Sustainability Science Program

Overview

Sustainable Development of the Energy Sector in China: Challenges and Options

Overview

This initiative addresses the environmental implications of energy policies in China and the challenges posed by energy initiatives for environmental policy. Together with scholars from Tsinghua University and practitioners from China's Ministry of Science and Technology, the National Development and Reform Commission, and the Development Research Center of the State Council, this initiative explores how China can manage these issues. China‘s economic growth has relied on a resource intensive strategy. It is now the largest consumer of energy and largest emitter of greenhouse gases. China's cities suffer from severe air pollution and water resources are rapidly depleting. China has ambitious programs to improve energy productivity, increase the use of renewables, and revisit its use of market incentives to reduce water use and greenhouse gas emissions. Our research focuses on promoting policies that contribute to the thoughtful use of China's natural resources and the adoption of cleaner and less carbon intensive industrial and energy technologies.

The sustainable development problem
China faces the daunting challenge of continuing to supply the energy, water, and land resources it needs to fuel its economic growth, while simultaneously reducing its pollution levels, improving the efficiency of its resource utilization, and moving to a more sustainable energy future. This challenge will require developing and commercializing new technologies, designing policies to allocate, price, and consume natural resources more efficiently, and building networks between government, private business, and academia at all levels of governance. These changes must occur within the context of a society that is rapidly changing from a poor agrarian population to one characterized by a growing middle income population. In addition, Chinese governance and economic institutions face significant political and social pressures and are evolving as they attempt to cope with them. Tensions between the provincial and central governments are more frequent and visible.

Research question
In an economy that has historically relied on large state-owned enterprises, a growing entrepreneurial sector is emerging, raising the questions, to what extent does China want to encourage these entrepreneurial businesses and to what extent does it want to protect the incumbent state-owned enterprises?

Solving a practical problem of sustainable development
The China initiative will aim to assess sustainable development tensions and better understand the factors that are driving them, with the hope of informing decision makers at both local and central levels, and of helping them shape the policies and programs to more effectively manage the sustainability challenges they will face in the next two decades. To do this in a credible way, the initiative is constructing a network of scholars and practitioners in both China and in the international expert community. The initiative emphasizes both world-class research and the development of a working network of scholars and stakeholders. We are developing and implementing a series of forums and workshops in China and at Harvard. This memo provides a synopsis of the China Initiative's major activities in the 2012-2013 academic year and an overview of the project's focus in 2013-2014.

Research strategy
The China initiative began the 2012-13 academic year with three goals: 1) develop a research program and begin to produce reports on issues at the intersection of Chinese energy policies and environmental sustainability; 2) build a network of partners in China; and 3) lay the groundwork for a series of workshops in Beijing in 2014 and 2015. We have made measurable progress towards meeting each of these goals.

We invited two Fellows to join us in the fall of 2012: Scott Moore and Dr. Chao Zhang.  Scott was completing his doctorate at the University of Oxford and had worked in China for several years. He was a Rhodes Scholar, whose research focused on allocating water in the Yellow River Basin.  Chao came from the environmental program at Tsinghua and focused his research on the water-energy nexus in China. A short summary of their research appears below:

Chao Zhang worked on two papers. The first presents the water footprint (i.e., water withdrawal, water consumption and wastewater discharge) of China's energy system using a mixed-unit multi-regional input-output (MRIO) model disaggregated at the provincial level. The paper shows that China's entire energy production system is responsible for 61.4 billion m3 water withdrawal, 5.0 billion m3 wastewater discharge, and 11.0 billion m3 water consumption, which are equivalent to 12.3%, 8.3% and 4.1% of the national totals, respectively. It also points to the geological mismatch between water resource endowments and energy-related water needs. For example, more than half of the energy-related water withdrawals occur in the affluent eastern and southern coastal areas, while water consumption appears to be much higher in the arid northern region of China than in the water abundant south. Chao argues that current plans for the energy sector in China do not seem to be consistent with water scarcity concerns. His second paper discusses the inter-regional virtual water trade in China. It shows that this transfer accounts for 36% of total annual fresh water withdrawals and is twice as large as international virtual water trade. Chao is now a Junior Faculty member at Tongji University in Shanghai and will continue his affiliation with the China Initiative.

Scott Moore's research aims to understand China's water scarcity not simply as a technical or resource problem, but as a broad political, social, and economic challenge in 21st century China, and to produce policy recommendations on how to meet this challenge as part of a comprehensive sustainable development strategy. Using the Yellow River as a case study, Scott assessed the provincial needs for water along the Yellow River and how the needs of the provinces at the upper end of the river differed significantly from those in the middle and at the terminus. He points out the pressing need to build institutional capacity to address these differences - institutions which too often are lacking in China. He presented his work on the role of dispute resolution mechanisms in resolving competing priorities within large river basins in several venues – both at Harvard and outside. He also had one article accepted in China Quarterly series and wrote several opinion pieces.

Technology Innovation
In addition to the work described above, Professor Laura Diaz Anadon has continued to lead an effort to assess China's initiatives in demonstrating and deploying new energy technologies. Her work has focused extensively on renewable energy options including solar and wind. Laura and our fellows are attempting to identify the key factors behind China's success in commercializing technology innovations in these two fields. Laura plans to expand on these efforts in the forthcoming academic year.

Network Development
We are developing a strong network in China, centered at the School of Public Policy and Management at Tsinghua University and the Energy Research Institute within the National Development and Reform Commission (NDRC). The network includes faculty at two additional schools at Tsinghua, the School of the Environment and the Engineering School. We also have linkages with the Energy Foundation, the Development Research Center, and the World Resources Institute – all of whom have strong China programs located in Beijing.

Sabrina Howell is a third year doctoral student in economics and has been working on both economic development in China and environmental sustainability. Her work will focus on the problems of air pollution from mobile sources. Specifically she will assess a menu of options to convert a portion of the Chinese automobile fleet to alternative fuels, including electric vehicles, natural gas power cars, hybrid cars or super efficient conventional vehicles. She will be working with Henry Lee and with Professor Ariel Pakes from Harvard's Economics Department. Her research is partially sponsored by the Development Research Center. Sabrina will be affiliated with both SSP and the East Asia Program at the Ash Center.

Outreach
We plan to hold the first of two workshops in May 2014 with Tsinghua University.  The first workshop will focus on market incentives for a low carbon future and the second will address sustainable energy technology innovation. Tsinghua faculty, Prof Su Jun and Prof He JianKun, have agreed to co-host the workshops.

In addition, we will be establishing a China, Energy, and Sustainability speaker series this year and will invite experts from both the Chinese government and other countries to come to the Harvard Kennedy School to speak to students and faculty.

Colleagues from the region
We will continue to build on the networks that we have developed with Tsinghua University and the Energy Research Center, using them to reach out to other organizations within China.

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