Premier Wen Jiabao has been unstinting in addressing
the environmental problems of China. I recently had occasion to
personally hear this resolve when the premier said, "I want to be
the environmental premier," during his meeting with the China
Council for International Cooperation on Environment and
Development.
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We met at Zhongnanhai on a crisp Thursday afternoon at the end of
November, with blue skies and white clouds acting as the perfect
backdrop for a meeting about the environment. After greeting each
of us personally, Premier Wen invited us to "take the opportunity
to talk freely about our views", explaining that China would "build
a strong country" in part by taking others' advice. He was relaxed
and energized as he talked about the environmental challenges that
China faces and the importance of innovation in science and
technology in solving them, but he added "innovation in our ways of
thinking" as well. The premier grew serious as he painted a picture
of "China at a crossroads in environmental protection and
sustainable development" and the necessity to "drive home the
message to all levels of government and all Chinese people".
This declaration triggered a flashback for me to 1988 when then
candidate George HW Bush said he wanted to be the environmental
president. At that time, there was widespread skepticism about this
assertion. However, candidate George Bush became President Bush in
short order. Prior to taking office, a president establishes a
transitional team, allowing him to begin to establish policy
priorities before taking office. One of the tasks for the
transitional team was to determine just how the new president would
make good on his claim to an environmental mantle. To accomplish
this, they invited groups to make suggestions - among them
Environmental Defense. We proposed that the new president attack
the acid rain problem in the US by creating a market for emissions
reductions. President Bush liked the idea and when he announced his
proposed amendments to the Clean Air Act, he credited Environmental
Defense with "breaking the logjam on acid rain". The program has
been wildly successful and much emulated.
Premier Wen faces a similar challenge in finding policies to
that would dramatically improve China's environmental condition.
While there are many policy choices, only a handful offer the type
of leverage that could truly be transformational by unleashing both
innovation and investment. These include: environmental criteria
for government officials' performance reviews, reform of the
penalty structure, implementation of market-based policies, public
disclosure of emissions data and continued leadership from the
top.
Each of these five levers are oriented toward getting the
incentives right, the single most important environmental policy
challenge in China. The first of these incentives, pointing
government officials in the "good and fast" direction for
development, is under way via new government regulations. Alluding
to the new Energy Efficiency Law and its accountability provisions,
Premier Wen said: "Government officials have learned GDP, they are
now learning energy efficiency and SO2 (sulfur dioxide), and soon
they will have a new word to learn - COD (chemical oxygen
demand)."
The second lever concerns current penalties under China's main
environmental laws, which are artificially capped at ridiculously
low levels and create a financial incentive for noncompliance. The
Water Pollution Control Law amendment is currently being debated in
the National People's Congress. The premier should throw his
substantial authority and prestige behind the reform of the penalty
to at least become a daily cap to ensure that polluting is not more
rewarding than compliance with the law. This precedent would send a
strong, clear signal to enterprises of the government's commitment
to environmental protection and of the financial peril they face if
they ignore it.
Sticks are not enough to effectively control pollution. In
China, as elsewhere, rewards are more effective and here is another
powerful lever - market forces. China has the opportunity to turn
pollution control on its head. Rather than being an unfortunate
cost of doing business, market-based policies like emissions
trading create rewards for those that control emissions beyond the
minimums required by government. Emissions trading converts
enterprises into environmental entrepreneurs who receive both
additional income from extra pollution control and reduced
compliance costs. This is one of the most important paths to an
innovation society. Waiting in the wings are draft SO2 emissions
trading regulations developed under the State Council's December
2005 decision on the environment. The premier could hustle up a
review of that plan and get it promulgated before the Spring
Festival so that key sectors like the electric utilities will
understand their responsibilities and get busy on the 11th five
year plan goal of reducing SO2 by 10 percent.
The premier could also turn up the heat on polluters by
disclosing to the public emissions data within each community in
the nation. Empowering the people with information will allow them
to shoulder some of the responsibility locally for controlling
pollution. While some may worry about data quality, this is a
self-correcting problem. Public disclosure will cause enterprises
to be ever more vigilant in reporting their emissions accurately.
Premier Wen has previously stated that the government cannot solve
all of the problems that China faces and that civil society must
take an increasing role in assisting in the work of the government.
Providing basic environmental information to the public would go a
long way toward that end.
Most important, the premier needs to continue his unswerving
focus on China's environmental problems. His steadfastness in
raising awareness of the severity of these issues, their priority
for the government and the challenge of solving them has been
unusual and refreshing for a world leader. He could cement this
dedication institutionally by surrounding himself with an
environmental cabinet that would include the State Environmental
Protection Administration.
If Premier Wen grasps the five levers, he will truly transform
the environmental situation in China and earn the precious title of
the environmental premier.
The author is Chief Economist of the Environmental
Defense,a US-based non-governmental organization.
(China Daily December 18, 2007)
