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Cost of Environmental Degradation in China Is Growing

March 29, 2013 by Leave a Comment

The statistic came from a study by the Chinese Academy of Environmental Planning, which is part of the Ministry of Environmental Protection.

The $230 billion figure, or 1.54 trillion renminbi, is based on costs arising from pollution and damage to the ecosystem, the price that China is paying for its rapid industrialization.

“This cuts to the heart of China’s economic challenge: how to transform from the explosive growth of the past 30 years to the sustainable growth of the next 30 years,” said Alistair Thornton, a China economist at the research firm IHS Global Insight. “Digging a hole and filling it back in again gives you G.D.P. growth. It doesn’t give you economic value. A lot of the activity in China over the last few years has been digging holes to fill them back in again — anything from bailing out failing solar companies to ignoring the ‘externalities’ of economic growth.”

And the costs could be even higher than the ministry’s estimate, he said. The $230 billion figure is incomplete because the researchers did not have a complete set of data. Making such calculations is “notoriously difficult,” he said.

The 2010 figure was reported on Monday by a newspaper associated with the ministry, and so far, only partial results of the study are available. In 2006, the ministry began releasing an estimate of the cost of environmental degradation. But the ministry has issued statistics only intermittently, not on an annual basis, though its original goal was to do the calculation annually.

The rapidly eroding environment across the country has become an issue of paramount concern to many Chinese. In January, outrage boiled over as air pollution in north China reached record levels, well beyond what Western environmental agencies consider hazardous. The public fury forced propaganda officials to allow official Chinese news organizations to report more candidly on the pollution.

Chinese state-owned enterprises in the oil and power industries have consistently blocked efforts by pro-environment government officials to impose policies that would alleviate the pollution.

There have also been constant concerns over water and soil pollution. The discovery of at least 16,000 dead pigs in rivers that supply drinking water to Shanghai has ignited alarm there. This week, China Central Television reported that farmers in a village in Henan Province were using wastewater from a paper mill to grow wheat. But one farmer said they would not dare to eat the wheat themselves. It is sold outside the village, perhaps ending up in cities, while the farmers grow their own wheat with well water.

The Beijing government on Thursday released details of a three-year plan that is aimed at curbing various forms of pollution, according to a report Friday in China Daily, an official English-language newspaper. The report quoted Wang Anshun, Beijing’s mayor, as saying that sewage treatment, garbage incineration and forestry development would cost at least $16 billion.

In 2006, the environmental ministry said the cost of environmental degradation in 2004 was more than $62 billion, or 3.05 percent of G.D.P. In 2010, it released partial results for 2008 that totaled about $185 billion, or 3.9 percent of G.D.P. Several foreign scholars have criticized the methods by which Chinese researchers have reached those numbers, saying some critical measures of environmental degradation are not included in the calculations.

There is consensus now that China’s decades of double-digit economic growth exacted an enormous environmental cost. But growth remains the priority; the Communist Party’s legitimacy is based largely on rapidly expanding the economy, and China officially estimates that its G.D.P., which was $8.3 trillion in 2012, will grow at a rate of 7.5 percent this year and at an average of 7 percent in the five-year plan that runs to 2015. A Deutsche Bank report released last month said the current growth policies would lead to a continuing steep decline of the environment for the next decade, especially given the expected coal consumption and boom in automobile sales.

Mr. Thornton, the economist, said the recent official estimates of the environmental cost “marries with our on-the-ground feeling that a lot of short-term positives over the past few years are turning into long-term negatives.”

Patrick Zuo contributed research.

Article source: http://www.nytimes.com/2013/03/30/world/asia/cost-of-environmental-degradation-in-china-is-growing.html?partner=rss&emc=rss

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Clean Energy Projects Face Waning Subsidies

January 27, 2012 by Leave a Comment

At the same time, wind and solar companies are telling Congress that they cannot be truly competitive and keep creating jobs without a few more years of government support.

Their efforts received a boost on Thursday from President Obama, who called for a package of tax credits for renewable power as part of a broader energy plan that he outlined while on a campaign swing through Nevada and Colorado.

But the lobbying by the wind and solar industries comes at a time when there is little enthusiasm for alternative-energy subsidies in Washington.

Overall concerns about the deficit are making lawmakers more skeptical about any new tax breaks for business in general. And taxpayer losses of more than half a billion dollars on Solyndra, a bankrupt maker of solar modules that defaulted on a federal loan, has tarnished the image of renewable power in particular.

“Most of the folks I think recognize that this is not a Solyndra effort here,” said Representative David G. Reichert, Republican of Washington, who introduced a bill to extend a renewable tax credit last year. Solyndra was financed under a now-expired program, part of the 2009 stimulus package, that provided government loan guarantees for clean-energy projects, some of which administration officials expected to be risky.

The wind and solar companies argue that the tax breaks they are seeking are different. The tax credits can be taken only by businesses that are already up and running, so taxpayers are less likely to be stuck subsidizing a failing company, proponents say.

“This is a program that doesn’t pick winners or losers,” said Rhone Resch, president and chief executive of the Solar Energy Industries Association. “It’s hard to argue against a program like this that is creating jobs.”

Without the new breaks, industry executives warn, they will be forced to scale back production and eliminate jobs in a still-weak economy.

The American division of Iberdrola, a big Spanish producer of wind turbines, is already feeling the impending loss of one tax break that expires this year. “We’ve seen the prospects for new wind farms really fall off,” said Donald Furman, a senior vice president at Iberdrola Renewables, which announced this week that it was laying off 50 employees. “We’re not getting out of the business and we’re not in any financial trouble, but we are doing the prudent thing so that we don’t have issues.”

