Carbon Reporting with only one catch.

Really the Hong Kong the government is so far behind the curve in environmental matters I am surprised that it is not a serious concern for business, or are they blind to the risk? Instead of leading Asia, we lag behind the so called developing countries, and it is our economy that will suffer. I think nobody would want to try and predict the outcome from the Copenhagen summit but as a Chinese city we can expect some impact.

I have previously reported that the writing is on the wall for voluntarily carbon reporting.  And that prediction is one step closer to reality since the EPA (USA) has grasped the opportunity of the new 2009 presidency and signalling intentions for compulsory carbon reporting for US factories.

Global Carbon
Since Carbon is a global phenomena it does not require a vivid imagine to see where all this could lead.  Let’s assume for a moment that China continues to claim “developing country” status and does not require compulsory carbon reporting for manufacturing facilities. Importing countries, like the USA could demand it. You might think I am stretching the US EPA’s jurisdiction, perhaps, perhaps not. Consider the considerable power wielded by US trade negotiators, and the political pressures recently demonstrated by the “Buy American Only” stimulus package! It seems clear to me that any factories or business exporting to foreign markets will need to report their local carbon emissions.

Indeed it could be argued that the China is already heading in this direction (China wants importers to cover some emission costs) has already laid the groundwork, with Chinese official’s arguing that the cost of Chinese emissions for products exported to US markets are the responsibility of US market. In the future US importers may be required to bare an extra cost, the carbon cost, for emissions within China, but wait China is not the only exporter to the US.  Surely India, Thailand, Vietnam, etc. will have equally valid reasons to claim equal rights?

While US business might be quietly smarting over the idea, extra costs that are never welcomed, another surprise could be around the corner because the distant carbon emitted, and hence its cost, will surely give them further reason for pause.

China Energy Efficiency
If your report card was based on China’s energy efficiency, its one that you’d probably like to hide. The power generation sector is predominately coal based that is well known, lacks modern boilers and the latest controls technology. The risk from the resultant emissions could cause a nasty surprise. How this will play out is unclear, it is really a political trade issue more than a technical Carbon issue, undoubtedly there is an unseen business risk.

John Herbert
Consultant
Kelcroft E&M Limited