At a Green China Forum meeting earlier this month, Pan Yue, the vice president of China’s State Environmental Protection Administration (SEPA), made an unequivocal statement about the need to address the nation’s mounting environmental challenges. “There is no time for China to wait for the launch of environmental economic policies,” he said.
At a Green China Forum meeting earlier this month, Pan Yue, the vice president of China’s State Environmental Protection Administration (SEPA), made an unequivocal statement about the need to address the nation’s mounting environmental challenges. “There is no time for China to wait for the launch of environmental economic policies,” he said. “We should release several policies within one year, set up major pilot projects within two years, and create a fundamental framework for an environmental economic system in China within four years.”
Pan described this new framework as comprising seven major elements: pollution charges, emissions trading, a “green” capital market, ecological offsets, ecological taxation, trade in environmentally friendly goods, and environmental insurance.
China first imposed a fee on pollution discharges in 1978, and this has become one of the country’s most widely embraced environmental policies. But the standard fine for polluters remains exceedingly low despite China’s recent economic boom, and in most cases it is cheaper for violators to pollute than to comply with environmental laws. The new pollution charge policy in the pipeline will change this by not only raising the fee for polluters, but also establishing a “cap-and-trade” system for emissions that will rely on market forces to allocate natural resources efficiently.
A major barrier to implementing these policies is how to identify the total number of emissions permits to issue. In 1991, China launched pilot projects in emissions trading in six cities, but these efforts have made only minimal progress because the trading has been controlled largely by government authorities, rather than by the market.
Another focus of China’s new environmental policy framework is to develop an ecological “offset“ mechanism that will compensate local areas for the loss of economic development when measures are taken to protect the environment. It will apply in nature reserves, areas with important ecological functions, mining areas, and river basins.
While China has so far developed a variety of economic-related environmental regulations, enforcement and implementation remain poor. Most of the policies have traditionally been carried out by isolated administrative authorities, with little coordination among these bodies. SEPA now recognizes that cooperation across government departments and sectors is the key to the success of the new environmental framework.
According to a 2006 report on China’s environment by the Organisation for Economic Co-operation and Development (OECD), a critical way to improve the implementation of existing environmental policies is to strengthen the effectiveness and efficiency of these rules. China also needs to better integrate environmental concerns into economic decision-making, the report notes. It concludes that the biggest obstacle to implementation remains at the local level, where authorities often lack the capacity for monitoring, inspection, and enforcement.