Can China make a great green leap forward?

The Chinese once rode to work on bicycles. Millions of pedalling commuters in Chinese cities would, decades ago, crowd out ancient lorries and limousines carrying Communist Party officials. The choice of two wheels wasn’t a fashion for Lycra-clad ethically green mobility. It was poverty. Given the choice, today’s Chinese commuters would rather burn petrol while seated in air-conditioned cars than inhale the foul fumes of China’s cities, while burning body fat.

The Chinese need to get back on their bikes. Not back-pedalling to a bleak past of rural poverty and backyard steel mills but a great leap forward. It must leapfrog from a neo-Victorian world of metal-bashing heavy industry to a low-intensity, low-carbon world of electric vehicles, wind turbines, light industry, organic farming and bicycles.

That is what many in the rich world would like. At the UN in New York, Hu Jintao, the Chinese President, yesterday made a gesture that might begin to bridge the gap between our carbon-neutral fantasy and the real world of energy choices. He set out targets to reduce China’s energy intensity by pledging to “cut carbon emissions per unit of GDP by a notable margin by 2020”.

The first point to make is that this is not a pledge to cut emissions. If China’s economy is expanding at a rate of 7-8 per cent per annum, China’s carbon dioxide emissions will increase because the country is powered by coal: it must burn more tonnes as it moves forward. China’s leaders have made clear that their primary goal is to lift people out of poverty. Up until yesterday, the best China had offered the UN climate talks was a vague promise that CO2 emissions will plateau before 2050.

Last year China became the world’s biggest emitter of CO2 and in response to finger-pointing by Western politicians, China’s leaders complained of unfairness. While every OECD citizen emits 11 tonnes of CO2 per year, each Chinese emits only 4 tonnes.

But President Hu is now promising to reduce energy intensity. That matters hugely because it is about efficiency. Simply put: it is about how much fuel you need to burn to make another dollar. In this respect, China is a squanderer. For every extra unit of GDP, China expends almost six times as much energy as Europe.

What President Hu offers is not a cut but a slowdown: the rate at which Chinese emissions increases will diminish. If India can be persuaded to make a similar commitment, the world might in aggregate reduce CO2 emissions if rich countries at the same time make savage cuts.

What the Chinese President promises is achievable; it is no more than the speeding up of a natural cycle. As nations emerge from the poverty of subsistence farming, they build heavy industry. Building big things consumes large amounts of power and energy intensity rises.

Later, the focus shifts to light industry, making consumer goods and, finally, to developing services, from hairdressing to web design. These later transitions lighten the energy load; energy intensity in the rich West is still declining and the ratio of barrels of oil for dollars earned could easily fall farther if the US made the relatively modest efficiency gains that Europe has achieved — more fuel-efficient cars, homes and public transport.

China’s energy intensity is already in decline. In the first half of 2009 China used 3.35 per cent less energy to generate each GDP dollar than in the previous year. Moreover, efficiency is an easy sell in Beijing where the communist mandarins obsess about energy security.

But China must make two big commitments if we are to build a virtuous circle of declining energy intensity in Asia and falling carbon emissions in Europe and North America. First, it must fully embrace market forces and let the true cost of energy hit Chinese consumers in their wallets. Energy demand is price elastic — it shrinks when the cost of fuel rockets upwards. The evidence is in oil consumption figures. As the price of oil flew above $140 per barrel last year, global oil consumption fell by 0.6 per cent but it was the rich countries that pulled it down. In market economies, where fuel is taxed, oil consumption has been falling for three years. In non-OECD countries, including China, where the price of fuel is regulated and subsidised, consumption continued to rise.

The second commitment is to clean up the environment, and they should start with coal. Without targeting this noxious Chinese industry that kills hundreds of thousands every year, not just in unsafe mines but in respiratory disease, we will never make it. Coal supplies China with 70 per cent of its energy needs and it will carry on — there is no realistic escape from coal.

But Beijing’s commissars have the power to shut down old coal generators and replace them with more efficient plant that doesn’t choke cities and turn rain into acid. Even without the huge expense of carbon-capture technology, China can curb the growth in carbon emissions and make life better.

China cannot leapfrog to a hi-tech, low-carbon bicycling lifestyle but it can accelerate the transition and make life more pleasant for Chinese people. It might help to save the planet, too.

Carl Mortished, world business editor.