Tracking emissions in China

Katie Luu: From MIT, this is the Energy Initiative. I’m Katie Luu. Today we’re talking with Valerie Karplus, assistant professor of global economics and management at the Sloan School.

Your research is looking at the ramifications of the government response to “airpocalypse”. Can you talk more about your work with power plant emissions and mentioned satellite data?

Valerie Karplus: If we go to China today, and actually, you mention the airpocalypse. Rewinding to 2013, the airpocalypse was a series of weeks in January when residents of mainly the northeastern part of China, particularly Beijing, because Beijing is so populous, many residents were affected by it but actually much of the northeastern part of China was really suffering from an extended episode of degraded air. The accounts of the concentrations of particulate matter were off the charts relative to any standard scale that is used internationally and well above World Health Organization measures of safe levels. When you walked around Beijing you couldn’t see your hand in front of your face. I remember back in grade school in the 80s seeing these doomsday visions of what environmental destruction looks like. I wasn’t in Beijing at that time but I was doing a lot of work in Beijing and was in Beijing during some severe orange alert episodes that happened later in that year. The air quality was basically unbreathable. Many residents stayed inside. I think the health toll is really significant. One of the leading risk factors for death in China, and India as well, and other developing countries, is degraded air. I think the airpocalypse was, more than anything else in China’s recent history, a wakeup call and a realization how bad this problem is. There were efforts. Journalists began to write about the problem of air pollution in China around that time, really bringing it to the forefront of the public mind. If you look back before, you had people referring to degraded air around Beijing. When I first went to Beijing in 2002, we referred to it as fog as well. The Chinese word for fog was what everyone thought the pollution was. Now that awareness has really changed dramatically as a result, first of the airpocalypse, but then a series of additional episodes of degraded air that unfolded over the years since then.

I think what’s really exciting about the work that we published, and that’s written up in Energy Futures, is the idea that developing countries, governments are looking at the increasing threat of air pollution as one additional public policy challenge that they’re increasingly trying to meet by adopting standards and policies. These standards and policies, many governments in developing countries have adopted standards and policies that look actually quite similar to those that are introduced in developed countries.

But the biggest challenge is understanding whether those standards and policies are actually being implemented on the ground. What’s happening at the plant level? That’s not something we have a lot of insight into. Even in the developed countries, I think there are reasonably good sources of data, but they’re not always so easy to get. We often forget to look at what plants are actually doing and what they’re doing from hour to hour, day to day.

What our research starts to unpack and understand, in the Chinese context, is how are power plants in China that are newly being asked to monitor their pollution coming out of their stacks, is, are plants complying with new regulations? What’s happening at the ground level, and is pollution actually falling? I think what our research does is to say, all right, we have essentially two independent from each other data sources. We have plant level measures that are readings that are coming out of plant smokestacks and we’re putting those next to readings that satellites, NASA’s Aura satellite and the ozone monitoring instrument, are providing to us. In particular, we’re looking at SO₂ readings, the column amounts of SO₂, in specific locations across China. We’re matching those up with what plants are saying they’re doing in terms of their plant level stack emissions. With that information we can say, first of all, how did a new standard for SO₂ change what plants actually did? Are plants meeting standards? Which are usually written in terms of concentrations of the pollutant coming out of the stack. Are those levels reducing around the policy deadline? Which, in July of 2014, all plants had to meet new accelerated standards for air pollution, or the concentration of air pollutants that they were emitting. How does that correspond to what we see in the satellite data? The satellite data really provides an objective check on what the plants are reporting. What we are really interested in is the match between what the plant data are saying and satellite data are saying.

An interesting question we were able to ask in this research was to say, first of all, how much are plant emissions changing on the policy deadline? Are they changing differently in different places as a function of policy stringency? There the policy was differentiated between areas that were essentially more populated, where more population was at risk from local air pollution. These were called the three key regions: an area around Beijing, an area generally around Shanghai, the Yangtze River Delta, and then in the south, in the Pearl River Delta. These were areas that were under intense scrutiny, also because they are major centers of commerce and areas where there’s a rising middle class. I think these areas were singled out as areas for tighter control. We compare what happened in those areas to what happened in the rest of China. In those three areas, the three big regions that I mentioned, you have air pollution standards that were significantly tighter after the introduction of the new standard relative to those areas in the other parts of the country. These plants in these areas were asked to meet a 50 mg per cubic meter standard for their SEMs emissions relative to a 200 mg per cubic meter standard, which was the standard in the rest of the country.

