China letting go of ‘command and control’ environmental policy
From the site China Dialogue:
In a change from the previous strategy of “environmental storms” – strict crackdowns on polluters – Pan Yue, the deputy director of China’s State Environmental Protection Administration (SEPA), proposed seven new green economic policies in a speech to the China Green Forum on September 9, 2007. The emphasis has shifted from the so-called “big stick approach” to a more practical, economic approach to environmental protection.
One of the reasons that I like this website so is their very adult conversations about things like environmental policy. Neither: nanny-state (my impression of the UK); always (and always unnecessarily) political (same, Australia); and not overly-corporatised and corrupted (the US). The latter, in particular, almost never evidence-based, or even very mature – usually a media problem.
This interview between Pan Yue and the Ma Li, a reporter for Beijing News contains a lot of very interesting discussion, both within the context of China, but also relevant and generalisable much more broadly.
Ma Li: What are the reasons behind this shift from the “big stick approach” of environmental crackdowns to the search for new economic policies to solve environmental problems?
Pan Yue: Four major crackdowns have taken place since early 2005, and they have had positive effects. But to be honest, the results are far from what we might have hoped for. A number of limitations – restrictions on lawful punishments, limited scope and over-reliance on local enforcement agents – mean that the crackdowns have failed to alter the situation and put a durable system in place.
It has always been our aim to build systems, and so it’s a great shame to find ourselves in this situation. Legal crackdowns have resulted in nothing more than a tug of war. We need to change the rules of the game, and put green economic policies into place. We’re now going to shift from traditional administrative measures to using economic policies – and then to large-scale legislation.
ML: Other countries are using green economic policies, and Chinese academics have raised them in discussion. Why does China still not have any?
PY: There are a lot of reasons for this, but perhaps the most important is that they would affect the powers and interests of many government departments, regions and industries. When a new policy conflicts with established interests it is likely to be set aside.
Therefore, the theoretical discussion of these policies is not enough – I want to call on the economic authorities and any authorities with an environmental remit to work together in developing policies to curb emissions and energy use. And let me make this clear, we would be happy to play a supporting role if any economic authority wants to take a lead in making this happen.
It will be interesting, within the context of Chinese environmental policy specifically, to see how open to abuse this large-scale market-based approach to environmental policy becomes. One of their big problems has been control over regional party officials. That has led to wide-spread corruption of the policing of former ‘command and control’ legislation – will it now lead to wide-spread corruption in the implementation of Pigovian taxation, etc.? I think there’s a good chance it will, but let’s hope not.
Background: the road to the new green economics
When Pan Yue revealed his plans for seven new green economic policies to the China Green Forum on September 9, he called on the economic authorities and government departments responsible for the environment to work together in researching and conducting trials of these proposals.
Pan’s proposed policies include green taxes, which would tax individuals or groups based on their use or misuse of environmental resources.
Green capital markets would leave polluting enterprises unable to obtain credit, or do so only at punitive rates of interest. Polluters would be unable to issue bonds or increase their investments, while environmentally-friendly firms would enjoy lower interest rates and other benefits.
Environmental insurance policies would force polluters to take out insurance against environmental risks. In the event of a pollution accident, the insurers would pay compensation to the victims.
Other policies include: environmental charges; environmental compensation; an emissions trading market; and a green trade policy.
Pan has revealed that SEPA’s next step is to join forces with the Ministry of Finance for research and trials on environmental tax and compensation policies. The China Securities Regulatory Commission will audit the environmental records of listed companies. The CIRC will hold trials of compulsory environmental liability insurance, and the Ministry of Commerce will strengthen its oversight of export firms’ environmental standards.
SEPA and its partners hope to unveil these policies within a year, says Pan, and have trials up and running in two years. This means, he says, that the first stages of China’s green economic policies should be in place within four years.