March 5, 2008
China's Environmental Problems and Policies
Gregory Chow
Professor in Economics, Princeton University
Minutes of the 22nd Meeting of the 66th Year
President Giordmaine called the 22nd meeting of the 66th year to order at 10:15.
(The invocation was intoned by George Hansen; the minutes were read by Jim Deneen. Approximately 100 members attended. President Giordmaine thanked the Hospitality Committee for the snack provided before the meeting, although some members grumbled about the pre-partitioned chocolate chip cookies. He welcomed new members Donald Edwards, George Vaughn and Peter Wise. He also mentioned the hand-out by Bruno Walmsley describing updates to the Old Guard website. (I used the site in preparation of these minutes and found it easy to follow and very helpful.)
Bob Varrin gave an overview of the spring program and then introduced our guest, Doctor Gregory Chow, Class of 1913 Professor of Political Economy at Princeton. Professor Chow has spent over 40 years working in his field and has received many honors for his efforts.
Professor Chow and his associates will soon sponsor a major colloquium at Princeton University on the economic impact of China’s attempts to deal with its contributions to global warming and environmental degradation. He discussed China’s polluted air, fouled water, mushrooming energy needs and CO2 emissions. He described laws and policies in place to deal with each of these matters and the problems China faces in enforcement of these instruments. He then cited two of his own proposals for improvement and left time for a forest of raised hands from questioners.
Professor Chow pulled no punches: Coal burning provides 60-70% of the energy used in China. The country suffers from the worst pollution on our planet. Of the 10 most polluted cities in the world, 7 are in China. But coal is not the only problem. Oil and gasoline are major contributors. Mercury is captured in rivers and streams and absorbed into the soil. Waste materials from industry and households form large deposits all over the country. He cited depressing statistics such as the projected growth in energy consumption by China from 9.8% of world production in 2001, to an estimated 14.2% by 2025. In greenhouse gas emissions, China surged from third place behind the US and Europe in 2001, to first place, overtaking the US in 2007.
These bleak facts probably surprised no one in his audience, but Professor Chow pressed on. (No wonder economics is known as the dismal science.) He discussed China’s macroeconomic policy, which, under the current 5-Year Plan calls for a reduction in the ratio of energy use to GDP by 4% per year. The Plan also calls for a reduction in pollution discharges by 2% per year. To achieve these goals, the government has legislated heavy penalties on polluters, has commissioned the construction of heavy equipment to capture CO2 emissions, has provided preferential loans as incentives to install pollution treatment facilities, and has adopted reforms in the pricing of natural gas. In 2007, Hu Jintao announced China’s willingness to observe the Kyoto protocols. But, in admitting responsibility for its share of pollution, he insisted that the more developed countries have a bigger share of both the responsibility and the obligation to mitigate the problem.
While China has taken steps to develop clean and renewable energy, this has come at great cost to their population: Witness the dislocation of millions to provide hydroelectric power at the Three Gorges Dam.
According to Professor Chow, the record of progress against the targets has been, by and large, not very good. Instead of a 4% reduction in the ratio of energy use to GDP, China has achieved only a 1.3% reduction, and even though the Chinese Government is highly centralized, they have many problems with provincial bureaucrats. There have been failures to cooperate, and failures to prosecute. One reason is that it is in the interest of local leaders to develop their own economies. Another is that because of communistic, or public ownership of the land, the local cadres are not averse to earning some side benefits through tokens of appreciation from enthusiastic real estate developers. Again, this is China, not New Jersey.
Professor Chow seemed to place China on a similar timeline to development as the United States was during our industrial coming of age. We hadn’t heard of global warming, greenhouse gases or the need to control pollutants, and we carried on with the 100 year destruction of our great rivers, watersheds, our forests and mountain valleys. He postulated the cycle of economic wealth-creation that takes a nation through stages from clean, to developing, to dirty, to wealth, to cut the dirt, to clean again.
His own proposals to the Chinese government include, first, the use of muscle on provincial governments that refuse to comply with evolving laws and standards; and, second, the creation of a market based allocation of the use of the environment: If you use the air, there will be a charge, based on the theory that the natural environment is property owned by the state and it is for sale at market prices, no longer free.
The interesting questions raised by the members left no doubt as to the rapt attention paid during this classic and scholarly presentation.
