August 7, 2020

As Pollution Worsens in China, Solutions Succumb to Infighting

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.

Mia Li and Amy Qin contributed research from Beijing, and Chris Buckley contributed reporting from Hong Kong.

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New Breed of Leaders Helped Guide Fuel Standards, Chrysler Says

In past battles over gas-mileage requirements, the Detroit car companies argued that big increases in fuel-efficiency would be too expensive and cost jobs.

But last week’s accord between the Obama administration and carmakers to reach an average of 54.5 miles per gallon by 2025 showed how times, and senior executives, have changed in Detroit.

“These are business people who did not grow up and become conditioned to doing business in Detroit,” Sergio Marchionne, the head of Chrysler and its parent company, the Italian automaker Fiat, said at an industry conference here. “They accept the challenge of the new without being afraid.”

Mr. Marchionne, who has dual Italian and Canadian citizenship, took over the top spot at Chrysler when it emerged from its government-sponsored bankruptcy two years ago.

Similarly, the chief executive of General Motors, Daniel F. Akerson, joined the company from the Carlyle Group private equity firm after G.M. came out of Chapter 11. And at Ford, Alan R. Mulally was recruited from the aircraft manufacturer Boeing in 2006 to bring a fresh perspective to the automaker’s top ranks.

The three executives, Mr. Marchionne said, were not hamstrung by the litany of past protests by Detroit against tougher fuel rules mandated by Washington.

“This industry had a very bad habit of crying wolf,” he said. “Sooner or later, somebody is going to call your bluff.”

Mr. Marchionne’s observations were echoed by other attendees at the conference sponsored by the Center for Automotive Research, an industry research group, including environmentalists who locked horns with Detroit over fuel-economy in the past.

“It’s become really hard for the companies to say they can’t achieve these higher standards,” said Dan Becker, director of the Safe Climate Campaign, a group working to mitigate global warming. “I endorse Marchionne’s truth-telling. These new guys get it.”

Even the United Auto Workers union has shifted course and backed the new fuel rules, rather than bemoaning the potential job losses resulting from government mandates.

Bob King, who was elected the union’s president last year, said the U.A.W. was an “ally with environmentalists” and that he expected higher mileage rules to create new jobs in Detroit’s factories.

“They recognize that if you are adding technology to these vehicles, it should be their members who are doing it,” said Mr. Becker.

Still, not everyone in Detroit is as embracing of the new fuel rules, which require automakers to improve the efficiency of their cars by 5 percent annually from 2017 to 2025, and trucks by 3.5 percent each year for the first four years of the cycle, then 5 percent annually for the remainder.

“I personally saw it as political engineering,” said Sean McAlinden, the Center for Automotive Research’s chief economist. He said that government agencies were setting fuel targets based on a “mass of extrapolated exaggerations” about the gains that new technology could achieve.

But Mr. Marchionne was more in step with the overall sentiment that car companies need to embrace the new standards instead of criticize them.

“Anybody who surrenders 14 years before the date ought not to be in business,” he said, referring to the 2025 deadline for the new standards.

He said the government regulations could work if they were “technology neutral” and not weighted toward developing electric cars or vehicles powered by hydrogen fuel-cells. The new regulations are expected to offer credits for low-emission technologies, but the precise regulations are still being drafted by the government.

Instead, Mr. Marchionne advocated continued, incremental improvements in the internal combustion engine, including the size of engines and improving transmissions.

He cited the mileage improvements made on Chrysler’s new 300 full-size sedan. That sedan has a smaller V-6 engine than earlier models and a new eight-speed transmission, and its mileage has improved from 27 miles a gallon to 31 miles a gallon in the 2012 model, he said.

“The power-train guys are an incredible pool of talent,” he said. “Let them do their jobs.”

That view was shared by G.M. executive Charlie Klein, who leads a team of engineers responsible for meeting the new fuel-efficiency rules.

Mr. Klein said in a presentation that G.M. was stepping up work on existing technologies, including direct-injection engines, improved aerodynamic designs, and fuel management systems like engines that shut down when stopped and reactivate when the driver presses the accelerator.

Improving fuel economy is, he said, an open-ended quest that was hardly worth fighting over anymore. “It’s here to stay,” he said. “We might as well get used to it.”

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