What we’re able to do is say, is there any difference in the extent to which the plant data match the satellite data as a function of that policy stringency? We do indeed see a difference. We see that in the areas where plants were facing a less stringent increase in the policy requirement, we see much more evidence that the reduction in the satellite data match the plant data, and indeed suggests that the plants are reporting accurately. Whereas in these three key regions, with the isolated plants that we have, we have to use isolated plants because we don’t want emissions from other industrial neighboring sources to interfere, we use this across the board and consistently in the analysis, we find for those plants in the key regions, we actually don’t find evidence that the reductions reported at the plants are recorded in the satellite data, which we trust to be the objective measure. That suggests to us that, it’s hard to know, but suggestive evidence that these tougher standards may have pushed firms into a situation where they might have taken steps to manipulate the data rather than to change the underlying pollution control levels.

KL: A lot of people talk about carbon dioxide these days but your research today focuses on sulfur dioxide, which is what causes the air pollution. Can you talk more about what inspired you to go down that path of air pollution?

VK: We focus on sulfur dioxide in this work because it’s one of the major precursors to the formation of fine particulate matter. Which is one of the leading causes of the health effects of air pollution that we see in terms of cardiac and respiratory problems. The special thing about sulfur dioxide, we could have looked at a broader range of pollutants here, but in this case, sulfur dioxide is really a proxy. It’s emitted by large industrial facilities and specifically by coal-fired power plants. It’s not emitted from vehicles. It gives us a good signature on, what are these plants emitting? We need that because we’re using satellite data and plant-level data and we’re putting it together. The satellite data would pick up all sources of SO₂ in a given area. If we used a different pollutant, we would be picking up additional maybe transportation sources. SO₂ in its own right has adverse cardiac and respiratory effects but it contributes to the formation of even this fine particulate matter, PM_2.5, which you hear in China these days is actually a standard part of people’s vocabulary now.

KL: A couple of questions to follow up on this. One would be, how are you accessing the information from the power plants and from the NASA satellite? Is it publicly available or did you have to pull some strings?

VK: The NASA data are publicly available. I think this is also a tremendously important resource. You think about needing an independent check, regardless of where you are on earth. In our analysis for China we use the NASA data and compare them to the SEMs data, the plant-level stack measurements, for the very first time. But similar studies looking at correspondence between satellite and ground measurements have been performed for the United States and for other countries and having these publicly available data sources is a godsend if you want to conduct this kind of detailed research. Also, for regulators, I think it will play a very important role going forward in helping regulators identify anomalies.

I think it’s really to the credit of China’s Ministry of Ecology and Environment that the plant-level hourly emissions data are required to be posted online. Researchers in China are really benefiting from this as well. It provides a tremendous new resource for regulators, for researchers, for scientists. I think this is perhaps one of the most exciting things about doing this research was bringing this… you have to, of course, scrape the data and clean the data very carefully in order to ensure that you’re using valid data. Once we did that, though, I think we feel very confident that these data are providing a whole range of new insights into how plants are responding to regulation.

KL: How did you first become interested in energy and policy in China? It’s safe to say you’re an expert, so we just want to hear where your path, where you came from.

VK: I’ve been fascinated with the developments in China since I finished college, I guess it was around 2002. That was right after China joined the World Trade Organization and was really starting to emerge on the world stage. As an increasingly interesting case of how a country was really sustaining economic growth over a long period, providing opportunity to hundreds of millions of people on a scale that history had never seen. This type of transition fascinated me. I didn’t know much about China at that time but I was fascinated with the developments that were happening.

I received a Luce Fellowship, which sends young Americans to China who have no experience with the Chinese language or culture. It was a sink-or-swim, fascinating experience for a year. It was during my time there that I became deeply immersed in some of the questions that, at the time I was studying biotechnology but you couldn’t ignore the air all around you. The fog, as I mentioned, was also quite present still at that time, in the middle of China’s industrial development. I became fascinated with the challenges of energy transition that the country was going to be facing as it developed and as households began to ask for better quality of life. That began to include things like clean air, clean water, alongside the sort of portfolio of economic possibilities that I think comes with development.

