Chinese heavy industry pressured on pollution by government, citizens

China's heavy industries are facing increasing pressure to reduce pollution and control CO2 emissions as the government looks to embrace cleaner forms of economic growth and citizens step up protests. The National Centre for Climate Change Strategy and the Energy Research Institute have called for carbon to be priced at CNY60 ($9) a tonne or more, and for greater investment in wind and solar power.

SOMETHING has been amiss recently in the city of Tangshan, the source of about one-tenth of China’s steel output and (literally) eye-watering levels of pollution. Through much of May and June, no smoke billowed out of the mills near the railway station, two hours east of Beijing. In the sidings, wagons full of coal and steel girders sat idly. Hundreds of feet up in the air, vividly decorated kites fluttered against an unusually blue sky. A city whose industrial heritage includes China’s first mechanised coal mine, first freight locomotive and first cement plant has found itself in an incongruous position. It is hosting a vast international flower show laid out across an abandoned coalfield, overlooked by a gaudy metal phoenix that appears to be clinging to—or strangling—a smokestack.

To keep the air clean for the event, the local authorities have sporadically suspended steel production (playing havoc with futures prices in Shanghai). Their efforts look like a crafty way of disguising the effects of the country’s economic slowdown and industrial overcapacity, which have undoubtedly taken a toll on Tangshan’s steel industry. But for the workers, the subtext may be starker still. Bamboos sprout out of railway bridges; children clamber on lotuses sculpted out of steel. A noticeboard among the blossoms suggests that Tangshan’s days as a steel town are numbered (40 years after the city itself was flattened by an earthquake that killed hundreds of thousands of people—the phoenix symbolises its rebirth). The city is striving for “the transformation from industrial...to ecological civilisation”, it says. In other words, it welcomes people to a kitsch, rose-scented future (unlike the Tangshan pictured).

The country’s industrial bases are coming under pressure from three mutually reinforcing efforts by the central government: to rebalance the economy towards a less energy-hungry mode of growth, to curb pollution and to control carbon emissions that cause global warming. The upside is that on good days citizens can at least breathe cleaner air. Besides, China’s carbon emissions from energy use are estimated to have fallen last year for the first time in 17 years, according to research by BP, an oil company. The question is: can these environmental gains be sustained?

The goal: less coal

Two of China’s most influential advisory groups, the National Centre for Climate Change Strategy (NCSC) and the Energy Research Institute (ERI), have suggested ways they can be. On July 7th they said the country should ensure that carbon emissions will peak in 2029. To achieve that, they say, it should price carbon at 60 yuan ($9) a tonne or more (China has several regional carbon markets, but prices are lower than that). They also want the government to require that a minimum share of electricity production must come from renewable energy, such as wind and solar power. Such measures would hasten the shift away from coal and heavy industry.

Coal is the focus of both the government’s climate goals and its “war on pollution”. Currently, half of the coal burned anywhere is burned in mainland China. However, its use is expected to fall for a third year in a row in 2016, partly because of the slowdown in industrial activity, and also because of the increasing amounts of energy generated by wind and sun, says Lauri Myllyvirta of Greenpeace, an NGO. He adds that pressure from Chinese citizens to curb air pollution has, in recent years, forced the government to limit the use of coal in industrial areas. This year it ordered a three-year suspension of the building of new coal-fired power plants in 15 regions with notable overcapacity.

That may be too little, too late. Mr Myllyvirta says that in the 15 months before the partial moratorium, local governments had authorised the construction of more than 210 coal-fired power plants, with the potential to generate about 200 gigawatts (more than the total power-generating capacity of Germany), as officials sought to boost investment and economic growth whatever the environmental cost. That is on top of existing overcapacity, which he puts at about 200GW. As the NCSC and ERI pointed out, coal’s share of primary energy use is likely to stay at roughly half, even if their recommendations are adopted.

But top-down efforts to rationalise coal consumption in power plants and steel mills—however inadequate—are being complemented by pressure from the bottom up. Ma Jun, a prominent environmentalist who heads the Institute of Public and Environmental Affairs, is using the NGO’s “Blue Map” app, with the help of real-time data released by the government, to show which industrial complexes are violating air-quality standards. Users can then denounce polluters through social media.

Mr Ma says some firms have admitted their mistakes, but in many cases local governments have tried to hide the problem, believing that GDP growth targets are more important than environmental ones. This year the central government launched its first crackdown, sending inspectors to Hebei province, home to Tangshan. Reportedly they closed down 200 companies and ordered the arrest of 123 people, some for allegedly fabricating information about pollution-control measures. On July 5th Hebei responded to the inspectors’ criticisms by pledging to “put environmental protection in a more prominent position”.

The central government has begun to use environmental law as “a stick” to encourage the shift to a service-oriented economy, says Mr Ma. But the authorities are still so concerned about minimising job losses and maintaining social stability that he is unsure whether their mindset has changed for good. He says it is unclear whether lower pollution levels in Beijing this year are because of a fundamental improvement, or because of the weather (smog is still ever-present).

Another culprit for air pollution and carbon-dioxide emissions is oil. As an energy source in China it is dwarfed by coal, but its use will rise as China’s consumers become richer and travel more. As the industrial economy has slowed, so has the use of diesel for trucking freight. But oil demand will continue to grow as more people drive cars and fly on planes. In the longer term, however, fuel-efficiency standards will rise, public transport will improve, denser urbanisation may dent the appeal of owning cars and electric vehicles may become more popular.

Such is the importance of energy-intensive industries such as coal, iron, steel and cement to China’s economy that it is hard to imagine the country continuing to grow unless they rebound. In that case, anti-pollution measures will have to be even tougher. The government is sending the right signals: officials say that high-level inspection teams will be sent to other provinces, too. “In the past environment inspections were like a slap in the face, but now it is like having a knife to the neck,” said a glass-factory manager in Hebei to Xinhua, a state news agency. Few believe that the central government is quite as serious as such words suggest. But local officials will not want to find out the hard way.