China and India’s participation in global climate negotiations
Huifang Tian, Sean Walsh, John Whalley and Manmohan Agarwal
International Environmental Agreements: Politics, Law and Economics， ISSN 1567-9764，DOI 10.1007/s10784-011-9161-y
Abstract
In this paper, we discuss a range of issues concerning developing country participation in current global climate change mitigation negotiations, especially India and China. We argue that the problem of redefining ‘common yet differentiated responsibilities’ in a way which allows developing countries room to pursue their individual development goals while still achieving the necessary level of carbon mitigation is central to the debate. The choice of negotiating instruments, effective technology transfer and financial support, and other related issues have been raised principally by China and India, and may also be raised by several other countries. Kyoto non-compliance by Annex 1 countries will also greatly impact the negotiating power of China and India and other developing countries. We conclude that, once basic principles are clearly defined, the greatest incentive for China and India to participate in climate change negotiations is the prospect of future negotiating rounds that can be linked to a large number of climate change related issues, such as intellectual property, the potential for financial transfers and trade/market access.
Keywords China – India – Climate change – International negotiations – Development
1 Introduction
In this paper, we compare China and India’s participation in current climate change mitigation negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). With the Kyoto Protocol largely believed to have failed in its mitigation goals, policy makers and negotiators have sought to find a better path. In the 2007 Bali meeting, it was (and still is) deemed critical that, unlike the previous Kyoto agreement, the developing world should take on a significant role in order for any new emissions reduction agreement to be effective. Of these countries, China and India are particularly important due to their size and growth (for a different view on the importance of India see Massetti this issue). The 2009 Copenhagen Accord has taken the first step towards bringing these developing countries into a binding and effective climate treaty, but there is still a long way to go. The design and implementation of any post-Kyoto arrangement will be a critical factor in policy coordination over the next 20–30 years, particularly in terms of developed and developing nation coordination.
Turning our attention to China and India, the following observations are relevant in the context of future climate change negotiations. Despite spectacular economic growth rates, China is still a low-income country and the primary policy emphasis remains on achieving further growth and eliminating poverty. Developed countries of the world agree that these are important goals. However, they also fear that alleviating poverty through conventional economic growth will result in even larger carbon emissions. China has already exceeded, on a level basis per year, the United States’ emissions, the highest emitter among developed countries. Nevertheless, and in contrast with Western views, China supports global environmental arrangements that would allow it to continue to grow without restrictions.
Chinese resistance to Western views is slowly but increasingly being lessened by the growing recognition in China of the potential damage that is and could be inflicted from climate change as well as increasing awareness about the myriad ways in which improvements can be made. For example, regulation for China’s large manufacturing and export sector is constantly being strengthened in terms of greater energy efficiency and stricter emissions standards. More significantly, perhaps, plans are currently underway to decommission a significant portion of small coal power generation plants and replace them with more efficient larger ones. Such projects broadcast China’s willingness to participate in green initiatives, which may aid in facilitating a broader bilateral or international climate change deal.
India is in much the same position. It wants to safeguard the openness of the trading system, more for foreign direct investments (FDI) than for exports, but India’s position is potentially somewhat further away from the Western stance on climate change than China.
India’s stated priority is to avoid unnecessary and costly emission restrictions that can reduce its ability to grow and to reduce poverty. Thus, India’s official stated policy is to, at minimum, match the per capita emissions goals of developed countries indefinitely (Government of India 2008), a barrier India is not likely to be restricted by for many years.
That said, however, India has initiated some important changes. The recent commitment to reduce the carbon intensity of the economy by 20–25% in 2020 with respect to 2005 shows some departure from a climate policy position focussed exclusively on emissions per capita (see Shukla and Dhar this issue). India is searching for win–win options that would allow it to reduce emissions while enhancing development. India is, in fact, implementing many green projects through the clean development mechanism (CDM) of the Kyoto Protocol, thus absorbing a great deal of ‘green’ technology, which is expected to impact on its long-term development path.
Four issues seem likely to dominate the climate change negotiating agenda concerning China and India’s participation (Tian and Whalley 2008). One is the interpretation of the 'common but differentiated responsibilities’ principle agreed in the Kyoto negotiation for non-Annex 1 countries. This involves defining the scope of developing countries’ involvement in emissions mitigating activities and will ultimately require defining whether poverty abatement or emissions mitigation takes a higher priority. The consensus among developing countries is clearly in favour of poverty abatement. Developed countries, while taking the same view in principle, have mixed feelings regarding their responsibility to actively support that stance in the face of global climate change, at least in the carbon-intensive business-as-usual context.
Several other contentious negotiating issues have arisen from this core principle and essentially aggregate to whether developing countries are entitled to some form of compensation for taking on environmental commitments, especially if doing so may impact poverty reduction and quality of life improving efforts. The countries that participated in the recent Copenhagen Accord do admit that some compensation is in order, but the magnitude and timing of such compensation is a matter of contention.
