Sustainability Policies: The EU ETS Case

Climate change is an urgent and serious matter affecting developing and developed countries.
Many organizations, like the World Bank, UN, WWF, are discussing about the related issues and about their possible solutions. But what are the European Policies in place?
The EU Emissions Trading System (EU ETS) is the European Union’s flagship policy launched in 2005 and aimed to address the climate change problem.

EU ETS has the objective to reduce CO2 and other industrial greenhouse gas emissions (GHG) in a cost-effective way and at the lowest cost. This international trading system covers more than 11000 power stations, airlines and “heavy energy-using” manufacturing industries in the 31 countries. ETS is today the biggest emission trading market of the world, covering almost 45% of the total EU emissions.

The emission-saving activities (CDM & JI projects) generate credits (offsets) that can be invested in low carbon technologies, sustainable development and environmental friendly projects in the developing countries.

How does it work?

The EU ETS is based on the “cap and trade” system.  There is a limit (cap) of emissions that companies and power plants need to respect every year in order to avoid high fines. In addition EU ETS has put a price on carbon and a financial value to the CO2 tons of emissions saved. Companies can also buy or get credits from the CDM projects around the world and decide if trade them. The credits or allowances represent the currency of this “emission trading market” and each allowance gives the right to the company to emit one CO2 Ton or equivalent (nitrous oxide N2O and perfluorocarbons PFCs).

Companies need to match their emissions with the allowances and for this reason are encouraged to reduce their emissions investing in more efficient and low carbon technologies or buying extra credits on the market.

The cap decreases over time so the total emissions are reduced. In 2020, the emissions of those sectors under the ETS framework will be 21% lower than in 2005.

 

Work in progress: THE PHASES

The first phase started in 2005, when the framework was launched. The number of credits in this first phase was too high in comparison of the demand and the price of the allowances went down to zero in 2007, last year of this first period.

During the second phase (2008-2012) the number of credits was reduced by 6.5% but because of the global financial crisis emissions were reduced even more and the decrease of the general demand generated a surplus of allowances, which –contrary to what happened with phase I—could be banked for future phases.

The third phase (2013-2020) just started and includes several changes and reforms. First of all the introduction of an auctioning system (40% of allowances) as a method to allocate allowances, instead of being allocated for free or grandfathered by governments.  Second a single EU-wide cap on emissions instead of the former 27 national caps. And finally the inclusion of more types of gases and of more sectors and industries.

 

What the IMPACT?

The EU ETS framework is directed to those companies, power plants and industries that have a central role in the climate change context, due to the high GHG emissions. Because of the cap system, companies are encouraged to invest in low carbon technologies or to reduce their total annual emissions. Another positive impact of this system is represented by the investment of a part of the revenue originated by the sales of the allowances of the current period (5%) in renewable energy projects and in carbon capture and storage plans (NER300 program).

Companies can also realize emission-saving projects in developing countries in order to get extra credits. Kyoto Protocol’s Clean Development Mechanism and the Joint Implementation Mechanism represent another possibility of reduce emissions while investing in a responsible and “clean” way in the developing countries.

The mandatory participation of the companies operating in certain sectors, the cap system, the alternative mechanism of generating credits represent a way of addressing the climate change issue and reducing the GHG emissions, one of the main responsible of the climate change effects.

Cutting emissions while investing in low carbon and renewable energy technologies and in responsible projects in the developing countries represent an effective way of getting closer to a sustainable development and step by step the EU ETS is giving its contribution through this successful system.

 

What NEXT?

The current financial crisis is affecting this recent emission trading market. The surplus and mismatch between available credits and the demand is pushing down the allowances price. For this reason the EU ETS system could be undermined by the surplus of allowances and the long-term emission reduction targets could not be achieved in a cost-effective way.

A structural reform therefore is needed and the European Commission has started a debate on structural measures, necessary in order to address the surplus issue and has decided to postpone the auctioning of some allowances (this is still lost in the legislative process and the European Parliament plenary will vote on this issue mid April).

Time and the response to the current economic crisis will tell.