I think that living there and working out alongside people, I began to also very strongly identify with many of my colleagues and understand their increasingly present concern about air quality and environmental degradation and also understand, in terms of how China’s energy system is governed, how important it is to get the incentives right and moving towards lower carbon sources of energy in that country.

I came back actually to MIT in 2006. It took a while to be able to really focus my work on China. I learned a tremendous amount in the interim. But I was very involved in projects during that time, and in particular a collaboration with Tsinghua for five years which led to a tremendous number of insights into the possibilities for low-carbon transition in China.

KL: I think you mentioned India earlier. On your detour between the Luce Fellowship and then coming back to MIT, did you look at other Asian countries as well?

VK: I think pollution as a byproduct of industrial development is a challenge facing all developing countries at some stage. Unless you’re fortunate to have a carbon-free energy system by virtue of availability of natural resources. A lot of this is very path-dependent though. Places like India, China, South Africa still rely heavily on coal. There are huge challenges facing countries across Africa. In terms of moving away from carbon-intensive sources without taxing their economic growth trajectories over the longer-term.

In my recent past research, we’ve looked also at several countries in Africa and the uptake and impact of solar energy, as well as you mentioned Asia, and India is of course struggling with severely degraded air. We’re actually looked at, on the energy side, some of the implications of different pathways for meeting India’s climate targets. We haven’t looked at air pollution explicitly yet but that would be a natural next step. There’s also new research going on in India focusing on the continuous emissions monitoring systems that we use in China. Which is really exciting, out of the University of Chicago. I think that more researchers are really seeing and accessing the value that these data, these high frequency and increasingly reliable, well, you can check that, but that these data have to offer.

KL: I think that’s great that other researchers are seeing the value in this. Are you working currently with any researchers at other institutions for studies you just mentioned?

VK: Yes. I should say, the present study is carried out with researchers at Columbia University and University of Colorado at Boulder. My co-authors, Douglas Almond and Shuang Zhang, were absolutely instrumental. This work is really the joint product of a broader effort to try to make accessible the SEMs data and to understand patterns in the SEMs data for China.

In terms of other projects, definitely. I’ve had the pleasure of working with some terrific MIT… actually the MIT Tata Center supported a graduate student who did a lot of the work together with a principal research scientist in the Global Change Program here at MIT. It was just accepted in Climate Change Economics. Other projects continue to build on the momentum that we established in the China Energy and Climate Project, which was a major effort between 2011 and 2016. That’s a collaboration with colleagues at Tsinghua University in Beijing. These are China’s leading experts on air pollution, on energy, on climate change. Many of them are still strongly engaged. We just had a postdoc return to Tsinghua to get an assistant professorship there. We continue to actively collaborate on these issues. I’m really excited about what the next iteration of this research will bring. You can think of this research as being more broadly part of an area you might think of as pollution forensics, and energy and pollution forensics. Trying to understand what’s actually happening on the ground and comparing that to what policy has required and thinking about what that can say about how we can make policy more effective.

KL: You write, you research, and you also teach at the Sloan School. How does your research influence your courses and vice-versa?

VK: This a great question. I would say that there’s a way that China broadly has strongly influenced my teaching interests. I teach an action learning course, which is a hallmark of Sloan’s education offerings. It’s basically sending students to work with companies over the course of a semester but also on site. In the case of China, that involves travel over two weeks in the middle of the semester. It’s really a hands-on experience in understanding how business is really done on the ground in China and gaining an appreciation for the new business trends. That is offered every spring.

