Response to Climate Change

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Development

The Journal of Environment &

DOI: 10.1177/1070496508326123

2008; 17; 379 The Journal of Environment Development

Ye Qi, Li Ma, Huanbo Zhang and Huimin Li

Response to Climate Change

Translating a Global Issue Into Local Priority: China's Local Government

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379 Authors’ Note:The authors wish to thank Dr. Miranda Schreurs, professor of environmental policy at the Free University of Berlin, for proposing the idea for this research, providing critical comments, and edito- rial revisions. They also wish to thank Raymond Clemencon and the other anonymous reviewers for their comments. The research for this article was funded by the Ministry of Science and Technology of China under its Science and Technology Support Program. Please address correspondence to Ye Qi, School of Public Policy and Management, Tsinghua University, Beijing, 100084, China; e-mail: qi@tsinghua.edu.cn

Volume 17 Number 4 December 2008 379-400

Translating a Global Issue Into Local Priority

China’s Local Government Response to Climate Change

Ye Qi Li Ma

Huanbo Zhang Tsinghua University Huimin Li

Beijing Normal University

This article provides an analysis of a puzzling development among local governments in China: Climate change largely ignored as a problem in the past has suddenly become a high priority of provincial and prefectural governments. It is observed that the mandate from the central government, internalized needs, and the international market are three primary factors that transformed local governments’ responses to climate change. Other factors, including the local impacts of climate change, capacity and awareness, and leadership and vision also contributed to the changes. Climate change can and should be further internalized as a priority issue for local governments. Clean development mechanism and other market mechanisms should also continue to be key elements of post-Kyoto proposals. The central government will remain the most important player directing national, regional, and local responses to climate change, but its role needs to be complemented with local initiatives.

Keywords: climate change; local government in China; CDM; national response

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limate change has not been a priority for local governments in China, at least until recently. Climate change has been treated primarily as an international issue to be dealt with by the central government and as an issue well beyond the jurisdic- tion and responsibility of local governments. Moreover, climate change mitigation efforts were believed to work against local interests because reducing greenhouse gas emissions and energy consumption could slow economic growth (Pan, 2003). Until

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mid-2007 no local government, right from the provincial to the most local level, expressed serious interest in working on climate change, even though the issue is a major threat for the global human community. Intriguingly, this situation began to change in mid-2007. Since this time, most provinces have set up special task forces to lead efforts on climate change, and some provinces have even made specific plans for research, mitigation, and adaptation measures. These provinces have also asked their prefectural governments to organize offices and special taskforces to design and implement plans for how they will address climate change. Investment, staffing, capacity building as well as international cooperation are all parts of current local efforts. What are the factors and mechanisms that have resulted in this sharp change?

What are the implications of this change for Chinese and global greenhouse gas emission trends and for environmental governance in China?

This analysis starts with a discussion of the interactions between the central and local governments in China. Despite its size, China is a unitary and not a federal system. The system is organized along a typical hierarchy. In China’s unitary governmental system, local governments are supposed to implement decisions made by the central government. Thus, any change in local government priorities is usually a result of requirements instituted or incentives offered by the central government. The extent to which local governments respond to the central government depends on their motivations, capacity, and constraints. Even though it is risky to generalize about the diverse interests and motivations of local governments at all levels and across different regions, top political leaders tend to be concerned about their career advance- ment, and this means that they do what they can to promote the local economy.

Economic growth and political promotion are closely related. Economic growth typ- ically helps the political promotion of local government officials. It is an important measure in their performance evaluation by higher levels of government. Climate change was not a factor in the performance evaluation system, and mitigation efforts were believed to slow economic growth. It is thus no wonder that local governments had no interest in taking serious actions to address rising greenhouse gas emissions.

The following sections examine local government climate change actions and the motivations behind local governments’ sudden about-face on climate change mitigation. In China, below the central government are four levels of governments: the provincial, prefectural, county, and township. The provincial level governments include 23 provinces, 5 autonomous regions, 4 provincial level municipalities, and 2 special administrative regions. We focus on the provincial and prefectural levels of local governments in this analysis. The following sections also consider the changes in incentives introduced by the central government.

Central and Local Government Actions on Climate Change

Since mid-2007, initiatives and actions on climate change have become a notice- able feature of provincial and prefectural governments. Shortly after the creation of

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the National Leading Group on Climate Change (NLGCC) by the central government, provincial governments created their counterparts and asked prefectural governments to create their own copies. In addition, many provinces developed plans for climate change mitigation and adaptation. A few provinces have organized and funded research programs on climate change.

Establishment of the NLGCC

The State Council represents the central government in China. It leads and over- sees about 30 central government agencies known as ministries, commissions, administrations, and offices. To highlight the importance of a particular issue, and more important, to coordinate policies and actions on the issue, the State Council occasionally creates an ad hoc group consisting of related agencies. The leading groups are often headed by a vice premier or by the premier when the issue is a top national priority. In June 2007, the State Council announced the creation of the NLGCC; it is led by the premier. Twenty-seven agencies are in the group, repre- senting almost all agencies of the central government and highlighting the significance of climate change for the country. The role of the leading group is to make major decisions and to coordinate national actions on climate change.¹The NLGCC further demonstrates the change in the central government’s stance on climate change and the priority now being placed on climate change.

