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Could China Be Greener Than the US?

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We’re number three! We’re number three! We’re number---dammit!

When it comes to offering incentives to encourage green energy, the US is behind both China and the U.K., according to a new study by the Climate Institute.

Britain boasts an impressive implied carbon price per ton of $29.30, followed by China with an implied carbon price of $14.20 per ton.

Here in the US, we’re looking at $5.10, followed by Japan ($3.10), Australia ($1.70) and South Korean ($0.70).

Naturally, the higher the implied carbon price the greater the incentive to move to green energy.

According to Bloomberg, China’s incentives—which are triple those of the US—“ aims to cut carbon dioxide emissions per unit of gross domestic product by 40 percent to 45 percent from 2005 through 2020.”

If all this talk of China stealing the spotlight is making you feel a little insecure, relish in the fact you’re not alone.

The study comes on the heels of a well publicized dispute between China and the US over China’s green technology sector. Last Friday, the United Steelworkers filed a petition to the Office of the US Trade Representative alleging that “China employs a wide range of World Trade Organization (WTO)-inconsistent policies that protect and unfairly support its domestic producers of wind and solar energy products, advanced batteries and energy-efficient vehicles, among other products, as China seeks to become the dominant global supplier of these products.”

China has defended its position. The Financial Times reports that Zhang Guobao, head of the National Energy Bureau, offered that “Chinese subsidies to new energies companies are very small, but the United States had subsidized the new energy enterprises with 4.6 billion U.S. dollars in cash in the first nine months of 2010, including 3 billion U.S. dollars to wind power enterprises"

One possible explanation for the dispute is, surprise, politics.

The FT observes:

“US rhetoric on China typically heats up in advance of an election season, and the US November midterm elections will be particularly closely fought. China’s currency is also in the spotlight this election cycle as politicians point to the undervaluation of the renminbi as a cause of slow economic recovery in the US.”
POSITION:  No positions in stocks mentioned.