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On the Functions for Government to Promote Low-carbon Economic Development ZHANG Fude School of Law, Shandong University of Technology, China, 255049 [email protected] Abstract: The externality of low-carbon economy and the public goods characteristics of climate and environment determine that low-carbon economy can not be regulated spontaneously by market. The government should exert dominant roles in the course of low-carbon economic development. Those roles should be embodied in government's economical management functions. The government's management functions in the low -carbon economy consists mainly in plan, guidance, supervising and managing, service, appraisal, education, and so on. Keywords: Low-carbon economy, clean energy, Function 1. Introduction Large amount of historical data shows that carbon dioxide in the atmosphere is the culprit for global warming. Through burning of fossil fuels, we have made carbon dioxide concentration in the atmosphere increase from 280ppm at pre-industrial to 387ppm at present. The critical point of which carbon dioxide significantly impacts on climate is 350ppm. In the long run, carbon dioxide concentration will be accumulating gradually. Its specific results will appear through an indirect form. Exceeding the critical point does not mean that a major disaster will occur, but it implies a change from "possibility" to "inevitability". At present, the situation about global warming is more urgent than originally anticipated. Carbon dioxide concentration in atmosphere has already reached so dangerous degree that it is time to take the necessary action to make it return to 350ppm or a lower level. Therefore, it is imperative to develop low-carbon economy. Low-carbon economy is a new economic model based on low energy consumption, low pollution, and low emission. Its essence is the efficient use of energy and exploitation of clean energy. The basic approach of developing low-carbon economy is to innovate energy technologies and reduction technologies of carbon emissions through system innovation and to adjust industrial structure. The experience of Western countries is that the Government should set down policies and take measures to develop low-carbon economy and lead the development of low-carbon economy. The intent of this article is to illustrate Chinese government's dominant roles in low-carbon economy and its function. Government's economic management functions are some administration responsibilities and functions that government should perform and exert when government supervises and administer the various economic activities. These responsibilities and functions aim at optimizing resource allocation or meeting some specific macroeconomic goals in the course of government's organization, leadership, coordination of economic operation and social development. The key to low-carbon economy lies in low growth, zero growth or even negative growth of carbon emissions, which can restore the carbon unbalance of the earth ecosystem resulted from human-made global carbon increase. Therefore, low-carbon economy evidently takes on positive externalities. The goal of low-carbon economy is to alleviate or eliminate global climate crisis induced carbon imbalance of the earth ecosystem and maintain the suitability of human existence. Suitable climate and environment is public goods. In the market surroundings, because of positive externality of low-carbon economy, the external benefits from the implementation of low-carbon economy can not be automatically transformed into internal benefits of economic entities and the cost from the implementation of low-carbon economy can not be made up either. At the same time, because the climate and environment possess the public goods characteristics, the benefits of low-carbon economy can not be obtained alone by the economic entities. Carbon dioxide 309 emission beyond criterion will not necessarily increase economic entities' production cost. Therefore, the economic entities which regard the pursuit of profit maximization as their goal do not consciously go for energy technology innovations or the use of clean energy. Market mechanisms can not adjust spontaneously low-carbon economy conducts. Economic entities often do not have the inherent incentive to reduce carbon emissions. The externality of low-carbon economy and the public goods characteristics of climate and environment make the market fail to regulate low -carbon economy. This requires the Government as an agent of public interest to bring into play its economic management functions and to adjust and induce economic conduct of enterprises. The purpose of government administration is to reduce the quantity of carbon emissions and to settle the environmental problems resulted from intensive carbon emissions, which maintains social economy for sustainable development. Consequently, the main goal of government in the low-carbon economy model is to overcome market failures and induce enterprises to perform low-carbon economy conduct consciously. With the low-carbon economy model, the market failure mainly attributes to the public goods characteristics of climate and environment, economic externalities and price mechanism failure, which requires that the implementation of government economic functions primarily aims at those aspects above mentioned. What the government should do is to remedy the defect of market mechanism and encourage economic entities to develop low-carbon economy consciously. Of course, we can only say that government leads development of low-carbon economy, and should not become into the main body of low-carbon economy. Low-carbon economy is essentially a market economy system, market regulation is still fundamental. The fundament on which government leading functions in the low-carbon economy is market mechanism. The laws and policies established by government for promoting development of low-carbon economy should regard market as platform on which the functions are exerted. Government can not go against the basic principles of market economy, only because of promoting the development of low-carbon economy. The forms of government's promoting low-carbon economic development consist mainly in the following items. 