VZCZCXRO1235
PP RUEHGH RUEHVC
DE RUEHCN #0264/01 3220902
ZNR UUUUU ZZH
P 180902Z NOV 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC PRIORITY 3530
INFO RUEHC/USAID WASHDC
RUEAEPA/EPA WASHINGTON DC
RUEHOO/CHINA POSTS COLLECTIVE
RUEHCN/AMCONSUL CHENGDU 4234

UNCLAS SECTION 01 OF 03 CHENGDU 000264 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM 
 
E.O. 12958: N/A 
TAGS: ECON EAID EFIN PREL PGOV PINR SENV KGHG
SUBJECT: CLIMATE CHANGE: UK EFFORTS IN SOUTHWEST CHINA TO ENCOURAGE A 
LOW-CARBON ECONOMY 
 
REF: A) CHENGDU 166; B) CHENGDU 163 
 
CHENGDU 00000264  001.2 OF 003 
 
 
¶1. (U) This message contains sensitive but unclassified 
information.   Not for distribution on the Internet. 
 
 
 
¶2. (SBU) Summary.   Chongqing leads SW China in moving towards a 
low-carbon economy, with Guizhou lagging furthest behind, a UK 
official told Consul General.  Chongqing owes its lead to the 
"internationalist" perspective of Party Secretary Bo Xilai.  Bo 
has encouraged foreign companies (e.g. Ford) to produce lower 
carbon products (e.g. green cars) to compete with those from 
China's coastal provinces.  Chongqing's "Energy Saving 
Committee" has been giving out grants primarily to larger 
state-owned enterprises, with smaller private firms largely left 
out.  The UK has several climate change projects in SW China, 
including: one to promote "Low Carbon Zones" modeled on the 
"Special Economic Zones (SEZs)" of the 1980s; a "green credit 
policy" for lending to the steel and iron sector; and a pilot 
project to encourage cities to incorporate low-carbon goals in 
their municipal planning.  Chongqing passed but Sichuan flunked 
the National Development and Reform Commission's (NDRC) recent 
report card on achievement of 2008 goals on reducing energy and 
pollution relative to GDP.  End Summary. 
 
 
 
Convincing SW China "To Take Climate Change Seriously" 
 
--------------------------------------------- -------- 
 
 
 
¶3. (SBU) The UK Consulate General in Chongqing has three 
staffers with a modest budget but a major goal: encouraging 
Chinese officialdom in southwest China "to take climate change 
seriously," UK Climate Change and Energy Consul Bryn James told 
Consul General recently.  The success of the four administrative 
regions within his consular district (Chongqing Autonomous 
Municipality, and Sichuan, Yunnan, and Guizhou Provinces) in 
reducing CO2 emissions is "varied," with Chongqing the most 
advanced, and Guizhou the least (refs A and B).  Guizhou has 50 
billion tons of easily recoverable coal, which may be why the 
mayor of Guiyang (Guizhou's capital) recently declined to talk 
about climate change.  This being said, James added, Guizhou 
officials have shown interest in carbon capture and storage. 
 
 
 
¶4. (U) [Note: The NDRC, in its report card on energy savings and 
emission reductions per unit of GDP released on October 29, gave 
Sichuan Province a failing grade for have reached less than 50 
percent of its target.  The other provinces in SW China got 
mediocre grades of between 50 - 60 percent of their target 
achieved.  These provincial goals for the last year of the 11th 
Five-Year Plan (2006-11) were pursuant to the national goal of 
reducing energy consumption relative to GDP by 20 percent over 
five years, and reducing pollution emissions relative to GDP by 
10 percent.  Details at tinyurl.com/2008-prc-energy-intensity. 
End Note.] 
 
 
 
Chongqing, Under Bo Xilai, is Leader on Low-Carbon Efforts 
 
--------------------------------------------- ------------- 
 
 
 
¶5. (SBU) Chongqing's lead in reducing carbon emissions is 
largely due to its Party Secretary, Bo Xilai, who James 
described "as an internationalist, not a traditionalist."  Bo 
Xilai has told the UK Consulate General that, even though 
Chongqing is like "a developing province within a developing 
country," it has achieved CO2 emissions well below China's 
national average.  Chongqing officials claim to be meeting the 
11th Five-Year Plan's objective to increase energy efficiency by 
20 percent.  Two ways the municipality is doing this is by 
boosting the efficiency of its existing heavy industry, and 
shifting to higher-tech, lower-polluting industries.  Chongqing 
Iron and Steel, for example, is building a new main plant, to be 
operational within six months, which will be at least 20 percent 
more energy efficient and give off less CO2 than the aging plant 
that it will replace. 
 
 
 
 
CHENGDU 00000264  002.2 OF 003 
 
 
¶6. (SBU) Bo Xilai is also encouraging foreign-invested companies 
based in Chongqing to introduce innovative, low-carbon products 
that would also give his municipality a competitive edge 
vis-`-vis China's coastal provinces, James said.  For example, 
Bo recently convened his once-per-year summit with foreign CEOs, 
including Alan Mulally of Ford, which has a huge joint venture 
in Chongqing (ref A).  Bo urged Mulally to produce green cars 
locally. 
 
