The following post is from Michael G. Williams, Vice President of Strategic Development for the BlueGreen Alliance.
Following up on yesterday’s post on just transition, today I’d like to go over transparency and verification, which is indispensable if we are to ensure a level playing field for American manufacturing while taking action on climate change at the United Framework Convention on Climate Change (UNFCCC) and through other multi- and bi-lateral efforts.
Agreements to act on climate change are only effective when they are implemented properly and transparently, and they include the necessary means for measurement, reporting, and verification (MRV). We all want transparency and verification to make sure countries are cutting the requisite pollution to scientifically address the climate crisis, but it is equally necessary to ensure that lower-emitting domestic manufacturing remains competitive. To put this in perspective, on a per ton of product basis the Chinese aluminum industry produces more than double the carbon dioxide of the U.S. industry.[1] As of data from 2009, the steel industry in China similarly produces twice the amount of carbon. This is occurring while China faces a steel antidumping probe from the U.S. and the European Union, and global aluminum prices have tanked over 25 percent in 2015 alone mostly due to a recent surge in Chinese exports.
China’s primary aluminum smelting capacity is the most carbon intensive in the world. The Chinese aluminum industry is at an all-time high for overcapacity and is projected to produce a 2 million metric tons (Mt) surplus this year, equivalent to approximately 50 percent of total North American production. As a result of that overcapacity, significantly more carbon intensive aluminum is flooding the U.S. market—contributing to climate change and undermining our industries. By examining just GHG emissions from aluminum smelting in China alone, China would be the 16th largest GHG emitter in the world based on one industry.
According to analysis performed by the Stockholm Environmental Institute, steel produced in Russia is twice the carbon intensity as steel produced in the U.S., and Chinese steel is on average 1.5 times as carbon intense. In addition, Chinese exports have risen 36 percent and Russian steel is booming partly due to an extraordinarily weak Ruble. The flood of Chinese and Russian steel on global markets is significantly undercutting global markets to the detriment of our environment, while creating instability for domestic production.
The production of materials such as iron, steel, and aluminum are all carbon intensive, and how these industries are included in carbon regimes across the world will factor greatly into whether we successfully reduce carbon pollution. The recent bilateral agreements between the U.S. and China and U.S. and India are very heartening, as would also be a global agreement in Paris. However, these agreements and their subsequent commitments do nothing for the climate if they do not produce true emissions reduction. And, if all parties to these agreements do not meet their end of the bargain, then they are receiving an unfair competitive advantage.
While China has examples that are easy to identify, the issue of transparency is global, especially in the context of globally agreed upon climate change actions. In many manufacturing industries—those commonly known as the “energy-intensive, trade-exposed”—additional costs to production can mean losing competitive ground. That’s because no matter how small the costs are, the ability to pass on such costs is often non-existent. Manufacturing of energy-intensive, trade-exposed goods directly employs nearly 800,000 Americans. Losing competitive ground can mean losing jobs, and it can mean increasing carbon pollution.
The BlueGreen Alliance has long argued that an effective global climate treaty must be a transparent deal. The agreement must include strong provisions for annual and biannual reporting and review, so that we can regularly assess and hold accountable the progress of all countries towards their commitments and achievement of the environmental objectives. This level of review and transparency is an absolute must if we are to begin to tackle global climate change. It is also vital to ensuring a level playing field for globally competitive manufacturing while ensuring we are meeting the greatest environmental challenge of our time.
For historical background on this issue in the UNFCCC, check out this post by Jake Schmidt from NRDC.
[1] 15.5 metric tons of CO2 per mt of aluminum as compared to the 6.5 mt of CO2 produced per mt of U.S. produced aluminum. Source: The Aluminum Association.