Michael T. Rock and Michael A. Toman, China’s Technological Catch-Up Strategy: Industrial Development, Energy Efficiency, and CO2 Emissions

New York, Oxford, Oxford University Press, 2015, 274 pp.

Review by Jean-Paul Maréchal

Marechal

In the first decade of the twenty-first century, China acquired the world’s second largest economy and became the top carbon dioxide emitter as well as the leading consumer of energy. The future of the planet’s climate is thus bound up with the Chinese economy’s evolution.

Therein lies the interest in the work of Michael T. Rock and Michael A. Toman, who take stock of evolution in four industries – aluminium, cement, iron and steel, and paper – that have contributed substantially (at least the first three) to the country’s transformation and are among the highest CO2 emitters in China. While industry as a whole accounts for 60% of China’s CO2 emissions, the four sectors cited represent nearly 60% of industrial emissions. China’s Technological Catch-Up Strategy seeks to understand – by examining these four high-energy consuming industries – the impact of technological upgrading on the Chinese economy’s energy efficiency and CO2 intensity.

It is clear from the outset that the Chinese economy’s energy efficiency has been increasing over the past three decades. This can be seen from the fact that between 1980 and 2010, the Chinese economy’s CO2 intensity fell from nine kg to three kg of CO2 per dollar of GDP created, while that of industry slid from 18 kg to a little more than three kg.

Such an evolution was possible because of deliberate public policies. Right from the early 1980s, the authorities put in place energy efficiency criteria in a certain number of industrial sectors and included adherence to these criteria in the checklist for evaluating cadres. China inaugurated an industrial restructuring policy that took the form of a vast programme of mergers and acquisitions with the slogan “grasp the large, let go the small.” Despite some difficulties in implementation, this modernisation strategy deeply transformed the four industrial sectors studied in this book.

Between 1985 and 2010, CO2 intensity in cement production fell by 36% (p. 69), that of iron and steel by 64% (p. 105), of aluminium by 49% (p. 145), and of paper by 57% (p. 182). The differences between the levels of emissions obtained and what would have corresponded to the reference scenario were considerable. Thus in 2010, cement factories prevented the emission of 904 million tonnes of CO2 into the atmosphere (p. 70), iron and steel factories about 2.5 billion tonnes (p. 106), aluminium firms nearly 175 million tonnes (p. 135), and paper mills about 185 million tonnes (p. 179).

What the authors say regarding cement production holds almost word for word for the chapters on the three other sectors and summarises the book’s conclusions. Rock and Toman note that “none of this would have been possible without a strong central government committed to a pragmatic approach to industrial development and high-speed technological learning in energy intensive industries” (p. 73).

The results obtained through detailed study of the four branches are confirmed by statistical studies presented by the authors. They show that higher energy prices combined with investment in new technologies and formation of larger companies led to diminution of energy intensity (p. 208).

Of course, this does not mean CO2 emissions have fallen in absolute value, but simply that there is now a decoupling between growth in GDP and that in greenhouse gas emissions. Between 1971 and 2011, China’s GDP rose 33-fold, from US$127 billion to US$4,195 billion, with an average annual growth rate of a little over 9.2%, while during the same period, energy consumption rose from 392 million tonnes oil equivalent to 2.727 billion tonnes, a 6.9-fold increase, with a growth rate of almost 5%. Given these conditions, it is possible to better understand why in climate negotiations, China systematically stresses the need to take into account intensity indicators. The 12th Five-Year Plan (2011-2015), for instance, aimed to reduce CO2 emissions by 11% per unit of GDP.[1]

China is by far the planet’s top CO2 emitter and will remain so for a very long time. With 10.3 billion tonnes of emissions, it accounts for nearly a third of global emissions (35.3 billion tonnes). Besides, China’s per capita emissions are nearly eight tonnes, equivalent to the level of the EU’s 28 countries (France being a bit lower at five tonnes).

Of course, some of these figures need to be regarded with caution: in early November 2015, it was learned that Beijing had massively underestimated coal consumption in the 2000-2012 period. The result: in 2012, Chinese CO2 emissions had to be reassessed at one billion tonnes,[2] or nearly thrice the total French emissions! Nothing too surprising in this discovery, given that an article published in 2012 showed that based on data supplied by local statistics departments, China in 2010 emitted 1.4 billion tonnes of CO2 more than it was declaring.[3]

The book by Rock and Toman containing meticulous analyses, several graphs, tables, and concrete examples constitutes an interesting contribution to a debate that is far from over.

 

Translated by N. Jayaram.

Jean-Paul Maréchal is associate professor of economics at the Université Paris-Sud (marechal.jean-paul@wanadoo.fr).

 

[1] For more details on these figures, see Jean-Paul Maréchal, “La Chine et le climat. Mur de l’environnement et bras de fer sino-américain” (China and Climate: The Environment Wall and Sino-US Tussle), in Pierre Alary and Elsa Lafaye de Micheaux (eds), Capitalismes asiatiques et puissance chinoise (Asian Capitalisms and Chinese Might), Paris, Presses de Sciences Po, 2015, pp. 95 and 107.

[2] Chris Buckley, “China Burns Much More Coal Than Reported, Complicating Climate Talks,” The New York Times, 3 November 2015.

[3] Dabo Guan, Zhu Liu, Yong Geng, Sören Lindner, and Klaus Hubacek, “The Gigatonne Gap in China’s Carbon Dioxide Inventories,” Nature Climate Change, No. 2, 2012, pp. 672-675.

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