China uses economic tools against smog

Economic leverage

Having realized the seriousness of the problem, Chinese provincial governments have resorted to economic tools to encourage environmental protection and help reduce pollution.

In North China's Hebei province, the provincial government has offered cheaper electricity to power plants that upgrade their equipment, said Zhang Shaohua, deputy head of the provincial development and reform commission.

Higher targets set for emission reduction

Figures vary but scientists agree cars major polluters

According to control measures released by the province in September, all 19 thermal power plants in the region should upgrade their equipment for dust collection.

To encourage this, the government will offer 20 yuan ($3.3) for per 100 kwh of generated electricity, Zhang said.

The province will also slash capacities by 15 million tons of steel, 10 million tons of cement and use 15 million fewer tons of coal this year, according to a government work report released last month.

Tianjin Municipality, which borders Hebei, launched carbon emissions trading in December, following Shenzhen, Shanghai and Beijing.

Under the trading program, companies that produce more than their fair share of emissions will have to buy unused quotas on the market from companies that cause less pollution.

Environmental protection authorities in Beijing are getting banks involved.

In a joint circular released in August by the city's environmental protection bureau, the China Banking Regulatory Commission and its Beijing branch, companies with poor pollution records will be banned from obtaining bank loans, said Wang Ruixian, of the Beijing's environmental protection bureau.

Governments at all levels should explore more ways to fight smog, and encourage people to join the effort, Zhou Shengxian, minister of environmental protection, has said.