[Last month, after deadly air pollution hit record levels in northern China, officials led byWen Jiabao, then the prime minister, put forward strict new fuel standards that the oil companies had blocked for years. But there are doubts about whether the oil companies will comply, especially since oil officials resisted a similar government order for higher-grade fuel four years ago. State-owned power companies have been similarly resistant. The companies regularly ignore government orders to upgrade coal-burning electricity plants, according to ministry data. And as with the oil companies, the power companies exert an outsize influence over environmental policy debates.]
By Edward Wong
BEIJING — China’s state leadership
transition has taken place this month against an ominous
backdrop. More than 16,000 dead pigs have been
found floating in rivers that provide drinking water to
Shanghai. A haze akin to volcanic fumes cloaked the capital, causing convulsive
coughing and obscuring the portrait of Mao Zedong on the gate to the Forbidden
City.
So severe are China’s
environmental woes, especially the noxious air,
that top government officials have been forced to openly acknowledge them. Fu
Ying, the spokeswoman for the National People’s Congress, said she checked for
smog every morning after opening her curtains and kept at home face masks for
her daughter and herself. Li Keqiang, the new prime minister, said the air
pollution had made him “quite upset” and vowed to “show even greater resolve
and make more vigorous efforts” to clean it up.
What the leaders neglect
to say is that infighting within the government bureaucracy is one of the
biggest obstacles to enacting stronger environmental policies. Even as some
officials push for tighter restrictions on pollutants, state-owned enterprises
— especially China’s oil and power companies — have been putting profits ahead
of health in working to outflank new rules, according to government data and
interviews with people involved in policy negotiations.
For instance, even
though trucks and buses crisscrossing China are far worse for the environment
than any other vehicles, the oil companies have delayed for years an
improvement in the diesel fuel those vehicles burn. As a result, the sulfur levels
of diesel in China are at least 23 times that of the United States. As for
power companies, the three biggest ones in the country are all repeat violators
of government restrictions on emissions from coal-burning plants; offending
power plants are found across the country, from Inner Mongolia to the southwest
metropolis of Chongqing.
The state-owned
enterprises are given critical roles in policy-making on environmental
standards. The committees that determine fuel standards, for example, are
housed in the buildings of an oil company. Whether the enterprises can be
forced to follow, rather than impede, environmental restrictions will be a
critical test of the commitment of Mr. Li andXi Jinping, the new party chief
and president, to curbing the influence of vested interests in the economy.
Last month, after deadly
air pollution hit record levels in northern China, officials led byWen Jiabao,
then the prime minister, put forward strict new fuel standards that the oil
companies had blocked for years. But there are doubts about whether the oil
companies will comply, especially since oil officials resisted a similar
government order for higher-grade fuel four years ago. State-owned power
companies have been similarly resistant. The companies regularly ignore government
orders to upgrade coal-burning electricity plants, according to ministry data.
And as with the oil companies, the power companies exert an outsize influence
over environmental policy debates.
In 2011, during a round
of discussions over stricter emissions standards, the China Electricity Council,
which represents the companies, pushed back hard against the proposals, saying
that the costs of upgrading the plants would be too high.
“During the procedure of
setting the standard, the companies or the industry councils have a lot of
influence,” said Zhou Rong, a campaign manager on energy issues for Greenpeace
East Asia. “My personal opinion is even if we have the most stringent standards
for every sector, the companies will violate those.”
On Feb. 28, Deutsche
Bank released an analysts’ note saying that China’s current economic policies
would result in an enormous surge in coal consumption and automobile sales over
the next decade. “China’s air pollution will become a lot worse from the
already unbearable level,” the analysts said, calling for drastic policy
changes and “a strong government will to overcome the opposition from interest
groups.”
The report estimated
that the number of passenger cars in China was on track to hit 400 million by
2030, up from 90 million now.
For the most part,
Chinese automakers have supported upgrading cars with cleaner technology, which
makes them more marketable worldwide, environmental advocates say. But better
technology cannot operate properly without high-quality fuel, and this is where
the bottleneck occurs.
The system of forging
fuel standards has led to fierce bureaucratic infighting.
