Reading in her hotel room in 1996,
geology student Cao Jing noticed something alarming: the pages
of her book were being coated with brown coal dust.
Her realization — in Qinhuangdao, a tourist city where
China’s Great Wall meets the sea — marks the moment when the
young undergraduate at Beijing’s Tsinghua University became
interested in studying the effects of China’s runaway industrial
pollution. It was the first step in a 17-year journey that has
taken Cao, 36, into the field of economics to tackle emissions
in the world’s biggest producer of greenhouse gases.
Her work gained a new urgency after a leadership change
this year installed President Xi Jinping, who has promised to
combat pollution even at the cost of slowing the economy. Cao’s
goal is to develop a tax structure that would curb harmful
emissions with the least effect on growth and company profits.
“China is in urgent need of climate policies like a carbon
tax to save energy and reduce emissions,” said Cao, an
associate professor of economics at Tsinghua and a consultant
for the World Bank. “If they are well designed, there will be
no big impact on the economy. If they are poorly designed, they
may bring disastrous consequences.”
Cao, also a researcher at Tsinghua National Institute of
Fiscal Studies funded by the Ministry of Finance, predicts the
government initially will adopt a carbon tax. She says this
would have a smaller economic impact — and so is more
politically acceptable in China — than the cap-and-trade model
adopted in the European Union, where companies buy and sell
permits to pollute.
Health Benefits
If China started with a tax of 10 yuan ($1.63) a ton of
carbon dioxide this year and raised it steadily to about 50 yuan
by 2020, carbon emissions could fall by as much as 19 percent,
while health and energy benefits would mean the effect on
economic growth would be almost zero, she said.
China’s State Council has set a 2020 goal of reducing
carbon-dioxide emissions per unit of gross domestic product by
40 to 45 percent from 2005 levels. Cao’s study, “Towards a Low-Carbon Economy: The Design of a Carbon-Tax Policy for China and
an Analysis of the CGE Model,” won the McKinsey China Economics
Award in 2011 for its contribution to the policy debate on
“tackling greenhouse-gas emissions in an economically and
environmentally sustainable way.”
‘Main Stars’
“She is one of the main stars in the energy and
environmental economics field in China,” said Thomas Sterner,
visiting chief economist at the Environmental Defense Fund in
New York, whose 2011 book “Fuel Taxes and the Poor” includes
contributions from Cao. “She has an unusually well-developed
network of influential researchers and policy makers.”
Cao was born in Wuhu, Anhui province’s second-biggest city,
famous for its lakes and, since 2008, a 74-meter-high tower
shaped like a glass fish on a bridge over the Yangtze River.
Her father was a driver and her mother worked in an egg
factory, where hundreds of chickens are kept in rows of cages.
She said neither had a college education because of the Cultural
Revolution, when students from the cities were forced to work on
farms.
An only child, Cao said she never traveled outside Wuhu,
300 kilometers (185 miles) west of Shanghai, until she was
offered a place in Peking University in 1994 to study geology, a
rare choice for a girl at the time. Eager “to see the outside
world,” she jumped at the chance.
“I liked the great outdoors,” she said. “I never thought
I would study economics.”
Field Trips
During the next two years she stuck with geology, making
field trips to the mountains around Qinhuangdao in Hebei
province, accompanied by a telescope and compass, “because I
often got lost.” It was one of these trips that sparked her
interest in China’s pollution.
“We stayed in a hotel downtown,” she said. “I was
reading by the window and I noticed that the pages would become
covered in dust. I guessed it was from the coal. The pollution
in Qinhuangdao was scary.”
Since her visit, the city has become China’s biggest coal
port, delivering 235 million metric tons of the fuel last year,
according to China Coal Transport and Distribution Association.
In her third year, she was among a group of students given
the option of joining a dual-degree program in economics, led by
Justin Lin, who later became chief economist and senior vice
president of the World Bank. Her teachers included Wen Hai, now
vice president of Peking University, and Yi Gang, now deputy
governor of China’s central bank.
Geology Telescope
Attending classes in the university’s large lecture
theaters, “I never succeeded in getting a seat in the front
rows,” Cao said. So she brought her geology telescope to read
the small numbers in equations her professors scribbled on the
blackboards.
After finishing the program in 1998, she combined her
experience and pursued a career in environmental economics. In
2001 she went to Guiyang, capital of Guizhou province in
southwest China, for her first field research in her new
discipline. While in the city — which has large steel, coal and
chemical industries — she noticed the buildings degraded much
more quickly than those she’d seen in Singapore.
“Twenty- or 30-year-old Singapore houses looked newer than
five-year-old Chinese houses,” she said. “Not until then did I
realize how serious acid rain was in China.”
Cao said her challenge was to find a way to persuade a
country pursuing short-term industrial growth also to address
the long-term effects of climate change.
Energy Savings
“People talked about what would happen in 50 or 100
years,” she said. To make the debate more immediate for
lawmakers, Cao decided to quantify the so-called co-benefits of
pollution reduction, things like energy savings and lower
medical costs that provide an immediate return.
