASA), the National Oceanic and Atmosphere Administration (NOAA), and the National Science Academy (NAS) began projects or research on stratospheric ozone depletion and CFCs. A 1976 NAS report, in particular, confirmed the possibility of ozone depletion due to CFCs, and suggested the necessity of the control of CFCs’ emission into the atmosphere. The report also emphasized the uncertainty involved in this problem. In the beginning of the 1980s, for example, scientists were still debating the relationship between CFCs and ozone reduction. This is reflected in a 1982 NAS report, which stated: “Our opinions are divided on whether there are sufficient scientific grounds to estimate the effect of resolving one of the discrepancies, that of ClO in the upper stratosphere, on calculations of ozone reduction. We agree that we do not know enough at this time to make a quantitative judgment of the uncertainty associated with other major discrepancies, NO2 at high latitudes and lifetime of CFCs in the stratosphere above 20 km” (NAS 1982: 29). Nevertheless, the 1982 NAS report did not hesitate to issue a strong warning: “Current scientific understanding … indicates that if production of two CFCs, CF2Cl2 and CFCl3, were to continue into the future at the rate prevalent in 1977, the steady state reduction in total global ozone, in the absence of other perturbations, could be between 5 percent and 9 percent” (NAS 1982: 2). Thus, despite continuing uncertainty, the report’s conclusion made it clear that, without major changes, the depletion of the ozone layer would soon become a major environmental risk. No significant advancement in scientific certainty occurred before the Vienna Convention (in 1985). This remained true even after a scientific assessment report by the WMO became available. Unfortunately, the updated transnational assessment did not help much to reduce uncertainty as much as some policymakers expected. The major finding of the assessment report was that accumulation of CFC-11 and CFC-12 in the atmosphere had nearly doubled from 1975 through 1985 (WMO 1985). The assessment predicted that continued emissions of CFCs 11 and 12 at the 1980 rate could reduce the ozone layer by about 9 percent on a global average by the last half of the twenty-first century, with even greater seasonal and latitudinal declines. The report, however, noted that there were many gaps in

170 Atsuko Sato understanding, inconsistencies among data sets, and “little support for the suggestion of a statistically significant trend” in global ozone levels (WMO 1985: 1). Precautionary actions under uncertainty Although the earlier stages of ozone science were characterized by a high degree of uncertainty, this did not prevent the United States from taking precautionary actions. In May 1977, the US government announced a timetable for the phase out CFCs in nonessential products. Signs of the precautionary action were also seen at the international level. The United Nations Environment Program (UNEP) began preliminary work on plans for coordinated activities to protect the ozone layer, and sponsored two international meetings of governments and international agencies in 1977 and 1978. The 1977 meeting adopted the World Plan of Action on the Ozone Layer, and established the Coordinating Committee on the Ozone Layer (CCOL), which was designed to conduct periodic scientific assessments of the ozone problem. The CCOL also brought together scientists from governments, industry, universities, and international agencies (Benedick 1998: 40). Following the 1977 meeting, the United States held an international meeting concerning regulatory alternatives. In this meeting, participants (thirteen nations and five international bodies) recognized that, despite uncertainty, current knowledge was adequate to justify concerns about effects of CFC use on the ozone layer. They also recognized that “possible regulatory actions should be discussed and harmonized to the extent possible in view of the need to approach international environmental issue in a coordinated manner for maximum effectiveness and in view of the international economic and trade issues involved” (Stoel 1983: 45–74). In November 1978, UNEP sponsored a second international scientific meeting, the CCOL meeting in Bonn. The meeting produced a report, the Assessment of Ozone Depletion and Its Impact (UNEP: 1978), which emphasized that atmospheric research programs have led to reasonably consistent model predictions of ozone depletion. In response to the report, a second international conference was held in Munich in December 1978. In this conference, participants produced a number of recommendations, one of which specified the precautionary principle as a needed course of action. As the report noted: The problems of the effects of chlorofluorocarbons on the ozone layer and of ultraviolet radiation on health cannot be ignored. The Conference recommends that, as a precautionary measure, there should be a global reduction in the release of CFCs. It therefore calls on all government, industry and other bodies to work towards the goal of achieving a significant reduction in the release of CFCs in the next few years in relation to 1975 data. (EEC 1978) Still, the large uncertainties reflected in the Assessment of Ozone Depletion and its Impact prevented any political decision being made that bound governments. The participants, however, recognized and agreed on the importance of the

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CFC/ozone issue and on the risks. On this point, it is important to note that, besides the United States, Canada had already moved to restrict some aerosol products in 1979. In addition, Sweden in 1979 and Norway in 1981 banned the manufacture and import of CFCs, while the Netherlands mandated the placement of warning signs on CFC products in 1979. In the late 1970s, the European Community (EC) was still debating about the regulation of CFC products. Notably, Great Britain was strongly against imposing any regulations on CFCs. Yet, by 1980, the precautionary principle became predominant in the EC. This was manifested in a policy to require a 30 percent reduction in CFC aerosol consumption based on 1976 levels. Two years later, the EC imposed a production capacity freeze of CFCs at 1980 levels.2 Products of the precautionary principle: the Vienna Convention and the Montreal Protocol At the international level, taking CCOL’s report seriously, UNEP began work on international agreements protecting the ozone layer. In 1981, UNEP created an Ad Hoc Working Group of legal and technical experts to develop an international convention. UNEP’s working group met seven times between 1982 and 1985. In March 1985, representatives of forty-three nations, including sixteen developing countries, convened in Vienna to complete work on the ozone convention. By this time the Ad Hoc Working Group had reached an agreement on a framework convention and drafted all elements of a protocol. Thus, the Vienna Convention began with a general awareness of “the potentially harmful impact on human health and the environment through modification of the ozone layer” (Vienna Convention 1985: Preamble). This agreement represented a compromise between the Toronto Group (Canada, Finland, Norway, Sweden, and Switzerland), which called for stringent control of CFCs within a legal framework, and the EC side (the EC, the Soviet Union, and Japan), which argued that specific controls should not precede a framework convention due to the absence of scientific consensus. The Toronto Group retained the framework convention, while the EC side gained the exclusion of control provision. As a result, the Vienna Convention was signed by twenty nations and the EC Commission.3 Signatories included most of the major CFC-producing countries except (most notably) Japan.4 Shortly before the Vienna Convention, a major discovery concerning ozone layer depletion was made, ironically enough, by a Japanese scientist from the Meteorological Research Institute: In 1984, Shigeru Chubachi reported the existence of an ozone hole above the Antarctic. Chubachi’s findings were later confirmed by Joseph Farman and colleagues from the British Antarctic Survey (1985), and by NASA (1986). The discovery of the ozone hole did much to change the attitudes of many formally skeptical policymakers. Although uncertainties remained regarding the relationship between CFCs and ozone layer depletion, at least ozone depletion was now perceived as an immediate environmental problem. Finally on September 16, 1987, the Montreal Protocol on Substances that

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Deplete the Stratospheric Ozone Layer was complete and signed by twenty-four countries. The Japanese delegate received authorization from his government to sign the protocol at the last minute (Benedick 1998: 75). The controversies and uncertainties regarding the causal relationship between ozone depleting compounds and ozone depletion were still strong when the Vienna Convention and the Montreal Protocol were negotiated and established. It was not until 1988, when the Ozone Trends Panel released its summary report, that scientists expressed more certainty regarding the causal relationship. Therefore, the Vienna Convention and the Montreal Protocol can be understood as products of a precautionary discourse.

Japan’s response to the ozone crisis Knowledge and Japan’s response to ozone politics in the 1970s In the 1970s, Japan’s policy response to the CFC/ozone issue can be simply characterized as indifference. Japan’s indifferent attitude toward the ozone issue was shown in various international settings. For example, while Japan attended the above-mentioned UNEP-sponsored 1977 international meeting, it chose not to participate in the 1978 meeting, in which participants agreed on the necessity of precautionary measures. In addition, for the November and December 1978 international scientific meetings of the CCOL, despite a request by UNEP for the Ministry of Foreign Affairs (MoFA) to send Japanese experts, no representative was sent to the meetings. Japan’s indifference does not mean that Japan was shut out from transnational knowledge flows on the CFC–ozone depletion issue. Most significantly, the United States frequently transmitted knowledge on the CFC–ozone depletion issues with the precautionary principle through a channel of the Japan–US Joint Planning and Coordination Committee, which was set up in 1975 to discuss major environmental policy issues. At the annual committee meetings, the United States sent leading experts, and repeatedly expressed serious concerns about ozone layer depletion and reported on the development of scientific knowledge and on ozone protection policy (see Environment Agency 1983). In response, the Environment Agency (EA) stressed the need for further research in order to obtain certain scientific evidence on the relationship between CFCs and ozone depletion. On this point, in July 1978, the EA established the Preliminary Meeting for Investigation of Fluorocarbon Gases, and in the following year, the Office of Environmental Health Affair in the EA published Fluorocarbon and the Environment II, which was a compilation of the scientific and political progress on CFCs in the Organization for Economic Cooperation and Development (OECD), the United States, the EC, and in international conferences. In addition, a series of scientific reports on CFCs were translated into Japanese. Yet, these valuable reports were confined in the Office of Environmental Health Affair as administrative documents. Ozone layer depletion never gained political relevance for the Japanese government.

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Regarding the knowledge of other actors, the NGOs, the media, the public and scientists generally had little interest in or were ignorant of ozone issues. Yet, it is important to emphasize that the Japanese fluorocarbon industry, a clear stakeholder, followed the progress of scientific knowledge and policy development on the CFCs/ozone issue with deep interest.5 In the 1970s, experts and scientists employed by the Japan Fluorocarbon Manufacturers Association ( JFMA) began to collect information to understand the progress and the development of foreign research on the relationship between CFCs and ozone layer depletion. The primary source of information for the JFMA was the transnational network of fluorocarbon companies in the advanced industrial countries. The network connected the major fluorocarbon manufacturers, including Du Pont (in the United States), Hoechst (West Germany), Imperial Chemical Industries (Great Britain), Phone Poulenc (France), Nippon Montedison (Italy), and Australian Fluorine Chem (Australia). The JFMA also exchanged information on scientific and political developments domestically. For example, in 1978, the network held a conference in Tokyo to exchange information and report on current developments. The meetings and intensive correspondence among members of the network were used to set the guidelines for major fluorocarbon companies, both within and outside Japan to deal with possible regulatory developments on CFCs. By cooperating with other major fluorocarbon companies, the industry in Japan was able to move far ahead of the Japanese government. This often resulted in the industry informing the government of the key issues, rather than the other way around. According to Takada, for example, the JFMA supplied information collected through the transnational network to the EA and the Ministry of International Trade and Industry (MITI).6 Not surprisingly, this informational advantage allowed the industry to exercise political influence. This was most clearly manifested in the position the CFC industry took in the 1970s. Namely, that no regulations should be considered before unequivocal scientific knowledge was established. This position stood in stark contrast to the precautionary approach taken by the United States and like-minded countries. Toward the Vienna Convention and the Montreal Protocol Japan’s position on the ozone issue until the early 1980s was characterized by a high degree of caution compared with other industrial countries. Japan’s first positive but still toothless official response to the ozone problem appeared in December 1980. In response to the widespread world concerns and the international politicization of ozone layer depletion, Japan announced its official view at an OECD meeting, the first time it did so in an international setting. During the meeting, Japan said that it would make efforts: (1) to reduce the use of CFC-11 and CFC-12 in aerosol products; (2) to freeze on the production of CFC-11 and CFC-12 for the present; (3) to promote research and development of substitutes for CFCs; and (4) to promote research on ozone issues. To partially fulfill its pledges at the international level, in 1980, MITI announced the implementation of “administrative guidance” – the extra-legal regulation of business and other

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activities under a ministry or agency’s jurisdiction – for the fluorocarbon industry. The main requirement was for the industry not to increase the use of CFC-11 and CFC-12. Concurrently, MITI began a serious investigation on the CFC–ozone problem and possible policies to cope with the problem. To this end, the Committee on Measures for Environmental Protection from Fluorocarbons was created. In addition, MITI established the Model Review Committee on CFCs to research and assess mathematical models of the CFC–ozone relationships, which had been produced in the United States and other advanced countries. Other than administrative guidance, Japan’s indifferent attitude continued. In particular, during the negotiations in the UNEP Working Group from 1982 to 1985, Japan refused to agree to any international regulation for ozone protection. At the Working Group meeting in 1985, it continued to argue that as long as the CCOL’s assessments were pending, it was unreasonable to regulate CFCs primarily based on political concerns. When the 1985 Vienna Convention was established, Japan still emphasized the scientific uncertainty of the relationship between CFCs and ozone layer depletion. Facing an upcoming series of major international conferences designed to deal with specific regulations of CFCs, Japanese policymakers finally realized that they could no longer avoid taking action. As a result, a range of bureaucratic offices began working on the ozone issue. One of the first to act was the EA, which established the Study Group on Protection of the Stratospheric Ozone Layer in the Air Quality Bureau in order to put together guidelines for policy making. Although leading scholars and experts in various fields related to the stratospheric ozone participated in the Study Group, for the most part, these experts could only review and summarize scientific assessments of research completed outside of Japan. In May 1987, the Study Group completed an Interim Report. The report summarized the present knowledge on CFCs/ozone relations based on scientific assessments done mainly by NASA, NAS, and the WMO. The report concluded that although scientific knowledge was not completely certain, it was important to act quickly (Study Group on Protection of the Stratospheric Ozone Layer 1987). The report warned Japanese policymakers that the potential damage from the ozone depletion was too serious to wait any longer, and thus earlier protection was necessary to save the biosphere as a whole. The Interim Report, in fact, became the main guideline for the EA (Gotoh 1988). In response to the Interim Report, the EA began to adjust Japanese policy among the ministries and agencies. Then, in June 1987, the Director-General of the EA expressed a positive and concrete Japanese position on the ozone issue for the first time. In his speech to the 14th UNEP Management Meeting, the Director-General stated that (1) Japan was ready to implement concrete control on CFCs, and (2) Japan was ready to contribute to strengthen scientific research on ozone and CFCs issues. In September 1987, when the Montreal Protocol was adopted, Japan signed the Protocol along with the Vienna Convention. To fully cooperate with these international agreements, Japan needed to enact the appropriate laws domestically. After going through a review process among ministries and agencies, the original proposal, the “Law Concerning the Protection of Ozone Layer through

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the Control of Specific Substances and Other Measures (The Ozone Layer Protection Law, thereafter),” was submitted to the Diet on March 14, 1988. The House of Representatives and the House of Councilors unanimously passed the Law on May 13. Meanwhile, both the Vienna Convention and the Montreal Protocol were submitted to the Diet and approved on April 28, and ratified on September 30, 1988.

Knowledge and climate change policy Setting precautionary actions under scientific uncertainties Like the ozone crisis, the issue of climate change began as an essentially scientific matter. And as with the ozone crisis, the science of climate change contained too many uncertainties and disagreements to have any immediate policy implications. In spite of continuing scientific uncertainty on the causes and impacts of increased atmospheric carbon dioxide (CO2) and other greenhouse gases, however, outspoken atmospheric scientists suggested the need for precautionary actions. At the 1985 Villach Conference, for example, participating scientists agreed that human activity was causing an increase in atmospheric concentrations of greenhouse gases, which caused global warming. Moreover, those scientists recommended taking steps toward policy analysis. As a first effort toward such steps, the 1985 Villach conference created a trans-science forum: the Advisory Group on Greenhouse Gases (AGGG). The purpose of the AGGG was to provide regularly updated evaluations of the issue to the heads of the WMO, UNEP, and the International Council of Scientific Unions. Along with these organizations, the AGGG helped translate the complexity of scientific findings into languages for policymakers. In other words, the conference institutionalized, for the first time, a climate science for policy making. In 1987, the WMO followed up the Villach Conference with two workshops, which moved the issue into technical, financial, and institutional areas. Shortly thereafter, the Global Conference on the Changing Atmosphere was hosted by the Canadian government in Toronto. In this conference, global warming experts and activists were invited for a specific purpose: to build scientific consensus on global warming, and eventually to ask governments, the United Nations, NGOs, industry, and individuals to respond to the degradation of the atmosphere. The conference concluded that more than 50 percent of CO2 reduction from 1988 levels was required to stabilize CO2 concentrations in the atmosphere. A 20 percent reduction by 2005 was proposed as an initial goal. The conference also urged governments to move toward an atmospheric convention (Lancaster 1992: 543). In response to all of these events, the Intergovernmental Panel on Climate Change (IPCC) was established by the WMO and the UNEP. The primary purposes of the establishment of the IPCC were to assess the available scientific, technical, and socio-economic information in the field of climate change under governments’ supervision, and to provide information for policymakers. The first

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report from the IPCC/Working Group I produced in 1990 noted that there are still many uncertainties in predictions particularly with regard to the timing, magnitude, and regional patterns of climate change (IPCC 1990). The report also emphasized the importance of further research, and concluded that “continued accumulation of anthropogenic greenhouse gases in the atmosphere would lead to climate change whose rate and magnitude were likely to have important impacts on natural and human system” (cited in Houghton et al. 1996: xi; emphasis added). Further the report suggested that immediate reductions of over 60 percent in the net emissions of long-lived gases (CO2, N2O, and CFCs) could stabilize concentrations at present levels. Meanwhile, the predominance of the precautionary principle under scientific uncertainty was becoming more significant. For example, the 1989 Noordwijk Conference of sixty-eight environment ministers produced a declaration, which pledged stabilization of CO2 emissions at the 1990 level by 2000. The declaration also urged the adoption of a framework convention on climate change no later than at the United Nations Conference on Environment and Development (UNCED) in 1992. In addition, when the Ministerial Declaration was announced at the Second World Climate Conference in 1990 (in Geneva), ministers from 137 countries and the European community committed themselves to take active steps in a global response to a common problem. The Declaration spelled out the problems and the actions needed, and called for a Global Framework Convention on Climate Change. These commitments resulted in the establishment of the Intergovernmental Negotiating Committee for a Framework Convention on Climate Change (INC/FCCC) at the 45th Session of the United Nations General Assembly. In 1991 and 1992, with the support of the UNEP and WMO, the INC engaged in a series of negotiations with the member states of the UN, specialized agencies, and observers from the interested NGOs. After five sessions, a text became ready for the UNCED, the Earth Summit in Rio. The UNFCCC states that the “Parties should take precautionary measures to anticipate, prevent or minimize the causes of climate change and mitigate its adverse effects” (UNFCCC 1992: Art. 3, Sec. 3). It established the precautionary principle as a guiding principle in the international response to climate change. The FCCC was signed by 155 countries as well as the European community in June 1992. After the 50th ratification was deposited on December 21, 1993, the Convention came into force on March 21, 1994. The IPCC Second Assessment Report (SAR) became available before the First Conference of Parties (COP-1). Scientists were still struggling with uncertainties, but the message for policymakers sounded stronger than the First Report in 1990. According to the report, “Our ability to quantify the human influence on global climate is currently limited because the expected signal is still emerging from the noise of natural variability, and because there are uncertainties in key factors. … Nevertheless, the balance of evidence suggests that there is a discernible human influence on global climate” (Houghton et al. 1996: 5; emphasis added). With a much stronger statement from the IPCC, from COP-1 in 1995 to COP-2 in 1996,

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it became easier to make progress toward the establishment of a protocol. Although the United States was opposed to controlling greenhouse gas emissions based on scientific uncertainties, it changed its position, and supported the development of a legally binding protocol to lower emission after reviewing the SAR. In this sense, there was a general agreement on the precautionary principle, but this did not mean that everyone agreed on how and how much greenhouse gas emissions should be cut. In addition, the position of developing countries was another critical issue. Having a number of unsettled political problems, Japan hosted the COP-3 and the Parties muddled through the Kyoto Protocol in 1997.

Japan’s response to climate change Negotiations for the framework convention on climate change Unlike the ozone layer depletion issue, when climate change became an international policy concern in Japan, all actors, including bureaucrats, politicians, scientists, NGOs, the media, and business were generally well informed about climate change. Still, in the transitional period from 1988 to 1993 in terms of environmental discourses, the Japanese position continued to be inconsistent. When the IPCC was formed, Japan had at least a few scientists who could take part in the main domain of scientific knowledge construction. Because these scientists were selected by the government, the Japanese government was able to directly access transnational scientific knowledge on climate change. The government also began to spend more money on climate change research and the global environment in general. Researchers were encouraged to contribute to the IPCC scientific assessment reports. For the second IPCC report, two Japanese scientists participated as lead authors and nine as contributors, and thirty-three research papers in which Japanese scientists were involved were cited. Yet, this did not mean that the Japanese government was more active in the negotiations of the FCCC. The government could not seem to take any concrete decision on climate change. More specifically, there was no consensus among ministries and agencies regarding climate policy, and as a result, the government’s position was confusing and indecisive in various international conferences. This indecisiveness was apparent at the 1989 Noordwijk Conference, where Japan did not join in signing the Declaration. Japan’s confused position was also apparent at the April 1990 White House Conference on Science and Economics Research Related to Global Change. At the conference, MITI insisted that Japan would suffer economic hardship due to a cut in CO2 emissions; yet, at the same time, the EA announced that the introduction of regulations on CO2 emissions would not necessarily lead to any significant economic disadvantage (Asahi Shimbun, May 5, 1990). After such embarrassing experiences, Japan was urged by other governments to clarify its position, which the government did after the Third Inter-Ministerial Council on Global Environmental Protection in June 1990. It was a necessary decision because (1) the major European governments, including Great Britain,

178 Atsuko Sato successively announced their numeric targets to stabilize the CO2 level, and (2) the Second World Climate Conference was scheduled in October 1990 (Yagishita 1991). Right before the Second World Climate Conference, the Japanese government adopted an Action Program to Arrest Global Warming aimed at stabilizing per capita as well as total emissions of CO2 to 1990 levels by the year 2000. When the FCCC was opened for signature in Rio de Janeiro, Japan signed the convention and then ratified it in May 1993. Japan and the Kyoto conference Japan’s response to the climate change issue became more active after 1994. By this time the global environmental discourse and the precautionary principle were firmly set in institutional arrangements in Japan. This new activism was first demonstrated after the Convention came into force. It was at this point that the government expressed a willingness to take a leading role on the climate change issue. Thus, when COP-1 was held in 1995, the Japanese government expressed a willingness to host the subsequent session of COP. At COP-2 in July 1996, Japan officially announced its candidacy, which was accepted. Taking this leading role, however, was not an easy one: both within and outside Japan, a number of battles raged. Inside Japan, the EA and MITI were working separately on their own policy proposals (see Chapters 7–8). Working with its advisory council, the Central Environment Council, the EA proposed a 7 percent reduction from the 1990 level by 2010, in accordance with its own economic model – the Asian Pacific Integrated Model. MITI, on the other hand, working with the Energy and the Industrial Structure Council, proposed the possibility of stabilizing emissions at the 1990 level by 2010. The EA and MITI remained far apart, yet some agreement was necessary, if Japan was to successfully move forward. The lack of movement compelled Prime Minister Hashimoto to instruct the Offices of Internal and External Affairs in the Cabinet Secretariat to take charge of handling Japan’s protocol negotiations on climate change. Hashimoto also instructed the Cabinet to establish the Joint Conference on Relevant Advisory Councils on Domestic Measures Addressing the Global Warming Issues. The Joint Conference was charged with assembling a committee from different ministries and agencies, which would then examine major policies and measures proposed by related ministries on one table. The Joint Conference consisted of eight experts from the field of environmental technology, law and economics; sixteen industrial leaders; and two journalists. There were, however, no representatives from NGOs; as a result, the Joint Conference had a strong inclination toward industries (Hattori 2000: 61–80). Despite this imbalance, the Cabinet Secretariat played a mediator role, which facilitated a speedy and satisfactory outcome (Ibid.: 39). Outside of Japan, the government had to deal with different proposals from the United States and other major advanced nations, as well as developing countries. Japan’s attempts to mediate the differences through informal meetings with major countries continued before the Kyoto meeting, using a proposal that introduced

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differentiated targets for each country. The biggest split was shown with proposals from the EU and the United States. The EU proposed a 15 percent reduction in emissions of CO2, methane, and nitrous oxide, while the United States proposed a zero percent reduction. The negotiation among these major parties was not settled until the last day. The final agreement was reached without numerical targets for developing countries but with adoption of emission trading, joint implementation and sinks. The Kyoto Protocol was adopted on December 11, 1997, and Japan signed it in April 1998 and ratified in June 2002.

