1. Engaging China on Reducing Air Pollution 11 January 2008 Dennis Leaf U.S. Environmental Protection Agency Washington, DC USA

2. Introduction The U.S. is engaged with China on reducing air pollution on two main tracks –Institutional: EPA has been actively cooperating with China since mid-1980s. A Memorandum of Understanding between the U.S. Environmental Protection Agency and the Chinese State Environmental Protection Administration was signed in 2003. An annex to the MOU concerns Clean Air and Energy strategy. –Political: A Strategic Economic Dialogue initiated by Presidents Bush and Hu in 2006 has resulted in 3 multi-ministerial meetings This dialogue involves many issues related to trade, food and product safety, and air pollution

3. Main SEPA-EPA Activities Under MOU Regional Air Quality Management Conferences (RAQM) with Ad Hoc Participation/Support by Italy and EC Developing the Institutions and Infrastructure for Improved Air Quality Management and SO 2 Emission Trading Clean Fuels & Vehicles

4. Major Air Pollution Issues Under the Strategic Economic Dialogue Joint Economic Study on the costs and benefits of various air pollution control strategies, focusing on power generation and clean fuels and vehicles Low Sulfur Transportation Fuels Other key projects include methane capture, and cooperation on energy efficiency (e.g., work with NDRC)

5. The Emerging Giants of World Energy China & India will contribute more than 40% of the increase in global energy demand to 2030 on current trends 0% 20% 40% 60% 80% 100% Total energy CoalOilNuclearHydroPower sector investments Rest of the world India China Increase in Primary Energy Demand & Investment Between 2005 & 2030 as Share of World Total OECD/IEA - 2007

6. New Light-Duty Vehicle Sales in China China’s oil imports reach 13 mb/d in 2030 as car ownership jumps to 140 per 1 000 people from 20 today Overtake US sales Overtake Japan sales OECD/IEA- 2007

7. Joint Economic Study Assess the economic, environmental, and health impacts of policies to reduce SO 2 emissions and reduce energy needs Build on existing cooperation on energy efficiency, pollution control policies, and economic analysis, and share information about best practices Develop China-specific models to improve the capacity to conduct cost-benefit analyses A summary report was presented at the 3 rd SED in December 2007; a full report is expected in the first half of 2008

8. Regional Air Quality Management 2005, 2006, and 2007 Conferences - Over 150 people attended –Over 25 provinces, many localities, electric power sector, NDRC, etc. Significant understanding and acceptance of the concepts and principles of regional air quality management on the part of Chinese partners, and the need to cooperate across provincial and urban boundaries to improve air quality The 2008 conference may focus on strategies for reducing fine particle emissions from the electric power generation and transportation sectors

9. Institutions and Infrastructure for SO 2 Emission Trading Improve in-stack emission measurement practices in China Design emission trading policy Enhance compliance assessment capabilities Develop emission and allowance tracking registry Conduct assessment of economic impact from policy

10. Clean Fuels and Vehicles Completed successful workshop on Compliance Management for Vehicles and Fuels in December 2006—attended by 200 people Retrofit devices installed on 20-30 buses in Beijing: project successful—Beijing funded expanded retrofit program Three SEPA engineers trained in compliance programs during two months at EPA facilities. Worked with SEPA and partners to develop plan for sulfur reduction in transportation fuels SEPA has joined the UN Partnership for Clean Fuels and Vehicles

11. Observations The bilateral institutional relationship is strong and growing stronger as China’s commitment to environmental quality strengthens The Strategic Economic Dialogue has helped to focus high-level attention on critical issues, and has included key economic agencies (e.g., National Development and Reform Commission and Ministry of Finance) It takes time to develop relationships and identify key institutions and players in China Important to relate cooperation to China’s Five Year Plans U.S. and EU can provide important “lessons learned” but China has to decide on major environmental infrastructure investments (institutional and policy initiatives) Critical to continue to show that economic growth and environmental protection can move forward together The bottom up and top-down approaches are both important Useful to engage relevant multilateral organizations (e.g. OECD, ADB, PCFV)