Climate policy in China, the European Union and the United States: Main drivers and prospects for the future
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Climate policy in China,
the European Union
and the United States:
Main drivers and
prospects for the future
Alina Averchenkova, Samuela Bassi, Keith J. Benes,
Fergus Green, Augustin Lagarde, Isabella Neuweg
and Georg Zachmann
Policy brief
In collaboration with:The Centre for Climate Change Economics and Policy (CCCEP)
was established in 2008 to advance public and private action on climate
change through rigorous, innovative research. The Centre is hosted jointly
by the University of Leeds and the London School of Economics and
Political Science. It is funded by the UK Economic and Social Research
Council. More information about the Centre for Climate Change
Economics and Policy can be found at: www.cccep.ac.uk
The Grantham Research Institute on Climate Change and the
Environment was established in 2008 at the London School of Economics
and Political Science. The Institute brings together international
expertise on economics, as well as finance, geography, the environment,
international development and political economy to establish a world-
leading centre for policy-relevant research, teaching and training in
climate change and the environment. It is funded by the Grantham
Foundation for the Protection of the Environment, which also funds
the Grantham Institute - Climate Change and Environment at Imperial
College London. More information about the Grantham Research Institute
can be found at: www.lse.ac.uk/grantham/
Bruegel is a European think tank that specialises in economics.
Established in 2005, it is independent and non-doctrinal. Bruegel’s mission
is to improve the quality of economic policy with open and fact-based
research, analysis and debate. Bruegel’s membership includes EU Member
State governments, international corporations and institutions. More
information about Bruegel can be found at: bruegel.org/
The Center on Global Energy Policy provides independent, balanced,
data-driven analysis to help policymakers navigate the complex world of
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This Policy Brief is intended to inform decision-makers in the public,
private and third sectors. It has been reviewed by at least two internal
referees before publication. The views expressed in this paper
represent those of the author(s) and do not necessarily represent those
of the host institutions or funders.
2Table of
contents
Executive summary 6
Key findings by jurisdiction 8
1 Introduction 12
1.1 The study approach 12
2 Current climate change policies 14
3 Economic factors 17
affecting climate policy
4 Institutions for climate policy 21
development and implementation
5 Public opinion, interest 24
groups and political consensus
on climate change
6 Outlook for development 27
of climate policies
Conclusions 30
References 32
3The authors Nations in New York. She holds on Climate Change and the
MSc’s in Economics from University Environment and the ESRC Centre
Alina Averchenkova is the Co- of Trieste (Italy) and from Birkbeck for Climate Change Economics
head of Policy at the Grantham College, London. and Policy at the London School of
Research Institute on Climate Economics and Political Science.
Change and the Environment Keith J. Benes is a non-resident He has also been a Teaching Fellow
and the ESRC Centre for Climate Fellow at the Center on Global in the Centre for International
Change Economics and Policy at Energy Policy. His research Studies and Diplomacy at SOAS
the London School of Economics is focused on national and at the University of London, where
and Political Science. She has 16 international policy frameworks he taught Global Energy & Climate
years of experience in climate policy that will address climate Policy at Masters level (2013–14).
and international development, change and facilitate the global He began his career as a corporate
including as Global Director for transition to clean energy. He lawyer in Australia specialising
Climate Change and Carbon at is also Managing Director of in climate change, energy, water
KPMG. Prior to KPMG, Alina worked Euclid Strategies, a boutique and environmental regulation
for a carbon-asset manager, environmental strategy firm. (2009–2012).
First Climate, in Zurich, and as Previously he served the US
a Programme Officer at the Department of State as an Isabella Neuweg is a Policy
United Nations Climate Change Attorney-Adviser, where he provided Analyst at the Grantham Research
Secretariat. Her professional strategic, analytical, and policy Institute on Climate Change
experience also includes work for expertise on the negotiations under and the Environment at the
the Environmental Defense Fund the UN Framework Convention London School of Economics and
in Washington, Metroeconomica on Climate Change, negotiated a Political Science, with expertise on
Ltd, and the Bureau of Economic variety of conservation treaties, international climate cooperation
Analysis. Alina holds a BSc in represented the US in investor- and European climate and energy
Geography from Moscow State state arbitrations, and advised on policy. She is also responsible for
University, and an MSc and a environmental elements in WTO providing policy-related research
PhD in Economics and International disputes. Mr. Benes holds a Juris advice to Professor Lord Stern of
Development from the University Doctor from Georgetown University Brentford. Isabella has several
of Bath. Law Center (magna cum laude), years’ experience in applied policy
an LLM from the London School research and evaluation of climate
Samuela Bassi is Statkraft Policy of Economics and Political Science policy, energy efficiency and
Fellow at the Grantham Research (with merit), and a BA from the green growth. Prior to joining the
Institute on Climate University of Nebraska – Lincoln. Grantham Research Institute, she
Change and the Environment worked for global policy consulting
and the ESRC Centre for Climate Fergus Green is a PhD candidate in firm ICF International in their
Change Economics and Policy at Political Science in the Department climate policy team, where she
the London School of Economics of Government at the London advised the UK Government and
and Political Science. Her work School of Economics and Political European Commission on energy
focuses on climate change and Science, and a climate policy and climate policy. She helped to
energy policy and green growth. consultant. He is also an Associate evaluate the UK’s multi-million
Previously, she worked as a Senior of the Melbourne Sustainable programme to incentivise take-up
Policy Analyst at the Institute Society Institute at the University of energy efficiency measures in
for European Environmental of Melbourne. From January 2014 to households, provided research and
Policy in London and Brussels, October 2015, Fergus was a Policy analysis on the effectiveness of the
for an environmental consulting Analyst and Research Advisor to European Union Emissions Trading
company in Italy, and for the Italian Professor Lord Stern of Brentford at System and options to reform
Permanent Mission to the United the Grantham Research Institute it, developments in European
4and global climate and energy Brussels. At Bruegel, he has worked and the Environment at the
policy , as well as competitiveness since 2009 on the European London School of Economics and
and employment impacts of electricity and gas market, energy Political Science, the Bruegel
energy efficiency and renewable system decarbonisation, European Institute (Brussels), Tsinghua
investments. Her professional renewables policy and green University School of Public Policy
experience also includes work for growth. Prior to Bruegel, Georg & Management (Beijing), and the
the Smart Cities Energy Group worked at the German Ministry of Center on Global Energy Policy at
at Hitachi Europe, the German Finance, the German Institute for Columbia University (New York).
