China’s Green Mountain Motto

With a government restructuring, China now aims to pair economic growth with environmental protection. The iconic rectangular CCTV building, on the horizon, shrouded in smog last week in Beijing.

“Green mountains are more valuable than silver or gold mountains.” For the past year or so, that’s the environmental slogan that China’s President Xi Jinping has been espousing. Now, his message seems to be getting even more traction among other senior government officials in rhetoric and action.

I’m just back from Beijing after attending last week the Paulson Institute’s annual sustainability conference. (Yes, the air pollution was awful. More on that in a minute.) The conference is regularly attended by very high level representatives from governments, private sector and NGOs. Former Treasury Secretary, Henry Paulson, in partnership with the University of Chicago, established the institute to promote green economies in China and the United States.

At the conference last week, top Chinese government officials touted the same message: China has achieved great economic success at the expense of the environment, but this has to be rebalanced. “Our society has entered a new era. Green development is the answer to this era….We can no longer compromise on the environment, ” said Shi Zihai, a top official of China’s powerful National Reform and Development Commission (NDRC).

To its enormous credit, China’s economic growth has raised the standard of living for hundreds of millions of people. China has made extraordinary gains in clean energy. In a short period, it’s become the world’s leader in solar and wind installations and EV manufacturing and deployment, for example. China’s also created one of the world’s largest funds for green bonds.

To do more to protect the environment, the national government earlier this year reorganized two agencies to strengthen environmental protection domestically and internationally. It mandated that climate change policy and enforcement responsibilities be shifted from NDRC to the Ministry of Ecology and Environment. Now this may seem merely bureaucratic reshuffling. But one Beijing expert on China’s environment said last week in an interview that this is a positive change for the environment. He said, “MEE is now more powerful” than before. Under the agencies’ restructuring, “environmental protection has been decoupled from economic development,” which is the purview of NDRC. He said MEE can now act as the police for the environment.

The most obvious test perhaps would be solving the dreadful air pollution in major cities. The day I landed in Beijing, the air quality index in Beijing spiked to 400, a level deemed hazardous to everyone. That day, colleague’s young daughter sung outside in that foul air for a school performance. As soon as it was over, my friend hustled her daughter inside for the rest of the day.  Beijing’s AQI stayed above 100 the entire week I was there, a level that affects sensitive groups, including young children and the elderly.  Greenpeace says that last year smog in China improved the least amount annually since the nation’s war on pollution began in 2013.

This week Beijing announced that motor vehicles are now the main culprit for its air pollution, not coal, and last year accounted for 45 percent of PM2.5 particles. This despite the fact that car ownership in Beijing is exceedingly difficult. To get a license plate, you must certify you have a parking space and then apply to a lottery. If you want to buy an EV, your odds are better–or at least you’d have more certainty. The wait list for an EV license plate in Beijing is three years. Still, motor vehicles have overtaken coal as a bigger source of pollution there.

The challenge for China, as the national government knows well, is to find ways to create green mountains faster so that its children can play safely outside any day.



China’s First Steps in Nationwide Emissions Trading

China is poised to announce a national carbon emissions trading system this week. The start of the program is likely to be far less ambitious than originally hoped for. Nevertheless its overarching goal remains admirable.

China likely won’t address many details yet, experts in China and the U.S. say. There are issues of monitoring, reporting, and verification. The program still needs baseline data. And the Chinese are unlikely to say much about the regulatory requirements or what sectors will be covered. There’s a decent chance that the trading scheme will cover the power sector.

It’s not surprising that China is not yet ready to launch a full-scale program. As a point of reference, California took several years to launch its own cap and trade program. China’s program will be much larger than California’s. Just four years ago, China launched seven pilot programs in emissions trading in various locations across the nation. At the same time, it set an extremely ambitious target to kick off a national program this year.

Experts say to watch the process in which China incrementally builds up its emissions trading program to a national scale. The irony is that China is seizing the initiative to construct a national emissions trading program using capital markets. That’s the farthest thing from the Trump Administration, which instead is hell bent to promote the coal industry and withdraw from the Paris accord.