Climate Change and Local Policies in China
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Energy Saving and Pollution Reduction Leading…
China | An enduring centralisation
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Although the issue of climate change has been long neglected by local authorities in China, it has moved high on their agenda since 2007. This turnabout is neither a direct reaction to the threat posed by climate change nor the result of a heightened awareness in political spheres. It embodies rather a response to central government demands and to a well-understood local economic interest.

Climate change has not been a priority for local governments in China. Climate change has been treated primarily as an international issue to be dealt with by the central government and as an issue well beyond the jurisdiction and responsibility of local governments. Moreover, climate change mitigation efforts were believed to work against local interests because reducing greenhouse gas emissions and energy consumption could slow economic growth.[1] Until mid-2007, detail>no local government, from the provincial down to the most local level, expressed serious interest in working on climate change even though the issue is a major threat for the human community. Intriguingly, this situation began to change in mid-2007. Since this time, most provinces have set up special task forces to lead efforts on climate change, and some provinces have even made specific plans for research, mitigation, and adaptation measures. These provinces have also asked their prefectural (municipal) governments to organize services and special task forces to design and implement plans for a climate change response. Investment, staffing, capacity building, and international cooperation are all part of current local efforts. What are the factors and mechanisms that have resulted in this sharp change? And what are the implications of this change for Chinese and global greenhouse gas emission trends and for environmental governance in China?

This analysis opens with a discussion of the interaction between the central and local governments in China. In China's unitary governmental system, local governments are supposed to implement decisions made by the central government. Thus, any change in local government priorities is usually the result of requirements instituted or incentives offered by the central government. The extent to which local governments respond to the central government depends on their motivations, capacity, and constraints. Even though it is risky to generalize about the diverse interests and motivations of local governments at all levels and across different regions, top political leaders tend to be concerned about their career advancement, and this means that they do what they can to promote the local economy. Economic growth and political promotion are thus closely related. Economic growth typically helps the political promotion of local government officials, and this is an important measure in the evaluation of their performance by higher government levels. Since climate change has not been a factor in the performance evaluation system, and since it is widely believed that climate change mitigation efforts will slow economic growth, it is no wonder that no local government has shown any interest in taking serious action to address climate change.

The following sections examine local government actions related to climate change and the motivations behind their sudden about-face on climate change mitigation. They also consider the changes in incentives introduced by the central government. But first, a basic introduction to the Chinese governmental system is in order.

Central and local governments actions on climate change. Since mid-2007, initiatives and actions on climate change have become a noticeable feature of provincial and municipal governments. Shortly after the creation of the National Leading Group on Climate Change (NLGCC) by the central government, provincial governments have created their counterparts and asked prefectural governments to create their own versions. In addition, many provinces have developed provincial plans to address climate change. Some provinces even issued specific measures for mitigation and adaptation. A few provinces have also organized and funded scientific research on climate change.

Establishment of the National Leading Group on Climate Change

The State Council represents the central government in China. It leads and oversees about 30 central government agencies known as ministries, commissions, administrations, and offices. To highlight the importance of a particular issue, and more importantly, to coordinate policies and actions on the issue, the State Council occasionally creates an ad hoc group consisting of related agencies. The National Leading Group on Agriculture and the National Leading Group on Finance and Economy are examples of such organizations. The leading groups are often led by a Vice Premier or even the Premier, especially when the issue is a top national priority. In June 2007, the State Council announced the creation of the NLGCC, which is led by the Premier. The group includes 27 agencies, representing almost all the agencies of the central government and highlighting the significance of climate change for the country. The role of the leading group is to make major decisions and to coordinate national actions on climate change. The organization of the NLGCC is evidence of a change in the central government's stance on climate change and speaks of the priority now being placed on climate change.

The predecessor of the NLGCC was the National Coordination Group on Climate Change Strategy (NCGCCS), which was led by a Vice Premier. The NCGCCS was first set up in 1990 under the direct leadership of the Environmental Protection Committee of the State Council. After a series of institutional reforms, with the approval of the State Council, the new NCGCCS was officially established in October 2003. Its office was relocated from the National Meteorological Bureau to the National Development Reform Commission (NDRC), considered the most powerful agency in the central government. This was an early symbol of the fact that climate change was no longer being treated simply as a science issue but rather as an issue of sustainable development.

NDRC is designated as the leading agency for sustainable development in China.