The predecessor of the leading group was the National Coordination Group on Climate Change Strategy (NCGCCS). It was led by a vice premier. The NCGCCS was organized by the State Council in October 2003 and grew out of the previous National Coordination Group on Climate Change (NCGCC). The NCGCC was first set up within the China Meteorological Administration but was relocated to the State Development and Planning Commission (the former body of the National Development and Reform Commission² [NDRC] considered the most powerful agency in the central government) in 1998.³This move itself was an early symbol that climate change was no longer being treated simply as a science issue, but rather, as an issue of sustainable development. There were 13 members in NCGCCS, including the NDRC; the Ministries of Science and Technology, Foreign Affairs, Finance, Commerce, Agriculture, Construction, Communications, and Water Resources; the State Forestry Bureau, the Chinese Academy of Sciences; the State Oceanic Administration; and the Civil Aviation Administration of China. The NCGCCS was set up to coordinate climate change actions among these various ministries. It is responsible for deliberating on major climate-related issues, interagency coordination of climate change policy and activities, organizing negotiations, and making decisions on general interagency issues relating to climate change. The NCGCCS was also responsible for leading and coordinating implementation of the United Nations Framework Convention on Climate Change, which China signed in

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1992. Despite the fact that China was not required to make a numerical greenhouse gas reduction commitment, NCGCCS was forthcoming in developing a voluntary report on greenhouse gas emissions and a national assessment report. In June 2007, the NCGCCS released China’s national plan on climate change response.

As a coordination group, NCGCCS’s policy making authority was limited. The newly established NLGCCC has considerably strengthened the central government’s decision-making capacity on climate change. It is worth noting that the composition of the NLGCC is basically the same as the National Leading Group on Energy Saving and Pollution Reduction. Both groups are led by the premier and comprise the same agencies. They are one group of agencies and officials but work under two different titles. The two leading groups do, however, have different goals and objectives and set up their secretariats in different agencies. This shows the close link made by the central government between climate change and energy saving. The top leadership of China treats these issues as integrated in their policies and actions.

Provincial Leading Groups on Climate Change

The manner in which the two leading groups were created and named at the central level generated mixed reactions from provincial governments. Between June 2007 and March 2008, eight provinces and autonomous regions created leading groups on climate change, following the model of the central government. These include Fujian, Gansu, Hainan, Hubei, Ningxia, Qinghai, Sichuan, and Zhejiang.

Other provinces (including provincial level municipalities and autonomous regions) named their leading groups as Energy Saving (the case in Shaanxi and Xinjiang Provinces) or Energy Saving and Pollution Reduction, the case for the remaining provinces (see Table 1).

Among the eight provinces that have established provincial leading groups on climate change, seven combined them with energy saving and pollution reduction.

Qinghai is an exception as it did not make this association; it is the only province that did not set up a leading group on energy saving and pollution reduction. This may be because Qinghai Province, part of the Qinghai–Tibetan plateau, is considered one of the most vulnerable areas within China to global warming. Those provinces that did not include the phrase “climate change” in the names of their leading groups nevertheless clearly stated that climate change is included in their scope of responsibility.

With few exceptions, provincial leading groups were created after the creation of the National Leading Group in June 2007. Hainan Province, for example, formed a provincial leading group on climate change, energy saving, and pollution reduction within days of the National Leading Group.⁴The group is led by the governor with assistance from the vice governor and heads of agencies in the provincial government.

The group developed the Hainan Provincial Work Plan on Energy Saving and Pollution Reduction. The provincial government distributed the work plan to all agencies and

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lower level governments. In the cover letter (known as notice) that accompanied the distribution of the work plan, it was made clear that the mission of the leading group was to organize implementation of the national strategies and policy on climate change; to design provinces’ actions on climate change, energy saving, and pollution reduction; to review plans on international collaboration and strategies on negotiation;

and finally to coordinate key provincial actions on climate change, energy saving, and pollution reduction. The cover letter requires that prefectural and county governments establish their own leading groups with similar functions. This way of setting up the provincial and prefectural leading groups is typical to all provinces. Because the secretariat of the national leading group is set up in the National Development and Reform Commission, the provincial groups are in the Provincial Development and Reform Commission. City and county governments follow the same model.

At the request of the provincial government, prefectures began to organize their leading groups on climate change. For example, Xiamen City, a major city of Fujian Province along the Taiwan Strait, organized its leading and coordination group on

Table 1

Energy Saving and Pollution Reduction Leading Group

Phase Province Date Established

Leading group on energy saving Xinjiang August 18, 2006

Shaanxi September 10, 2006

Leading group on energy saving, Fujian July 23, 2007

pollution reduction, and Gansu June 23, 2007

climate change Hainan July 23, 2007

Hubei September 11, 2007

Ningxia March 21, 2008

Qinghai September 4, 2007

Sichuan June 28, 2007

Zhejiang July 1, 2007

Leading Group on energy saving and Guangdong April 27, 2007

pollution reduction Inner Mongolia May 8, 2007

Tianjin June 2, 2007

Jilin June 4, 2007

Jiangsu June 7, 2007

Gansu June 23, 2007

Shandong June 27, 2007

Beijing June 29, 2007

Shanghai July 6, 2007

Hunan July 9, 2007

Guizhou July 17, 2007

Chongqing August 14, 2007

Liaoning August 31, 2007

Guangxi September 5, 2007

Jiangxi October 24, 2007

Yunnan October 31, 2007

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climate change in January 2008.⁵ It has a secretariat in the Bureau of Economic Development (a local version of the Development and Reform Commission). Putian City in Fujian Province and Huzhou City in Zhejiang Province, both county level cities, established their leading groups on climate change, energy saving, and pollution reduction at the end of 2007.

Within just a few months’ time, there were dramatic institutional developments on climate change from the central down to the provincial, prefectural, and county levels. This is important because administrative measures are usually the most effective governance mechanisms in China. The formation of such governmental institutions is a critical step signaling that prominence is being given to an issue.

