Environmental Policy and Reform in China

This feature report falls into four parts: firstly, introduction, it introduces research background and objectives. Secondly, it has analyzed the practice patterns of watershed eco-compensation both at home and abroad, pointed out existing problems and analyzed the difference in watershed eco-compensation between China and foreign countries. Thirdly, case study of practice of watershed eco-compensation in China; it has analyzed the mode and effect, use of fund during the practice of eco-compensation in Xin'anjiang River and Huaihe River and expounded existing problems. Fourthly, it has put forward suggestions for legislation for watershed eco-compensation after streamlining problems in practice of watershed eco-compensation and the legislative demand.

In recent few years, market economy mechanism in China has gradually established, and market-based policy tools were attached more importance than ever before. As China’s economy has been growing fast in the past three decades with an annual increasing ratio greater than 8%, its environmental problems are mostly getting worse. In the future, more environmental restraints would be imposed on the economic development, and bigger pressures of major pollutants reduction will be ensued, so policy innovation of environmental pollution prevention and control should be expedited. Emission trading pilot projects has emerged in China since late 1980s, but advanced very slowly. However, with great efforts in environmental protection of the governments these years, environmental monitoring and supervision and management capacities have been greatly increased, in particular in some industrial sectors or regions, and with these years pilot projects exploration, lots of policy implementation experiences of emission trading also gained. Under such backgrounds, pollution emission trading programs developed rapidly especially since 2007, development trends of emission trading have become vigorous. Firstly, this paper reviewed systematically practices and progresses of international and domestic emission trading policy in China during the past two decades, and concluded that emission trading is broadly used in the air pollutants reduction in USA, and the global carbon reduction with better effects, the emission trading policy exploration in China could be roughly divided into three stages: Initial Development stage (1988–2000), Piloting exploration stage (2001–2006), Deepening Piloting stage (2007-). Secondly, nine characteristics of the current emission trading practice in China were concluded and six key issues influencing the advancement of emission trading piloting were identified and discussed. And lastly, the paper proposed the pilot roadmap for implementation of the emission trading, and pointed out that efforts in the near future should focus on the construction of “six systems”, that are key technical supporting system, fair and reasonable allocation system of the emission permit, emission trading market system, laws and regulations system, pollution source monitoring and management system, and law enforcement and supervision system.

With rapid industrialization and urbanization, the “resources and environment for growth” model in China has led to increasing inconsistencies between economic and social development and environmental protection. As an issue of national concern, environmental protection has been become a policy focus for the Communist Party of China (CPC) and the national government. In spite of this, the country continues to face serious environmental challenges; excessive pollution, high levels of smog in many cities, contamination of surface and groundwater and soil degradation are just some of the challenges faced. Strengthening the government’s environmental audit systems must be part of the solution to China’s increasingly serious environmental problems. The government and its senior officials play crucial roles in the implementation of environmental and economic policies. Improved environmental audit systems are required to review the environmental performance of senior officials and hold them accountable for performing their environmental protection duties responsibly and fully. China already has an established economic accountability audit system for senior officials and has been actively making efforts in standardizing its systems for natural resource and environment audits. In July 2014, the Implementation Guidelines for Regulation of Economic Accountability Audit on Leading Officials of Party, Government and State-owned Enterprises was jointly issued by several key agencies of the Chinese government1. According to these guidelines, the economic accountability auditing of China’s senior officials should include, in addition to the quality and sustainability of economic and social development, auditing of officials’ performance with respect to environmental protection, natural resource management and improvement of people’s livelihood.

While the environments of more and more Chinese cities are becoming less polluted following successful introduction of pollution control and environment renovation measures in recent years, more attention is now being given to the livability of cities. However, these successes are often not quantifiable and are not universally recognized. Based on a survey of globally- recognized urban livability indices and their monitoring systems, the paper is to develop and agree with the government counterparts on a verifiable and measurable environmental livability index system targeting the PRC cities, and find a suitable approach for investment assessments in reaching the benchmarks, i.e. the costs of producing changes in environmental livability. With the Chinese Environmental Livability Index System developed in the paper, environmental performance of 33 Chinese cities were ranked and the environmental challenges of these cities are identified with the further Pressure-State-Response analysis and trend analysis. With a comprehensive analysis with the trends of long-term environmental livability and the pollution control investment of Chinese cities, more effective and aim-oriented incentives and investment policies for urban environmental livability improvement are put forward in this paper.

