China Workshop Addresses Multinational Approach to Reducing Emissions of Greenhouse Gases

DECEMBER 26, 1997; UPDATED AUGUST 11, 1998 -- Climate change policy experts from China, Japan, and the United States recently met to discuss innovative and cost-effective options for reducing global levels of greenhouse gas emissions. Their meeting was the culmination of an international research project in which researchers analyzed opportunities and obstacles for transferring and diffusing lower-emissions technology in developing countries, and evaluated the potential for the increased use of economic incentives for industrialized countries to invest in these production processes. 

Specifically, their emphasis was on understanding the means for technology transfer and diffusion generally, and the market mechanisms and government policies that stimulate or impede the transfer and diffusion of climate-friendlier technologies. The collaborative analysis emphasized the identification of practical options that address incentives, policies, and institutional requirements in the context of carbon dioxide limitations and the energy sector.

The project brought together diverse national, institutional and disciplinary perspectives from the Beijing Environment and Development Institute* (BEDI) in China, the Central Research Institute for the Electric Power Industry (CRIEPI) in Japan, and Resources for the Future (RFF) in the U.S. Its major strength, project coordinator Michael Toman says, is the participation of experts from China who worked in concert with American and Japanese researchers to promote a better understanding of the issues and opportunities for international cooperation from a Chinese perspective.

Researchers considered a variety of obstacles to the international transfer and diffusion of climate-friendlier technologies that can curb greenhouse gas emissions while providing economic benefits to suppliers and recipients. Aside from the limited availability of funding for such new technologies, such obstacles include: energy sector pricing and investment distortions; problems in technology markets such as insecure intellectual property and inadequate institutions for spreading information; and fiscal, trade and investment policies that limit the sharing and adoption of technology.

They are also investigated how to strengthen economic incentives for the mutually-beneficial, international diffusion of technology. One such approach is joint implementation, where industrialized countries meet their obligations for greenhouse gas reductions by receiving credits for investing in emissions reductions in developing countries. Proponents argue that such an international trade in emissions credits would achieve greenhouse gas reductions in industrialized countries at much lower costs while providing foreign investment benefits to developing countries. Critics argue that joint implementation compromises the sovereignty and development interests of developing countries, and diminishes incentives for industrialized countries to develop better ways for reducing their own emissions.

The BEDI-CRIEPI-RFF collaboration addressed issues raised by both these perspectives as well as other related concerns, such as the identification of credible baselines for assessing emissions reductions and the development of feasible methods for verifying emissions reductions.

A number of reports were also issued that address options for implementation of international agreements to limit greenhouse gases. The reports from the U.S. team include:

• Some Perspectives on U.S. Energy Policy, by RFF's Joel Darmstadter. In his report, Darmstadterreviews the past 25 years of U.S. energy policy and highlights those parts of the experience from which useful lessons for improved policymaking in the years ahead can be drawn. Although its content may be familiar to most Americans, the report was written primarily to convey introductory information to Chinese scholars and government representatives as they transition from a regulated to a free-market energy sector.

• Promoting International Transfer of "Clean" Technology, by RFF' s Ron Lile and Michael Toman. In their report, Lile and Toman argue that promoting technology transfer through government mandated programs may not be the most effective way to exploit mutual interests in enhanced technology transfer. To establish their point, they examine conceptual arguments concerning market failure and the role of government in technology transfer, and review the experience with technology transfer obstacles and programs in advanced industrialized economies. They also discuss several technical issues that must be addressed in the context of international market mechanisms for technology transfer.

• Climate Impacts of Foreign Direct Investment in the Chinese Power Sector: Barriers and Opportunities, by RFF's Allen Blackman. In his report, Blackman provides background information on the Chinese power sector; discusses foreign direct investment in the power sector; presents survey data on U.S. investment in the power sector; and offers his recommendations for public policy.

• A Summary of US Views on Climate Change Policy, by RFF's Michael Toman, Michael Tebo and Matt Pitcher. In their report, researchers at RFF sketch out the major elements of positions on climate change policy issues held by key groups and individual actors in the United States.