Understanding changes in Japan’s response to global atmospheric politics Japan’s environmental policy discourse in the 1970s and the early 1980s In the 1970s, when the advanced industrial nations became concerned with global atmospheric destruction, the Japanese government was far behind, despite massive knowledge flows from abroad. As a result, knowledge of ozone layer depletion did not develop into a politically relevant issue. Japan continued to be indifferent about ozone layer depletion until the middle of the 1980s. In response to major international developments – such as a report of the World Commission on Environment and Development, the Montreal Protocol, and the Toronto Meeting – Japan finally realized the importance of the emerging dominant environmental discourse. This earlier indifferent policy reaction of Japan to precautionary action at the international level can be better understood in relation to the dominant environmental policy discourse in the 1970s and the 1980s. During this period, Japan’s predominant approach to environmental issues was based on “pollution and response.” The origin of this policy discourse is clear: when various types of pollution problems developed in industrial and urban areas due to a rapid economic development in the 1960s, grass-roots environmental movements emerged along with a series of environmental litigations. These movements and litigations led to successive victories in the courts. The result was the emergence of “unusual strong anti-kogai [anti-pollution] sentiment” in Japan during the 1970s (Tsuru 1989: 36). Despite this strong sentiment, Japanese concerns for the environment rarely reached beyond the national borders. In other words, the environmental discourse in Japan was dominated by a shared concern for domestic anti-pollution efforts. But it stopped there. This tendency was clearly illustrated in a prominent study of kogai and citizen politics by McKean (1981): Most activists in our sample were preoccupied with this piecemeal, dichotomous, divisive, discriminatory picture of pollution. They did not think much about the larger aspects of the issue: the relationships between high consumption levels, population growth, economic growth, the occurrence of pollution, and the increasingly rapid depletion of natural resources. They did

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The anti-kogai sentiment and the domestically centered and reactive policy discourse meant that the media, the public, and even Japanese scientists had little awareness of, or at least little concern for, the ozone crisis. Thus, when the ozone crisis emerged in the 1970s, Japanese people were almost completely unaware of the discourse on global environment, much less the emerging precautionary policy discourse. And Japanese policymakers could not easily accept the newly emerged foreign concepts of the global environment and the precautionary principle. In sum, the Japanese government continued to take a wait-and-see position and did not seriously move until it realized international negotiations would finally lead to regulations. Japan insisted on no action until science proved the causal relationship between ozone layer depletion and CFCs. This is exactly the same reaction one would expect to see based on the conventional pollutionresponse discourse and traditional cost–benefit decision-making. Japan and the transformation of environmental discourse When climate change was politicized at the international level, Japan’s reaction to the issue was still reactive (see Chapter 7), but much more responsive than its reaction to the ozone politics. When climate change became an international political issue in the late 1980s, the dominant environmental policy discourse at the international level was the precautionary principle. As shown by the ozone issue, however, Japan had not yet fully accepted this principle. Still, by the late 1980s, the precautionary principle and the discourse surrounding this principle had definitely made inroads into the Japanese policy-making process and in the consciousness of the Japanese people. In this regard, one might say that Japan was clearly ready, or at least primed, to accept the new environmental discourse on global atmospheric issues. This was apparent in the transformation of institutional arrangements throughout Japanese society and government. Japan’s new found commitment was particularly apparent in a number of different areas in the bureaucracy. For example, the Department of Global Environment was finally established in the EA in 1990. Subsequently, MITI also established a new office dealing with the global environment. The most significant institutional arrangement, however, can be seen in the Basic Environment Law, which replaced the Basic Law for Environmental Pollution Control and parts of the Nature Conservation Law. The new Law went into effect on November 19,

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1993 and is based on three fundamental principles: (1) conserving the environment for present and future generations, (2) fostering a society allowing sustainable development with less burden for the environment, and (3) promoting global environmental conservation through international cooperation. The Law (Art. 15) also required the government to establish the Basic Environment Plan to set “the basic concepts and long-term objectives of environmental policy.” In the Principles of Environmental Policy of the Basic Environment Plan (1993), a desired relationship between people and the environment and the use of the precautionary principle was put forth as follows: The environment is finite and is the life support system of humankind. In the environment, materials circulate between air, water, soil and living creatures. They break down and reassemble in a constant process that is characteristic of nature’s circulation of materials. The ecosystem is formed by many delicate balances. In order to conserve a rich, sound environment, it is necessary to maintain both the entire system and each individual, component, system in healthy condition. To achieve this, precautionary measures employing scientific knowledge should be applied to avoid serious, irreversible negative impacts on the environment. To harmoniously coexist with nature, nature’s own material circulation should be utilized. In this way, a system incorporating closed material circulation will emerge from everyday socioeconomic activities. The Plan articulates a shared common understanding among all groups and sectors of society and encourages cooperation for conservation of the environment (Sec. 3). In sum, the new discourse on the global environment and the precautionary policy discourse were clearly translated into concrete Japanese policies, which set the direction for Japanese society as a whole. The effect of the global environment discourse was not limited to the governmental sector; business, the media, the public, and NGOs also dramatically increased their interests and involvement in global environmental issues in the 1990s. For instance, the Japanese Federation of Economic Organization (Keidanren) adopted a Global Environment Charter in 1991, which asserted that the business must recognize and be concerned about global environmental problems. In addition, major corporations began to establish specialized departments on the global environment. Of course, many, if not all, Japanese corporations were acting in terms of their perceived business interests, rather than a general concern with the environment. One area where this is clear is in the development of the eco-business sector (Environment Agency 1994: 182–183). Whatever their motives, however, Japanese businesses were clearly responding to changes in domestic and international attitudes toward the global environment. In the media, too, the changes were obvious. For example, journalists called 1988 the first year of the global environment (Ishi et al. 1992: 77–78). Not surprisingly, media coverage on the global environment sharply increased beginning in 1988. Widespread transformation was also apparent in the Japanese public. For

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example, in 1988, when the Japanese government adopted the Vienna Convention and the Montreal Protocol, only one-fifth of Japanese expressed any concern about global environmental problems, according to a government opinion survey (The Prime Minister’s Office 1995). In fact, the survey indicates that most Japanese were far more concerned about domestic and industrial pollution. In 1990 and 1995, by contrast, the same survey question indicates that citizen’s concerns about the global environment increased to 42.4 and 42.5 percent, respectively. Moreover, concern about global environmental problems has taken precedence over most other issues, including domestic and industrial pollution. Citizen interest in the global environment is also reflected in the number of people who participate in environmental NGOs, as well as in the increasing number of these organizations in Japan. In 1980, there were fifty-nine NGOs, but by 1993, this increased to 290 ( JANIC 1994). Using a different definition of an NGO, the EA recognized 4,506 environmental NGOs in 1996 (Environment Agency 1996). More significant, perhaps, was the establishment of NGOs concerned specifically with global atmospheric issues. The most important of these was the Citizens’ Alliance for Saving the Atmosphere and the Earth. By the time of the Kyoto Conference, the number of environmental NGOs concerned with global atmosphere issues had increased to at least thirty-six. These thirty-six NGOs, moreover, established a network organization (the Kiko Forum) designed to help ensure the success of the Conference. In sum, it is reasonable to conclude that Japan’s proactive position in climate change politics was promoted and supported by the implementation of a newly emerged environmental discourse, which had become embedded in Japanese society.

Conclusion The first important point to come from this study is that, by themselves, scientific knowledge flows do not matter. Instead, they must be accompanied by a broader shift in attitude, thinking, and perceptions – a discourse shift. In Japan, a major discourse shift occurred between the 1970s – when the country was focused almost exclusively on domestic pollution problems – and the early 1990s. It was in the late 1980s that a global environmental discourse, tied to a precautionary principle, emerged in Japanese society. The new environmental discourse, of course, did not immediately affect Japan’s response to the international politics of climate change. Instead, Japan remained cautious toward the targets and timetable of reduction in CO2 emissions. Beginning with the 1990s, however, the principles of the new discourse were translated into institutional arrangements. Subsequently, new theoretical concepts of the global environment and the precautionary principle were inserted into major laws and policies. Meanwhile, the global environment discourse began to permeate society as a whole. Media coverage of global environmental issues, public awareness of the global environment, and the number of environmental NGOs all increased drastically. Industries also changed, although they saw the global environment as a business opportunity.

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When climate change came to the international political agenda, Japan was still in the process of discourse transformation. It took a decade for Japan to strongly commit to climate change politics. Japan’s commitment to climate change politics, as shown in the country’s stance toward the Kyoto Protocol, can therefore be understood as an outgrowth of the implementation of the global environmental discourse and the precautionary principle in Japanese society. On the other hand, Japan’s indifference and reluctance, which was clear in the ozone politics of the 1970s and 1980s, can be understood in relation to the predominance of the conventional pollution-response discourse. However, while the precautionary principle became the dominant environmental policy discourse in Japan, this does not mean that the pollution-response discourse and other competing discourses withered away. Nor does it mean that the precautionary principle has gained dominance over all environmental issues in Japan. Different issues involve different actors, interests, and values, and thus involve different discursive dynamics.

Notes 1 See, for example, Haas (1989, 1990), taking knowledge as given, argues that an epistemic community can make a difference in the formation of international environmental regimes. Liftin (1994), taking a reflectivist approach, on the other hand, narrates knowledge as constructed in the process of international environmental regime creation. 2 Many consider the EC’s actions as insignificant. According to Makhijani and Gurney (1995), “European sales of CFCs for aerosols had already declined by approximately 28 percent since 1976, and the production-capacity freeze was such that output could increase by more than 60 percent over 1980 levels – approximately 480,000 tonnes – before running into the legal limit.” Also see Benedick (1998). Yet, among EC states, there were competing discourses of environmental policy, and the 1980 decisions by the EC is understood as an indication of prevailing precautionary discourse. 3 Those twenty nations were Argentina, Belgium, Byelorussian, Canada, Chile, Denmark, Egypt, Finland, France, Germany, Fed. Rep., Greece, Italy, the Netherlands, Norway, Peru, Sweden, Switzerland, Ukrainian SSR, USSR, and the United States. 4 The United Kingdom signed two months later. 5 The industry included four major fluorocarbon manufactures (Daikin Kogyo, Asahi Glass Company, Mitsui Fluorochemicals Company, and Showa Denko Company) and over one hundred smaller aerosol-producing companies, which together employed approximately 40,000 people in Japan. 6 Based on internal memorandum collected by the JFMA in 1979.

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Keohane, R.O. (1988) “International institutions: two approaches,” International Studies Quarterly 32: 379–396. Lancaster, J. (1992) “The developing law of the atmosphere and the 1992 Rio de Janeiro convention” in R. A. Geyer (ed.) A Global Warming Forum: Scientific, Economic, and Legal Overview, Boca Raton: CRC Press. Liftin, K.T. (1994) Ozone Discourses: Science and Politics in Global Environmental Cooperation, in H. Milner (ed.) New Directions in World Politics, New York: Columbia University Press. McKean, M.A. (1981) Environmental Protest and Citizen Politics in Japan, Berkeley: University of California Press. Makhijani, A. and Gurney, K. (1995) Mending the Ozone Hole, Cambridge: The MIT Press. Marchetti, A. (1996) “Climate change politics in Italy,” in T. O’Riordan and J. Jager (eds) Politics of Climate Change: A European Perspective, London: Routledge. Miles, E.L., Underdal, A., Andresen, S., Wettestad, J., Sskjaerseth, J.B. and Carlin, E.M. (2002) Environmental Regime Effectiveness: Confronting Theory with Evidence, Cambridge: The MIT Press. Molina, M. and Rowland, F.S. (1974) “Stratospheric sink for chlorofluoromethanes: chlorine atom-catalyzed destruction of ozone,” Nature 249: 810–812. NAS (1982) Causes and Effects of Stratospheric Ozone Reduction: An Update, Washington, DC: National Academy Press. O’Riordan, T. and Rowbothan, E.J. (1996) “Struggling for credibility: the United Kingdom’s response,” in T. O’Riordan and J. Jager (eds) Politics of Climate Change: A European Perspective, London: Routledge. Rowlands, I.H. (1995) “The politics of global atmospheric change,” in T. O’Riordan, A. Underdal and A. Weale (eds) Issues in Environmental Politics, Manchester: Manchester University Press. Shackley, S. and B. Wynne (1996) “Representing uncertainty in global climate change, science and policy: boundary ordering devices and authority,” Science, Technology, and Human Values 21(3): 275–302. Shreurs, Miranda A. (1994) “Policy laggard or policy leader? Global environmental policymaking under the liberal democratic party,” Journal of Pacific Asia 10(2): 3–33. Shreurs, Miranda A. (1996) Domestic Institutions, International Agendas, and Global Environmental Protection in Japan and Germany, Dissertation, Political Science, University of Michigan, Michigan. Stoel, Jr T.B. (1983) “Fluorocarbons: mobilizing concern and action,” in D. A. Kay and H. K. Jacobson (eds) Environmental Protection: The International Dimension, Allanheld, NJ: Osmun. Study Group on Protection of the Stratospheric Ozone Layer (1987) Interim Report, Tokyo: Environment Agency. Sydnes, A.K. (1996) “Norwegian climate policy: environmental idealism and economic realism,” in T. O’Riordan and J. Jager (eds) Politics of Climate Change: A European Perspective, London: Routledge. Takeuchi, K. (1998) Chikyuiondanka no Seijigaku (The Politics of Global Warming), Tokyo: Asahishimbunsha. Tanabe, T. (1999) Chikyuondanka to Kankyogaiko (Global Warming and Environmental Diplomacy), Tokyo: Jijitushinsha. The Prime Minister’s Office, Japan (1995) The 1995 Kankyo Hozen to Kurashi ni Kansuru Seron Chousa (Opinion Poll Regarding Environmental Protection and Life), Tokyo: The Prime Minister’s Office. Tsuru, S. (1989) “History of pollution control policy,” in S. Tsuru, and H. Weidner (eds) Environmental Policy in Japan, Berlin: Edition Sigma.

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United Nations Environment Program (UNEP) (1978) “An assessment of ozone depletion and its impacts,” Bonn: UNEP. United Nations Framework Convention on Climate Change (UNFCCC), A/AC.237/18 (Part II)/Add.1, 15 May 1992. Victor, D.G., Raustiala, K. and Skolnikoff, E.B. (1998) The Implementation and Effectiveness of International Environmental Commitments: Theory and Practice, Cambridge: The MIT Press. Vienna Convention for the Protection of the Ozone Layer (1985), adopted by the Conference of Plenipotentiaries on the Protection of the Ozone Layer, Vienna, March 18–22, 1985. WMO (1985) Atmospheric Ozone 1985: Assessment Of Our Understanding Of The Processes Controlling Its Present Distribution And Change, Geneva: WMO. Wynne, Brian (1994) “Scientific Knowledge and the Global Environment,” In Social Theory and the Global Environment, (ed.) Redclift, Michael and Ted Benton. London: Routledge. Yagishita, Seiji (1991) “Environmental Diplomacy and Japanese Options,” Japan Review of International Affairs 12(4): 248–266.

10 Beyond Kyoto The formation of a Japanese climate change regime Dana R. Fisher

Introduction Japanese climate policy is one of the most effective in the world. Not only is the country exceptionally efficient, but in 1998 it implemented the Law Concerning the Promotion of the Measures to Cope with Global Warming (Law Number 117). Through strong regulation and state control, Japan is working to meet its emission targets by the deadline stipulated within the Protocol. This chapter looks at Japanese domestic responses to the issue of climate change since the 1997 Conference of the Parties (COP3) to the Framework Convention on Climate Change held in Kyoto, Japan, during which the Kyoto Protocol was drafted. I examine the development of this “climate change regime” within Japan, following the country’s responses to the Kyoto Protocol leading up to its June 2002 decision to ratify the agreement. Beginning after the Protocol was signed in 1997, I look at the various social actors involved in the political decisions regarding how Japan responds to the potential international regulation of global climate change. I conclude with a summary of the present status of the Protocol in Japan, and an analysis of which social actors are leading the Japanese climate change regime. Data for this chapter were collected during two trips to Japan. During my first visit, from June through August 1999, I worked out of the Japanese National Institute for Environmental Studies in Tsukuba. During my second visit, from February to April 2000, I worked out of the Tokyo Institute of Technology in Tokyo. In total, I met with over thirty-five people involved in various activities related to climate change in Japan. In addition, I spoke with members of Japanese nongovernmental organizations (NGOs), industry, science, and the state, at both the first and second parts of the COP6 negotiations, in Fall 2000 in The Hague and Summer 2001 in Bonn, Germany. Twenty-two of these people, who are key players within the debate about Japan’s approach to mitigating global climate change, were formally interviewed. Interviewees include academics, governmental officials, representatives of industry and NGOs, and members of the media. These people represent a snowball sample of those who are involved in the debate about implementation and adoption of the Kyoto Protocol in Japan. In other words, during interviews with those people identified through the Japanese government and media accounts, interviewees were asked for referrals to other actors

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involved in the development of the climate change regime in Japan (for more information on the snowball sampling method, see Jary and Jary 1991: 444). The Appendix to this chapter provides a list of the interviewees and their professional affiliations. The interviews were conducted in Japanese and English. All translations were done by the author.1 It is impossible to think about Japanese society’s relationship with the environment without thinking about pollution disease. From the 1950s into the 1960s, thousands of Japanese suffered diseases caused by environmental degradation and pollution. By the 1970s, almost 50 percent of the Japanese population thought that they were suffering from a pollution-related disease (Huddle and Reich 1975; McKean 1981). Consistent with the mechanisms outlined in the theory of reflexive modernization (see Beck 1987, 1995, 1997, 1999; Beck et al. 1994; see also Offe 1996),2 in 1970, the Japanese government responded to massive citizen demonstrations and passed sweeping regulations to protect the environment. Today, evidence increasingly suggests that Japan’s leaders no longer see economic growth as being antithetical to environmental protection. In the 1980s, McKean (1981) reported that Japan had the strictest pollution regulations in the world, spending more of its gross national product on anti-pollution measures than any other country in the world. This trend has continued. For example, Japanese manufacturers have embraced the ISO 14,000 standard of environmental good housekeeping “faster than any other country” (The Economist 1998: 61; see Hideaki 1999). Like the expectations of the post-industrial theories of the society– environment relationship that are best summarized by Giddens when he says that environmental protection is “a source of economic growth rather than its opposite” (Giddens 1998: 19), environmental quality in Japan has appeared to improve with economic growth. In the words of Mitsuda (1997: 442), “the very success of [ Japanese] economic growth, the so-called ‘economic miracle’, has encouraged the establishment and strengthening of environmentalism in the process of Japanese modernization.”

Japan and the climate change negotiations In contrast to its general support of environmental issues, the Japanese government has been much slower to adopt measures to deal with global climate change. Prior to COP3, the Japanese did not seem particularly supportive of international climate change regulation that relied on domestic reductions of greenhouse gases. In 1994, for example, the Japanese government reported to the Organization for Economic Cooperation and Development (OECD) that “it considers that joint implementation should not be restricted to Annex I parties, but should also be allowed to take place between Annex I and other Parties of the Convention” (International Energy Agency 1994: 107–108). Rather than focusing on domestic emission reductions, in other words, Japan focused its early climate change plan on emissions reductions outside its borders. Throughout the negotiation process after 1994, Japan maintained its position that carbon sinks and other overseas mechanisms, the framework for which were only finalized at the 2001 COP7 in

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Marrakech, Morocco. These mechanisms will account for much of Japan’s emission reduction commitment. Since before 1997, Japan was an active member of an alliance with the United States, Canada, Australia, and New Zealand. This “umbrella group,” called JUSCANZ, coordinated its negotiating because “these were the developed countries with reasons to want to slow down the European Union … Japan was wholly dependent on imported oil and coal, and already far less energy-intensive than other developed countries” (Leggett 1999: 249). As a result of these factors, Japan, working with the other members of the umbrella group, pushed for the inclusion of developing country participation in a climate change treaty. In the end, however, the Berlin Mandate coming out of COP1, in 1995, stated that only the Annex I, or developed countries, would be bound by the protocol that was to be agreed in 1997. Although the JUSCANZ umbrella group has continued to maintain a relatively consistent negotiating block throughout the negotiations, at the 1996 COP2 negotiations, the United States shifted its position away from JUSCANZ and agreed to the Geneva Declaration that pushed the parties to work for a legally binding protocol at the next round of negotiations.3 Partially as a result of the shifting of the alliance and the specifications of the Berlin Mandate, Japan – the host of the COP3 negotiations – changed its position on climate change. In the words of Taka Hiraishi, a Japanese national who co-chairs the National Greenhouse Gas Inventories Task Force Bureau of the Intergovernmental Panel on Climate Change (IPCC), “Japan did not favor a big reduction before Kyoto. Now, Japan believes that there is a need for a big reduction” (Hiraishi 1999). Some people say that the change in Japan’s position was also a response to the European Union’s (EU) position on emission reductions. Going into the COP3 negotiations, the EU supported the inclusion of a 15 percent reduction in emissions below 1990 levels in the Kyoto Protocol. In the words of Yasuyoshi Tanaka, the environment writer for the Mainichi Shimbun, the third largest newspaper in Japan, “If it were not for the EU decision, the Japanese would not have agreed. International pressure played a role. The Japanese are weak to international pressure …. Because the EU was pushing for more [emission reductions], Japan changed its position” (Tanaka 2000). In addition to the change in the JUSCANZ alliance and the international pressure from the EU, Japan has a large investment in the outcome of the Kyoto Protocol as it was the host of COP3, where the Protocol was officially drafted; the Protocol itself even holds the name of one of the most sacred cities in Japan. Although the international environmental group, Friends of the Earth, has claimed that Japan is one of the countries that is trying “to do everything they can to wreck the Treaty” (Friends of the Earth Dike Action Update n.d.), Japan’s commitment to environmental protection appears to be genuine. Since the official drafting of the Kyoto Protocol in December 1997, Japan has been actively promoting the regulation of climate change. As will be discussed in greater detail in the pages that follow, that Japanese government has passed legislation in response to the Protocol. The first step in the establishment of a climate change regime in Japan is the “Law Concerning the Promotion of the Measures to Cope with

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Dana R. Fisher Table 10.1 Emissions of CO2 for selected nations (million tons of CO2) Country

1990

1997

1998

Change since 1990 (%)

Japan The Netherlands USA

1,048.5 156.8 4,843.8

1,160.3 175.4 5,467.6

1,128.3 171.4 5,409.8

7.6 9.3 11.7

Source: International Energy Agency 2000b.

Global Warming” (Law Number 117 of 1998) that “aims to promote the measures to cope with global warming through, e.g., defining the responsibilities of the central government, local governments, businesses and citizens to take measures to cope with global warming, and establishing a basic policy on measures to cope with global warming, and thereby contribute to ensuring healthful and cultural lives of present and future generations of people, and to contribute to the welfare of all human beings” (Environment Agency of Japan 1998: 1). Beyond this preliminary legislation, the Japanese government has debated a number of measures to achieve its 6 percent reductions. In order to meet the reductions agreed upon in the Protocol, Japan has planned to account for 5.5 percent of its reductions below the 1990 level through growing forests – otherwise known as carbon sinks – and actions outside its borders – what are called the Kyoto Mechanisms (IGES 2000). Although Japan intends to meet the 6 percent reduction below its 1990 levels predominantly through other means, it has been one of the more successful countries in getting close to achieving stabilization of emissions domestically since 1997. Emissions levels in Japan have supported Leggett’s (1999) statement that Japan is one of the most efficient of the developed countries. Even before the Kyoto Protocol was drafted, on a per capita basis Japan produced less than half as much CO2 as did the US, the top emitter in the world (CQ Researcher 1996). Also, according to World Resources Institute calculations (1994: 208), Japan’s total greenhouse gas emissions in 1990 were only about a quarter as high as those of the United States. Even with its high levels of efficiency, however, emissions in Japan have still grown since 1990. As of 1998, Japan had increased its overall CO2 emissions to 7.6 percent above 1990 levels (IEA 2000b). Table 10.1 provides comparative emissions data for Japan, the US, and the Netherlands since 1990. Although Japan’s emissions have increased since 1990, it has the lowest level of growth of the three countries.4 Perhaps of more interest, however, is the fact that since the drafting of the Kyoto Protocol in 1997, CO2 emissions have gone down 2.8 percent.5

Japan’s post-Kyoto status on science Science In contrast to the US, where the issue of the validity of the science has been at the center of the climate change debate, the science of climate change has been accepted in Japan (see Chapter 9). Of all of the people whom I interviewed, not

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one person challenged the validity of the science of climate change. Instead, there was just one mention of skeptical responses to the science by Kimiko Hirata a leader of the Kiko (Climate) Network, an NGO that coordinates environmental groups working on climate change, and it scarcely endorsed the skepticism: “most of the people who believe that climate change is happening, of course there are the skeptics on this issue but they do not have an impact” (Hirata 1999). In general, however, as can be summed up in the words of Professor Shuzo Nishioka, a professor of media and governance at Keio University, the project leader of the climate change group at one of the leading Japanese think tanks working on climate change – the Institute for Global Environmental Strategies (IGES) – and the former manager of the Center for Global Environmental Research at the Japanese National Institute for Environmental Studies, the research arm of the Japanese Environment Ministry,6 “There is no real opposition to the ‘scientific view’ here in Japan. There is no suspicion about science. It is accepted” (Nishioka 1999). Thus, although some scientists in Japan may acknowledge that there are uncertainties regarding the science of climate change, they tend to agree that, in the words of Tsuneyuki Morita, the head of the social and environmental systems division at the National Institute of Environmental Studies and a coordinating lead author of the IPCC Third Assessment Report for Working Group Three, “at this moment, scientific knowledge is at a very, very low level about the climate. We need a lot more time but we cannot wait … policy should be promoted simultaneously” (Morita 1999). Even with the limited discussions of the science of climate change in Japan, Taka Hiraishi, the co-chair of the IPCC National Greenhouse Gas Inventories Program Task Force points out that “the focus is on the political and negotiation even though more discussion of the scientific argument is needed” (Hiraishi 1999). To some degree, due to the role that academics play in policymaking in Japan, the science and the policy has become conflated. Many of the scientists whom I interviewed hold positions both in academia as well as in the leadership roles of political agencies. One such example can be seen in the case of Yoichi Kaya, a professor of the graduate school at Keio University. In addition to holding an academic position, Kaya is the chairman of two energy-related committees for the Ministry of International Trade and Industry (MITI). Also, he is the vice chairman of the integrated council of the government that coordinates policy strategy development on global environmental issues. In his own words, “I have been connected quite closely to the government, but still, I am a scientist” (Kaya 1999). Professor Kaya is not unique in his affiliations. “Many members of the Central Environment Council and the joint panel are at the same time members of MITI’s advisory councils” (Ouchi 1998: 26). Similarly, Professor Tsuneyuki Morita is also an economics professor at the Graduate School of Decision Science and Technology at the Tokyo Institute of Technology. Morita, like many academics working on climate change, sees himself as an “interface between policymaking and science … a go-between who interprets the line between science and policy” (Morita 1999).

