Beijing Rudely Awakened from 'Green' Dream

After nearly three decades of breakneck economic growth, China has some of the most polluted cities in the world. All of the country's major rivers are dangerously contaminated, with millions of people lacking access to clean drinking water.

Published: 17-Jan-2007

BEIJING - China's resolve to abandon its decades-old habit of pursuing economic growth at any cost and instead promote energy conservation and environmental protection has stumbled because of resistance from development-minded local officials and powerful interest groups.

In an embarrassing blow to China's top leadership, which has cast itself as an advocate of green development, the country missed its much-publicized goals of reducing energy consumption and pollutants last year. Despite a target of cutting energy use per unit of gross domestic product (GDP) by 4%, consumption actually increased by 0.8% in the first half of the year and indices for the main pollutants continued to rise.

Last year was "the most grim year for China's environmental situation", Pan Yue, deputy head of the State Environmental Protection Agency (SEPA), said in a statement last week. "The goals set out by the cabinet at the start of the year have absolutely not been achieved."

After nearly three decades of breakneck economic growth, China has some of the most polluted cities in the world. All of the country's major rivers are dangerously contaminated, with millions of people lacking access to clean drinking water.

There was a pollution accident once almost every two days last year, Pan admitted, with authorities receiving 600,000 environmental complaints. The number was up 30% over 2005.

The failure in energy-saving and pollution controls is seen as a result of the diehard attitudes of local officials who continue to tie their career achievements with GDP growth figures. After extolling the virtues of rapid economic growth for 27 years, Beijing is struggling to reverse the tide of its blind pursuit by establishing a "green development index" as a performance indicator.

The new green GDP index attempts to account for environmental degradation and resource depletion caused by economic development. Over the past two years, green GDP projects have been launched in some 10 Chinese provinces and municipalities, including the capital and the northeastern port hub of Tianjin.

Yet central-government officials have conceded that such projects have met with resistance by local civil servants.

"A lack of economic motives is the fundamental reason for the local governments' weakness in reducing energy consumption and improving environmental protection," Chen Qingtai, a senior economic official under the Chinese People's Political Consultative Conference, was quoted recently by the state news agency Xinhua.

The failure has prompted Beijing to get tough with penalties for polluters and energy wasters. Last week the country's environmental watchdog targeted major state companies and provincial governments that missed their targets in 2006.

Four of the country's top power firms will not get environmental approval for any projects until they solve pollution and energy-consumption problems in their existing plants, Pan Yue announced. Without such approval, construction of new plants is illegal.

Four industrial cities were also penalized for lending support to local projects that violated environmental standards and caused serious pollution, according to SEPA. The watchdog said it will suspend approval for all new projects in the four cities.

The new crackdown is bolder than SEPA's previous attempts to safeguard environmental standards because for the first time it targets big state firms, including large steel and power companies.

"It is the first time since the establishment of the administration [SEPA] that such penalties have been meted out to punish those administrative regions, industries or large enterprises," Pan said.

The target list covers 82 projects with a combined value of more than 112 billion yuan (US$14 billion). Top power companies such as China Huaneng Group, China Huadian Corp and China Guodian Corp, which represent the bulk of the country's hydropower-generation capacity, are named and shamed for failing to install devices to remove sulfur and shut down unsafe generators.

Pan said some enterprises had promised to cut pollution and energy consumption when their projects were banned by SEPA, but failed to do so once the local governments relaxed their environmental controls.

One example is the city of Tangshan, whose 70 steel factories account for one-tenth of the country's output. According to Pan, 80% of these steel factories, the majority of them small plants, were never approved by SEPA.

In the future, highly polluted cities such as Tangshan will be carefully scrutinized when applying for permission for new construction projects, Pan said.

China wants to reduce energy consumption per unit of GDP by 20% in the five years from 2006 to 2010. To get back on tack with its targets this year, Beijing is considering higher export taxes to curb exports of energy-intensive or polluting goods, and tax breaks for energy-saving products.

China's state banks are also joining Beijing's crusade against polluters. The People's Bank of China, the central bank, is working on a green scheme that would evaluate the eligibility of companies for loans based on their environmental performance.

Enterprises that have poor environmental records risk having their applications for bank loans rejected, according to Su Ning, the bank's deputy governor.

"This [move] will encourage enterprises to think more about the effect their operations have on the environment," Su said at a press briefing in Beijing last week.

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