There were 13 members in the group, including the NDRC, the Ministry of Science and Technology, the Ministry of Finance, the Ministry of Commerce, the Ministry of Agriculture, the Ministry of Construction, the Ministry of Communications, the Ministry of Water Resources, the State Forestry Bureau, the Chinese Academy of Sciences, the State Oceanic Administration, and the Civil Aviation Administration of China. The NCGCCS was set up to coordinate climate change actions among these various ministries. It is responsible for deliberating on major climate-related issues, inter-agency coordination of climate change policy and activities, organizing negotiations, and making decisions on general inter-agency issues relating to climate change. The NCGCCS is also responsible for leading and coordinating implementation of the United Nations Framework Convention on Climate Change (UNFCCC), which China signed in 1992 as one of the first group of signing nations. Despite the fact that China is not required to make a numerical commitment, the NCGCCS has been forthcoming in developing voluntary reports on greenhouse gas emissions and national assessment reports. In June 2007, the group released China's National Plan for a Climate Change Response.

As a coordination group, however, the group's policy-making authority was limited, and the newly established leading group has considerably strengthened the central government's decision-making capacity on climate change.

It is worth noting that the composition of the National Leading Group on Climate Change is basically the same as that of the National Leading Group on Energy Saving and Pollution Reduction. The two groups have the same leader, Premier Wen Jiabao, and are composed of the same agencies. They form one group of agencies and officials but work under two titles. However, the two leading groups have different goals and objectives, and they have set up their secretariats in different agencies. This shows the close link between climate change and energy saving (and perhaps pollution control as well). In other words, the top leadership of China now treats these issues as integrated when it comes to policy and action.

Provincial leading groups on climate change. The way the two leading groups were created and named at the central level generated mixed reactions from provincial governments. Since June 2007, eight provinces and autonomous regions have created leading groups on climate change following the model of the central government. These include Fujian, Gansu, Hainan, Hubei, Ningxia, Qinghai, Sichuan, and Zhejiang. Other provinces (including provincial level municipalities and autonomous regions) named their leading groups either as Energy Saving (for Shanxi and Xinjiang) or Energy Saving and Pollution Reduction for the rest of the provinces (see Table | Energy saving and Pollution Reduction Leading Groups).

Energy Saving and Pollution Reduction Leading Group

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Among the eight provinces that have established provincial leading groups on climate change, seven combined them with energy saving and pollution reduction. Only Qinghai named its climate change group without making a link to energy saving and pollution reduction. Even more interestingly, it is the only province that did not set up a leading group on energy saving and pollution reduction. Qinghai province, which is part of the Qinghai-Tibet plateau, is considered one of the places most vulnerable to climate warming. Even those provinces that did not include the phrase "climate change" in the names of the leading group did state clearly that the issue of climate change is included in their scope of responsibility.

With few exceptions, almost all provincial leading groups were created after the creation of the National Leading Group in June 2007. Hainan Province, for example, formed a provincial leading group on climate change, energy saving, and pollution reduction in June 2007. The group is led by the Governor with assistance from the Vice Governor and heads of agencies in the provincial government. The group developed the Hainan Provincial Work Plan on Energy Saving and Pollution Reduction. The provincial government distributed the work plan to all agencies and lower level governments. In the cover letter (or "notice") that accompanied the distribution of the work plan, it was made clear that the mission of the leading group was "to organize implementation of the national strategies and policy on climate change; to arrange the province's actions on climate change, energy saving, and pollution reduction; to review plans for international collaboration and strategies for negotiation; and finally to coordinate key provincial actions on climate change, energy saving, and pollution reduction." The cover letter requires that city (prefectural) and county governments establish their own leading group with similar functions. This model is typical of all provinces. Since the secretariat of the national leading group is set up in the NDRC, the provincial groups are also in the provincial Development and Reform Commission. City and county governments follow the same model.

At the request of the provincial government, municipal level cities began to organize their leading groups on climate change. For example, Xiamen City, a major city in Fujian Province along the Taiwan Strait, organized its Leading and Coordination Group on Climate Change in January 2008. The group has a secretariat in the Bureau of Economic Development (a local version of the Development and Reform Commission). Putian City, also in Fujian Province, and Huzhou City in Zhejiang Province, both county level cities, established their leading groups on climate change, energy saving, and pollution reduction at the end of 2007.

Within only a few months, there were dramatic institutional developments focused on climate change at the central, provincial, municipal, and county levels. This is important because within China the formation of governmental institutions is the most critical step that can be taken for the promotion of an issue.