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In sum, the scientists working within Japanese academia are the same people who are leading the national labs to conduct research on climate change, and in many cases, they are the leaders of the governmental committees that are deciding national climate change policies. These close relationships between science and policy have significant implications on the efficacy of environmental policy in Japan. In sum, because leading scientists are linked with the government, scientific findings are easily diffused to policymakers.7 The state This link between science and policy needs to be kept in mind as we turn to the role that the Japanese state has played in dealing with the issue of climate change. Not only are the people involved in Japanese policymaking the same as those working on the science of climate change, but actors within the state in Japan see the relationship between the science of the issue and policy as inherently related. In the words of Kazuo Matsushita, an ex-member of the Environment Ministry who now serves as the acting Vice-President of one of the leading Japanese think tanks working on climate change, the government-funded IGES, the goal of this type of work is to “translate these global environmental issues into domestic policies” (Matsushita 1999). Generally in Japan, the government is perceived as being responsible for taking the lead in the issue of climate change. As Suda Harumi, a leader of the consumer and environmental movement in Japan and the director of the Citizen’s Movement National Center states, “Because the government is strong, if the government does not lead, lifestyles cannot change” (Suda 1999). Although the basic expectation is that the government is responsible for dealing with environmental issues such as climate change, Tsuneyuki Morita points out that “the government cannot do much about what people think and they are very critical” (Morita 1999). Even though citizen lifestyles may not easily change as a result of governmental policy, climate change mitigation in Japan is based on a top-down approach that relies heavily on government action. As previously mentioned, the government has been active in beginning to respond to the targets set by the not-yet-ratified Kyoto Protocol. In the words of Akiko Domoto, a former member of the Japanese Parliament, or DIET, and the recently elected mayor of Chiba Prefecture, “implementation of numerical targets is a priority” (1999). This opinion is echoed in similar statements by Japanese bureaucrats, such as Hironori Hamanaka, the Director General of the Global Environment Department of the Environment Agency and one of the heads of the Japanese negotiating team, “the goal is, of course, to implement our own policy effectively … and to reduce our emissions of greenhouse gases” (Hamanaka 1999). Although the Environment Ministry is responsible for dealing with and regulating environmental issues in Japan, MITI is responsible for energy policy. As such, MITI is responsible for instituting such measures that deal with global climate change. This distinction between the bodies regulating in Japan leads outsiders, such as Harumi Suda of the Citizen’s Movement National Center, to claim

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that, “Because the different governmental agencies are fighting against each other, it is hard to get things accomplished” (1999). Still, even though some level of infighting between the agencies seems to be taking place, Tsuneyuki Morita of the National Institute for Environmental Studies insists that “they both agree that something should be done” about global climate change (Morita 1999). On June 19, 1998, the Global Warming Prevention Headquarters of the Japanese government, which includes cabinet members and the Prime Minister, published the “Guideline of Measures to Prevent Global Warming: Measures Towards 2010 to Prevent Global Warming.” The Guideline reports the measures that the government plans to take to achieve the 6 percent emissions reductions stipulated in the Kyoto Protocol. In essence, the government plans to “strengthen efforts which can attract the participation and cooperation of every social actor, mobilize every possible policy measure, and promote comprehensive actions in a systematic way in order to steadfastly achieve the reductions” (Global Warming Prevention Headquarters 1998: 1). The report continues by pointing out the main goals of achieving a 2.5 percent reduction in domestic emissions by “promoting measures relating to both energy supply and demand focusing on promoting energy saving, introduction of new energy and the construction of nuclear power plants” (1998: 2). As a means of providing a cleaner energy source to support Japanese economic growth, the Japanese government’s global climate change reduction plan included “an energy supply forecast with 20 additional nuclear reactors as its centerpiece” (Ouchi 1998: 25). When dealing with energy policy in Japan, one of MITI’s main concerns is energy security. “Japan’s limited indigenous resources translate into high dependence on energy imports … . Security of energy supply is a policy priority, since energy demand is expected to rise as a stimulus to economic growth” (International Energy Agency 1994: 110). As has been previously mentioned, the central aspect of the Japanese government’s energy policy to deal with climate change is the construction of new nuclear power plans. Given the lack of any indigenous energy options in Japan, the government has chosen to invest in a domestic energy option that is considered clean in terms of greenhouse gas emissions. Taka Hiraishi of the IPCC justifies the Japanese government’s decision: “is the 6 percent reduction feasible? Without nuclear power it is not possible” (1999). This plan to increase the number of nuclear plants in Japan has been criticized by many sectors of society. The decision itself was based on models that predicted energy consumption and emissions extrapolated from the Japanese economy of the early 1990s. As a result of the decreased economic growth in Japan in recent years, energy consumption has slightly decreased.8 With the stabilization of energy consumption, advisors to MITI, such as Yoichi Kaya, the chairman of two energy-related committees for MITI, have pointed out that, with the lower levels of consumption, the national need for energy has decreased. In his own words, “the environmental target [of the Kyoto Protocol] will be realized … because of the reduction in economic growth” (1999). Recently, the largest English Language newspaper in Japan, the Japan Times, reported emissions reductions that substantiate Kaya’s prediction. “Environment Agency officials say the

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decline in emissions is due largely to a drop in the industrial sector, attributing the reduction in part to economic stagnation” ( Japan Times 2000: A6) Concurrent with new energy policies being coordinated by MITI, the Environment Ministry has designed and implemented the “Law Concerning the Promotion of the Measures to Cope with Global Warming.” This law involves a nation-wide inventory of greenhouse gas emissions being conducted on the local level. This plan also, in the words of Director General Hamanaka of the Environment Ministry, “requires national government and all local authorities, local government and also 3,200 cities, towns and villages … to draw up their own plans … to reduce greenhouse gases” (Hamanaka 1999). In addition to the inventories and plans, the law creates a national center for climate change that will work with NGOs and citizens. Although the law has been criticized by members of NGOs like Naoyuki Hata of the Citizen’s Forum who states that it “is weak” (Hata 1999), others, such as Yasuko Kawashima9 of the National Institute of Environmental Studies, see it as “the starting point … [to help us know] from where emissions come” (1999). These steps are, indeed, only preliminary and do not go far enough to meet Japan’s emission reduction targets set in the Kyoto Protocol. For these reasons, the Japanese government has been debating other measures. In an interview with Director General Hamanaka at the COP6 negotiations in the Hague, he outlined a number of climate change mitigation measures that are being considered by the government for implementation after the Protocol is finalized and ratified by the Japanese government. These measures include the possible amendment of the Energy Conservation Law to include emission’s trading, as well as the possible introduction of a green tax that would apply to consumers and small businesses. The Institute for Global Environmental Strategies held a forum in November 2000 to review Japanese climate change mitigation policy options, including those mentioned by Director General Hamanaka (IGES 2000). In the end, however, Hamanaka stated that the implementation of some or all of these measures is “based on the outcome of the [COP6] conference” (2000), which did not conclude until after the COP6bis meeting in July 2001. Until the treaty enters into legal force, however, the Japanese government is maintaining its energy policy and local projects that address the issue of climate change. Although Japanese and International NGOs continue to criticize the Japanese position for being too conservative and for the Japanese government “just waiting until after ratification” (Hirata 2000), the fact that the Japanese government has taken these preliminary steps to consider how it will meet its commitment is laudable. Industry With Japan’s strong state, it is not a surprise that Japanese society is also well known for its close ties between the state and the industrial sector (see van Wolfren 1989). The state tends to work closely with industry to determine how to implement necessary regulations. One report about the Japanese government’s Central Environment Council, which advises the government on issues such as global

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climate change, says that “the reality on the council level is one of close cooperation between the Environment Ministry, MITI, and business” (Ouchi 1998: 26). The regulation of climate change in Japan is a case in point in that the government has only taken steps that are approved by industry. Kimiko Hirata, of the environmental group Kiko (Climate) Network, stresses this point: “there is always the government choosing industry” (1999). Although the Japanese government has committed itself to implementation of the Kyoto Protocol and has even passed a preliminary law that is the first step in regulating climate change, it has avoided regulating industry. Director General Hamanaka describes the process of environmental law making in Japan and the present climate change law: In our country, the industries themselves accept their own action plans with their goals … we thought it would be premature to impose legal requirements for emission reductions, so basically this law just promotes voluntary actions to establish plans for reduction of greenhouse gases … . This is just a voluntary action [for] industry, they are not legally required to achieve the goal. (Hamanaka 1999) As this high-ranking governmental official points out, the Japanese government is trying to provide industry with a guide to its priorities. The Japanese government considers voluntary commitments from industry “major policy measures to be applied” (Akio Morishima, head of the Central Environment Council as quoted in Corliss 2000: A9). In other words, the government uses voluntary laws such as the Law Concerning the Promotion of the Measures to Cope with Global Warming to warn industry that it needs to figure out how to deal with environmental issues like climate change. Unlike what might be expected by critical or skeptical analysts who see these types of voluntary measures as merely symbolic actions by the state (see Edelman 1964), the Japanese government’s warning seems to be taken to heart by Japanese industries. Shuzo Nishioka of Keio University states that industry focuses on these “top-down approaches” (Nishioka 1999). This strategy of the government warning industries about its priorities seems to be rather effective in promoting voluntary agreements in industries. Nippon Steel, for example, has voluntarily committed to decreasing its energy consumption. In the words of Teruo Okazaki, the senior manager of the global environmental affairs department of the environmental affairs division of Nippon Steel Corporation, “The energy savings in our production line is one of the most important things for us … . Our target is 10 percent for energy savings so from 1992 to 2010, 10 percent of our total amount of energy consumed will be saved” (Okazaki 1999). Similarly, Hajime Ohta, the Executive Counselor of Environment, Energy and International Economic Affairs of the Keidanren ( Japanese Federation of Economic Organizations), which is responsible for 60–80 percent of the Japanese gross national product, says that the “business sector is responsible for 40 percent of Japan’s CO2 emissions. They will do what they promised” (Ohta 1999). In

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short, even though these are voluntary measures, many actors in industry do not feel that they have a choice. Ohta goes on to say that the Keidanren recognizes that if they “did not do it on their own, the government would regulate them. Also, there’s pressure from the public” (Ohta 1999). In a related editorial by the same counselor for the Keidanren, he points out that through the increased pressures for voluntary agreements, “the government is effectively tightening its control over corporate activities” (Ohta 1998). Even with these pledges, some NGOs have criticized the voluntary measures. In the words of Yurika Ayukawa, the Climate Change Campaign Officer for the World Wide Fund (WWF) for Nature Japan, “there is no place for a third-party evaluation or verification team … they will say they will do this and I think they will do it, but who knows?” (Ayukawa 1999). Even while she complains about the evaluation of these agreements, there is a sense that these agreements are effective and industry will achieve the goals. The Director General of the Japanese Environment Ministry is more certain of industry’s commitments to climate change. “They are, all of them, well-known companies, and they already made their plans public. I think that the CEOs are under heavy pressure if they fail to achieve that goal … I think the likelihood or the possibility for them [the companies] to reach their own target would be … large” (Hamanaka 1999). This behavior is consistent with other aspects of Japanese culture in that saving face is a central component in social interaction (van Wolfren 1989). Positive environmental outcomes of these agreements can already be seen in the 9.5 percent decrease in the emissions of Japan Iron and Steel Federation and the 9.7 percent decrease in the emissions of the Cement Association of Japan between the years 1990 and 1998 (Keidanren 2002). In response to these types of voluntary agreements, there is an overall approval of the role that industry is playing in dealing with climate change in Japan. In particular, Japanese industry has been lauded as being exceptionally efficient. Some have even called Japan “the most energy efficient country of the OECD” (Ohta 1999; see also Leggett 1999). The big criticism of Japanese companies comes not from their efficiency standards and ability to implement commitments to such standards, but from their ever-increasing production and pressure for consumer consumption. Again, NGOs criticize Japanese industry. Yurika Ayukawa, for example, provides a very different criticism here stating that companies “will reduce their energy consumption, they will make their products more energyefficient, but they will make more. That is what they are saying. And that is what the projection is, that we will be using more computers, more phones … and we will be using more energy in 2010” (Ayukawa 1999). Even with this criticism, however, Japanese industry, by initiating its own voluntary measures, is working with the government to respond proactively to the issue of climate change using a top-down approach. At the first part of the COP6 climate change negotiations in Fall 2000, Director General Hidenori Hamanaka of the Environment Ministry discussed industry’s role in emission reductions prior to the ratification of the Kyoto Protocol in Japan. He pointed out that industries and the Keidanren, as the largest

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association of industries in Japan, is cautious about taking any further steps. “They seem reluctant to move forward and sign an agreement with government. They think that other things should be done first on a consumer level” (Hamanaka 2000). Given the fact that the Japanese economy has been suffering for many years and that the future of the Protocol is still uncertain, it makes sense not to implement costly measures until the treaty goes into force. Given Japan’s strong state and the close ties between industry and the state, implementation of measures to achieve the country’s emission reductions by the 2008–2012 Kyoto target seem feasible. Civil society In contrast to industry, which has been aggressively working to deal with the issue of global climate change in Japan, civil society has paid much less attention to the issue. As has been previously mentioned, the industrial sector in Japan has an economic incentive to follow the issue of climate change and to respond to the issue in order to avoid governmental regulation. For citizens, however, the situation is different. Makoto Ikeuchi, the Managing Director of the Hokkaido Seikatsu (Lifestyle) Club, one of the largest consumer cooperatives in Japan, points out that “Because the economy is bad, many people are not thinking about the environment. People are thinking about prices and money” (Ikeuchi 2000). When it comes to climate change, Japanese citizens do not appear to be particularly motivated to put pressure on the institutional structures of the state or the market to make environmental changes like they did in response to the pollution diseases of the 1970s. In addition to the financial problems facing many Japanese citizens during the recession that began in the 1990s, the complexity of the issue of climate change also contributes to the lack of citizen activity. Surrounding the COP3 negotiations in Kyoto, the Japanese media were deeply involved in covering the issue of climate change; the major newspapers in Japan covered the issue of climate change on an almost daily level (Tanaka 2000). Although there was a good deal of media coverage of the issue in 1997, coverage has since dropped significantly. At this point, in the words of Yurika Ayukawa of the WWF, “people do not know about global warming so much any more” (Ayukawa 1999). Beyond the lack of media coverage, however, many of the people whom I interviewed pointed out that the complexity of the issue of climate change has limited citizen understanding of the issue. Environmental experts such Kazuo Matsushita of the government-funded think tank, IGES, states that “for the general public, I suppose it would be very difficult to understand the overall significance and importance of the climate change issue” (1999). Similarly, Kimiko Hirata of the NGO Kiko (Climate) Network, points out that “global climate change is very tough to understand, only about 10 percent of the people do” (2000). Writers for the newspapers themselves echo such opinions. In the words of Yasuyoshi Tanaka, the science and environment writer for the Mainichi Shimbun, one of the most-read newspapers in Japan, “Japanese citizens cannot get all of the issues

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involved in global climate change” from reading the newspapers, understanding the issue requires more depth than the amount of space available in a newspaper can provide (Tanaka 2000). Still another reason for the lack of citizen participation in the issue of climate change may be the structure of Japanese civil society itself. Many of the people whom I interviewed, including citizen activists, pointed out the weakness, or lack, of an active citizenry in Japan. In the words of Harumi Suda, “citizen involvement is not Japanese society’s style” (1999). The weakness of the citizenry leads some, such as Hajime Ohta, to say that the “public always tries to find somebody to take care of them” (Ohta 1999). Most people in Japan agree that the citizen activism against the pollution diseases of the 1970s no longer exists. “In Japan, they [citizens] receive information from the government but not from the bottom up, there are no protests now” (Hirata 2000). Although the public is not very engaged in the issue of climate change in Japan, a number of NGOs are working on the issue of climate change. Mie Asaoka, the President and founder of Kiko (Climate) Network, points out that some of these organizations work specifically to “widen the public’s consciousness” about the issue (Asaoka 1999). Other NGOs negotiate with the national government about Japan’s international climate change position, provide input into national legislation regarding climate change, and work with industry. One of the NGOs most active in working with industry is the WWF Japan. As Yurika Ayukawa, their climate change campaign officer, describes the WWF’s work with industry, “our future is to be working with industry, so we have this industry approach, and I am trying to gather a group of companies who are progressive or very interested and dedicated to the prevention of global warming” (1999). Even with this involvement in national issues and industry programs, many of the people whom I interviewed pointed to certain unique characteristics of civil society in Japan. In her comments on the citizenry in Japan, Mie Asaoka stated that “the citizenry is so weak. … it is not so much that the citizens’ movement is very weak, but it is different” (1999). It is likely that the most appropriate interpretation of the uniqueness of civil society in Japan is that it has an obvious spatial component: citizen involvement tends to take place on the local level. Perhaps members of the Seikatsu (Lifestyle) Club in Hokkaido best describe it: “There is no shimin undo [national citizen’s movement] in Japan, but there is a jumin undo [local people’s movement]. Local movements exist but there is not much on the national level” (Demura 2000). Mie Asaoka builds on this idea, “Citizens are only active at the local level and they only have small involvement on the national level. The local level is where it can happen … NGO action is within a small community. They want it to be larger, but there is not much on a national level” (Asaoka 1999). These statements by NGO leaders in Japan are consistent with some of the findings of Mitsuda in his research on environmentalism in Japan (1997; see also Mitsuda and Fisher 2000). When discussing the specific character of civil society in Japan, many of the people whom I interviewed discussed the role that locally based lifestyle changes could take in mitigating climate change. As one of the most well-known

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movement leaders in Japan, Harumi Suda states “The best way to change the system is through the community. Changing citizen’s lifestyles could happen through community culture” (Suda 1999). The results of my interviews with representatives of national environmental NGOs, in short, suggested the need to look at more locally based organizations involved in global climate change. To gain a better understanding of the dynamics of civil society in Japan and its action with regard to climate change, I decided to follow the recommendations of a number of NGOs in Tokyo that mentioned a local project in Hokkaido, the northern island of Japan. The project was described by WWF Japan in Tokyo as “one big consumer group … saving electricity in their own group and … supporting a wind turbine in some other area” (Ayukawa 1999). Begun as the response to a proposed nuclear power plant in Hokkaido, the Seikatsu (Lifestyle) Club cooperative created a project to decrease energy consumption and develop an alternative source of energy. As one of the largest cooperatives in Japan, the Seikatsu Club has over 250,000 family memberships throughout Japan. The project has now become its own organization, called the Green Fund, and is run by members of the cooperative. “The fund charges its members for their electric bills plus an additional 5 percent of their bill which is put in the “Green Fund.” The fund then pays the electric companies for its members’ electric bills. Any resident of Hokkaido can join this fund by paying an annual membership fee”(Katsuta 2002). Once enough money is collected, it will be matched by a governmental subsidy to fund the construction of one windmill. Electricity generated from the 6 megawatt windmill will go to the electricity company that distributes electricity in Hokkaido. When I met with the members of the Seikatsu Club and the Green Fund to learn about their wind energy project, I asked how the goals of their project are different from the various wind energy parks being developed by the government on Hokkaido that are supported by MITI, and jointly funded by the government (33 percent) and industry (66 percent). Most of the organization’s members had little awareness about the government’s plans; in fact, they were visibly surprised by the growth in wind energy on Hokkaido. In response to a question about the significance of their project, Ruriko Demura, a member of the Seikatsu Club board of trustees and an organizer of the Green Fund responded, “the Green Fund project is different from the government’s because of where the money comes from” (Demura 2000). While the government has windmill projects where “no citizen money is involved” (Mizushima 2000), the Green Fund’s project is motivated, developed, and funded by citizens. Instead of working with the government to promote wind energy in Hokkaido, the citizens have chosen to pursue their own separate program. As of March 2001, enough money had been collected by the Green Fund to begin construction on the planned windmill. It is unlikely, however, that the windmill will become a major source of electricity for the citizens who supported it – its 6 megawatts will represent less than 0.00034 percent of Japan’s 1998 electric demand (IEA 2000a)10 – the project does provide a positive example of active locally based civil society actors in Japan. Like many social movement organizations

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that are constrained by resources, the organizations involved are focusing their attention on a project that is firmly outside the social complexes of the state and industry. It is unclear, however, if local citizen groups might have a more significant effect on global climate change were they to work with, or between, the government and industry to bring in a citizen component to those projects that are already under way.

Conclusion The case of the Green Fund project in Hokkaido provides data for one of the main conclusions of my case study of Japan: there is a clear spatial component to civil society in Japan. Although there is not a strong Japanese civil society working on the national level to deal with a global issue such as climate change, at the local level, Japanese civil society is engaged. In particular, my interviews yielded rather striking consensus regarding the absence of citizens in both the national debate as well as in playing a role in the mitigation of global climate change in Japan. This conclusion is consistent with Knight’s research on Japan that finds: “The failure to achieve a civil society nationally has been attributed to the power of primary social groups … related to the particularism of earlier village society” (1996: 239). In other words, the absence of a citizen presence in the national work on climate change and the strength of local, jumin-level, movements is the result of the history of Japanese society itself. It was only after disfiguring pollution diseases struck people throughout the country that Japanese citizens demonstrated against industrial pollution. Since that time, the Japanese government has maintained a strong leadership position on many environmental issues, including global climate change, while working closely with industry. In the words of Yasuyoshi Tanaka of the Mainichi Shimbun: “The government must express that climate change is very important. Industry must improve the materials and efficiency … and citizens must choose efficient products even if the products are more expensive” (Tanaka 2000). Thus far, the different social actors in Japan have distinctive roles in the climate change regime, with the citizen’s role being that predominantly of a consumer. Although the history of Japanese environmentalism, as was mentioned in the beginning of this chapter, is consistent with reflexive modernization, the present global climate change regime in Japan fits the expectations of Ecological Modernization theory more closely (see Fisher and Freudenburg 2001 for a review of the theory; see also Mol, 1995, 1997, 1999; Mol and Spaargaren 1993, 2000; Spaargaren and Mol 1992; Spaargaren et al. 2000). The preliminary results of this research suggest that Ecological Modernization appears to be happening in Japan in that actors from science, industry, and the state lead the way in making environmental protection possible. Ecological Modernization theory, however, also says that social movement organizations end up working with the state and industry to build new coalitions and, to date, these new coalitions are not forming. In other words, these data from Japan suggest flaws in the argument about how political possibility is created. This absence of an active civil society in Japan, at least at the national level, suggests important implications to the theory that says

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there must be significant social movements and a strong civil society to have ecological modernization. One possible interpretation of the Japanese case is that the magnitude of past environmental mistakes created a political consensus around avoiding them in the future. Thus, there is need to check these results through further research, and to include other cases in order to understand the specifics of the dynamics of Ecological Modernization. At the first part of the COP6 negotiations in The Hague in November 2000, advisors to the Japanese government, such as Professor Shuzo Nishioka, stated that the emission reduction target agreed upon by Japan in 1997 was a “huge mistake” (Nishioka 2000). In addition, he stated that a change in the US position, such as we saw in 2001, “does not matter” to Japan’s intention to ratify the Kyoto Protocol. Although Japan’s intention was hard to predict after the change in the US position, on June 4, 2002, Japan ratified the Kyoto Protocol. Now that the Protocol is ratified and is likely to be moving toward its entrance into legal force in early 2003, it is not clear whether there will be changes in the roles that social actors in Japan will be playing to meet the Japanese targets for climate change mitigation. All we can tell for certain is that Japan has begun to develop an effective climate change regime in the face of an economic recession.

Acknowledgment The author would like to thank Professor William R. Freudenburg at the University of California-Santa Barbara for helpful comments on earlier drafts of this chapter. This research was made possible through the support of a US National Science Foundation Dissertation Enhancement Award, and through the US National Science Foundation Summer Institute in Japan in conjunction with the Japanese Science Technology Agency, the Japanese National Institute of Environmental Studies, and the Tokyo Institute of Technology.