 

References

EU ETS Directive for phase 3: http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:140:0063:0087:EN:PDF

Increasing Demand by Raising Long Term Expectations: the Importance of a 2030 Target for the European Union’s Climate Policy, Executive Summary, February 2012, by Pedro Piris-Cabezas and Ruben Lubowski

The state of the European carbon market in 2012. Report from the commission to the european parliament and the council. Brussels, 14.11.2012 COM(2012) 652 final. Available at: http://ec.europa.eu/clima/policies/ets/reform/docs/com_2012_652_en.pdf

http://ec.europa.eu/clima/policies/ets/cap/auctioning/docs/20121112_swd_en.pdf

The EU ETS system: http://ec.europa.eu/clima/publications/docs/factsheet_ets_2013_en.pdf

http://ec.europa.eu/clima/policies/ets/index_en.htm

 

 

Comments Off on Sustainability Policies: The EU ETS Case / 04 Apr 2013 por Veronica Recanati
IMSD /

The EU Emissions Trading System and the Complexities of Incentivizing a Clean Energy Future

The European Union has been working diligently to promote the expansion of a low carbon economy. They have ratified the Kyoto Protocol, passed a relatively rigorous energy strategy for 2020, and created the largest Carbon Cap and Trade System in the World: the European Emissions Trading System (EU ETS).

To briefly explain how the EU ETS works, industries that are part of the trading scheme are given emissions allocations – or credits (the right to emit 1 ton of CO2 into the atmosphere). They must either reduce their emissions to the amount of credits allocated to them, or buy additional credits for every ton of CO2 over the allotted number of emissions allocations given to them. These emissions credits can be purchased on the EU ETS carbon market. Industries that reduce their emissions lower than the number of credits given to them will have a surplus of credits and can sell their extra emissions credits on the carbon market.

Each year, industries must hand over to the government the amount of emissions credits equal to the quantity of CO2 emissions they emitted within that year. The submission of credits to the government creates the necessity for some industries to buy emissions allocations if they have emitted more than they were allotted, and also gives the incentive for others to sell their surplus of credits if they have more allocations than they emitted. This supply and demand for credits creates the market for carbon.

The number of total emissions will always be at, or below, the “Cap” – the total number of credits in the system. The actual emitters will depend on each company’s decisions to either reduce their emissions or purchase additional credits from others. (Hence the name, Cap and Trade).

In the first two phases (2005 – 2012), most of the emissions credits were given by EU nation governments to industries without charge (with the exception of a few countries, like the UK and Germany which began to auction a portion of their allowances during phase 2). The third phase of the EU ETS began in January of this year and ends in 2020. In this phase, over 40% of total allocations will be auctioned. 100% of emissions allocations will be auctioned for the Power Generation Sector – creating a significant revenue stream for national governments.

The EU ETS and incentivizing Clean Energy Technology

The EU ETS was designed to be “technology neutral”, in that it does not favor one technology over another. One of the main goals of the system is to give a price to the environmental costs from emitting CO2 (contributing to climate change) that are not being paid by the emitting industries. The emission of CO2 by industries is a typical case of a negative externality: a cost resulting from one person’s activities which affects an otherwise uninvolved party. In other words, the one producing the “cost” is not paying the full price of that cost. In the case of CO2, without a carbon price, society is “paying” the costs of the additional carbon being emitted into the atmosphere by individual industries – as emitting CO2 into the atmosphere has traditionally been free for these companies.

The EU ETS puts a price on carbon emissions that companies must then factor into their cost of production. When the price of carbon is high, companies have a higher incentive to look into cleaner (or less carbon intensive) technologies. When the price is low, companies have less of an incentive to reduce their emissions, as the cost of emitting more CO2 is relatively low.

Unfortunately, currently the EU ETS has a large structural surplus of emissions (for several reasons), and therefore has a relatively low price for carbon. Therefore, the EU ETS is not properly incentivizing the investment in cleaner technologies; there is still need for the European Union to incentivize these technologies. To do this, the EU has created a programme within the EU ETS, called the NER300 Programe, which is meant to “boost the deployment of innovative low-carbon technologies and stimulate the creation of jobs in those technologies within the EU”.

