3 Aug, 2013

China’s Economic Boom Creating Huge Ecological Pressure – UNEP report

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Kubuqi (China) /Bangkok, 02 August 2013 – China has surged ahead of the rest of the world in material consumption, creating intense environmental pressures, but the country also remains among the most successful in the world in improving resource efficiency, according to a new report released by the United Nations Environment Programme (UNEP) today.

The report found that China’s growing affluence has made it the world’s largest consumer of primary materials (such as construction minerals, metal ores, fossil fuels and biomass), with domestic material consumption levels four times that of the USA.

From 1970 to 2008, China’s per capita consumption of materials grew from one third to over one and a half times the world’s average levels.

Domestic consumption of natural resources per capita increased at almost twice the rate of the whole of the Asia Pacific region due to massive investments in urban infrastructure, energy systems and manufacturing capacity. The report notes, however, that some 20% of the resource use in China goes towards the production of goods which are eventually consumed abroad.

“China has seen dramatic growth in past decades and the effect of this transition on global demand for natural resources is unprecedented,” said UN Under-Secretary General and UNEP Executive Director Achim Steiner.

“While that growth has lifted millions out of poverty, it has also come with rising environmental challenges linked to the extracting, processing and use of those natural resources. This report underlines that China, in common with other emerging economies, needs to make significant investments in more resource-efficient infrastructure, such as green buildings and public transport, but also in human capital and governance capacity, if a transition to a sustainable economic model is to be truly realized,” added Mr. Steiner.

The UNEP report underlines China’s relative improvements in energy efficiency. While the country’s absolute energy efficiency is below the average for the Asia Pacific region and the rest of the world, its energy efficiency improved faster than anywhere else over the past four decades.

However the report notes these improvements in energy efficiency alone are not enough to stabilize environmental pressures. It states that if China’s most recent policy initiatives – which include targets to reduce water consumption and losses of arable land, and to increase the up-take of non-fossil fuels – fail to accelerate resource efficiency gains beyond current rates, environmental pressures can be expected to increase rapidly.

The report underlines the effects of China’s massive urbanization, and related infrastructure investments. As a proportion of total domestic consumption of materials, the proportion of biomass dropped from 63 per cent to 15 per cent between 1970 and 2008, while consumption of construction minerals increased from 8 per cent to 63 per cent and metal ores and industrial minerals doubled their share from 4 per cent to 8 per cent.

Over the same period, the absolute level of consumption of fossil fuels increased more than sevenfold, at an average annual growth of 5.3 per cent.

Of the fossil fuels, coal supply grew most rapidly, increasing from 1970’s 49 per cent to 2009’s 67 per cent of total primary energy supply. The large and increasing share of coal also contributes to fast rising carbon dioxide emissions. China emits more than four times the world average of greenhouse gases per unit of economic output, and twice that of the Asia Pacific region.

As a response to such pressures, the UNEP report notes that recent government planning in China has seen a major sustainability shift in terms of the objectives of economic policy. The previous and current Five-Year Plans for Social and Economic Development (FYPs) have an increased focus on more balanced growth, greater resource and energy efficiency, better living standards, and sustainable rural-urban development

Chinese government has adopted a number of policy instruments to strengthen the economy and conserve resources, including a US$586 billion stimulus package with a green focus, incentives for more efficient vehicles, and setting targets for a more energy efficient building sector. Mainstreaming sustainability into national development plans and decoupling resource use from economic activity may prove to be very successful strategies to improve environmental quality while ensuring further investment into economic growth and human development.

China is also one of the first countries to embrace the circular economy approach as a new paradigm for economic and industrial development. China’s Circular Economy Promotion Law came into force in 2009 and aims to improve resource efficiency, protect the environment and achieve sustainable development.

According to a UNEP-backed study released earlier this year, China consolidated its position in 2012 as the world’s dominant renewable energy market player – up 22% to US$67 billion – thanks largely to a jump in solar investment.

