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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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Summary

China has become the largest emitter of greenhouse gases in the world. Estimates for 2010 vary between 7.3 and 8.3 Gt CO2e, representing some 24 % of total global emissions. Given its position as a developing country and its insistence on the principle of common but differentiated responsibilities in the UN climate regime, it remains unclear what China might be willing to commit to under a future global climate agreement. Beijing has pledged cuts of 40 to 45 % in the carbon intensity of the economy during 2005–2020, and has included a corresponding target in its 12th Five-Year Plan (FYP).

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