Development Agency (GIZ) on Economic Research in Berlin and The initial research was carried
reducing emissions from land- the energy think tank LARSEN in out by each of these three last-
transport in developing countries Paris. Georg holds a doctoral degree mentioned institutes, focused on
and research for The Energy in economics. their respective jurisdictions, and
and Resources Institute in New using a uniform questionnaire
Delhi, India. Isabella holds an designed by all of the institutes.
MSc in Environmental Policy and Acknowledgements Based on these research inputs,
Regulation from the London the Grantham Research Institute
School of Economics and Political The work benefitted from excellent produced this Policy Brief,
Science, and a BA in Political research and early drafting of the which was reviewed by all
Science from the Free University of China section by Xiaofan Zhao and collaborating institutes and by two
Berlin, Germany. Qi Ye, from Tsinghua University, independent reviewers.
Beijing. The in depth analysis in the
Augustin Lagarde is an Economist China section would have been
at Simetrica, conducting policy impossible without them. The work
evaluation and social impact benefitted from research and early
measurement. Before joining drafting of the US section by Aziz
Simetrica, Augustin worked at Nayani, Columbia University School
Bruegel as a Research Assistant of International and Public Affairs.
in the area of international We are also very grateful to Sam
climate commitment and Fankhauser, Terry Townshend and
sectoral competitiveness. During Alyssa Gilbert for their valuable
his time at Bruegel, he wrote input and comments. We would
and participated in publication also like to give special thanks to
around the Paris negotiation as Jana Davidová for research support,
well as other European climate Maria Carvalho for analysis of the
policies. Prior to this, Augustin prospects for implementation of
worked as a Policy Analyst at the the ’intended nationally determined
French Ministry of Environment. contributions’, to Jared Finnegan
He holds two undergraduate for his insightful advice on the
degrees in Economics from the institutional system in the United
University of Poitiers (France) and States and academic literature, to
from the University of Banska Christopher Wratil for his reflections
Bystrica (Slovakia), and an MSc in on the future of the European
Environmental Economics from the Union and to Sini Matikainen for
Toulouse School of Economics. editing assistance.
This policy paper is the product of
Georg Zachmann is a Senior a multi-institutional collaboration
Fellow at Bruegel - an independent between the Grantham Research
economic think tank based in Institute on Climate Change
5Executive summary
An improved understanding policies, describing some of the broker a deal between more
of current national climate key drivers, including economic and less ambitious Member
policies, and the factors factors, institutional settings States and unite them behind a
that drive their development and features of the political common vision for the European
and implementation, is systems, as well as the role of energy market. It could also
required to aid the domestic public opinion, interest groups further mobilise the established
implementation of and party politics. and growing low-carbon
climate policy under the industry as its ally. For the US,
Paris Agreement. Over the past decade, China, bottom-up action by cities or
the EU and the US have all States could help to ratchet up
The purpose of this Policy Brief made progress in developing ambition at the federal level.
is to assess the key factors and implementing climate A few proactive States should
affecting both the development policies. Yet each of these champion more ambitious US
and the implementation of three jurisdictions faces unique climate policy. At the same
climate policies in three key challenges in delivering on, time, a committed executive
jurisdictions: the People’s and raising the ambition of, branch could make further use
Republic of China, the European their nationally determined of provisions under the
Union (EU) and the United contributions (NDCs) to the Clean Air Act to advance
States (US). The aim is to assist Paris Agreement. This study climate policy at the federal
policy-makers, climate change highlights where levers for more level. However, this seems
negotiators and analysts from ambitious climate policies lie unlikely to happen under the
outside these jurisdictions and where structural factors recently elected Donald Trump.
to understand the domestic as well as economic or political
constraints and opportunities developments will likely help or This analysis of the trends
facing each jurisdiction, and hinder progress. in the development and
to identify areas of common implementation of climate
interest or concern, facilitating For instance, the co-benefits policies illustrates the
both mutual understanding of fostering a growing green importance of understanding
and cooperation. industry and reducing air the diversity of economic,
pollution are so palpable that institutional and political factors
China, the EU and the US they have persuaded China to at the national level, as well
together are responsible for the move strongly toward a low- as their interplay with public
majority of global emissions of carbon path for economic and private interests and the
greenhouse gases, and produce growth. To help this transition, media. These will strongly affect
about half of global GDP. China could improve incentives countries’ ability to implement
Hence, their climate and energy and mechanisms for its State- their NDCs and to ratchet
policies not only have a strong Owned Enterprises and the up ambition in the future.
influence on current and future provinces to comply with targets Notably, the study shows that
global emissions of greenhouse set at national level. It could the relative importance of the
gases, but also affect policy also allocate adequate resources factors investigated differs
developments in other countries. to monitor compliance. The EU, across the three jurisdictions.
