When TXU, the big Texas energy company, abandoned its plans to build eight coal-fired power plants in February, Americaâ€™s environmental movement won a great victory. But China is building, on average, a new coal-fired power plant every week to fuel its growth. Until that changes, the threat posed by global warming will get worse before it gets better.
The Natural Resources Defense Council was right in the thick of the astonishing TXU dealâ€”the private equity firms that bought the company, Texas Pacific Group and KKR, asked for and obtained the support of NRDC and Environmental Defense before going forward with the dealâ€”and it is also right in the thick of efforts to slow down the coal rush in China. NRDC has an office with about a dozen people in Beijing, and its new CEO, Frances Beinecke, is just back from a conference in China that was aimed at strengthening environmental laws.
The other day, Beinecke led a delegation from NRDC to FORTUNE to talk about a variety of issuesâ€”the political debate over climate change in the U.S., the greening of American business and how consumers now have available to them environmentally-friendly choices in a range of product categories, from food (organics) to cars (hybrids) to light bulbs (CFLs) to paper (recycled). But the question of whether China will go green, and how we can affect that, if we can, struck me as the most interesting and important thing we discussed. News reports suggest that in the next year or two, China could overtake the U.S. as the largest emitter of greenhouse gases, although our per capita emissions are, of course, much higher.
Does the U.S. have any leverage over China? David Hawkins, the NRDCâ€™s climate change guru, argued that we do. (Thank goodness.) The first way we can help drive change in China is by adopted strict mandatory controls over greenhouse gases in the U.S.â€”no surprise thereâ€”which would, in effect, make it all but impossible to build conventional coal-fired plants here. That would deliver the needed impetus to technology that would capture the CO2 created by burning coal, and then sequester it in the earth.
Unlike some environmentalists, Hawkins and his colleagues at NRDC do not believe that â€œclean coalâ€ is an oxymoron. â€œOne of our key focuses,â€ Hawkins said, â€œis to rapidly deploy the CO2 carbon capture and sequestration technology.â€
Capturing CO2 from burning coal is not easyâ€”it requires first turning the coal into a gasâ€”and burying it deep in the earth for a very long time (like forever) is complex, too. Both will cost a lot of money, and raise the price of generating electricity. (Thatâ€™s why they must be combined with aggressive energy efficiency measures.) If coal capture and storage become the norm in the U.S., the globalized power plant industry is far more likely to deploy it in China, and the image-conscious Chinese are more likely to buy it.
Another point of leverage is the argument that China simply canâ€™t afford to waste energy and keep growing. Every inefficient building and gas-guzzling car in China sucks up energy and capital (for all those coal plants, or for oil drilling around the world) that could be put to better use. â€œWeâ€™re emphasizing efficiency as a growth strategy for China,â€ Hawkins said.
Thereâ€™s also the argument that, yes, curbing global warming may be costly, but doing nothing will in the long run be a whole lot more expensive. Chinese government leaders understand the threat posed by climate change to their economy, â€œThey understand that Chinese agriculture is heavily depending on water from the Tibetan plateau,â€ he said. That water comes from melting glaciers, and right now there is plenty of it, but messing with the earthâ€™s climate could mean future droughts.
Finally, thereâ€™s Wal-Mart. That is, Wal-Mart and Target and Dell and HP and every other American company that imports goods from China. â€œThe demand for U.S. goods,â€ Beinecke said, â€œis creating the pollution from innumerable factories in China.â€ Some of that air pollution makes its way to California.
Those companies have a voice in China. Might Wal-Martâ€™s pursuit of sustainability, which is it already using to green its supply chain, lead the company to incentivize better environmental performance from its suppliers in China? It’s not a far-fetched idea. After all, many American companies already set labor standards for their global suppliers. Their buying power gives them a cudgel to improve environmental standards as well.
Who knows? Those of us old enough to remember Red China might one day be talking about Green China.