Provincial Plans for Climate Change Response

The central government issued China’s national plan on climate change response on June 4, 2007. The plan was a product of the earlier NCGCCS. Shortly after the release, provincial plans were developed and released. In November 2007, Xinjiang published its climate change strategy and plan (Implementation Plan, 2007). This autonomous region with a territory one sixth the size of the entire country, suffers greatly from climate change. Already covered by desert, it is experiencing the melting of its glaciers, the major source of freshwater for the region. The Xianjing plan focuses on energy production and consumption. Although conventional fossil fuel continues to dominate the autonomous region’s energy supply, the government will promote renewable energy and energy saving. According to the plan, which has goals for 2010 relative to 2005, energy intensity measured by energy consumption per unit of GDP will decrease by 20%. This is the same as the national target set by the central government and will have the effect of reducing carbon emissions. Xinjiang will increase its hydropower and wind power generation to reach 3.5% of its total energy production and 5% of its consumption. As a major producer of coal, Xinjiang will make efforts related to power generation, the coal-based chemical industry, and clean coal technology. The region, which suffers from desertification, plans to increase its forest cover to 3.2% of its total area and increase water use efficiency from 42% to 48%. Government policy will provide incentives for energy saving by purchase and use of mass transportation as well as hybrid and lower emission vehicles.

Hebei Province is a major steel producer in China. As a result, it is a major emit- ter of carbon dioxide (CO₂). The provincial government passed its implementation plan for climate change response in January 2008. By 2010, it proposes to reduce energy intensity by 11% relative to 2005 levels, leading to a reduction of 0.128 Giga tons of CO₂, keep NO₂emissions stable, and increase forest cover to 26%. Fujian, Beijing, Liaoning, Shandong, and Jiangxi also have developed climate change goals and targets and issued policies and regulations.

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Local Measures and Actions

Performance Evaluation

To achieve carbon emission reduction and energy saving goals and measures, provincial governments developed performance evaluation systems and linked performance evaluation to the promotion of local government officials and even leaders of state-owned enterprises (SOEs). A key target is a nationwide reduction of 20% of energy intensity from 2005 to 2010.⁶If the target is achieved, China will reduce its CO₂emissions by 1.2 Giga tons from the baseline, according to an estimate by the U.S.-based Energy Foundation. To reach the target, quotas have been established for all provinces and major SOEs. Provincial governments have basically done the same thing, assigning quotas to each of their prefectural level governments and SOEs. Prefectures also have given quotas to county level governments, a typical way that a hierarchy functions within a unitary system. Lower-level governments are evaluated based on their progress toward reaching the target. In a sharp break with the past, the evaluation is to be used in career promotion decisions. Some provinces use a veto mechanism; for instance, failure to achieve the energy saving target will adversely affect the promotion chances of local government officials even if they do well in other parts of their job. This target (quota)-evaluation system is also used for SOEs. Shandong Provincial government signed a contract with 103 major enterprises. Failure to achieve the annual target will mean that SOEs will not be able to receive any awards or honors.⁷Anhui Province made similar contracts with 153 enterprises and required city governments to sign responsibility contracts.

Legislation

Some provinces have been quick to legislate energy saving. Shanghai, Shandong, and Anhui have issued a regulation on energy conservation. The regulations contain provisions related to industrial structure, energy consumption, and technological innovation. Enterprises and organizations will face penalties for failure to meet certain standards. Beijing also issued regulations on energy saving in the construction sector, requiring use of energy saving materials and technology in building construction, particularly for heating and lighting.⁸

Scientific Research

Although most of the scientific research on climate change is conducted for the nation as a whole, provinces have become very active in supporting and funding regional assessments of climate change impacts. In August 2007, Guangdong Province released an assessment of climate change impacts on Guangdong.⁹The writing of the assessment report basically followed the structure of the Intergovernmental Panel on Climate Change Assessment Report. It documented the changes in climate patterns in the province, provided explanations of causes for the changes, and projected future

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scenarios and impacts of climate change on ecosystems, economy, and society. The report also proposed measures for mitigation and adaptation. In November 2007, Qinghai Province released an assessment report on Plateau Climate Change Impacts on Economy and Society in Qinghai.¹⁰It also followed the Intergovernmental Panel on Climate Change Assessment Report’s structure. The Qinghai report recommended inclusion of climate change mitigation and adaptation measures in the mid- to long- term planning for the social–economic development of the province.

More research and regional assessments are under way. In May 2008, Sichuan Province, having just been hit hard by a disastrous earthquake, launched a research project on the assessment of climate change impact on agriculture and water resources in Sichuan Province.¹¹ The project is to be conducted by Sichuan Meteorological Bureau and sponsored by the Department of Science and Technology of Sichuan Province with generous funding.

Some provinces work together in collaborative research projects. In January 2007, five provinces in western China launched a joint research assessment of climate and ecosystem changes, including estimates of extreme weather for the region for the next one or two decades.¹²To enhance their capacity to conduct research, some provinces have invited international experts for study. Gansu Province invited Canadian scientists to conduct research on climate change impacts on ecosystems in the region in September 2007.

Chongqing developed an action plan for research on response to climate change based on the National Action Plan. The action plan was distributed to districts and counties, emphasizing climate change as a priority in scientific research and defining the overall goals and objectives of the research for the period of the 11th Five-Year Plan.

