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May 1st, 2008:

Exporters Confront Rising Environmental Costs

GUANGZHOU, May 1 (Xinhua) — Chinese manufacturers have seen their costs for environmental protection rise, in many ways, since the government raised the standards over the past year.

Companies that were identified as violating environmental laws were barred from the Canton Fair, or the China Import and Export Fair, during a penalty period, said fair spokesman Xu Bing.

One such company was Jilin Fudun Timber Co., Ltd., a timber company, which was placed on a blacklist by environmental regulators last year.

The Canton Fair is the most important channel for Chinese exporters to expand overseas, so a ban means big losses.

China has conducted special campaigns against polluting companies since last year. And violators have lost more than just export opportunities: blacklisted firms find it difficult to get loans. The State Environmental Protection Administration, now the Ministry of Environmental Protection, along with the central bank and the Banking Regulatory Commission, jointly issued a “green loan” policy in July that banned loans to blacklisted companies.

In addition, the government stated that the worst violators would face shutdowns of up to three years.

A senior official with the National Development and Reform Commission, the country’s top economic planner, said that “all these measures made it clear that companies must establish pollution-treatment facilities. Only paying fines for degrading the environment is definitely not enough.”

As supervision strengthened, some companies had to shut down.

Fuan Textile Mill, a Hong Kong-listed company, shut down last March as it was found to be discharging wastewater directly into underground pipes. The company was fined 11.55 million yuan (1.65 million U.S. dollars).

During the spring session of this year’s Canton Fair, which concluded on Wednesday, Minister of Commerce Chen Deming said China would maintain strict controls on polluting and energy-wasting companies, despite a tougher export situation.

Appliance giant Haier introduced a “green strategy” at the fair. It showed off more than 100 new products, such as washing machines that don’t require laundry powder. The company won orders worth 850 million U.S. dollars.

Sales manager Yang Hong said that a Spanish customer had decided to buy more than 10 million U.S. dollars worth of environmentally-friendly products in less than 15 minutes. “It was a surprise to us,” said Yang.

Other products at the fair, such as furniture, decorations and toys, also emphasized an environmentally-friendly trend. Products using recycled materials were especially popular.

Liu Zhenyi, president of Shandong Luyi Wooden Product Co., Ltd., said their wood and woven-grass products all used recycled materials.

“Our products were made to European standards, although the cost was much higher,” he said. “They do not contain any lead or toxic chemical materials. We are confident about our products.”

Xu said Chinese companies were following stricter rules in designing, manufacturing, recycling and selling their products. “To promote energy-efficient products is to save resources for the world,” he said.

A Mexican buyer said that consumers in his country believed Chinese products were low-end only a couple of years ago “but now nobody would worry about quality.”

He said: “China is our major import country. Last year, we imported one to two containers of goods every month, but now we need to import at least two containers.”

Air Quality Worsens In Delta

Air quality worsens in delta, monitoring network finds

Cheung Chi-fai – SCMP – Updated on May 01, 2008

The Pearl River Delta was hit by poorer air quality last year, with ozone pollution worsening in most cities covered by a cross-border air quality monitoring network, according to a report released yesterday.

The report found the delta suffered from bad to worst air quality 33.81 per cent of the time, up 2.19 per cent from 2006.

The hardest hit city remained Foshan , a major construction materials and ceramics production centre, which had the worst grade of air quality 18 per cent of the time.

Individual pollutants generally recorded a rise in average concentration of between 2 and 7 per cent, with the exception of nitrogen dioxide, which dropped 2 per cent.

The monitoring network, jointly operated by the Environmental Protection Department and the Guangdong Environmental Protection Bureau, covers 16 places including three in Hong Kong, and measures the concentration levels of sulfur dioxide, nitrogen dioxide, respirable suspended particles and ozone.

Data gathered from each monitoring station is used to compile the regional air quality index. Based on the mainland air quality standard, the index is then ranked from Grade I to V, with Grade III to V being bad to worst air quality.

It was the second full-year report since the network started operating in November 2005 to provide a tool for environment officials to gauge the effectiveness of emissions control measures. These measures were implemented after Hong Kong and Guangdong agreed in 2002 to cut emissions of four pollutants by 20 to 55 per cent of 1997 levels, by 2010.