Here we outline their key on the other hand, will need to
6In China, the rise and fall of carbon-intensive industries
emissions is closely linked determine to what extent
to economic development climate policies are de facto
and the ongoing transition implemented at the provincial
of its economy. For the EU, levels. Similarly, the voting
energy security and economic behaviour of Members of the
concerns have been key drivers European Parliament (MEPs)
of European leadership on on climate policy tends to be
climate policy and its promotion strongly correlated with the
of the renewable energy carbon intensity of the Member
industry. The EU also has an State they represent. This is
institutional system that enables comparable to the US where
the European Commission, legislators from States with
Parliament, and some Member large fossil fuel resources and/or
States to champion ambitious a large share of energy intensive
action on climate change. industries try to deter ambitious
Institutional leadership matched climate action. Also, despite the
with favourable public opinion, different governmental systems
influential green parties and within the three jurisdictions,
active non-governmental they all operate in a fairly
organisations has allowed it decentralised way, with much of
to agree successive packages the implementation happening
of relatively ambitious climate at the subnational level.
and energy policies for 2020
and 2030. In the US, political
institutions enable economic
interests, partisanship and
ideology to polarise the political
debate and stymie climate
action via the legislative branch.
However, they also leave room
for executive action from the
President and the Environmental
Protection Agency.
Despite these differences,
there are some similarities. For
instance, the political economy
of climate and energy policy
in the jurisdictions is driven
by similar dynamics. In China,
7Key findings
by jurisdiction
Key findings enforcement capacity at the major hydro and wind resources
for China local level i.e. funded by to distant populations continues
the national level and not by to be a major driver of China’s
1) Likelihood of the local level, where leaders are growing grid investments.
achieving targets: more likely to be conflicted.
4) Developing transition
China will likely meet the targets 3) Energy market reform to strategies for steel and coal
in its nationally determined increase renewable energy mining:
contribution (NDC) to peak penetration:
carbon dioxide emissions by The biggest challenges for
2030 at the latest, and to Further state measures to China’s climate policies relate
reduce the carbon intensity of support the accelerated scale- to phasing out high-carbon
its economy by 60-65 per cent up of renewable and other and energy-intensive industries,
by 2030 compared with 2005. non-coal energy sources — such such as coal-mining, coal-
as feed-in tariffs and green fired power generation, and
2) Enhanced monitoring, finance initiatives — offer strong steelmaking — industries in
reporting and verification: potential for climate change which the state and party are
mitigation in China, as they deeply entangled. Nevertheless,
A significant challenge for the lead to industrial modernisation China has committed up to 100
successful implementation of and innovation, job creation, billion yuan (US$15.27 billion)
climate policies is that regions lower air pollution and to cover the significant lay-offs
and industries (including state- improved energy security. Such they expect in the steel and coal
owned enterprises) that suffer measures are likely also to enjoy industries as a result.
economic losses as a result may widespread public backing.
seek to evade them. Monitoring, However, as renewable sources 5) Addressing rising
reporting and verification (MRV) compete for grid access with non-CO2 greenhouse gases:
and enforcement capacity will fossil fuel incumbents in a flat
therefore need to be improved energy market, the former may China’s overall greenhouse gas
if targets and standards are to continue to be under-utilised emissions are likely to continue
be fully implemented. A more relative to their potential, to grow until and beyond
rigorous and better resourced as local governments and 2030 due to expected higher
system would help to improve market operators favour coal- production and application
access to information and help fired utilities. Reforming the of fertilisers, expansion in
more effective implementation electricity market to avoid these the electric power sector,
of climate policies. Key for this problems will be a considerable coal-mining and because
is to have independent MRV challenge over the coming years. current policies are likely to be
The challenge of connecting insufficient to address non-
8CO2 greenhouse gas emissions. financial crisis and challenges to 2020, and delay decisions
China will need to implement particularly from southern on increasing its post-2020
additional policies to reduce Member States; the refugee and ambition. Instruments such as
emissions of non-CO2 gases migrant crisis; and the growing the Modernisation Fund, which
especially from the chemical, sense of dissatisfaction within sets aside allowances from the
electrical, coal mining and some Member States about the EU ETS to support lower income
agricultural industries. concept of a federal Europe). Yet Member States to modernise
the European Commission - a their energy systems, will need
Key findings for the permanent bureaucracy with a to be further developed and
long record of climate leadership transparently implemented.
European Union – so far has shown itself capable
of driving the climate policy 4) Energy Union as a give-
1) Likelihood of
agenda among EU institutions and-take:
achieving targets:
and Member States, even
amidst significant shocks, such The European Commission
The European Union (EU) will
as the global financial crisis and needs to come up with a
need to increase its current
its regional aftermath. Hence, package of energy and climate
ambition and ensure effective
unless the institutional set-up policies that makes Member
policy implementation in order
of the EU itself is undermined, States better off by reaching
to meet its 2030 targets.
the European Commission will high-level compromises on
Current policy assessments
continue to play a significant issues that they consider to
indicate that the EU’s emissions
role in shaping the climate be secondary. For example,
are likely to exceed its 2030
policies of Member States. Germany might increase
target by about 5-10 percentage
efforts to help central and
points. The EU will need to at
3) Reform despite resistance: eastern European partners
least double the annual rate
to modernise their energy
of emissions reductions from
The EU must deal effectively infrastructure, who in return
2015 onward to meet the 2030
with resistance to European might accept a continuation
target, focussing on power
climate change policies from of the EU’s decarbonisation
generation, industry, transport
Member States with large ambition. Or France may
and buildings.
fossil fuel resources and/ cease its insistence on strong
or large pollution-intensive government intervention into
2) Stable climate policies and
sectors as it proceeds with the energy markets and prices if the
leadership from the European
implementation of the Energy price of allowances for the EU
Commission:
Union and the reform of other ETS is sufficiently high to make
key policy instruments (i.e. the its nuclear power generators
The climate policies already
EU ETS) geared to achieving more competitive. However,
in place commit the EU to a
its existing climate targets for such compromises between
continued reduction in emissions
2020 and 2030. The Market Member States might unbalance
until 2030. A constant annual
Stability Reserve agreed as delicate compromises between
reduction factor under the EU
a reform of the EU ETS will domestic stakeholders. Hence,
emissions trading system (EU
be insufficient to remove the the European Commission
ETS) directive will bring the
oversupply of permits. Since must seek for this agenda to
issuance of new allowances
renegotiations have started be discussed by heads of states
to zero by 2067. This target
over the EU ETS, the divide over and by ministers of energy
can only be changed by a
how ambitious the EU should and environment, as they are
qualified majority. The EU’s
be in its climate policies after often more aware of sectoral
integrity is being threatened
2020 has re-emerged among preferences and sensitivities.