Provincial plans for climate change response. The central government issued China's National Plan for a Climate Change Response on June 4, 2007. The plan was a product of the earlier National Coordination Group on Climate Change Strategy. Shortly after the release of the national plan, provincial plans were made and released. In November 2007, Xinjiang published its climate change strategy and plan. This autonomous region with a territory one-sixth the size of the entire country, suffers greatly from climate change. Already covered by desert, it is experiencing the melting of its glaciers, the major source of freshwater for the region. The Xianjing plan focuses on energy production and consumption. While conventional fossil fuel continues to dominate the autonomous region's energy supply, the government will now promote renewable energy and energy saving. According to the plan, which has goals for 2010 relative to 2005, energy intensity measured by energy consumption per unit of gross domestic product (GDP) will decrease by 20 percent. This is the same as the national target set by the central government and will have the effect of reducing carbon emissions. Xinjiang will increase its hydropower and wind power generation to reach 3.5 percent of its total energy production and 5 percent of its consumption. As a major producer of coal, Xinjiang will make efforts related to power generation, the coal-based chemical industry, and clean coal technology. The region, which suffers from desertification, plans to increase its forest cover to 3.2 percent of its total area and increase water use efficiency from 42 percent to 48 percent. Government policy will provide incentives for energy saving, purchase and use of mass transportation, and hybrid and low-emission vehicles.

Hebei Province is a major steel producer in China. Each year, it produces one-sixth of all steel used in the world. As a result, it is a major emitter of carbon dioxide. The provincial government passed its Implementation Plan for a Climate Change Response in January 2008. By 2010, it proposes to reduce energy intensity by 11 percent relative to 2005 levels, leading to a reduction of 0.128 gigatons of carbon dioxide, keep NO2 emissions stable, and increase forest cover to 26 percent. Fujian, Beijing, Liaoning, Shandong, and Jiangxi have also developed climate change goals and targets and issued policies and regulations.

Local Measures and Actions

Performance evaluation. In order to achieve carbon emission reduction and energy saving goals and measures, provincial governments have developed performance evaluation systems and linked performance evaluation to the promotion of local government officials and even leaders of state-owned enterprises (SOEs). A key target is a nationwide reduction of 20 percent in energy intensity measured by energy use per unit of GDP from 2005 to 2010.

China's 11th Five-Year Plan for National Economic and Social Development (hereafter, the Five-Year Plan) aims to achieve the goal of a 20% reduction in GDP energy intensity. The Plan mainly aims to arrange national key construction projects, manage the distribution of productive forces and individual sector's contributions to the national economy, map the direction of future development, and set targets. From 1949 to 1952, the economy was in its so-called "recovery period." In 1953, the central government implemented its first five-year plan. Except for a period of economic adjustment between 1963 and 1965, a total of ten five-year plans have been drawn up and implemented to date. The five-year plan for 2006-2010 is called the "11th Five-Year Development Guidelines." For more details, see www.china.org.cn/english/features/guideline/156529.htm

If the target is achieved, China will reduce its CO2 emissions by 1.2 gigatons from the baseline, according to an estimate by the US-based Energy Foundation. In order to reach the target, quotas have been established for all provinces and major SOEs. Provincial governments have basically done the same thing, assigning quotas to each of their municipal level governments and SOEs. Municipalities have also given quotas to county level governments. This is how a hierarchy functions within a unitary system. Lower level governments are evaluated based on their progress toward reaching the target. In a sharp break with the past, the evaluation is to be used in career promotion decisions. Some provinces use a veto mechanism, which means that failure to achieve the energy saving target will adversely affect the promotion chances of local government officials even if they do well in other parts of their job. This target evaluation system is also used for SOEs. For example, the provincial governments in Shandong signed a contract with 103 major enterprises. Failure to achieve the annual target will mean that SOEs will not be able to receive any awards or honors. Anhui Province made similar contracts with 153 enterprises and required city governments to sign responsibility contracts.

Legislation. Some provinces have been quick to legislate energy saving. Shanghai, Shandong, and Anhui have issued a Regulation on Energy Conservation. The regulation contains provisions related to industrial structures, energy consumption, and technological innovation. Enterprises and organizations will face penalties for failure to meet certain standards. Beijing also issued regulations on Energy Saving in the Construction Sector, requiring the use of energy saving materials and technology in building construction, particularly for heating and lighting in buildings.

Early in 2001, Beijing promulgated the "Beijing building energy conservation regulations."

Scientific research. While most of the scientific research on climate change is conducted for the nation as a whole, provinces have become very active in supporting and funding regional assessments of climate change impacts. In August 2007, Guangdong Province released an Assessment of Climate Change Impacts on Guangdong The writing of the assessment report basically followed the structure of the Inter-governmental Panel on Climate Change (IPCC) Assessment Report. It documented changes in climate patterns in the province, provided explanations of causes for these changes, and projected future scenarios and impacts of climate change on ecosystems, the economy, and society. The report also proposed measures for mitigation and adaptation. In November 2007, Qinghai Province released an assessment report on Plateau Climate Change Impacts on Economy and Society in Qinghai. It also followed the IPCC assessment report's structure. The Qinghai report recommended inclusion of climate change mitigation and adaptation measures in mid- to long-term planning for the socioeconomic development of the province.

