x Abu Dhabi, UAEThursday 27 July 2017

China aims for green growth

Building Brics: After thick smog in the capital left residents struggling to breathe properly this year, Beijing last month set an ambitious target to get to grips with the problem of increasing pollution in the world's second-largest economy.

Emerging markets will be a key driver of growth for wealth managers globally Reuters
Emerging markets will be a key driver of growth for wealth managers globally Reuters

The smog over Beijing became a global news story in January, and the level of pollutants in the capital's air increased by almost 30 per cent in the first three months of this year.

The "airpocalypse" in the early months of the year was a by-product of rapid industrialisation, of over-reliance on coal for energy production and of the country's growth in car ownership.

China's economic growth in the past three decades has been the envy of the world, but the environment has paid a heavy price.

The World Bank reckons 16 of the world's 20 most polluted cities are in China, and the government is facing mounting public criticism that it is not doing enough to fend off potential environmental catastrophe.

The January smog prompted a serious change in government attitudes, with new rules for car ownership, greater accountability for environmental crimes and a focus on cleaning up the air.

Most of the initial measures were local. The Beijing government ordered some cars off its roads, including state vehicles, shutting factories and recommending its 20 million residents avoid outdoor activities as air pollution.

Then last month, things really got serious, when the Chinese government set a target of growing the annual output of the country's environmental industries to 4.5 trillion yuan (Dh2.69tn) by the middle of 2015. That means the sector would expand by 15 per cent annually over the next three years.

The national development and reform commission reckons cleaning China's air will cost a hefty 1.7tn yuan over the next five years, with much of that going on transferring energy production from coal to gas power plants and by installing air cleaners at power stations and factories.

The government has also set a target of cutting emissions intensity in key industries, or emissions per unit of economic output, by 30 per cent by the end of 2017.

China has set a target of reducing its carbon emissions per unit of GDP by 40 to 45 per cent by 2020 from the 2005 level and raising non-fossil energy consumption to 15 per cent of its energy mix, says Xie Zhenhua, deputy director of the national development and reform commission.

As part of broader plans to curb pollution, the government will also roll out tiered power pricing for eight energy intensive industries, while sectors that struggle with overcapacity will face higher power tariffs, Mr Xie says.

China asked seven cities and provinces last year to put in place regional caps and pilot programmes for trading emission rights and the government will expand the programme to more cities starting from 2015, with the aim of creating a national market, he adds.

The government plans to have 100 gigawatts of wind-power installed capacity and more than 35 gigawatts of solar power by 2015, says Mr Xie.

The moves from the government have inspired companies to act - China Petrochemical or Sinopec has said it will invest 22.9 billion yuan on an environmental protection plan.

The government is making renewed efforts to encourage heavy polluting industries to clean up their act. At the end of July the government ordered hundreds of companies in the metals, paper, leather and battery industries to close obsolete production lines.

Wang Tao, an official with the pollution prevention department under the ministry of environmental protection, told the Xinhua news agency an airborne pollution prevention and control action plan was in the works.

Mr Wang added that an estimated 2tn yuan would be put in to enhance monitoring of drinking water sources and control poisonous contaminants.

He said the output value of the energy conservation and environmental protection industry during the 12th Five-Year Plan period (2011 to 2015) was expected to exceed 10tn yuan, a more than 40 per cent increase compared to the 11th Five-Year Plan period (2006-2010).

Ma Jun is among China's foremost environmentalists. The writer, journalist and activist is the founder of the Institute of Public and Environmental Affairs, which seeks to take on the polluters and raise public awareness.

"The Chinese economy has developed a lot but the environmental protection hasn't followed up. The demand is big and there is long-term need to develop environmental industries. Growth in the environmental industries of 15 per cent is possible, but will this expansion really solve environmental issues?" says Mr Ma.

"The development of the environmental industries has the support of economic policy, subsidies and government promotion. The government must strictly enforce policy and regulations to stir up the real needs."

He believes environmental standards including for air, water, and soil are being better implemented.

"The government is enforcing stricter standards. For example, stricter air control. They have put some new pollutants in the index. Also stricter standards on textile industry," Mr Ma says.

"There is a need for the energy structure to be changed, better control of pollutants and improvements in recycling.

"All of the environment related industries will benefit from the change in rules, such as clean tech, business involved in controlling pollutants, exhaust fumes, clean fuel for motor vehicles and the water pollution control industry," adds Mr Ma.

He believes the government has changed its attitude largely because of a new understanding about the environment.

"Before, everybody thought if we were poor, we had to develop economy. However, now, public health is more important, such as food safety," he says,

"Secondly, because of social stability. There were a couple of mass incidents which affected local economy. Thirdly, as the number one carbon emitting nation, there is a lot of pressure from the rest of the world.

"The government says it will take 18 years to reach normal international standards.

"However, the social force is big and people are pushing it very hard because people don't want to wait that long to get clean air." Mr Ma says.

So I think it might take less time than 18 years."

 

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