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China's State-Owned Enterprises as Climate Policy Actors

The Power and Steel Sectors

image of China's State-Owned Enterprises as Climate Policy Actors

A significant share of the greenhouse gas emitting activities of China is operated by state owned enterprises (SOEs). This report, written by Fridtjof Nansen Institute for the Nordic Council of Ministers, discusses the role of SOEs on the electricity and steel sectors, for instance, in upgrading technologies, centralizing operations and developing alternative energy sources. Informal networks, guanxi and nomenklatura, and financial ties provide the state control over SOEs. This makes SOEs a preferable alternative to private companies. As policies limiting emission growth have been economically attractive to SOEs so far, they have shown little opposition but this may change should costly measures be introduced in the future. While China’s position in climate negotiations is determined by the political leadership, the SOEs deserve attention due to their impact on China’s emission trends.

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Case Study: Electricity Sector

Since China opened and reformed its economy in the 1980s, the electricity industry has experienced rapid expansion. From 1978 to 2009, powergeneration capacity grew from 57 GW to 874 GW and output from 257 billion Twh to 3,664 billion Twh. The sector is not only the backbone of China’s economic modernization: it is also responsible for about half of the country’s CO2 emissions. The IEA has estimated that in 2008 SOEs controlled 57% of power-generation capacity, and emitted 1.4 Gt CO2e.

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