More research and regional assessments are under way. In May 2008, Sichuan Province, hit hard by a disastrous earthquake, launched a research project on Assessment of Climate Change Impact on Agriculture and Water Resources in Sichuan Province. The project is to be conducted by the Sichuan Meteorological Bureau and sponsored by the Department of Science and Technology of Sichuan Province, with generous funding.

Some provinces work together on collaborative research projects. In January 2007, five provinces in western China got together to launch a joint research assessment of climate and ecosystem change, including estimates of extreme weather for the region for the next one to two decades. To enhance their capacity to conduct research, some provinces have invited international experts to join the study. In September 2007, Gansu Province invited Canadian scientists to conduct research on climate change impacts on ecosystems in the region.

Similarly, Chongqing developed an Action Plan for Research on a Response to Climate Change based on the national action plan. The action plan was distributed to districts and counties, emphasizing climate change as a priority in scientific research and defining the overall goals and objectives of the research for the duration of the 11th Five-Year Plan.

Government sponsored programs. Many provinces and municipalities have developed special programs targeting energy saving and emissions reduction. For example, Beijing is promoting switching to energy saving light bulbs. Rizhao City and Dezhou City (in Shandong Province) are encouraging use of solar heating for household and building use. The city of Baoding in Hebei Province is working with the World Wildlife Fund (WWF) and Tsinghua University to launch an initiative on low-carbon urban development. The city government developed a work plan for promoting the renewable energy industry and for renewable energy use in urban infrastructure and households. The city is now working with Tsinghua University to rework their urban development plan in order to achieve goals and objectives for a low-carbon city. The mayor also sees the need to develop institutions and policy for low-carbon urban development and hopes his pioneering efforts will lead to a wave of low-carbon urban development in the country. The Ministry of Housing and Urban and Rural Construction (known as the Ministry of Construction before March 2008) issued a regulation on building standards, requiring a 50% cut in energy use for construction and operation. The city of Chongqing has developed its implementation plan and tightened its monitoring and enforcement.

International cooperation. There have been numerous international efforts related to the mitigation of greenhouse gas emissions, but often under the category of energy efficiency. Starting in the late 1990s, the US Department of Energy worked with the Chinese government to develop an energy efficiency program. The joint center on energy efficiency (called BECON), developed jointly by USDOE's Lawrence Berkeley National Laboratory and NDRC, played a very important role in this process. This pioneering effort helped pave the way for long-term collaboration between ndrc, the ministry of construction, and the energy foundation, with the aim of increasing energy efficiency in china.

Local government response to the cdm-induced market

the clean development mechanism (cdm) of the kyoto protocol provides strong incentives for local government involvement in climate change mitigation. As the largest supplier of CDM-based Certified Emission Reductions (CERs), China has made a significant contribution to developed countries' fulfillment of their Kyoto Protocol commitments. Of course, it has also received financial benefits in return for its collaboration. While the national CDM office is set up within the NDRC, China's provinces have their own offices within provincial Development and Reform Commissions, and they have developed regulations and guidelines for CDM project development. As early as 2006, Shangxi Province, the largest coal producer in China, formed a leading group on CDM led by the Vice Governor and with a secretariat within its Development and Reform Commission. The group was set up to lead and coordinate the development of CDM projects and to review and approve CDM-related policies, regulations, and standards. Guizhou province set up a joint conference of eleven agencies led by the Vice Governor. Guizhou Province also set up a Center for CDM Project Development. This kind of high-level governmental organization for CDM development is rare worldwide, indicating that local governments in China treat CDM very seriously.

Some provinces have issued special regulations for CDM projects. In September 2007, Gansu Province issued a joint guideline on CDM project development. It was issued by the Provincial Development and Reform Commission, Department of Science and Technology, Department of Finance, and Office of Foreign Affairs. Other provinces incorporate CDM projects into their implementation plan for energy saving and pollution reduction. Chongqing Province set specific targets for CDM development.

Chongqing plans to develop 40 CDM projects by 2012, producing 15 million tons of CERs with a revenue of US$0.15 billion.

Hunan Province also incorporated CDM into its 11th Five-Year Plan and scientific research funding priority list. By September 2007, 27 provinces had established CDM promotion centers. These centers are to help with the development of CDM projects. Hebei's Provincial Center for CDM Promotion proposes the development of three to five projects successfully registered with the National Authority and one or two projects approved by the CDM Executive Council.

