China confronts global warming dilemma
China, the world leader in both economic growth and carbon emissions, faces the dilemma of how to respond to the challenges of global warming while not harming its robust economy.
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Among the prominent opponents of a coal tax or other price hike are the CEOs of the top 10 power companies. “Power system reform is an ongoing process. There’s no need for anyone to get overexcited,” Lu Qizhou, president of China Power Investment Corporation told the Chinese newspaper Southern Weekly. “Of course the government will make sure that the pace of reform is in line with economic development and the market’s ability to cope.”Skip to next paragraph
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Because China Power is state-owned, Lu speaks as both an industry head and a de facto part of government. As with the CEOs of all major state-owned enterprises, he was appointed by the leadership in Beijing. Previously, he served as deputy CEO of China’s State Grid Corporation and then as China Power’s Communist Party secretary.
In China, both the power sector and the oil sector — each critical to climate and energy policy — are dominated by a handful of large state-owned enterprises. And, in one sense, that obviates the need for lobbyists.
“There is a permanent revolving door between the Party and government and the SOEs [state-owned enterprises],” says Beijing-based political commentator Zhao Jing, who writes in the English-language press under the name of Michael Anti. “There don’t need to be ‘lobbyists,’ when discussions can happen directly through the Party.”
This interwoven network does not mean everyone always shares the same immediate goal. For instance, the power company CEOs would like to see the central government increase the price of electricity, which is currently fixed, while Beijing worries that raising prices that impact poor farmers could lead to social unrest.
However, the cozy political arrangement does mean that power companies are involved in reviewing draft regulations that would impact their sector, and they can exercise something close to veto power.
“The bosses of the big five power companies, they have official ranking — almost minister level,” says Greenpeace China’s Yang. “As an official of the system, they are not even made accountable to the energy bureau in the National Development and Reform Commission, which is ranked lower.”
Fueling the future
In another sector critical to climate outcomes — transportation — the industry profile is quite different. Now the world’s top auto market, China has an estimated 65 million vehicles on the road, and experts predict [pdf] it will have 300 million by 2030.
But unlike the power sector, the transportation industry is not dominated by state-owned enterprises. Rather, it is characterized by joint ventures between Chinese firms and prominent US, European, Japanese, and Korean automakers, including General Motors and BMW.