Respectfully submitted.
James J. Ferry
With gratitude for editorial assistance from John F. Burton, good neighbor.
(The invocation was intoned by George Hansen; the minutes were read by Jim Deneen. Approximately 100 members attended. President Giordmaine thanked the Hospitality Committee for the snack provided before the meeting, although some members grumbled about the pre-partitioned chocolate chip cookies. He welcomed new members Donald Edwards, George Vaughn and Peter Wise. He also mentioned the hand-out by Bruno Walmsley describing updates to the Old Guard website. (I used the site in preparation of these minutes and found it easy to follow and very helpful.)
Bob Varrin gave an overview of the spring program and then introduced our guest, Doctor Gregory Chow, Class of 1913 Professor of Political Economy at Princeton. Professor Chow has spent over 40 years working in his field and has received many honors for his efforts.
Professor Chow and his associates will soon sponsor a major colloquium at Princeton University on the economic impact of China’s attempts to deal with its contributions to global warming and environmental degradation. He discussed China’s polluted air, fouled water, mushrooming energy needs and CO2 emissions. He described laws and policies in place to deal with each of these matters and the problems China faces in enforcement of these instruments. He then cited two of his own proposals for improvement and left time for a forest of raised hands from questioners.
Professor Chow pulled no punches: Coal burning provides 60-70% of the energy used in China. The country suffers from the worst pollution on our planet. Of the 10 most polluted cities in the world, 7 are in China. But coal is not the only problem. Oil and gasoline are major contributors. Mercury is captured in rivers and streams and absorbed into the soil. Waste materials from industry and households form large deposits all over the country. He cited depressing statistics such as the projected growth in energy consumption by China from 9.8% of world production in 2001, to an estimated 14.2% by 2025. In greenhouse gas emissions, China surged from third place behind the US and Europe in 2001, to first place, overtaking the US in 2007.
These bleak facts probably surprised no one in his audience, but Professor Chow pressed on. (No wonder economics is known as the dismal science.) He discussed China’s macroeconomic policy, which, under the current 5-Year Plan calls for a reduction in the ratio of energy use to GDP by 4% per year. The Plan also calls for a reduction in pollution discharges by 2% per year. To achieve these goals, the government has legislated heavy penalties on polluters, has commissioned the construction of heavy equipment to capture CO2 emissions, has provided preferential loans as incentives to install pollution treatment facilities, and has adopted reforms in the pricing of natural gas. In 2007, Hu Jintao announced China’s willingness to observe the Kyoto protocols. But, in admitting responsibility for its share of pollution, he insisted that the more developed countries have a bigger share of both the responsibility and the obligation to mitigate the problem.
While China has taken steps to develop clean and renewable energy, this has come at great cost to their population: Witness the dislocation of millions to provide hydroelectric power at the Three Gorges Dam.
According to Professor Chow, the record of progress against the targets has been, by and large, not very good. Instead of a 4% reduction in the ratio of energy use to GDP, China has achieved only a 1.3% reduction, and even though the Chinese Government is highly centralized, they have many problems with provincial bureaucrats. There have been failures to cooperate, and failures to prosecute. One reason is that it is in the interest of local leaders to develop their own economies. Another is that because of communistic, or public ownership of the land, the local cadres are not averse to earning some side benefits through tokens of appreciation from enthusiastic real estate developers. Again, this is China, not New Jersey.
Professor Chow seemed to place China on a similar timeline to development as the United States was during our industrial coming of age. We hadn’t heard of global warming, greenhouse gases or the need to control pollutants, and we carried on with the 100 year destruction of our great rivers, watersheds, our forests and mountain valleys. He postulated the cycle of economic wealth-creation that takes a nation through stages from clean, to developing, to dirty, to wealth, to cut the dirt, to clean again.
His own proposals to the Chinese government include, first, the use of muscle on provincial governments that refuse to comply with evolving laws and standards; and, second, the creation of a market based allocation of the use of the environment: If you use the air, there will be a charge, based on the theory that the natural environment is property owned by the state and it is for sale at market prices, no longer free.
The interesting questions raised by the members left no doubt as to the rapt attention paid during this classic and scholarly presentation.
Respectfully submitted.
James J. Ferry
With gratitude for editorial assistance from John F. Burton, good neighbor.