The Ministry of Environmental Protection is
the main government advocate for both higher fuel standards and better
automobile technology. It has the power to force automakers to use new
technology by issuing stricter tailpipe emissions standards, but it cannot
unilaterally impose new fuel standards or enforce compliance from the oil
companies. Instead, it can merely lobby other relevant ministries or agencies
to take action.
When fuel standards do
not keep pace with vehicle technology, the environmental ministry has to delay
issuing new tailpipe emissions standards, and so cars do not get upgraded.
Fuel standards are
issued by the Standardization Administration of
China, which convenes a committee and a subcommittee to research standards.
They each have 30 to 40
members, almost all of whom are from oil companies, said Yue Xin, a scientist
who sits on one of the groups on behalf of the Ministry of Environmental
Protection.
The members from the oil
companies “will represent more of the company’s interests,” Mr. Yue said.
Sinopec and PetroChina, two of the biggest oil companies, have insisted that
consumers or the government pay to upgrade their refineries to produce cleaner
fuel, and they have delayed approving higher standards unless there is
consensus on who pays.
“Sinopec for years has
never argued against the need to improve China’s standards,” said David Vance
Wagner, a senior researcher at the International Council on Clean
Transportation who used to work under the Chinese Ministry of Environmental
Protection. “They’ve just argued about the finance of it.”
In late January, Fu
Chengyu, chairman of Sinopec, acknowledged that the oil companies bore some
responsibility for air pollution, but he also argued that the government’s fuel
standards were not high enough, according to Xinhua, the state news agency.
What Mr. Fu failed to explain was that oil company representatives on the
committees researching fuel standards have been the main impediment to pushing
through better standards.
Mr. Yue and others say
that because of constant haggling by the oil companies, the government for
years delayed issuing upgraded China IV diesel standards that are on par with
European standards. On Feb. 6, after the uproar over record-breaking air
pollution, the State Council, China’s cabinet, smashed the gridlock by putting
out guidelines that called for a nationwide adoption of the new China IV diesel
standards by the end of 2014.
It also set deadlines on
the issuing and phasing in of even cleaner China V standards. The next day, the
Standardization Administration of China issued the upgraded China IV diesel
standards that the oil companies had been trying to delay for years.
But the costs of
upgrading could still lead the oil companies to ignore the new standards, which
is what they did when the State Council in 2009 ordered a phase-in of the China
III diesel standard.
In the Feb. 6
announcement, the State Council said the government needed to create a fiscal
policy to support the refinery upgrades, but the Ministry of Finance has yet to
make the policy.
Another big concern lies
in the debate over the cleaner China V gasoline standard, which the State
Council said must be issued by December and phased in by the end of 2017. In
the committee debates, Sinopec argues that it is expensive to meet the requirements
for sulfur levels.
Oil company
representatives did not reply to requests for comment. In public, oil company
executives are trying to shift the blame. Mr. Fu told reporters this month that
“in fact the biggest killer is coal.”
Beijing officials have
said that vehicle emissions account for 22 percent of the main deadly
particulate matter in the air, known as PM 2.5, and another 40 percent is from
coal-fired factories in Beijing and nearby provinces.
In February, the
Ministry of Environmental Protection issued stricter factory emissions
standards for six coal-burning industries. First on the list is the power
industry, which accounts for about half the coal consumption in China.
But compliance by the
state-owned enterprises could be a problem. The environmental ministry
publishes annual lists of factories that have violated emissions regulations. A
review shows that the factories are all run by the biggest power companies.
The annual lists
represent only a fraction of the plants in violation, since installation by the
factories of monitoring equipment is spotty, and the equipment readings can be
manipulated, said Kevin Jianjun Tu, an energy scholar at the Carnegie Endowment
for International Peace.
Another problem is the
low penalties: fines are generally capped around $16,000, not much of a
deterrent, said Ms. Zhou, the Greenpeace representative. She said the violating
factories “should be required to stop production temporarily — that would then
force companies to take this seriously.”
Mia Li and Amy Qin contributed research from
Beijing, and Chris Buckley contributed reporting from Hong Kong.