NER300 Programme

As part of the EU ETS Directive (2009/29/EC), Article 10(a) 8 sets aside the funds raised from the auction of 300 million allowances in the New Entrants Reserve (NER) to be used to subsidize “commercial demonstration projects that aim at the environmentally safe capture and geological storage (CCS) of CO2 as well as demonstration projects of innovative renewable energy technologies, in the territory of the Union.” The New Entrants Reserve is a reserve of credits withheld in order to provide credits to possible new installations that may open during the current phase. According to the Directive, a maximum of 5 percent of the total quantity of allowances from 2013 to 2020 can be set aside for new entrants into the EU ETS.

The NER300 Programme assumes the role of choosing the clean energy programs that will receive the grants. In December 2012, 1.5 billion euros were raised from the auction of 200 million allowances earmarked for the NER300 Programme. The Programme awarded 1.2 billion Euros to 23 renewable energy projects under the first call for proposals. Regarding the grants, Climate Action Commissioner Connie Hedegaard stated:

This year Christmas has come early – today’s Decision is a major milestone in EU climate policy. The NER300 programme is in effect a ‘Robin Hood’ mechanism that makes polluters pay for large-scale demonstration of new low-carbon technologies. The €1.2 billion of grants – paid by the polluters – will leverage a further €2 billion of private investment in the 23 selected low-carbon demonstration projects. This will help the EU keep its frontrunner position on renewables and create jobs here and now, in the EU.

Programs and Policies like NER300 and the EU ETS are crucial to the success of renewable energy technologies; they are necessary in order to lock in clean energy technologies in the future.

“Locking In” Technologies?

“Lock in” is a phenomenon in which a certain technology is chosen over another; once this decision has been made, the chosen technology will be developed and implemented within society. After implementation of the chosen technology, society subsequently becomes locked in to that technology.

A simple example of this idea is demonstrated in the implementation of energy efficiency technologies when constructing a new building. If building owners do not take energy efficiency technology into account when designing the building, they will be locking themselves in to having a energy inefficient building once it is completed. Another example is the decision of whether or not to adopt Metro systems in certain cities.  Since Los Angeles did not invest well in developing a Metro in the early stages of development, Los Angelinos are  now “locked in” to using their vehicles to move around the city.

Regarding the “lock in” phenomenon:

It is not (always) because a particular technology is efficient that it is adopted, but (sometimes) because it is adopted that it will become efficient. (Arthur, 1989).

This idea is directly reflected in the current situation regarding renewable energies. Many countries are trying to incentivize the adoption of renewable energy technology at the moment, but not because it is cost efficient. In fact, renewable energy sources have historically been much more expensive to introduce into the electricity grid (although that is changing) and are not as reliable as conventional energy plants (the wind is not always blowing and the sun is not always shining). However, the act of investing in and adopting these technologies now will allow these technologies to become cost efficient, and therefore “locked in”, in the future.

Equally, “Lock In” can work in reverse:

Since our choices in the present directly impact the future path of technological advancement, technologies that have short-term advantages, yet long‐term disadvantages, can become “locked in” to society if we do not look at the long term effects of our decisions.

In the end, the European Union has taken tremendous strides in creating policies that help foster the innovation and implementation of cleaner technologies. Do they need to be improved? Yes. Currently, the European Union is working (with difficulty) on “fixing” the policy issues related to the structural surplus of emissions credits in the EU ETS.

If the EU ETS were able to send a credible long term signal to the market regarding the true social cost of CO2 emissions, companies would move towards cleaner technologies on their own, and complimentary policies like the subsidies from the NER300 Programme would not be necessary as an incentive to invest in clean energy.

However, in my opinion the NER300 Programme does serve its own purpose by helping stimulate development of new renewable energy technologies – “getting them off the ground” so that companies find an interest in investing in them.

Although there have been some bumps in the road, and some still to smooth out, when it comes to clean energy policy it is evident that the European Union is setting a strong example that the rest of the world should learn from and follow…  and soon.