Appendix: people interviewed in Japan Mie Asaoka, President Kiko Network July 28, 1999 Yurika Ayukawa Climate Change Campaign Officer World Wide Fund for Nature (WWF ) Japan July 29, 1999 Ryriko Demura Board of Trustees, Seikatsu Club Consumers’ Co-operative Hokkaido Green Fund March 15–16, 2000

Akiko Domoto Member of the House of Councillors, Japanese Diet July 23, 1999 (written interview) Hironori Hamanaka Director General, Global Environment Department, Environment Agency July 20, 1999 November 16, 2000 Naoyuki Hata Citizen’s Forum July 29, 1999

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Kimiko Hirata Kiko Network July 29, 1999 April 3, 2000 November 15, 2000 Taka Hiraishi Co-Chair Intergovernmental Panel on Climate Change National Greenhouse Gas Inventories Program and Senior Consultant Institute for Global Environmental Strategies and Intergovernmental Panel on Climate Change July 23, 1999 Makoto Ikeuchi Managing Director Seikatsu Club Consumers’ Co-operative, Hokkaido March 16, 2000 Yasuko Kawashima Researcher National Institute of Environmental Studies August 3, 1999 Yoichi Kaya Director General Research Institute of Innovative Technology for the Earth August 2, 1999

Hokkaido Government March 14, 2000 Kazuo Matsushita Institute for Global Environmental Strategies July 22, 1999 Atsui Mizushima Shigen Energy Center of the Hokkaido Prefectural Government March 15, 2000 Tsuneyuki Morita Head of Environmental Economics Program National Institute of Environmental Studies and Tokyo Institute of Technology August 3, 1999 Masayo Nakase Member of the Board of Trustees Seikatsu Club Consumers’ Co-operative, Hokkaido March 16, 2000 Shuzo Nishioka Graduate School of Media and Governance, Keio University July 22, 1999 November 21, 2000 Hajime Ohta, Executive Counselor Keidanren-Japan Federation of Economic Organizations August 4, 1999

Kiyoshi Kawamura Executive Director Hokkaido Association of Towns and Villages March 15, 2000

Teruo Okazaki, Senior Manager Global Environmental Affiars, Nippon Steel July 27, 1999

Kojo Kunieda Environmental and Nature Planning Office

Harumi Suda, Director Citizen’s Movement National Center August 2, 1999

Formation of a Japanese climate change regime Toru Suzuki Secretary General Hokkaido Green Fund March 15, 2000

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Yasuyoshi Tanaka, Environment Writer Mainichi Shimbun March 9, 2000

Notes 1 Grammatical errors were edited from the responses of non-native English speakers for clarity. 2 For the sake of simplicity, I am including Beck’s work on the Risk Society and Subpolitics within the literature on reflexive modernization. Although he has used various terms to describe these theories, they are consistent in their main points. 3 Since the United States pulled out of the negotiations in March 2001, the nature of the JUSCANZ alliance has changed. 4 Even though the European Union has just about stabilized its emissions, and was only 0.6 percent above 1990 levels in 1998, it has achieved this goal through an EU-wide burden sharing agreement that includes technology transfers to the former East Germany. 5 Although comparable data are available only through 1998, Japanese emissions are expected to have fallen even further since then. 6 Although the Environment Agency only became a Ministry of the Japanese government in 2001, to avoid confusion it is referred to as the Environment Ministry throughout this chapter. 7 At the same time, this close connection between science and policy can be problematic. One such example can be seen in the case of the pollution diseases, where scientists recognized the linkage between the pollution and the disease but their findings were covered up by the government. 8 The US Energy Information Administration reports that Japanese primary consumption was 21.75 Quadrillion BTU in 1997 and 21.48 Quadrillion BTU in 1998 (EIA 1999: 178). 9 After the data for this chapter were collected, Yasuko Kawashima’s surname changed to Kameyama (see her chapter (Chapter 7) in this volume). 10 This calculation is based on 6,000 hours of operation per year.

References Beck, U. (1987) “The anthropological shock: Chernobyl and the contours of the risk society,” Berkeley Journal of Sociology 32: 153–165. —— (1995) Ecological Politics in an Age of Risk, Cambridge: Polity Press. —— (1997) “Subpolitics,” Organization and Environment 10: 52–65. —— (1999) World Risk Society, Cambridge: Polity Press. Beck, U., Giddens, A., and Lash, S. (1994) Reflexive Modernization: Politics, Tradition and Aesthetics in the Modern Social Order, Stanford: Stanford University Press. CQ Researcher (1996) “Global warming update: are limits on greenhouse gas emissions needed?,” CQ Researcher 6(41): 961–984. Corliss, M. (2000) “Updated environment plan to add new economic options,” The Japan Times, August 25: A9. Edelman, M. (1964) The Symbolic Uses of Politics, Urbana: University of Illinois Press. Energy Information Administration (EIA) (1999) “International energy annual 1999,” Washington, DC: EIA, http://www.eia.doe.gov/emeu/iea/tablee1.html

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Environment Agency of Japan (1998) “Law concerning the promotion of the measures to cope with global warming” (Law Number 117), July. Fisher, D.R. and Freudenburg, W.R. (2001) “Ecological modernization and its critics: assessing the past and looking toward the future,” Society and Natural Resources 14(8): 701–709. Friends of the Earth (n.d.) Dike Action Campaign Update. From martina.demoor@ RUG.AC.BE Giddens, A. (1998) The Third Way, Cambridge: Polity Press. Global Warming Prevention Headquarters (1998) “Guideline of measures to prevent global warming,” June 19. Hann, C. and Dunn, E. (1996) Civil Society: Challenging Western Models, London: Routledge. Hideaki, A. (1999) “Environmental standard bearers,” Look Japan, September: 4–17. Huddle, N. and Reich, M. (1975) Island of Dreams: Environmental Crisis in Japan, Rochester, Vermont: Schenkman Books, Inc. Institute for Global Environmental Strategies (IGES) (2000) Climate Policy Debate in Japan, Report on the IGES Open Forum for Global Warming Abatement, Tokyo: IGES. International Energy Agency (IEA) (1994) Climate Change Policy Initiatives, Paris: OECD. —— (2000a) Energy Statistics of OECD Countries 1997–1998, Paris: OECD. —— (2000b) CO2 Emissions from Fuel Combustion 1971–1998, Paris: OECD. Japan Times (2000) “Greenhouse gas output declines,” September 23: A6. Jary, D. and Julia, Jary (1991) Sociology: The Harper Collins Dictionary. Edited by E. Ehrlich. New York: Harper Collins. Katsuta, T. (2002) “Wind Energy & Small Hydro Power,” in Renewable Energy in Japan. Accessed at www.cnic.or.jp/english/topics/energy/renewable/%5B2%5Dwindhydro.html Keidanren (2002) Trends in CO2 Emission By Industry. Accessed at www.keidanren.or.jp/ english/policy/pol114/attachment1.html Knight, J. (1996) “Making citizens in postwar Japan” in Chris Hann and Elizabeth Dunn (eds) Civil Society: Challenging Western Models, London: Routledge Press, pp. 222–241. Leggett, J. (1999) The Carbon War, London: Allen Lane The Penguin Press. McKean, M. (1981) Environmental Protest and Citizen Politics in Japan, London: University of California Press. Mitsuda, H. (1997) “Surging environmentalism in Japan: a sociological perspective,” in Michael, R. and Graham, W. (eds) The International Handbook of Environmental Sociology, Cheltenham: Edward Elgar, pp. 442–452. Mitsuda, H. and Fisher, D.R. (2000) “Environmental sociology in Japan,” Environment and Society, Newsletter of Research Committee 24 of the International Sociological Association, July: 2–4. Mol, A.P.J. (1995) The Refinement of Production, Utrect: Van Arkel. —— (1997) “Ecological modernization: industrial transformations and environmental reform,” in Michael, R. and Graham, W. (eds) The International Handbook of Environmental Sociology, Cheltenham: Edward Elgar, pp. 138–149. —— (1999) “Ecological modernization and the environmental transition of Europe: between national variations and common denominators,” Journal of Environmental Policy and Planning 1: 167–181. Mol, A.P.J. and Spaargaren, G. (1993) “Environment, modernity and the risk society: the apocalyptic horizon of environmental reform,” International Sociology 8 (1993): 431–459. —— (2000) “Ecological modernization theory in debate: a review,” in Mol, A.P.J. and Sonnefeld, D.A. (eds) Ecological Modernisation Around the World: Perspectives and Critical Debates, Essex: Frank Cass and Co, pp. 17–49. Offe, C. (1996) Modernity and the State: East, West, Cambridge, MA: MIT Press.

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Ohta, H. (1998) “Signs of command and control?,” The Japan Times, July. Ouchi, K. (1998) “Policy-making after the Kyoto conference,” in Forum on Environmental Administration Reform (FEAR) (ed.) Turning Up the Heat: Japanese NGO Responses to the Kyoto Conference and Japanese Climate Change Policy. Spaargaren, G. and Mol, A.P.J. (1992) “Sociology, environment, and modernity: ecological modernization as a theory of social change,” Society and Natural Resources 5: 323–344. Spaargaren, G., Mol, A.P.J., and Buttel, F.H. (2000) Environment and Global Modernity, London: Sage Studies in International Sociology. The Economist (1998) “Toxic waste in Japan: the burning issue,” July 25: 60. Van Wolfren, K. (1989) The Enigma of Japanese Power, New York: A.A. Knopf. World Resources Institute (1994) World Resources: Guide to the Global Environment 1994–1995, New York: Oxford University Press.

PART IV

The costs and opportunities of climate change in Southeast Asia

11 The Philippines in the climate change arena Joy V. Galvez

Introduction As scientists refine our understanding of global warming and climate change, sea levels are on the rise, global temperatures continue to increase, and prolonged drier or wetter spells continue to wreak havoc in many countries. Increasingly, many countries and populations are not able to cope with impacts of a rapidly changing climate. Less developed and developing countries now have to contend with the potential impacts of a warmer climate – in addition to dealing with their domestic economic development, national security threats, and other problems. Among these countries is the Philippines. The Philippines is a hot spot for natural hazards. Being an archipelago consisting of approximately 7,100 islands and rocks, it is highly vulnerable to projected impacts of climate change. It can be very wet during the wet season and very dry during the dry season. Floods and droughts are common. An average of twenty tropical cyclones pass through the Philippines’s area of responsibility every year, nine of which cross land (Tibig 2001: 61). These cylones cause storm surges and river flooding that result in millions of pesos in damage to the country’s agriculture and infrastructure. When the rainy days have gone, dry spells are not too far behind. Reduced water supplies and changes in precipitation mean low agricultural yield that can exacerbate food shortages. The Philippines is regarded as one of the highest priority countries in the world for conservation concerns. It has enormous biological diversity in both animal and plant species, and an extraordinarily high percentage of uniqueness (or endemicity) among these species. Sudden temperature changes could lead to rapid deterioration, possibly extinction, of plant and animal species. Unfortunately, the Philippines also has a very high rate of deforestation and other forms of habitat destruction, depleting further the natural resource base at an alarming rate. Its forests have been steadily shrinking at an average rate of 2 percent (approximately 550,000 hectares) per year. The country’s remaining forest area is 5.6 million hectares, down from 20 million hectares a century ago (ESSC 1999: 18–22). The 32,400-kilometer coastline is home to an estimated three million people who sustain their livelihood from fishing, tourism, and coastal farming. But due to increase in population in the coastal areas and destructive fishing practices, there

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is not much left to live on. Mangrove areas are reduced at an average annual rate of 3,000 hectares, 70 percent of the country’s coral reefs are in progressive stages of degeneration, and 50 of the 421 rivers in the country are already considered biologically dead. Sectors projected to suffer the most from climate change-related impacts are the water resources, agriculture, coastal resources, and human health.

Projected impacts of climate change Water resources Climate change could disrupt the global hydrological cycle, affecting global temperature, precipitation, soil moisture, and sea level. A change in the volume and distribution of water will affect both ground and surface water supplies, and changes in precipitation and its frequency and intensity will directly affect the magnitude and timing of runoff and the intensity of floods and droughts (Cruz 2001: 40). At present, the Philippines’ water resources are manageable, with substantial supply brought about by abundant rainfall. However, the supply may not be enough to meet the demands of the population due to, among other things, the uneven distribution of rainfall, uncontrolled groundwater extraction, and watershed degradation. Additionally, a significant increase in future demand is expected from high population growth rate, particularly in highly urbanized areas (Cruz 2001: 40). A change in the climate system will have an effect not only on the water supply but also on the usage of water, particularly through basic socio-economic activities such as agriculture. In the agriculture sector, irrigation and livestock rearing could be greatly affected by warmer temperatures, resulting in lower crop yields and reduced livestock products. Agriculture Agriculture is the economic lifeline of the Philippines and the driving force behind its economic development. Agriculture contributes to about one-third of the country’s total gross domestic product (GDP) and employs approximately 46 percent of its total labor force (Lantin 2001: 53). Total agricultural land amounts to about 10 million hectares. Rice and corn remain the most important crops. Coconut, sugarcane, and some cash crops like bananas constitute important export commodities. Rice, being the staple food of most Filipinos, plays a dominant role in agriculture and the economy as a whole, and approximately one-third of the total agricultural land is devoted to rice crops. Weather and climate are key factors in agricultural productivity, but with the impending disturbance in precipitation due to a changing climate, rice production could be greatly reduced. Climate change could exacerbate the problems of an increasing population (with a growth rate of 2.4 percent per annum), the spread of urbanization, lack of adequate water resources, and environmental pollution. As it is, the Philippines depends on rice imports, and with climate change and the aforementioned factors, the Department of Agriculture concedes that the Philippines

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will most likely continue to depend on rice imports if agricultural production, of not only rice but corn and other crops as well, does not improve in the next five years (Tibig 2001: 60–61). Coastal resources The coastal sector is highly vulnerable to one of the projected impacts of climate change – sea-level rise. An accelerated sea-level rise will bring about increased frequency and intensity of storms and storm surges; saltwater intrusion into surface and ground water, affecting the amount and quality of water supplies; destruction of mangroves and other habitats of benthic organisms due to changes in salinity; increased runoff due to high precipitation; and lower fish yields because the pattern of fish reproduction would be affected (Perez 2001: 19). As an archipelago, the Philippines is already bearing the brunt of some, if not all, of the impacts of an accelerated sea-level rise. The Philippines has a coral reef cover of approximately 27,000 square kilometers and has a high level of coral diversity. These reefs contribute at least 15 percent of the country’s total annual fish yield. Unfortunately, human activities, such as destructive fishing practices, siltation, and coral harvesting, have contributed much to the destruction of Philippine reefs. They are now considered to be one of the highly threatened reef areas in the world, with only approximately 25 percent of the total coral reef cover of the country considered to be in good condition (Perez 2001: 20). If human-induced stresses on coral reefs continue unabated, weakened corals and coral reefs would not be able to respond positively to future sea-surface temperature changes. Human health The Philippines is already experiencing extreme cases of vector-borne diseases. There are periodic outbreaks and the most affected are the most vulnerable – children. Inadequate hospitals – shortage of rooms, medication, attending physicians – and the high cost, and sometimes lack of health maintenance programs contribute to this dilemma. Climate change can affect human health (Table 11.1). Higher temperatures will induce more cardiovascular and respiratory diseases. Incidents of dengue fever, malaria, yellow fever, and other tropical diseases will continue to increase because warmer temperatures are more suitable for vector-borne diseases (FPE-1 2001:13). Non-vector borne diseases could also pose potential threats to an already vulnerable population. With climate change, incidents of cholera and diarrhea could become more frequent, and there could be an increased incidence of viral encephalitis (Flavier et al. 2001: 72–73). These impacts worsen conditions of an already underdeveloped country and a destitute population. Without a timely response from the national government, international organizations, and the Filipino people, the Philippines will most likely suffer from the projected impacts of climate change.

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Table 11.1 Ways climate change can affect human health Mediating process Direct effects Exposure to thermal extremes Altered frequency and/or intensity of other weather extremes Indirect effects Effects on range and activity of vectors and infective parasites Altered local ecology of water-borne and food-borne infective agents Altered food productivity due to changes in climate, weather, pests, diseases Sea-level rise and resulting population displacement and damage to infrastructure Air pollution, including pollen and spores Social, economic, and demographic disturbance

Health outcomes Heat- and cold-related illness and death Deaths, injuries and psychological disorders; damage to public health infrastructure Changes in geographic ranges and incidence of vector-borne diseases Changes in incidence of diarrhea and certain other infectious diseases Regional malnutrition and hunger, consequent impairment of growth and development Injuries, increased risks of various infectious diseases, psychological disorders Asthma, allergic disorders; other acute and chronic respiratory disorders and deaths Wide range of public health consequences (e.g. civil strife, nutritional impairment)

Source: Flavier et al. 2001: 70–71.

Philippine policy making and the climate change convention The Philippines faces the dilemma of balancing economic growth and poverty alleviation with environmental conservation. Although developing countries like the Philippines have no concrete emission reduction commitments under the Kyoto Protocol, they have been instrumental and significant in the international negotiations. The Philippines has taken the initiative to be actively involved and to participate in response to climate change issues, consistent with its sustainable development objectives. The Philippines was one of the first countries to discuss and develop positions on climate change, and it was involved in the setting up of the Intergovernmental Negotiating Committee at the United Nations Framework Convention on Climate Change (FCCC). The Philippines aligned itself with other developing nations and formed the “Group of 77 and China,” which negotiates with the industrialized developed countries in determining commitments of each State Party to the FCCC. At the national level, the Philippines was also among the first countries to set up a national committee to negotiate at the Conferences of Parties of the FCCC. The Philippine Interagency Committee on Climate Change (IACCC), composed of national agencies, academic institutions, and civil society,

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contributed to the scientific research related to climate change vulnerability of smaller countries like the Philippines, as well as to the strong legal position of developing countries in relation to the responsibilities and commitments of developed nations. Climate change will affect different countries in varying degrees. Philippine policy making, in relation to its negotiating position in and implementation of its obligations as a State Party to the FCCC, are based on the basic principles of the convention. The Philippines takes the position it does, along with other developing nations, based on the principle of common but differentiated responsibilities. The country’s position in the negotiations is further based on the different aspects of this principle, on the scientific assessments of the Intergovernmental Panel on Climate Change, and on the commitments of each State Party under the Convention. The principle of common but differentiated responsibilities is recognized as one of the basic guiding principles of sustainable development, and the Preamble of the FCCC states that international cooperation in climate change should be in accordance with this principle. Further, the FCCC states that responsibilities of each State Party shall be according to their respective capabilities and social and economic conditions. While climate change and its adverse effects are a global concern, the responses that have to be made by each State Party, and their responsibilities under the Convention, have to take into account the differences in their contribution to the present concentrations of greenhouse gases (GHGs) in the atmosphere, their response capabilities, and their specific situations (Muller 2001: 106). However, while the industrialized countries are historically the major sources of GHGs that contribute to global warming, in the end, all countries of the world will be adversely affected, therefore requiring all countries, regardless of their contribution to the present GHG concentrations in the atmosphere, to respond in their own capacities and based on the urgency of the projected effects on them. The Philippines, as a State Party to the Convention and in recognition of the common but differentiated responsibilities of each State Party, draws up its adaptation and mitigation measures in response to potential climate change impacts and integrates them into the country’s mainstream development plans.

Philippine obligations and initiatives In the 1994 Greenhouse Gas Inventory of the Philippines, the country’s energy, industry, agriculture and waste sectors emitted 104,765 Gigagrams (Gg) of carbon dioxide (CO2). Although this number pales in comparison to the industrial countries’ carbon emissions, this is already alarming when taken in the national context (FPE-1 2000: 6–7). Of the four major sectors mentioned in the inventory, the country’s energy sector accounted for about 51 percent of the total carbon emitted (Villarin et al. 1999: 1–2) (see Figure 11.1). One of the foremost obligations of all State Parties is the preparation of national communications, the contents of which are determined through decisions of the Conference of the Parties. The national communications consist mainly of a national inventory of anthropogenic emissions and a general description of

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Sector

CO2 emissions (Gg in 1994)

Energy

50,038

Industry

10,603

Agriculture

33,482

Waste Total

7,198 101,321 Energy 50%

Waste 7%

Agriculture 33%

Industry 10%

Figure 11.1 The Philippines’ GHG emissions. Source: Narisma et al. (2001).

steps taken and envisaged by each Party to implement the Convention. The Philippines, as a State Party to the FCCC, is obligated to prepare its national communication, and as a non-Annex I State Party, it is likewise called upon to formulate programs containing measures to mitigate climate change and to facilitate adequate adaptation to it. In this regard, the Philippines developed and integrated its climate change adaptation and mitigation program into its sustainable development plan, the Philippine Agenda 21. In 1999, the Philippines submitted its Initial National Communication to the Conference of the Parties, containing its 1994 national inventory of anthropogenic emissions by sources and removal by sinks of GHGs. It likewise outlined the measures taken or planned by the Philippine government in achieving the objectives of the FCCC. Globally, the Philippines cooperates in adaptation, research, systematic observation and development of data archives, and exchange of relevant scientific, technical and socioeconomic and legal information related to climate change issues. The country is specifically cooperative in education, training and public awareness campaigns, which are the bases for achieving effective implementation of policies and measures on climate change.

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In 1991, the Philippines formed the IACCC through Executive Order 220, promulgated by then President Corazon Aquino. It is composed of fifteen government agencies and NGOs (represented through the Philippine Network on Climate Change (PNCC)) that are tasked to provide the government with technical and scientific support on matters concerning climate change. The IACCC is co-chaired by the Department of Environment and Natural Resources (DENR) and the Department of Science and Technology, and includes the National Economic Development Authority, the Department of Energy, the Department of Transportation and Communication, other government agencies and the PNCC. The IACCC is tasked to coordinate various climate change-related activities, to propose climate change policies, and to prepare the Philippines’ position for FCCC negotiations (Dalupan 2001: 86). Through the IACCC, in 1997 the National Action Plan (NAP) on Climate Change was drafted. The Plan aims to integrate concerns on climate change into the mainstream processes of development planning by the various agencies of national and local government units. Various activities emerged from the drafting of the NAP, one being a series of Local Action Planning (LAP) workshops held in seven pilot provinces. The LAP project was part of the Philippine Climate Change Program Development project of the Foundation for the Philippine Environment, with funding support from the US Agency for International Development. Project implementation on the ground, which included networking with the seven provincial governments and coordination with scientific and technical experts on climate change, was supervised by the Institute for Climate, Energy and Environment. The focus of the workshops was information dissemination and capability building for provincial and municipal development planners, in order to equip them with the necessary tools for integrating climate change concerns with their mainstream development plans. One of the key agencies in the LAP project was the Manila Observatory, which conducted the 1994 Philippine Greenhouse Gas Inventory. Experts from this research institution contributed much to the understanding of the dynamics between human activities and climate change. As a follow-up to the LAP project, the Manila Observatory is now looking into institutionalizing education and training among local and national government units and agencies to better enable them to develop adaptation and mitigation measures for climate change. There have been other small and short-term activities initiated in the Philippines with regard to climate change and climate change-related issues, but most of them have dealt with information dissemination, communications, education and training, and lobbying. The most recent environmental law that was passed by the Philippine Congress, the Clean Air Act of 1999, demonstrates the growing interest in, and concern with, climate change impacts. The Law states that The DENR, together with concerned agencies and local government units, shall prepare and fully implement a national plan consistent with the FCCC and other international agreements, conventions and protocols on the reduction

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As mentioned above, the Philippines’ energy sector accounted for about half of its total carbon emissions. The 50,000-Gg contribution of this sector can further be attributed to power generation and the residential, industrial, agricultural, transport, and commercial subsectors (Figure 11.2). The issue to be addressed with regard to the energy sector’s major contribution to GHG emissions is the country’s energy mix. At present, the Philippines is highly dependent on crude oil and coal for power generation. The use of alternative

Subsector Power generation

CO2 emissions (Gg) 15,508

Residential

4,359

Industries

9,497

Agriculture

1,189

Transport

15,888 3,370

Commercial Fugitive emissions

50,038

Total

Transport 32%

Agriculture 2%

Commercial 7%

Industries 19%

Figure 11.2 The Philippines’ energy sector. Source: Narisma et al. (2001).

227

Fugitive emissions 0%

Power generation 31%

Residential 9%

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sources of energy (e.g. solar, wind, hydro, waste) will lessen the heavy dependence on fossil fuels, and will also result in reduced expenditures on oil importation. However, lessened dependence on fossil fuels is only half of the solution. Emphasis should also be given to the reduction of energy consumption, the promotion of mass transportation, and the use of energy-saving devices. Thus, bills pending in Congress relevant to climate change are the New and Renewable Energy Program Act, an Act to Institutionalize Energy Conservation and Enhance Efficient Use of Energy, and an Act to Strengthen the National Program for the Development and Promotion of the Use of Non-Conventional Energy Systems. These bills are particularly relevant to the issue of climate change since the energy sector is the leading contributor to GHG emissions. Agriculture comes second with regard to GHG emissions in the 1994 inventory. This sector accounts for 33,482 Gg of the country’s CO2 emissions (see Figure 11.3). Emissions from rice cultivation, domestic livestock, and agricultural soils could be reduced through more efficient agricultural production. The agriculture sector CO2 emissions (Gg)

Subsector Rice cultivation

13,364

Domestic livestock

10,507

Agri residue burning

8,680

Agricultural soils Grassland burning Total

Agri residue burning 2%

350 33,482

Agricultural soils 26%

Domestic livestock 31%

Figure 11.3 The Philippines’ agricultural sector. Source: Narisma et al. (2001).

581

Grassland burning 1%

Rice cultivation 40%

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could potentially contribute to alternative sources of energy through the installation of biomass energy systems using bagasse (waste product from sugarcane), rice hulls, and animal wastes. On the adaptation side, the agriculture sector should focus on the discovery and introduction of heat- and drought-resistant plant varieties. The issue of sustainable forest management may be resolved. The Total Log Ban in Primary Forests seeks to reduce deforestation and preserve the remaining primary forests in the country. This policy might prove effective in conserving Philippine forests and at the same time potentially serve as sinks for CO2. There are other laws that need to be looked into in relation to the Total Log Ban (e.g. the National Integrated Protected Areas System) and any overlapping or contradicting issues in them need to be resolved. Water resources management is closely linked with land use change and the forest sector. Aside from a sustainable forest management plan, the government should also strengthen the implementation of such laws that address the protection and rehabilitation of watershed areas. The anticipated increase in the incidence of drought, salt water intrusion, and coral bleaching may affect food production, industrial processes, and sanitation and health, therefore better irrigation systems and management, and the rehabilitation of rivers, should also be considered.

