This important new book analyses the likely impact of China's energy institutions and governance on its transition towards a low-carbon economy. Its central argument is that the principal challenges for such a transition are not technical, but political, economic and social – in particular the nature of the society's prevailing institutions. After three chapters outlining China's energy sector, its carbon emissions situation and the fundamental social changes needed in any country for a move towards a low-carbon economy, two central chapters summarize the book's theoretical framework and its general application to China. Four chapters then apply the framework specifically to China's energy sector in relation to policy making, reform, policy implementation and technological innovation respectively, before a conclusion draws lessons for China's ability to reduce carbon emissions.
The book's theoretical basis is the new institutional economics. It uses a broad concept of institutions, encompassing three levels – general social values; formal political, economic and social organizations; and the systems that govern individual transactions. Institutions are important constraints on the pace and direction of economic and political change, and in many situations their resilience and resistance to change result in a high degree of path dependency. However, the capacity to change is crucial to the transition to a low carbon economy, and the author argues that that capacity is greater in “open access” social orders than in limited access social orders dominated by the state (such as China).
Chapter six applies the ideas developed in the previous chapter to the Chinese case, arguing that history – of both imperial China and the People's Republic – is an important constraint. The generally high level of coherence between China's institutions and their environment acts as a barrier to change. The highly centralized nature of the Chinese system – attributed, perhaps questionably, to the legacy of Wittfogel's hydraulic agrarian system – leads to a preference for state control of key sectors, exemplified by the prominent role still played by the National Development and Reform Commission. This has left the energy sector in particular stranded between plan and market, while the regime's strong preference for self-reliance and security of supply, itself with deep historical roots, conflicts in some cases with other priorities more relevant to tackling carbon emissions.
On the basis of his general theoretical analysis, the author is able to suggest areas where the state has been – and may well continue to be – successful, and those where success has been more difficult. Its successes tend to have been in sectors where administrative mechanisms are paramount and in relation to policies that depend on, and favour, the large state-owned enterprises. For example, the state has been strikingly effective over the past 30 years in mobilizing the funds to increase energy capacity to match China's economic growth, and this bodes well for the development of capacity in low carbon technologies such as wind farms. On the other hand, it has been much less successful with policies that might inflict short-term losses on important groups in society or require broader behavioural change among the populace. Such policies are vulnerable to resistance from vested interests or to serious difficulties in implementation.
On the basis of its analysis of the governance of the energy sector, the book develops conclusions about China's ability to implement policies moving towards a low carbon economy, a move that will be necessary to avoid the worst effects of global warming and climate change. Here the author counsels caution. On the one hand, he gives due credit to the “astonishing capacity for social learning” (p. 135) that the Chinese state has exhibited over the past 30 years. On the other, the resilience of Chinese institutions is such that it is extremely unlikely that the country will make the changes necessary to meet the more ambitious or optimistic targets for the reduction of carbon emissions. Incremental change on the current path is far more likely. Given that there is little sign even in developed countries of state or society being willing to implement the far-reaching changes in lifestyles that are necessary, this is a conclusion that should not surprise us, however troubling it might be.
In this book, Philip Andrews-Speed makes a major contribution to our understanding of the trajectory of the energy sector in China and the problems in the way of its moving towards a low-carbon model. His focus on political, social and economic issues ahead of technical issues, and his grounding of the possibilities for change in the institutional underpinnings of the sector must surely be taken into account when China scholars or climate change experts analyse the prospects for reducing carbon emissions, whether in China or indeed elsewhere. Equally, his cautious conclusions are a necessary corrective to some of the more optimistic scenarios painted for China's energy future.
