China Environmental Law

I attended a workshop today sponsored by the Shanghai Energy Conservation Supervision Center, with the endorsement of the Shanghai Economic Commission (SHEC) . Chen Jinhai from the SHEC made the opening remarks and he reiterated a theme I have been harping on for some time: the achievement of energy efficiency and pollution reduction goals are very important drivers for local officials. These goals are articulated in the 11^th Five year plan and codified as performance criteria for political cadres in several recent laws (see, Article 5 of the new Water Pollution Prevention and Control Act amendments (previously discussed), and the amendments to the Energy Conservation Law that will be the subject of a forthcoming post).

Mr. Chen reported that the achievement of energy efficiency and environment pollution reduction goals top Shanghai’s list of 20 most important tasks for 2008. With respect to energy efficiency, he said that in 2006 Shanghai reduced energy consumption per RMB10,000 of production by 3.7% (the goal was 4%), and in 2007 beat the 4% goal and made up some of the 2006 shortfall, although he did not give the precise figure.

The workshop, part of a series which will also stop in Shenzhen and Beijing, featured a well-tailored, well-paced presentation by a US sustainable developer and architect which highlighted the Living Building Challenge  and The Natural Step system  for designing sustainable buildings. The workshop slides are supposed to be posted on this site: http://www.edo.org.cn/; I’ll let you know when they go up.

There was a feature story by the China Internet Information Center last November which presents a very candid picture of the challenges facing the drive to increase energy efficiency in new buildings in China.  Zhang Zaidong, chairman of Fengshang Real Estate, is quoted as saying: “We do not lack laws and regulations and technology is not a problem. The key problem is that we have no incentive policies.”  He could have also cited the lack of “incentive pricing.” “A huge hindrance is that the price of energy is still relatively low. Users and developers of buildings gain few benefits from energy saving technology projects. Therefore they are not very enthusiastic about these projects” an unnamed “insider” said.

In the US, the cost of going “green” is usually overestimated, in fact, we workshop goers were told, it only adds from 0 to 2% of additional upfront costs, and can result in operational savings equal to 20% or more of the initial construction costs over the life of the building. While 2% may seem small, it is enough to place green buildings at a competitive disadvantage even in the United States because the vast majority of consumers are not yet willing to pay a green premium. In China I suspect the situation is the same, if not worse. My sense is that the green premium is probably higher in China (with even fewer people willing to pay it), and the operational savings are lower because of below market energy rates.

Incentives and market energy prices are required to drive green building development in China. New regulations imposing energy consumption caps for “public” buildings, i.e. any building that is not residential or industrial, with significant penalties for over consumption are rumored to be in the works.  Let’s hope the fact that energy efficiency improvements are at the top of the political agenda will lead to these and other moves in the right direction. This is an extremely important issue, which we will return to in the future.