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China cuts fossil fuel consumption to achieve clean energy goal, but must carefully balance the consequences for Chinese citizens.

By Paul Davies and Andrew Westgate

In tandem with China’s significant economic growth over the past three decades, coal emissions have soared, increasing from 446 million tonnes in 1990 to 2.6 billion tonnes in 2017. Coal remains, and for some time likely will remain, an important source of fuel for the Chinese economy. However, the harmful effects of coal consumption are evident in the shortening life expectancies of Chinese citizens, particularly in northern China. An individual in the north apparently has an average life expectancy that is approximately 3.1 years shorter than an individual in the south, which has been linked to the burning of coal.[1]

Achieving President Xi Jinping’s promise to “to make the skies blue again” is by no means an easy feat, and the government’s plan is ambitious. Entitled the “Energy Production and Consumption Revolution Strategy”, the plan aims to ensure that emissions reach their highest level in 2030 and decline thereafter, and that by 2050 coal and other fossil fuels make up less than 50% of the country’s energy mix. China has invested heavily in renewable energy, adding more renewable capacity in recent years than any other country.

China’s Ministry of Environmental Protection’s increased authority over climate change and pollution control issues indicates a greater enforcement role for central government.

By Paul A. Davies and Andrew Westgate

The Chinese government has announced a major reorganization of China’s ministries that comprise the Chinese central government at a session of the 13th National People’s Congress in Beijing. The reorganization, which will reduce the number of ministries from 34 to 26, is intended to streamline and strengthen central government’s role in accordance with the principle of “comprehensively deepening reforms,” a key component of President Xi Jinping’s political program.

The Ministry of Environmental Protection (MEP) will be reconstituted as the Ministry of Ecology and Environment (MEE) as part of the reorganization. The MEE’s authority will expand to consolidate pollution-related responsibilities currently allocated among several other ministries, as well as assuming responsibility for climate change policy from the National Development and Reform Commission, a powerful economic planning agency which developed the national emissions trading system launched in late 2017. Specifically, MEE will expand its authority with respect to supervision and prevention of groundwater pollution, wastewater emission control, protection of rivers, non-point source agricultural runoff, protection of oceanic environments, environmental oversight for China’s massive South-North Water Transfer Project, and responsibility for climate change and emissions reduction policies.

China’s new energy ministry demonstrates the country’s continued commitment to environmental protection and renewable energy.

By Paul A. Davies and Andrew Westgate

Recent comments from senior communist party leaders indicate that the Chinese government intends to establish a new Ministry of Energy to streamline and consolidate authority for energy-related issues. The responsibility for these issues is currently dispersed among a variety of other ministries. The new ministry will be responsible for managing sectors including electric power generation, oil and natural gas in a bid to improve the workings of government and policymaking in relation to energy. However, the full extent of the new ministry’s authority remains unclear, including whether it will have oversight of China’s state-owned oil companies.

China implements ban on imported waste, stimulating plastic waste-exporting nations to develop alternative manufacturing, consumer products, and recycling strategies.

By Paul Davies, Bridget Reineking, and Andrew Westgate

Following China’s notification to the World Trade Organisation (WTO) in 2017, the country is now phasing in a ban on certain types of waste imports. The new Chinese regulation banning the import of 24 types of waste, including plastics and unsorted paper, came into force on 1 January 2018 and will address major environmental and health issues in China.

By Paul Davies, Andrew Westgate, and Bridget Reineking

China’s chief economic planning body, the National Development and Reform Commission (NDRC), has today announced the launch of its national Emissions Trading System (ETS). The ETS is an ambitious effort that likely will surpass every other emissions trading system in the world, including that of the European Union.

Many observers anticipated that China would launch the national ETS at the 23rd Conference of the Parties (COP 23) to the Paris Agreement in Bonn, Germany, in November 2017. However, Chinese officials at COP 23 merely previewed that the national ETS still required government approval. The delay in launching the national ETS likely stems from the system’s logistical challenges, including the following:

  • The need for timely and comprehensive emissions data for each industrial sector covered by the system
  • Issues relating to the determination of consistent methods for setting benchmarks for free allowances
  • Coordinating utilization of offset credits to satisfy compliance obligations during the initial compliance period

By Paul Davies, Bridget Reineking, and Andrew Westgate

Since establishing the People’s Bank of China’s Green Finance Task Force in 2014, China has encouraged green financing mechanisms through a variety of pioneering initiatives. For example, the country has designated five green finance pilot zones, within which financial institutions are incentivised to provide credit and special funds for environmentally friendly industries.

However, investors have yet to take full advantage of these developments. The lack of uptake may in part relate to recommendations set out in the Green Task Force Final Report published in April 2015. In particular, recommendation 13 of the Report proposes imposing environmental lender liability on banks – the practical consequence of which is that banks and other financial institutions become liable for environmental pollution or damage caused by their borrowers. Although green projects are by nature less environmental risk-laden than other projects, they are not risk-free. As a result, investors have been hesitant to utilize the new financing mechanisms, and banks are equally hesitant to offer financing in the face of uncertain associated liabilities.

By Paul Davies, Bridget Reineking, and Andrew Westgate

President Xi has announced the creation of a new environmental bureau to oversee China’s state-owned natural resources. Establishment of the new bureau is one of the most notable outcomes of the recent meeting of the 19th National Congress of the Communist Party, and follows Xi’s pronouncement that building an “ecological civilization” in his country is necessary for the continued development of the Chinese people.

Currently, China’s natural resources are administered by a set of localized bureaus, which oversee natural resource assets without a centralized national monitor. Local governments are responsible for staffing and funding these bureaus, so economic agendas and industrial development have directed local environmental efforts for years. Frequently, local governments have stripped the protection bureaus of the ability to impose penalties or otherwise enforce environmental compliance measures. And even if the bureaus receive staff and funding, regional and local needs are generally at odds, often causing untimely and frustrating backlogs regarding the uses of resources and land. Without national coordination, even the best-intentioned regulators working for these bureaus have struggled to implement environmental policies.