11 August the State Council published a detailed list of measures and guidelines to boost environmental protection and energy conservation industries. With the aim of elevating environmental protection to form a new “pillar Industry” for Chinese economic growth, supported by government subsidies and tax breaks.

The document vows to boost technological innovation, increase consumption demand of green and energy saving products, as well as boosting the environmental protection services industry. It also reiterates the goal made in an industrial development plan last year that it will raise the total output value of environmental protection industries to RMB 4.5 trillion (US$729.7 billion), or a CAGR of 15% by 2015.

The Policy said it would accelerate development of the following key areas:

• Environmental Protection: denitrification & desulphurisation equipment, development & application of environmental monitoring instruments, new water and solid waste treatment technologies, technology for remediation of contaminated soils
• Energy Conservation: environmentally friendly vehicles, high efficiency boilers and electric motors, regenerative combustion and semiconductor lighting technology

Under the new policy it is hoped that by 2015 Urban sewage treatment capacity will also increase to 200 million cubic meters per day, and the market share of energy-efficient products will increase at least 50%.

With regards to specific policies, the document stated that the state council will use more of its budget to fund environmental protection industries and encourage eligible companies to issue bonds.

Efforts will also be made to establish pricing schemes of renewable energy and to push forward tiered prices for household water and gas consumption.

To further improve market mechanisms, pilot programs for emissions and carbon trading will also be carried out, the State Council said in the document.

Under the environmental protection plan, foreign funded firms would also be eligible to the same benefits as their Chinese counterparts. This should go some way to appease concerns about past errors made with previous “pillar industries”, which had been linked to vast overcapacity and trade conflicts.

Further Reading

• Enforcing China’s Planned Green Economy – Can China achieve its planned RMB4.5trn energy-saving & environmental protection industry? HSBC’s Wai-Shin Chan on incentives, changes in environmental law, more regulatory muscle and what this means for water
• Water: Beijing Leads the Way – Beijing takes the lead announcing a RMB500 billion Energy Savings & Environmental Protection industry days after the national plan, with more water treatment, recycling, harvesting and pipes plus stricter monitoring of pollution