Keynote Speech by Maurice F. Strong at Caofeidian Forum 2009 – Sustainable Development and New-Type Industrialization against International Financial Crisis, at Tangshan Caofeidian Bohai International Convention Center,  15-17 October 2009

It is indeed an honour to have been invited to participate in this most important and timely Forum and have the opportunity to address it. This is the most appropriate and auspicious place to meet as it has played such a special and distinguished role in China’s history and is contributing so much to China’s unprecedented economic progress. The dynamism and resilience of Caofeidian has been impressively manifest by its rapid recovery from the tragic earthquake of 1976 to make this region a new and exemplary model of sustainable development and industrialization. A particularly great example is the fact that the region has now become a major center of China’s dynamic steel industry.

Coming as this does as we join in celebrating the 60th anniversity of the new China, there is indeed much to celebrate. In the 60 years, since Chairman Mao Zedong established the People’s Republic of China, restoring its unity and its dignity, China has experienced remarkable progress, lifting more of its people out of poverty than any other nation has ever done, and providing its people with new opportunities and freedom to enjoy a better life and promising future. Since Dong Xiaoping opened up the economy China has again moved to the front rank of the world’s leading economies and taken its place as one of its most influential nations.

Leadership commitment

China’s leaders have made clear their commitment to making the transition to sustainable and harmonious development guided by science as the key to China’s continued progress. The challenge which China now faces is to effect this transition at the time when the world’s economy is experiencing its greatest crisis in recent times.

China’s rapid and decisive response to this crisis has mitigated its effects. This has enabled China to be the first amongst the world economies to contain the crisis and enable the millions of unemployed workers in export-dependent industries to survive it. This needs not, and I believe will not, mean that China will embrace the kind of indulgent and unsustainable consumerism that contributed to both the causes and the effects of the economic crisis in the United States and other countries that have a emulated the US model. I am confident that the Chinese will continue to progress in development of its distinctive model of a socialist market economy. Its consumerism will reflect the traditional care and conservatism with which the Chinese manage their personal affairs.

I have had a long love affair with China through the period in which it emerged from the extremely turbulent and dramatic times that caused its people so much devastation to the recent period of dynamic economic growth which has enabled China to move more people out of poverty than any nation has ever achieved.

I know that the Chinese are characteristically modest in responding to predictions that it will become the world’s leading nation. But China cannot escape the greater influence, and indeed responsibility, that this will inevitably produce. Though those who have dominated the world economy and its political institutions will be apprehensive and reluctant but they have nothing to fear.

The importance of China

None of the major issues confronting the world community today can be resolved without China. And China cannot achieve its own goals and aspirations except through engagement at the global level. Already we can see how China’s leaders are responding in such a responsible and constructive way to the economic and climate change crises now confronting the world community. All Chinese can take pride in the role China is playing, as evidence by the recent statement of President Hu Jintao to the United National General Assembly. This, indeed, is a great time to be Chinese: and I can also say that it is a great time to be a friend of China.

It is in the larger context that I view these issues. The economic and climate change crises are both rooted in the unsustainable nature of the existing economic system. The rapid and unexpected economic meltdown which began in the United States and quickly spread throughout the world demonstrated dramatically that the phenomenon of globalization and interdependence has a dramatic downside of shared risks and vulnerability. This dictates that we must manage these crises cooperatively on a systemic, integrated basis— rather than as separate and often competing issues. Only thus can we transform them into a unique opportunity to rebuild our civilization in a manner that will ensure the security and sustainability of life on our planet.
The accelerating damage to the Earth’s natural capital will have even more devastating consequences for the human future than the current financial and economic crises. The economic and human costs of climate change to the global economy already amount to an estimated $125 billion per year and the loss of 300,000 lives, according to a recent study by the Global Humanitarian Forum headed by former UN Secretary-General Kofi Annan. And, as noted in a recent report by the World Resources Institute, we face the increased extinction of species, the waning of fish stocks, the ominous decline in the quality and availability of water for human consumption, the continued degradation of forests and biological resources, the loss of productive soil, worsening air pollution, and a severely contaminated food chain—all threatening the very nature and sustainability of life on Earth. Together, they represent the single greatest threat ever to human security.