Air pollution has a great impact on human health. Accelerated population ageing in China will aggravate disease burden attributable to air pollution. Making use of the predictive population data of different age groups in China from 2010 to 2030, and adopting the methodology of Environmental Burden of Disease (EBD), this Study calculates the disease burden of people in different scenarios of air pollution. Results show: (1) Population ageing has a great impact on disease burden attributable to air pollution. Affected by ageing, Average Potential Years of Life Lost in 2030 will be 20 years, 33% higher than 2010; premature deaths attributable to air pollution will be 558,000, up by 20.1% over 2010. (2) If air quality is not improved, with the dual impact from urbanization and ageing, premature deaths attributable to air pollution in cities will grow markedly. In 2020, premature deaths attributable to air pollution in Chinese cities will be 632,000, up by 36% over 2010; in 2030, the figure will be 845,000, up by 81.8% over 2010. (3) To contain the growth in air-pollution premature deaths in cities, China has to improve air quality substantially. If the air quality of all Chinese cities reaches Grade I (40 μg/m³), premature deaths in 2030 can be controlled at the 2010 level.

With the development of medical care in China, the amount of medical waste is also increasing, the disposal and management of medical waste is particularly important. However, China has limited legislation and management experience in the treatment of medical waste. Especially after the outbreak of “SARS” in 2003, such problems became more prominent. Since then, CAEP has begun to carry out relevant research in the field of medical waste management and technology. We started the preparation work for the formation of “National Hazardous Waste and Medical Waste Disposal Facilities Construction Planning”, and promised to provide more than ten years of technical support. We also participated in the project of sustainable environmental management of medical waste in China, undertaking the sub-project of “Research on the Economic Treatment of Medical Waste Disposal” and “Study on the Construction and Operation Mode of Medical Waste Disposal Facilities”, at the same time providing technical support for the demonstration activities. We also participated in the compiling of “Technical Specifications for Steam Autoclave Centralized Treatment Engineering on Medical Waste” and “The Best Feasible Technical Guidelines of Medical Waste Disposal”, which cultivated a professional research team for our academy.

Beijing, Tianjin, Hebei and their surrounding areas are known as the most serious air pollution area in China. Relevant research showed that during heavy haze pollution episodes in winter, low source emissions, e.g. scattered coal combustion, contributed a lot to the concentration of PM_2.5.In order to promote civil scattered coal replacement and air quality improvement in Beijing–Tianjin–Hebei Region, CAEP research team have implemented this research to design the electricity substitution plan for civil scattered coal and analyze the corresponding economic costs and environmental effects, so as to provide decision-making reference for the government. This research was funded by the Energy Foundation. The project team carried out field visit to Beijing, Tianjin and Hebei Province, and investigated the basic status of civil coal using, the progress of energy substitution from coal to clean energy and the main obstacles. Three workshops on these issues were held in Beijing (in July 2016, March 2017 and August 2017 respectively), and relevant experts taking part in these discussions came from the Ministry of Environmental Protection, the National Energy Administration, Tsinghua University, Beijing Municipal Research Institute of Environmental Protection, Beijing Municipal Commission of Rural Affairs, Tianjin Development and Reform Commission and other relevant agencies.

Cost–benefit analysis is an important means for policy formulation, implementation and adjustment. The study presents a cost–benefit analysis of the policy to eliminate yellow-label vehicles in the Beijing-Tianjin-Hebei region. It estimates the costs and environmental and health benefits of scrappage subsidy program and ban program under the baseline scenario and the controlled scenario, compares results between the two programs and analyzes the economic impact of scrappage subsidy program. It calculates the costs based on the social cost method, the environmental benefits based on the emission factor method and air quality model, the health benefits based on method of environmental health assessment, and the economic and social benefits based on the input–output method. The results show the policy played an important role in reducing pollutant emissions and improving environmental quality in the region during 2008–2015. It reduced the concentration of NO_x by 2.5% and PM_2.5 by 0.84% in Beijing, 3.2% and 1.15% in Tianjin and 7.98% and 0.78% in Hebei, respectively. The net benefits derived from scrappage subsidy program reached 20.34 billion yuan and from ban program 92.722 billion yuan, and totaled 113.06 billion yuan. The policy also exerted a positive impact on the macro economy. It approximately increased the vehicle consumption by 182.25 billion yuan, total output 829.01 billion yuan, gross domestic product 234.42 billion yuan, and residents’ income 981.0 billion yuan, and created about 14.2 million jobs.

