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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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China's Climate Policy

As China is a non-Annex I country under the United Nations Framework Convention on Climate Change (UNFCCC), it is not obliged to report annual GHG inventories internationally, and it is only in the process of developing a comprehensive domestic inventory system. Thus, a range of differing estimates have been developed. As illustrated in Graph 1, the trends show the same increasing direction of emissions. China’s emissions have been skyrocketing since 2000, and more than doubled (depending on the estimate) during the first decade of the 2000s. The highest figure (7.2 Gt) comes from the World Resources Institute; the IEA estimate is 0.7 Gt lower (6.5 Gt) in 2008. On a global scale, this difference represents some 2.2% of total emissions based on World Bank figures for total emissions in 2008.

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