Bank Eyes Carbon Cuts

China could curb carbon emissions without cutting growth, World Bank says.


By Michael Lelyveld

BOSTON—China and other East Asian nations could stop the rise of greenhouse gas emissions by 2025 without sacrificing economic growth, a World Bank study says.

The climate goal would require greater commitment to energy efficiency, new technologies, and added investment of U.S. $80 billion per year over the next two decades, according to the report.

But the 146-page study by the World Bank and the Australian government holds out hope for progress in a region where global warming gases have tripled in the past 20 years.

“To achieve these goals requires that governments take immediate action to transform their energy sectors toward much higher energy efficiency and more widespread use of low-carbon technologies,” the study said.

Environmental experts agree that curbing carbon dioxide (CO2) emissions is possible in the next 15 years without cutting economic development.

“The challenges are substantial on the regulatory side and on the financing side, but less so on the technology side in the near term,” said Michael Levi, senior fellow for energy and the environment at the Council on Foreign Relations in New York.

“There’s no reason why this is not physically possible to do.”

Sweeping shift

The study, released in Singapore on April 19, seems likely to play a role in debates that erupted among developing and industrialized countries at the Copenhagen climate conference last December.

China and other developing nations have refused to set caps on total CO2 emissions that might restrain growth, arguing instead for efficiency targets that measure carbon consumption per unit of GDP.

The World Bank study argues that the economies of China and the five largest nations of Southeast Asia won’t suffer from CO2 curbs if they boost efficiency beyond current targets and move quickly from fossil fuels to renewable energy and nuclear power.

The sweeping shift would require the share of coal in power to generation to drop from 70 percent to 36 percent by 2030 in the country group that includes China, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

The biggest impact would come from in China, where coal supplies 80 percent of power generation.

The country also accounts for 80 percent of the region’s energy use and 85 percent of its CO2, the report said.

To meet the target, the region would have to raise efficiency and increase the share of renewables and nuclear energy in power generation to 50 percent by 2030, compared with 17 percent under current plans.

The good news is that the regional target includes goals that China has already set for itself, such as massive investments in nuclear and other sources like wind power.

The question is whether policies such as energy pricing reforms will follow to help achieve those goals.

The “sustainable” scenario also depends on China’s ability to increase energy efficiency by 4.3 percent per year until 2030, slightly more than the official target of 4.2 percent but substantially more than the 3.4 percent of the past decade.

Higher efficiency would demand a major change in relying on energy-hungry construction industries like steel and cement for economic expansion.

Michael Levi called the targets a test of political will rather than economic growth.

“The political will is going to be harder to come by,” Levi said.

“It’s widely misunderstood that the challenge of transforming to a low-carbon economy is about growth versus not growing. The challenge is really about winners and losers."

“And that’s what becomes difficult,” he said.

Major benefits foreseen

The study sees major benefits from the transformation, however.

By meeting the more ambitious targets, countries of the region could save 50 percent in environmental damage costs by 2030, it said.

China could also reduce oil imports by 38 percent compared with current trends, while Malaysia and Vietnam would switch to being net energy exporters from becoming energy importers in the same period.

The U.S. $80 billion estimate in added annual funding for the sustainable energy target may understate total costs, since a savings of U.S. $40 billion per year on unneeded thermal power plants would also go toward the carbon-cutting goal.

But because of future fuel savings, the more ambitious targets would only cost more than current investment plans for the first three years, the study said.

Concessional financing would cover one-third of the U.S. $25 billion in added annual investment for renewable energy, the bank said.


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