Subsector

CO2 emissions (Gg) 4,103

Solid waste Municipal wastewater

104

Industrial wastewater

2,018 973

Human sewage

7,198

Total

Industrial wastewater 28%

Human sewage 14%

Municipal wastewater 1%

Figure 11.4 The Philippines’ waste sector. Source: Narisma et al. (2001).

Solid waste 57%

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The waste sector is one of the four major sources of the Philippines’ GHG emissions. Proper waste management could be a solution to the growing problem of waste disposal in all the major cities in the country. Dumpsites are filling fast, and garbage is quickly piling up along streets and highways. Figure 11.4 shows that solid waste – generally from households, industries, and commercial establishments – contributes the most to CO2 emissions, with industrial wastewater second. The country’s current state of waste management (collection and disposal), rapid population increase, urbanization, and growth of industries have to be taken into consideration before any new law or plans are drawn up with regard to this sector. Emphasis should be given to reducing, reusing and recycling waste, and community-based or community-level waste management (i.e. proper waste segregation and composting) should be promoted.

Conclusion If the Philippines is to prepare itself for the projected impacts of climate change, a solid political strategy is needed for the legislative branch to ensure that there are enough laws that will particularly address this problem. The executive branch should undertake the full implementation of these laws. In turn, the citizenry must be involved in the implementation of any adaptive or mitigating measures because, in the end, the greatest numbers of people who may be affected by increased global warming are those who have the fewest resources available to them. The government has the responsibility for reducing GHG emissions and for mitigating climate change. Consumers and the industries can also do their part. Some of the following practices will not only reduce the emissions of GHGs, but will also protect the local environment in general (FPE-1 2001:18–23): ● ● ● ● ● ● ●

●

Backyard composting for biodegradable materials Use of energy-saving devices and appliances Treatment of liquid, gas and solid wastes from the industrial sector Opting for high-occupancy and mass public transportation Responsible electricity and water use Reducing, reusing and recycling Participating in community-, local- and national-level activities promoting environment-friendly practices Changes in lifestyle that are less energy intensive.

The Philippines submitted its Initial National Communications to the FCCC Conference of Parties in 2000. While the Annex I developed countries have complied with the requirements of the Second and Third National Communications to update inventories of their GHG emissions and sinks, the Philippines is yet to find financial support to conduct its second national GHG inventory. It is only then that it will be known whether the country’s local and international efforts in mitigating climate change impacts have been truly effective. In the meantime, it is clear that in order to cope with the projected impacts of climate change, the Philippine government must do several things, including (1) developing programs for massive information campaigns that educate people

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about the issue of global warming and how they contribute to it; (2) reviewing existing national and local environmental laws based on their relationship and congruence with international environmental laws, particularly on biodiversity conservation and climate change; and (3) imposing stiffer penalties on violators of these laws (e.g. the total logging ban and the clean air act) so as to curtail abuse and wanton environmental destruction. For its part, the citizenry, when they are more aware of the environmental issues that affect them, should do their share of environmental conservation and the conscientious use of the Philippines’ natural resources.

References Arceo, H.O., Quibilan, M.C.C., Licuanan, W.Y., and Aliño, P.M. (2001) “Coral bleaching in the Philippines” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. Cruz, N.A. (2001) “CC impacts on water resources,” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. Dalupan, M.C.G. (2001) “Policy and legal responses to the challenges of CC,” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. ESSC (1999) Decline of the Philippine Forest, Quezon City: AEC Graphics. Flavier, J.D.A., Baylon, M.L.L., and Paraso, G.R.V. (2001) “CC and public health in the Philippines,” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. Foundation for the Philippine Environment (FPE-1) (2001) Hotter Facts on Hot Climate (Primer on Climate Change 1), Quezon City. Foundation for the Philippine Environment (FPE-2) (2001) Cool Practices for Hot Climate (Primer on Climate Change 2), Quezon City. Gallares-Oppus, P.I. (2001) “Local climate action: fine-tuning local mindsets,” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. Lantin, R.S. (2001) “Philippine agriculture in a changing climate,” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. Muller, B.C. (2001) “Philippine policymaking and the FCCC,” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. Narisma, G.T., Villa-Real, A.V., and Villarin, J.T. (2001) Greenhouse Gases from Local Communities (An Inventory Manual), Quezon City: Manila Observatory. Perez, R. (2001) “Responding to the challenges of the rising sea,” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. Tibig, L.V. (2001) “Responding to the threats of CC to Philippine agriculture,” in J.T. Villarin (ed.) Disturbing Climate, Quezon City: Manila Observatory. Villarin, J.T., Narisma, G.T., Reyes, M.S., Macatangay, S.M. and Ang, M.T. (1999) Tracking Greenhouse Gases: A Guide for Country Inventories, Quezon City: Manila Observatory.

12 Cashing in on Kyoto? Lessons from Indonesia for emissions offset projects Frank Jotzo, Agus P. Sari, and Olivia Tanujaya

Introduction The expected devastating impacts of climate change have pushed countries around the world to negotiate the 1997 Kyoto Protocol, an international treaty to limit greenhouse gas (GHG) emissions. The Kyoto Protocol requires industrialized countries to limit their GHG emissions as well as to enhance the “sinks” of these gases. One of the unique characteristics of the Kyoto Protocol is the provision for carbon emissions offset mechanisms, where countries can “trade” their emissions permits internationally. The Clean Development Mechanism (CDM) is the only mechanism that can include developing countries. Basic rules and procedures on CDM were agreed at the Seventh Conference of the Parties (COP7) to the United Nations Framework Convention on Climate Change (FCCC). Rules regarding the use of sinks in CDM remain part of a major debate, and decisions on them have been deferred until COP9 in 2003. Using a quantitative model developed specifically for policy issues in the implementation of the Kyoto Protocol – the Pelangi Emissions Trading (PET) model – in this chapter we analyze the implications of including sinks projects under the CDM. We find that including sink projects in order to increase the volume of the CDM may be a fallacy. This is because the increase in low-cost sinks projects can lead to a fall in the price paid for emission credits, which can outweigh the quantity gains, and lead to lower revenue and lower financial gains for developing countries. However, equity between countries and regions within countries may be enhanced by the inclusion of sinks. These findings are exemplified in the case of Indonesia. We also analyze the potential impacts of emerging “parallel markets” for emission offset credits driven by demand from outside the Kyoto Protocol framework, as well as the possibility of restricting the supply of offset credits from CDM projects. Developing countries are especially vulnerable to climate change for many reasons (see Chapter 2). Indonesia, as a tropical archipelagic country with one of the world’s longest coastlines, could expect to suffer a significant amount of damage as a result of rising sea levels and changes in weather patterns that result from global warming. These are potential threats to the majority of the Indonesian population. Furthermore, changing climate patterns are expected to disturb the

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agricultural sector, which has already been badly affected by the severity of recent El Niño and La Niña weather events. Although agriculture is no longer the largest contributor to GDP, almost half of all Indonesians employed work in the agricultural sector. Indonesia thus has a great interest in avoiding global warming and the climate changes associated with it. In common with many developing countries, Indonesia’s national priorities are socio-economic development and the eradication of poverty; the need to focus on these issues has been even greater since the 1997–1998 economic crisis. Within this context, reduction of GHG emissions should not hinder the primary goal of development. However, the goals of economic development and reduction of GHG emissions need not be contradictory, and the CDM could be one way to reconcile them.

The policy context The climate convention and the Kyoto Protocol To mitigate the irreversible impacts of climate change, countries around the world started to find ways to collectively slow, if not to halt, climate change. Starting in the late 1980s with the establishment of the Intergovernmental Panel on Climate Change (IPCC) and its first findings, presented at the Second World Climate Conference, governments have negotiated the division of labor and the extent of all countries’ commitments to reduce GHG emissions. The IPCC suggested an immediate cut of GHG emissions by more than half of their current levels to stabilize their concentrations at recent levels. As a result of this alarming suggestion, the FCCC was signed in 1992 at the Earth Summit in Rio de Janeiro. The Climate Convention entered into force in 1995, and the First Conference of the Parties (COP1) was held in Berlin, Germany, that same year. The Berlin Mandate, the ultimate result of COP1, led to the adoption of the Kyoto Protocol in 1997 at COP3 in Kyoto, Japan (see Chapters 7–10). At COP6 in Bonn, Germany, governments accepted the basic political principles of the Protocol, whereas COP7 in Marrakech, Morocco, forged further agreements on the applied rules and procedures. With the withdrawal of the United States from the Kyoto Protocol, followed by Australia, it has been an uphill battle to get the Protocol ratified. However, with the eventual ratification from Russia, it is expected that COP9 will be the first simultaneous Meeting of the Parties to the Kyoto Protocol, thereby bringing it into force. Far short of the IPCC’s recommendation of 60–80 percent immediate reductions in GHG emissions, however, the Kyoto Protocol only commits the industrialized countries to reduce their collective emissions to approximately 5 percent below 1990 levels in the period between 2008 and 2012, on average. Emissions from the industrialized countries as a group were already roughly 5 percent below their 1990 levels, making the Kyoto target merely keeping emissions at 1995 levels until 2012. The industrialized countries that made the limitation and reduction commitments are listed under Annex I of the Climate Convention (thus the reference to Annex I countries in the FCCC), and their commitments are listed

Indonesia and emissions offset projects 223 under Annex B of the Kyoto Protocol. These commitments can be met by reducing emissions from their sources or enhancing sinks to remove existing GHGs, domestically or overseas. The provisions that provide for meeting commitments overseas are very important in the Kyoto Protocol. There are three of these so-called “flexibility” mechanisms. Emissions trading consists of exchanging parts of an Annex I country’s emissions reduction commitments with another country. Joint implementation is investment by an Annex I country in another Annex I country in a specific project that leads to reduction of emissions. The emissions reduced by the project are credited to the investing country. Finally, there is the CDM, the only creditable emissions trading that may involve developing countries (“Non Annex I countries”). An investment in a project in a developing country by an Annex I country that leads to emissions reductions will be certified, and the “certified emissions reduction” can be credited to the investing country. CDM is expected to facilitate resource and technology transfers to developing countries. The Clean Development Mechanism The CDM is a mechanism whereby a committed country can limit its GHG emissions through reductions made overseas. Article 12 of the Kyoto Protocol defines the dual purpose of CDM as follows: (1) to assist parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention; and (2) to assist parties included in Annex I in achieving compliance with their quantified emissions limitation and reduction commitments under Article 3. CDM projects require voluntary participation by each party, subject to guidance provided by an Executive Board. Either private or public entities may participate in the CDM. The projects should demonstrate real, measurable, and long-term benefits that are additional to any that would occur in the absence of the projects. The emissions offset are transferred through tradable/transferable Certified Emissions Reductions (CERs), as stipulated under Article 12.5 of the Kyoto Protocol. The investing country may use the CERs to contribute towards compliance with its emissions limitation and reduction commitments under Article 3. What is unique about CDM compared with the other flexibility mechanisms is that CERs obtained from 2000 through 2007 can be used to assist in achieving compliance in the first commitment period (2008–2012). In addition, a fraction of the proceeds from the CERs is to be used to assist developing country Parties that are particularly vulnerable to the adverse effects of climate change to help meet their costs of adaptation. Basic rules and procedures for CDM were agreed at COP7 in Marrakech, Morocco, in 2001 (the “Marrakech Accords”). Among the agreements are that the credits for all three mechanisms be fungible, and that banking of all credits be limited to only 2.5 percent of a Party’s initial assigned amount except those derived from sinks projects. Unilateral CDM is allowed, enabling developing countries to undertake CDM projects without an Annex I partner and to market the resulting emissions credits on the world market. COP7

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also appointed ten members and ten alternate members of the CDM Executive Board. The Kyoto Protocol Article on the CDM is not explicit as to whether enhancement of sinks, especially reduction of deforestation and expanding forest cover, can be attributable to meeting the commitments of the Annex I countries. Under the Marrakech Accords, Annex I countries can offset up to 1 percent of their emissions in 1990 with credits from sinks CDM projects. Sinks credits are differentiated from emissions reduction credits. Coined Removal Units (RMU), sinks credits cannot be banked for future commitment periods. Detailed rules and procedures for sinks projects remain to be decided, and the general provisions are to be reviewed for the second commitment period. Since CDM is one of the three “flexibility” mechanisms, it needs to compete with emissions trading and with joint implementation. The toughest competitor is emissions trading, with the possibility of “hot air” from Russia, the Ukraine, and some Eastern European countries crowding the market. Hot air is the phenomenon where Russia – having experienced a major economic breakdown in 1992 – is committed to an emissions limit (i.e. to stabilize its emissions at 1990 levels in 2008–2012) that is significantly higher than its current emissions. Predictions show that by the years 2008–2012, Russia’s emissions will still be lower than its Kyoto targets. Under the Emissions Trading mechanism, Russia can “sell” this difference without having to do any mitigation activity. Indonesia’s energy system, emissions, and the CDM Indonesia is interested in hosting CDM projects either in terms of emissions reduction or in terms of enhancing sinks. While it has clear interest in tapping the benefit of forestry CDM projects, Indonesia is very cautious of the negative impacts that these projects may bring. Indonesia is in the process of submitting a draft law to ratify the Kyoto Protocol, and is expected to ratify it during 2003. Sponsored by the German International Technical Cooperation (GTZ) and the World Bank, Indonesia published the result of its first National Strategy Study (NSS) on the CDM in 2001, focusing on the energy sector (Ministry of Environment Indonesia, GTZ, and World Bank 2001). Currently, Indonesia is in the process of finalizing the second NSS focusing on the forestry sector. In East Asia, Indonesia is the fifth largest consumer of energy after China, Japan, India, and South Korea. Indonesia’s total consumption of energy increased threefold over the past two decades, from approximately 184 million barrels of oil equivalent (BOE) in 1980 to approximately 595 million BOE in 1998. This has been dominated by petroleum-based fuels, followed by electricity, natural gas, and coal (Resosudarmo and Tanujaya, 2002). Petroleum-based fuels are predicted to dominate until 2020. While coal currently plays a relatively small role, it is predicted to overtake natural gas by 2006. With the current trend in demand for coal, reserves will last for fifty years – longer than oil (Pelangi 2002). The transportation sector has been the largest consumer of energy, and is predicted to remain so for the foreseeable future. In the fiscal year 1997–1998,

Indonesia and emissions offset projects 225 transportation accounted for approximately 40 percent of total energy consumption, almost all of which was petroleum-based. The industrial sector was the second largest consumer of energy, consuming approximately 37 percent of the total energy consumption in 1997–1998. Approximately 48 percent of total energy consumed by the industrial sector was petroleum-based fuel, and approximately 27 percent was natural gas (Resosudarmo and Tanujaya 2002: 162–163). Carbon dioxide emissions from energy use grew by 7 percent per year on average during the 1990s and were around 270 megatons (MT) in the year 2000 (OECD 2002). Energy sector emissions are projected to keep rising, albeit at a lower rate than over the last decade (Ministry of Environment Indonesia, GTZ, and World Bank 2001). The role of renewable energy in Indonesia’s energy system has been comparatively small and relatively steady. Currently around three-quarters of renewable energy is from hydropower, and most of the rest from geothermal energy. There is a significant potential for the use of geothermal energy in a number of locations in Indonesia. Solar, biomass, wind, tidal, and wave energy contribute only small amounts at present, but they may also have significant potential in the future. Renewable energy generation is predicted to increase around threefold in volume by 2020, increasing its share from 5.7 percent in 1998–1999 to around 7 percent of final energy demand (Centre for Energy Studies, University of Indonesia 2000: 136). Deforestation in Indonesia occurs at the highest rate in the world. Indonesia has been losing approximately 2 million hectares of forest per year since 1998, and was losing about 1.6 million hectares per year before that. By 1997, Indonesia had lost 72 percent of its primary forest cover, while 54 percent of the remaining forests were threatened. The pressures from the World Bank, the International Monetary Fund, and the recently formed Consultative Group on Indonesian Forests appear to have been ineffective in bringing down the deforestation rate. Illegal logging is rampant, whereas forest fires contribute to further destruction of the remaining forests (Sari et al. 2002). It has been estimated that 3.0–9.4 gigatons (GT) of carbon dioxide were released due to the fires in 1997, notably from burning peat forests (Page et al. 2002: 61). Future emissions from energy, forestry, and other activities in Indonesia are alarming, and at the same time present an ample potential for CDM. Aware of the potential, the Indonesian Government is currently in the process of establishing the Designated National Authority, not only to deal with CDM but also from non-Kyoto offset mechanisms.

Scenarios for the CDM How the Kyoto Protocol commitments are implemented, as well as the climate mitigation action outside of the Kyoto framework, will impact the volume of CDM as well as the regional distribution of projects. To exemplify these effects and to give a sense of the relative magnitudes of different factors affecting the size and distribution of the CDM, we have conducted scenario modeling. In the

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following sections, we look at three issues in turn: (1) the inclusion of sink projects in the CDM, which was one of the “crunch” issues in the negotiations leading up to the Marrakech Accords; (2) the possibility of a parallel demand for emission offset projects in developing countries outside of the Kyoto Protocol framework; and (3) what would happen if developing countries collectively restricted the supply of CDM projects in order to achieve higher prices for emission offset credits. Modeling framework To analyze these scenarios, we use a model of the global carbon market called PET model. PET is a simple trade model that equilibrates supply and demand of emission offset credits under international emissions trading in the first commitment period of the Kyoto Protocol. It includes the distribution of abatement among domestic actions and the three flexibility mechanisms, and the distribution between major countries (including Indonesia) and groups of countries. The model is based on marginal abatement cost curves and geared towards comparative scenario analysis.1 The key modeling features and assumptions are as follows: Emission reduction requirements relative to business-as-usual are based on US Department of Energy forecasts for emissions from fossil fuel combustion (Energy Information Administration 2002), and take into account credits for sinks under Article 3.4 of the Protocol for both forest management and agricultural soils. The United States is assumed not to ratify the Kyoto Protocol and not to take part in emissions trading. Country-specific marginal abatement cost curves are constructed with reference to results from the Massachusett Institute of Technology’s Emissions Prediction and Policy Analysis (MIT-EPPA) general equilibrium model, and in addition the potential for reductions in gas flaring in oil and gas extraction as CDM projects is explicitly modeled. For countries with surplus emission quotas, such as Russia, an assumption is made that only around one-third of their overhang of emissions permits enters the market, plus some supply from joint implementation projects. All developing countries are assumed to participate in the CDM, with differentiation in supply according to technical potential and costs. Sinks in the CDM are restricted to 1 percent of 1990 emissions of net emission permit buying Annex B countries (as per the Marrakech Accords), and are assumed to be implemented at costs lower than those for energy-sector projects.2 Results in the standard scenario The key results from our standard modeling scenario are summarized in Table 12.1. The estimated international price of emission offset credits of just under $14 per ton of carbon is in the range of results from other current modeling, and broadly in line with prices paid in the emerging CDM market. Total CDM volume would be around 100 MT carbon per year (C/year), accounting for roughly one-third of total required emission reductions of Annex B net-buying countries. CDM projects in Indonesia are estimated to yield a total of a little less than 5 MT C/year of certified emission reductions. This would yield total revenue from CDM projects

Indonesia and emissions offset projects 227 Table 12.1 Emission offset credits: results from a standard modeling scenario International price of emission offset credits Global CDM project volume … of which from sinks projects CDM revenue over the first commitment period Indonesia CDM project volume … of which from sinks projects CDM revenue over the first commitment period

$13.85/tons of carbon 101.5 MT C/year 18.4 MT C/year $7 billion 4.6 MT C/year 1.8 MT C/year $320 million

Source: Authors’ calculations from PET model.

in Indonesia of $320 million over the period 2008–2012. Around 40 percent of that would come from forestry projects, based on the assumption that Indonesia can attract 10 percent of the market for sink CDM projects.3

Sinks in the CDM Carbon can be sequestered in trees and other vegetation, and thus removed from the atmosphere. Whether and to what extent such “carbon sink” (i.e. forestry) projects should be included in the CDM was a sticking point in the negotiations leading up to the Marrakech Accords, and is likely to be an important issue in the negotiations for the second commitment period of the Kyoto Protocol. The discussion on sinks in the CDM tends to focus on local environmental and social impacts of forestry projects (from the perspective of developing countries) and on their potential to lower the cost of Kyoto compliance for Annex B countries. However, there are important economic implications for the CDM host countries as well. This is because the inclusion of sinks has feedback effects on the volume of other project types, and on the price paid for permits in the international market. Emission offsets from sinks projects are likely to be achieved at a significantly lower price than in most other project types. In this analysis, it is assumed that the cost of achieving sequestration of 1 ton of carbon is well below that of competing projects in the energy sector. The scenarios contrasted here are (1) “with sinks” (the standard scenario): sinks projects are allowed under the CDM, up to a maximum of 18 MT C/year, equivalent to the maximum that the net buying Annex B countries are allowed to use towards reaching their targets under the Marrakech Accords; and (2) “no sinks”: sinks projects are excluded from the CDM. The key result of including sinks under the CDM is that the quantity of emission offset credits from the CDM increases, but the price paid in the international market decreases as a result of more low-cost supply. Also, the amount of energy sector projects decreases as the higher-cost projects are crowded out by (cheaper) sinks projects. The fall in prices achieved for offset credits from all CDM projects counterbalances the overall increase in quantity. As a result, under our modeling

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With sinks in the CDM (standard scenario) Without sinks

110 100 90 80 70 Index 60 (with sinks = 100)

Price of emission credits

Quantity of CDM, total

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Figure 12.1 Effects of sinks in the CDM. Source: Authors’ calculations from PET model.

assumptions total revenue from the CDM slightly decreases as a result of including sinks (Figure 12.1). This result also depends on the assumption made that the supply of surplus emission credits from Russia and Eastern Europe remains unchanged as a result of including or excluding sinks under the CDM and the associated changes in the international permit price.4 The inclusion of low-cost sinks projects in the CDM lowers the price paid for all CDM credits in the international market because it reduces the global marginal cost of implementing the Kyoto Protocol (the cost of the last unit of emission reduction needed to achieve the collective target). Under the PET model parameters, the international price without sinks in the CDM would be around 14 percent higher than with sinks.5 The total quantity of CDM projects is higher in the scenario with sinks than without sinks. However, this increase leads to the replacement of some non-forestry projects in the CDM – which would mainly be in the energy sector – with sequestration projects. The volume of emission reductions from non-sinks projects falls, partly offsetting the increases through sinks projects. The projects that are not implemented would be those at the higher end of the cost spectrum. The revenue from CDM activities is equal to the product of quantity multiplied by price, because the same price is assumed to be paid for CDM credits in the global market, regardless of how the emission offsets are achieved. The effect on price is slightly greater than on quantity, resulting in lower overall revenue. The flipside is that for Annex B countries that are buyers of emission offset credits, the economic effect of including sinks in the CDM is unambiguously positive. They substitute a greater amount of costly domestic action with CDM credits, and at a lower unit cost. The total cost savings to Annex B countries of including sinks in the CDM in the scenario analyzed here is around $2 billion over the five-year commitment period (2008–2012). These savings come about

Indonesia and emissions offset projects 229 through greater efficiency in meeting the Kyoto targets, using more low-cost emission offset options globally. Whether the inclusion of sinks leads to greater CDM revenue for any particular country depends on the relative size of the project opportunities in the energy and other sectors, compared to forestry. The regional distribution of sinks CDM projects depends on the potential for afforestation and reforestation projects, as well as institutional issues and preferences by Annex B investors. Therefore, the distribution in the first commitment period is difficult to assess. However, it is generally expected that Latin American countries will secure a large share of the sinks CDM market, but that there is significant potential in Southeast Asia and also in China. Effects on Indonesia For Indonesia, the effect of including sinks in the CDM depends on its share in global sinks projects. Indonesia has potential both for sinks and other CDM projects; however, it is difficult to assess what the volume of forestry projects would be. In this analysis, we assume that Indonesia will account for 10 percent of emission reductions generated from sink CDM projects, mostly through reforestation projects. Under this assumption, Indonesia would produce 1.8 MT C/year of sinks CERs, while energy sector projects would be reduced by only around 0.2 MT C/year. The percentage drop in the international price for emission credits – brought about by low-cost sink projects in developing countries – is projected to be lower than the percentage increase in CDM volume in Indonesia. Under our assumptions, total CDM revenue for Indonesia is projected at $320 million over the first commitment period with sinks, compared to around $240 million if sinks were excluded from the CDM. Perhaps the most important effect is in the regional distribution of CDM projects within Indonesia. Since the lion’s share of Indonesian energy consumption, and therefore energy sector emissions, occurs in Java, this is where the options for nonsink projects are concentrated. Assuming that 90 percent of energy-sector CDM projects in Indonesia occur in Java, in line with its share of the country’s energy consumption, the inclusion of sinks could change the regional distribution within Indonesia dramatically. Reforestation projects would be located almost exclusively outside Java. In the “with sinks” modeling scenarios, around 40 percent of CDM revenue accrues outside Java. Again, this result is illustrative only, as it depends on the global distribution of sinks projects. Sinks in the CDM: policy conclusions The analysis here shows that including sink projects in the CDM in order to increase the volume of the CDM may, from the perspective of developing countries, be a fallacy. While the quantity of CDM emission offsets is bound to increase, the corresponding fall in the price paid for emission credits is likely to outweigh the quantity gains and lead to lower revenue and lower financial gains to the host

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countries of CDM projects. Hence, volume is not everything. At the same time, increasing the CDM volume through sinks projects will result in some crowding out of non-forestry projects. It is the higher-cost projects that may not be viable any more, and higher-cost projects may tend to have a greater technologytransfer component. In any case, the scope for technology transfer is generally comparatively low in forestry projects (see Chapter 13). From this point of view, it may be undesirable to effectively shut out certain non-sink projects as a result of including forestry under the CDM. Including sinks means significant efficiency gains generally, as lower cost alternatives are used in order to reach the same overall Kyoto targets. However, these efficiency gains accrue only to Annex B countries in the form of cheaper emission offset credits. The potential efficiency gains from including sinks far outweigh the reductions in economic benefit to developing countries. Therefore, realizing possible efficiency gains and compensating CDM host countries could in principle be an issue for negotiation, although this aspect has not figured prominently in the negotiations so far. International equity considerations are also important to enhance the political acceptability and therefore feasibility of any set of policy rules (see Chapter 2). It has been argued that inclusion of sinks can improve equity between developing countries, and this may be an important point in negotiations for the second commitment period. For Indonesia, the effect of including sinks in the CDM depends on how great a share of total sink projects Indonesia can get. If Indonesia’s share is relatively low, the effect of lower prices outweighs the increase in quantity; if Indonesia’s share is relatively high, CDM revenue and total financial benefit are projected to be greater than without sinks in the CDM. Equity issues will presumably also figure large for Indonesia; giving the provinces a fair slice of the CDM cake will probably be possible only if forestry projects are included under the CDM. In connection with the political and administrative decentralization process underway in Indonesia, a more equal distribution of revenue from international environmental investment may be seen as desirable. However, it remains to be seen if administrations at the district level – who now have a strong role in determining resource use – can fulfill the institutional requirements needed for CDM projects. Property rights are uncertain in many places, and illegal logging and land clearing happen on a large scale. These factors will tend to discourage investors in forestry projects. The definition of sinks CDM projects under the Marrakech Accords will tend to restrict projects to tree plantations, thus excluding forest rehabilitation. However, there is significant potential for the rehabilitation of degraded forestlands. The Indonesian Ministry for Forestry estimated that 2.5 million hectares of degraded forest could be rehabilitated as part of the CDM, if the rules allow for it (see Sari and Nugroho 2001). Forest rehabilitation would present a great opportunity for combining global environmental aims in terms of carbon sequestration with local environmental benefits (such as biodiversity preservation, erosion control and watershed protection), as well as potentially providing benefits to local people (Sari et al. 2002).