Despite such positive steps, the UNEP report released today finds there remain many challenges for China in its transition to a green economy, particularly water and waste issues. Key governance concerns include weak implementation and policy enforcement, and poor monitoring due to lack of technical and financial resources as well as human capital.

The UNEP study recommends the development of national indicator systems so policy makers can gauge the effectiveness of their policies and strengthen the capacity of local governments to implement and enforce policies.

China is one of over 30 countries currently availing of UNEP’s Green Economy Advisory Services. The support package consists of policy advice, technical assistance and capacity building provided to governments in support of their national and regional initiatives to transform and revitalize their economies.

The full report, Resource Efficiency: Economics and Outlook for China, is available at: www.unep.org

Summary Highlights

(+) The ‘Resource Efficiency: Economics and Outlook for China’ report supplements the ‘Resource Efficiency: Economics and Outlook for Asia and the Pacific’ report published by UNEP in 2011, with more detailed data and analysis specific to China.

(+) This report, a joint effort of UNEP and its regional partners, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) of Australia and the Chinese Academy of Sciences, intends to quantify environmental pressures through deeper analysis of resource use patterns, resource efficiency, drivers of resource use, greenhouse gas emissions and resource efficiency policy in China.

(+) China’s rapidly improving material standards of living have come with a greatly increased per capita demand for natural resources, and a corresponding increase in the environmental pressures associated with extracting, processing, and using these natural resources.

(+) The efficiency with which China converts energy into economic output, as measured by TPES/GDP (energy intensity), improved greatly over the period 1970 to 2009. Over the full period, energy intensity (EI) decreased at an average rate of 3.91% p.a. compounding. The Chinese improvement in energy efficiency by far exceeded the improvements for the world (0.68% per annum) and for Asia and the Pacific (0.13% per annum).

(+) Material intensity (MI) indicates the extent to which an economy has managed to decouple its growth from ever increasing inputs of raw materials. For most of the period 1970 to 2008 China exhibited a clear trend toward decreasing (improving) MI, decreasing by around 2% p.a. compounding, between 1970 and 2000. Unfortunately, since the year 2000, coinciding with a period of extremely rapid economic growth in China, the ongoing improvement in MI has almost stagnated, with MI decreasing by less than 1% p.a.

(+) China’s per capita energy consumption, as measured by total primary energy supply (TPES), has increased from 31% of the world average levels in 1970 to over 74% of the world average in 2005 and 95% in 2009.

(+) China’s growth in total water withdrawals was subdued over the period 1980 to 2005, when compared to the extremely rapid rates of growth in consumption of materials and energy. The total changes for the three sectors over the full twenty five year period were: agriculture –8%, industry +81%, municipal +797%, total + 25%.

(+) China clearly achieved major decreases in its GHG intensity over most of the period 1970 to 2005, notably from the late 1970s to the early 2000s. Despite these improvements in GHG intensity, GHG emissions per capita grew rapidly over the same period, by an average of 4.1% p.a. compounding, with growth accelerating from the turn of the millennium.

(+) By the end of 2010, China had basically realized the targets of energy conservation and emissions reduction set up in the 11th FYP, including reducing accumulated CO2 by 1.46 billion tonnes, energy intensity by 19.1%, annual SO2 by 14.29% and COD emissions by 12.45%.

(+) China is the world’s largest market for new construction projects with around 2 billion m2 of floor space added annually, mostly in urban areas. While 60% of these new buildings are classified as residential, 30% are public buildings (i.e. non residential buildings) and the remaining 10% are used for industrial purposes. At present, the building sector accounts for nearly 30 per cent of China’s total energy consumption, and this proportion is growing steadily.

(+) China is a leading producer and consumer of motor vehicles and it has overtaken the United States as the biggest automobile market in the world. The number of registered cars increased from around 1 million in 1994 to nearly 33 million in 2008 (Pan, 2011).

(+) China is world leading in its effort to align economic development objectives with environmental objectives through well designed public policies that increase human wellbeing and reduce environmental degradation through promotion of a circular economy and cleaner production.