A recent choking bout of smog that engulfed much of northern China, indicates just how far the country still has to go in its war on pollution, but also how much things are changing.
In the past, local governments, including officials in the capital of Beijing, would’ve been in a state of denial. During the most recent bout, schools were closed, as were polluting factories, and the number of cars allowed to drive on the city’s roads was cut in half.
The number of blue-sky days is increasing, environmental groups say, and so is awareness of the deadly impact of microscopic lung penetrating PM 2.5 pollutants in the air. During the five-day bout of pollution, the state run Xinhua news agency reports that 15 million face masks were sold online.
And as another batch of smog lingered on Christmas Day in Beijing, members of the country’s National People’s Congress passed a landmark environmental tax law that aims to put more pressure on polluters and give enforcement more teeth.
Weak local enforcement
The law also seeks to address the failure of local governments to enforce, monitor and punish polluters, but how far it will go toward that aim remains to be seen. For nearly four decades, China has been collecting fees from polluters, a system that suffered from corruption, collusion and weak enforcement.
Under the pollution fee scheme, local governments were under more pressure to reach economic growth targets and that meant the environment became a minor concern. The result has been a dramatic rise in water, soil and air pollution.
Yuan Ying, assistant manager of Greenpeace East Asia’s Climate & Energy Unit in Beijing, says switching to a pollution tax is a positive step.
“The new policy will encourage or incentivize the local governments to have more stricter regulations on polluting companies,” Yuan Ying says.
The law will tax emitters of not only air and noise pollution, but water and solid pollutants as well.
It will also include incentives.
In the past, local officials from China’s Ministry of Environmental Protection were responsible for collecting pollution fees and the system was easily compromised. Earlier this month, state media reported that investigations carried out this year alone have already led to the punishment of more than 3,700 officials for inadequately protecting the environment.
Now, the funds will be collected by local tax officials and will go directly to local government coffers, instead of local environmental protection departments. Environmental officials will be responsible for the monitoring of polluters.
And because it will be a pollution tax and not a fee, enterprises will need to be much more careful, says Yang Fuqiang, senior adviser on climate change and energy at the Natural Resource Defense Council in Beijing. Now, polluters will not just be facing fines, but the possibility of criminal punishment.
“Before when it was a fee they [polluting companies] did not care,” Yang says. “They would just say it is only the ministry of environment, who cares?’
But now they will feel much more pressure, he adds.
War on pollution
China has long been criticized for taking a half-hearted approach to curtailing polluters because of the impact it could have on economic growth. Critics of Beijing, including Peter Navarro, the man president-elect Donald Trump appointed as the head of what he is calling the National Trade Council, have argued that going easy on polluters is just one of many unfair trade practices China uses to cut costs for its companies and boost the economy.
But over the past few years as the public awareness and opposition has grown, so has pressure to clean up the environment. China’s top leadership has realized that the problem is not only impacting the country’s water, soil and air, but is a major source of social instability.
At a recent high-level economic planning meeting, President Xi Jinping listed air pollution as one of the six issues the country needs to address.
Too little, too slow
How much of an impact the tax will have is uncertain. A quick glance at figures released in state media show that few will feel an incentive to clean up their act. For example, the tax on one ton of hazardous waste is 1,000 Chinese yuan or $144. Coal mines and users are expected to pay less than a dollar for one ton of waste and the charge for releasing one kilogram of sulfur dioxide is about 17 cents.
But officials note the increase in funds received will not be insignificant. Last year, under the old system, authorities collected $2.5 billion from some 280,000 polluters, an average of about $9,000 per unit. The tax law is expected to bring in as much as $50 billion during its first year.
Greenpeace’s Yuan Ying says that based on their calculations the current rate is still too low.
“In the case of coal-fired power plant, the environmental tax is far from enough to actually curb or to cover the external environmental costs,” she says.
Yang agrees and says that after working for years to see the fee converted to a tax, he is a little disappointed that the base or rate of the tax is not higher.
Although officials are hesitant to go too high, too fast, given the slowing economy, that will not keep some local governments from being more aggressive, he adds.
“The law also gives the National People’s Congress authority to increase the base or the rate of tax, based on the [local] situation,” on the ground, Yang says.
Given that the law does not go into effect until January of 2018, there will be time for the economy to possibly recover some and for officials to make further adjustments. And while some see that as more stalling tactics, others note that it is more about the sea of transition that has to take place before the new system is put in place.
One key issue, they say, is how local tax bureaus and the environmental ministry inspectors will work together.