Ross Garnaut and the state of China’s emissions

Ross Garnaut and the state of China’s emissions

The lecture theatre filled up quickly. I was on the edge of my seat, excited to see Ross Garnaut at the Sidney Myer Asia Centre. We all fell silent in the theatre as he approached the stage. On 25 August, Professor Garnaut gave his take on the future of China’s emissions. This vast country has become not only a great superpower but also a great emitter. But in the past few years and into the future, it will have to take responsibility of its influence on world pollution.

In the twentieth century, China’s emissions per person were moderate, but in the past decade and a half – in the new century – its emissions grew dramatically. China is the source of upwards of fifty per cent of the increase in global emissions. This was partly due to the extraordinary economic growth, as large as 14% in 2007. This was also because growth in energy efficiency subsided; coal was utilised much more.

The vast increase in global emissions was primarily caused by an extortionate increase in China’s use of coal. This increase in coal use fuelled massive economic growth over the past decade, which led to large growth in national earnings. But with the rising incomes, inequity also rises, particularly between city and country citizens.

This rise in inequity has caused concerns and sparked an environmental debate. Not only is there material inequity, but the immaterial inequity has risen as well. In the more industrial parts of China, which pollute more, life expectancy has significantly decreased. These changes in the new millennium have sparked a rise in new regulations and policies domestically to improve the state of the environment.

Now, China’s emissions will be mitigated by the new model for economic growth. This model predicts a decrease in the coming years in the investment share of income (which drives the heavy emissions of industry). This is to be replaced by consumption, mostly of services (less carbon-intensive). This shift in the share of national income itself is expected to reduce pollution. Also, the declining labour force, coupled with the slower growth of capital stock, is expected to contribute to significantly lower GDP growth than in the first part of this century.

But, China’s changes do not stop there. Now, the superpower is focused on market-focused reform, oriented towards boosting productivity. In the 12th Five Year Plan, the Chinese government expect a sixteen per cent fall in the use of energy per unit of output. This is has been from reductions in electricity. Solar, wind and nuclear power are rising rapidly, and this energy has been converted into the electrical infrastructure. This investment means low-emissions capacity has been maximised.

This has caused a decrease in the growth of coal. But, very importantly, there has not been a decrease in GDP alongside this. GDP has increased without coal usage increasing for the first time in China’s history. This poses questions for Australia. We, who are so very dependent on exports to fuel our growth, could be upon the brink of trouble. Recently, mining companies have invested many billions into mining infrastructure, but their share prices have begun to fall: Rio Tinto recently losing 20 cents, closing at $62.14 and BHP Billiton dropping by 18 cents to $36.02. The price of iron ore has continued to fall, sitting at US$84.30 (as of 4 September 2014), a five year low for the commodity. A report by the Bureau of Resources and Energy Economics stated the mining boom’s peak has passed: there is an oversupply of both coal and iron ore in global markets. China’s demand for these finite resources is steadily decreasing. In fact, the country is expected to reach peak coal demand in 2015.

China is also actively contributing to a low-carbon future: in manufacturing capital goods, they have achieved economies of scale of very low emissions technologies, reducing the cost of lower emissions world-wide. China is taking initiative. Australia, on the other hand, is actively blotting out environmental reform. China, representing 14.9% of global income, has a responsibility to the world; it must lead environmental reform. And as this superpower comes into the age of environmentally-aware growth, I fear Australia could be left behind.