Government-Sponsored Programs

Many provinces and prefectures have developed special programs targeting energy saving and emissions reduction. For example, Beijing is promoting switching to energy saving light-bulbs; Rizhao City and Dezhou City in Shandong Province are encouraging use of solar heating for household and building uses. The city of Baoding, Hebei Province is working with World Wide Fund for Nature and Tsinghua University to launch an initiative on low-carbon city development. The city government developed a work plan for promoting the renewable energy industry and for renewable energy use in urban infrastructure and households. The city is now working with Tsinghua University to rework their urban development plan to achieve goals and objectives for a low-carbon city. The mayor realizes the need to develop institutions and policy for low-carbon city development and hopes that his pioneering efforts will set a role model for low-carbon city development in the country. Ministry of Housing and Urban and Rural Construction (known as Ministry of Construction before March 2008) issued a regulation on building standards, requiring a 50% cut in energy use for construction and operation. The city of Chongqing has developed its implementation plan and tightened its monitoring and enforcement.

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Local Government Response to Clean Development Mechanism (CDM)-Induced Market

The CDM of the Kyoto Protocol provides strong incentives for local government involvement in climate change mitigation. As the largest supplier of CDM-based certified emission reductions (CERs), China has made a significant contribution to developed countries’ fulfillment of their Kyoto Protocol commitments (see Figure 1).

It has, in turn, received financial benefits from the projects.

China had registered 224 projects as of June 26, 2008. The total estimated annual CERs produced by these projects reached 111.68 million tons CO₂equivalent (CO₂e).

In fact, as of May 13, 2008, the NDRC had approved 1,295 CDM projects for an estimated annual emission reduction of 289.95 million tons CO₂e. Most provincial CDM

Figure 1

CDM Copartners With China and Their Estimated Annual Emission Reduction

Source: Compiled by authors based on data from Office of National Leading Group on Climate Change:

http://cdm.ccchina.gov.cn/

Note: Estimated annual emission reduction in million metric tons CO₂equivalent (CO₂e). Data updated through May 13, 2008.

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projects focus on energy-saving and efficiency improvements and hydro- and wind power development (see Table 2). European countries have bought up 72.66% of the estimated per annum CO₂e CERs in China (see Figure 1). The United Kingdom, Japan, Italy, Germany and the Netherlands are the largest CER buyers.

Table 2

CDM Types and Estimated Emission Reductions (Unit: 10⁶tons of CO2)^a

Types^b

Province T1 T2 T3 T4 T5 T6 Total

Hainan 0.13 0.05 0.08 0.26

Tianjin 0.28 0 0.28

Ningxia 0.11 0.4 0 0.78 1.29

Qinghai 0.41 1.27 1.68

Jiangxi 1.17 0.59 0.15 1.91

Shaanxi 0.58 0.82 0.86 2.25

Shanghai 3.24 0 0.07 3.31

Heilongjiang 0.96 1.28 0.36 1.07 3.67

Jilin 1.64 0.36 0.41 1.28 3.69

Xinjiang 0.1 0.93 1.73 0.96 3.72

Beijing 1.62 1.69 0 0.61 3.92

Anhui 0.3 4.12 0.03 4.45

Chongqing 0.23 2.77 2.24 5.24

Guizhou 2.09 3.56 5.65

Hebei 0.64 0.32 2.6 0.1 2.18 5.84

Hubei 4.14 2.31 0.03 6.48

Guangxi 1.97 5.1 7.06

Fujian 5.12 1.54 0.46 7.12

Guangdong 6.81 1.26 0.3 8.37

Hunan 1.43 7.59 9.03

Gansu 1.47 7.53 0.59 9.6

Henan 0.43 4 5.55 0.51 0.11 10.6

Inner Mongolia 0.78 0.81 4.19 0.14 8.41 14.34

Yunnan 0.79 0.93 12.61 0.16 14.49

Liaoning 0.36 16.5 0.07 1.46 18.4

Shanxi 0.13 2.36 18.28 0.16 0.24 21.17

Sichuan 2.92 1.19 19.51 23.63

Shandong 1.6 15.44 6.23 0 1.35 24.62

Zhejiang 0.15 27.2 5.23 0.94 0.25 33.78

Jiangsu 1.6 23.17 8.06 0.04 1.25 34.13

Total 8.71 77.81 1.73 109 70.51 21.78 290

Source: Compiled by authors based on data from Office of National Coordination Committee on Climate Change: http://cdm.ccchina.gov.cn/

a. Estimated emission reductions in million metric tons of CO₂equivalent per annum and data updated to May 13, 2008.

b. Type specification: T1=bioenergy; T2 =greenhouse gas decomposition; T3 =solar energy; T4 = energy-saving and efficiency improvement; T5 =hydro power; T6 =wind power.

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Although the national CDM office is set up in the NDRC, provinces have their own offices in provincial Development and Reform Commissions and have developed regulations and guidelines for CDM project development. As early as 2006, Shanxi Province, the largest coal producer in China, formed a leading group on CDM, led by the vice governor and with a secretariat in its Development and Reform Commission. The group was set up to lead and coordinate development of CDM projects, to review and approve CDM-related policies, regulations, and standards.

Guizhou Province set up a joint conference of 11 agencies led by the vice governor and established a Center for CDM project development.¹³This kind of high level governmental organization for CDM development is rare in the world, indicating that local governments are very serious about the CDM.

Some provinces have issued special regulation for CDM projects. In September 2007, Gansu Province issued a joint guideline on CDM project development. It was issued by the Provincial Development and Reform Commission, Department of Science and Technology, Department of Finance, and Office of Foreign Affairs.

Some other provinces incorporate CDM projects into their implementation plan for energy saving and pollution reduction. Chongqing set specific targets for CDM development.¹⁴Hunan Province also incorporated CDM into its 11th Five-Year Plan and scientific research funding priority list. By September 2007, 27 provinces had established CDM promotion centers to help with the development of CDM projects.