2. The Forms of Government's Promoting Low-carbon Economic Development 2.1 Indirect macro-control. In order to realize the total balance of resources, environment and social development and ensure socio-economic sustainable, stable and coordinated growth, the government adjusts some of the economic variables (expenditure, money supply) which it possess to influence the numerical value of various variables in market, consequently to guide the various conductors in the market to act automatically in favor of a low-carbon economy. That means indirect macro-control. It is a sort of mode for government to intervene economy. With this mode, the government dose not directly use executive orders to indicate a market entities what can do, or what can not do, and through regulation of all market parameters government indirectly induce the market entities to act according to the government's will. This is the biggest features for government to intervene economic performance through macro-control functions. 2.2 Direct government control. Direct government control mainly refers that the number of administrative agencies within government, regarding putting low-carbon economy in order as theirs own responsibility, take direct control of or interference with the behaviors of micro-economic entities (mainly refers to corporate) by the light of laws and by means of a large number of enacted laws, regulations, orders and awards. 2.3 Direct management. Government as independent legal entities directly participate and thus take guiding influences to socio-economic activities by the means of setting up of state-owned enterprises or supplying with community infrastructure and public services to society. 310 To consider the way of government's promoting low-carbon economy, government functions in low-carbon economy appears in the following main areas. 3. Government Functions in Low-carbon Economy 3.1 Planning functions. On the condition of market economy, the market must play a fundamental role in allocating resources. It is impossible for the instructing plan from Centralized government to allocate resources effectively. But dose plans have no role? In fact, on the case of market regulation, rational individuals' decision-making targeting at utility maximization may lead to collective irrationality and impairment of social welfare. Insufficient information on which individuals' decision-making depend and limited rationality may lead to wrong decisions. Therefore, Sometimes the market may fail. Deterioration of climate and environment is the best example of failure of market regulation. On the condition of market economy, the Government's plan is indispensable. Of course, these plans are not the mandatory plan in the planned economy era, but the program of improving market economic development. The background of low-carbon economy is deterioration of climate, which are the inevitable results from human unrestrained, unplanned exploitation and use of carbon-intensive resources. In order to keeping balance between environmental sustainability and social development needs, keeping balance of the interests among different generations and maintaining sustainable development, low-carbon economy is inevitable choice, and low-carbon economy is a kind of economic model that designedly and rationally utilizes nature resources. In low-carbon economy, the Government's planning functions should be strengthened. Government should make programs about major policy, directions and strategies of low-carbon economy. Those programs are not only total programs on social economy, but also the programs related to specific details. Government's programs about low-carbon economy are major guidelines on society and economy development drawn up by government, after Government's integrating whole information of society and economy development and analyzing the problems of climate deterioration and shortage of resources at current society. Those programs can provide a realistic blueprint for social development and point out the direction for the development of enterprises. At the same time, such programs also strengthen the purpose of administrative actions and help Government promote their own efficiency and effectiveness. 3.2 Guiding functions. Under the confirmed guidance of developing low-carbon economy, on the basis of market mechanism and rule of value and by means of indirect macro-economic adjusting lever and micro-economic stimulating measures such as, taxes, subsidies, credit and so on, Government makes producers and consumers who inappropriately exploit and harness energy bear the corresponding costs, makes low-carbon economy behaviors of corporate and individuals match with economic benefits directly and actively guide and encourage enterprises to conduct various kinds of economic activities in favor of low-carbon economic principle. That is guiding functions. Government uses economic means to guide enterprises to develop low-carbon economy that can stimulate businesses and individuals to carry out the low-carbon economic activity, that is conducive to develop low-carbon economy in-depth and sustainable. 3.3 Regulatory functions. Regulatory functions are that government, by the means of administrative compulsory measures, such as law enforcement, administrative orders, makes enterprises and individuals implement actions consistent with the principles of low-carbon economy. In general the implementation of mandatory measures consists in four steps: identification of regulatory standards - licensing - supervising implementation sanctions against offenders. A series of environmental management systems has been formed in the course of environmental protection in China, mainly including assessment system of environmental 311 impact, three simultaneous system, disposal charging system, disposal permit system, time limit treatment system, environmental goal responsibility system. This series of systems act on controlling environmental pollution and environmental protection. Likewise, those systems are also very necessary in promoting low-carbon economy. Such systems as carbon disposal charging system, carbon disposal permit, time limit treatment and so on can be regarded as mandatory measures to promote low-carbon economy. Commonly at the beginning of development low-carbon economy, the use of mandatory measures can bring about better effect. 