Comments Off on The EU Emissions Trading System and the Complexities of Incentivizing a Clean Energy Future / 02 Apr 2013 por Amy Blyth
IMSD /

Climate Change and Cornerstones

Blog post for the subject Sustainability Policies in the E.U

The European Union’s Emissions Trading System (EU ETS) is the cornerstone of the E.U’s climate policy. It also happens to be the cornerstone of both my doubts and optimism that we will be able to successfully mitigate climate change through economic market-based approaches. In this post, I will first discuss the key policy debate currently surrounding the EU ETS, namely, the increasing debate about supply side management. Next, by examining the position of Poland as an example, I will aim to give an overview of the policy making process in the EU and identify the different actors who can shape this debate and thus direction of policy. Finally, I will conclude with an analysis of both the costs and benefits of this process and whether it is effective in terms of reaching the broader EU goals of sustainable development. From this, I will explain why the ETS remains a cornerstone of both my doubts and optimism for the future of today’s long term decarbonization objectives.

According to the EU ETS Directive, the objective of the ETS is to “promote GHG reductions in a cost-effective and economically efficient manner”. That is, the ETS is designed to facilitate the distribution of carbon allowances across the EU market to those who can cut emissions with the least economic impact. Through this market approach, another long term objective of the ETS was to create a situation where an increasingly scarce supply sent clear price signals about the price of carbon in the future for investors. However, due to over-allocation in phase I, international credits and the economic recession, there is now an over-supply of allowances in the market which has resulted in market not meeting this broader price signaling objective. Even though the ETS is working as any market economic market should, the ETS is not just any economic market. It was create for a purpose. That purpose is to facilitate the EU in achieving its sustainable development goals outlined in the European Energy Efficiency Plan 2020 and The Low Carbon Economy 2050 roadmap. This lack of a clear price signal in the market is therefore is a threat to the success of the EU’s ability to meet these broader goals.

Given the current situation of the market, the key debate that now surrounds the ETS is regarding how to address the over-supply of allowances and how to increase its effectiveness. A range of different options have been thrown around the union as proposals on how to best fix the market. While some demand side measures have been suggested, the majority of debate focuses of the issues of how to manage supply over phase 3 and 4. At the top of list has been the European Commission’s proposal to ‘backload’ the auctioning of future allowances from 2013-2015 to 2018-2020 (Phase 3). This proposal supposedly has the potential to address the current over supply and strengthen the future policy framework which could also help to provide increased certainty to future investors about the long term price of carbon. However, this backloading proposal would have different impacts on the different member states and this proposal is currently being reviewed and contested through the EU policy reform process.

In order to introduce the actors in policy reform process in the EU I will examine the position of Poland. What is Poland’s problem with backloading? Well, Poland believes that the backloading proposal will severely disadvantage its use of the allowances it was allocated for free to compensate it for the transition of its existing carbon intensive energy sector. The backloading proposal represents the possibility that these allowances may be cancelled. Poland therefore is facing the risk of loosing considerable value in its ETS based transition incentive ‘compensation package’.

Therefore, Poland wants the European Union member states to reject the European Commission’s backloading proposal based on free-market principles. That is, that this proposal would amount to intervention in the market and that intervening with new measures like backloading would just add more uncertainty for investors about the regulatory framework of the market. Moreover, Poland therefore distinguishes between the role of the EU in creating the market to reduce emissions and the right of the EU Commission to play with market price.

So how does the EU settle its policy proposal debates? Well, with more “amending Directive” proposals of course. The Commission had to submit another proposal which would give it the ability to amend the existing ETS legislation. The original proposal was therefore delayed while this second proposal is being approved by a committee of member state representatives. While the majority of member state support the backloading proposal, Germany is still deliberating over the proposal and its official position. Given Germany’s weight in the EU, the debate could still take another turn if Germany decides to reject the proposal. Given the lasting debate surrounding this proposal, the European Parliament has now been called into action in order to allow ‘the people’ of the EU to now have their say.

As the above example shows, policy debate through the EU involves many different actors and can be influenced from top-down (European Commission), from the individual member states (i.e. Poland/Germany) and also from the Parliament who are representing the EU’s citizens. Furthermore, this example shows how challenging it is to make sustainability policies fly and function in the E.U. Sustainability policies in the EU, face not only the prerequisite of cooperation among its members but now also faces new challenges presented by its current socio-economic situation, such as the case with the ETS. If the member states and different actors do not see eye to eye, then the policy process is extremely slow, as in the case of the amendments to the ETS directive which is still failing to alleviate the concerns in the market.