by a number of current crises
the Member States, creating
(e.g. the economic malaise that
a risk that the EU will focus
has persisted since the global
on its current commitments
95) Focus on reductions from its power Power Plan, and thus reduce
low-carbon innovation: sector, but will also need to emissions from their power
introduce more ambitious sectors, despite the stay by
European research and policies for emissions reductions the Supreme Court. Together
development spending on from its industry and transport they represent 36 per cent of
innovation has been decreasing sectors, amongst others. the emissions reductions that
since 2009 and is now at a would be delivered by the Clean
record low level (although large 2) Executive branch action Power Plan in the interim period
disparities exist between the can drive climate policy: (2022-2029), and 30 per cent of
Member States on innovation the cuts expected by 2030 and
spending, and some have been The institutional system in the beyond. Nevertheless,
investing more). There is also US has a high separation of the election of Donald Trump as
little cooperation between powers between the legislative President creates
Member States on low-carbon (Congress) and executive significant uncertainty.
innovation. However, the EU (President) branches that
is working to improve this. The makes aligning different 4) Risk of roll-back of climate
EU has set a target to increase priorities between the two policies post-election:
overall innovation spending from difficult. On the other hand, it
the equivalent of 2 per cent of also vests the executive with Donald Trump announced
GDP at present to 3 per cent (1 considerable powers to develop during the presidential
per cent public funding, 2 per policies independently of campaign and in his America
cent private-sector investment) Congress. For instance, President First Energy Plan that he would
by 2020. In addition to plans Obama released the Climate cut all federal climate spending
to double its funding for clean Action Plan in June 2013, which by eliminating domestic and
energy research under the directed federal agencies to international climate programs,
Horizon 2020 programme, the take concrete steps to reduce withdraw from the UNFCCC
EU is preparing an integrated emissions, and proposed the Paris Agreement, repeal the
research, innovation and Clean Power Plan, which aims Clean Power Plan, encourage
competitiveness strategy for the to cut carbon dioxide emissions use of fossil fuel resources
Energy Union, to be launched from the power sector by 32 per and dismantle climate policy
in November 2016. It has also cent compared with 2005 levels in general through executive
joined Mission Innovation, a by 2030. action. This is unlikely to be a
global initiative on clean energy straightforward, quick or easy
launched at COP21. 3) Subnational action process. Firstly, under existing
as driver: law the US Environmental
Key findings for the Protection Agency, the climate
The 50 States have considerable policy administrator, has not
United States
authority. In some areas, their only the authority to regulate
authority extends beyond that greenhouse gas emissions,
1) Likelihood of
of the federal government, but also an obligation to do
achieving targets:
and in other areas authority is so. Secondly, any change to
shared between the Federal and regulations (including repeal)
In order to meet the target
State governments. This means must go through the same
in its nationally determined
that many policy ideas are first type of rigorous public notice
contribution (NDC) (decreasing
generated locally, with much and comment process that
annual emissions by 26 to 28
climate policy leadership coming the original regulations went
per cent below 2005 levels by
from the States. For example, through to become law. So
2025) the United States (US)
19 States have indicated that changing them would take
will not only have to increase
they will continue to submit significant political commitment
its ambition for emissions
plans to comply with the Clean over several years. Thirdly,
10the subsequent rule-making industrial interests a strong
must take account of the voice in US climate policy-
administrative record compiled making. However, the economic
to support the original rule. In importance of the energy-
the case of the Clean Power intensive industries varies
Plan, this record includes greatly between States, which
hundreds of pages of technical means that there are leaders
documents and responses to 4.5 and laggards in climate policy
million public comments that at the State and local level. It
were produced to support the remains true, nevertheless, that
final rule. A repeal or change to legislators from States with
the regulations that does not high concentrations of energy-
adequately address the record intensive industries have actively
that supported the regulations tried to hinder more ambitious
in the first place is more climate action in Congress and
susceptible to being invalidated through judicial rulings (the
as ‘arbitrary and capricious’ stay of the Clean Power Plan
by a reviewing court. by the highest federal US court
was one outcome of several
Nevertheless, given that Donald groups suing the Environmental
Trump will appoint at least Protection Agency).
one Supreme Court justice,
likely tilting the court towards
conservatism, he could seek to
repeal previous amendments to
the Clean Air Act that brought
greenhouse gases under the
EPA’s remit, and override
or weaken the authority of
the EPA. It has already been
reported that Trump will appoint
a climate sceptic, Myron Ebell,
to run the EPA. It is difficult to
predict how quickly changes to
climate policy will happen, but
the Climate Action Plan and
the Clean Power Plan will likely
stall. Action on climate change
would then depend largely on
the States.
