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The Third Pole

China’s desperate efforts to control pollution — before it’s too late

by Ari Phillips

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“It’s the pollution, stupid”
When eight-year-olds start getting lung cancer that can be attributed to air pollution, you’ve got a problem. When smog forces schools, roads, and airports to shut down because visibility is less than 50 yards, you’ve got a problem. When a study finds that severe pollution is slashing an average of five-and-a-half years from the life expectancy in northern China, you’ve got a problem.

Such a visible problem, literally, can lead to myopic responses in a frantic effort to make it appear that the problem is being confronted. For instance, last month the Chinese central government announced it will start publishing a list of its 10 worst — and best — cities for air pollution each month. But underneath all the haze, the seeds of a real transition are taking root. In July 2013, the government said it would spend $275 billion through 2018 to reduce pollution levels around Beijing. Last month Shanghai released its Clean Air Action Plan in an effort to rapidly and substantially improve the air quality in China’s most populous city of nearly 24 million residents.

The Chinese government is not stupid and neither are China’s 1.35 billion residents — they can all see that pollution is a real problem. Earlier this month, Chinese communist party leaders convened a major plenary meeting to discuss economic reform, with over 200 party members gathering at the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC) in Beijing, or third plenum. Plenums are significant because every member of the party must be present and this year, energy and environmental issues were on the agenda. Third plenary sessions have been met with high anticipation ever since the 11th Third Plenary Session in 1978 led to the structural reforms ushered in by Deng Xiaoping and the ensuing three decades of rapid growth that have turned China into the export-driven, world power it is today. The economy has slowed, and China is confronting the cumulative consequences of its three-decade focus on economic expansion with little attention paid to mounting ecological and social costs. R. Edward Grumbine, a senior international scientist at the Kunming Institute of Botany, writes:

“The economy has slowed, and China is confronting the cumulative consequences of its three-decade focus on economic expansion with little attention paid to mounting ecological and social costs...One thing is certain: China’s leadership is now feeling intensifying public pressure to do something about the environment. A growing number of China’s 1.35 billion people — especially those in the rapidly expanding middle class — are fed up with government inaction on environmental issues.”

Key Environmental Issues

Take water for instance. Half of China’s rivers — about 28,000 — have vanished since 1990. China also has about 1,730 cubic meters of fresh water per person, just above the 1,700 cubic meter-level the UN deems “stressed.” In the north, where half of China’s people, most of its coal, and only 20% of its water are located, the situation is even more dire. About 300 million rural residents do not have access to safe drinking water, and 57 percent of urban groundwater, a primary source of drinking water, is also polluted.

Coal industries and power stations use as much as 17% of China’s water, and by 2020 the government plans to boost coal-fired power by twice the total generating capacity of India. China would account for 25% of global growth in energy demand through 2030. China’s energy mix currently comprises 68% coal, 18% oil and 5% natural gas.

In the past, China has been able to get away with ignoring environmental concerns to achieve economic gain. But going forward, even as energy demand grows along with the growing middle-class, it’s becoming increasingly clear that a more holistic approach will be necessary. Not only because of public opinion, but because of real environmental constraints, such as the water needed to produce coal-fired power. And that’s before even considering the impact of climate change, in which higher temperatures, sea-level rise, and more intense natural disasters make everything that much worse. China is the world’s biggest greenhouse gas emitter — putting it again at the fulcrum of economic and environmental concerns,  domestically and internationally. The U.S. and China make up more than 40 percent of global CO2 emissions. According to the International Energy Agency current projections show that energy-related carbon dioxide emissions will rise 20% by 2035, a trajectory consistent with a long-term average temperature increase of 3.4 degrees Celsius, far above the internationally agreed-upon 2 degrees Celsius target. 

“The biggest fear or frustration in life today is the pollution levels in China. A lot of consumers are saying, ‘Who cares if I have a great job? Who cares if I can buy a Louis Vuitton bag, if the air and water are killing my family? Pollution is the biggest problem that’s facing China’s government today, and they really need to do a better crackdown on it, otherwise they’re going to face serious social instability going forward.”
- Shaun Rein, Director, China Market Research Group

China has also built the world’s biggest installed capacity of wind power in the last decade and solar is now on a similar trajectory. It has the largest hydropower capacity in the world and has dramatically increased imports and production of natural gas to substitute for coal in key sectors such as household use. However, as Chris Nielsen of Harvard's China Project notes,

“These positive changes have been overwhelmed by negative changes in many respects. By far the most important of the negative changes is a tremendous concomitant rise in the consumption of coal to fuel the economy, which by itself cancels many of these gains.”