The tax break that Iberdrola and other wind companies rely on, called the production tax credit, has been in place since 1992 but after repeated extensions is now scheduled to expire at the end of 2012. It allows for a credit of 2.2 cents per kilowatt-hour of electricity generated for the first 10 years of a project’s operation, which the industry says is sometimes enough to eliminate the price difference between wind power and fossil fuels.

The Congressional Joint Committee on Taxation recently estimated that the production tax credit would cost the government $6.8 billion from 2011 to 2015 for projects in place before the end of this year.

The other tax break, which expired at the end of last year and was especially popular with solar companies, allows renewable energy companies to get 30 percent of the cost of a new project back as a cash grant once construction is complete. Without the cash grant program, a company can still take the 30 percent credit, but must spread the benefit over a period of years. The industry says the grant program is more effective because it encourages a broader range of private investors to help finance its projects.

As of early this year, the cash-grant program, known as the 1603 program, had awarded $1.76 billion for more than 22,000 solar projects, according to the Treasury Department.

Mr. Obama, who has been a steadfast supporter of clean-energy programs, has already begun making a case for new government investment in clean energy projects as a way to foster both energy independence and employment at a time when Capitol Hill evaluates new laws in terms of job creation as well as budget cost or savings.

Article source: http://feeds.nytimes.com/click.phdo?i=aec49d941c877e2166741956d4efb817

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News Analysis: Chinese Solar Trade Case Has Clear Targets, Not Obvious Goals

October 21, 2011 by Leave a Comment

LIKE Detroit automakers taking on the Japanese a generation ago, the seven American solar panel makers that filed a trade case on Wednesday against China might find that a legal victory, if it comes, may not translate into business success.

In the 1970s and ‘80s, American car companies won a long series of trade cases to limit Japanese car imports. Japan’s automakers responded by moving assembly lines to the United States, creating many new blue-collar jobs. But they kept most of the high-paying design and engineering positions back in Japan. The new factories in the United States not only shielded Japanese auto companies against most further trade protectionism but helped them stay competitive when the yen soared against the dollar.

Meanwhile, American consumers had many new, affordable choices in cars — while Detroit continued to have trouble competing with its Japanese rivals.

Don’t be surprised if Chinese solar companies try to pursue a similar path, which could benefit American consumers of solar power if it helps propel the technology beyond its current niche status.

Chinese solar panel makers have already begun moving operations to the United States to avoid trade restrictions. With the new case, filed at the Commerce Department, some industry executives expect the Chinese industry to increase its American expansion. That could help the Chinese companies avoid import restrictions and insulate them from currency fluctuations as China allows the renminbi to appreciate gradually against the dollar.

The trade complaint, which accuses the Chinese industry of receiving unfair government subsidies and dumping its products in the United States at below cost, “will only accelerate the setting up of solar module and solar cell manufacturing in the United States,” said Ocean Yuan. Mr. Yuan is the president of Grape Solar, a company based in Eugene, Ore., that is a big importer of solar panels from China, Korea and Taiwan. Grape Solar has already been in discussions with big Chinese panel makers on ways to move more manufacturing to the United States.

Meanwhile, Suntech Power of Wuxi, China, the world’s largest manufacturer of blue solar panels — the most commonly used type — has already moved some simple assembly tasks to the United States. Other big Chinese manufacturers like Yingli Green Energy and Trina are considering similar moves. A partial shift of Chinese production could help create some new and mostly blue-collar American jobs. But a broader move into the United States could turn Chinese solar panel manufacturers into even fiercer competitors with their American counterparts.

The steep tariffs sought in the trade complaint could also cause China to retaliate. The country might, for example, shift more of its hefty annual purchases of solar panel manufacturing equipment to German suppliers instead of American ones. “It would be a travesty for the solar industry,” said Tom Zarrella, a former chief executive of GT Solar, a New Hampshire supplier of the manufacturing equipment.

American companies like GT Solar ship a total of about $1 billion worth of products a year to China, while other American firms ship an additional $1 billion a year in raw materials to the Chinese solar companies. In the first eight months of the year, Chinese panel makers shipped $1.6 billion of products to the United States.

China’s commerce ministry still had no comment on the trade litigation on Thursday, and the state-controlled Chinese news media were still ignoring the case — signs that Chinese officials were struggling to draft a response.

The current betting by trade experts is that the American solar panel industry will win its case, which could lead to tariffs early in 2012, even if the proceedings take a year or so to play out. That is because the United States still classifies China as a nonmarket economy, which sets off special rules for the evaluation of antidumping and antisubsidy cases that heavily favor American companies. American companies have won almost all the antidumping and antisubsidy cases they have filed against Chinese companies for the last 20 years. The solar industry has clear differences from the auto industry, of course. The American solar power market totaled only $6 billion last year, with the industry employing no more than 100,000 people and possibly considerably fewer, depending on whose estimates one believes. In contrast, the United States’ auto industry in the ’70s had revenue in the hundreds of billions and employed more than a million people.

But while the solar industry is in its relative infancy — solar power now contributes about one-tenth of 1 percent of the United States’ electricity — it is growing fast. The new solar wattage installed in the United States has been growing 74 percent a year since 2008, according to GTM Research, a renewable energy market analysis firm in Boston. Companies that develop solar power projects in the United States would not welcome paying tariffs on panels that might exceed 100 percent of the wholesale price.

Article source: http://feeds.nytimes.com/click.phdo?i=52cfb2ff6311fbc06b50b4925dba82a0

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