Her case study on the public-health benefits of emission
reduction and technology innovation in local power plants,
cement factories and steel plants helped her gain admission to a
doctorate program at Harvard University’s Kennedy School of
Government in Cambridge, Massachusetts, and her research caught
the attention of Harvard ProfessorDale Jorgenson, who later
became her tutor.
She expanded her analysis of carbon control at Harvard
before returning to Tsinghua, where she was one of the authors
of a joint study by China’s Ministry of Environmental Protection
and the U.S. Environmental Protection Agency on the cost
benefits in China’s power industry from energy-saving and
emission-reduction policies for 2006-2010.
Evaluation Tools
Cao’s aim was to provide the Chinese government with tools
it could use to evaluate the real costs of policies. A
breakthrough came when the government published its 12th five-year plan for 2011-2015, which included a reference to the
introduction of an “environmental protection tax,” Cao said.
Li Shuo, a Beijing-based analyst with environmental group
Greenpeace, is skeptical about how quickly such a tax would be
adopted, or whether it would come before a cap-and-trade market.
“We have been seeing the indication of a future carbon tax
for a few years now — most of the time with no meaningful
elaboration or detailed implementing road map,” Li wrote in an
e-mail on Sept. 26. “We see quite some intellectual exercises
here for sure, but none of them could be deemed as a concrete
policy intention.”
China has test programs in seven cities for cap-and-trade
and could expand those to a national system, said Shobhakar
Dhakal, former executive director of the Global Carbon Project,
an international scientific program hosted by the National
Institute for Environmental Studies in Japan.
Low Levy
Cao expects China will begin collecting carbon tax by 2015
at the earliest or within the next five-year plan. The levy
initially will be low — around 5 to 15 yuan per ton of carbon -
- because the government likes gradual change, she said. The
country also may roll out cap-and-trade measures for bigger
companies later on, perhaps after 2020, she added.
“China is getting rich and our lifestyles are becoming
westernized, which means the country will have higher emissions
in the future due to our reliance on fossil fuel,” Cao said.
“The Chinese economy has developed fast, but we sacrificed so
many things.”
Chinese women also “sacrifice a lot,” she said. “It’s
very difficult to strike a balance between career and family.”
Time is “a luxury for me; my family have breakfast, lunch and
supper in canteens either in Tsinghua University or China
Academy of Sciences,” where her husband works as a researcher.
While she splits the housework with him, she spends more time
with their seven-year-old son.
Spicy Rabbit
She said she cooks on the weekend, including her son’s
favorite dishes: spicy rabbit with lots of chili and fish.
Otherwise, her free time is dedicated to helping him with
schoolwork or taking him on trips to museums.
“I haven’t read a book in ages,” she said. “I used to
like novels but don’t have time for them anymore.”
Instead, part of Cao’s time is taken up in lobbying for the
adoption of environmental-tax measures.
“Economists like to talk about tax, but everybody hates
tax,” she said. To craft a proposal that would win support, she
began to canvass opinions of ordinary people and work on a
structure that would be acceptable to all sides.
“The biggest obstacles of climate policies are inertia and
interest groups, just like other reforms in China,” she said.
Those groups include powerful lobbies from big state-owned
enterprises and electricity generators. To overcome this barrier,
Cao suggests the carbon tax be integrated into an overhaul of
the tax system that would limit the cost of new environmental
measures.
“If everybody objects to your reform plan, then it’s
unrealistic,” she said. “It must be both politically feasible
and economically efficient. In economics, you often just make a
bigger cake and let somebody else do the cutting. But we care
about the size of this cake, as well as its fair distribution.
We must make a real policy. We can’t just tell a fairy tale.”
–Sarah Chen and Hu Shen. With assistance from Feiwen Rong,
Kevin Hamlin and Henry Sanderson in Beijing. Editors: Adam Majendie, Melinda Grenier
To contact Bloomberg News staff for this story:
Sarah Chen in Beijing at
schen514@bloomberg.net
To contact the editor responsible:
Paul Panckhurst at
ppanckhurst@bloomberg.net
Tsinghua Economics Professor Cao Jing
Kelvin Ma/Bloomberg
Cao Jing, associate professor of economics at Tsinghua University in Beijing, stands for a photograph on the campus of Harvard University in Cambridge.
Cao Jing, associate professor of economics at Tsinghua University in Beijing, stands for a photograph on the campus of Harvard University in Cambridge. Photographer: Kelvin Ma/Bloomberg
Tsinghua Economics Professor Cao Jing
Kelvin Ma/Bloomberg
“China is in urgent need of climate policies like a carbon tax to save energy and reduce emissions,” said Cao Jing, associate professor of economics at Tsinghua University in Beijing. “If they are well designed, there will be no big impact on the economy. If they are poorly designed, they may bring disastrous consequences.”
“China is in urgent need of climate policies like a carbon tax to save energy and reduce emissions,” said Cao Jing, associate professor of economics at Tsinghua University in Beijing. “If they are well designed, there will be no big impact on the economy. If they are poorly designed, they may bring disastrous consequences.” Photographer: Kelvin Ma/Bloomberg
China"s Poisoned Air Prompts Woman to Devise Green Tax
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