 
 
¶7. (U) Parts of Bo Xilai's "Five Chongqings" initiative (ref A) 
are consistent with climate change goals: "Green Chongqing 
(reforestation, air pollution)," "Smooth Chongqing (public 
transport)," and "Livable Chongqing (building energy 
efficiency)," James noted.  In terms of building energy 
efficiency, Chongqing is one of the four autonomous 
municipalities in China (along with Beijing, Tianjin, and 
Shanghai) that were given tougher goals under the 11th Five-Year 
Plan to boost energy savings in new buildings (65 percent 
improvement, versus 50 percent for the rest of China).  Towards 
this and other energy savings goals, the Chongqing 
municipality's "Energy Saving Committee" gives out grants, 
primarily to the largest energy consumers, James explained. 
Because of this, the beneficiaries of this assistance tend to be 
state-owned enterprises (SOEs), not privately owned small and 
medium-sized enterprises (SMEs), he said. 
 
 
 
Three UK Projects: "Low Carbon Zones," "Green Credit Policy," 
and Aid to Municipalities in Low-Carbon Planning 
 
--------------------------------------------- ---------------- 
 
 
 
¶8. (U) James explained that the UK is now sponsoring 30 climate 
change projects in China, and shared the details of three with 
direct linkages to southwest China: 
 
 
 
A) Moving Chongqing toward a Low-carbon Economy (Sept 2009 - Oct 
2010; 382,000 Pounds Sterling).  The project summary states that 
"Low Carbon Zones (LCZs)," modeled on the Special Economic Zones 
established in the 1980s, could be the key to decisively 
shifting China toward a low-carbon economy.  If China 
established zones LCZs that "go beyond business-as-usual in 
promotion low carbon production and consumption, then the 
European Union would offer extra investment, aid, joint R&D, and 
other sweeteners."  The project would also work closely with 
another pilot project in Jilin, James explained, where UK and 
Chinese academics are working on a "road map" to a low carbon 
economy that is to be discussed by the NDRC in Beijing sometime 
in November.  The researchers examined three ambitious scenarios 
for Jilin, the most ambitious of which had CO2 peaking there in 
2020, in part through the use of carbon recapture. 
 
 
 
B)  "Green Credit Policy" in Sichuan's Steel and Iron Sector 
(April 2009 - March 2011; 243,000 Pounds Sterling).  The project 
will assist the China Banking Regulatory Commission (Sichuan 
Branch), the People's Bank of China (Sichuan Branch), and the 
Sichuan Provincial Environmental Protection Bureau to jointly 
issue environmental guidelines for local financial institutions 
when they lend to the steel and iron sector.  Chongqing, 
Guizhou, and Yunnan will issue similar guidelines. 
 
 
 
C) Moving to a Low-carbon Economy Under Different Economic 
Circumstances (April 2009 - September 2011; 310,000 Pounds 
Sterling).  The project seeks to have four demonstration cities, 
including one large and one small city (Guiyang and Zunyi 
respectively) in Guizhou Province in underdeveloped, western 
China, and one large and one small city (Jinan and Dongying) in 
Shangdong Province in richer, coastal China, integrate 
low-carbon action plans into their municipal development plans. 
(Note: James briefly mentioned that a town in Sichuan devastated 
by the May 2008 earthquake, Guangyuan, would be a similar pilot 
city under another UK-sponsored project whose partner was 
China's Academy of Social Sciences.) 
 
 
 
 
CHENGDU 00000264  003.2 OF 003 
 
 
¶9. (SBU) James added that, while the Sichuan "Green Credit" 
project was off to a good start, the Chongqing Low-Carbon 
Economy project had become "mired" in differences between the UK 
consulting firm hired to implement it (ERM), and the Chongqing 
Academic of Social Sciences.  In all 30 UK-funded projects, he 
explained, the PRC Government has insisted that at least 50 
percent of the aid money be given to a Chinese organization that 
must also be the project lead.  Chongqing officials in this 
project have been jealous of the high salaries paid to the UK 
consultants, whose relations with their Chinese partners have 
also been hurt by a lack of language fluency in Chinese. 
 
 
 
Ambiguity over Definition of "Low-Carbon Economy 
 
--------------------------------------------- --- 
 
 
 
¶10. (SBU) Speaking more broadly, James recalled that his SW 
Chinese interlocutors like the phrase "low-carbon economy," but 
have no clear definition of what this means.  When they do try 
to define it, it is usually in terms of an early focus on energy 
efficiency, with carbon emissions peaking at some point in the 
future.  The UK Consulate in Chongqing recently sponsored a 
Chinese delegation to the UK, which came back supporting 
inclusion of language in the 12th Five-Year Plan promoting a 
low-carbon economy.  (James also recalled that Chinese President 
Hu Jintao recently discussed notable cuts in China's carbon 
intensity by 2020 as part of the PRC's position at the 
forthcoming December climate change talks in Copenhagen.  James 
also stressed that provinces need a measuring system to assess 
carbon intensity that is "MRV" (measurable, reportable, and 
verifiable) - "something that Beijing has opposed so far in 
international negotiations.") 
BOUGHNER