Some, however, still contend that we can only deal with the risks of climate change and repair the damage from environmental degradation after we fix the global economy. This is the height of folly. Waiting while merely patching up the current economic model would only exacerbate the imminent threats to our civilization.

Severe risks

Climate change produces especially severe risks for China. Some of its consequences are already being experienced in the increase in droughts and floods stemming from changes in rainfall patterns which affect agricultural productivity and devastate the lives of the people who depend on it. One of China’s most daunting challenges is to ensure its future supply of water – both its quality and its quantity. The great rivers and main aquifers of China are becoming overdrawn and suffering pollution. Melting of the glaciers in the Himalayas as the source of its major rivers will increase the flows of water, and the risks of disastrous floods in the near term and reduce them catastrophically in the longer term.  

The projected rise in sea levels could have devastating effects on China with its high concentration of population in low lying areas which includes this region. Accommodation to this risk will require substantial measures for prevention and adaptation, a challenge which you are better able to meet than most.

Continued population grows adds to these pressures and the need to concentrate more of the population in cities, particularly in new cities. This creates a new generation of challenges which opens up important opportunities for China to make “Eco-cities” the central focus of its urbanization policies in the building of new cities and rebuilding of existing cities. Tangshan is leading the way with its establishment of the very impressive Tangshan South Lake Eco City , the largest urban central ecological park in the country, setting a world-class example. 
The commitment of the Hebei government, with the full support of the Communist Party, to make the Tangshan Caofeidian a leading example of sustainable development and green growth for the world is already well underway.  It will require transformation of the regions’ energy economy from production of coal and oil and its industrial economy, notably the steel industry, to science-guided technological development designed to effect major reductions in greenhouse gas emissions as well as local air and water pollution.  The resilience, experience and success of the exceptionally resourceful people of this region will surely be able to achieve this ambitious goals, and make an exemplary contribution to the future sustainability of China and the world.

Threshold levels of risk

The Intergovernmental Panel on Climate Change states that the warming trend over the last 50 years is nearly twice that of the previous century. Thus, we are already at or near the threshold levels of risk. This means that the more developed countries must collectively reduce their emissions by more than 85 percent from 1990 levels by 2050, clearly a daunting challenge. To achieve the long-term goal of global emissions reductions would require that emissions peak by 2020, at the latest, and decrease thereafter. More developed countries, as a group, would need to reduce their emissions by at least 45 percent from 1990 levels and up to 95 percent by 2050.

China’s role in the negotiations now underway in preparation for December’s Conference of the Parties to the United Nations Climate Change Convention in Copenhagen will be decisive. It must produce binding and enforceable commitments with penalties for non-compliance.  So we must learn from the many agreements and conventions that governments have committed to in the past but seldom complied with.  If they had done so we would not be in the current state of crisis.
China and India are now the main source of increases in global emissions and will be under heavy pressure to accept specific targets. China, India, and other newly developing nations will rightly insist on greater reductions by the main industrialized countries, which are primarily responsible for the accumulated emissions that have brought the world’s climate to today’s dangerous threshold. This must be accompanied by commitments to provide massive support to developing nations to enable them to reduce their emissions without impairing their continuing economic growth.

Climate Security Fund

The optimistic scenario for Copenhagen would include agreement on a Climate Security Program, or, at least the main elements thereof, combined with establishment of a “Climate Security Fund” to finance implementation of the program. More developed countries would commit resources to this fund on a formula proportional to their emissions and their gross domestic product (GDP). The scale of such a fund—initially on the order of at least $1 trillion—is far beyond anything that more developed countries are contemplating. It will likely be viewed as unrealistic, particularly in light of the global financial and economic crisis. Still, this price tag is less than the cost to the United States alone of the wars in Iraq and Afghanistan.

Such a level of funding, particularly under current circumstances, will require new and innovative means. These could include fees for the use of the global commons (the oceans, the atmosphere, and outer space that are not under national jurisdiction), taxes on fossil fuels and other sources of emissions, and penalties for those who fall behind in meeting targets. After all, most countries have long accepted high taxes on substances and practices they consider harmful such as alcohol and smoking.

This need not come primarily from new money that rather from massive reallocation of existing funds so at the additional taxes and fees are all set by corresponding reductions in existing tax and subsidies.

