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16 Apr 2014

China’s war on pollution

Wai Shin

by Wai-Shin Chan

Climate Change Strategist, HSBC

China’s war on pollution

Enforcing regulations is key to controlling pollution in China

China has declared war on pollution. However, winning this war will take many years and require sweeping changes to the way pollution is viewed, regulated and – most importantly – enforced.  The government is now focusing on how to encourage and force the transition to a more ‘beautiful China’.

The development of infrastructure for dealing with pollution has not kept pace with the increase in pollutant discharge. The government’s urbanisation plans highlight the problem. Millions of people in one place strains resources, with the Ministry of Environmental Protection estimating that 110 million people live within 1km of a high-polluting plant such as a petrochemical refinery, a coking smelter or a thermal power plant.

Air pollution is arguably the most visible pollution. Last year’s record number of ‘smoggy days’ affected more than 600 million people with some incidents covering an area twice the size of France. Only three cities met China’s air-quality standards in 2013 but air data now allows people to compare their city with others and check how healthy it is relative to national and international standards.

Water pollution may be less visible but could be more widespread. The illegal discharge of pollutants over 30 years has resulted in extensive pollution of groundwater – a key source of drinking water.

Beijing recognises the need to prevent further pollution before the natural environment can be cleaned up

Soil pollution is not easy to see or assess and is the hardest to clean up. But Beijing acknowledges the risk to food security and is planning to release soil and water pollution data too this year.

Enforcing regulations is key to pollution control and central authorities are examining mechanisms to make the laws more effective. But although the will to change seems apparent at central level, it has yet to filter down to levels where actual enforcement is carried out.

Beijing recognises the need to prevent further pollution before the natural environment can be cleaned up. But there is still a long way to go before China meets its goal of improving the rate of compliance with existing regulations.

The ministry is seeking new ways to finance the war on pollution. Last December it issued trial guidelines that give companies environmental ratings which banks must refer to before approving credit facilities. The government has indicated it will enhance the green-credit policy to help companies issue bonds and there are insurance proposals to ensure companies can pay to clean up any pollution incidents.

The air pollution action plan tackled the main sources of air pollutants – coal, industry and vehicles. The water and soil action plans could do something similar to sectors such as textiles and chemicals that pollute soil and water.

In 2014, China will shut 50,000 small coal-fired furnaces and install more pollution control at existing facilities. The country consumes half the world’s coal but also produces more than half the world’s cement. Some 42 million tonnes of cement capacity will be cut this year and new emission standards have been imposed, alongside new limits on heavy-metals discharge, especially mercury.

Meanwhile fuel upgrades are in the works to tackle pollution from transportation. Several cities are already limiting the number of vehicles licensed annually. In some cities, new licence plates are auctioned or issued via a lottery system.

Planning China’s 2016-20 Five-Year Plan will begin in earnest soon with the environment featuring even more heavily. That has major implications for high consumers of energy and resources such as iron and steel, cement, other heavy industries, plus high polluters such as power generation.

This research was first published on 27 March 2014.
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