Moving the mountain

Why does Lanzhou want CNPC, its main taxpayer, out of the city?

Employees close a valve of a pipe at a PetroChina refinery in Lanzhou, Gansu province

Locked down: CNPC refinery

Yu gong yi shan is one of China’s most famous parables and dates from more than 2,000 years ago. It tells the story of an old man who decides to move a mountain blocking the view from his house. When told he’s crazy, the man simply says that if he and his descendants work hard every day – and keep removing rock from the mountain – then one day it will no longer be there.

In modern times, the city authorities in pollution-ridden Lanzhou have debated the more drastic step of blowing up nearly 700 mountains ringing the city to allow cleaner air to circulate, as well as moving heavy polluters to an industrial zone on the outskirts.

Until recently, the seat of government for Gansu province had the unhappy distinction of being China’s most polluted provincial capital. But recent actions by its Environmental Protection Bureau (EPB) have demonstrated the true moral of the yu gong yi shan tale: persistence pays off and small steps can lead to big changes. Earlier this month, its officials held a media briefing during which they lambasted the China National Petroleum Corp (CNPC) subsidiary, Lanzhou Petrochemical for recent infractions of environmental laws. They also demanded the company apologise to local citizens.

Chief among the failings cited was an incident in early January when equipment failure led to plumes of black smoke over the city. The CNPC unit has hit back saying the city government is forcing it to move out, but has not yet reached an agreement with its parent over relocation fees.

Local newspapers have interpreted the public dressing down as a sign that China’s EPBs are starting to deploy the weapons at their disposal. Each county and city-level government has an EPB and the 3,000 bureaus are supposed to be the ground troops in the Ministry of Environmental Protection’s war against pollution.

Instead, they have long found themselves confined to barracks by local government officials more concerned with taking the shortest cut to GDP growth – a predictable outcome since that it is how they have always been rewarded in their appraisals.

But China’s new environmental law, which took effect on January 1, means enforcement may finally become the order of the day.

The bureaus are newly empowered to impose unlimited daily fines on polluters. And they may actually start doing so since the performance of local government officials will now be weighed against their efforts to combat pollution. To make sure they comply, local governments have been given until June to scrap any rules which hinder the enforcement of the new law.

Responding to events in Lanzhou, China’s most famous environmental campaigner, Ma Jun tells Global Times that, “It is rare to see a local government criticise an SOE like this, especially when the company is a major taxpayer.”

Ma runs the Beijing-based Institute for Public and Environmental Affairs (IPE) and publishes an online heat map of the country’s water and air pollution. Its aim is to name and shame the worst polluters and raise awareness among the general public so they can agitate for higher standards too.

This has led to growing use of the courts as a means to stop polluters as well as the local government officials who protect them. Bringing lawsuits has not been without its challenges though, given that local governments not only control the courts, but also pay for their staff.

But the number of successful cases is growing and at the end of 2014, the intermediate court of Taizhou in Jiangsu province fined six local polluters Rmb160 million ($26 million) – a record amount for a public interest lawsuit.

Lanzhou is now being held up as an example for other polluted cities to follow. Professor Bai Yongping of Northwest Normal University is a former deputy director of Lanzhou’s EPB. He tells Southern Metropolitan Daily that, “Lanzhou has achieved remarkable results in air pollution control over the past three years.”

Inefficient polluters are being moved out, or shut down. All 1,000 of the city’s coal-fired heating boilers have been replaced with gas-fired ones and residents have been ordered to use anthracite instead of coal. “In 2014, Lanzhou had a record 310 days of good air quality,” he concludes. “The environment has been greatly improved.”

A far bigger challenge confronts the government in Hebei province, where pollution from its steel mills – which account for almost a quarter of China’s annual production – regularly blankets Beijing and Tianjin. This month the Economic Observer published a feature examining the cost of cleaning up the mess in Tangshan, one of the seven Hebei cities that rank in the 10 most polluted in China.

According to the newspaper, 42 out of 62 iron and steel projects in China that need to be ‘transformed’ are in Tangshan. Hebei has committed itself to reducing overall steel output by 60 million tonnes by the end of 2017 and recently announced that it met its 2014-targeted reduction of 15 million tonnes.

But the Economic Observer cites preliminary estimates, which show that it will cost Rmb38.2 billion to implement the 2,000 environmental governance projects that Tangshan is supposed to execute over the next three years. This amounts to just over Rmb10 billion per year compared to the city’s budgeted revenues of Rmb31.84 billion.

So where is the funding supposed to come from, the newspaper asks? Clearly the local government is not going to be able to pay for it all by itself. And its job has been made all the harder because more than half of Hebei’s slated 60 million tonnes of production cuts are occuring in Tangshan. Tax revenues will be decimated to the tune of Rmb3.8 billion, according to the municipal finance bureau.

The central government may subsidise Rmb1.5 billion of these losses over three years, plus provide a further Rmb2 billion from its air pollution control fund. This will be used to eliminate vehicles with high emissions, purchase 565 clean fuel buses for the public transport system and fund the construction of a greener heating network to hasten the demise of coal-fired boilers.

But the funds will not cover the far bigger costs of dealing with corporate polluters. To get rid of excess capacity and force small steel mills out of business, the local government has said the plants have until the end of 2015 to convert to dry dusting. And by the end of 2016 blast furnaces smaller than 1,000 cubic metres must be shut.

One local mill owner says, “Improved emission standards will increase the cost per tonne by Rmb100 to Rmb150. Small, mismanaged companies will have to be shut down.”

Tangshan city government has also decided to adopt more market-oriented policies to try and bridge the shortfall in funds it needs to combat pollution. As such it has earmarked Rmb730 million in public funds to reward local companies that develop clean energy, or replace inefficient equipment.

It has also registered 21 energy saving service companies in the city and its surrounding districts. These companies have invested Rmb300 million to provide energy management services to more then 50 key enterprises in the city.

Local newspapers believe one of the positive fallouts from the war on pollution will be the growing economic importance of businesses that deal in environmental protection. But in an editorial Caijing points out that while Beijing is clearly serious about combating pollution it needs to get a better grip on the true scale of the problem.

It says the central government has never released data showing the upper limit of the nation’s environmental ‘carrying capacity’ – i.e. when cities become uninhabitable owing to pollution. It wonders whether the government knows the actual number or has not released the figures because they are too worrying.

It cites a ministry-level survey in 2003, which asked local authorities to examine their environmental carrying capacity. A final assessment was never released, the suspicion being that few authorities could, or would, submit the data.

A sign of how far the country has yet to go comes from Dazhou in Sichuan where one official has been blaming high pollution on the local tradition of smoking bacon to celebrate the New Year. As one netizen remarks on Sina Weibo, “Smoking bacon has a long history in China, smog does not.”

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