Interest in CDM projects goes beyond provincial governments. Some municipal and even county level governments are also enthusiastic about the development of CDM projects. Longnan City in Gansu Province formed a Coordination and Leading Group for CDM in March 2006. Their emphasis was on hydropower-related projects. In addition, Gannan Prefecture, Leshan City in Sichuan Province, Nanyang City in Henan Province, and Baoding City in Hebei Province all formed governmental organizations for CDM development. In December 2007, Baoding city government signed a letter of intent for strategic collaboration on pollution reduction in dairy farms through CDM.

Factors affecting local government involvement in climate change actions

Motivation. The motivation of a local government is essentially the collective expression of the motivation of key government officials, i.e., top leaders in the government. Historically, top officials have cared about their reputation with the public, which often reflects what and how much they have done for the region they govern. Currently, economic growth seems to be the most important measure of such achievement. There are numerous cases in China where economic growth has come at the detriment of the environment and social equity. This must change. Economic development has to be balanced with social equity, stability, and environmental well-being.

Officials care about the revenue accruing to the government they serve, and government revenue is a major motivating factor for them. Taxes, fees, and dividends from SOEs are the primary sources of revenue for local governments; officials thus cultivate and maintain the businesses that generate taxes, fees, and dividends is in the interest of local governments. Moreover, economic growth and growth in government revenue has helped boost the personal income of officials and others who work in the government. Finally, officials are motivated by opportunities for career promotion. Under a performance evaluation system, chances of promotion are linked to how well a local government responds to the calls and requirements of upper level government(s). These calls and requirements are listed among the measures in the performance evaluation system and are given as administrative orders from time to time, just like the call to establish leading groups on climate change. Local economic development and prompt responses to calls and requirements from upper level governments seem to be the most important of all motivating factors.

Power. Power is a key factor in local government behavior. First, the source of power determines who the government responds to and how it responds. Despite the provision of laws on the selection of local government officials, the process and results of official promotions are strongly influenced by upper level governments. In practice, upper level governments are important sources of power over local governments. In addition, in the unitary system of China, the central government, which represents the State, often delegates some of its power to provincial governments, which in turn delegate that power further down, depending on the nature of the issue. Thus to some degree, every level of government may represent the state and possess a degree of state power, including the power to give mandates to the next level of government and to allocate state and government resources (such as finance, land, and concessionary rights). Second, the power that a local government possesses determines what and how much it can do. Basically, most cities and all counties have no power to make legislation. Instead, they implement legislation and policy made by the central and provincial governments. However, local governments are delegated a great deal of power by upper level governments and have a substantial degree of authority and discretion in dealing with specific issues.

Capacity. Capacity, together with power, determines what and how much a local government can do. All levels of government face the challenge of lack of capacity in dealing with climate change issues. This is especially the case for local governments, where awareness and technical capacity are low. Even if the government is willing to take action, its capacity is often a limiting factor.

Incentives. Local governments respond to incent­ives, laws, and regulations set by upper levels of government. The performance evaluation system provides a number of incentives. For example, gross domestic product (GDP) growth rate has been used as an index for political promotion.

Financial incentives are often strong and effective means to influence local government behavior as well. China has a dual taxation system, with most taxes collected by the central government while some tax-collecting authority is accorded to local governments. This has helped concentrate financial resources in the hands of the central government and limited the share available to local governments. An exception has been in relation to certain industries, for example, the construction industry, on which local taxes and fees can be levied. This system functions as an incentive for local governments to provide preferential treatment to this industry. In order to increase their revenue, local governments tend to promote construction and land auctions.

Constraints. Local governments are confined by their political, legal, administrative, and social frameworks. These constraints set limits for behavior and penalties for noncompliance. In the relationship between the center and localities, the rules governing the behavior of governments are often not explicitly defined and delineated, which makes constraints on local governments less stringent. In addition, local governments are often not constrained by the opinions of the public because the accountability structure is top-down, i.e., lower levels of government are held accountable to upper levels. This contrasts sharply with governments whose top-officials are elected by the people and thus are held accountable to their constituencies.

Local response to central government dictates. As the highest level of local government, provinces must respond to dictates from the central government. Provinces receive political power and much of their financial resources from the central government. This is perhaps the most important reason why there has been a mushrooming of provincial leading groups on climate change. Essentially, it is an administrative response. This response may have little to do with the rise in awareness of climate change or the vision of provincial governments, as observed in, for example, California and the northeastern states of the United States.[2] For the same reason, municipal governments established their leading groups on climate change in response to calls from provincial governments. This response by lower levels of government is expected or even required in a command-and-control system.

