By Lu Wei and Shi Guang, Department of Techno-Economic Research, the DRC

Research Report No 180, 2013

Abstract:

Environmental protection in China is encountering two major problems -- insufficient controls and underutilized economic means. Its administrative handling of the early-, middle-, and late-stage of examination and approval is weak; and environmental protection lacks economic incentives and fails to arouse people's support. This is similar to the difficulties that developed countries faced in the 1990s, when, to push emissions reductions in society at large, they improved environmental and economic policies and achieved good results.

This paper summarizes the economic methods that developed countries use to push environmental protection, including an environment tax, subsidies, emission permit trading, and environmental foundations. It also analyses desulfuration subsidies in China's coal-fired power plants and government procurement of environmental protection services provided by enterprises, and makes policy suggestions.