China’s Mixed Messages On Carbon Are A Precursor To Legislation
The Chinese government continues to send mixed messages over plans for a carbon tax on energy-intensive industries by 2015. The past six months have seen a series of state-backed news agencies suggesting China will introduce a carbon tax. For example on January 5, 2012 the Xinhua-backed Economic Information Daily announced the Chinese government will introduce a tax of 10 yuan ($1.58) per tonne of carbon before 2015. Yet just a few days later, Su Wei, China’s chief negotiator on climate change, stated that a carbon tax is just one of several policy options being considered for China to reduce its greenhouse gas (GHG) emissions.
The recent spate of carbon tax announcements from the Chinese government and media is consistent with the mixed policy signals coming from the country. Whilst commitment to reducing GHG intensity is proclaimed in the country’s 12th Five Year Plan (which targets a 17% reduction in CO2 per unit of GDP by 2015), the country did not sign a global GHG reduction treaty at the recent 2011 COP17 in Durban, but agreed to the new negotiation process running until 2015. At the same time on 4 January, 2012, the China Air Transport Association confirmed major Chinese airlines will boycott the regulations linked to the EU’s Emissions Trading System.
This apparently confused situation fits squarely with the pattern observed in the Western economies. It is easy to forget that the Chinese economy is facing much more moderate growth in 2012, linked to weaker demand for its exports from Europe. The country’s leadership will feel under pressure to consider only environmental policies that will not hinder economic growth. China’s contemplation of GHG reduction measures, particularly with regards to long term commitment, follows the established pattern of the economic situation taking centre stage during periods of instability. But what else have we learnt from recent history? These policies make their way in good time. Witness Australia’s carbon pricing scheme starting at AUD23 ($23.4) per tonne in July 2012, developed within an economy which grew at 1.3% during the 2009 global recession, and after lengthy political battles.