3.4 Service functions. In the course of government's promoting low-carbon economy, service functions are also very important, for it provides low-carbon economic development with supports. The Government's main service functions are to provides low-carbon economy with technical support and information services. Low-carbon economic can not develop without advancement of science and technology. Government should support technology research on low-carbon economy and enhance capability of independent innovation. Government can also introduce foreign advanced technology and build technology platform of low-carbon economic development. In information services, Government should establish sound service system of information consultation, build information sharing system, speed up exchanges about knowledge of low-carbon economy and technology, ensure flexibility, timeliness and effectiveness of information exchanging among different businesses and industries. 3.5 Evaluation functions. On the basis of evaluating the level of low-carbon economic development, the situation of regional low-carbon economic development can be monitored and predicted, problems identified and developing direction corrected. Evaluating the level of low-carbon economic development can also provide with policy making services for the development planning and regulatory policies of low-carbon economic development. Low-carbon economy is a kind of economy depending on policies, so how to measure effect of the promoting policies of low-carbon economy and How to evaluate the performance of Government's promoting low-carbon economy are fundamental work for low-carbon economic development. Only in this way can the policy optimized continually, and will remarkable results for Government's promotion be achieved. Currently, the Government should speed up to establish, implement and improve the low-carbon GDP accounting system, so that the Government can evaluate the real socio-economic status, which is a critical link for developing low-carbon economy and abandoning the extensive economic in which the ecology is demolished and the resources are wasted. Second, we must reform the evaluation mechanism about government performances. In the past the evaluation of civil servant performance places so much emphasis on GDP growth rate, fiscal revenue and other economic indicators, that a considerable number of administer leaders, in order to achieve the short-term performance effects, pulse on large projects and exploit vigorously, compete GDP growth rate for the cost of carbon intensive emissions and climate-environment impaired. We have paid a heavy environmental cost for doings above. Therefore, to develop low-carbon economy, we must reform the existing evaluation system for performance; establish a set of assessment criteria reflecting the coordinated development between economic growth and environmental resources. 3.6 Educational function. At micro-aspect, in order to serving the turn of economic model, the economic behavior fashions of enterprises and the life-style of publics must be changed fundamentally. If only depending on exteriorly mandatory measures, the changing of fashions of behavior and life is difficult to be effective, it must rely on the changing of entities in values and moral standards. Only when the economic behavior fashions of enterprises and the life-style of publics are supported by more internal moral, the action of entities would be done initiatively and consciously. In this way low-carbon economy would run in order and in effect. Value conception and consciousness of ethics and morality can not do without education. 312 To develop low-carbon economy, the government must first play the basic role of public education. The government should make full use of broadcast television, newspapers and magazines, Internet and other modern propagandizing tool to make public aware of the ponderance of global warming problem, enhance awareness of environmental crisis, popularize knowledge of low-carbon economy. The government should advocate moderate, health and low-carbon consumption. The government should stress on low-carbon education in general education. Resources conservation, clean use of energy and other knowledge should be incorporated into the textbooks of general education at all levels. At the same time, in the adult education, low-carbon knowledge should be also brought into all levels and types of training for specialized personnel, managers and entrepreneurs. In short, the government should take advantage of various forms of publicity and education activities to develop and enhance the environmental awareness and low-carbon awareness of all members of society, rear low-carbon economic concept, mobilize the whole society to broadly participate in low-carbon economy activities. These activities will make low-carbon economy recognized and supported by all social members. These activities will create a good social atmosphere for the development of low-carbon economy. 4. Conclusion The market fails when it regulates low-carbon economy, which is determined by the externality of low-carbon economy and the public goods characteristics of climate and environment. The market failure needs government to play a main role during promoting low-carbon economy. Those roles, of course, are embodied in government's functions. The government's management functions in the low-carbon economy consist mainly in plan, guidance, supervising and managing, service, appraisal, education, and so on. References [1]. Zhang Yu, Chen Xu Mei, Zhang Yue Jun. Low-carbon economy is the only way to achieve scientific development concept. China's energy. 4(2008), P21 (in Chinese) [2]. Hu Tu Yang. Low-carbon economy and the development of China. Impact of science on society. 1(2008), P11 (in Chinese) [3]. Yao liangJun, Sun Chengyong. Italy's policy of low-carbon economic development. China Science and Technology Industry. 3(2008), P58 (in Chinese) [4]. Wang Tao. The future of China's low-carbon economy. Low-carbon economy. Beijing: China Environmental Press, 2008:64 (in Chinese) 313