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Parallel demand from developing countries for emission offsets credits The withdrawal of the United States and Australia from the Kyoto Protocol has significantly weakened the effective emission reductions required, and therefore the demand for emission offsets from the CDM. Under its Kyoto target, the United States would have accounted for as much as two-thirds of total effective demand because it is the largest emitter globally and its GHG emissions are projected to continue growing under business-as-usual scenarios. While this weakens the Kyoto Protocol emissions market, there are indications that parallel demand for emission offsets through voluntary arrangements is emerging, particularly for projects in developing countries. For example, the 2002 Global Economic Forum bought emission reductions amounting to 4,000 tons of carbon dioxide from a geothermal power station in Java. This deal was done in a bid to offset transport emissions for the forum, thereby making the meeting “carbon neutral.” It has nothing to do with Kyoto Protocol commitments and is outside the CDM; nevertheless, it is similar in nature to a CDM project. Investors and operators argue that this renewable-energy project replaces coal-fired generating capacity, although of course the power station’s operation is independent of this relatively small carbon deal. It is possible that more events and companies in future will strive to offset emissions voluntarily through projects in developing countries. This would create additional demand for projects that could in many cases also be implemented under the CDM. While it is impossible at this stage to estimate the magnitude of this parallel demand, we can use an illustrative modeling scenario to highlight the effects that such action outside the Kyoto framework could have on the CDM market (Figure 12.2). In our modeling scenario, we assume that demand in the parallel market for emission offset projects in non-Annex B countries amounts to 50 MT C/year – around half the estimated volume for the CDM in the standard scenario, and under a third of our modeling estimate of the amount of CERs the United States would use if they ratified the Kyoto Protocol. The main effect of such extra demand is to raise the price of emission offsets within the Kyoto markets – by around 40 percent in our example. This is because many of the lower cost options in developing countries will be used up for offset projects such as in the Global Economic Forum (GEF) example, or by companies in countries who do not ratify the Kyoto Protocol voluntarily offsetting some of their emissions. The quantity of CERs traded in Kyoto markets is lower as a result of higher prices, because more abatement will be undertaken domestically in Europe, Japan, and other net buying countries.6 However, CDM revenue is projected to remain almost unchanged, as lower quantities are offset by higher prices. The combined amount of offset projects undertaken under the Kyoto Protocol and outside would be higher than without parallel markets. Combined with higher prices, this could lead to significantly higher revenue for non-Annex B countries from emission-offset credits. In our example, estimated total revenue is

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No parallel demand (standard scenario) Kyoto market under parallel demand 160

Parallel market Combined Kyoto plus parallel market

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100

70 Index (no parallel demand Price of emission credits = 100)

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Figure 12.2 Effects of parallel demand for emission offset credits. Source: Authors’ calculations from PET model.

two-thirds higher. The distribution between countries will again depend on technical options for emission reductions and carbon sequestration, as well as institutional factors, investor preferences and the political willingness of host countries to support such projects. Parallel markets: policy conclusions Demand for emission offsets from outside the Kyoto Protocol framework clearly presents opportunities for extra climate mitigation action and technology transfer. Financial transfers both from ratifying and non-ratifying Annex B parties could be increased, mainly as a result of higher prices for offset credits. However, such parallel markets would not be subject to Kyoto Protocol rules and standards for CDM projects. Consequently, there is less certainty that projects will in fact achieve the emission reduction effects claimed, that they will comply with minimum standards for their impact on sustainable development, and that they will contribute to sustainable development. Thus, the quality of many non-Kyoto projects could be well below that required for CDM projects.7 If host countries are interested in promoting sustainable development and achieving technology transfer rather than just financial gains, they will need to carefully screen proposals for emission-offset projects outside the Kyoto Protocol framework. The volume of parallel demand for emission offsets is unlikely to be anywhere near as large as what would eventuate under the Kyoto Protocol, because it stems

Indonesia and emissions offset projects 233 from voluntary action. If costs become high, companies will tend to shy away from investing in emission offset credits. To this end, voluntary action by nonratifying countries can probably only ever be a partial substitute for binding commitments. Nevertheless, it would be advisable for developing countries to remain open to all kinds of emission-offset projects, be it within the Kyoto Protocol framework or outside. Thus, Indonesia is preparing institutions for carbon offset projects both within and outside of the Kyoto Protocol framework.

Restricting CDM supply Issues of the relative scale of different mechanisms of the Kyoto Protocol – such as domestic abatement, emissions trading with other Annex B countries, and the CDM – have been another major “sticky issue” in the climate change negotiations. There have been various proposals for quantitative limits on the Kyoto Protocol’s flexibility mechanisms, but the only ones applied under the Marrakech Accords are on sinks. Restrictions on demand and supply could significantly affect the carbon market, especially if there are more stringent emission targets in future commitment periods. By restricting supply, sellers of emission credits could drive up prices and achieve higher profits. Monopoly behavior by Russia and other Annex B net sellers has been taken into account in many recent studies modeling the global carbon market. Our modeling assumption – that supply of such surplus emission permits is limited to well below the total available – can also be interpreted in the context of revenue or profit maximization by those countries. Less analysis has been done on restricting CDM supply. However, even without binding limits evolving out of the negotiations, it can be argued that a CDM supply restriction is waiting to happen if there is stronger demand for emission offset credits in future commitment periods, because key features of the market are conducive. In particular, the CDM market is likely to (1) be dominated by a few large sellers (countries), so cartelization is relatively easy; (2) concern a single, perfectly homogenous commodity (emission offset credits), so there are no complications with substitutes; and (3) provide a perfect verification mechanism (the CDM registry), which prevents cheating. These conditions could make it relatively easy for a number of the larger developing countries to get together and agree on voluntary restriction of available carbon offset credits. Of course, for such a cartel to work, there needs to be sufficiently large demand so that “free riders” outside the cartel do not fulfill most of the demand. In an illustrative modeling scenario for the first commitment period, we assume that CDM supply is limited to two-thirds of the amount under the standard scenario with unrestricted, competitive markets (67 MT C/year). If supply from Russia and other Annex B net sellers remains constant, this would drive prices up by more than 50 percent, owing to steeply increasing costs of domestic abatement in net buying Annex B countries. In this case, total CDM revenue would remain approximately the same as in the standard scenario, but implementation costs would be lower as fewer projects would need to be implemented to gain the same

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revenue, and those projects would be in the lower range of the cost curve. Therefore, net financial benefits for developing countries from the CDM could be significantly higher under restricted CDM supply. Regional distribution and equity in the context of quantitative limits is entirely a matter of negotiating quota allocations, and is not addressed in this chapter. Given that there would be comparatively large additional rents available for distribution, it is conceivable that an allocation could be found that could satisfy the demands of the main CDM host countries. This additional benefit to developing countries stems entirely from rent shifting: the gap between marginal cost and price creates economic rent, which in this analysis is distributed entirely to the sellers. Limiting the amount of CDM also creates a loss in efficiency, which is borne by Annex B countries in the form of higher cost of complying with their commitments. A big winner out of a restriction of the CDM volume would be Annex B sellers of emission credits such as Russia. These countries would benefit from higher prices even without cutting back their own supply. Of course they could also undermine the cartel by increasing their supply of surplus emission credits. This illustrates the incentive for free riders among developing countries to break out of any supply restraint agreement. Restricting CDM supply: policy conclusions There are significant potential economic gains to be had for developing countries by a restriction on the total volume of the CDM. Extra funds could be used to ensure higher standards for environmental and social sustainability of projects. The effect of a negotiated cap on CDM would be the same as that of a voluntary agreement to limit supply, but the latter would be subject to the incentive to free ride. However, the issue of a quantitative restriction on the CDM has not been prominent in the negotiations, and there is as yet no sign of attempts for voluntary supply constraints. Financial gains from cartelization for developing countries would come at the expense of increased costs to Annex B countries, and higher overall cost of reaching the Kyoto Protocol targets, due to efficiency losses. The implication is that both sides of the bargain could be made better off than in the case with limitations on the volume of CDM, if unrestricted CDM were supplemented with additional financial transfers from Annex B countries. Such additional funds could then be used to pay for measures to adapt to climate change impacts, for example.

Conclusion For developing countries, the devil can be in the detail regarding implementation of the Kyoto Protocol’s CDM. This is exemplified in the question of whether sinks (forestry) projects should be included in the CDM. The upshot is that there is a multitude of policy issues in the climate change negotiations. The model applied in this chapter can be used to shed light on some of the other “crunch” issues that will have impacts on developing countries of East Asia and beyond.

Indonesia and emissions offset projects 235 Using quantitative modeling, we have found that including sinks projects under the CDM, as provided for under the Marrakech Accords, may not in fact raise the size of CDM overall in terms of revenue because increases in volume are likely to be counterbalanced by lower prices achieved in the international market for emission offset credits. However, equity between countries and regions may be enhanced by the inclusion of sinks. For example, Latin America has relatively little potential for emission offsets in the energy sector, but presents large opportunities for forestry projects. The equity impacts are mirrored in the case of Indonesia, where emission offset opportunities in the energy sector are concentrated in Java, while forestry projects would take place in other regions. The United States, and possibly other countries that have emission reduction commitments, may not ratify the Kyoto Protocol. This will greatly diminish the effect of the Protocol on global emissions and the size of the CDM. However, we expect that there will be an amount of voluntary emission offset action, for example, by companies who want to make their operations “carbon neutral.” Such offsets could be achieved through subsidizing emission reduction projects in developing countries, and in effect creating a market parallel to the CDM market. Developing countries may want to leave the door open to emission offset projects outside the Kyoto framework, but should make sure that projects comply with acceptable minimum standards, for example, in their impact on sustainable development objectives.

Acknowledgments The authors wish to thank Axel Michaelowa at the Hamburg Institue (HWWA) for his input to related research and the development of the PET model; Helmut Krist and Holger Liptow and the German development agency GTZ for allowing us to pursue the development of the PET model as part of the National Strategy Study on CDM; as well as Daniel Murdiyarso and Rizaldi Boer for reviewing the first version of the model. During part of this research, Frank Jotzo received funding from the Cooperative Research Centre for Greenhouse Accounting, Australia, and from an Australian Postgraduate Award scholarship.

Notes 1 Ellerman and Decaux (1998) provide an exposition of the principles behind modeling climate policies using marginal abatement cost curves. 2 A more detailed description of the model can be found in Jotzo and Michaelowa (2002). The calibration and key parameters used for the modeling here are the same as in that paper. 3 Currently, any predictions on the distribution of sinks projects between non-Annex B countries are subject to great uncertainty. Therefore, the assumption on Indonesia’s share is illustrative only. 4 In an economic supply–demand framework, including more low-cost sinks projects shifts the aggregate CDM supply curve to the right, and at any given price for credits in the international market, more credits from CDM emission offset projects are available.

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The new equilibrium of aggregate Annex B demand for CDM credits and total CDM supply occurs at a lower price and increased quantity. The price drop tends to reduce revenue, the expansion in quantity to increase revenue. The net of the two effects depends on the shapes of both the demand and the supply curves. Under the cost function parameters and emission projections used in the PET model, the reduction effect outweighs the expansion effect, because of a relatively steep Annex B demand curve. 5 An interesting feature of the cap on the use of sink CERs by Annex B countries is that if demand is constrained significantly below the equilibrium level, there is a possibility that offset credits from sink projects will be traded separately from other offset credits, and at lower prices (see Forner and Jotzo 2002). This would further lower total CDM revenue compared to the case without sinks, and exacerbate the effects we are describing here. The analysis here assumes that all offset credits are traded at the same price. 6 We are again assuming unchanged supply of surplus emission credits from Russia and Eastern Europe. 7 To this extent, the two markets may be separate to a certain degree, rather than connected as assumed in the above analysis.

References Centre for Energy Studies, University of Indonesia (2000) Indonesia 2000, Energy Outlook and Statistics. Ellerman, A.D. and Decaux, A. (1998) Analysis of Post-Kyoto CO2 Emissions Trading Using Marginal Abatement Curves, MIT Joint Program on the Science and Policy of Global Change, Report 40, Cambridge MA. Energy Information Administration (2002) International Energy Outlook 2002, Washington, DC: US Department of Energy. Forner, C. and Jotzo, F. (2002) “Future restrictions on sinks in the CDM: How about a cap on supply?,” Climate Policy 2, 4: 357–369. Jotzo, F. and Michaelowa, A. (2002) “Estimating the CDM market under the Marrakech Accords,” Climate Policy 2, 2–3: 179–196. Ministry of Environment Indonesia, GTZ, and World Bank (2001) National Strategy Study for CDM in Indonesia, Jakarta. OECD (2002) World Energy Outlook 2002, Paris. Page, S. E., Siegert, F., Rieley, J. O., Boehm, H.-D. V., Jaya, A., and Limin, S. (2002). “The amount of carbon released from peat and forest firest in Indonesia during 1997,” Nature 420: 61–65. Pelangi (2002) Life After Oil: Energy for Indonesian Sustainable Development, Jakarta: Pelangi. Resosudarmo, B.P. and Tanujaya, O. (2002), “Energy semand in Indonesia: past and future trend,” The Indonesian Quarterly XXX, 2: 158–74. Sari, A. and Nugroho, T. (2001) Money Does Grow on Trees: Accelerating Forest Rehabilitation in Indonesia through the Clean Development Mechanism, Jakarta: Pelangi. Sari, A., Rusmantoro, W., Abidin, E., Rachman, I., and Panjiwibowo, C. (2002) Does Money Grow on Trees? Opportunities and Challenges of Forestry CDM in Indonesia, Jakarta: Pelangi.

13 Climate change investment and technology transfer in Southeast Asia Tim Forsyth

Introduction Technology transfer is crucial to international agreement on environmental policy and is seen by many developing countries as a prerequisite for adherence to treaties. Yet many investing countries see technology transfer as a lengthy and costly process with potential risk to intellectual property rights. This chapter argues such views need to be rethought, and that technology transfer instead needs to be understood by distinguishing between so-called “horizontal” transfer (including long-term sharing of technological expertise), and “vertical” transfer (in which technologies are relocated without sharing). The chapter illustrates how such vertical transfer may occur using evidence from Thailand, Vietnam, Indonesia, and the Philippines. The chapter’s key argument is that integrating technology transfer with international investment offers a powerful way to overcome disagreements in the climate change negotiations, and is an important reflection of foreign policy relating to international economic competitiveness. Foreign investment is increasingly a crucial component of domestic and foreign policy. With the onset of global investment and global production of commodities in the late twentieth century, governments are no longer seeking to achieve national technological competitiveness by developing domestically owned industries located within their own countries alone. Instead, national competitiveness may also occur through developing effective multinational companies that invest overseas, or through attracting and keeping investment from foreign companies at home. The location and ownership of investment therefore have immense significance for the development and control of technology production worldwide. The new globalization of technology production offers different strategies to developing countries. On one hand, developing technology through domestic companies may give a country the chance to become internationally competitive in investment; but this may mean waiting years before success is achieved, and also success may never come if the market is already dominated by producers elsewhere. Alternatively, countries may allow foreign companies to produce new technology locally because it may accelerate the supply of useful technology to local users, and also provide associated benefits of investment. Yet the risk of this strategy is that it assumes local producers may never gain economic competitiveness in

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the production of that technology. Technology production and ownership therefore have immense implications for national and international economic competitiveness and rates of economic development. As such, they are relevant to foreign policy by affecting comparative growth of economies, and also the factors concerning foreign aid or assistance to other countries that may request technology transfer and technological development as part of their strategy to achieve economic development. The role for international investment in environmental policy was made clear under the Kyoto Protocol of 1997. The establishment of joint implementation ( JI) and the Clean Development Mechanism (CDM) as two so-called “flexible mechanisms” of climate change mitigation, allowed international investment in climate-friendly activities as a means by which Annex I countries (i.e. countries with specific targets for greenhouse gas [GHG] reduction) could achieve their targets. In particular, the CDM was established specifically for non-Annex I (or usually developing) countries, and was aimed to assist projects related to sustainable development in general in relation to the United Nations Framework Convention on Climate Change (FCCC). For East and Southeast Asia, all countries except Japan are classified non-Annex I, and therefore stand to receive CDM-related investments. Yet, at the Sixth Conference of the Parties to the FCCC at The Hague in November 2000, and negotiations since, there was much disagreement between different Parties about how such flexible mechanisms were to be interpreted and implemented. The near-collapse of negotiations in 2000 was widely attributed to disagreements concerning the incorporation of “sinks” into measures to reduce concentrations of GHG concentrations. While the question of sinks – or the use of forests and other land-use activities to sequester carbon – raises important questions for political analysis and physical monitoring of GHG concentrations (Cullet and Kameri-Mbote 1998), the underlying causes of disagreements also lay in the perceived purpose of international investment for climate change mitigation, and the impacts on technological development. Since the signing of the FCCC at Rio in 1992, technology development, and specifically “technology transfer” have been bitterly contested, and a major dividing line between Annex I countries and many developing countries. India, China, and Brazil, for example, have reiterated demands for agreement with the FCCC to be contingent upon the urgent and unconditional transfer of valuable technologies for climate change mitigation. Yet, for their part, many Annex I countries have resisted guaranteeing technology transfer, arguing that it is a long-term and complex process, and increasingly difficult for the state to organize because most environmentally sound technology (EST) is now owned by investors in the private sector. Discussions about flexible mechanisms, and the possibility of using these to enhance technology transfer, have often led to some of the most intractable disputes in the climate change negotiations. This chapter considers the role of technology transfer and international investment under the FCCC in relation to recent experience in Southeast Asia. The aim of the chapter is to discuss how international investment may assist in overcoming

Investment and technology transfer 239 some of the dilemmas faced in the negotiations concerning international climate change policy, and how such investment may also assist – or fail to assist – national strategies for economic development, and particularly electricity supply (see also Chapters 6 and 13). There can be fewer more important themes in domestic development, and in climate change policy, than in influencing the growth of power sectors toward more climate friendly technologies. The chapter is divided into three main sections. First, the concept of “technology transfer” itself is discussed, in relation to the climate change negotiations and international investment. Second, the chapter assesses case studies of investment in renewable energy technologies from Thailand, Vietnam, Indonesia, and the Philippines to indicate how investment may assist the production and adoption of EST. Third, the implications for the climate change negotiations and dilemmas of foreign policy are discussed.

Technology transfer and the climate change convention Technology transfer – or the transfer of EST from industrialized to industrializing countries – has long been identified as one of the most urgent ways to reduce global GHG emissions (TERI 1997). Indeed, at the 1992 Rio Earth Summit, China and India, speaking on behalf of other developing countries, insisted that developed countries commit themselves to technology transfer as a requirement for developing country support for the proposed agreements. The resulting wordings of agreements indicate the perceived urgency and responsibility for technology transfer. The FCCC (Article 4.5) stated that developed country Parties “shall take all practicable steps to promote, facilitate and finance, as appropriate, the transfer of, or access to, environmentally sound technologies and know-how to other Parties, particularly the developing country Parties … .” And Chapter 34 of Agenda 21 suggested that the access to and transfer of EST should be promoted “on favorable terms, including on concessional and preferential terms, as mutually agreed, taking into account the need to protect intellectual rights as well as the special needs of developing countries for the implementation of Agenda 21.” Yet despite these statements, comparatively little has been achieved. First, experts now agree that the term “technology transfer” is extremely difficult to define, and is actually a long-term and complicated process ( Baldwin et al. 1992; MacDonald 1992; Heaton et al. 1994; Martinot et al. 1997). Commonly, technology transfer is thought of as the simple relocation of “hardware” such as equipment or blueprints. In reality, “software” such as training, personnel, and financial support systems are also necessary in order to ensure long-term technical maintenance and full cost recovery for investors.1 Similarly, companies do not use the term “technology transfer” but instead refer to “joint ventures” ( JVs) or “contracting” as alternative descriptions of commercial relationships concerning technology. The statements above from the FCCC and Agenda 21 make no reference to this complexity, although later publications stressed this complexity (see IPCC 1996, 2000a). Second, there are also difficult problems in defining “climate technology.” Different technologies have varying impacts on GHGs. “Renewable energy,”

240 Tim Forsyth for example, includes biogas generation – which involves the emission of GHGs during use – but other forms that do not emit during use, such as photovoltaics or passive solar heating, also have various environmental effects during their manufacture (Philips and Browne 2000). Large renewable energy projects, such as dams and geothermal developments also have a variety of other social and environmental impacts that make their all-round contribution to environmental policy questionable. Nuclear energy is also in this category. Third, it is also agreed that effective technology transfer requires incentives for private-sector participation. Most climate technology is owned and developed by commercial companies. “Transferring” technology therefore implies risking intellectual property rights and empowering competitors. Some negotiations about climate technology transfer, however, have not appreciated this problem. In 1996, for example, at the Second Conference of the Parties to the FCCC, the Chinese government published a booklet entitled The List of Chinese Government Needed Technologies (SPC 1996), in which it demanded equipment such as integrated gasification combined cycles, fuel cells, and rice husk energy transfer instruments as examples of required climate technology. This booklet did not discuss any compensation for technology producers, and consequently is yet to produce the impact the government wished for (Forsyth 1998). In conflicts such as these, the relationship between technology transfer and more general objectives of foreign policy become more obvious. The demands of China (and other developing countries) for technology is most linked to the desire to enhance industrialization and economic competitiveness, and accordingly such demands are often resisted by the more developed countries, leading to impasses in discussions about how to enhance the adoption of environmentally sound technology. Fourth, there is much political opposition in Annex I countries to undertake any measure that may seem to threaten intellectual property rights, or competitive standing, of national companies through encouraging them to engage in technology transfer. There is a perception among many investors that “technology transfer” has to imply sharing technology with potential competitors, and consequently that requirements to conduct technology transfer would reduce the comparative advantage of investors. Such factors have contributed to the proposed use of the CDM for projects not directly related to industrial technological upgrading. Indeed, despite his active engagement in other environmental issues, it is also reported that then US Vice-President Al Gore was personally opposed to integrating the Climate Change Convention with measures that placed responsibility for technology transfer with US companies (Robert Frosch, Harvard University pers. comm. 2000). And fifth, and related to topics of foreign policy, discussions in general about technology transfer and investment for climate change mitigation have been affected by deep divides between industrialized and industrializing countries about responsibility for world development and for addressing climate change. These divides have particularly affected negotiations concerning flexible mechanisms of climate change mitigation on the grounds that they reduce the need for developed countries to undertake GHG abatement within their own territories (see Box 13.1). Furthermore, the proposal to use JI (or its pilot phase entitled Activities Implemented Jointly (AIJ), from 1995 to 2000), and the CDM for sinks

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Box 13.1 Flexible mechanisms for climate change mitigation under the Kyoto Protocol Emissions Trading: Annex I countries may achieve emissions reductions targets by trading GHG emission permits with other members of Annex I. Countries who fail to achieve their targets (potentially the United States and Japan) may buy permits from those that have overachieved their targets (potentially Russia and the Ukraine). Critics claim that emissions targets, based on pre-1990 levels, offered to countries in industrial decline (such as Russia and the Ukraine) imply reduction in total emissions achieved via trading that would have occurred anyway (the so-called “hot air problem”). Joint Implementation: Annex I countries may achieve emissions reductions targets by investing in GHG abating activities in other countries of Annex I. Proponents argue JI provides fast and low-cost climate change mitigation. Critics claim JI’s impact on climate change is difficult to measure and that JI will only address cheaper projects (such as sinks), leaving more expensive projects (such as upgrading industrial technology) to host governments. After the 1st Conference of the Parties to the FCCC in Berlin in 1995, a pilot phase of 1995–2000 for JI was agreed under the name “Activities Implemented Jointly”. AIJ could take place throughout the world, but without crediting against emissions targets. At the Kyoto Protocol, JI with crediting was approved, but only within Annex I. The Clean Development Mechanism: Annex I countries may achieve emissions reductions targets by investing in GHG abatement activities in non-Annex I (usually developing) countries. The CDM is different to JI by focusing on non-Annex I; by supporting “sustainable development” in general. The original text of the CDM made no mention of the word “sinks” but later conferences of parties to the FCCC agreed that some element of sinks could be permitted. However, there are no specific guidelines for enhancing technology transfer, and it is still unclear how far the CDM will adopt the same governance and monitoring structures of AIJ. Sources: Forsyth 1999a; Grubb et al. 1999; Gupta 1997.

projects has been criticized by some developing countries. Some have claimed these projects overlook the scientific difficulties in monitoring carbon sequestration through land use (Cullet and Kameri-Mbote 1998). Others have argued that simple sequestration projects reduce the need to discuss industrial technology transfer as a means of climate change mitigation (Gupta 1997).2 Indeed, when the CDM was created under the Kyoto Protocol of 1997, the original wording of the agreement did not mention “sinks,” and this was taken to indicate a potential use of the CDM for investment relating to industrial technology. Such disagreements reached a head in at the Sixth Conference to the Parties (COP6) of the FCCC in The Hague in 2000, when it seemed that divisions on “sinks” threatened to

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undermine the entire implementation of the FCCC. But further meetings in Bonn (the so-called COP6 bis) and then at Marrakesh (COP 7) both in 2001 led to the Marrakesh Accords that allowed a framework for allowing the CDM to enable both investment in sinks (to specified levels), and in the provision of an “adaptation fund” to support longer-term support of technology and adaptive capacities. Supporters of the Accords suggested that they allowed rapid mitigation of greenhouse gas emissions, as well as helping to address developingcountry objections to the FCCC. Critics suggested that the Adaptation Fund acted as a tax on investments, and that there should not be a line drawn between CDM projects and long-term capacity building, as ideally both should be integrated. As a result of these disagreements and problems in incorporating private investment, most discussions about technology transfer since the Earth Summit have remained largely deadlocked, and focusing on the different responsibilities of states rather than the mechanisms that may allow companies to participate. For example, the Technology Assessment Panels set up by the FCCC secretariat quickly reached an impasse in discussions on the grounds of identifying which countries should attend, and who should have responsibility for undertaking technology transfer. Similarly the Climate Technology Initiative (CTI), set up by the International Energy Agency (IEA) and the government of Japan, has sought to lessen investors’ costs by establishing international seminars and offering prizes for product development, but has not produced the transfer of EST demanded by developing countries. The CTI is still ongoing, and in 1997 the IEA launched the Global Remedy for the Environment and Energy Use – Technology Information Exchange (GREENTIE) initiative, aiming to enhance the use of climate change mitigating technology in official aid and private investment. Other initiatives include the establishment in 1994 of an Ad Hoc Group on Technology Transfer and Cooperation by the UN Commission for Sustainable Development (UNCSD), and ongoing work by the UN Commission on Trade and Development (UNCTAD) to build capacity for technology transfer, training and learning in developing countries. The FCCC Subsidiary Body on Scientific and Technical Advice (SBSTA) is primarily responsible for the negotiation and identification of technology needs under the FCCC.

