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March 20th, 2008:

Beijing Cool On Warming Deal

Updated on Mar 20, 2008 – SCMP

In his own way, Theodore Roosevelt, the 26th president of the United States, was deeply concerned about the environment.

Granted, if he were around today his enthusiasm for big game hunting would certainly disqualify him as a conservationist. On safari in East Africa in 1909, Roosevelt and his party shot hundreds of animals from antelopes to rhinoceroses, hippopotami and elephants, shipping tonnes of trophies back to the US.

But on the other hand, while in office Roosevelt did more than any previous president to preserve America’s natural environment. During his two terms in the White House he created 150 national forests, 51 federal bird reservations, 18 national monuments, five national parks and four national game preserves. Altogether he protected some 230 million acres of wilderness territory. That is almost one million square km, or roughly 1,000 times the total land area of Hong Kong.

It is a legacy the president’s great-grandson is keen to advance. In addition to his day job as a managing director of the investment bank Lehman Brothers, Theodore Roosevelt IV is chairman of the Pew Centre for Global Climate Change, a trustee of the Alliance for Climate Protection, and a councillor of the China-US Center for Sustainable Development.

Yesterday, Mr Roosevelt was in Hong Kong with his Lehman colleague, the economist John Llewellyn, to talk about the wealth of business opportunities they believe will be created when China strikes a deal with other world governments, led by the US, to tackle climate change.

Theirs is an extremely optimistic view of the future.

They are correct to say that to be successful, any agreement on climate change must include China. As the first chart below shows, in recent years China’s emissions of greenhouse gases have soared, very likely overtaking US emissions last year. As a result, any agreement which does not limit Chinese emissions will be doomed to failure.

They are also right that an effective deal would generate enormous business opportunities. China’s dismal failure to tackle its domestic pollution problem demonstrates that a regulatory approach to limiting greenhouse gas emissions is unlikely to work. On the other hand, a market-based system that creates an economic incentive to reduce emissions by putting a price on carbon dioxide could well be successful.

And if such a deal were struck many of the opportunities would be in China. As the second chart shows, China is a very carbon-intensive economy, producing far more greenhouse gases per unit of output than developed countries. That means China offers the greatest scope for cost-effective reductions.

Unfortunately, there is little evidence either that China is prepared to sign up to such a deal, or that Beijing is willing to pursue the domestic regulatory culture of transparency and public accountability necessary to make it work.

Mr Roosevelt argues there is a greater than 75 per cent chance that a global agreement on climate change can be struck in the next few years. If he can help persuade China to sign up, it would be an achievement to match those of his illustrious ancestor. Alas, his chances of success look slight.

Greenhouse Gas Emissions, Carbon Intensity

Green Challenge To China’s Mega-Projects

China Business – Mar 20, 2008 – By Candy Zeng

SHENZHEN, China – Local governments in China, keen on attracting big investment projects to boost local economies, are starting to listen to a public increasingly concerned with potential environmental hazards.

Some projects, such as a chemical plant planned for Xiamen, in southwestern Fujian province, are being shelved, suspended or relocated due to public objections. A US$5 billion Sinopec-Kuwait oil joint-venture refinery proposed for Guangzhou, in Guangdong province, is at the center of one such dispute.

The public’s expanding chorus of environmental concerns is pushing the central government to rethink its investment policies.

During the just-closed annual sessions of the National People’s Congress (NPC), deputies Li Miaojuan, director of the Guangdong Provincial Development and Reform Commission, and Chen Min, vice chief of the Provincial Environmental Protection Bureau, told Xinhua News Agency that the planned oil refinery in Guangzhou won’t be launched before winning approval from the nation’s environmental protection authority.

The refinery, designed to process 15 million tonnes of crude oil annually and scheduled to be built in Guangzhou’s Nansha district, at the throat of the Pearl River Delta, involves China Petroleum and Chemical Corporation, the Guangdong government and Kuwait National Petroleum Co.

Just before the NPC annual sessions, 14 local legislators in Guangdong called for a rethink of the project, citing potential pollution of the Pearl Delta.

Liu Yiling, director of a provincial government-funded center of research on environment protection, said the project would worsen air quality in the delta and harm Nansha’s already fragile environment. “Nansha is in the heart of the delta. The project will have substantial impacts on not only Guangzhou and Shenzhen, but Zhongshan, Dongguan and Hong Kong as well,” said Liu, citing important urban centers and in the province.

Tian Rugeng, a retired urban planning expert in Shenzhen, has submitted an analysis to the provincial government, opposing the launch of the Nansha project, citing its proximity to heavily populated cities in the region.

“The project is located 68 kilometers from the center of Guangzhou, but only 40 kilometers from the center of Shenzhen, 37 kilometers from Yuen Long in Hong Kong, 40 kilometers from Macau, and 31 kilometers from Zhuhai,” said Tian.