I also teach a course that is really much closer to my research, global energy politics, markets, and policies, in the sense that it has a lot of discussion, and interaction also with practitioners around the question of, how do you reimagine the energy system? How do you orchestrate a transition to lower carbon energy sources? How do you do that at multiple levels? At the level of the business firm, the individual, all the way up to states, regions, countries, and then, of course, at the global level. We have the students negotiate a global climate agreement as part of that course. The Climate Interactive has a terrific simulation. Colleagues at MIT have really facilitated the possibility to bring that into the classroom in the context of this course. Students have the opportunity to simulate a negotiation and then understand viscerally what it means to commit to actions at the national level that ultimately need to add up to global goals and levels of ambition that are needed to address the climate problem, keep temperature rise below two degrees Celsius. It’s not easy. In the past few years we’ve had, only one of my classes has reached that goal. But indeed, it’s much more the journey of understanding how fraught and how challenging and how complex that changes that need to take place in order to address the problem are something that students really come away with after something like that. I think on multiple fronts, both the China and the energy elements connect closely with my teaching.

KL: What is something most people would be surprised to learn about global energy policy or policy in China?

VK: One thing that was really surprising to me was actually that, within China there are, you think of China perhaps from the outside as a unified actor, as having a single mind. But within China, there are a lot of… indeed it’s true, in any complex nation you have a lot of different interests, different stakeholders. The idea that China could convert its energy system to renewables tomorrow if it just had the political will, I think is actually it’s actually far from the truth. If you think about the challenges of evolving a system, you have stakeholders on both, on many sides of the issue, actually. The local level, the national level. You have consumers who are increasingly representing their interests in keeping prices low. How these, the political economy of energy system transition in China I think is different, but it’s just as complex as it is in many other parts of the world.

KL: One thing that I came across when I was preparing for this is, and you had mentioned it, is there have been since the 2013 airpocalypse episode, there have been other episodes of degraded air quality in China. I saw another airpocalypse referred to in the Financial Times from December 2016 talking about Beijing. It was saying that flights were cancelled and even restaurants were forbidden from running their fires to roast duck for a time being. It was so bad that they also restricted traffic. They only let vehicles with odd-numbered license plates go on one day and even on another. You can imagine that impacts so many things in terms of making deliveries for businesses. It’s just amazing to me what a standstill airpocalypse causes in a nation like this. Also, in that article, they were saying that there’s a tension between China wanting to really cut back on the emissions but also wanting to stimulate industry and make sure that they’re not holding industry back from the economic side of things. I’m wondering what you think of all of this.

VK: I think the reality is that there’s a real challenge that China’s policymakers face. Environmental damage has a negative effect on the economy, that much is true. That has continued to mount to the point where I think policymakers have started to acknowledge that indeed some investment environmental protection is actually good for the economy and that those benefits will be captured by businesses, by people. Fewer hospital visits. Generally higher labor productivity. There are ways in which addressing pollution is aligned with growing the economy. But on the other hand, you can also see ways in which tougher regulations will impose costs. Those costs will be fairly concentrated on emitting businesses, and to some extent households.

I think that it’s really important to put in place the types of policy mechanisms that will give flexibility to minimize the costs on businesses and for those the emitters to have the opportunity to try to identify what are the least-cost ways of reducing emissions and meeting the goal. I think that’s partly where these longer-term targets come in. If I set the finish line little further out but the target is a little tougher, it might be less costly in fact for me to meet that than it would be for me to meet a less stringent short-term target. Thinking carefully about how to incorporate the type of flexibility while still meeting environmental targets is going to be the name of the game. That’s not just going to come from the top down. That will partially come from building an awareness and changing mindsets and approaches within local governments. Increasing the seriousness of enforcement and so forth. There’s a lot of capabilities building that will need to be done in order to support the implementation of policies. I think the first step is recognition of the magnitude of the problem, and the second is thinking about how can we create the flexibility and incentivize the transition that is compatible with economic goals.

KL: Could you let us know where people can keep up to speed with your latest research? Do you have a website or Twitter feed?

VK: I try to tweet about all of my new research, you can follow me @vjkarplus on Twitter. I also have a website, just simply vkarplus.com. That will provide the full picture on where our publications are and potentially any new working papers that are coming out soon. I encourage everyone also just to stay tuned. I think MIT News is also a great place to see what folks at MIT are doing. Our research is sometimes featured there. It’s a good way to keep up with what’s happening.

KL: Absolutely. Thank you so much, Valerie. It was such a pleasure to talk to you about all of this.

VK: Thank you so much. This is a lot of fun. I appreciate it.