In fact, command and control is not limited to the establishment of the leading groups but is also used in dividing up the responsibility for energy saving and pollution reduction among local governments. During the 1980s and 1990s, China made steady advances in its energy efficiency achievements.[3] Since the beginning of the new millennium, however, due to a new wave of growth in energy-intensive chemical engineering plants and rapid urbanization, the trend has reversed. Since 2000, both total consumption of fossil fuel and energy intensity has increased significantly.[4] Strong increases in car ownership and the associated boom in the automobile industry have boosted energy demand to a record high. The nation must put the growth of energy use under control or face an energy crisis. Already, shortages of coal and oil have became apparent across the country, as shown clearly in energy prices and occasionally long lines of vehicles waiting to fill their tanks. China suffers additional pressures due to the subsidies that have historically been provided to state-owned oil companies to keep domestic consumer prices of oil and gas at low levels. To address the energy supply issue, the central government made energy saving a top priority in the national development plan. Specifically, the central government set a target of a 20 percent cut in energy intensity as measured by energy use per unit of GDP from 2005 to 2010. As noted above, this 20 percent cut is converted into actual energy consumption and divided as a quota among provinces and then further divided among all cities and counties. This hierarchical administrative system is employed in order to reach the national energy saving target. Meanwhile, the central government also set a target for pollution reduction, cutting the annual production of chemical oxygen deficit (COD) and SO2 by 10 percent. This target was also divided among provinces, cities, and counties. To ensure the implementation of the target, the central government set up the leading group on energy saving and pollution reduction.

Yet it would be an oversimplification to view the establishment of local leading groups on climate change as simply an administrative response. After all, most provinces labeled their leading groups "energy saving and pollution reduction," not "climate change." Local need is an important factor that must also be considered.

Responding to local needs. The central government put energy saving, pollution reduction, and climate change together in forming the national leading groups, implying that they are equal in significance. In fact, at the central level, energy saving and pollution reduction are essentially domestic issues that are driven by internal concerns, while climate change has been treated from the very beginning as an international issue and driven mostly by external pressure. The central government defined climate change as an issue for sustainable development.[5] In general, the central government is more concerned about these issues than are local governments. These three issues are considered and treated differently at local levels. Of the three, energy saving is the most relevant to local governments because intensive energy use increases the cost for-and affects the sustainability of-economic growth, not because fossil fuel combustion affects climate. Comparatively, pollution control is less of a priority for local governments. Reducing pollution implies not only more investment in technology but also at times slowing GDP growth by forcing polluting industries to invest in pollution control technologies or shutting them down. It may also mean reduced sources of tax and government revenue. Finally, climate change per se is an issue that is of little relevance to local governments. Although climate change will most likely result in many damages at global, regional, and local levels, these damages are less likely to make significant impacts on the local economy in the relatively short period of time that government officials are in office. In addition, local governments do not feel pressure from the public to act on climate change, nor do they have to deal with international pressure.

Why then should these officials and governments care about climate change? Basically, there is no motivation for local governments to work on climate change. Yet, all provinces have pledged to work earnestly on the issue. Beside the requirements emanating from the central government discussed above, local governments have come to appreciate the link between energy saving and climate change, and they can claim credit for action on both issues even though they only take action related to energy saving. In essence, they are killing two birds with one stone. A quick look at provincial and municipal plans on climate change response clearly reveals that the proposed tasks for tackling climate change are almost all related to enhancing energy efficiency and promoting renewable energy, which is important to local economic growth and is a priority for local governments. It is this link, together with the dictates of the central government, that have helped to translate the global issue of climate change into a local priority.

Economic growth through industrialization is a primary motivation of local governments. For local governments, economic development cannot be allowed to be compromised. Local governments show no sign of willingness to actually cut emissions to lower levels, but rather simply to reduce the rate of growth in energy consumption.

Some provinces are suffering more than others from climate change. Qinghai is experiencing greater change and impacts than others. Other western provinces such as Xingjiang, Ningxia, and Gansu have been experiencing warmer and wetter climates and the melting of glaciers, which are an important source of water. These provinces face immediate threats and are keener to work to address climate change than their eastern counterparts. Coastal provinces such as those in the Pearl River and Yangtze River Deltas face the risk of inundation from a rise in sea level and have a vested interest in taking immediate and drastic actions.[6] Yet a lack of awareness of the urgency of the problem on the part of local government officials is sometimes a factor in the slow governmental reaction.

