China is an environmental mess. Smog in Beijing is so bad it’s literally broken the air-quality index. In Shanghai, it’s at times turned the city into a scene from Blade Runner. (It almost matches the infamous Cleveland smog of the 1970s.) Meanwhile, thousands of dead pigs—cause of death not yet known—have been floating down a river that cuts through Shanghai and provides part of the region’s drinking water. More than half of China’s water is so polluted, in fact, that even treatment plants can’t make it safe to drink. And China is now responsible for almost half the world’s coal consumption. That coal burning not only contributes to climate change—it’s also saddled China with severe cases of acid rain, something the United States dealt with a generation ago.
All of that makes what I’m about to say sound even crazier: China may one day be the world’s leader in combating climate change. In almost every way you cut it, China is already taking a much more aggressive approach toward climate change than the United States is.
This is important for two reasons. First, China is seeing the world’s fastest growth in energy consumption and in CO2 emissions. In the United States and Europe, by contrast, energy usage is nearly flat and CO2 emissions are down. So China’s policies exert a huge lever on future CO2 emissions. Second, one of the prime arguments against U.S. action on climate change has been that it doesn’t matter what the United States does if China isn’t on board.
Well, China already is on board in a number of ways that the United States isn’t. Consider the following:
1. China is launching a cap-and-trade plan.
In the United States, the Waxman-Markey cap-and-trade plan fizzled in the Senate in 2009. In China, meanwhile, authorities have moved forward with pilot cap-and-trade systems covering seven regions, including the manufacturing hub provinces of Guangdong and Hubei, as well as the cities of Beijing, Shanghai, Tianjin, Chongqing, and Shenzhen. The first of those cap-and-trade systems, in Shenzhen, will start operation June 17. By 2020, the Chinese government plans to link those regional systems into a national carbon market. Just last month, the governments of China and Australia announced their intent to link the two countries’ carbon markets into a regional one.
2. China is also launching a carbon tax.
In March, the U.S. Senate unceremoniously voted down an amendment that would have opened the way to a carbon tax. Not so, China. Officials there have announced their intent to institute a tax on CO2 emissions, likely starting in 2015 or 2016.
3. China is investing more in renewable energy.
Not satisfied with those future plans? Consider the here-and-now. In 2012, the United States spent $35 billion on renewable energy—actually down 37 percent from $56 billion in 2011. China, meanwhile, spent a whopping $65 billion on renewable energy in 2012, or 85 percent more than the United States did in the same year.
Yes, China’s population is more than four times the United States’. But China’s economy is only half the size. As a fraction of its overall economy, China invested almost four times as much as the United States in renewable energy in 2012.
4. China dominates in solar production …
China has taken a huge lead in the production of solar panels in particular. In 1995, the United States produced nearly 40 percent of the solar panels produced around the world, while China made less than 1 percent. Now Chinese companies produce more than half the solar panels manufactured worldwide, while the United States produces less than 10 percent.
Critics have decried this as a case of China’s government using cheap loans and investments to bootstrap an industry. And that’s exactly what it is. Whatever the short-term fluctuations in the solar market may be, whether China is guilty or not of intentionally flooding the market, in the long run the demand for solar power is going to grow by orders of magnitude. Solar power is going to be absolutely essential to meeting growing energy demands while staving off climate change. Chinese banks and Chinese leaders know this, and they plan to be the world leader in that industry.