In conclusion, the ETS was undoubtedly an ambitious project by the EU and they have paved the way for the rest of the world to follow and learns from its mistakes. However, given the global cooperation required to tackle climate change, the very fact that even within the EU community this market-based approach has been so difficult to agree on, would it ever be possible to implement a truly global and thus effective carbon market so that reductions in the EU were not just in vain? Furthermore, the market based approach, as we have seen in the ETS is highly susceptible to unforeseen events and given the urgent need for climate change mitigation, I have my doubts whether this approach is appropriate. We need clear signals about the price of carbon now and not before its too late. Nevertheless, the creation of a ‘functioning’ economic market itself is on the other hand a reason for some optimism because it shows that there is considerable political will and effort being devoted to achieve long term sustainable development goals even in the face of economic recession. Furthermore, with the E.U currently in discussion with Australia about linking the EU ETS with the Australian Carbon Pricing Mechanism, there may be some signs of hope that one day a truly global emissions trading scheme could be created that would be appropriate for mitigating a truly global problem. However, given the ongoing challenges faced by creating an effective carbon market just within the E.U, the question undoubtedly stands…how long would such a market take to create and would it even be effective in time to limit climate change below devastating levels to our planet?

 

Comments Off on Climate Change and Cornerstones / 25 Mar 2013 por Daniel Salter
IMSD /

Study trip 3: China, lights and shadows

It has been an amazing experience to travel to China and study in Jiao Tong University. Now, back home, everything seems like a movie, where the lessons I learned, the people I met and the moments I lived, mix together in a very interesting way. I still can´t believe how lucky I was to live this experience, not only beacuse I can see now why China represents the future, but also because I feel ready to face it.

All the things I have learned can be separated in three chapters, that represent the pilars of sustainability. Sustainable growth can be defined as the equilibrium between the economic, the social and the environmental side of things, and here are some of  my toughts about these three aspects after my trip…

The business and economic side

There is no doubt about how important this sector is for China in the present moment. The economic growth has been the symbol of this country in the past ten years, and the numbers say it all. China has been growing in a constant average of 10%, and for the government, even a growth of 6% is a reason to be worried. We have learned how China has put all its efforts in increasing this growth, and all the multinational companies want to be part of this party. We have met entreprenours and visited companies from different countries and every person we met has said the same: If you want to succeed in the global economy, you have to keep an eye in China. It was surprizing to learn that, for some companies, even if the chinese adventure was not reporting great benefits after a few years of investment, having presence in the chinese economy was a need to atract investors in the shares market.

But the chinese economy is changing. All the analysis we have heard lead to the same conclusion: China is going from an economy based in production, to an economy that will be based in consumption. Somehow it reminds me to Walt Rostow’s theory of Modernization,that defnes 5 stages for a country´s development. This theory expains economic growth trough 5 stages, where the last stage is based in High Mass Consumption. I see China located between stage 4 and 5, and it wouldn´t be a bad sign if the social and environmental variables were included.

The last news provided by the chinese government about their concern for a sustainable future are quite optimistic, and it seems like economic growth, no matter at what prize, is not an option anymore. Let´s hope that is real!

The human side

There are some signs for genuine worries about the human side of the chinese growth. The labour costs are not as ridiculous as they were, and the government is putting some efforts in improving the workers conditions. However, even if the salaries in China are still a very important competitive advantage, this is somehow discouraging investors into the chinese economy. The government has created a policy that will try to double salaries every 5 years. A measure that, in my opinion, is quite rigid, and does not guarantee real social development.

Most of the chinese inhabitants still struggle for a decent health system, and the foreign investors don´t seem to care for their employees conditions as much as they would do in their own countries. We visited a few companies where the workers conditions would be forbidden in countries like Spain, showing that regulation in working environment or coporate responsibility, in my opinion one of the most powerfull tools for social development, is still out of the picture. And I am not a radical about this, I am just talking about very simple (and cheap) practices, that would ensure better conditions and better productivity.