Response to market incentives. The third factor explaining local government behavior on climate change is its response to market forces. Long before local governments began taking any political and administrative action on climate change, most provincial governments became involved in CDM projects and formed similar leading or coordination groups. This is somewhat peculiar since the CDM is a market mechanism that allows the trading of CERs between a developing country as a supplier and a developed country as a buyer. Actual buyers and sellers are usually businesses, not governments. Interestingly, China's provincial governments and some municipal governments have been highly interested in the development of CDM projects, with top government officials serving as heads of leading groups on CDM project development. This contrasts sharply with most other countries, where CDM project development is essentially left to the private sector and the government is restricted to a role as an authority for project review and approval.

This keen interest in CDM project development indicates the entrepreneurial nature of local governments in China, as discussed by Oi (1995)[7], Walder (1995)[8], and other scholars. In many ways, local governments in China act very much like profit-seeking businesses, and the CDM provides a market for profit. Shanxi Province, as the largest producer of coal and power in China, has great potential for developing CDM projects through coal cleaning and carbon dioxide capture as well as storage (CCS). Therefore, the CDM is an important market opportunity for this coal producing province. Perhaps more importantly, the CDM is expected to bring technology to the province. Gansu Province, which the Yellow River bisects, possesses large hydropower potential, a qualified activity under the CDM. This province is thus very interested in CDM also.

It is fair to say that financial gain and technology are two primary motivations of local governments for developing CDM projects. CDM projects have the advantage that they can bring in financial gain at little cost. By the end of 2006, China had become the largest seller of CERs through the CDM.

For detailed information on the CDM, see http://cdm.unfccc.int/Statistics/index.html. By July 31, 2008, expected average annual CERs from China had surpassed half of the world total.

This achievement is clearly attributable to the serious efforts of local governments.

In sum, local governments' responses to the demands and requirements made by the central government, local needs, and the international and domestic markets are the three primary factors that can help explain local governments' behavior on climate change. Beyond this, capacity, awareness, vision, and leadership are also important contributing factors, but not as critical as the first set of three.

Capacity and awareness. In general, capacity for climate change research, mitigation, and adaptation is low at provincial and municipal levels. Technical capacity is concentrated at central level, particularly in Beijing. Leadership capacity is also critical for the provincial and municipal leading groups on climate change. Most officials and their assistants are not familiar with the issue. Thus capacity building is badly needed. International assistance has been important to the establishment of provincial offices on climate change.

In Gansu Province, for example, the Research Institute on Cold and Arid Regions of the Chinese Academy of Sciences at Lanzhou, the capital of the province, is a major research institution on climate change. In Guangdong Province, the Southern China Branch of the Chinese Academy of Sciences is located in the provincial capital city of Guangzhou, which has helped the province conduct regional assessments of climate change for the Pearl River Delta.

Vision and leadership. Vision and leadership are also important. Some visionary local governments are seizing the opportunity to take leadership. They are trying to distinguish themselves for being innovative by taking proactive actions on an important issue. A common stereotype is that the Chinese government and political system is rigid and does not encourage innovation by political leaders. In fact, some of the most important innovations started in the localities and were later accepted and promoted by the central government. For example, agricultural reform started with the experimental "household responsibility system" of the late 1970s in villages in Anhui and Sichuan. Such a system was soon recognized, debated, and eventually accepted and promoted throughout the country. A local innovation thus led to national change. In contrast to this spontaneous innovation, the special economic zones of Shenzhen and Pudong were purposely set aside for local experiments and innovation. The policies were then evaluated before spreading nationwide.

The endeavor of Baoding in Hebei Province to establish a low-carbon city is such a case. The mayor and his colleagues recognize that decarbonation of the world economy provides opportunities for the development of low-carbon industries. They thus decided to make the manufacturing of renewable energy equipment a top priority of their industrial development. The municipal government provides incentives for manufacturing solar power panels and wind power turbines. It promotes the use of solar heating by households and requires city street lights and traffic lights to be powered by solar panels. By doing so, local officials hope to transform production and consumption into a low-carbon mode.

In January 2008, Shanghai and Baoding became China's low carbon city pilots. Baoding earned this reputation for its substantial contribution on renewable energy and manufacturing of efficiency products. For more details, see the official webpage of the WWF China at www.wwfchina.org

The vision and leadership of the mayor are critical in this.

Vision and leadership for innovation often create political opportunities as well. For example, a few years ago, the municipal government of Guiyang, the capital of Guizhou Province, sensed the significance of the concept of "material recycling in industrial production" and started to develop a "circular economy." Guiyang quickly became a role model for the rest of the country. When the central government finally decided to promote the circular economy idea nationally, the Guiyang government officials were promoted. Whether the officials of Baoding, a model of low-carbon city development, will have similar political opportunities in the future is not clear. But the officials surely understand that innovations and demonstrations of this kind are encouraged under the political and governmental system of china.

