ClimateIntel.com

China has taken an aggressive posture on technology transfer in its comments on the Bali Action Plan - the “roadmap” for guiding the next round of discussions on a post-Kyoto global climate change regime.

The UNFCCC Secretariat posted comments from 26 countries earlier this week, in advance of the first session of the Ad hoc Working Group on Long-term Cooperative Action under the Convention that will convene in Bangkok from March 31 to April 4, 2008. While most countries’ positions reiterate statements made during the Bali Climate Change Conference, China’s submission is notable for its stance on intellectual property rights (IPR), clean technology financing, and transfer. China made it explicitly clear that it has uniquely high expectations for the United States, noting that special consideration in the negotiations should be given to ensuring “quantified emission reduction targets [25%-40% of 1990 levels by 2020] for the Annex I Parties to the Convention that are not Party to the Kyoto Protocol.”

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Reflecting growing pressure from institutional investors to curb potential environmental and climate policy risks to public companies, China has put into effect a “green securities” plan. The new requirements impose barriers on heavy polluters applying for an initial public offering (IPO) and mandate that listed companies disclose more information about their environmental performance.

According to the regulation issued by China’s Securities Regulatory Commission (CSRC) in January of 2008, companies from energy- and pollution-intensive sectors must undergo inspection by a State Environmental Protection Agency (SEPA) environmental specialist if they wish to launch an IPO.

Specifically, companies in the sectors of thermal power generation, iron and steel, cement, and electrolyte aluminum, and companies with cross-provincial business in any of 13 listed industrial operations that may cause heavy pollution will be required to obtain SEPA approval of their environmental performance. These companies’ IPO application to CSRC shall include recommendations drawn up by the environmental regulator before they may be considered. (more…)

While U.S. and Chinese participants in the recently concluded second annual U.S. Clean Energy Trade Mission to China have lauded the commercial and environmental benefits of the mission to both countries, the mission also raised the profile of ongoing tensions related to China’s enforcement of the intellectual property (IP) rights of U.S. companies.

U.S. Assistant Secretary of Commerce David Bohigian, who led the mission, warned during a news conference that there have been “negative developments” in China’s IP enforcement efforts over the last year, exacerbated by problems in China’s efforts to enshrine the rule of law. Bohigian further noted that U.S. companies are declining to export their most innovative environmental technologies to China because they are concerned these technologies will not be protected.

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The U.S. Department of Commerce is leading a Clean Energy Trade Mission to China and India, on January 8-17, 2008, to promote a broad range of clean energy technologies such as renewable energy, biofuels, energy efficiency, clean coal, and distributed generation. The Mission is taking place in the context of the Asia-Pacific Partnership on Clean Development and Climate, and reflects growing dialogue between the United States and China on urgent environmental issues.

Media reports from China on the Mission (also known as the Sino-U.S. Clean Energy Dialogue) focused on the significant opportunities for U.S. and Chinese businesses that could be gained through collaboration, as well as the political and policy barriers that expanded trade in clean energy technologies may face.

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Although China has enacted progressive laws designed to promote the development of renewable energy, existing regulatory hurdles continue to present significant barriers to financing clean energy projects. In a report entitled Financing Energy Efficiency in China, William Chandler of the Carnegie Endowment for International Peace concludes that restrictions on debt financing and foreign equity investments in China, a heavy-handed tax policy, and onerous regulations for investing in emissions reductions projects under the Kyoto Protocol’s Clean Development Mechanism make foreign investment in renewable energy projects risky and burdensome.

Chandler recommends that China take action at the national and local level to exempt renewable energy projects from foreign exchange and foreign-invested enterprise policy controls, provide tax holidays or exemptions for companies investing in clean energy, provide loan guarantees for energy-efficiency projects, and streamline the country’s Clean Development Mechanism regulations.

This week, I will be posting updates on the United Nations Conference on Climate Change discussions being held in Bali, Indonesia.

A major theme of discussions over the past two days was the Clean Development Mechanism (CDM) process, which is a financial mechanism under Kyoto allowing Annex 1 countries to invest in emission reductions projects in developing countries.

The Executive Board of the CDM shared recent statistics on projects, estimating that:

• The current project pipeline is expected to generate +2.5 billion Certified Emissions Reductions (CERs) by the end of the first Kyoto commitment period (2012);
• These CERs will result from more than 2,600 project activities;
• About 150 projects enter the pipeline each month, and no reduction is expected in this trend.

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China stepped up its energy conservation drive with a law that makes officials’ career prospects dependent in part on their energy-saving efforts, according to Xinhua News Agency, the official press agency of the People’s Republic of China.

The amendments to China’s Energy-Saving Law, which almost doubled the size of the original legislation, will take effect on April 1, 2008.

Among the new provisions is one that requires the performance reviews for local government officials’ — vital for advancement in the Communist Party — to include an assessment of their energy-saving efforts.

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Next month in Bali, countries will start what are sure to be tough negotiations over how to mitigate and adapt to climate change after commitments under the Kyoto Protocol expire in 2012.

With China’s greenhouse gas output soaring, many Western politicians want Beijing to spell out its goals for limiting emissions growth — something developing countries (or “non-Annex 1″ countries, including China) are not obliged to do under Kyoto.

Visiting Chinese Premier Wen Jiabao expounded on China’s climate change policy in Singapore on November 21, 2007, stating that China is ready to join world efforts in tackling climate change within the framework of the U.N. Framework Convention on Climate Change in accordance with the principle of “common but differentiated responsibility.”

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China issued a new policy on natural gas utilization at the end of August to regulate the use of natural gas and alleviate a shortage of supply. The policy became effective on August 30, 2007, after approval by the State Council.

The new policy issued by the National Development and Reform Commission (NDRC) classifies natural gas utilization into four categories: residential and urban gas use, industrial fuel, power generation and chemical feedstock, and labels them as categories of Given priority, Permitted, Limited, and Banned respectively.

The new policy bans the use of natural gas as raw material to produce methanol, the construction of gas-fueled power plants at large coal production bases, and the use of natural gas produced by large and medium-sized gas fields as raw material for Greenfield LNC projects.

These prohibitions, as well as other limits stipulated by the new policy, are to curb gas demand and for better conservation and higher usage.

The guideline state that urban residential gas use is the most favored option. Beijing municipal government started from November 13, 2007 to provide subsidies to residential household natural gas users in Beijing.

Existing gas-based petrochemical projects, especially fertilizer production, will remain in operation. Approved and under-construction projects which have signed long-term gas-purchase contracts won’t be affected, the NDRC said.