A second issue is the choice of the negotiating instrument (emissions intensity vs. levels) and the accountancy rules for emissions embedded in exports. A third issue is size and form of the funds that will likely be created to facilitate adaptation and innovation. A final issue is how to deal with non-compliance by key OECD countries with their Kyoto commitments, which, in the view of the developing countries, weakens the credibility of any future commitments made by those countries.
All these issues are expected to have a profound influence on the future negotiations between developed and developing countries. In particular, China and India will be important leading actors in this process due to their growing importance in shaping global emissions. This paper examines the role of China and India in the climate change negotiating process in terms of the four issues mentioned above and the common but differentiated responsibilities principle in particular. We argue that the problem of redefining‘common yet differentiated responsibilities‘in a way which allows developing countries room to pursue their individual development goals while still achieving the necessary level of carbon mitigation is central to achieving a successful global climate change agreement.
The paper is structured as follows. Section 2 presents the status of climate negotiations between developed and developing countries. Section 3 examines the role of China and India as major global emitters of GHGs. Section 4 deals with relevant open issues in the climate agenda. Conclusions with a proposal for a way forward follow.
2 Where current global climate negotiations stand between the developed and developing world
Most developing countries, including India and China, took on no environmental commitments as part of the Kyoto agreements. Russia was the notable exception. This reflected an interpretation of the concept of ‘common yet differentiated responsibilities’ (CBDR) that developing country carbon emissions remain unrestricted by the Kyoto Protocol. Developing country participation in the Protocol was indirect through the cleandevelopment mechanism (CDM), which allowed them to voluntarily reduce emissions in ways that furthered development and then sell emissions reduction rights to producers in developed countries.
China and India are the two countries with the highest estimated trajectory of emissions growth over the coming years as their economies develop further (Sunstein 2007). China’s desire is to maintain its recent *8–10% growth rates to achieve further poverty reduction. Since a large portion of China’s growth is trade-dependent, this means that a significant part of China’s negotiating position is concerned with maintaining the openness of the global trading system as it impacts Chinese imports and exports.
India’s goal also revolves around poverty eradication through economic growth. However, India’s growth strategy is much more internally focused. Specifically, India’s principle aim in the UNFCCC climate change negotiations is to harness them as much as possible to further internal growth and development (see also Massetti this issue; Shukla and Dhar this issue). This takes the form of India’s deep interest in CDM and similar related types of projects and also the intellectual property rights debate, arguing for fewer restrictions on technology diffusion. India also does not want emissions restrictions to get in the way of these goals, hence the trivial (for the next few decades) emissions mitigation goal that India will never surpass developed country emissions per capita stated in India’s National Action Plan on Climate Change (Government of India 2008).
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3 Economic growth and emissions in China and India
3.1 China
China was responsible for 58% of the increase in carbon emissions worldwide from 2000 to 2006. With continued rapid growth, its emissions by 2030 would be about 25% of the global annual total but, per capita, would still be less than half that of the United States. China is a rapidly growing, large population and relatively low-wage economy which has in the last two decades become heavily trade and foreign direct investment (FDI) dependent. WTO data (2007) shows the share of imports and exports combined relative to GDP in China as 69% in 2006, up from 49% in 2000. Both are growing at *30% per year. Foreign invested enterprises (financed by FDI flows) account for 60% of both exports and imports, and also account for over one half of all OECD FDI flows to non-OECD countries. The recent financial crisis impacted growth severely however, raising the question in China of whether more inward oriented growth would be more stable. Thus, China’s position in global climate change negotiation should be assessed in light of this economic situation.
The numerical emissions implications of China’s growth are the central friction between China’s negotiating strategy for a post-Kyoto world and OECD objectives. China has experienced a fourfold increase in GDP/capita since 1978 and 10% growth between 2000 and 2050 implies a 30-fold increase in GDP/capita (WTO 2007). The Asian Development Bank (2007) forecast is that China will be the world’s largest economy, surpassing the United States by 2025. China accounted for 17.5% of global CO2 emissions in 2004, only second to the United States. Between 1990 and 2004, China’s carbon emissions increased by 108% and China substantially underperformed the OECD countries in terms of emission intensity (emission/GDP). Although this gap is significantly reduced by using Chinese GDP in US$ at PPP exchange rates rather than at current rates, emissions intensity measures are falling much faster in China than in the OECD countries.
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3.2 India
The Indian economy is one of the fastest growing in the world with a consistent average growth of about 6% over the past decade and 7–8% in more recent years. This level of growth is much needed for eliminating poverty among its population, representing 27% of the world’s poor. Roughly time lagged by a decade or so, Indian GDP is following a similar growth path to the Chinese case (see also Massetti this issue).
