Climate Change and Air Quality News: June 18, 2015

Our Beijing-based Climate Change & Air Quality Program team share what they are reading and talking about

Pictured: The Mingxing Power Station in Shanghai; China is working to alleviate its pollution problems through a variety of levers, including increased penalties, a growing carbon trading market, and a planned environmental tax law.

Carbon Emissions Trading: Fresh off the heels of the Paulson Dialogue on carbon emissions trading held in Beijing last week, it was reported that Beijing’s municipal government is in discussions with Hebei, Inner Mongolia and Jiangsu province to include some of their cities in the Chinese capital’s carbon market. The Paulson Institute is co-authoring a paper with the Environmental Defense Fund, looking at the carbon ETS experiences of the US and EU and the key elements that would make China’s transition to a national carbon emissions trading scheme a success. The contents of that paper, which will be published later this year, were discussed in a private dialogue with policymakers, NGOs and businesses last week. Putting a national price on carbon emissions, such as via a carbon emissions trading system, would be an important step toward helping China achieve greater integration of policies in energy, air emissions and economic transformation.

Environmental tax law: Last week, China’s State Council released a long-awaited draft law on environmental taxes aimed at cutting down on water, soil and air pollution in key industries. The law could potentially be good for two main reasons:

  1. It would prompt the tax department to closely monitor emissions, increasing overall transparency and regulation of emissions – something that would contribute to the success of the national ETS planned for 2016.
  2. It would impose a price on all emissions, as opposed to the current law which only imposes cost only on excessive illegal emissions.

This tax on emissions (almost all of which come from fossil fuel sources) will complement China’s plan to put a price on carbon through the national carbon ETS in 2016. A big outstanding question: will the cost be high enough to change behavior?

Tougher enforcement: Under the new stricter environmental protection law that went into effect this year. The new law fines violating companies on a cumulative daily basis rather than on the previous one-time basis. The heftiest fine of RMB 15.8 million (US$ 2.55 million) was given in March to state-owned Shaanxi Coal and Chemical Industry Group Co. Ltd for failing to stop discharging polluted water after it was warned twice during a 79-day period. Zou Shuomin, head of the Ministry of Environmental Protection’s (MEP) supervision bureau, said that companies are spending more on environmental protection under the pressure of large fines.