China has been highly successful in electrifying rural areas in the past half century. Institutional structure and its reform are important for investment and, therefore, development of rural electrification. Over time, there have been three major institutional changes initiated by the central government; When the People's Republic was founded in 1949, it was short of capital, technology and management professionals to promote rural electrification, so rural electricity had a separate administrative system from the urban areas.

From 1949 to 1977, China established a comprehensive vertical system of rural electricity administration under strict central planning. At the end of the 1970s, with the adoption of economic reform policy, the central government handed over the management of the local electricity system to local government. County level has proved the most effective implementation unit for both planning and project implementation of the rural electricity system. From 1998 to 2002, the central government has been separating local electricity supply from local governments to facilitate the commercial operation of the utility market. After 2002, the rural electricity system was merged with the urban system, forming an integrated national electricity administrative system in China.

When addressing an externality such as air pollution, regulators can control policy inputs (e.g., pollution taxes and technology standards) or outputs (e.g., emission caps). Economists are familiar with this debate, known broadly as "prices vs. quantities," but analysts of international environmental agreements have rarely focused sustained attention to such questions. Using an inventory of all international air pollution agreements, we document the historical patterns in instrument choice. Those agreements that require little effort beyond the status quo are usually codified in terms of effort, but agreements that require substantial actions by the parties nearly always deploy a cap on emission quantities as the central regulatory instrument.

We suggest that this concentration of experience with emission caps and paucity of serious efforts to coordinate policy inputs may explain why the architects of international environmental agreements appear to believe that emission caps work best. We illustrate what's at stake with the example of international efforts to control the emissions that cause global climate change. We also show that the conventional history of the agreement that is most symbolic of the superiority of emission caps - the Montreal Protocol on Substances that Deplete the Ozone Layer - has wrongly overlooked a little-known provision that operates akin to a "price" instrument.

This paper is part of the wider Program on Energy and Sustainable Development study on the historical experience of Independent Power Producers (IPPs) in countries that are in the midst of transforming the industrial organization of their electric power sectors. The study seeks to explain the patterns of investment in IPPs and the variation in IPP experiences. The aim is not only to assess the historical record accurately but also to chart possible future paths for the IPP mode of power sector investment. This paper follows the research methods and guidelines laid out in the project's research protocol.

In terms of IPP history, fuel context, and economic and political environment, Poland is not unique among the countries of Eastern Europe. All three EU accession countries in Eastern Europe-Poland, the Czech Republic and Hungary-are formerly centrally planned economies that are in the midst of liberalizing their power sectors. As seen in Figure 1, both Poland and the Czech Republic rely primarily on coal for electric power generation. Poland was selected for study because it is the largest market and because coal is an entrenched incumbent.

In recent years, the U.S. debate on global warming policy has been stymied by the unachievable goals of the Kyoto Protocol. Cutting U.S. emissions by one-quarter in barely a decade, as agreed at Kyoto, was never politically feasible.

Now the Bush administration, nearly a year after pulling out of the Kyoto Protocol, has finally announced its own plan for global warming. It falls far short of a grand strategy but does take a few important steps forward.

One of them is to offer a better way to measure progress on the problem. The Bush plan sets goals in terms of "greenhouse gas intensity" -- the ratio of greenhouse gas emissions per unit of economic activity. That ratio declines as the economy grows and policies encourage people to control emissions of greenhouse gases. The administration seeks an 18 percent reduction in intensity over the next decade.

By contrast, the Kyoto approach would require the United States and all other industrialized nations to regulate their total quantity of emissions to exacting targets during brief five-year periods. Thus the Kyoto approach unwittingly pitted advocates of economic growth against those who sought environmental protection, especially in the United States. As the U.S. economy grew rapidly in the 1990s, emissions soared, and it became ever harder to devise an economic plan for meeting the Kyoto limits.

The truth is that policymakers are not able to plan compliance for Kyoto-style targets because they don't really have much control over the short-term volume of emissions. Governments can implement such policies as fuel economy standards or tax credits for carbon-free fuels, but these are most effective only over long time periods. By putting a spotlight on trends in greenhouse gas intensity over long periods of time, the new approach better matches goals with the real leverage available to policy- makers.

The administration's plan would also invest more in scientific research on the causes and dangers of global warming. And it wisely pumps new money into research on energy technologies, such as fuel cells, that may allow future generations to move beyond fossil fuels.

But the weaknesses in the plan are severe. First, it is exceedingly modest. The planned cut in greenhouse gas intensity -- less than 2 percent per year compounded over the next decade -- sounds like a lot, but viewed from the long perspective of economic history it is trivial. In the 19th century, U.S. greenhouse gas intensity rose as industrialization accelerated the burning of fossil fuels even more rapidly than the economy swelled. Greenhouse gas intensity peaked in 1917 and has been declining ever since, on average about 1.5 percent per year.

New economic activities -- such as banking and software design -- do not require the same level of emissions as old energy-intensive industries such as steel production.

The Bush plan does little to accelerate this decoupling of economic growth from greenhouse gas emissions. Even the planned cut in intensity will not stop the growth in total emissions, which will probably rise about 10 percent in the next decade.

The Europeans won't be impressed. Their greenhouse gas intensity is already one-third lower than the United States' and slated to decline more than 2 percent per year over the next decade.

A second weakness in the Bush plan is the lack of credible incentives for firms to invest in emission reductions. Clear signals are necessary because the power plants, cars and factories we build today will constrain our freedom to control emissions in the coming decades.

Rather, the plan only encourages firms to implement voluntary reductions in emissions. Firms that make cuts would earn credits that would be honored in the future, if the United States ever adopts a mandatory emission control scheme.

This voluntary system could accelerate development of a binding emission trading system for the United States, which would be a welcome step forward. In the interim, though, the voluntary approach will create a snake pit of promises and technical problems that will hamper serious future efforts to control emissions. For example, how will the U.S. government know whether a firm has reduced its emissions? A complicated and intrusive scheme to review every project might offer answers, but it would be costly and bureaucratic. Worse, this approach allows firms that happen to install technologies that reduce emissions to stake a claim on credits that would be tradable in the future. In essence, it encourages a land rush in which the dirtiest firms with the largest potential for emission reductions can seize the greatest property rights. A better approach would start with a simple, binding system today.

Third, the new plan fails to solve many of the problems that rightly led the Bush administration to criticize the Kyoto framework. Last spring the president lambasted Kyoto for setting arbitrary short-term targets. His plan is little different -- it sets vapid short-term goals, yet is silent on long-term trajectories that matter most.

Nor does the plan offer a credible reply to the administration's critique that Kyoto fails to require participation by developing countries. The administration's plan offers some additional funding to entice developing countries, but the sum total is actually much smaller than the schemes that other nations are already developing within the Kyoto framework.

The good news is that the administration has broken its silence on the important problem of global warming and offered a reasonable framework for debating policy goals. The bad news is that it offers little else.

The writer directs the Program on Energy and Sustainable Development at Stanford. He is a senior fellow at the Council on Foreign Relations and author of "The Collapse of the Kyoto Protocol and the Struggle to Slow Global Warming."