Change in energy mix encouraging

Liberalization means new challenges to firms from emerging economies

An employee refuels a vehicle at a gas station in Qingdao, Shandong province on Oct 31. Yu Fangping / For China Daily

China is sending "encouraging" messages on climate change issues, and the country has "a huge amount" to teach the world in this area, said Andrew Steer, president and chief executive officer of the World Resources Institute.

Commenting on China's decision to push forward the liberalization of water, petroleum, natural gas and electricity prices after the Third Plenum of the 18th Central Committee of the Communist Party of China, the head of the renowned environmental think tank and former special envoy for climate change issues at the World Bank said that he believes it's a good move.

"It's a good thing because it will promote better efficiency in the use of resources. That's good for the economy, and generally good for the environment too," Steer said.

But he added that market forces alone will not solve the problem.

"When you move to a market economy, you can't assume that market prices will necessarily point to the right direction for the environment because environmental issues are outside the market," he added.

"So you must put other mechanisms in place. For example, regulation, or pollution taxes that add to the costs of polluters, or subsidize energy from sources that don't cause pollution."

A batch of reform plans for the environmental arena was unveiled on Friday in the full statement following the Third Plenum.

Energy- and pollution-intensive products will be subjected to a consumption tax. The current environment protection fee will be converted into an environment tax. Audits on local natural resources are also expected to take place after local officials finish their terms, and the officials will be held accountable during and after their terms.

Steer said that it's very important for local officials to be held accountable for the quality of life they create in their regions.

"It's exceedingly important that governments of countries everywhere are not only interested in how many goods they produce, because the evidence is overwhelming that more goods do not make you happier" he said.

He noted that following a 1.7 trillion yuan ($278.7 billion) program to fight air pollution, China has banned new coal-fired plant projects in three major metropolitan areas. These areas consume 28 percent of the country's coal and the banned projects represent 5 percent of the nation's newly built coal-fired plant capacity.

The Chinese government invested 50 billion yuan this year in subsidizing renewable energy power generation.

"Because of China, the cost of renewable energy became much, much lower than it was before. It's a great gift that China gave to the world. Look at the curve of renewable prices, it's so encouraging," he said.