However, the report does not conclude whether real improvement has been made.

While nine of the 16 monitoring stations’ annual nitrogen dioxide readings improved last year, 13 stations’ ozone readings deteriorated. For sulfur dioxide, half of the stations recorded an improvement, but for particulates, 10 stations showed a worsening trend.

The environment department said the lack of rain last year made air pollution dispersion difficult, and higher temperatures and more sunshine made the formation of photo-chemical smog easier. “Short-term air quality is mainly affected by meteorological conditions, and two years’ data is not sufficient to assess the changing trend of air quality.”

It said Hong Kong’s ambient air quality, which was also affected by regional air quality, remained stable last year, with only a slight increase in the annual concentration of nitrogen dioxide, ozone and respirable suspended particles.

Improving Air Quality For The Sake Of People’s Health

A clean sweep

Updated on May 01, 2008 – SCMP

Joining things up into a coherent whole is never easy but it is a mark of competence. First of all, you need to have a clear focus of what the endgame is and then you need to understand what needs to be done to get there. The rest is about implementation.

New reports last week noted Hong Kong’s very poor roadside air quality. Despite a decade of effort, conditions remain a daily threat to the public health of this city’s people. Government spin focuses on “achievements” – that there have been some reductions in pollutant levels, based on levels of a certain year in the past. In reality, absolute levels remain very high and, when compared with the World Health Organisation’s recommended air quality standards, Hong Kong’s street-level air quality is positively dangerous.

Instead of recounting how well officials rearranged the deck chairs on the Titanic, the government may want to ask itself how it could have averted the roadside air crisis over the past decade. There is no point repeating what it has done – we know officials switched taxis and most minibuses from diesel to LPG, and ultra-low-sulphur diesel has been made available, for example – but the measures have not been enough. So, with the benefit of hindsight, we should ask: if our officials had to do it all over again, what other steps would they have taken?

The answer is that they should have taken numerous, related steps that affect roadside air quality. If the government wants to have any chance of cleaning up our roadside air, it needs to not only focus on what comes out of exhausts but also to change direction. Measures include taking the oldest, most-polluting trucks off the road, and converting buses running along urban routes to run on natural gas.

A more challenging solution is to reduce vehicles on our roads altogether. This means investing in railways, which is finally happening now but, until relatively recently, the emphasis had been on building roads. It also requires officials to co-ordinate road and rail interchanges so people opt to take the train into denser urban areas, and fewer empty buses. That kind of co-ordination requires a clear focus on the public health endgame.

That hasn’t happened, because officials were focused elsewhere. Their priority was roads. Even though some corner of the bureaucracy knew that Hong Kong must follow a rail-led public transport policy – which had been articulated – it was not followed in practice because some other parts of the administration built roads and were sympathetic to providing cheap road transport. The government could just as well have provided cheaper rail transport by subsidising rail construction to keep fares down, which it seems to be finally doing.

The city’s topography poses another challenge. Urban areas are dominated by tall buildings and narrow streets with heavy traffic. Emissions from vehicles gets trapped in “street canyons” that become extremely polluted and endanger public health. The solution for cleaning the city air should have involved a change in urban planning, in which vehicles were removed from the picture through massive pedestrian schemes. Again, officials have been too timid. There have only been small-scale schemes here and there. Instead, officials have allowed the “walled-buildings” phenomenon to spread across the city. In addition to street canyons, we now have massive buildings blocking air circulation in many places.

The failure in all these policy areas to fight roadside pollution is the reason for this crisis. Our officials continue to avoid admitting publicly that our roadside air quality is extremely poor. If they did, pressure would mount on them to take action. But they cannot connect all the dots for what needs to be done because there is no policy focus or priority for improving air quality for the sake of people’s health.

Things won’t get better until officials adopt a new outlook. When will our political leaders take the lead and speak out, for the sake of our health?