Seeking new forms of technology governance Despite the deep disagreements in the meaning and urgency of technology transfer in the climate change negotiations, academic debates about technology transfer have illustrated a variety of alternative means of looking at the subject, and which may offer insights into integrating climate technology transfer with new investment from the private sector. Under the statements from Agenda 21 and the FCCC above, technology transfer is seen to be a linear process in which technology may be developed by particular companies or countries, and then disseminated to other users. This approach reflects conventional assumptions that technological competence lies in developing expertise within indigenous companies (Porter 1990). Alternative thinking, however, has stressed that national economic progress may not necessarily depend upon the development of indigenous technological

Investment and technology transfer 243 expertise, but may rely instead on the attraction of investment in general, even if it is foreign owned (Howells and Michie 1997; Dunning 1998). This thinking partly reflects the belief that some indigenous companies may never be able to compete successfully with more powerful transnational corporations under current trade regimes. Yet, in addition, it is likely that the short-term investment from foreign companies in these relatively more advanced technologies will create associated benefits for host countries such as employment (Reich 1991). As Howells and Michie (1997: 30) wrote: Globalization of technology does not imply the need for the abolition of national or regional policies, or an attempt to create a protectionist barrier around an economy’s technology base; rather it requires sensitive policies that seek to engage the major economic base of the nation or region with both indigenous and foreign technological capabilities. Accordingly, some theorists have argued that it is possible to identify two forms of technology transfer (Leonard-Barton 1990). The first is the relocation, or point-to-point transfer of new manufacturing or sales of technology, in which ownership of production remains in foreign hands. The second is the traditional embedding or education about technology manufacture that is usually the subject of discussion about technology transfer under the FCCC. The first may also be likened to vertical integration of companies through the creation of subsidiaries, and the second is similar to the formation of joint ventures or other contractual relationships between different firms (Williamson 1996). Advancing “vertical” or point-to-point technology transfer via international investment may therefore provide climate technology to new locations quicker than conventional, “horizontal” forms of embedding. But the cost of this approach is that the host country may not gain long-term economic success in this particular technology, and that its own competing technologies may lose competitiveness in relation to the imported varieties (Forsyth 1999a). In addition, there is a need to understand better ways of ensuring private investment may be harnessed in order to lead to technology transfer. Past experience from North America and Europe has indicated that certain market interventions at the same time as private-sector investment into new forms of renewable energy technology have resulted in greater adoption of new technologies. In the United Kingdom, the Non-Fossil Fuel Obligation (NFFO) (ironically introduced to support the nuclear industry) and the Public Utilities Regulatory and Policies Act (PURPA) in the United States greatly increased investment in renewable energy technologies, and also consequently reduced the development and operating costs of renewable energy (Grubb 1995). One unseen impact, however, was to increase sales of Danish wind turbines in the United Kingdom, and decrease the market share of British-made turbines, because the Danish technology was considered more efficient (and hence more competitive) than British technology (Gregory et al. 1997). Encouraging investment through mechanisms such as the NFFO/PURPA may therefore enhance “vertical” or point-to-point

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technology transfer rather than just boosting the performance of indigenous technology manufacturers. Yet, simply inviting further private investment in new technologies may not be sufficient for enhancing technology transfer. On the one hand, host countries may lack the capacity to ensure that imported technologies are appropriate for local development (e.g. the “dumping” of outdated technologies at low cost by importers is common). Yet, on the other hand, countries may insist upon so many regulations for joint ventures and long-term sharing of technology, that they repel investors and also avoid the potential benefits of point-to-point relocation of technology. Experts have therefore agreed that the key requirement of privatization in developing countries is to build the associated incentives and regulatory bodies before privatization, in order to ensure that investment both proceeds and also addresses local concerns. As Ranganathan (1992: 173) wrote concerning electricity privatization in Africa: “a bane of all African countries constrained by a shortage of funds is that … they look to donors or lenders whose preferences come to disrupt and dictate power sector planning … in other words, foreign financial assistance has failed to promote technology transfer.” Similarly, Bruggink (1997: 87) wrote: To privatize the generation business without fundamentally strengthening the regulatory bodies and the transmission and distribution segments of the sector involves substantial risks for both private and public interests. If developing countries wish to attract substantial and continuous inflows of private capital, they must avoid the dangers of having to change the economic rules of the game at subsequent stages of restructuring. Otherwise the availability of foreign capital will drastically decrease and its price will move up inexorably. Under the CDM, exports in climate technology will effectively be subsidized between Annex I and non-Annex countries, and therefore a new wave of investment in climate technology may be expected. The experiences of electricity privatization so far suggest that successful technology transfer may be achieved first by the creation of legislation similar to the NFFO/PURPA (“vertical,” or point-to-point technology relocation), and second by the establishment of new capacity – possibly including organizations such as Renewable Energy Project Support Offices (or REPSO) – that can effectively bypass the bureaucratic state mechanisms and integrate foreign investment and technology into new locations (“horizontal” technology transfer or sharing). Yet it is also important to note that many successful renewable energy technologies already exist in developing countries that are cheaper and more appropriate to local needs than many imports (e.g. biogas generators in India) (Reid and Goldemberg 1997; TERI 1997). It is therefore important for both climate change mitigation and local economic development that new subsidized exports do not threaten the competitiveness of indigenous technology companies.

Case studies from Southeast Asia The role of renewable energy in Southeast Asia is still generally currently small, but it is growing in size. In particular, national statistics generally refer to electricity

Investment and technology transfer 245 Mostly grid connected technology FDI mostly unrestricted access/ Category 1 private ownership e.g. mainland territory encouraged of Thailand, Malaysia, and Singapore

FDI mostly heavily regulated/ privatization undeveloped

Mostly off-grid

Category 4 e.g. outer islands of the Philippines

Category 2

Category 3

e.g. mainland, coastal territory of China and Vietnam

e.g. outer islands of Indonesia, plus rural Vietnam and China

High competition from fossil fuels

Investment tending towards vertical integration (i.e. dominated by larger companies and subsidiaries)

Investment tending towards horizontal integration (i.e. using joint ventures and technology sharing)

Low competition from fossil fuels

Figure 13.1 Southeast Asia: classification according to business and regulation structures for renewable energy investment.

from national grids rather than for the potential size of markets that exist in areas that are currently off-grid, and for whom new, renewable energy technologies may provide sources of decentralized electricity generation. Large proportions of Southeast Asia’s 500 million people live in locations that are not supplied by grid electricity, particularly in Vietnam and Indonesia, and these areas may prove the most likely sites of renewable energy development. The following case studies aim to present information about how national policies concerning electricity privatization have affected new investment in renewable energy technologies. The four countries are selected in order to reflect different investment regimes and physical circumstances for renewable energy development (see Figure 13.1). Thailand, for example, has few opportunities for off-grid investment because it has few islands and is already supplied with an extensive grid. Indonesia and the Philippines, by contrast, are suitable for off-grid technology because they are archipelagos comprising thousands of islands. All countries vary in terms of government incentives for inviting foreign investment and privatization, as well as per capita income and energy growth. It is not possible in this chapter to provide all details of privatization and liberalization regimes in each case study (Forsyth 1999b), but the case studies do highlight which political and economic reforms impacted most on the adoption of renewable energy technologies. Thailand Thailand is by far the most electrified of the case studies, with some 95 percent of rural population grid connected, and also highly dependent on centralized

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fossil fuel-based generation. Nevertheless, the Thai government has been particularly active in energy sector reform, and instigated demand-side management (or energy cost-saving measures) from the fifth Five Year Plan (1982–1986) that established the first Energy Conservation Program and an Energy Conservation Center of Thailand in order to educate companies on energy use. The 1992 Energy Conservation Act defined targets for industry, and established a fund for promoting energy efficiency by applying a tax on petroleum products (at less than one US cent per liter). The seventh Five Year Plan (1991–1996) reduced peak electricity demand by an estimated 238 MW (Lefevre and Bui Duy Thanh 1996; TEI 1997). The contribution of small-scale renewable energy to electricity supply, however, has been small, and is also difficult on account of the large percentage of villages connected to the central grid. Much development of renewable energy technology has been from international development agencies. For example the Australian Center for Application of Solar Energy (CASE) had four projects in Thailand in 1997 using advanced PV, micro-hydro and wind technology. Two projects are grid connected and two are off-grid. For example, Ban Khun Pae is a village in the northern Chiang Mai province, inhabited by the Karen nationality, and uses 7.2 kW of PV in conjunction with diesel and batteries (a hybrid fuel source) to power refrigerators and lighting in homes and a school. In Ban Den Mai Sung in Tak province, in the far west, a similar PV system was installed in 1986 and then connected to the grid in 1990 (Woravech 1997). Privatization of electricity supply has brought opportunities for renewable energy technology through the Small Producers Program (SPP). The SPP was introduced in 1992 as a means in which factories that generate their own electricity may sell surplus amounts back into the grid, and usually refers to producers of about 50–90 MW a year. By August 1997, there were officially twenty SPPs supplying the national grid, with the total supply rising from 1.3 MW in 1994 to 1,215 MW in 1996 (Lefevre et al. 1997b: 85). The SPP particularly favors biomass electricity generation, as factories using woodchips or vegetation can use waste material to fuel generators. For example, the TRT Parawood rubber-wood sawmill in southern Thailand constructed a 2.5 MW cogeneration plant for internal use in the early 1990s at the cost of $2.2 million. The company can now expect to save $840,000 per year in reduced energy costs, and also earn income from electricity sales at an estimated $48,000 per year (Green 1997: 114). Privatization, however, may also limit the ability of state agencies to adopt and demonstrate renewable energy technologies. For example, since 1976, government bodies such as the Ministry of Public Health and the Telephone Organization of Thailand have adopted PV systems to power rural clinics and relay stations often with the help of US Agency for International Development (USAID). By 1997 about 2.5 MW of PV was installed in Thailand, of which about 90 percent was government funded. Despite the progress made under the SPP legislation, the privatization and liberalization of state bodies may reduce their ability to adopt and demonstrate renewable energy technologies (see Table 13.1 for summary).

Investment and technology transfer 247 Table 13.1 Different investment niches for technology transfer

Vertical technology transfer (ownership remains with investor) Horizontal technology transfer (ownership is shared with local producers)

Expertise and economic base in technology exists locally

Expertise and economic base in technology does not exist locally

1 High competition and low profit margins

2 Most attractive to new foreign investors

3 Least attractive to new foreign investors

4 High transaction costs and potential loss of competitiveness

Source: The author’s case studies described in this chapter. See Forsyth 1999a for more detail.

Vietnam By contrast with Thailand, Vietnam has both a poorly developed electricity supply industry and privatization program (IPP). Indeed, “privatization” in Vietnam to date is generally the invitation of IPPs to build new power plants while the State Electricity Board (SEB) remains centralized. Installed capacity in Vietnam in 1995 was just 4,485 W, of which hydro comprised 63 percent, coal 14.4 percent, diesel 9.7 percent, gas 8.5 percent, and fuel-oil 4.4 percent (Toan 1997: 3). Invitations to international investors have been characterized by long and protracted negotiations that have caused much resentment from some well-known companies. For example, negotiations between the government and IPPs such as Oxbow and Enron of the United States on private-sector participation (PPAs) have also been characterized by bureaucracy and uncertainty, and the ruling Communist party has stated at party conferences that private-sector participation in crucial industries like power remains sensitive (Birchall 1997; Quinn 1997). The most immediate impact of privatization on renewable energy relates to large hydro schemes, where a combined 3,764 MW of extra capacity is planned (World Bank et al. 1996: 37). Such schemes, however, were planned with Russian assistance that is unlikely to materialize. Also, some large dams, such as the proposed 2,300 MW Son La project in the far northwest, would involve relocating thousands of villagers. Smaller renewable energy development, however, has been encouraged through the cooperation of international agencies and local citizens organizations. For example, the Vietnamese Women’s Union (VWU) and the Solar Electric Light Fund (SELF)3 started the so-called “Solar Project in Support of Rural Women and Children” project in 1994 in three provinces in northern and southern Vietnam. The project supplies Solar Heating Systems (SHS) manufactured by the United Solar Systems Corporation of the United States to villages for lighting and refrigeration. Households were required to make an initial downpayment of 20 percent and then pay monthly contributions for four years. The long-term aim of the project is to provide SHS to one million

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households before 2010, although initial results suggest that more investment needs to be made in providing local maintenance skills and availability of spare parts. Other approaches include the use of build-operate-transfer (BOT) schemes for urban waste treatment in Vietnam’s large cities. In 1995, one BOT of 20 years’ duration was approved with an Indian consortium for using urban waste in Ho Chi Minh City to generate electricity and manufacture organic fertilizer (Vietnam Investment Review, March 27–April 2, 1995). The contact with India is a good example of technology transfer between developing countries, rather than simply between developed and developing countries. There are also government schemes to advance renewable energies. The Institute of Energy has established the Solar Laboratory of Ho Chi Minh City, which has installed PV battery chargers in villages in the Mekong delta. The Ministry of Agriculture and Rural Development has also undertaken joint work with EVN to invest $28 million in 150 micro-hydro stations in mini grids in the mountainous regions of Vietnam before 2000. Micro-hydro systems have also been supported by the Vietnam Bank for Agriculture and Rural Development and the Vietnam Bank for the Poor in collaboration with the VWU, the Veteran Association, and Farmer Association (Toan 1997: 11). The Council on Renewable Energy in the Mekong Region (CORE) was also established in 1996 to create “focal points” on disseminating renewables in cooperation with neighboring countries (Rakwichian et al. 1996). These small, yet focused organizations have therefore allowed progress on renewable energy development despite the government emphasis on fossil fuels and large hydro schemes. Indonesia The potential for decentralized renewable energy development in Indonesia seems high. There are some 13,000 islands within the archipelago, and in 1995, it was estimated that unelectrified rural populations amounted to 82 percent of the population in Irian Jaya (arguably the least developed island), 59 percent for west Sumatra, 36 percent for west Java, and 18 percent for Bali. Renewable energy development in Indonesia has been largely undertaken through the activity of a specialist government office on renewable and alternative energy sources created in the late 1970s, the Baden Pengkajian dan Penerapan Teknologi (BPPT). This has overseen much research and development of indigenous renewable energy such as, for example, a $7 million ocean and wave technology project on the southern coast of Java near Yogyakarta (Symon 1997: 129). Another large-scale project, the so-called “One Million Homes PV Rural Electrification Scheme” was launched in 1997 with a long-term goal of providing SHS to one million household, or 10 percent on non-electrified households by 2007, at an estimated cost of $450 million. The scheme uses PV technology built indigenously within Indonesia, and is assisted by the World Bank, AusAID, and the governments of France and Bavaria. The scheme aims to transfer ownership of the SHS gradually to households through a process of part payment, offering the most attractive terms to households furthest from the grid (Djojodihardjo et al. 1997).

Investment and technology transfer 249 This scheme, however, has been criticized for relying almost exclusively on indigenous technology (which may not be competitive in relation to imports); for overlooking long-term cost recovery mechanisms in remote areas; and for a long supply chain for spare parts from Jakarta. Winrock International, the US-based non-profit making development agency, in eastern Indonesia, has adopted an alternative approach. In 1995, it installed ten wind turbines of between 10 and 15 kW in small rural villages for water pumping and power generation, using imported technology from Bergey Windpower of the United States. A key difference between this project and the “one million homes” scheme is that the dissemination of technology is accompanied by the creation of new governance systems (or “distributed utilities”) to ensure technical maintenance and financial cost recovery. Local utilities were effectively created through building a tri-partite agreement between Winrock, the new utility (commonly the village committee), and a local NGO. Each was assigned duties concerning finance, training, and maintenance, which enabled each party to ensure the utility was performing its duties (Winrock International 1997). In addition, the government has enabled existing producers of electricity to adopt renewable energy sources through a small producer scheme similar to Thailand. The Pembangkit Skala Kecil dan Korporasi (PSKSK) was introduced to encourage developers to use fuels besides oil. Under the PSKSK, SPPs may generate and sell electricity to Perusahaan Listrik Negara: the State Electricity Utility of Indonesia (PLN) in amounts of up to 30 MW to the Java–Bali grid, and up to 15 MW for other systems. The tariff is prioritized by fuel type, in which wind, solar, and mini-hydro is given priority over oil, coal, and gas. Biomass fuel, including vegetable and animal waste, is given second priority. The PSKSK scheme has enabled many small manufacturers who have constructed their own “captive” power supplies to sell excess production to grid systems. In northern Sumatra for example, the PT Asahan Aluminum smelting works is a Japanese–Indonesian JV that has constructed two power plants of 268 MW and 317 MW on the Asahan River to benefit from this scheme. In southern Sulawesi, a similar Canadian–Indonesian JV has built a 165 MW plant on the Larona River to service a local nickel plant (Symon 1997: 123). However, negotiations with international investors remain bureaucratic. The Bronzeoak company, for example, sought to establish a biomass generating facility in Java in 1997 that could produce 8–12 MW of electricity using palm oil waste. The approach to the government was made in association with the US Export Council for Renewable Energy and the Environmental Business Support Foundation of Jakarta. The request of Bronzeoak to negotiate a PPA based on 70 percent debt finance using the project itself as collateral was refused by the government, leading to deadlock (Walden 1997). The Philippines The Philippines are arguably the most likely location for renewable energy development because of the coincidence of some 7,000 islands and a government policy that actively supports investment. The New and Renewable Energy Program (NREP)

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was implemented in 1990 by the Department of Energy through its NonConventional Energy Division. This has sub-programs to address technology development, commercialization, promotion, and localized implementation. The Philippines Council for Industry and Energy Research and Development of Science and Technology has also integrated research on renewables with business development. Small renewable energy technologies are expected only to contribute 4 percent of planed additional capacity during 1996–2005, but this amounts to 4,000 MW. Under the NREP, $30 million has been made available for biomass and mini-hydro projects through low interest funds. The Development Bank of the Philippines offers similar low interest loans to solar projects undertaken in villages. In 1991, RA 7156 (the Mini-hydropower Incentives Act) included special tax rates for importing equipment, and deferring or crediting VAT and income tax (Lefevre et al. 1997a: 118). Two much larger schemes were launched in 1997. The so-called “Pole Vaulting” program aims to utilize the Philippines domestic ocean, solar and wind resources, where it is estimated there is a potential 266 million MW of supply. The program aims in general to employ domestic renewable technology with a budget of $30 million in 1997–2001. A second project is the Municipal Solar Infrastructure Project, which aims to supply 1,003 PV generators to more than 400 villages in Mindanao and the Visayas at a cost of $36 million, using PV from BP Solar (Australia). The PV will be used for a variety of applications including lighting, water pumps, and refrigeration. Smaller-scale schemes have also been adopted by village-based organizations known as electricity cooperatives or barangays. In 1995, total sales from ECs amounted to 4,315 GWh, or 16 percent of national sales, and are now identified to be part of government plans to increase grid supply and renewable energy usage. Other nongovernmental organizations involved in electricity development are Affiliated Non-Conventional Centers (ANECs) mostly comprised of twenty state universities in different regions. However, perhaps most significantly, the organization Preferred Energy Incorporated (PEI) was established by Winrock International with assistance from UNDP to operate at the national level to coordinate foreign investment and local renewable technology development. For example, the US biomass generating company, Silk Roads, has invested in biogas anaerobic digestion plants in Baguio City, north of Manila, using local municipal and farm waste.

Rethinking technology transfer and investment under the FCCC This chapter has outlined various themes relating to the rethinking of technology transfer under the FCCC. They include: ●

Much debate on climate change mitigation that has avoided the need to consider, first, the role of international private investment within environmental policy; and second, how international investment relating to environmental policy may also influence national economic competitiveness and technological development.

Investment and technology transfer 251 ●

●

●

●

Instead, much discussion concerning technology transfer under the FCCC has reflected a conventional approach to international investment and technology transfer by assuming that the process must involve sharing intellectual property rights between local and international investors, and is a long-term, costly process. This has been reflected to some extent by the creation of the “Adaptation Fund” under the CDM, which has implied that outright investment to mitigate climate change may be separated from projects that can build long term technological and adaptive capacity. Newer thinking relating to technology development and transfer, however, has argued that technology transfer may be conducted through both “horizontal” transfer (involving long-term capacity building and sharing of technology); and “vertical transfer” (referring to the relocation of technology construction or usage, without sharing ownership of the technology process itself ). It may be possible, therefore, for “vertical” investment to achieve both rapid climate change mitigation and some forms of technology transfer in ways that do not require the usual perceived costs to investors. These differences radically alter the debate about technology transfer by indicating ways in which it may be achieved without necessarily challenging the foreign policy dilemmas associated with international competition and technological development. This approach, however, implies that Government intervention may be needed to ensure such vertical transfer is both attracted to a region, and then successfully adopted by local users. Examples of government interventions from the United Kingdom and the United States include measures such as the Non-Fossil-Fuel-Obligation (NFFO) and PURPA, which encouraged new investment into small, renewable energy technologies. These measures, however, were occasionally associated with challenges to domestic technology industries whose products were considered less attractive than international investors. New mechanisms are necessary to bypass cumbersome state bureaucracies in the case of renewable energy technologies, and to allow decentralized electrification beyond centralized national grid systems.