5) Importance of energy-
intensive industries:
The relative importance of the
energy-intensive industries
to the US economy affects
government willingness to
implement ambitious policies to
reduce emissions and also gives
111. Introduction
The signing ceremony of The purpose of this Policy Brief an accompanying Policy
the Paris Agreement at the is to assess the key factors Paper ‘Climate policy in the
United Nations in New York affecting both the development United States, China and the
on 22 April 2016 marked the and the implementation of European Union: main drivers
beginning of a new chapter in climate policies1 in three key and prospects for the future -
international climate action. jurisdictions: the People’s country analyses’ (Averchenkova
As governments have now Republic of China, the European et al., 2016).
reasserted their commitment Union (EU) and the United
to the Agreement, attention States (US). The aim is to assist 1.1 The study
will turn from the international policy-makers, climate change
stage to the domestic arena. negotiators and analysts from
approach
Questions have emerged about outside these jurisdictions
China, the EU and the US were
whether and how countries to understand the domestic
chosen as the focus of the study
will implement the pledged constraints and opportunities
for three reasons. First, they
targets and policies contained facing each jurisdiction, and
are the three largest emitters,
in their ‘nationally determined to identify areas of common
collectively emitting around 55
contributions’ (NDCs) and interest or concern, facilitating
per cent of global greenhouse
about the potential to increase both mutual understanding and
gas emissions, measured by
their ambition in the future. A cooperation. The framework
domestic production (Boden
key need is for policy-makers to used in this work and its main
et al., 2015; Germanwatch,
gain an understanding of the insights may serve as a useful
n.d.), as shown in Figure 1.
current trends in national policy- tool for undertaking similar
Furthermore, as they together
making, and their implications analyses in other jurisdictions.
import more emissions
for the achievement of targets,
embodied in tradable goods
as well as of the key institutions This Brief provides a
than they export, they are
and actors that shape the comparative summary of a
responsible for up to two-thirds
design and implementation more extensive assessment
of global emissions (Boitier,
of climate policy at the undertaken for each of
2012). Understanding the
national level. the three jurisdictions in
1
‘Climate policies’ in this Policy Brief refers to policies having the explicit aim and/or significant effect of reducing greenhouse gas emissions below what they would otherwise
be. This definition is intended to capture policies that may have other primary objectives (e.g. energy security or air pollution reduction) if they also have a significant
mitigation effect on greenhouse gas emissions. It also covers laws and regulations as well as plans and other non-legal instruments.
12factors affecting domestic production, consumption, factors affecting climate change
climate policy in these trade, investment, policy and policy (chapter 3), institutions
geographies is therefore key for technological innovation. Hence, for policy development and
assessing the overall dynamics for the task of decarbonising implementation (chapter
of global emissions. the global economy, they will 4); public opinion, interest
Second, the economies of these have significance for reasons groups and political consensus
three jurisdictions are the three extending well beyond the size on climate change (chapter
largest in the world, together of their emissions per se. 5), and the outlook for policy
accounting for 50 per cent development (chapter 6) in
of global GDP in 2015 (IMF, The following sections explore each jurisdiction.
2015). Therefore, they have an current climate change policies
important influence on global (chapter 2), the economic
Figure 1. Carbon dioxide emissions in the US, China, EU (EU-28) Source: European Commission, Joint Research Centre,
PBL Netherlands Environmental Assessment Agency
and the world (total)2 (2015); Olivier et al (2015).
2
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tC
on
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M
00
10
40
35
30
25
20
15
10
5
0
06
08
09
07
90
96
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94
95
10
92
93
97
00
04
05
02
03
91
11
01
14
13
12
20
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World EU28 United States China
2
Carbon dioxide emissions totals from fossil fuel use and industrial processes (cement production, carbonate use of limestone and dolomite, non-energy use of fuels and other
combustion). Excluded are: short-cycle biomass burning (such as agricultural waste burning) and large-scale biomass burning (such as forest fires).
132 . Current climate
change policies
In this chapter, an overview is and measures have also been per cent reduction in carbon
presented of the status quo introduced, including: energy intensity of GDP relative to a
of climate policies in the three conservation targets and 2005 baseline, a more ambitious
jurisdictions. The constellations associated accountability 2020 target for carbon intensity
of climate policies, as well mechanisms for officials and than China pledged in the
as their drivers and level of state-owned enterprise (SOE) 2009 Copenhagen Accord
ambition, differ greatly managers; frameworks for (King, 2016). The 13th Plan
across the three jurisdictions monitoring, reporting and also includes a target to keep
(see Table 2). verifying progress on energy energy consumption within
conservation/efficiency; targets 5 billion tonnes of standard
China and support measures (e.g. coal equivalent by 2020,
feed-in tariffs; subsidised which is more ambitious than
China has moved from a finance, etc) for low-carbon the forecast target for 2020
relatively reactive approach energy; and, more recently, air contained in the 12th Plan
to a much more active stance pollution-related restrictions (Chen & Stanway, 2016). In
toward climate policies, on coal production and continued efforts to diversify
integrating them closely with consumption in key regions. their energy mix and limit coal
other policy priorities. This Additionally, pilot emissions use, the Chinese Government
change has occurred in stages trading schemes have recently has also set a target to increase
over the last decade, mostly been introduced in seven cities the share of natural gas to
driven by energy security, and provinces, and a national 10 per cent by 2020 and to
air pollution, and economic scheme is planned for rollout have 150 GW of solar capacity,
development objectives, as in 2017. 200-300 GW of wind capacity
well as growing awareness (Roselund, 2015, The Climate
of the potential negative China’s 13th Five-Year Plan Group, 2015) and 58 GW of new
impacts of climate change on (2016–2020), released in March nuclear capacity (Xinhua, 2016)
its development. Since 2005, 2016, includes an updated installed by 2020. Furthermore,
climate change targets have target to reduce the carbon through its NDC to the Paris
been included in the Chinese intensity of GDP by 18 per cent Agreement in December 2015,
Five-Year Plans. A number of over the course of the plan China has committed to peak
climate change laws, policies period. This equates to a 50 its carbon dioxide emissions by
14around 2030 and to make its sets the objectives to be met of climate-change-related
best efforts to peak earlier; to by 2030, namely: a binding regulations have since been
reduce the carbon intensity of EU target of reducing annual introduced, including transport
GDP 60-65 per cent below 2005 emissions of greenhouse gases emissions standards, tax
levels by 2030; and to meet 20 by 40 per cent below 1990 levels; breaks for renewable electricity
per cent of total primary energy a binding target of generating and several energy efficiency
consumption from sources at least 27 per cent of energy programmes. Given the
other than fossil fuels by 2030 from renewable sources; a non- difficulty of passing legislation
(China, 2015). binding target of improving at the federal level, several
energy efficiency by at least 27 initiatives have also flourished
European Union per cent, to be reviewed by 2020 at sub-national level, including
(with the potential of raising renewable energy portfolios in
The European Union (EU) has so the target to 30 per cent); and several States and a cap-and-
far shown the most ambitious an electricity interconnection trade system in California
and consistent approach to target of 10 per cent between (AB 32).