Hebei Provincial Center for CDM Promotion proposes to develop three to five projects successfully registered with the national authority and one or two projects approved by the CDM Executive Council.

Interest in CDM projects goes beyond provincial governments. Some prefectural and even county level governments have also exhibited enthusiasm about the development of CDM projects. Longnan City of Gansu Province formed a coordination and leading group for CDM in March 2006. Their emphasis was on hydropower- related projects. In addition, Gannan Prefecture of Gansu Province, Leshan City of Sichuan Province, Nanyang City of Henan Province, and Baoding City of Hebei Province have formed governmental organizations for CDM development. In December 2007, Baoding City Government signed a letter of intent for strategic collaboration on pollution reduction from dairy farms through CDM.

Factors Affecting Local Government Actions on Climate Change

MPC-IC: A General Behavioral Model of Local Government

In this section we introduce a conceptual model for understanding how local governments respond to various factors in their environment. Local governments oper- ate according to motivation (M), power (P) and capacity (C). They are also affected

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by various incentives (I) and constraints (C). These variables determine the way a local government behaves. We have dubbed this conceptualization of local government behavior the MPC-IC model. The diagram found in Figure 2 shows the links among the five variables.

Motivation.The motivation of a local government is essentially the collective expression of the motivation of key government officials, that is, top leaders in the government. Historically, top officials have cared about their reputation with the public, which often reflects what and how much they have done for the region they govern. Presently, economic growth is still the most important measure of such achievement. There are sadly numerous cases in China where economic growth has come at the sacrifice of the environment and social equity. This must change.

Economic development has to be balanced with social equity, stability, and environmental well-being.

Officials care about the revenue of their government. As a result, government revenue is a major motivating factor. Taxes, fees, and dividends from SOEs are the primary sources of government revenue. Therefore, cultivating and maintaining the businesses that generate taxes, fees, and dividends are in the interest of local governments. Moreover, economic growth and growth in government revenue has helped to boost the personal income of officials and others who work in the government. Finally, officials are motivated by opportunities for career promotion. Under the performance evaluation system, the chances of promotion are linked to how well a local government responds to the mandates and requirements of upper-level government(s). The mandates and requirements are listed in the measures of the performance evaluation system and are given as administrative orders from time to time, just like the call to establish leading groups on climate change. Local economic

Figure 2

The MPC-IC Model of Local Government Behavior

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development and prompt responses to calls and requirements from upper-level governments seem to be the most important of all motivating factors.

Power.This acts as a key factor in local government behavior. First, the source of power determines who the government responds to and how it responds. Despite the provision of laws that spell out selection criteria for local government officials, the process for determining and the results of official promotions are strongly influenced by upper-level governments. In practice, upper-level governments are important sources of power over local governments. In addition, in the unitary system of China, the central government, which represents the state, often delegates some of its power to provincial governments, which in turn delegate power further down, depending on the nature of the issue. Thus to some degree, every level of government may repre- sent the state and possesses a degree of state power, including the power to give mandates to the next level of government and allocate state and government resources (such as finance, land, and concessionary rights). Second, the power that a local government possesses determines what and how much it can do. Basically, most cities and all counties have no power to make legislation. They implement legislation and policy made by the central and provincial governments. Local governments, however, are delegated much power by upper-level governments and have much authority and discretion in dealing with specific issues.

Capacity.Together with power, capacity determines what and how much a local government can do. All levels of government face the challenge of lack of capacity in dealing with climate change issues. This is especially the case for local governments where awareness and technical capacity are low. Even if the government is willing to take action, its capacity is often a limiting factor.

Incentives. Local governments respond to incentives, laws, and regulations set by upper levels of government. The performance evaluation system provides a number of incentives. GDP growth rate has been used as an index for political promotion.

Financial incentives are often strong and effective means to influence local government behavior as well. China has a dual taxation system, with more than half of the taxes collected by the central government and some tax authority accorded to local governments. This has helped concentrate financial resources in the central government and limited the share available to local governments. An exception has been in relation to certain industries, for example, the construction industry, which can be assessed for local taxes and fees. This system functions as an incentive for local governments to provide preferential treatment to industry. To increase their rev- enues, local governments tend to promote construction and land auctions.

Constraints.Local governments are confined by their political, legal, administrative and social frameworks. These constraints set limits for behavior and penalties for

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noncompliance. In the relationship between the center and localities, the rules gov- erning the behavior of governments are often not explicitly defined and delineated, which makes constraints on local governments less stringent. In addition, local governments are often not affected by the opinions of the public because the account- ability structure is top-down, that is, lower levels of government are held accountable by upper levels. This contrasts sharply with governments where top officials are elected by the people and thus can be held accountable by their constituencies.

Local Response to Central Government Calls

As the highest level of local government, provinces respond to calls from the central government. Provinces receive political power and much of their financial resources from the central government. This is the most important reason why there has been a mushrooming of provincial leading groups on climate change.

Essentially, it is an administrative response. This response may have little to do with heightened awareness of climate change or the vision of provincial governments, as observed in, for examples, the states of California and the northeastern states in the United States (Lutsey & Sperling, 2008). For the same reason, prefectural governments established their leading groups on climate change in response to the calls from provincial governments. This response of lower levels of government is expected or required in a command and control system.

