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This paper examines the impact on global warming of development and structural changes in the electricity sector of Guangdong Province, China, together with the possible effect of international instruments such as are generated by the Kyoto Protocol on that impact. The purpose of the paper is three-fold: to examine and analyze the data available, to put that data into an explanatory economic and institutional framework, and to analyze the possible application of international instruments such as CDMs in that locality. Our plans are to supplement this work with similar work elsewhere in China.

This research contributes to two groups of existing studies. First, several researchers have studied China's energy industry, including the utility sector, in the context of global greenhouse gas emissions and abatement policies. Not much attention has been paid to the electricity sectoral development at the sub-national level and its regional differences. Yet, important decisions are taken and important constraints operate at the sub-national level. Second, since the Kyoto Protocol provided for the Clean Development Mechanism (CDM) as a policy instrument to involve developing countries in carbon emissions abatement in 1997, a number of studies have focused on the operation of CDM. Applying CDM is challenging because its rule of additionality requires that a "baseline" estimate be made of what developing countries, including China, would do to reduce carbon emissions in the absence of CDM. Minimizing moral hazard and other incentive problems is a daunting task. The studies to date have focused on discussions of general embedded problems and desirable principles for applying the additionality rule. However, how to identify baseline factors in specific economies and evaluate their impact on the energy sector decisions in terms of transaction or institutional costs remain unsettled questions.

This study is a first step towards filling that gap. By investigating Guangdong's electricity sector, we hope to highlight new characteristics of Guangdong's electricity market and institutions, which may have been neglected from large model and highly aggregated approaches. At the same time, by examining the economic and institutional features of the decision making process in Guangdong's electricity sector, we hope to get a better understanding of the factors affecting possible baselines and to draw some preliminary implications for CDM and other carbon abatement policy instruments. This study may also provide a reference for other regional analyses and permit some preliminary implications for baseline and abatement policy studies to be drawn.

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Working Papers
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CISAC
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Michael M. May
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The United States has a global security strategy, in deeds if seldom clearly in words. The U.S. security strategy is to enlarge the areas of the world that it can control militarily and to weaken all states outside those areas. The strategy does not rely solely on military means, but enlarged military control is the end and military means--armed interventions, alliance extensions, arms sales--usually lead the way. Aside from a 1992 Pentagon trial balloon, which was poorly received though accurate enough as far as it went, and a few other statements, the strategy has been manifested via a series of consistent actions rather than formal statements.

Along with this overall strategy, the United States also has policies regarding nuclear weapons. Some of these policies are stated, some are tacit. The stated policies include de-emphasizing nuclear weapons, discouraging nuclear proliferation, and pursuing nuclear arms reductions, a comprehensive test ban, and other nuclear-arms-control measures. The tacit policy is reliance on deterrent nuclear forces to limit escalation of conventional conflicts and to offset the nuclear forces of other powers.

These two policies, military enlargement and reliance on nuclear stability and arms control, are not compatible. Continued enlargement backed or led by military force will not support de-emphasis of nuclear weapons, let alone nuclear disarmament. It may not support nuclear nonproliferation even among allies, depending on whether the United States is seen to become overextended or overcommitted at home or abroad. Military enlargement weakens support for several of the arms-control measures on the U.S. agenda. Enlargement is also likely to lead to crises that will test the stability of nuclear deterrence more seriously than it has been tested since the early years of the Cold War.

In this paper I first remind the reader of the main components of the U.S. military enlargement strategy. Next I describe why other states, given the U.S. enlargement strategy, find and will continue to find nuclear weapons useful. These states are not all potential opponents. Third, I explain how the U.S. enlargement strategy undermines nuclear arms control. What is more important, I show why it will inevitably lead to nuclear crises. Last, I discuss the alternative strategy of military restraint and show how it would ensure U.S. influence for a longer time and with greater safety than the present strategy of unilateral U.S. military enlargement.

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CISAC
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Michael M. May

The Project on Peace and Cooperation in the Asian-Pacific Region has been a cornerstone of research at the Center for International Security and Cooperation for three decades. It supports initiatives on security cooperation and tension reduction in the Asia-Pacific region with special emphasis on China and Korea. Currently, it focuses on Asian nuclear issues and Northeast Asia regional peace issues.

