China will lead the world’s green industrial revolution, says Nicholas Stern

Posted on 8 Nov 2010 in

China is at the forefront of the global green industrial revolution, and its strong moves towards, and future plans for, low-carbon economic growth have not been adequately recognised by other countries, according to a policy paper by Nicholas Stern published 8 November 2010 by the Grantham Research Institute on Climate Change and the Environment and the Centre for Climate Change Economics and Policy (CCCEP).

Lord Stern’s paper points out that China’s 12th five-year plan, for the period between 2011 and 2015, should help it to make further progress along the transition to a low-carbon economy, and could include new measures to create a price on greenhouse gas emissions. The outline of the 12th five-year plan was published in October.

The paper concludes: “China’s commitment to a low-carbon economy has been under-appreciated around the world. The green stimulus of 2008/2009, strong investment in rail transport, regulation of vehicle emissions, rapid growth in production and use of renewables, reforestation, and strong emission intensity targets, are all evidence of this commitment.

“Low-carbon growth in China is vital both for China’s future and that of the world as a whole. The urgency, the scale of the required changes and the magnitude of the opportunities in the new economy, mean that green policies should be at the heart of the 12th and 13th five-year plans; and we already know that they are central to the 12th plan.

“Given that total global annual emissions of greenhouse gases must be cut by about 30 per cent in the next 20 years, China’s size implies that if the world is to have a reasonable chance of holding global warming to no more than 2°C above pre-industrial levels, then China’s total annual emissions should return to no more than current levels of 8 to 9 billion tonnes by 2030.

“China can build on the advances in energy efficiency achieved through the 11th five-year plan. A 20 per cent reduction in energy per unit of output, as in the 11th plan, together with a 10 per cent reduction in emissions per unit of energy would create a 28 per cent reduction in emissions per unit of output over the next five years, approximately what is necessary to limit warming to no more than 2°C. This would approximately halve emission per unit of output over two five-year plans, if achieved in each plan.

“This is a stronger level of ambition than currently envisaged but would be necessary to have a reasonable chance of limiting warming to no more than 2°C, given that growth rates of 7 per cent would lead to a doubling of output each decade.

“Strong policies at both the national and local level would both raise resources for new investment and give incentives to achieve these targets effectively, efficiently and equitably.

“Such targets and policy action would not only help to put the world on track to limit warming to no more than 2°C, they would also show the world what is possible and the opportunities that are available.

“China has recently introduced a tax on natural resources, and plans to apply this to coal: a strong increase in such taxes, together with a cap and trade scheme under discussion, could move incentives powerfully in the right direction.

“It would be a real growth strategy: high-carbon growth has no future. Low-carbon growth is the model for the 21st century. We cannot afford to continue with the outmoded theory and practice of the 20th century. That is why the 12th five-year plan, quite rightly, embraces this new model.

“The argument that low-carbon growth is not simply the only realistic possible future, but also very attractive, must be won, both because it is correct and because the alternative path is so dangerous. And it must be won across the world.

“The current position is deeply inequitable: developed countries became rich on high-carbon growth, but poor countries are hit earliest and hardest, and all countries must find a new way. But China’s size and growth make it inescapably central to the response.

“There is no country more important than China in leading the way to a radically different, more dynamic, and much more desirable form of growth. There is no more important power than the power of the example. China and the world as a whole have so much to gain from its leadership.”

Notes for Editors

  1. Nicholas Stern was Second Permanent Secretary at HM Treasury of the UK Government between 2003 and 2007. He also served as Head of the Government Economic Service, head of the review of economics of climate change (the results of which were published in ‘The Economics of Climate Change: The Stern Review’ in October 2006), and director of policy and research for the Commission for Africa. His previous posts included Senior Vice-President and Chief Economist at the World Bank, and Chief Economist and Special Counsellor to the President at the European Bank for Reconstruction and Development. He was recommended as a non-party-political life peer by the UK House of Lords Appointments Commission in October 2007. Baron Stern of Brentford was introduced in December 2007 to the House of Lords, where he sits on the independent cross-benches.
  2. Lord Stern is Chair of the Grantham Research Institute on Climate Change and the Environment, which was launched at the London School of Economics and Political Science in October 2008. It is funded by The Grantham Foundation for the Protection of the Environment. Lord Stern is also Chair of the Centre for Climate Change Economics and Policy, which is hosted by the University of Leeds and the London School of Economics and Political Science (LSE). He is also Director of the India Observatory and the Asia Research Centre at London School of Economics and Political Science.