In fact, command and control is not limited to establishment of the leading groups only; it is also used in dividing the responsibility for energy saving and pollution reduction among local governments. Throughout the 1980s and 1990s, China showed steady advances in its energy efficiency achievements (Energy Foundation, 2007). Since the beginning of the new millennium, however, the trend has reversed due to a new wave of growth in energy-intensive, chemical engineering plants and rapid urbanization. Since 2000, both total consumption of fossil fuels and energy intensity has increased significantly (Raupach et al., 2007). Strong increases in car ownership and the associated boom in the automobile industry have boosted energy demand to a record high. The nation must ensure on the control of growth of energy use or face an energy crisis. Already, shortages of coal and oil have become appar- ent across the country, as shown clearly in energy prices and occasionally, long lines of vehicles waiting to fill their tanks. China suffers additional pressures due to the subsidies that have historically been provided to state-owned oil companies to keep domestic consumer prices of oil and gas at low levels. To address the energy supply issue, the central government made energy saving a top priority in the national development plan. Specifically, the central government set a target of a 20% cut in energy intensity as measured by energy use per unit of GDP from 2005 to 2010. As noted above, the 20% cut is converted into actual energy consumption and divided as a quota to each province and then further divided to each city and county. The hierar- chical administrative system is employed to reach the national energy saving target.

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Meanwhile, the central government also set a target for pollution reduction by reducing the annual production of chemical oxygen deficit and sulfur dioxide by 10%.

This target was also divided among the provinces, cities, and counties. To ensure the implementation of the target, the central government set up the Leading Group on Energy Saving and Pollution Reduction.

It would be an oversimplification to characterize the establishment of local leading groups on climate change as simply administrative responses. After all, most provinces named their leading groups Energy Saving and Pollution Reduction, not Climate Change. Local need is an important factor that must be considered in understanding why local governments in China are beginning to take action.

Response to Local Needs

The central government put the three issues of energy saving, pollution reduction, and climate change together when it formed the national leading groups, implying that they have been given a parallel significance. Yet there is a distinction among the three issues. Energy saving and pollution reduction are essentially domestic issues that are driven by internal concerns, whereas climate change has been treated from the very beginning as an international issue and driven mostly by external pressure. The central government defined climate change as an issue for sustainable development (Qi &

Ma, 2007). In general, the central government is more concerned about these issues than local governments. The three issues are considered and treated differently at local levels. Energy saving is the most relevant among the three to local governments because intensive energy use increases the cost for, and affects the sustainability of, economic growth—not because fossil fuel combustion affects climate. Comparatively, pollution control is less of a priority for local governments. Reducing pollution implies not only more investment in technology but also at times slowing GDP growth by forcing polluting industries to invest in pollution control technologies or shutting them down. It may also mean reduced sources of tax and government revenue. Finally, climate change per se is an issue that is of little relevance to local governments. Indeed, climate change will most likely result in many damages at global, regional, and local levels, but these damages are less likely to make significant impacts on the local economy in the relatively short period of time that government officials are in office. In addition, local governments neither feel pressure to act on climate change from the public nor do they have to deal with international pressures.

Why then should these officials and governments care about climate change?

Basically, there is little motivation for local governments to work on climate change.

Still, all provinces have pledged to work earnestly on the issue. Besides the requirements emanating from the central government that are discussed above, local governments have come to realize the link between energy saving and climate change.

They can claim credit for action on both issues even though they only take action related to energy saving; they are in essence killing two birds with one stone, or put

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more positively, they are finding win–win solutions. A quick look at the provincial and prefectural plans on climate change response clearly reveals that the proposed tasks for tackling climate change are nearly completely focused on enhancing energy efficiency and renewable energy, which are important to local economic growth and are priorities for local governments. It is this link, together with the dictates of the central government, that has helped to translate the global issue of climate change into a local priority.

Economic growth through industrialization is a primary motivation of local governments. For local governments, economic development cannot be allowed to be com- promised. Local governments show no sign of willingness to actually cut emissions to lower levels but rather simply to reduce the rate of growth in energy consumption.

The western provinces are suffering more than others from climate change.

Qinghai is experiencing particularly major changes and impacts. Xingjiang, Ningxia, and Gansu have also been confronted with changes in weather patterns. They have had warmer and wetter weather, and their glaciers are melting. This is of course critical as the glaciers are an important source of water. These provinces face immediate threats and as a result have been keener to work to address climate change than their eastern counterparts. Coastal provinces such as those in the Pearl River and Yangtze River Deltas face the risk of inundation from sea level rise and have a vested interest in taking immediate and drastic actions (Chang, Li, & Li, 2005). Nevertheless, a lack of awareness of the urgency of the problem by local government officials is some- times a factor behind slow governmental reactions.

Response to Market Incentives

The third factor explaining local government behavior on climate change is its response to market forces. Long before local governments began taking any political and administrative action on climate change, most provincial governments became involved in CDM projects and formed similar leading or coordination groups. This is a bit peculiar because the CDM is a market mechanism that allows trading of CERs between a developing country as a supplier and a developed country as a buyer. Actual buyers and sellers are usually businesses, not governments.

Interestingly, China’s provincial governments and some prefectural governments were immensely interested in the development of CDM projects, with top government officials serving as heads of leading groups on CDM project development. This contrasts sharply with most other countries, where CDM project development is essentially left to the private sector, and the government is restricted to a role as an authority for project review and approval.

The keen interest in CDM project development indicates the entrepreneurial nature of local governments in China as discussed by Oi (1995), Walder (1995), and other scholars. In conceptualization, local governments in China act very much like profit-seeking businesses and CDM provides a market for profit. Shanxi Province as

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the largest producer of coal and power in China has great potential for developing clean coal and CO₂ capture and storage CDM projects (Clean Development Mechanism, 2007). Therefore, the CDM is an important market opportunity for this coal producing province. More important, CDM is expected to bring technology to the province. Gansu Province, through which the Yellow River flows, possesses large hydropower potential, a qualified activity under the CDM. This province is thus very interested in CDM as well.

