Climate change is China’s next export

By Andrew Beatty

Date: 26/05/05

Like most of North-East China, business in Taiyuan is booming. Around 400 kilometres south-west of Beijing this provincial capital of three million people is profiting from the country's remarkable industrial growth.

But as the largest producer of coal in China and home to heavy metallurgy industries, it is also one of the most polluted cities in the world.

It is certainly not the low-carbon economy which European governments and companies say they are committed to. According to the International Energy Agency, 75% of the country's energy production is derived from coal.

This is not just a Chinese problem. As the second largest energy consumer in the world, China's use of carbon-based fuels could offset any cuts made in Europe through emissions trading or other schemes.

In Europe the rationale for prodding the world away from its current dependence on carbon fuels is well known.

Aside from the environmental impact of burning fossil fuels, the war in Iraq, instability in most of the world's major oil producers, problems with oil pricing and concerns over the veracity of reserve estimates have only served to lessen carbon's appeal.

But in China the need for energy has not yet outstripped the desire to improve the environment and security issues are not yet so severe.

Increasingly European businesses are helping to transform this thinking, becoming important players in multinational climate change.

Many European companies do a great deal of their business or manufacturing outside the continent and some multinationals are proving themselves to be drivers of change in places like China.

According to Paul Dickinson, co-ordinator of the UK-based Carbon Disclosure Project, which encourages the top 500 stock exchange listed companies to record their emissions, businesses are now moving towards a low-carbon future worldwide.

"Companies are starting to see themselves as part of the solution or part of the problem," he says.

Dickinson points out that banking giant HSBC, which was founded in Hong Kong and Shanghai over 130 years ago, is now aiming to be 'carbon neutral' worldwide.

Many large companies such as furniture manufacturer Ikea, which operates two stores in China and has plans for dozens more, expect suppliers abroad to sign up to improve their environmental performance.

"Step-by-step they have to introduce improvements," says Thomas Bergmark, Ikea's social and environmental manager, "we try and help them".

"It is very much about putting requirements on partners," he says.

According to Bergmark, Ikea audits suppliers in a range of social and environmental areas, drawing up action plans to improve performance.

But despite the transfer of best practice China is expected to account for almost 20% of world carbon emissions by 2020.

Demographic change and the cost of energy efficient technologies mean that reducing carbon emissions in India, China, South Africa or Brazil will continue to be a challenge for the world.