climate change. A range of Member States by 2030
targets for emissions reductions, (European Commission, 2016c). A key recent set of federal
energy efficiency and renewable regulations is the Clean Power
energy have been set for 2020 United States Plan (CPP), which for the first
and 2030, as well as aspirational time sets a target to cut carbon
long-term objectives for 2050. In the United States (US), dioxide emissions from the
Some of these have been on the other hand, developing power sector by 32 per cent
translated into mandatory climate change policy at compared with 2005 levels by
national targets for Member the federal level has been 2030 (EPA, 2015a)3. The Plan
States. The targets have been increasingly challenging, due will be key for the US to achieve
accompanied by a large number to strongly divided political the target of reducing total
of policies and regulations views on the issue along greenhouse gas emissions by 26-
to curb emissions, improve partisan lines. As a result, 28 per cent below 2005 levels by
energy efficiency and stimulate the US lacks comprehensive 2025, as per its NDC to the Paris
the uptake of low-carbon climate change legislation, Agreement (The White House,
energy sources, including the but has been regulating 2015). The legislation, however,
world’s first carbon emissions greenhouse gases using existing is currently been challenged
trading scheme. A new goal laws. Furthermore, federal in court and it is not yet clear
of establishing an Energy legislation has been shaped whether part, or even the whole,
Union was also set in 2014 and by judicial rulings, rather than of the Plan may be invalidated.
its related strategy aims to the ‘standard’ legislative route The future direction of US
foster affordable, secure and (e.g. through the President and climate policy will also be highly
sustainable energy across the the bicameral system). Most affected by the outcome of
Member States. This represents notably, court rulings required the 2016 Presidential election
one of ten priority areas which greenhouse gases to be covered (see Chapter 6).
the Junker Commission has set by the 1970 Clean Air Act and
for its term between 2014 and its subsequent amendments,
2019. so that, as from 2009, the
regulation of these emissions
The EU’s ‘2030 framework for fell within the responsibility of
climate change and energy the Environmental Protection
policies’, approved in 2014, Agency (EPA). A number
3
And emissions from sulphur dioxide would be reduced by 90 per cent and nitrogen oxides cut by 72 per cent by 2030 compared with 2005 levels.
15Table 2. Status quo of Sources: China (2015); Chen & Stanway (2016); The White
House (2015).
climate policy in the
three jurisdictions
China EU US
Key climate No dedicated climate change • 2020 Climate and Energy No dedicated climate change law.
law (but in progress). Climate- Package (2009); Relevant legislation:
policies and relevant policies and measures:
• 2030 framework for climate • Clean Air Act (1963,
legislation • Air Pollution Prevention and energy policies (2014) interpreted in 2009 to apply to
and Control Plan (2013) greenhouse gases)
• EU Emissions Trading
• Several targets set in System (2005) • Climate Action Plan (2013)
Five-Year-Plans
(esp. 2011-15; 2016–20) • Clean Power Plan
(proposed 2015, awaiting
• Pilot carbon emissions legal ruling)
trading schemes
• Moratorium on new coal mine
and possibly coal-fired power
station approvals (2016); plan
to eliminate 500 million
tonnes of coal capacity
GHG targets
Short term • 2020: Carbon dioxide • 2020: 20% reduction in • 2020: 17% reduction in
emissions intensity of GDP annual greenhouse gas annual greenhouse gas
50% lower than in 2005 emissions compared with 1990 emissions compared with 2005
(13th Five Year Plan)
• 2025: 26 -28% reduction in
annual greenhouse gas
emissions compared with
2005 (NDC)
Medium term • 2030: Peak carbon dioxide • 2030: 40% reduction in • 2030: proposed 32% reduction
emissions by 2030 or earlier; annual greenhouse gas in annual greenhouse gas
CO2 intensity of GDP of 60- emissions compared with emissions compared with
65% below 2005 (NDC) 1990 (NDC) 2005 for power sector
Long term N/A • 2050: 80–95% reduction in N/A
annual greenhouse gas
emissions compared with 1990
Renewables • 15% of primary energy • 20% of primary energy • 20% of electricity from
from low-carbon sources by from Renewables by 2020 non-hydro renewables
targets 2020 (with individual Member by 2030 (President
States’ targets) announcement 2015)
• 20% of primary energy from
low-carbon sources by 2030. • 27% of primary energy
from renewables by 2030
(no individual targets)
Energy efficiency • Energy conservation targets in • 20% improvement in energy • 20% of electricity from
the Five Year Plans efficiency vs ‘business as usual’ non-hydro renewables by
targets by 2020; 2030 (Presidential
• Energy efficiency standards for announcement, 2015)
vehicles, buildings, appliances • 27% improvement in energy
and industrial equipment efficiency vs ‘business as usual’
by 2030
• Emission standards for light
duty vehicles
• Energy efficiency standards
for buildings
163. Economic
factors affecting
climate policy
Different economic took place in China (Green population of 1.36 billion in 2013.
