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MIT report finds China’s actions on climate change crucial; argues for global economy-wide greenhouse gas tax

29 May 2012

A new report from the MIT Joint Program on the Science and Policy of Global Change shows the importance of all major nations taking part in global efforts to reduce emissions—and in particular, finds China’s role to be crucial.

The report—titled “The Role of China in Mitigating Climate Change” and published in the journal Energy Economics, compares the impact of a stringent emissions reduction policy with and without China’s participation. Specifically, the study finds that with China’s help the global community may be—under the most optimistic scenario—able to limit warming to 2 °C, relative to pre-industrial levels. Without China, we miss that mark by about 1 °C.

We explore short- and long-term implications of several energy scenarios of China’s role in efforts to mitigate global climate risk. The focus is on the impacts on China’s energy system and GDP growth, and on global climate indicators such as greenhouse gas concentrations, radiative forcing, and global temperature change. We employ the MIT Integrated Global System Model (IGSM) framework and its economic component, the MIT Emissions Prediction and Policy Analysis (EPPA) model.

...Alternative actions by China in the next 10 years do not yield any substantial changes in GHG concentrations or temperature due to inertia in the climate system. Consideration of the longer-term climate implications of the Copenhagen-type of commitments requires an assumption about policies after 2020, and the effects differ drastically depending on the case.

Meeting a 2 °C target is problematic unless radical GHG emission reductions are assumed in the short-term. Participation or non-participation of China in global climate architecture can lead by 2100 to a 200–280 ppm difference in atmospheric GHG concentration, which can result in a 1.1 °C to 1.3 °C change by the end of the century.

We conclude that it is essential to engage China in GHG emissions mitigation policies, and alternative actions lead to substantial differences in climate, energy, and economic outcomes.

—Paltsev et al.

Not only will it be close to impossible to achieve the 2 degrees mark without China’s participation, but emissions reductions will also be more expensive because substantial costs would shift to only some countries. The researchers argue for a global economy-wide greenhouse gas tax that spreads the burden of responsibility.

Even in this best-case scenario, reducing emissions comes with a steep price tag. China could experience substantial GDP losses by the end of the century under the most stringent policy cases. These losses come from higher energy prices, which influence consumption and export dynamics.

The researchers stress, however, that reaching that 2 degrees threshold with China’s participation is only possible in the most optimistic case. The researchers tested various levels of emission reduction plans—a global carbon tax of $10, $30 or $50. The various taxes would slow warming to 3.5, 2.4 and 2 degrees, respectively, by the end of the century, according to their analysis. With no global policy, the increase in warming is projected to be about 5.5 °C.

These scenarios show that, even more modest and realistic goals require near universal participation of major greenhouse gas emitters, Paltsev says.

The importance of China’s participation in a global climate treaty increases with each year, as the country’s population, economy and energy use continue to grow rapidly.

From 2000 to 2010, China’s energy use grew 130%, up from a growth of 50% the previous decade. With a growing, wealthier population, China has become the world’s largest energy consumer—and with it, the world’s greatest source of greenhouse gas emissions.

China’s share of global energy-related CO2 emissions has increased in just eight years from 14% in 2000 to 22% in 2008. Eighty percent of those emissions came from coal, making China the consumer of about half the world’s coal.

China recently announced it will be testing a pilot cap-and-trade program in select major cities in 2013, and plan to make the program national by 2015. John Reilly, the co-director of the Joint Program on Global Change, pointed out recently the irony behind the plan. While the United States created the idea of cap and trade, he says, “just as many of our best innovations are produced in China, they may beat us in implementing such a system ... we’re really being left behind.”

Paltsev agrees that the system would be “a very good start” for China, allowing the country to reach its goal of reducing carbon intensity by 40% relative to 2005 and increasing the share of non-fossil fuels by 15% by 2020. But, he says, “these actions are still not enough, making almost no substantial difference in reducing global emissions.”

The change, taken by China alone, would only reduce global temperature by about 0.1 degree Celsius in 2020.

