For years, China was seen as a major obstacle to global efforts to combat climate change because of its refusal to reduce emissions under the Kyoto Protocol.
Now, for some, the concern is not that China is moving too slowly, but that it is rushing ahead so fast that clean-energy companies in the West will be left in the dust.
Demands on China for verifiable monitoring of emissions have been a long-running source of tension in climate negotiations. They helped to sour the mood at the UN climate meeting in Copenhagen a year ago, which broke up in acrimony after poorer countries balked at accepting limits on their emissions.
Heading into this year, however, there were some surprising signs of renewed movement in efforts to control greenhouse gas emissions.
A UN climate meeting last month in Mexico pleased many environmentalists by putting global talks back on track. And this month, Bloomberg New Energy Finance, a research group, reported that investors had injected a record US$243 billion into cleaner sources of energy last year as the rising price of oil gave a lift to the prospects for renewable and low-carbon alternatives.
With the gloomy atmosphere dissipating, organizers at the World Economic Forum in Davos, Switzerland, said last week they expected that business leaders would be ready to pay attention again to climate issues.
The meeting in Mexico showed an “enhanced spirit of cooperation” on cutting emissions, said Caio Koch-Weser, who leads sustainability initiatives for the forum and is vice chairman of the Deutsche Bank Group.
And the clean-energy sector “has never been more dynamic than it is today,” he said.
However, along with such optimism, there is also mounting anxiety about which countries — and whose companies — will benefit from the clean-energy boom. As financially struggling governments in Europe and the US trim support for clean-energy development, emerging countries, led by China, have been pouring state resources into the sector.
China represents “a huge challenge” for established clean-energy businesses, said Connie Hedegaard, the EU’s commissioner for climate action. “We can never subsidize it as much as they would do in China.”
She said China was preparing a five-year plan that would be the clearest indication yet of its determination to become a clean-energy powerhouse.
European nations would need to “pool our efforts better” to remain competitive, said Hedegaard, who was expected to attend the forum.
Investment in clean energy in China rose 30 percent last year, to US$51.1 billion — by far the largest figure for a single country — and represented more than 20 percent of the total global investment of US$243 billion, according to Bloomberg New Energy Finance.
At the same time, the issue of clean-energy subsidies in China is at the heart of an investigation US President Barack Obama’s administration started last month. The administration is looking at bringing a case against China, including accusations about manufacturing subsidies for wind turbines, before the WTO.
This month, in what looked like a countermove, Obama signed a law that contained a “buy American” provision for US Department of Defense purchases of solar panels.
The European Commission has raised concerns with China about access to rare earth minerals and other elements used in clean-energy industries, including the manufacturing of electric cars, but so far, the commission has taken no formal action on trade in the wind and solar industries.
Not everyone sees China’s drive to dominate the clean-energy sector as worrisome.
“China is moving so far into the lead” on a number of clean-energy technologies “that we don’t have to worry as much about whether they’ll really keep their commitments, because they have a commercial drive to do it,” said Jonathan Lash, president of the World Resources Institute, an environmental research group in Washington.
The surge of investment in climate-related industries, as well as growing concerns about extreme weather, should deliver significant business opportunities in the coming year, and not just in China.
Vincent Mages, a director for climate change initiatives at Lafarge, the giant cement company based in France, said catastrophic flooding in Australia and Pakistan and a scorching summer heat wave in Russia should be good for businesses like his.
Cities and regions grappling with a changing climate increasingly need the kinds of products made by Lafarge, he said, to make buildings and infrastructure more energy-efficient and robust.
However, he added, Europe and the US could do more to support domestic industries by adopting tougher rules for new buildings and retrofittings now, rather than setting goals that are decades away for cutting emissions or adopting renewable power.
“China talks about programs and policies rather than focusing on targets,” Mages said. “We focus on targets too much.”
The main tool most governments in the developed world are counting on to cut emissions and drive investment into climate-related industries is carbon trading, also known as cap and trade. The EU established its system six years ago. Its goal is to cut emissions by one-fifth from 1990 levels by 2020.
Carbon trading has run into obstacles in Europe, where the system has been rocked by extreme volatility, computer attacks, tax fraud, recycling of used credits and suspicions of profiteering.
In Australia, Japan and South Korea, governments that have supported carbon trading have been delayed by political concerns.
Koch-Weser said he believed that “shortcomings” in international carbon trading could be overcome, adding that he saw no need to invalidate any existing carbon credits.
He also said business leaders at the World Economic Forum would push for progress on a Green Climate Fund for countries most vulnerable to the effects of climate change, which could help to channel US$100 billion each year by the end of the decade.
The committee running that fund should include representatives from the private sector and multilateral lenders, he said.
Failure to raise that money, he said, would “reinforce mistrust and breed cynicism” in the developing world before the next round of global climate talks, in Durban, South Africa, in November.
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