Beyond pollution, Tian is concerned about the safety of the project. “The transportation of the whole delta would be paralyzed should there be any major accidents in Nansha.” He suggested sighting the refinery in a less developed area along the Guangdong coastline and away from the delta.

The project was approved by the National Development and Reform Commission (NDRC) at the end of last year. About eight square kilometers of land has been reserved by the Nansha district government, with all residents there being removed.

As disputes continue on the project’s environmental side-effects, the prospects of Nansha refinery being built may become as blurred as those of the suspended paraxylene (PX) plant in Xiamen.

Xianglu Group planned with the permission of Xiamen municipal government to invest 10.8 billion yuan (US$1.5 billion) in PX production in the city’s Haicang district. Construction began in November 2006 with NDRC approval. Then the public, concerned at the proximity to residential areas, and some experts, began to air their protests through various channels. Alerted by mobile-phone short-messaging helped to bring thousands of people onto the streets.

During the NPC annual session last March, 105 members of the Chinese People’s Political Consultative Conference, the country’s top political advisory body, signed a petition urging relocation of the chemical plant. Later, on the first two days of last June, more than 5,000 Xiamen residents “took a walk” together to the local government offices in a silent protest against the project.

By the end of last year, Fujian provincial and Xiamen municipal governments decided to halt construction of the chemical plant and planned to relocate it to the less-developed Gulei Island of Zhangzhou, also in Fujian. The relocation has yet to win central government official approval.

The mainland’s financial hub, Shanghai, is also having to contend with residents as it seeks to develop its infrastructure. During this year’s NPC sessions, mayor Han Zheng told reporters that a controversial extension of the high-speed Maglev train line has not been included in the list of the city’s major investment projects for 2008. The municipal government has to further consult the public and obtain a professional assessment on the feasibility of the project, according to Han.

Residents opposed on health concerns a plan to extend the existing Maglev train line starting from Shanghai’s Hongqiao Airport to Hangzhou, the capital of nearby Zhejiang province. The German-designed Maglev train, which is driven by magnet technology, is intended to operate 300 meters away from residential areas, but in this case the line was to be built only 22.5 meters from the nearest homes. In March 2006, thousands of people “took a walk” on the streets together to protest against the project.

A plan by US giant DuPont to build a $1 billion titanium dioxide plant in Dongying, Shandong, south of Beijing, has also been challenged. The plant’s disposal of chemical waste by underground injection, though declared by DuPont as exclusive and state-of-art, was regarded as a way of transferring instead of reducing pollutants. Opponents are also worried about the release of carcinogenic dioxin, and claim the project doesn’t fit into the country’s goal of seeking sustainable development.

A government work report by Premier Wen Jiaobao, that includes consideration of major government tasks this year, stressed the importance of environmental protection by listing 10 specific sub-tasks ranging from closing highly polluting plants with low productivity to increasing public awareness of environmental protection.

Following Wen’s high-profile report, many NPC delegates, from areas as diverse as rich provinces like coastal Jiangsu to backward areas such as the Xinjiang Autonomous Region in the far west, demonstrated their willingness to reject substandard investment projects in the name of environment protection rather than pursue economic growth at the cost of the environment and natural resources.

From the second half of 2007, the central government delivered a series of policy adjustments to discourage pollution and high-energy consumption. Last June, export tax rebates were scrapped for 1,115 products and export taxes introduced for more than 300 products.

Guidelines were also introduced from December 1, 2006, restraining entry of foreign-invested enterprises in high-pollution and high-resource-consumption projects. More recently, the State Environmental Protection Administration issued a directive requiring environmental protection audits on companies before initial public offerings or refinancing. Plans by Hong Kong-listed Zijin Mining to issue shares in the mainland market were rejected last month by China’s securities watchdog for not meeting the newly set green thresholds for floating shares.

Even so, public outcries and environmental protection pressures have not prevented local governments from remaining the largest advocates of massive chemical plants, infrastructure work and power plants, along with other projects that boost local economic growth and employment.

A leader in Nanshan district of Guangzhou once said in defense of a refinery project that the larger a chemical plant is, the less polluting it would be. Li Miaojuan, of the Guangdong Development and Reform Commission, commented that the Nansha refinery project is important to Guangdong, as the highly industrialized area imports 10 million tons of refined oil products.

The trade-off between environment and economic growth is more critical in the debate over hydropower development of the Nujiang (Salween) River. The upper Nujiang River in southeast Yunnan province is listed as world natural heritage. The local government wants to use the waters for hydropower development to improve the well-being of the poor people.

To visitors, “A power plant may ruin the picturesque Nujiang gorge. But is that all that conservation means, to have our people wearing animal skins for others to watch and enjoy?” said the provincial Communist Party Secretary Bai Enpei.

These disputed projects have one thing in common – they are all waiting for assessment reports made by the environmental protection authority. It could be a long wait. Pan Yue, deputy director of the State Environmental Protection Administration, which has been just upgraded as a cabinet ministry, commented during the NPC sessions that laws and regulations on environmental protection appraisals have yet to be detailed and improved.