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

　

Abstract

　

        In Chapter 6, Axel Michaelowa, Jusen Asuka-Zhang, Karsten Krause, Bernhard Grimm, and Tobias Koch examine potential opportunities and barriers 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 China chapters, 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.