Implications for central-local governance in China

On establishing leading groups on-or related to-climate change, provincial governments essentially followed the instructions and expectations of the central government. This does not mean that provincial governments have no power to act on their own initiative. Rather, inaction is due to lack of motivation. Local governments tend not to initiate projects when there is no clear indication that the initiation will bring benefit to either governments or individual officials. However, provincial governments have responded to the call from the central government. They realized that by addressing the energy efficiency issue, climate change related responsibilities (which were required from above) could be fulfilled without extra effort. In fact, in the case of CDM, some provincial governments took the initiative and moved forward without instructions from the central government.

The response of municipal governments resembles that of provincial governments, but focusing more on specific measures. Industrial development, housing and construction, urban infrastructure, etc, are all taking place in cities, and policy and actions on climate change make significant differences to a city and thus to the performance evaluation of the top leaders in the municipal government. This is seen in the case of low carbon city development in Baoding. Comparatively, municipal government may have greater motivation to take new initiatives on climate change mitigation and adaptation. However, the bottom-up approach characteristic of the United States, with state and city governments taking the lead in many initiatives, is not seen in China.

Yet, with greater motivation, more actions and initiatives can be expected. However, the issue of climate change must first be translated into a local need. Second, the local capacity must be enhanced quickly. The central government must realize that it is in the national interest to take proactive action on mitigation of-and adaptation to-climate change and that the cooperation and initiatives of provincial and municipal governments are essential for success. After all, since impacts are on localities and results, mitigation and adaptation have to come from localities as well. Better central-local interactions, more local actions, and greater local capacity are critical for policy making and implementation.

Climate change has been treated by the government of China as an issue of sustainable development, and specifically as part of energy saving. However, it is important to realize that the issue can go beyond energy consumption. Thus it warrants to be treated as a stand-alone issue with its own significance.

Concluding remarks

Local governments' response to climate change took a sharp turn in 2007, from lack of action to the establishment of provincial and municipal leading groups on climate change with a clearly stated responsibility for climate change response. This radical change is not a direct response to the threat of climate change or the result of a growing awareness of climate change in most provinces. Rather, it follows the expectation put into place by the central government for these institutions to be created. Local governments quickly realized that climate change mitigation is closely tied to energy saving, a highly relevant and important issue to local economic development. Because of the collateral effect, local governments can claim credit for tackling climate change even though it is an issue primarily driven by the central government. While local governments show little direct concern about climate change, they are enthusiastic about the development of CDM projects as they believe that these will bring financial benefits. Central government mandate, internalized needs, and the international market are the three primary factors that transformed local governmental responses to climate change. Other factors, including actual climate change impacts, capacity and awareness, and leadership and vision played an additional role but only as secondary factors in most cases.

Some policy implications may be identified from these conclusions. First, due to its intrinsic link to energy use, climate change can and should be further internalized as a priority issue for local governments. Even though the issue seems to be a priority at the present moment, it is basically a task forced on local governments by the central government. Beyond energy conservation, meaningful actions are unlikely until this "global" issue is internalized as a local issue. Second, since local governments are responsive to market signals, the CDM or other types of market mechanisms should play a central role in a post-2012 international framework. Finally, the special structure of the Chinese government as a unitary system with a strong hierarchy places the central government at the pinnacle of authority. However, if climate change is to be addressed effectively in the near future, more attention needs to be paid to local and regional experiments and demonstration projects and policies.

Box 1 | China administrative division

Despite its size, China is a unitary, not a federal system. The system is organized along a typical hierarchy. Below the central government are four levels of governments: provincial, prefectural (municipal), county, and township. Geographically and organizationally, villages are clearly identified below towns and townships, but they are not considered a distinct level of government even though state power penetrates all the way down to the villages. The provincial level governments include 22 provinces, 5 autonomous regions, and 4 municipalities at provincial level, or a total of 31 units. In this analysis, we focus on the provincial and municipal levels of local government.

China | An enduring centralisation

Despite its size, China is a unitary, not a federal system. The system is organized along a typical hierarchy. Below the central government are four levels of governments: provincial, prefectural (municipal), county, and township. Geographically and organizationally, villages are clearly identified below towns and townships, but they are not considered a distinct level of government even though state power penetrates all the way down to the villages. The provincial level governments include 22 provinces, 5 autonomous regions, and 4 municipalities at provincial level, or a total of 31 units.
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