circumstances, including & Stern, 2015). As a result of China’s urbanisation plan has
resource endowments (Figure this heavy-industry-focused a target urban population of
2) and the carbon intensity of growth model, overall energy 60 per cent by 2020 (Xinhua,
manufacturing sectors, within consumption, fuelled by coal 2014b), implying a total of
the three jurisdictions affect in particular, soared during about 850 million urban
the preferences of businesses this period (see Green & Stern, residents on the assumption
and other stakeholders, which 2015; Green & Stern, 2016). that China’s total population
in turn can influence the design, This has led to a large increase at that time will be around
implementation and outcomes in emissions of greenhouse 1.4 billion. China can manage
of climate change policies. gases — especially in the period this extraordinary urbanisation
between 2001 and 2013 — as in a way that reduces traffic
China well as significant local pollution congestion and inefficient
effects (particularly from coal public transport, as well as air
China is a middle-income power plants), triggering public pollution, and builds adequate
developing country. While its demand for climate policies and infrastructure for energy, water
formerly centralised economy stimulating Government action. and waste; this would also
has been gradually opened-up limit greenhouse gas emissions
and marketised since the late The way in which China (Floater, Rode, Friedel &
1970s, a high proportion of its manages its rapid urbanisation Robert, 2014).
economy remains under state will also influence the trajectory
control. State-owned enterprises of its emissions pathway in the Political attention has recently
(SOEs) dominate in the energy future. China’s urban population moved from a near-exclusive
sector — particularly fossil fuel is expected to increase from focus on generating high
businesses — and in numerous around 700 million in 2013 to rates of economic growth,
other high-carbon sectors, around 850 million in 2020, to a greater emphasis on
such as steel and cement and to approach 1 billion in the quality of growth, often
manufacturing. Its industrial the late 2020s (World Bank & referred to as the ‘new normal’,
development has heavily relied Development Research Center creating greater political
on fossil fuels, especially large of the State Council, 2014). space for policies that reduce
domestic coal resources. In 2013, World Bank (2015a; 2015b) data greenhouse gas emissions. This
roughly half of the world’s coal, show China’s urban population has entailed state support for
steel and cement production was 53 per cent of China’s total low and zero -carbon energy
17industries, for example China in the regions where these firms Luxembourg (World Bank,
matched Europe’s investment in operate (Hornby, 2016). 2016a) - and in their capability
research and development for to recover after the crisis.5 Since
renewable energy for the first European Union 1990, the EU has experienced a
time in 2015, spending US$2.8 general decoupling of economic
billion (Frankfurt School-UNEP In the past three decades, the growth from greenhouse gas
Centre/BNEF, 2016). This has European Union (EU) has seen a emissions. Overall, energy
entailed measures to reduce rapid increase in its dependence industries are by far the largest
over-capacity in the coal and on imported fossil fuels, source of emissions, accounting
steel sectors through targets for especially from volatile suppliers for about 33 per cent of the
capacity reduction, and funds such as Russia, which has led to total in 20116, followed by
to restructure poorly-performing growing concerns over security the transport sector (21 per
companies and resettle of supply. Net imports increased cent) and manufacturing and
millions of displaced workers from less than 40 per cent construction (20 per cent)
from these industries. of gross energy consumption (European Commission, 2014).
in the 1980s to reach 53 per
These new economic dynamics cent by 2013 (Eurostat, 2015a). Structural and public budget
have made it both easier This has provided a common reforms have been the main
and more justifiable for the motivation for Member States priorities in the aftermath of
Government to develop further to seek climate policies that the financial crisis in the EU.
climate change policies, as these also reduce energy use or create However, short-term boosts, in
are now seen as net-beneficial substitutions for imported fossil the form of ‘green’ investment
and complementary to the ‘new fuels. Yet large disparities in (see e.g. Spencer, Bernoth,
normal’ growth model and the economic performance and Chancel, Guerin, & Neuhoff,
wide-ranging reforms needed fossil fuel endowments between 2012) that could increase
to fully achieve it. However, fully Member States have affected productivity and employment,
implementing the new growth their willingness to commit to improve economic resilience
model requires considerable ambitious climate objectives. against fossil fuel prices, and
reform of institutions, including facilitate the low-carbon
SOEs and the financial sector, While the EU’s GDP almost transition, are needed to meet
as well as fiscal arrangements doubled between 1990 and EU climate change objectives.
(IMF, 2015). Implementation is 20124, the growth slowed down Although innovation is a stated
being affected by the political and declined in 2008 and 2009, policy priority for the EU to
economy that has evolved and then again in 2012, due to enhance competitiveness
under the old model of growth. the global financial crisis. Yet the (European Commission, 2014),
High-carbon producers and EU still retains the largest share public and private financial
energy-intensive manufacturers, of the world GDP among the support for low-carbon research
which tend to be concentrated three jurisdictions, at about 17.3 and development is relatively
in particular regions, will per cent in 2014 (World Bank, low. Private investment in
likely suffer financial and job 2016b). However, there are large research and development in
losses, leading to resistance differences among the Member the energy sector is four to five
from the affected sectors States in per capita income times lower now than it was 20
(disproportionately SOEs) and – ranging from US$17,200 years ago (International Energy
the sub-national governments in Bulgaria to US$98,500 in Agency, 2015).
4
EU GDP increased by 44 % (in volume terms)
5
In 2014 growth rates ranged from negative 0.4 per cent in Croatia, Finland and Italy, to positive 5.2 per cent in Ireland (The World Bank, 2016a).
6
2011 is the last year for which official UNFCCC data is available.