But the fact that suprised me the most in the human aspect of today´s China is the sorpresive result of the one child policy: the lack of morality. We have learned that the one child policy has created some generations of “little dictators”. In our classes, they were refered  by our teachers as “little emperors”, kids that have grown surounded by 6 adults that were constantly satisfying every need and wish, resulting in a generation were people are not used to sharing, not used to beeing cooperative. It has become a major issue, and the government is really worried about it. To fix this picture, new “schools for morality” have been created, and some 30 years old are now forced to attend this courses, where they are tought how to work in teams. Individuality is against sustainable development, and cooperation is the answer to a good future. Let´s hope this generation of “dictators” is ready to change some behaviours, because the future of globalization will need China working as a team player.

As a conclusion, the human side of China today has lots of room for improvement, but there are some signs of a good change. If the government really wants to make this country a consumtion based economy, there are many things that will need to be solved in the social aspects. In the actual days, as we were told, the chinese society can´t consume as much because there is a need to save money to solve the problems that the future may bring (like children education or illnesses), so if the government really wants to make chineses big consumers, some social needs have to be covered first. And higher salaries is not the only answer…

The environmental side

I have had in my mind all the time the Kuznet’s curve. This graphic shows how countries only start to worry about environment after a certain grade of economic development has been reached.

This has happened in every developed country, and some countries or regions like the European Union, today one of the biggest deffender of policies against pollutions, have been the biggest polluters before reaching to this point. China is not exception.

Today we can see that pollution and environmental degradation is not one of the top priorities of China, but there have been already some signs of a change. Not only beacuse China has a very strong international preassures about this, but beacuse some of these problems are already stating to affect people. The fact that in Beiging the air is so polluted that people have to stay at home some days of the year is a strong point for a change. There is a need for new clean technologies, and if China puts its efforts in creating this technology, I have no doubt they will get great results.

Environment might not be now one of the biggest worries today, but only a few steps more of economic development will put this sector in the agenda, and the moment is comming fast, with “chinese speed”

Conclusion

I have learned that China is a very powerful country, a country that could set the bases of the global economy. A country with a populations that is used to obey, with discipline. I am sure that, whenever the country realizes the need to care more about the variables that make economic growth sustainable (the social and environmental sectors) they will do it really fast. So, now it is just a matter of time. I like to be always optimistic, and I think that, soon, China will be giving lessons to the rest of the world about sustainability. Just like they are doing now about economic growth.

So many things need to change in this country to ensure people´s well being, but there is room for dreamers. Soon, experts in sustainable development like me, that today feel out of the party in China, will have something to say. There is room for hope, there always is…

Comments Off on Study trip 3: China, lights and shadows / 11 Mar 2013 por Paloma Andres Urrutia
IMSD /

NGO´s created by students EOI

Last week, students at EOI coursed an elective subject focused on creating NGO´s.

The main objective of this course is to understand how an NGO is created in order for it to be sustainable.

Therefore, the first part of the course was to understand the evolution of NGOs and their current role in civil society. Secondly, the course was focused on both the legal and technical steps involved in creating an NGO.

Finally, the course ended with a practical experience that will involve the creation of an NGO.
Here are the links to all the great projects , students have worked on during this past week . Great job!

Stop traffic

http://stoptraffic.jimdo.com/

Mcsustainable

http://mcsustainable.jimdo.com/

Untaid

http://untaid.wordpress.com/

Hombres contra la violencia

http://hombrescontralaviolencia.jimdo.com/

Enviar comentario / 11 Mar 2013 por almudenadelamota
IMSD /

China: where are you going?

China is expected to become the world’s largest economy by 2025.

Since the beginning of the “Deng” era and the reform & opening up period lead by Den Xiaoping (1978), China joint the race toward the development and the economy growth. Indeed China economic performance in the last 20 years has been impressive, the growth has been exponential and all the entrepreneurs I met here keep talking about “China: the leap frog”.

This country is facing an incredible progress and instead of a linear growth China is “jumping” from an underdeveloped phase to an environment where high tech and innovation are at the center of the development. Internet has indeed a central role in the Chinese progress and is accelerating the economic development.

But China what kind of development are you running toward? Do you want to become a better copy of the capitalism model? Do you want to be the new USA? are you willing to loose your traditions and culture for the globalization?

It is quite clear China first objective is to be the number 1 player in the worldwide economy and this country is pursuing this goal at any cost.

