Environment: Asia’s Achilles’ Heel says Standard Chartered

Can Asia sustain its high growth trajectory without sliding down an environmentally destructive path? Standard Chartered analysts believe it is possible, but the matter needs more local and collective action, both by Asia and the advanced economies. In this respect, say Cheung and Kwan, China and the EU offer some optimism. Blue Skies China brings you their thinking.

Emissions: different measures

Although China’s aggregate emissions of CO2 is significant, when calculated on a per capita basis, its emissions rate is still below world average and is only 18% of the US level. Until now, basically all Asian emit less CO2 than the Americans, with the exception of the Singaporeans, whole emissions are amplified by the presence of a large refinery industry.

But in terms of emissions per unit output, China has the highest CO2 intensity in the world.

According to the US Energy Information Administration, China emitted about 3.1 tonnes per US$1,000 output (in 2000 prices). The US is around 0.5 tonnes. Part of this could be due to the relatively large industrial structures of China and other high carbon intensity Asian economies. But a more important factor could be the type of energy being used.

China’s problem is not because of inefficient use of energy. In terms of energy consumption intensity, China is actually lower than Singapore, Korea, New Zealand, Malaysia and the US, to name a few. Indeed, China has had an impressive enhancement in its energy efficiency. In 2004, its consumption of energy per unit of output amounted to only 38% of is 1980 level.

Combining CO2 intensity and energy consumption intensity, we get a measure of the amount of CO2 emissions per unit of energy consumption. This should net out most of the effect of economic structure differences. Looking at this indicator (chart 3), it is obvious that developing economies are generally more polluting when they consume energy. China emitted 0.35 tonnes of CO2 per 1,000BTU of energy it consumed – advanced economies emitted less than 0.1 tonnes with the same amount of energy consumption.

This is where improvement efforts should be focused in developing countries. China can halve its CO2 emissions if it is to improve its intensity to the levels of Indoneisa, or Thailand, not to mention to as low as Japan.

One of the main reasons China is not inefficient in using energy, but was emitting relatively much CO2 is its reliance on coal, a primary energy source that is highly polluting. Coal accounts for around 80% China’s power (compared to 50% in the US). At current trends, China’s CO2 emissions from coal will double by 2030.

Hence one key factor to reduce emissions is to reduce or improve the use of coal. In this respect a number of initiatives are being undertaken by the Chinese authorities, including a tightening of the Energy Conservation Law; a Top 1000 Energy Consuming Enterprises Program; and Ten Key Energy Conservation Projects to refit inefficient utility-scale coal-fired boilers.

More significantly, perhaps, it has concluded a near Zero Emissions Coal Agreement with the EU to develop carbon capture and storage technology for coal plants. On the demand side, the Chinese also make active use of the Clean Development Mechanism.


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