OECD Global Forum on Environment

“Towards quantifying the links between environment and economic

growth”

Paris, 24-25 October 2016

Environmental and Industrial Policies -- The Chinese Experiences

GAO Shi-Ji, Ph.D Institute for Resource and Environment Policies

DRC， China

1

China’s Environmental Governance in the

Context of Ecological Civilization

• An integrated and comprehensive approach:

To establish the strictest source protection system, process control

system, damage compensation system and accountability system.

• An effective regulatory system at the core：

To build and empower an effective environmental regulatory

system.

• Complementary policies:

Environmental + Industrial Policies

2

Environmental Policies： Command &

Control and Market-Based

Command and Control type: • Standards

• Environment Impact Evaluation

• Emission Quantity Control

• Emission Licensing

• Information Disclosure

Market-Based Policy Instruments: • Emission Charge

• Emission Trade

• Green Pricing

• Green Taxing

• Green Procurement

• Green Financing

• Pollution Insurance

• Green Trade

• Ecological Compensation

• Ecological Labeling

3

Industrial Policies： Traditional and Green

Traditional Industrial Policies: `

• For Declining Industries: supporting restructuring and rationalization of industries

to eliminate excess production capacities

• For Emerging Industries: supporting learning to acquire technological capability,

produce and capture knowledge spillovers

Green Industrial Policies:

• Greening Industries： incentives to improve resource productivity and

environmental performance in traditional industries .

• Green Industries: incentives to create green industries delivering environmental

goods and services in an industrial manner, and providing new green products for

green growth

4

Environmental and Industrial Policies： Two

Cases in China

Case I: The Sudden Drop of SO2 Emission in China:

The carrot and stick policy worked: The “regulation plus subsidy” policy has

encouraged coal-fired power plants in China to install and use desulphurization facilities

(scrubbers), thus reduced total SO2 emission quickly.

Case II: China’s Solar Photovoltaic (PV) Industry

Industrial Policies have encouraged entrepreneurial action to accelerate the

development of China’s solar PV industry (designated as a strategic new industry).

• Government supports (national): “Brightness Project”; feed in tariff; “Golden Sun” & “Roof

program”; R&D Program; Poverty alleviation Program

• Entrepreneurial efforts: mobilizing resources globally; adjustment to global competition

• Local governments’ role important

Steep learning curve in the solar PV industry achieved! 5

Turning Points for Emission of Traditional

Pollutants Reached Earlier in China

6

0

20

40

60

80

100

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50000

100000

150000

200000

19

73

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77

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81

19

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China’ Steel Production and

Electricity Production

钢产量（万吨）

6000千瓦及以上电厂发电设备容量

电厂发电设备容量增速

火电发电设备容量比重

Data Source: World Bank, Wind, DRC calculations

China’s COD and SO2 emission peaked in 2007, with GDP per capita of USD2460, ammonia and NOx

peaked in 2012 with GDP per capital of USD 6076. In both cases, GDP per capital levels were much

lower than those of advanced industrial countries when they had their own emission peaked respectively.

Steel (10,000 tons)

6MW and above power plant

Growth of power capacity

Percentage of coal fired power plants

0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0

Total SO2(10,000 tons)

SO2 Adjusted 1997

SO2 Adjusted 2011

Total NOx

Nox Adjusted 2011

Turning Points for Emission of Air Pollutants: China vs

Industrial Nations

7

Data Source: Chen et. al, 2015, DRC

Pollutants

Peak (Turning Points) GDP Per Capita (current USD)

GDP Per Capita （OECD data

2010）

GDP Per Capita (1990 international

USD )

SO2

USA 1974 6948 23184 16491

UK 1968 1896 21160（1970） 10410

Europe 1970s － － 10195 (29 countries) Japan 1965～1974 920～8954 － 5934～11145

China 2006 2069 5221 6303

NOX

USA 1994 26578 34549 24130

UK 1989 15057 22314 16414

Europe 1990s － － 15966(29 countries) Japan 2002 31235 － 20517

China 2012 6188 － 8032（2010）

VOC

USA 1970 4998 21160 15030

UK 1990 17805 22058 16430

Europe 1990s － － 15966(29 countries) Japan － － － －

China － － － －

8 China’s Industrial Policies Compared with Other Countries’

(From Zhang et. Al, 2016)

Thank you

9