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China’s high price for emissions reductions

Hille and Harvey in the Financial Times  quote a recent Chinese climate economics report as claiming reducing China’s total GGEs will cost $438bn a year within 20 years – about 7.5% of China’s forecast GDP.  Developed economies will have to bear much of that.

It is difficult to know what exactly this figure means – the report is unavailable.  The cost figure is well above the mitigation cost estimates for developed countries prepared by the Stern Review.  It might just be a bit of bellicose Chinese politics prior to Copenhagen to attempt to extract as much as possible and to give as little as possible.

As China expands its electricity supplies it will face huge total costs but only much lower incremental costs in pursuing carbon-friendly technologies than will developed countries which must replace existing technologies with new ones.  The high total costs reflect in large part the costs of electrifying for development – not costs of meeting emissions targets.

If the report is making the point that early action on emissions is cheapest, and that deferring curbs to emissions leads to far greater costs in the medium term then it is on sound ground.

China has already said that developed countries should spend 0.5-1% of GDP to help poorer countries cut emissions – a contribution that would cost the Group of Eight developed economies more than $300bn annually. The much larger figure of $438bn assumes that China continues its current measures to improve energy efficiency and to increase the use of renewable fuels.

China has resisted committing itself to any cap on its emissions, citing economic development needs while holding out for pledges of financial support for cuts. Some have claimed that the country’s emissions would peak by 2050 while others have suggested the earlier date of 2030.

This study suggests that costs of more aggressive measures to curtail Chinese emissions growth after 2030 at $284bn through to 2050 and $508bn annually after that.  Actually reducing emissions after 2030 would cost an additional $154bn a year. Thus a peak in 2030 is “technologically feasible but financially very challenging”. 

Mmmm. Maybe but I’d like to see the whole report.

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