The Chinese government is not monolithic — there are advocates for sacrificing economic growth for environmental protection and there are powerful government actors opposed to it. Nielsen believes the balance is probably gradually tipping towards stronger environmental protection:

“A time of slowing economic growth may not be the most hopeful time for transformative changes to limit environmental damage. Fears about unemployment may limit the political willingness to go that far. The entrenched power of state-owned enterprises, which the Third Plenary appears to have addressed only weakly, will likely continue to serve as a counterweight favoring economic growth over aggressive environmental progress. “

An “Ecological Red Line”
As part of the recent third plenum, the government released a communique that vowed to protect the country’s ecological environment, and urged the drawing of an “ecological red line.” Dr. Xia Guang, director of the Policy Research Centre for Environment and Economy wrote that “red lines” would not only refer to geological areas that were off-limits to exploitation, but also better control the use of natural resources and emissions of pollutants, including greenhouse gases. The plenum resolution listed environmental protection for the first time among the government’s five top responsibilities — behind macroeconomic management, job creation, market supervision, and social management. In China, however, what the central leadership wants is often not what local governments deliver. Economic incentives drive local government decisions even when the top-down leadership is pushing for reform. A crucial part of the ecological red line will be public oversight and awareness — otherwise, promises will end up being mere lip service to an eager public.

“The real number one barrier to environmental protection in China is not lack of money or technology. It is lack of motivation. We need the public to provide that motivation. But they must be informed before they can participate in any meaningful way. We have the laws and regulations, but enforcement remains very weak. Environmental agencies in China are hamstrung by local officials who put economic growth ahead of environmental protection; even the courts are beholden to local officials, and they are not open to environmental litigation.””
- Ma Jun, well-known Chinese environmental activist

There is obvious room for incentives or punitive actions, such as with a carbon trading scheme. China’s top climate official recently made a well-timed announcement that Beijing and Shanghai will launch emissions trading markets in late 2013. The government has approved seven pilot carbon trading exchanges. These markets will “play a very significant role” in China’s efforts to reduce its carbon emissions, Xie Zhenhua, vice director of China’s economic planning agency.

China has also recently announced that the government will begin measuring both PM2.5 concentrations and the long-term impacts of chronic air pollution on human health. Much like the government plans to shame the most polluted cities by listing them every month, the public can shame the government if the data doesn’t show improvements in air quality.

How Will China Find The Energy?
China relies on coal for nearly 70% of its energy production, but is currently aggressively pursuing natural gas based on increased availability and improved environmental sustainability over coal-fired power plants, especially in regard to local air pollution. A General Electric white paper concludes that China could save $820 billion in environmental costs by 2025 by doubling its current natural gas consumption at the expense of coal.

The full Third Plenary decision — a 30-page, 60-point document — was released after the conference. A Center For American Progress translation of part of the decision reads: “All prices that can be determined by the market should be turned over to the market, and the government should not engage in improper interference. Drive forward price reform in sectors such as water, petroleum, natural gas, electricity, transport, and telecom; open up and allow competition to determine prices.”

Shifting toward a more market-based system will not be easy. The big question is implementation. Price tinkering at the margins is one thing. Completely removing state controls is another. There are strong vested interests in China benefiting from sub-market, state-mandated rates for electricity, natural gas, and other energy inputs. Shifting toward a more market-based system will not be easy. It will have to be done, however, if Beijing wants to come anywhere near achieving its energy and climate goals.

Opening the energy industry to the international market will also mean good things for renewable energy sources such as solar and wind. Last week, the Chinese Bureau of Energy released a draft of proposed solar power installations for China in 2014 that said new solar installations in China are expected to reach 12 gigawatts. This is a record, and a good indicator for solar power in China and internationally. In the last few years, the government, under pressure to do something about pollution and struggling domestic solar companies, has put a renewed emphasis on domestic solar power.

China can gain huge economic advantage by continuing to dominate the market for renewables. Analysts have forecast that the global market for low carbon technology will reach $1.5 to $2.7 trillion annually in 2020. A separate UNEP report projected that by 2030, there would be 8.4 million jobs in solar photovoltaic and wind energy, and 12 million in biofuels, globally.

In conclusion
China’s economic and environmental policies have an outsized effect on the world. Long the most populous nation on the planet, it is now it is an economic powerhouse and the leading greenhouse gas emitter. Its government needs to balance growing popular awareness of local environmental issues against a massive, energy-devouring push towards urbanization. As its living standards approach those of the West, so do the demands of its citizens.

According to Paul Joffe of the World Resources Institute, China has self-interested reasons to confront energy and environmental issues beyond pollution control and renewable energy market share. Its domestic agriculture is already being adversely affected by climate change. By 2030, overall crop productivity in China could decrease by 5-10% if no action is taken. He believes China could lead the way in renewable energy technology, fuel efficiency standards for cars and smart grid implementation.

 

◊ Ari Phillips reports for Climate Progress. Publ. here 1.12.2013








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