This report is product of cooperation project between Chemicals Branch, DTIE, UNEP and CAEP, MEP, China under Small-Scale Funding Agreement (No.NF/4030–10-62–2201) signed in 27th Jan, 2011 with 30,000USD funds from UNEP to CAEP (Phase I) and a continuation SSFA was (No.NF/4030–10-85) signed in 26th, Nov, 2012 with 28,500 USD funds from UNEP to CAEP as supporting (Phase II). In phase I, the project aims to adopt international best practice and policy evaluation tools to assess policy performance of China’s Total Emission Reduction Policy in the period of 2006–2010 (11th FYP) at national level and pilots study in provincial level. While in the research, the project has adopted DPISR conceptual framework to form an indictaors-based evaluation system to assess the policy performance at implementation stage. In phase II, the project has three research tasks: 1 Revise the indictaors-based evaluation system at national level according to the new requirements of the policy in 12th FYP (2011–2015) in which two complusory reduction pollutants became to four; 2 Establish indictaors-based evaluation system for provincial and municipal level based on statistical characteristics; 3 Develop indictaors-based evaluation system for sectoral level, the pilot study was carried out in textile sector. Upon the project completion in 2013, it has quantified Total Emission Reduction Policy performance at national level between 2006 and 2010 and proposed a series of mature methods for assessing performance of emission reduction policy at provincial, municipal and sectoral level.

The statistical framework of the environmental goods and service sector (EGSS) is a method developed by Eurostat and used for the collection and collation of relevant statistics. The EGSS statistic framework has been incorporated by the United Nations Statistics Division (UNSD) into the “System of Integrated Environmental and Economic Accounting (SEEA)”to become an international statistic standard. China's environment protection industry is developing rapidly, and it must learn and reference the statistical practices of domestic and foreign environment protection industries to establish a statistical system to fully comprehend the actual conditions of the industry, enabling further development in China. This paper mainly investigate the feasibility of obtaining more comprehensive and detailed statistics from the base forms that can be used as EGSS statistics, and study the applicability of the Classification of Strategic Emerging Industries (2012) and the classification of the EGSS. The most feasible routes for introducing the EGSS statistic framework into China can then be further identified.

China has made noticeable achievements in the formulation and practice of green financial policies in 2018. First, green financial products and services grew steadily, with ceaseless innovation in green credit, green bonds, green insurance, green development funds and asset-backed notes and increasing diversification of green financial products provided by local financial institutions. Second, as relevant authorities further tightened project thresholds, public–private partnership projects concerning the ecological environment were better grounded and showed overall good momentum with the effective implementation of more projects. Relying on the national carbon market, the various pilot areas for the emissions trading scheme carried out policy practices in local contexts. Third, the unparalleled determination through unprecedented efforts to develop an ecological civilization provide an extremely favorable policy environment for the vigorous development of green finance. In order to help the public to keep abreast of China's policy system and practical progress in the field of green finance, the Progress Report on Green Finance in China 2018 is hereby prepared.

Think tank, as a research institute based on public policies, is a key source of references for decision makers, and a remarkable symbol of national soft power. As a think tank in environmental field in China, the main task of our academy is to provide comprehensively technical support for the Ministry of Ecology and Environment (MEE), and to assist MEE issue environmental polices scientifically and effectively. According to the “2018 Global Go to Think Tank Index Report” released by the Think Tanks and Civil Societies Program (TTCSP) of the University of Pennsylvania, our academy was ranked 36 out of 100 environmental think tanks globally, and was ranked No.1 in Greater China Region. As an environmental think tank, this paper tries to explore the development process of ecological & environmental think tanks in China, analyze the research topics of these think tanks, and give some suggestions for their future development.