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CO2 Credits and China

October 5, 2012

China’s CO2 emissions are increasing steadily, which is the direct result of rapid economic growth.

China’s leadership, while giving lip service to global warming and CO2 emissions, is focused on the economic needs of its people.

While in China, my conversations with people fluent in English established that the public accepts what is being told to them by the government about global warming and CO2 emissions, but that other issues are of far greater concern to ordinary people.

The English language newspaper, China Daily, publishes articles on global warming and will produce a special section highlighting the UN’s Climate Change Summit in Doha at the end of this year.

The China Daily asserted, “With the global warming, energy shortage and environmental pollution problems causing growing concern worldwide, the world energy industry has reached a global consensus on the issue.”

The extent that information on global warming reaches ordinary people who don’t speak or read English is questionable, though educated professionals who live in major cities such as Shanghai and Beijing, accept the thoughts expressed by the China Daily.

Energy, however, is a primary focus of China’s leadership. The Three Gorges Dam is an example of this with its 22,500 MW capability.

China continues to build coal-fired power plants, of the most modern ultra-supercritical type. Nuclear is progressing at a rapid pace, with the building of modern Gen II units. It’s also building wind power, but this is a small fraction of the electricity being produced, now and in the future. Wind is as much for deflecting environmental criticism as it is to actually produce electricity.

Coal, nuclear and the Three Gorges Dam exemplify China’s focus on electricity production. There’s no meaningful talk about cap and trade and issuing of carbon credits to industry.

Compare this to California that is fixated on Implementing AB 32, a cap and trade program. Implementing AB 32 is a major objective of California regulators. To California’s chagrin, most governments that were to join with California in its cap and trade program have opted out. The only exception is the European-oriented, Canadian Province of Quebec.

Businesses are threatening to leave California, so regulators are contemplating issuing more free credits.

The Sierra Club is, of course, violently opposed to any lessening of AB 32 requirements, even if it costs jobs. Yahoo consistently supports actions to cut CO2 emissions, regardless of any impact on the economy.

As it stands, industry is initially expected to pay $1 billion or more for allowances. This is expected to grow to $6 billion in 2015.

Each year the number of allowances will decline by 2 to 3%, placing an ever tightening noose around industry’s neck in California.

Yates, president emeritus of California’s food processors’ group said, “If you’re processing dried onions and garlic, China doesn’t have to deal with it [AB 32].”

China may have pollution problems, but its over-arching need is to provide energy and jobs for its people – something the regulators in California have forgotten.

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