China Urges End to Polluters' Tax Breaks
By ALEXA OLESEN Associated Press Writer
April 27,2007 | BEIJING -- The Chinese premier pledged Friday to phase out tax breaks and discounts on land and electricity for highly polluting industries, saying the country's environmental situation was grim and required urgent action.
"Our country is a major coal producer and consumer, and reducing polluting emissions is a responsibility we should bear," Premier Wen Jiabao said.
China is a major contributor to greenhouse gases, mainly carbon dioxide, which scientists say contribute to global warming.
The country had been forecast to surpass the U.S. as the world's top emitter of greenhouse gases in 2010, but its economic growth has pushed the date forward, according to the head of the International Energy Agency. The prediction has refocused attention on China's pollution policies and its contribution to global warming.
"We must clearly recognize that the situation the nation faces regarding energy conservation and emissions reduction is still quite grim," Wen said at a meeting of other top government leaders. "Last year, the nation did not meet its goals on reducing polluting emissions or on energy conservation, making our work to fulfill our five-year plan even more difficult."
The central government has difficulty ensuring that conservation initiatives are enforced at the local level, where many lower officials reap the rewards of China's rapid industrialization and economic growth at the expense of the environment.
China's three-decade economic boom has left its waterways and coastlines severely polluted by industrial and farm chemicals and domestic sewage. Its countryside is littered with garbage and construction waste, and its cities suffocated by smog.
China has committed itself to cutting 20 percent of its energy use for every unit of gross domestic product by 2010, but last year it failed to meet the first phase of that goal -- a 4 percent reduction. Instead, energy use fell by only 1.2 percent.
Pollution emissions were also meant to fall by 10 percent by 2010. But last year sulfur dioxide emissions and chemical oxygen demand, a water pollution index, shot up 1.8 percent and 1.2 percent, respectively.
A transcript of Wen's speech was posted to the government's official Web site.
Wen said the government would "clean up and rectify preferential policies that give land and electricity discounts or tax breaks to energy intensive or highly polluting industries."
Policies vary widely from place to place, but China's local governments routinely offer free or cut-rate real estate and utilities to developers looking to set up lucrative businesses, such as steel mills or chemical plants. Tax breaks are also used to lure potential investors.
Wen said China should create a system where polluters have to pay for the damage they cause, while enterprises that invest in clean energy are rewarded. He gave no specific guidelines for the initiatives and did not say when they would be realized.
He called, too, for continued price reforms on natural gas, heating fuel and water to encourage energy conservation, without giving a timeframe for the price adjustments.
China is a signatory to the Kyoto Protocol on reducing greenhouse gases, but it is exempt from its restrictions because it is a developing nation.
Wen and Japanese Prime Minister Shinzo Abe signed an environmental agreement this month that calls for the countries to work on a successor to the Kyoto Protocol.
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