Tougher laws and penalties could signal turning point in environmental fight in China, as president Xi Jinping urges officials to crack down on inefficient state industries
By Ed King
Coal, steel and concrete production in China faces tighter restrictions in 2016, say experts, as central government in Beijing cracks down on heavy polluters.
New rules to combat air pollution came into effect from 1 January, while courts are likely to continue to use a revised Environmental Protection Law to enforce change.
And a government pledge to stop producing materials or commodities it has no market for is likely to hit heavy industry hard, said Yang Fuqiang, a senior advisor with the National Resources Defense Council in Beijing.
“China has put removal of excess production capacity at the top of a list of five economic tasks,” he tells China Dialogue, a specialist website that tracks government policy.
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The government has already announced a ban on any new coal mines for the next three years, citing a glut in supply, while a clean coal action plan will end coal burning in urban areas from 2020.
“China needs to better manage the small-scale coal burning which accounts for 30% of total coal consumption, and cut the number of coal mining firms, currently at over 6,000, by half,” says Yang.
“We estimate that coal consumption will drop by between 2.5% and 3% in 2016.”
Steel and cement – both carbon intensive industries – are likely to be next in line, and critical from a climate perspective, given China’s industry emissions account for 3% of the global total.
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China is the world’s largest producer of steel, but huge oversupply and crashing prices left large and medium firms facing losses of $8.8 billion in 2015.
Inefficient plants are likely to go first, with president Xi Jinping last week demanding officials speed the restructuring of unprofitable “zombie” companies owned by the state.
Central government efforts to rein back on massive construction projects will also see the cement industry’s rapid expansion checked.
From 2011-2013 China used more cement than the US did in the whole of the last century – around 6.6 gigatonnes.
That’s set to fall this year as the economy slows, and the industry will have to boost its efficiency if – as expected – tighter pollution caps are imposed as part of the next Five Year Plan due in March.
“We should also see the start of emission caps this year, in preparation for the launch of nationwide carbon trading in 2017,” adds Yang.
The driving factors behind government policy are varied. President Xi knows industry is inefficient, and the country also needs to meet a 2030 goal to peak greenhouse gas emissions.
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But killer smogs afflicting major cities are also a huge incentive for change, Wang Hua, researcher at the Ministry of Environmental Protection, tells China Dialogue.
“Hopefully we’ll see breakthroughs in 2016, perhaps leading to more cost-effective and efficient ways of tackling smog.”
The Environment Protection Law is one stick government can use, says Wang, offering lawmakers the option of imposing uncapped penalties on the country’s dirtiest companies.
Introduced at the start of 2015, the EPL imposed over US $50 million in fines in its first eight months.
Zhang Boju, secretary general of the Friends of Nature NGO, agrees. The EPL and air pollution law will open another front in the fight against dirty private and state businesses, he says.
“These give environmental groups and members of the public more legislative tools with which to protect their own and the public interests.
“We expect to see an increase both in quantity and quality of environmental public interest cases, and a rise in the number of targeted and preventative cases – such as those on air or soil pollution, or protecting biodiversity.”
Questions remain, especially given China’s stock market turmoil and slowing growth. Closing inefficient state industries makes sense from a climate perspective, but could prompt social unrest.
The 2016-2020 Five Year Plan will offer the clearest sense of how bold Beijing policymakers feel, and how much confidence they have in a new and greener form of growth.
“There are several key parts of the 13th FYP that the outside world should be watching. First, a cap on total energy consumption, and in particular, whether or not there’s a cap on coal consumption,” says Yang.
“Secondly, what mandatory energy targets are to be put in place?
“Will the 13th FYP’s targets for reductions in energy and carbon intensity be lower than 18% and 20% respectively (viewed as important thresholds) and will the 2016 target for proportion of renewables in the energy mix go beyond 12.5%?”