Some interesting data we have been analyzing during our course on “Entrepreneurship in China”:

-The same people who didn’t have a fixed telephone line few years ago, own tablets and smartphones today

–778% video ads growth

–314.000 M$ Chinese e-commerce market value

–8.000$ online games market value

–96% of the Internet traffic visits are internal, only 4% goes outside China

-The Chinese Facebook has the same amount of users Facebook has worldwide

-The Chinese company Tencent is the biggest Internet company of the world

Considering the current situation, the population growth, the fast development, the first question coming into my mind regards the sustainability of this growth.

Where is the sustainable development? What is the role of corporate responsibility? Is China concerned about the environmental consequences of this exponential growth?

I am afraid sustainability and environment are not the priorities and despite the fact “go green” is one of the objectives of the China Five years plan, there is still much to do in this area.

During our study trip we visited several companies, Spanish and Chinese and we saw the same situation in all the facilities: employees working in unsafe and unhealthy conditions, lack of safe waste management and unreliable recycling process. When we asked our guide about quality control, certifications and recycling procedures she answered “growth first, later the environment”, this expresses very well what are the priorities for those companies at the moment.

So again..China continues its race toward the progress, the innovation and the growth but a development without sustainability is not feasible, especially in a 1.3 billions people country. So what kind of development will China achieve? where human development? and finally.. where is China going?

Time will tell if this country will be able to achieve a sustainable development.

 

 

 

4 comentarios / 07 Mar 2013 por Veronica Recanati
IMSD /

Living in Shanghai..first impressions..

Skyscrapers, big buildings, red lights, yellow letters I don’t understand, cars and taxi driving around, this is what I see from the big window of my hotel room, here in Shanghai.
I have spent some days so far in this amazing city where the food, the people, the language, the habits, the time, the weather, the sky are different from what I am used to see.

And what do I see here?

A busy city that is going fast, an economy that is growing exponentially, skyscrapers that are built by day and by night, many construction sites, malls, big hotels, a polluted sky, traffic and many many many people..yes 23 millions people all in the same city.

As part of my study-trip I am taking class on entrepreneurship, strategy, negotiations and Chinese culture every morning at Jiao Tong University (SJTU) and visiting Chinese and Spanish companies in the afternoon. I am also meeting entrepreneurs who have decided to take the challenge and set up their own business in such a fast growing and developing countries. In the past few days I have been visiting the biggest Chinese steel company (Baosteel), the biggest Chinese solar panel factory (EAR Solar Co. ltd) and met young entrepreneurs and consultants who shared their professional and personal experience in this country.

It is clear China is opening its economy and its door to the world and the world is more and more interested in entering that door, but what kind of development China is running toward? what is the environmental impact of such a rapid growth? and what are the main challenges and opportunities involved in this process?

I have these questions in my mind since when I landed here..but I don’t have the answers yet..hopefully at the end of my trip I will have a better view and some answers.

Zài giàn!

 

Comments Off on Living in Shanghai..first impressions.. / 04 Mar 2013 por Veronica Recanati
IMSD /

Study Trip 2: Catching up, is it the right path?

And of course it has hit me again. But maybe not the way I had expected.

Only a week ago I thought that walking through Sanghai would make me feel from another planet. But after a few days sightseeing the city, I have to say that I have felt very confortable. Of course the language is ununderstandable to me, of course the food tastes very different, of course the rules are not the same and of course it is so much easier if you are traveling in an organized trip with classes about chinese culture and just visiting the touristic side of the city. But I was not expecting to feel so confortable so soon, I was not expecting to feel so safe in this environment in just a few days.

I have always learned the best lessons of my life when traveling, because getting out of my confort zone and routine helps me question everything, it sets my head in a philosophical mindset. And these days I have been thinking a lot about what makes me feel safe.

The city and the people are very friendly, and when I look around I see so many familiar things that one question comes to my mind, is the economic globalization making all countries look the same in urban areas? I can see many shops, brands and food chains that are very easy to recognize for me. Do I feel safe because everything around looks so familiar? Ar we all going in the same direction? Is it a good one?