The catastrophic impacts of growing carbon emissions will affect the entire globe, no matter where the emissions originate. As such, large-scale assistance to developing countries accompanied by much expanded programs which enable them to earn credits from their capacity to reduce emissions at a lower cost than more developed countries offers cost-effective investments in climate security. China has already taken first steps in establishing its own distinctive model of emissions trading.

New opportunities for business and individuals

The investments we make to achieve climate security will generate new opportunities both for businesses and individuals that will make major contributions to the establishment of the new economy. Thus, both in their origins and solutions, the environmental and economic crises are inextricably linked.

The capitalism which has produced the current crises concentrates its benefits in a small minority of the population while widening the gap between them and the majority, particularly the poor. This is clearly inequitable and as we have learned from the current crises it is not sustainable.

It is a sad commentary on the morality of our civilization that we devote more of our resources to development and deployment of sophisticated weaponry and killing power than on meeting the humanitarian and social needs of people and protecting the environmental viability of our planet. China’s commitment to harmonious sustainable development guided by science to meet the needs and interests of its people are at the center of its policies.  Other countries must share in the actions required to ensure the security and sustainability of life on our planet.

China and the United States combined produce some 40 percent of global greenhouse gas emissions. While all countries must cooperate in meeting the climate change challenge, the cooperation of the United States and China will be essential.

China has now surpassed the United States as the main source of carbon emissions; but it is still well behind in per capita terms. The average Chinese produces only one-fifth as much in carbon emissions as the average American. Indeed, since the dawn of the industrial revolution, the United States has generated more than 1.1 trillion tons of carbon emissions from fossil fuels compared to China’s 300 billion tons.

There are immense opportunities for China and the United States to reduce their carbon emissions through increased energy efficiency. China uses more energy to produce each unit of GDP than do other leading industrialized countries. Industrial and energy efficiency can produce huge win-win opportunities for China’s economy as well as its environment. So Beijing has a strong incentive to make its energy economy more efficient. China’s Energy and Research Institute has suggested that, by 2020, the country could cut its current emissions growth rate by half, and could reduce absolute emissions by one-third by 2050. This will not be easy to achieve, but like many other difficult goals China has set for itself, we should not underestimate the capacity of the Chinese to meet their goals.

Energy at the heart of the challenge

Energy is at the heart of this challenge. As one who has spent most of my business life in the energy field, I see a great opportunity for this region to lead the way to achievement by China of a high degree of self sufficiency from foreign imports and its reliance on “dirty” coal and oil. This would enable it to make substantial reductions in its greenhouse emissions and create a new generation of economic progress. These exciting opportunities arise from a combination of the development of new energy technologies and the strong commitment of China’s government to development of new and renewable sources of energy and the policy incentives it provides for these purpose.

However, the transition away from the predominant dependence on fossil fuels will take some time to achieve even with the rapid expansion now underway in wind power and solar power and promising prospects of tidal power and biofuels. In the meantime, China has an extraordinary opportunity to build a new, national energy economy based primarily on its indigenous resources mainly natural gas, the cleanest of the fossil fuels. New techniques that enable previously inaccessible supplies of natural gas from shale promise to add massive new gas reserves in the United States and elsewhere. Especially important for China is the need to recover and make greater use of coal-bed methane which is both the most harmful of green house gases and the source of so many coal-mine tragedies in China. Development of China’s immense, though still not sufficiently measureable, potential for gas and liquids could make this the biggest source of indigenous energy for China.

Concerted efforts to expand the exploration for and development of its natural gas prospects and an accelerated program of capture and use of coal-bed methane, improvements in the transport, storage and marketing of gas liquids. Giving priority to the development of natural gas as the principal element in its new energy economy will enable it to meet most of its expanding energy needs during the longer period required to develop non-fossil renewable resources to the levels required as primary energy sources.

We are the first generation in history to have the ability and responsibility to determine the future of life on Earth. We cannot afford to be complacent in the belief that whatever we do, life will go on. We must realize that the conditions which make life possible as we know it have only existed for a very brief period of our planet’s long history and within very narrow limits. It is clear that humans are now impinging on these limits at a speed and on a scale beyond our ability to adjust or adapt. Human existence is at real and imminent risk. But the prospect of success, however challenging, is also very real.

The biggest challenge to China is to accept the responsibilities of leadership in achieving this success for the sake of its own people and the larger world community of which it is an integral and leading part.