The program explores the applicability of international policy instruments, such as the Clean Development Mechanism (CDM) sanctioned at Kyoto in 1997, to decisions regarding and prospects for energy sector modernization in provinces of China. Much of the cheapest ways to reduce greenhouse gas (GHG) emissions is to take advantage of low-cost opportunities for reductions wherever they arise in the world. Nevertheless, there is much uncertainty as to whether the CDM is the most practical and reliable way to ensure GHG reductions in developing countries.

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The Cox Commission of the U.S. Congress was established in June 1998 to investigate concerns over Chinese acquisition of sensitive U.S. missile and space technology in connection with the launching of U.S. civilian satellites using Chinese launchers on Chinese territory. The investigations were broadened in October 1998 to include alleged security problems and possible espionage at the U.S. nuclear weapons laboratories. Some conclusions were released in January 1999 by the White House together with the administration's response. The full declassified (redacted) version of the report of the Cox Commission was released on May 25, 1999.

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Policy Briefs
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CISAC
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Michael M. May
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The nuclear nonproliferation regime was challenged in 1998 by nuclear-weapon tests in India and Pakistan, by medium-range missile tests in those countries and in Iran and North Korea, by Iraq's defiance of UN Security Council resolutions requiring it to complete its disclosure of efforts to acquire weapons of mass destruction, and by the combination of "loose nukes" and economic collapse in Russia. Additional threats to the regime's vitality came in 1999 from the erosion of American relations with both China and Russia that resulted from NATO's 1999 bombing of Yugoslavia--with additional harm to relations with China resulting from U.S. accusations of Chinese nuclear espionage and Taiwan's announcement that it was a state separate from China despite its earlier acceptance of a U.S.-Chinese "one China" agreement. Major threats to the regime also came from the continued stalemate on arms-control treaties in the Russian Duma and the U.S. Senate, from a change in U.S. policy to favor building a national defense against missile attack, and from a Russian decision to develop a new generation of small tactical nuclear weapons for defense against conventional attack.

This paper will discuss the effect some of these developments had on the 1999 Preparatory Committee (PrepCom) meeting of Non-Proliferation Treaty (NPT) parties to prepare for review of the NPT in 2000, and speculate about their likely future effect on the regime.

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CISAC
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This article addresses two central questions: First, why have Chinese efforts over the last half century to create a modern air force failed? Second, what lessons have the Chinese gleaned from these failures? Based on their findings, the authors conclude that China's air force has moved away from a strategy based on "active defense" and no first strike, adopting along the way Western notions of the role of air power in combat.

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International Security
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The end of the Cold War left the United States in the fortunate position of facing no imminent threat of global war. But it also left the United States in a strategic vacuum, with no organizing principle for its national security. This book proposes a security strategy for the 21st century based on preventing new major threats to U.S. security from emerging.

Informed by the authors' service in the Pentagon during President Clinton's first term, this book identifies six major dangers to U.S. security that have the potential to grow into threats to American interests and values as ominous as the Cold War's nuclear standoff. In chapters that cover chilling dangers ranging from Russia's implosion to the rising power of China, and from proliferation of biological weapons to cyber terrorism, the authors first recount from first hand experience the Pentagon's efforts to define and prevent dangers to U.S. security since the end of the Cold War, and then advance preventive defense strategies for the future. It argues that implementing a Preventive Defense strategy will require a revolution in the way the Pentagon does business -- a revolution that is only beginning.

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Books
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Brookings Institution Press
Authors
William J. Perry
Number
0-8157-1308-8
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Can the current global moratorium on nuclear weapon testing survive the May 1998 tests by India and Pakistan and the refusal of US Senate leaders to permit consideration of the Comprehensive Test Ban treaty (CTBT) by the Senate? If nuclear testing resumes by India or Pakistan - or by Britain, China, France, Russia, or the United States - will it be condemned by most of the world as if an international norm against testing was already in effect? What will be the likely consequences for nonproliferation if tests resume? This article seeks to show that there are norms operating against nuclear testing even though the CTBT has not been ratified, and that renewal of testing would have widespread consequences.

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The Nonproliferation Review
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