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Cablegate: Sw China Officials Seek Greater Control of Climate Change

VZCZCXRO1970
RR RUEHGH RUEHVC
DE RUEHCN #0239/01 3010539
ZNR UUUUU ZZH
R 280539Z OCT 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 3482
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHC/USAID WASHDC
RUEAEPA/EPA WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 4176

UNCLAS SECTION 01 OF 02 CHENGDU 000239

SENSITIVE
SIPDIS

DEPT FOR EAP/CM

E.O. 12958: N/A
TAGS: ECON ENRG EINV CH
SUBJECT: SW CHINA OFFICIALS SEEK GREATER CONTROL OF CLIMATE CHANGE
FUNDING

CHENGDU 00000239 001.2 OF 002


1. (U) This cable contains sensitive but unclassified
information - not for distribution on the Internet.

2. (SBU) Summary. Even as Chinese officials in Beijing discuss
national-level climate change initiatives in the run-up to the
Copenhagen conference, Sichuan officials have been stymied in
efforts to increase provincial authority over the allocation of
mitigation funding at the local level. Sichuan established a
group of government officials responsible for coordinating
climate change efforts at the provincial level, particularly
focused on promoting energy conservation through industrial
restructuring. These officials are frustrated, however, that
they have not been able to decide on the allocation of
international funding that Sichuan has received through the
Kyoto Protocol's Clean Development Mechanism (CDM) - which may
not be a bad thing given the potential for local corruption and
interference with national goals for climate change mitigation.
Most of the CDM funding in Sichuan has been used to build or
renovate hydropower capacity. End Summary.

Provincial Climate Change Organization

-------------------------------------

3. (SBU) Sichuan Province in 2007 established a climate change
and environmental leading group (LG), headed by Governor and
Deputy Party Secretary Jiang Jufeng, that has responsibility for
coordinating the climate change work of 32 government bureaus,
according to an official at the Sichuan Province Development and
Reform Commission (DRC). The LG formulates and implements
emissions reduction policy that is designed to reduce energy
consumption and emissions in accordance with national-level
goals established during the 11th Five-Year Program (FYP). An
important goal established during the 11th FYP calls for a
20-percent reduction in energy consumption per unit of gross
domestic product. The LG has focused part of its work on
industrial restructuring as a way to reduce energy consumption,
particularly in the iron, steel, non-ferrous metals, and
chemical industries.

Beijing Controls the Purse Strings, Sichuan Seeks Change

--------------------------------------------- ----------

4. (SBU) The CDM allows greenhouse gas emitters in developed
countries to invest in emissions reduction projects in countries
like China, rather than reduce their own emissions. The goal of
CDM is to produce a net reduction of greenhouse gasses like
carbon dioxide. China's current process for directing CDM
dollars requires that the National Development and Reform
Commission (NDRC) in Beijing vet and approve all projects,
according to the same DRC official. Local businesses can
effectively bypass the provincial government and acquire CDM
funds through the NDRC approval process. The official went on
to say that this process deprives the Sichuan DRC of its ability
to provide provincial oversight of the projects.

5. (SBU) The DRC official implied that a better funding
mechanism would be one under which the Sichuan government had a
greater role in the selection of businesses that could apply for
funds; local government would also ideally control the
allocation of CDM funds. The official said that greater control
of funding would bolster the ability of provincial governments
to pursue climate change-related mitigation efforts. (Comment:
The DRC official did not offer any specific examples of project
waste or excess that had occurred due to insufficient provincial
oversight. At the same time, the extent that local officials
can control the allocation of funding will likely affect their
enthusiasm for the process, including local opportunities for
corruption. End Comment.)


CHENGDU 00000239 002.2 OF 002


Funds Channeled To Hydropower Projects

--------------------------------------

6. (SBU) Sichuan Province as of mid-2009 had roughly 10 percent
of the roughly 2,100 nationally approved CDM projects, according
to the DRC official. The overwhelming majority projects involve
hydropower, based on Congenoff's review of 180 Sichuan-based
projects published by the NDRC. All of 158 "renewable energy"
CDM projects in Sichuan focus on the construction, retrofitting,
or expansion of dams in the province. The total power output
from these projects will total more than 2,900 megawatts (MW),
roughly equivalent to three, third-generation nuclear power
plants. At least 30 percent of these dam projects have led, or
will lead, to the construction of small hydropower facilities
with a total installed power generating capacity of 30 MW or
less. While Congenoff could not determine the power capacity
for about half of the hydropower projects, at least 17 percent
of the dams will produce more than 30 MW; some will produce more
than 160 MW.
BROWN

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