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.



Case Study: Iron and Steel Sector

Since the 1980s and the opening up of the economy, China’s iron and steel sector has grown exponentially. Today, it is the largest in the world. In 2010, China produced over 622 Mt of steel, representing 44% of total world output. With continuous investments in infrastructure, buildings and machinery, the country’s share of global demand is expected to rise from 17% in 2005 to 26% by 2030. However, the steel sector is also a major emitter of GHGs. In 2010, China was responsible for about half of the world’s steelmaking CO2 emissions. According to IEA, this was equivalent to 911 MtCO2 in 2009.


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