While poverty, disparity and challenges remain, robust economic growth has already allowed millions of people to emerge from poverty. The national poverty ratio halved from 36 to 18% from 1994 to 2002 (NIRD 2003). However, higher consumption is drastically changing the nature and scale of impact on the country’s environment and natural resources, thus testing the carrying capacity of India’s natural ecosystems.
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4 Common principles and negotiation issues both countries face
The global environmental policy dilemmas for the Chinese and Indian governments are understandable. If they fail to respond to climate change and other environmental issues now, their economies will suffer in the medium to long run as global warming takes its toll. On the contrary, the cleaner energy options are costly to adopt and could hurt their current economic growth.
We argue that four issues may jointly dominate the two countries’ negotiating positions, which were described in detail by Tian and Whalley (2008). These four issues are: the interpretation of the CBDR principle adopted in Kyoto, the choice of negotiating instruments, the form of emission commitments and the size (and form) of accompanying financial funds for adaptation and innovation.
4.1 The ‘common yet differentiated responsibilities’ principle
The principle of CBDR between developed and developing nations is critically important in resolving numerous outstanding global environmental issues between these two groups of nations Walsh and Whalley (2009). In the Kyoto negotiations, it was interpreted to mean non-participation by developing countries in emission commitments. The failure of the Kyoto Protocol to deliver the desired results makes a reinterpretation of this principle a necessity for a treaty going beyond the Protocol. However, the developing world continues to emphasise the difficulty of achieving emissions reduction targets, even with the resources of the West backing the effort. In the Copenhagen meeting of the COP, developing countries asked for a fund which would see 300 billion US$ per year flow from developed to developing countries. Developed countries countered with a $100 billion/year fund starting in 2020. This indicates at least some agreement on the difficulty of ‘greening’ developing countries and their economies.
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4.2 The choice of negotiating instruments
A further division between China, India and other similar developing economies, and the developed nations is the choice of negotiating instruments. These are agreed mechanisms to determine how to reduce carbon emissions and the time table involved and quite probably, will not be totally in the form of a simple Kyoto target, even for developed nations. Redefining dates, units of measurement, reduction mechanisms, associated supporting mechanisms and more were all on the negotiating agenda for COP16 in Mexico and, given modest progress there, beyond to COP17.
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4.3 Innovation and transfer of technology
The post-Bali Roadmap process established two negotiation streams on adaptation and innovation, but both of which involve the establishment of funds. The size of the funds, where the funds come from and the criteria to be established for their use and administration are particularly key issues for India, but are also important for China. Technological issues to be negotiated include: diffusion, deployment, transfer, development and joint development. This discussion was principally set to take place in Cancun, Mexico in 2010. Given the current stages of development for both India and China, much thought has focused on a ‘green development path’ and what the technological requirements would be. India, especially, is taking to heart the concept of ‘green development’ largely through the discussions of technology transfer underway in the negotiation.
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4.4 Non-compliance with Kyoto targets
It is likely that some Annex 1 countries will be in significant violation of their Kyoto targets throughout the progression of the negotiations. In the Copenhagen Accord, these shortfalls were simply carried forward. However, this does not rule out penalties, possibly in the form of harsher targets, as we get progressively closer to 2012 so as to compensate for the shortfall and will impact positively on the developing country bargaining position.
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4.5 Internal forces affecting China and India’s participation
The Chinese and Indian negotiating positions also reflect domestic policy initiatives, particularly through the use of unilateral environmental measures (often aimed at achieving some other development goal as well).
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5 Concluding remarks
In this paper, we discuss a range of issues concerning developing countries’ participation in the UNFCCC climate change negotiating process, especially from an India and China perspective. Central to the debate is the issue of redefining CBDR in a way which allows developing countries room to pursue their individual development goals. The choice of negotiating instruments, effective technology transfer and financial support and other related issues have been raised principally by China and India, and may also be raised by several others as well. Kyoto non-compliance by Annex 1 countries will also impact greatly on the negotiating power of China and India and other developing countries.
In the post-Kyoto round of global climate change negotiations, we see a desire to broaden the scope of action to a truly global scale. Linkage, particularly in terms of trade, finance, development policy and technological transfer, seems to be integral in these negotiations, particularly in light of the financial crisis. In the mid-term, the possibility certainly exists to broaden energy and energy security issues, including nuclear, improved renewable energy sources, regional/continental smart grids and other current technology options, which is something India will be watching for closely. Given the emissions potentially emanating from the developing world, particularly China and India, these countries would play a central role. This prospect, perhaps not of a new order, but of future negotiations, is one key factor positively contributing to the likelihood of an agreement spanning both developing and developed countries. This is particularly the case insofar as the large, rapidly growing developing countries are concerned. As the lynchpin countries of the Western and Eastern worlds, much depends on the stances of the United States, China and India for a successful post-Kyoto negotiating round to be realised, particularly one that paves the way to branch out to include future linkage to non-environmental issues such as mentioned above.