Block’s Indicator of Sustainable Growth

by Ray Block

When China paraded its energy efficiency qualifications at the Copenhagen climate change conference, many observers were cynical, believing that Chinese statistics were regularly fudged.

Even when McKinsey consultants on assignment in China regularly reported that the Chinese were junking obsolete energy intensive plant and equipment and replacing them with energy efficient, low carbon equipment, the too smart western observers refused to believe them.

Xiong Yan, chairman of the China Beijing Environment Exchange and China  Beijing Equity Exchange at the Eight Transnational Corporations China Forum (China.org.cn March 2 2010) said that China’s decision to reduce the intensity of carbon dioxide emissions per unit of GDP by 40 to 45 per cent by 2010, compared with the levels of 2005, will require changes to the law and policy, and cause improvement of the development of technology.

“It will transform the structures of economy, industry and energy, including the area of renewable energy, energy efficient, forest carbon sinks, low carbon transportation and pattern of consumption,” Xiong said. The Chinese energy efficiency drive is on top of a “reduction of carbon emissions per unit of GDP by 47 per cent from 1990 to 2005, and I believe it is practicable to achieve its goal for 2020.”

Chinese Premier Wen Jinbao, in addressing a State Council meeting of conserving energy and cutting emissions in Beijing on May 5 2010, called for more efforts to cut emissions and conserve energy to meet the country’s targets set by the 11th Five Year Plan, (China Daily china.org.cn).

New targets to shut down outdated 10GW capacity of small coal-power plants, 25 million tonnes of small iron smelting, 6 million tonnes of steel production, 50 million tonnes of cement, 330,000 tonnes of aluminum, 6 million containers of glass sheets and 530,000 tonnes of paper production within this year.

All these closures are being achieved by administrative measures, with the “new targets distributed to local governments and enterprises by the end of May. The enterprises involved are expected to be closed down by the end of September. Local officials and executives of enterprises will be taken to task if their specific energy efficiency targets are not met by the end of the year.”

The environmental costs in the transformation to a fast growth economy have been very high, resulting in unacceptable levels of atmospheric pollution, and in water pollution.