I can see a trend in development that I don´t know if I like too much. I can see that China is somehow trying t emulate what the western countries have done, going for economic growth despite the environment or social improvements. It seems like a natural tendendy of growth, but, what is the final goal of this model? Is human happiness at the end of the road? Of course I see the conection between economic growth and human development, and I really think businesses and economy can be a very important tool for sustainable development (beeing a business owner in a developing country myself,I know very well how strong this link can be) Anyway, I can help but wonder, has the western model made us happier?

Economic growth only makes sense if it is a tool for improving people´s well being. People in China are experiencing now this good feeling of “take off”, and the differences in the quality of life of chinese people in the last 30 years are visible, which is a very good sign. But looking to the western countries, now lost in an economic crisis caused by a lack of values and an excess of trust in the financial markets, is China doing the right thing? Is really “catching up” the answer to a bright future?

Only time will tell…

 

Comments Off on Study Trip 2: Catching up, is it the right path? / 28 Feb 2013 por Paloma Andres Urrutia
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Study Tryp: Typical is always relative

It hit me last year. When the world reached a population of 7 billion, the National Geographic, one of my favorite sources, made a series of videos about its population. It was totally fascinating to learn that the average person in the world is Chinese. I have never been an expert in these kinds of numbers, and I knew that it was the most populated country in the world, but it was a shock to realize that, even if we put all the other countries together, China was still setting the bases.

Click here to see the video: Are you Typical? – National Geographic

 

Learning about China has always been a wonderful shock, because the more I learn, the more my idea of “what is typical in the world” changes.

It hit me when my brother told me that my four year old nephew had in school an optional subject called: basics of Chinese. Were 4 years old in our country learning Chinese? I felt really old, I thought that Spain was still struggling to improve in English, but the “new language of the future” is already other, and it comes from China.

It hit me when I learned about their millenary culture and spirituality. The culture of this country has been alive for thousands of years, and its art is one of the most unique expressions of the world. Their food and family systems have also lasted for generations, because China is a country that honors tradition.

It hit me again when I learned about China´s attitude about the Kioto Protocol, and the fact that it is the biggest polluter in the world. The correlation of economic growth with global warming is clear, and if China keeps growing as much as the past years, there is a need for a new model of development.

It hit me again when I learned that I would have the opportunity to go to China while I was studying my Master in Sustainable Development and Corporate Responsibility, to study in Jiao Tong University in Shanghai, a whole symbol of China´s future. The world needs the collaboration of this country if we want to get to a sustainable future, and since they are those who set the bases of what is “typical” , it is about time we start learning about it. I know China will be a player that I will find very often in my future career, so it is really good that we are finally going to meet each other. I can´t wait to learn about this country, its tradition, culture, food, language, urban systems and what is coming in the future, greening the Chinese economy.

I am sure it will hit me again…

Comments Off on Study Tryp: Typical is always relative / 18 Feb 2013 por Paloma Andres Urrutia
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China

China has been one of those countries that I have wanted to visit since I can remember.

Considered as a new emerging superpower, China is now part of our daily life. When we buy a product, it is likely to have been produced in this country, although its brand is European or American.

Due to its economic boom, China emerges as a country using the westernized trade economic model inserted in a completely different political regime, showing that democracy is not an essential element   to have economic growth.

Known for its poor environmental and human rights performance in the western world, China is also one of the leaders in creating new cheap renewable energy products. Its economic model is contributing   to the withdrawal of thousands of people out of poverty.

 

My trip has more goals than those proposed academically. I want to visit the country that will be the next superpower and help to avoid one of the biggest problems between the western and oriental world: the growth of deep misunderstandings between people, which are rooted in cultural differences.

My perspective is that knowing why people think and behave as they do fosters compassion and friendship.

 

This is an opportunity to reflect about how this new superpower diverges from former ones and the USA. This opportunity makes us aware of how important this ally is for some countries in Europe that struggle with the economic crisis and how to strengthen these ties for better international cooperation.

 

Personally, visiting Shanghai is also the possibility to know China that I know little. That contrasts with Macau that has Portuguese cultural influence.

 

For all these reasons, I hope to return with a more realistic perspective of this country and useful knowledge for my future career.

 

Comments Off on China / 18 Feb 2013 por Pedro Vicente
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