It may be fair to say that financial gain and technology transfer are two primary motivations of local governments for developing CDM projects. The CDM projects have the advantage that they can bring in financial gain with little cost. By the end of 2006, China had become the largest seller of CERs through the CDM (see Table 2 and Figure 1).¹⁵This achievement is certainly attributable to the serious efforts by local governments.

In sum, local governments’ responses to the demands and requirements made by the central government, local needs, and the international and domestic markets are the three primary factors that can help explain local governmental behaviors on climate change. Beyond this, capacity, awareness, vision and leadership are also important contributing factors, but not as critical as the first set of three factors.

Capacity and Awareness

In general, capacity for climate change research, mitigation, and adaptation is low at provincial and prefectural levels. Technical capacity is concentrated at the central level, particularly, in Beijing. According to a survey, even in Beijing most people of institutions, guild, and some enterprise related to CDM just know the concept of CDM and have no in-depth understanding of the market and technical issues on CDM (Yang, 2008). Leadership capacity is also critical for the provincial and prefectural leading groups on climate change.

Interviews show that most officials and their assistants were not familiar with the issue. Thus, capacity building is very much in need. International assistance has been important to the establishment of provincial offices on climate change.

In the case of Gansu Province, the Research Institute on Cold and Arid Regions of the Chinese Academy of Sciences at Lanzhou, the capital of the province is a major research institution on climate change. In Guangdong Province, the Southern China Branch of the Chinese Academy of Science is located in the capital city of Guangzhou, which helped the province to conduct regional assessments of climate change for the Pearl River Delta.

Vision and Leadership

Vision and leadership are also important. Some visionary local governments are seizing the opportunity for leadership. They are trying to distinguish themselves for

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being innovative by taking proactive actions on an important issue. A common stereotype is that the Chinese government and political system is rigid and does not encourage innovation by political leaders. In fact, some of the most important innovations indeed started in the localities and were later accepted and promoted by the central government. For example, agricultural reform started with the experimental Household Responsibility System of the late 1970s in villages in Anhui and Sichuan.

Such a system was soon recognized, debated, and eventually accepted and promoted throughout the country. A local innovation led to national change. In contrast to this spontaneous innovation, the special economic zones of Shenzhen and Pudong were purposely set aside for local experiments and innovation. The policies were then evaluated before spreading it nationwide.

The endeavor of Baoding, Hebei Province to establish a low-carbon city is such a case. The mayor and his colleagues recognized that decarbonization of the world economy provides opportunities for the development of low-carbon industries. They decided to make manufacturing of renewable energy equipment a top priority of their industrial development. The prefectural government provides incentives for manufacturing solar power panels and wind power turbines. It promotes use of solar heating by households and requires city street lights and traffic lights to be powered by solar panels. In this way, they hope to transform production and consumption to a low-carbon system.¹⁶The vision and leadership of the mayor have been critical to this transition.

Vision and leadership for innovation often create political opportunities as well.

For example, a few years ago, the prefectural government of Guiyang, the capital of Guizhou Province, sensed the significance of the concept material recycling in industrial production and started to develop a so-called circular economy.¹⁷Guiyang quickly became a role model for the rest of the country. When the central government finally decided to promote the circular economy idea nationally, the Guiyang government officials were promoted. Whether the officials of Baoding, a model of low-carbon city development, will have similar political opportunities in the future is not clear, but the officials surely understand that innovations and demonstration of this kind are encouraged under the political and governmental system of China.

Implications for Central–Local Governance in China

In establishing leading groups on (or related to) climate change, provincial governments essentially followed the instructions coming down from the central government and worked toward its expectations. However, this does not mean that provincial governments do not have the power to take initiatives on their own.

Rather, local governments have lacked motivation to act on their own as they have had no clear indications from the central government that taking action will bring any benefits to their government or to individual government officials. Provincial governments have responded to the call from the central government because they

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have come to realize that by addressing the energy efficiency issue, climate–change related responsibilities (required from above) can be fulfilled without additional efforts beyond the energy efficiency saving steps they have an economic incentive to pursue. In contrast, in the case of the CDM, some provincial governments have taken their initiatives on their own and moved forward without instructions from the central government.

The responses of prefectural governments resemble those of provincial governments, the main difference being that they tend to focus more on developing specific measures. Industrial development, housing and construction, and urban infrastructure are all urban matters. Developing and implementing policies and actions to respond to climate change can make a big difference for a city and thus for the performance evaluation of the top leaders of a prefectural government. This was seen in the case of the low-carbon city development of Baoding. Comparatively, prefectural government may have greater motivation to initiate new programs and measures for climate change mitigation and adaptation. Furthermore, the bottom-up approach that is occurring in the United States where various states and city governments are taking the lead is not seen in China.

There is reason to believe that in the future, local officials will have a greater motivation to act and that they will initiate more projects and programs. Before major changes can be expected, however, climate change countermeasures need to be better aligned with local needs. In addition, local capacity must be enhanced quickly. The central government must realize that it is in the national interest to take proactive actions for climate change mitigation and adaptation and also that provincial and prefectural governments’ cooperation and initiatives are essential for suc- cess. After all, climate change impacts will be felt by localities, and mitigation and adaptation actions will have to come from localities as well. Better the central–local interaction, more the local responses, and greater local capacity are critical for effective policy making and implementation.