But Tim Yeo, who chairs the United Kingdom Parliament’s energy committee, recently told The Financial Times that if China did impose a national cap and trade system, “It’s game over for the rest of the world ... Everyone will have to do it, including the US.

Resources

  • Sergey Paltsev, Jennifer Morris, Yongxia Cai, Valerie Karplus, Henry Jacoby (2012) The role of China in mitigating climate change, Energy Economics doi: 10.1016/j.eneco.2012.04.007

May 29, 2012 in China, Climate Change, Policy | Permalink | Comments (11) | TrackBack (0)

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By pushing manufacturing from USA/EU to China, we contributed heavily to China's GHG increase over the last 20+ years. It is fair that we share the burden with a general international GHG tax. End users should pay.

Chances are we couldn't get everyone to agree to a "global economy-wide greenhouse gas tax" but even tax-phobic countries like the US could put in their own carbon tax on retail goods. Knowing that goods that are imported incure more CO2 from transport, and goods from China incure even more from lax environmental laws, such a tax would shift the price advantage back to domestic production and lower unemployment.

It doesn't even need to be a new tax, just re-brand the sales tax and make all "Green Seal Certified" products; http://www.greenseal.org/ exempt. This way other countries can't complain of protectionism because ALL goods are treated equally (they all have to pay the same tax or meet the same certification), and even the anti-tax crowd could sell this because it gives the public a chance to not pay the sales tax just by buying something with a green label.

A smart idea ai_vin.

Would it work with those who want to push all the dirty polluting work somewhere else and reap in the profits, like Walmart, Target, Cisco, Dole, Apple, Dell, HP, Auto Parts and 100,000 + others?

Wouldn't financial transfer fees be easier to administer and become a smart way to expose tax heavens, unpaid taxes, dirty money etc?

The sales tax would be for the retail sector, financial transfer fees are a different idea for, well, the "financial" sector (ie trading banks).
It's a solution to another problem altogether; http://en.wikipedia.org/wiki/Financial_transaction_tax

And yes, it is designed to "shift the price advantage back to domestic production."

The analysis is incomplete if this report only focuses on policy options. What energy source can China use to replace coal? The best bet appears to be Thorium and the Molten Salt Reactor, but there is a lead time for research and development.

The completion of their Thorium program may cement China as a new world leader.

Transaction/sale taxes can be applied on just about every thing under the sun. Applied selectively, essentials such as basic uncooked food and prescribed drugs could be excluded and luxury items could have higher fees. Pure financial transaction fees could start at much lower level and or from a defined transaction size to exclude the very small one or use lower fees.

The idea is to find better ways to recover more $$$$ for general services from people who have it. People with less than $50K/year in revenue should not pay as much taxes as they do now or none at all.

Great idea, ai vin!
In fact, the EU have been considering similar measures to level the unfair cost advantage of some highly-polluting heavy coal users. The world will need to get together to act fast to slow down the release of GHG.

Oh you don't need to tell ME that;
http://www.msnbc.msn.com/id/26315908/ns/msnbc_tv-rachel_maddow_show/#47573071

@TD

Your analysis is also incomplete as it only focuses on the supply side of their electrical grid, what energy source can China use to replace coal. [Even in that respect they do actually have a growing renewable energy portfolio;
http://www.renewableenergyworld.com/rea/news/article/2011/08/china-tops-2011-rankings-for-renewable-energy
http://en.wikipedia.org/wiki/Renewable_energy_in_the_People's_Republic_of_China ] The real improvements would come from the demand side, the efficiency of how they use the grid electricity.

Nor is electrical production the only source of CO2 and therefore it's not they only way to cut emissions: Most buildings in China are currently made with concrete, a change in policy here would cut emissions from cement production AND energy efficiency in buildings. Car ownership is growing in China (in part because of policy to provide a domestic base for their car export goals), a change in policy, and greater investment in public transport, would cut emissions from gasoline and diesel use.

And too many other things to actually list.

And WAY too many things for China to even consider.

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