[The Vector] News From Around the World: The Latest Measures Taken by China – Taxing Polluters

China has committed to long-term development of green energy, as is evidenced by all. As the world’s largest user of energy – and also it’s largest polluter – it needs energy to power its growth. China’s latest five-year strategy is quite ambitious – to impose heavy environmental taxes on heavy polluters.

Since Copenhagen, China has shown every indication that it intends to live up to its Copenhagen pledge, and has promised to include new policies to curb pollution as part of its overall energy plans. The government plans to close dirty sources of energy: 10,000 MW of small power plants, 25 million metric tons of iron-mill capacity, 6 million tons of steel capacity and 50 million tons of cement capacity, saving equivalent of 16 million tons of coal, said Xie Zhenhua in a press release in the 4^th quarter of 2010. Xie is the vice chair of the National Development and Reform Commission.

China has already become a green energy leader, through hydropower, development and manufacture of solar and wind, and through its aggressive energy plan. It also wants to lead in a low-carbon economy and fight pollution by reducing pollution and emissions.  In the latest (12^th) five-year plan, energy efficiency and environmental services are being given “priority status.” Three trillion yuan will be spent on environmental protection, which is double the amount spent in the last plan between 2006-2010. The latest environment tax has been under consideration for several years, and will specifically levy fees on discharges of sulphur dioxide, sewage and contaminant.

Beijing pollution courtesy Reuters / Stringe

In October 2007, head of China’s Environmental Protection Administration told reporters that his agency was actively promoting the idea of a pollution tax and it was consulting with all relevant ministries (for implementation in the next energy plan.) It was acknowledged to the press that China’s strong economic growth has come at a high cost to the environment.  As China has forged forth in many green tech energy technologies, coal and fossil fuels continue to burn and pollute.

The new tax will levy fees based on the discharge of contaminants, and while it may be implemented nationally, it may be introduced into selected, more-polluted regions initially. The revenues flow to the central government, and many are calling for some of the funds to be used to restore damaged ecosystems and to compensate victims of contamination.

Ma Zhong, director of the School of Environment and Resources at Renmin University located in Beijing, said the objective of the tax is to change behavior.  A mandatory carbon trading systems is expected to be announced in March 2011 as well.  Greenpeach’s Wang Xiaojun said in a press release, “The launch of the environmental tax will mark China’s first real effort to use financial mechanisms to curb pollution.”