Rethinking technology transfer The case studies of Southeast Asia have shown varieties of success in achieving technology transfer through international investment. In Thailand and Indonesia, similar mechanisms to the NFFO/PURPA have been achieved via respectively the SPP and the PSKSK legislation. Each of these government interventions have provided incentives for renewable energy development. In the case of Thailand, the SPP has also demonstrated that renewable energy investment can still be encouraged as a feed into grid supplied electricity, and where there is high level of existing grid supply. Further assistance has been supplied by a variety of intermediary organizations that have acted as negotiators and go-betweens for international investors,

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state agencies, and end-users. These organizations (or REPSOs) include Preferred Energy Investments of the Philippines, subsidiaries of Winrock International, and local organizations such as SELF in Vietnam. The success of such organizations in creating distributed utilities in locations such as Eastern Indonesia suggest that they can provide a form of regulation for private investment during electrification. Critics of electricity privatization in developing countries (Berg 1997; Bruggink 1997; Ramani 1997) have argued that too much attention is usually given to electricity generation rather than transmission and distribution, and that the independent regulation of electricity supply needs to be developed in advance of investment. Creating distributed utilities through private investment is, in effect, creating generation, transmission, and distribution simultaneously with local regulation. Yet, the forms of privatization described in Southeast Asia have not necessarily indicated a total absence of state regulation during the process. Some state agencies (such as Indonesia’s BPPT) have remained influential in both technology development and dissemination. But it is also clear that large-scale schemes such as the Indonesian “One-Million Homes PV Rural Electrification Scheme,” or the Philippines’ “Pole-Vaulting” scheme have been probably too dependent on both subsidies: outdated indigenous technology and complicated supply chains for successful technology transfer. As an alternative, the Philippines’ “Municipal Solar Infrastructure Project” may be more successful because it combines ambitious large-scale local development with the use of up-to-date technology supplied by a transnational company, and consequently there is less chance of the scheme failing because the technology supplied may be unable to remain commercially competitive long enough to allow cost recovery or long-term adoption by users. The implication of these case studies is that international technology transfer may be achieved by a cautious integration of technology investment and national development programs. Such combinations integrate national public-policy objectives with the supply and maintenance of technology from specialized (if not domestically owned) suppliers. This kind of technology transfer is clearly different from the conventional (“horizontal”) form of transfer, which implies a lengthy commitment from investors to share technology with local producers. But, given new thinking about the possibility for local technological expertise in some globally competitive industries (see Reich 1991), such an objective may be both more feasible, and also quicker.

Implications for the climate change convention It may be possible to enhance technology transfer under the FCCC by providing incentives under the CDM. Table 13.1 shows a preliminary classification that may assist in the identification of which industries may be best suited to vertical or horizontal forms of technology transfer. Categories 1 and 3 of the diagram refer to those industries where hosts – or companies within developing countries – already

Investment and technology transfer 253 have a competitive basis, and may provide the basis for future technology transfer between developing countries. Category 2 is the niche most likely to attract rapid foreign investment via CDM crediting as it refers to technology not currently produced in host countries, but where there is little competitive risk from sharing technology. Examples of technology in category 2 might include high-value photovoltaics, which are from a globally competitive market, and which need to be updated regularly in order to remain competitive. Examples of categories 1 and 3 may include passive solar heating, which is relatively low technology. Category 4 broadly represents the type of technology transfer currently discussed in the climate change negotiations, but is unlikely to attract as much investment as category 3 because of the extra costs required in sharing technology. Technology transfer may therefore be accelerated fastest if the CDM credits companies that invest in category 2. Longer-term, or horizontal technology transfer, may still be achieved, but at higher costs to private investors. One possible solution is to enable international bodies such as the GEF, or local, and bilateral aid organizations to fund the long-term capacity building associated with successful horizontal technology transfer. The identification and support given to different industries will, inevitably, require strong governance systems at the international, national, and local levels in order to highlight which industries may be best supported by different forms of investment. The international governance may be best achieved by the CDM Executive Body, which was created under the 1997 Kyoto Protocol, but which has yet to be defined in detail (Stewart et al. 2000). The national governance may be achieved by new agencies within government. One possible solution is for the CDM to provide a variety of incentives for international investment to invest in climate technologies. Box 13.2 suggests some incentives – or “flexible mechanisms of climate technology transfer” – in which individual companies are rewarded for investment by the amount they contribute to national GHG abatement targets (Forsyth 1999a). Under this scheme, the CDM may be used most effectively for vertical technology transfer, while the existing aid mechanisms such as the GEF might best assist with horizontal transfer, or long-term capacity building that is less attractive to companies. Yet, all such incentives and mechanisms have to be applied with caution. In effect, the CDM will provide a subsidy for investors from Annex I countries to export EST to non-Annex I (usually developing) countries. As such, there is a chance this investment may undermine existing sales from indigenous companies. In theory, this may also allow Annex I countries to claim such investment as leading toward their national commitments for GHG reductions when in fact no overall increase in EST usage has been achieved (because the Annex I investors will have simply taken market share from companies in host countries). There is consequently a need for monitoring international investment under the CDM to ensure that new investments in technology actually do achieve an incremental impact on GHG abatement.

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Box 13.2 Flexible mechanisms for climate technology transfer for potential adoption by CDM 1

2

3

4

5

Allow emissions-reduction crediting activities undertaken by individual companies as well as by countries provides incentive for investment in carbon abatement, without risking intellectual property. Allow different levels of crediting for varying kinds of investment provides incentives for technology transfer projects of the greatest value to host countries or for climate change mitigation. Examples of preferred projects could include those assisting sustainable industrialization and capacity building rather than low-cost, low-risk ventures, or provide carbon sinks without transferring industrial technology. Allow crediting for EST development at the national level, and disseminate technology through an EST bank or clearinghouse provides incentive for governments to invest in EST research, plus a store of publicly owned technology which may then be shared or relocated by public or private bodies (horizontal transfer); also allows private companies to be credited for depositing technology, thus lessening risk to intellectual property rights. The clearinghouse may also develop “climate saving technology units” as a way to quantify the value of each new technological application. Allow crediting for actions that build horizontal technology transfer provides incentives for companies or organizations which undertake more costly, long-term education and inculcation of technology use among new communities. Create voluntary qualitative targets of EST research and development in non-Annex I countries allows integration of carbon abatement with economic growth (reversing the image that reducing GHGs implies decreasing GDP). Also forms basis of future technology relocation/transfer between developing countries.

Sources: Adapted from Chung (1998); Forsyth (1999a).

Conclusion In conclusion, it is hoped this chapter has illustrated ways in which international investment may be integrated with the transfer of technology related to climate change mitigation. The chief argument within the chapter has been that technology transfer must be seen increasingly as a function of international investment and national and regional technology policy. If technology development is still seen in conventional terms as a linear process, to be controlled by indigenous companies, then there is little prospect for enhancing international climate technology transfer, because the process will be seen as costly and a risk to competitiveness.

Investment and technology transfer 255 Yet, if it is seen as a chance to invite new technology investment from international companies that do not expect to give up intellectual property rights, then it is possible to have a win–win situation in which EST is increased; local development is assisted through the introduction of new investors; and investors are allowed into new markets. Technology transfer can therefore fully complement both international environmental agreement, and international private-sector investment. Redefining technology transfer from the conventional view that it can only assist potential economic competitors has ensured that foreign policy objections have acted against moves to enhance technology transfer in the past. Yet seeing technology transfer in terms of “vertical transfer,” or the relocation of economic activity without the sharing of intellectual property rights, may mean integrating foreign policy objectives with activities to mitigate climate change. Seeing the relationship of technology transfer to these other, important aspects of foreign policy, may lead to a more optimistic and successful negotiations under the Climate Change Convention.

Notes 1 Indeed, MacDonald (1992) concluded that successful technology transfer depends upon local demand for new technology; availability of information for users; supporting infrastructure such as transportation and education; economic viability and a lack of dependency on subsidies; sufficient capital for initial investment; and appropriateness of technology for the underlying needs of end-users. 2 Indeed, the CDM originated partly from a Brazilian proposal for a “Clean Development Fund” which would seek to fine Annex I countries for not achieving targets, rather than being a mechanism by which Annex I countries can achieve them. It is worth noting, though, that since 1997, many developing countries have stated they would accept “sinks” projects through the CDM (notably Costa Rica and Bolivia), whereas others have insisted that they should be excluded (such as China, India, and Thailand). 3 SELF is now entitled “Solar Electric Company” (SELCO) and is a commercially oriented development organization.

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Index

activists 7, 160, 175, 178–80, 198; see also civil society, nongovernmental organizations activities implemented jointly (AIJ) 53–4, 74, 83, 87, 93–105, 117–18, 154, 157–8, 161–2, 240–1; see also joint implementation adaptation 3, 20, 23–5, 32–3, 213–15, 218–19, 223, 234, 242, 251 “additionality” 95, 122, 126, 152, 161, 165 agriculture 3, 16, 20, 22, 24–6, 49, 55, 68, 71, 115, 136, 209–11, 213–14, 216–18, 222, 226, 248 aid, environmental see environmental aid air pollution 9, 16, 25, 43, 47, 49, 53, 57, 60, 70, 91, 114, 120, 146, 155–8, 174, 181, 212, 215–16, 220 Alliance of Small Island States (AOSIS) 53; see also islands alternative fuels 12 Asian Development Bank 58–9, 73, 115, 164 Asia Pacific 34, 36, 99, 158; see also East Asia assessment 21, 23, 25–6, 36, 49, 52, 61, 67, 70–1, 79, 158, 169–70, 174, 177, 213, 242 assistance, international see international assistance atmosphere 3–4, 6, 9, 14, 20–2, 24, 27, 29, 31, 94, 167, 169, 175–6, 180, 182, 213, 227 Australia 80–1, 120, 161, 173, 198, 222, 231, 235 Berlin Mandate 31–2, 53, 67, 82, 89, 95, 104, 140–1, 150, 161, 189, 222

bilateral relations 6, 11, 34, 54, 58–60, 77, 81, 86–7, 93–4, 96–9, 101–4, 118, 127, 154–5, 253 biodiversity 16, 25–6, 70, 156, 220, 230 bureaucracy 6–7, 9–11, 13, 18, 43, 44–5, 49, 51, 58–9, 61, 93, 100–1, 117, 127, 149, 154, 159, 165, 174, 177, 180, 192, 244, 247, 249, 251 bureaucrats see bureaucracy Bush, George W. 32–3, 55, 119, 144 business interests 56, 81, 94, 98, 165, 173, 177, 181–2, 190, 194–5, 244–5, 249; see also industry Canada 81, 94, 137, 144, 161, 171, 183, 189 capacity building 77, 94, 97, 118, 152, 156, 162–4, 242, 251, 253–4 carbon credit 121, 152–3, 161, 163–5 carbon dioxide (CO2) emissions 3, 9–10, 16, 20–4, 34, 36, 45, 48, 51, 53, 56–8, 60–2, 86, 88, 96, 103–9, 111, 114–15, 118–23, 125–6, 137–8, 140–3, 146, 148, 150, 160–1, 163, 175–7, 179, 182, 190, 195, 213–14, 216–19, 225, 231; see also greenhouse gases carbon fund 13, 152, 164–5 carbon tax 141, 145, 160, 162, 164 China 3–7, 9–12, 14, 16, 18–19, 23–7, 31–5, 43–132 passim, 140, 143, 154, 156–7, 159, 212, 224, 229, 238–40, 245, 255 Chinese Communist Party 7, 44, 47, 57, 247 chlorofluorocarbons (CFCs) 20, 86, 125, 169–74, 176, 180, 183 citizens 7, 15, 51, 58, 68, 70, 90, 138, 179, 182, 188, 190, 192, 194, 197–200, 219–20, 247

260

Index

civil society 7, 15–16, 55, 197–201, 212; see also nongovernmental organizations clean air act 16, 215, 220 Clean Development Mechanism (CDM), 10–13, 16–18, 32, 53–5, 60, 62, 69, 73–5, 87, 93–9, 103, 109–27, 144, 148, 150, 152, 154, 157–9, 160–5, 221–35, 238, 240, 242, 244, 251–5 climate change 3–5; causes of 7, 20–2, 30, 88, 175–6; impacts of 4–9, 16–28, 33, 35–6, 71, 175–6, 181, 209–11, 213, 215, 219, 221–2, 224, 227, 234–5, 238–40, 258; see also global warming, science and specific causes and impacts Clinton, Bill 31, 55, 89, 102, 105 coal 3, 10, 12, 20–1, 44–7, 49, 53, 56–60, 62, 66, 69–70, 72–3, 79–80, 91–2, 109–26, 146, 158, 189, 216, 224, 231, 247, 249 coastal resources 16, 22, 24–6, 32, 47, 49, 57, 71, 209–11 commercial entities see industry commitments 6, 10, 16, 27, 29, 31, 32, 34, 49, 50–5, 67–9, 76–8, 81–3, 88–9, 94–5, 97, 117–18, 141, 147, 149, 153, 176, 195–6, 212–13, 222–5, 231, 233–5, 253 common but differentiated responsibility 29–36, 88–9 commons: global 14, 167 competitiveness 17, 160, 237–8, 240 243–4, 247, 250, 254 compliance 11, 73, 86, 144–5, 148–9, 153, 161, 223, 227–8 cooperation see international cooperation debt–carbon swap 13, 164–5 deforestation 21, 47, 70, 155, 209, 218, 224–5; see also logging democracy 91; see also pluralism development see sustainable development development assistance see official development assistance, international assistance diplomacy 6, 11, 13, 48, 66, 73, 78, 80, 90, 147–8, 152–66 discourse 15, 167–8, 172, 177–83 disease 22, 24–6, 47, 55, 114, 188, 197–8, 200, 203, 211–12; see also health domestic politics 7, 18, 43–4, 62, 103, 136, 148 drought 3, 20–2, 25–6, 71, 209–10, 218

Earth Summit see United Nations Conference on Environment and Development East Asia: importance of 3–8; see also specific countries economic development see development economic policy 18, 70 education 214–15, 243, 254–5 effectiveness 11, 56, 86, 115, 163, 167, 170 electricity 12, 46, 56–60, 68, 72, 109–26, 145, 199, 219, 224, 239, 244–55 emissions see greenhouse gas emissions emissions credits 17, 94, 110, 125–6, 223 emissions offset projects 16, 221–36 emissions trading 17, 53–4, 67, 69, 74, 94, 117, 142–3, 145, 159–60, 165, 221, 223–6, 233, 241 energy consumption 45–7, 49, 58, 69, 89, 110–11, 114, 118, 120, 124–5, 138, 141, 193, 195–6, 199, 217, 225, 229 enforcement 10, 60, 75, 82 environmental aid 3, 14, 101, 153–9 environmental conservation/protection 11, 13, 15, 48, 67, 88, 90, 92–3, 98–9, 101, 104, 152, 153, 156, 164, 181, 188–9, 200, 212, 220 environmental groups see nongovernmental organizations, transnational organizations environmental security 14, 153, 156, 164–5 epistemic communities 87, 92, 183; see also knowledge, scientists equity 5, 8, 11, 17, 19–20, 23, 27–30, 33–6, 68, 86, 88, 90, 92, 94, 98, 221, 230, 234–5; see also justice, responsibility ethics 8, 19, 27–36, 74, 79, 152; see also equity, fairness, justice, responsibility European Community 171–2, 176, 183; see also European Union European Union 53, 80, 99, 103, 119, 123–4, 141–5, 147–8, 159–61, 179, 189, 203; see also European Community experts see epistemic communities, scientists fairness see justice financial resources 30, 50, 68–9, 74, 77, 79, 81, 118, 124, 164 fisheries 22, 25–6, 47, 209, 211 floods 3, 20, 22–6, 36, 60, 71, 209–10 food 25, 180, 209–10, 212, 218; see also agriculture foreign aid see development assistance, international assistance

Index foreign direct investment 59, 115–16 foreign policy 6, 8, 12–14, 17–19, 35, 66, 70, 73, 76–8, 81–2, 98, 127, 135–50, 167, 237–40, 251, 255 forests see deforestation, logging Framework Convention on Climate Change (FCCC) 3, 8, 12–13, 18–20, 27–32, 34, 43, 50–3, 55, 60–1, 67–8, 74, 76–7, 79–80, 82–3, 87–96, 100, 104, 118, 135, 139–42, 146–7, 152, 157, 159, 176–8, 187, 212–15, 219, 221–2, 238–43, 250–2 funding see environmental aid, international assistance glaciers 20, 22, 24; see also ice Global Environment Facility (GEF) 5, 9, 32, 60, 73, 80, 123, 231, 253 global warming 3–9, 11–12, 14, 16, 18–21, 23, 26–7, 33, 35–6, 43–5, 47–9, 55, 61, 71, 84, 86, 89, 138, 156–9, 161, 163, 167, 175, 178, 187, 190, 193–5, 197, 209, 213, 219–22, passim see also climate change and specific causes and consequences greenhouse gas emissions (GHG) 3–6, 9–10, 12, 16, 18, 20–2, 24–5, 29–34, 36, 43, 50–2, 54–6, 58, 66–72, 76–7, 79–82, 88–9, 91, 94, 97, 109–11, 117–19, 121, 139, 141, 143, 148, 153, 157–8, 161, 163, 165–6, 176–7, 188–95, 213–17, 219, 221–3, 231, 238–42, 253–4 Group of 77 developing countries (G-77) 31, 51, 53, 61–2, 74, 79, 83, 87–9, 91, 94, 98, 103–4, 212 health 16, 22, 24–6, 30, 47, 55, 70, 73, 115, 170–2, 181, 190, 210–12, 218, 246 history 6–7, 11, 101, 161, 200 ice: melting of 20–3; see also glaciers Indonesia 5, 16–17, 25–6, 157, 221–37, 239, 245, 248–9, 251–2 industrialization 20, 24, 43, 68, 240, 254 industry 7, 15, 20, 22, 32, 34, 45–6, 48, 56, 60, 122, 125, 139, 141–2, 145, 147–8, 156–7, 169–70, 173–5, 183, 187, 194–200, 213–14, 243, 246–7; see also business interests institutions 7, 13–14, 16, 19, 34, 50, 57–9, 70, 87, 115, 127, 152, 163, 165, 167–8, 212, 233 insurance 22, 154, 158, 162, 164

261

intellectual property 17–18, 237–55 Intergovernmental Negotiating Committee (INC) 50–2, 67, 88, 98, 104, 138–9, 147, 176, 212 Intergovernmental Panel on Climate Change (IPCC) 20–4, 28, 36, 48–9, 54, 71, 79, 137, 175–7, 189, 191, 193, 213, 222 international aid see development assistance, international assistance international assistance 5, 141; see also development assistance, environmental aid international cooperation 6, 9, 11, 18, 67, 69–70, 72, 76–8, 82, 91, 99, 152–3, 157–8, 181, 213 international financial institutions 7, 34 international institutions see institutions International Monetary Fund 91, 225 international negotiation 3, 5, 11–13, 19, 31–3, 43–4, 48–9, 61, 66, 90, 97, 135–6, 146, 148, 180, 212 international organizations 6–7, 9, 16, 61, 211; see also specific organizations international politics 3–5, 8, 14, 19, 27, 35, 182 international regimes 3, 9–14, 19, 26–7, 29, 31, 34–5, 73, 75–8, 81–3, 86–7, 91, 93, 98–9, 153, 161, 167–8, 183, 187–9, 191, 193, 197, 199–201, 203, 243, 245 Japan 3–4, 6–7, 9, 11–15, 18, 23–6, 34, 36, 54, 58, 60, 90, 94, 96–7, 99, 101–5, 111, 113, 116, 118–19, 121, 124, 127, 135–201, 222, 224, 231, 238, 241–2, 249 joint implementation 10–11, 50, 52–4, 62, 67, 69, 74, 79–80, 83, 87–9, 93–6, 98–9, 104–5, 117–18, 144, 154, 157–9, 161–2, 164, 179, 188, 223–4, 226, 238, 240, 241; see also activities implemented jointly justice: international 5–6, 8, 19–20, 23, 27–35, 78; see also equity, responsibility knowledge 4–5, 14–15, 20, 35, 87, 117, 154, 167–83, 191 Korea 23, 25, 140, 154, 159, 224 Kyoto Protocol 3, 10, 12–13, 16–17, 19, 26, 30–4, 53–5, 58, 66, 69, 73–4, 76, 80, 82–3, 89–90, 109, 117–19, 122, 135–6, 140, 142–5, 147–50, 159, 161, 165, 168, 177, 179, 183, 187, 189–90, 192–6, 201, 212, 221–35, 238, 241, 253

262

Index

logging 16, 220, 225, 230; see also deforestation “luxury” emissions 11, 86–104 passim

prestige 78, 80, 82, 88 public 13–14, 48, 55, 70, 137, 140, 142, 153, 162, 165, 173, 180–1, 196–8, 214

marine environment 22, 258; see also coastal resources markets 17, 58, 221, 231–3, 236, 245, 255 media 14, 173, 177, 180–2, 187, 191, 197 methane 20–1, 24, 72, 117, 121, 126, 128, 141, 179 mitigation 5, 15, 32, 74, 77, 81–2, 94–5, 115, 140, 143, 146, 149, 158–9, 161, 192–4, 200–1, 213–15, 225, 232, 238, 240–2, 244, 250–1, 254, 256 modernization 15, 45, 188, 200–1, 203 Montreal Protocol 15, 29, 171–5, 179, 182

realism see neorealism regimes see international regimes regulation 15, 18, 48, 60, 72, 77, 111–12, 141, 157, 171, 173–4, 177, 180, 187–9, 194, 197, 244–5, 252 responsibility 9, 27–32, 34–6, 50–2, 58, 62, 68, 76, 83, 88–90, 92–3, 101, 104, 209, 219, 239–40, 242; see also equity, justice Russia 25, 121–2, 126, 144, 160–1, 164, 222, 224, 226, 228, 233–4, 236, 241, 247

national interests 5–6, 66, 70, 72 national security see environmental security, security natural disasters 25, 71 natural gas 20–1, 47, 60, 86, 111, 118–19, 121–2, 224–5; see also oil neorealism 103 nongovernmental organizations (NGOs) 7, 13, 28, 93, 138, 149, 182, 187, 191, 197–8, 250 Northeast Asia 3, 25

science 3, 5, 8, 14–15, 35, 44, 48–9, 70–1, 92, 167–70, 175, 177, 184, 187, 190–2, 197, 200–1, 203; see also climate change, global warming, knowledge, perceptions scientists 7, 14, 20, 28, 36, 71, 81, 137, 168–70, 172–3, 175–7, 180, 191–2, 203, 209; see also science, knowledge Sea-level rise 3, 20–7, 49, 71, 209–12, 221 security see environmental security sinks: carbon 16–17, 69, 143–5, 148, 161, 179, 188, 190, 214, 218–19, 221, 223–4, 226–36, 238, 240–2, 254–5 small island states see Association of Small Island States socio-economic impacts of climate change 19–26, 35; see also climate change Southeast Asia 3, 6, 9, 15–18, 23–4, 26, 209–55 sovereignty 9–10, 50–1, 53, 58, 66–7, 70, 75–7, 82–3, 87, 90, 92, 95, 98 state, the 15, 46, 75, 136, 187, 192–5, 197, 200, 204, 238 suffering: human 4, 16, 18, 29, 33, 188 “survival” emissions 11, 89 sustainable development 6, 11, 30, 34, 54, 68–9, 73, 80–1, 83, 86–8, 99, 141, 155, 165, 181, 212–14, 223, 232, 235, 238, 241–2

official development assistance 6–7, 13, 68, 95, 101, 119, 141, 144, 152–66; see also environmental assistance, international assistance oil; see petroleum overseas development assistance see environmental assistance, international assistance, official development assistance perceptions 5–6, 15, 18, 27, 149, 182; see also knowledge, science petroleum 3, 20–1, 25, 45–6, 58, 62, 86, 110, 114, 116, 118, 124, 189, 216–17, 224–6, 246–7, 249 Philippines 5, 16–17, 25–7, 31, 157, 209–20, 237, 239, 245, 249–50, 252 pluralism 7; see also democracy politics see domestic politics, international politics, local politics polluter pays principle 33 poverty 4, 9, 11, 20, 26, 32, 42, 68–9, 81, 87, 90, 163, 212, 222 precautionary principle 15, 170–2, 176–7, 180–3

targets and timetables 30, 50, 52, 61 tax; see carbon tax technology transfer 14, 17–18, 32, 50, 52, 54, 59, 73–4, 77, 79, 119, 146, 153, 157–8, 165, 203, 223, 230, 232, 237–55 temperature rise 20–6, 71, 209–11 Thailand 17, 157, 237, 239, 245–7, 249, 251, 255

Index transportation 20, 25, 47,216–17, 219, 224–5, 231, 255 trees see deforestation, logging two-level game analysis 13, 136, 145, 149 uncertainty 15, 24, 35, 89, 116, 165, 168–70, 174–5, 235, 247 United Nations (UN) 31, 36, 66, 71, 79, 82, 87, 140, 155, 175–6 United Nations Commission for Sustainable Development (CSD) 242 United Nations Conference on Environment and Development (UNCED) 3, 22, 36, 49–50, 54, 67–8, 76, 79–80, 83, 87, 91–2, 99, 101, 104, 139, 146, 154, 176, 222, 239, 242 United Nations Conference on the Human Environment 47, 76 United Nations Convention on Biological Diversity 29 United Nations Development Program (UNDP) 58–9, 60, 62, 250 United Nations Environment Program (UNEP) 59, 95, 170–2, 174–6

263

United Nations Framework Convention on Climate Change see Framework Convention on Climate Change United States 4, 10, 28–9, 32–6, 45–6, 53–5, 60, 66, 69, 80–1, 86, 89, 90, 92, 94, 96, 99, 100–3, 110, 116, 118–19, 123, 138–50, 170–4, 177–9, 180, 183, 189–90, 203, 222, 226, 231, 235, 241, 243, 247, 249, 251 urbanization 24, 45, 210, 219 Vietnam 17, 237, 239, 245, 247–8, 252 voluntary commitments 31, 67, 76, 195 vulnerability 16, 20, 23, 25, 27, 33, 49, 71–2, 79, 87, 213 water 9, 16, 22–6, 43, 47, 55, 70–1, 154–5, 181, 209–12, 218–19, 249–50 wealth 5, 31, 33 World Bank 26, 34, 59–60, 62, 73, 87, 91, 115, 124–5, 153, 164, 225, 248 World Meteorological Organization (WMO) 169, 174–6