Climate change has been treated by the government as a matter of sustainable development, especially as being tied to energy saving. However, it is important to realize that climate change countermeasures must go beyond simply addressing energy consumption. In the future, climate change must also be understood as a more complex matter addressing many facets of China’s rapidly transitioning economy and society.

Discussion and Conclusion

Local government responses to climate change took a sharp turn in 2007. They went from inaction to the establishment of provincial and prefectural leading groups on climate change and leading groups with a clearly stated responsibility for climate change response. In most provinces, this radical change was neither a direct response

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to the threat of climate change nor the result of a growing awareness of climate change so much as it was a response to the central government’s expectation for these institutions to take action. Beyond this, however, local governments quickly came to realize that climate change mitigation is closely tied to energy saving, a highly relevant and important issue to local economic development. Because of the collateral effect, local governments can claim credit for tackling climate change, even though it is an issue primarily driven by the central government. Although local governments show little direct concern about climate change, they are enthusiastic about the development of CDM projects. They believe these will bring financial benefits. Central government mandate, internalized needs, and the international market are the three primary factors that transformed local governmental responses to climate change. Other factors, including actual climate change impacts, capacity and awareness, leadership and vision played some role as well but only as secondary factors in most local government cases.

Some policy implications may be identified from these conclusions. First, due to the intrinsic link to energy use, climate change can and should be further internalized as a priority issue for local governments. Beyond energy conservation, additional meaningful actions are unlikely until this global issue is internalized as a local issue. Second, because local governments are responsive to market signals, the CDM or other types of market mechanisms should play a central role in a post-2012 international framework. Finally, the special structure of the Chinese government as a unitary system with a strong hierarchy places the central government at the pinnacle of authority. Furthermore, if climate change is to be addressed effectively and in the near future, then more attention needs to be paid to local and regional experiments and demonstration projects and policies.

Notes

1. For detailed information on the National Leading Group on Climate Change, see http://news.people .com.cn/GB/71648/71653/5880981.html

2. The National Development and Reform Commission (NDRC) is a macroeconomic management agency under the State Council, which studies and formulates policies for economic and social development, maintains a balance of economic aggregates and guides the overall economic system restructuring.

3. For more details see the China Climate Change Info-Net (http://www.ccchina.gov.cn/cn/).

4. For detailed information on Hainan provincial leading group on climate change, energy saving, and pollution reduction, see http://www.hainan.gov.cn/data/news/2007/08/37040/

5. See details on the official Web page of Fujian Province (http://www.fujian.gov.cn/zwgk/zxwj/sqswj/

xm/200803/t20080305_59329.htm).

6. China’s 11th Five-Year Plan has the goal of a 20% reduction in GDP energy intensity. Each Five- Year Plan for National Economic and Social Development (five-year plan), mainly aims to determine key national construction projects, manage the distribution of productive forces and individual sector’s con- tributions to the national economy, map the direction of future development, and set targets. From 1949 to 1952, the economy was in a recovery period. In 1953, the central government implemented its 1st Five- Year Plan. Except for during the period of economic adjustment between 1963 and 1965, a total of 10

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five-year plans were made and implemented. The five-year plan for 2006-2010 is called the 11th Five- Year Development Guidelines. See http://www.china.org.cn/english/features/guideline/156529.htm

7. See Shandong Province’s official Web site, http://www.sdpc.gov.cn/hjbh/hjjsjyxsh/>t20070108_

109347.htm

8. Early in 2001, Beijing promulgated Beijing Building Energy Conservation Regulations. See http://bj.house.sina.com.cn/scan/2006-03-17/1127120769.html

9. For more information on the report of Assessment of Climate Change Impact on Guangdong, see http://www.gd.gov.cn/ govpub/gdyw/200708/t20070829_19335.htm

10. For more information on the assessment report on Plateau Climate Change Impacts on Economy and Society in Qinghai, see http://www.forestry.gov.cn/subpage/content.asp?lm_Tname=n_lyth&lmdm= 2000&id=588

11. See Sichuan Province’s official Web site, http://www.sc.gov.cn/zwgk/zwdt/bmdt/200805/t20080505_

275630.shtml

12. See details at http://news.xinhuanet.com/environment/2007-02/01/content_5684598.htm 13. See details at http://www.gzzb.gov.cn/zc/ShowArticle.asp?ArticleID=4366

14. Chongqing plans to develop 40 Clean Development Mechanism (CDM) projects by 2012, producing 15 million tons of certified emission reductions (CERs) with a revenue of US$0.15 billion.

15. For information on the CDM, go to http://cdm.unfccc.int/Statistics/index.html. As of July 31, 2008, more than half of global CERs were from China.

16. In January 2008, Shanghai and Baoding became low-carbon pilot cities. Baoding received this recognition due to her earlier efforts at promoting renewable energy and manufacturing of energy efficient products. See WWF China, www.wwfchina.org.

17. See Xinhua News, http://news.xinhuanet.com/mrdx/2005-03/11/content_2682449.htm

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Ye Qi is professor of environmental policy at Tsinghua University, School of Public Policy and Management. He received his PhD in environmental science in 1994 from State University of New York College of Environmental Science and Forestry and Syracuse University. His research areas include climate change policy, global and regional carbon cycling, and policy and strategic studies for sustainable development.

Li Ma is a PhD candidate at Tsinghua University, School of Public Policy and Management. Her research interests are governance and institutional economics.

Huanbo Zhang is a postdoctoral fellow of climate policy at Tsinghua University, School of Public Policy and Management. He obtained a doctoral degree in management science and engineering in Chinese Academy of Science. His major fields of interests are climate policy and environment management.

Huimin Li is a PhD candidate at Beijing Normal University, School of Environment. His research inter- ests are environment economics and management.