Christine Loh Kung-wai is chief executive of the think-tank Civic Exchange

Climate Strategy – US-Sino Co-Operation

Warming ties

Climate change challenges cannot be met without Sino-US co-operation

Peter Ogden and Matthew Rogier – SCMP – Updated on May 01, 2008

US President George W. Bush gave a major address recently about the need for America to curb its carbon emissions. The speech has been roundly derided as being “too little, too late”, and deservedly so. It is also characteristic of much of the energy debate in the United States in that it failed to mention an integral part of any successful energy and climate strategy in the 21st century: robust US-Sino co-operation.

Politicians and policymakers in Washington today are caught up in a largely domestic debate over the future of US energy policy. Yet US energy and climate security ultimately requires winning China’s support for a new international, rules-based energy system that works for developed and developing countries alike. The US and China are the top two emitters of greenhouse gases and two of the three top oil importers. If they cannot work together to create a sustainable global energy environment, there is little chance of averting the ill effects of climate change or building more efficient and transparent international energy markets.

That is why the US cannot afford to lose sight of the steps China is already taking to address its energy challenges and, in doing so, allow its own domestic energy debate to take place in a vacuum.

China’s political leadership is beginning to realise the importance of cleaning up the country’s energy and environmental act for the sake of the Olympic Games, China’s economy and, ultimately, perhaps even the Communist Party’s own survival. At the recently concluded National People’s Congress, China’s leaders took new steps to meet environmental challenges stemming from the country’s voracious appetite for fossil fuels. One notable development was the establishment of a National Energy Commission, responsible for creating, implementing and monitoring a new national energy policy, which includes promoting nuclear energy, alternative fuels and conservation.

China’s leaders also directed the NPC to upgrade the State Environmental Protection Administration to full ministry status and rename it the Ministry of Environmental Protection. Of course, this is the same agency that, under a variety of previous names, failed to rein in the country’s billowing pollution. One of China’s biggest energy and environmental failures has been its inability to ensure national policies are implemented by local party officials, whose primary concern is meeting immediate economic growth targets.

Significantly, however, the vice-minister of the newly upgraded Ministry of Environmental Protection, Pan Yue , is one of China’s most famous environmental activists. In 2005, Mr Pan surprised local and provincial authorities, and the people, when he closed projects worth US$14 billion that failed to file proper environmental-impact statements.

While no clear consensus appears to have emerged about how to solve China’s energy and environmental challenges, there is broad internal agreement among the political elite about the threats of failing to do so. One is that environmental degradation will dampen the country’s economic growth, which has been the party’s primary claim to political legitimacy.

A second threat comes directly from the anti-government protests sparked by China’s failed environmental policies. For example, 10,000 People’s Liberation Army troops had to be deployed to a village in Zhejiang province in 2005 when as many as 60,000 rioters swarmed nearby polluting chemical plants. More recently, in May last year, up to 20,000 protesters peacefully took to the streets in Xiamen to object to the construction of a US$1.4 billion petro-chemical plant near the city. According to Elizabeth Economy, of the Council on Foreign Relations, protests like these “represent the Chinese leadership’s greatest fear, namely, that its failure to protect the environment may some day serve as the catalyst for broad-based demands for political change”.

Moreover, as desertification exacerbated by global warming affects 400 million people in China alone, internal migration may cause civil unrest.

Perhaps this is why Premier Wen Jiabao appears ready to provide political backing for these and other reforms. Last year, at the World Economic Forum meeting in Davos, he said: “China is committed to saving resources and protecting the environment … We take climate change seriously and have formulated the national programme on tackling climate change.”

Creating a new Energy Commission and a more-empowered Ministry of Environmental Protection are signals that China is attempting to come to terms with its intertwined energy and environmental challenges, but more reform is needed. Many analysts in the US, as well as some in China, believe the commission itself ought to have been upgraded to ministry status, to enforce compliance at the local level.

The US, however, must itself address the energy challenge responsibly, and by doing so it will be able to demonstrate the leadership necessary to build and bolster the international architecture that the world needs to achieve greater energy and climate security.

China and the US can together help lead the world towards more sustainable energy policies that promote global economic growth and combat global warming, but they will never make significant progress towards their goal until they are willing and able to work closely with one another on these issues.

Peter Ogden is a senior policy analyst for national security and international policy at the Centre for American Progress. Matthew Rogier is a researcher at the centre