Environmental Protection Investment in the 12th Five-year Plan Will Reach RMB 3.1 Trillion

On 24 November 2009, Liu Zhiquan, Deputy Director of the Science and Technology Department of the Ministry of Environmental Protection (MEP) stated at the International Cooperation Forum on China Environmental Service that preliminary estimates indicate that the environmental protection investment in the 12th Five-year Plan rise to RMB 3.1 trillion, among which RMB 1 trillion will be invested in facilities for treatment of environmental pollution.

“In the near future, China’s investment in environmental protection will surpass that of developed countries such as Japan and the U.S.” Mr. Liu said.

It has been reported that national departments such as the NDRC and MEP have recently been pushing for the passing of an environmental industry plan. Recently, Premier Wen Jiabao has been briefed on the plan, and proposed the environmental protection industry as a new sector of economic growth.

Of the investment of RMB 4 trillion made by the government in 2009 to boost domestic demand, RMB 300 billion was invested into industries related to environmental protection for the primary purposes of ecological environment, environmental protection in reconstruction after the earthquake and livelihood projects for the people.

However, compared to the environmental protection investment that will be made during the 12th Five-year Plan, this investment represents limited progress.

Liu Zhiquan said that investment will be increased during the 12th Five-year Plan in terms of indexes and expectations, and this is something that will be done in light of domestic environmental problems, the huge demands for an environmental protection industry and needs for the development of a harmonious society.

RMB 3.1 trillion will be invested into environmental protection within five years, with RMB 1 trillion earmarked for the construction of facilities for the treatment of environmental pollution. In the next few years, the environmental protection industry will maintain a growth rate of 15% to 20%. The output of the industry is expected to reach RMB 4.92 trillion before the end of the 12th Five-year Plan.

“Our research indicates that investment in environmental protection greatly promotes the growth of the GDP, and its magnification on other related industries is between 8 to 10 fold.” Liu Zhiquan said.

As estimated by environmental protection departments, total investment in environmental protection during the 11th Five-year Plan is expected to total at RMB 1.4 trillion, accounting for 1.5% of the GDP in the same period. Investment in the eight key kinds of environmental protection projects stood at RMB 333.6 billion whereas investment in the ten key kinds of energy-saving projects totaled at RMB 15 billion. In addition, funds from the issuance of additional national bonds were also used in the construction of environmental protection facilities.

Investment in environmental protection during the 12th Five-year Plan will be more than double the total amount invested during the 11th Five-year Plan. As a new strategic industry, environmental protection will stimulate the rapid growth of the economy and become a new sector of economic growth.

Liu Zhiquan stated that national environmental governance will incorporate new important projects during the 12th Five-year Plan, such as new contents to be added in the governance of atmospheric pollution. For instance, PM value (inhalable particles in the air) will be added to the exhaust emission of motor vehicles, and there will be a special focus on the reduction of greenhouse gas emissions.

At present, the targets for emission reduction in the 11th Five-year Plan primarily concerns chemical oxygen demand and sulfur dioxide. Nitrogen oxides and air particles are not included in among the indicators for national economic examination.

In terms of pollution prevention and ecological protection, sludge disposal will be listed on the agenda in the 12th Five-year Plan, and the safety of rural drinking water will be given focus. In terms of ecological treatment, restoration of polluted soil will be initiated during the 12th Five-year Plan.

Moreover, circular economies including industrial waste solids, waste gases and waste liquids, medium and low-carbon economies and clean consumption goods, wind energy, solar energy, terrestrial heat and nuclear power are also key points of environmental treatment during the 12th Five-year Plan.

Yuan Qingdan, Deputy Director of the Research Center of Environmental and Economic Policies of the MEP pointed that China’s green credit and green securities are still in the early stages. The next point of focus will be policies on environmental protection taxation. The specific policies include imposition of environmental tax, cancellation of export rebates of polluting products, imposition of consumption tax on heavy polluting products and imposition of sales tax on environmental protection projects. “These policies are currently being researched and are close to culmination. So let’s wait and see”

It has been reported that the MEP has preliminarily formulated carbon tax policies. The above policies will help to reduce pollution losses sustained by the economy. In the judgment of Yuan Qingdan, the ineffective environmental governance seen in China at present is related to extremely low environmental costs that enterprises are required to bear. For instance, emissions fees only account for 1% of enterprise taxation. In the view of Yuan Qingdan, this shows that the environmental costs in China’s production and consumption have not become inherent.

“Competition between enterprises is conducted with no consideration for environmental pollution; there are also issues such as poor execution of environmental protection measures and local interference. These are problems that need to be addressed” (Source: 21st Century Business Herald)