18Figure 2. Primary energy
supply (2012)
China
US
EU-28
0% 20% 40% 60% 80% 100%
Coal (domestic) Coal (import) Oil (domestic)
Oil (import) Gas (domestic) Gas (import)
Nuclear RES, biofuel & waste
United States The economic importance of 2007), notably the Renewable
the energy-intensive industries Fuel Standard programme
The United States (US) can varies greatly between States. from the Environmental
count on large domestic For example, the mining sector Protection Agency (Earley,
resources of coal, oil and gas, (crude oil, natural gas, coal 2009).9 However, the energy
especially thanks to the recent and ore extraction) contributed security argument has not
development of shale reserves. only 2 per cent to total US GDP proved sufficiently powerful
Furthermore, it is still reliant in 2013, but its share of GDP in to generate broader support
on significant energy imports, some States, such as in Texas, for climate change action in
especially of oil. This has Wyoming, Alaska and West other areas. Energy security
contributed to relatively high Virginia, accounts for more than has become less of a policy
emissions per capita in the US7, 10 per cent (EIA, 2014). Elected driver because of the large-
which in 2014 were the world’s representatives in these States scale development of hydraulic
third largest, after Saudi Arabia tend to strongly oppose federal fracturing and horizontal
and Australia. Overall, the key climate change regulations. drilling in the US. Significant
sectors responsible for the emissions reductions have been
highest shares of greenhouse Reliance on imported fossil fuels achieved in the past decade
gas emissions, and therefore the (particularly oil) in the past has due to non-policy drivers, in
ones where mitigation policies led to strategic concerns about particular the substitution
are most needed, are electricity energy security8, motivating of coal in power stations as
generation (about 31 per cent legislation that has mandated the price of natural gas has
in 2013), transportation (27 per larger use of renewable fuels dropped due to the abundance
cent) and industry (21 per cent). in the transport sector (Leiby, of supply from shale reserves
7
About 16.5 tonnes in 2014 (Oliver, J., Janssens-Maenhout, G., Muntean, M., Peters, J., 2015)
8
In 2007, oil imports made up over 60 per cent of annual petroleum consumption, a quarter of it coming from the Middle East.
9
The increased use of bioethanol, however, has generated concerns over biodiversity impacts and raising food prices
19and the reduction in demand for it might be, financing harder priorities following the
electricity during the financial to obtain, and the innovation US elections in November
crisis and economic downturn pipeline unsecured for the future (see Chapter 6).
(OECD, 2014). Yet overall the (Brookings, 2011). The future of
low-carbon sectors in the US clean technology investment will Table 3 summarises the key
economy remain relatively remain strongly dependent on economic factors and their
slow-growing. Furthermore, policy choice in the absence of influence on climate change
evidence suggests that the strong economic signals, such as policies in the three jurisdictions.
scale-up of new technologies carbon pricing. The US therefore
has not been maximised due in appears particularly vulnerable
part to policies that have left to possible sudden changes in
domestic demand weaker than Presidential and Congressional
Table 3. Summary of economic
factors affecting policy
China EU US
Energy • Domestic access to • Large fossil fuel • High endowments of
cheap coal import dependency oil and natural gas (including
resources from shale)
• Imports most of its oil and • Wide differences in domestic
natural gas, and some coal resources between • Domestic access to
Member States (e.g. coal cheap coal
in Poland; natural gas in
the Netherlands) • Switch to natural gas has
reduced coal in electricity
• Nuclear phase-out is generation mix
being discussed in several
Member States
Importance of • Structural change toward • Coal- and natural gas- • Their influence varies
higher value-added powered energy utilities and greatly across States, but in
energy-intensive manufacturing large energy users can be some they are very powerful
and service sectors strong economic players.
industries Their influence tends to be • Leader in innovation on energy
• High-carbon producers offset by lower-carbon efficiency technologies
and energy-intensive sectors in western Member
manufacturers play large States but not eastern
role in some regions; Member States)
require financial support for
phase-down
Energy security • Energy security concerns have • Strong concerns over • Historical energy security
been strong motivator for increasing oil and natural gas concerns concerning crude
energy conservation and import dependency, especially oil, but recently mitigated by
alternative energy policies from Russia domestic shale oil exploitation
since ~2006
Implications • Delicate balance between • Some Western Member • Strong lobbying from coal, oil
economic development States push for renewables and natural gas industries
of economic concerns and climate as economic and energy
change mitigation security opportunity • Increasing counterweight
factors for from growing renewables
climate policy • Increasing importance of low • Eastern coal-rich sector (solar and wind)as a
carbon industry to economy Member States driven towards result of decreasing costs of
less ambitious climate action low-carbon technologies
• Recent strong investments
in renewables • Lobbying from both • Energy producing and
carbon-intensive and low- industrial States can delay
• State-owned enterprises can carbon industries climate legislation
exert high influence
204. Institutions
for climate policy
development and
implementation
Institutions make and shape enforcement and oversight of particular importance for
climate policies. Institutional of their policies. Institutions guaranteeing transparency
systems define how power is generate a mix of sanctions and generating trust between
distributed among decision- and incentives which steers parties. Based on the United
making bodies (i.e. legislative, political, social and economic Nations Framework Convention
jurisdictional and executive actors towards certain types on Climate Change, we define
branches) and across levels of of behaviour (Ostrom, 2015; monitoring as the measurement
administration (i.e. federal or Purdon, 2015). Whether these of efforts to address climate
central systems of governance). go in the direction intended by change and of the impacts
The way power is distributed policy-makers is often difficult of these efforts, including the
across different institutional to predict at the stage of level of emissions of greenhouse
bodies also affects the extent policy development. Successful gases by sources and removals
to which political leaders can implementation thus depends by sinks, overall emissions
exert influence. Overall, the on the institutional capacity reductions and other co-
concentration of authority possessed by policy-makers to benefits. Reporting refers to the
can facilitate leadership if key correct for unintended policy presentation and transmission
policy-makers are personally outcomes (Jänicke, 1992). The of data, measurements, and
committed to climate action, monitoring, reporting and associated analysis. Verification
in the same way that this can verification (MRV) mechanisms refers to the evaluation of
lead to stagnation in climate in place can help detect when emissions reductions and other
policy if they are not (Harrison & policies ‘go off-course’ and information that is measured
Sundstrom, 2007). provide necessary tools to and reported.
measure and improve their
On the other hand, institutions performance. In addition, they Institutions vary greatly across
affect climate policies because enable comparability of climate the three jurisdictions. However,
implementation depends, to a action between nations. In there are some similarities in
large extent, on the capacities the context of international the way that these institutions
institutions have to ensure climate negotiations, MRV is affect the development and
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