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Impact of China’s Carbon Policies on Buisness

New Research Reveals Impact of China’s Carbon Policies on Business

BEIJING—23 March 2015—Seismic policy shifts are underway in China as it transitions toward a lower-carbon, more resource efficient economy, according to a series of new reports by the International Institute for Sustainable Development (IISD).

IISD examined over 100 low-carbon policies to assess their impact on China’s 1,600 industrial development zones. The research also contains a first-of-its kind survey of businesses operating in the zones and a review of the first compliance year of the Beijing emission trading pilot, providing a snapshot of how companies are responding to policies designed to reduce green-house gas emissions.

China aims to lower the carbon intensity of its economy—the measure of carbon dioxide emitted for each unit of energy supplied—by 40 to 45 per cent by 2020. A variety of market-based instruments are being used to reach that target, including rebates, green finance, subsidies and trading systems.

While regulations are still central to the policy mix, the good news for industry is that they are increasingly becoming more flexible, allowing industry to make choices that lower compliance costs and minimize competiveness impacts.

“China has introduced a wide variety of measures to reduce air pollution, accelerate the adoption of clean energies, and improve the overall energy-efficiency of the economy. A lot of policy innovation is taking place in the country,” said Mark Halle, IISD’s vice-president of strategy.

These policies are having an impact. For example, the research finds that 60 per cent of businesses in industrial development zones have systems to reduce the impact of their activities on the environment. Half of the surveyed companies have targets to reduce their energy use. A smaller percentage, 20 per cent, maintain inventories of their greenhouse gas emissions.

The smaller the company, the less likely it is to have environmental and energy-saving systems in place.

“We recommend focusing on small and medium size enterprises,” said David Sawyer, associate at IISD. “The policies so far have tended to concentrate on large enterprises, but there are big gains to be made by smaller companies, which represent 40 per cent of China’s energy use.”

The companies surveyed said that the policies with the biggest impact are energy subsidies, differentiated electricity prices, and measures to phase out unproductive capacity.

However, awareness of existing policies is a problem. While some are clearly having an impact on businesses, only 20 per cent of companies claimed to be “well aware” of the policies that are in place, while 55 per cent were somewhat aware. Levels of awareness decrease sharply with smaller firms.


Synthesis Report: China's Low-Carbon Readiness and Competitiveness 2015:

Business Sentiments Survey of China’s Low-Carbon and Energy Policies:

Policy Trends and Drivers of Low-Carbon Development in China’s Industrial Zones:

Implementing Greenhouse Gas Inventory Management Systems for Economic Zones in China:

Development of Eco-Efficient Industrial Parks in China: A review:


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