China Plans Winter Smog Shutdowns

An analysis by Michael Lelyveld
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china-cyclists-smog-shandong-province-jan2-2017.jpg Cyclists ride along a road in heavy smog in Weifang, eastern China's Shandong province, Jan. 2, 2017.

China's government is hoping to avoid another smog-blackened winter in Beijing by cracking down on emissions in surrounding cities and cutting production during the cold weather months.

The plan announced last month by key agencies and six provincial-level governments would cover 28 northern cities with new pollution curbs on steel, cement and coal-fired power plants, state media said.

The rules may represent the toughest moves yet to ease the air quality crisis in the capital. Beijing claimed a 9.9-percent drop in smog-causing particles known as PM2.5 last year despite frequent pollution alerts.

Conditions were especially dismal in January as average PM2.5 density soared 70.6 percent from a year earlier to 116 micrograms per cubic meter, the Ministry of Environmental Protection (MEP) reported. The concentrations were more than four times the safe levels set by the World Health Organization.

Average readings for the first quarter stood at 84 micrograms, the official Xinhua news agency reported. Beijing has targeted a reduction to 60 micrograms this year from 73 micrograms per cubic meter in 2016.

The spike in smog has been blamed on steel production that surged in the second half of last year to take advantage of price increases, particularly in neighboring Hebei province.

According to the government, the industry met its official target for reducing production overcapacity with 65 million metric tons of cuts last year. But a study by Greenpeace East Asia found that capacity actually increased as mills reopened closed lines.

The new rules would require seasonal suspensions or production cuts during the winter heating season from November 15 to March 15, when emissions are high due to coal-fired heating and power.

Cement and casting plants would cease operations with limited exceptions for the entire period. Coal-burning power plants in the 28 cities would close unless they meet low emission standards by the end of October, the official English-language China Daily said.

Steelmakers will have to cut winter production by half in Hebei's two largest city centers, while aluminum output in all 28 cities would be reduced by 30 percent.

Other steps include shifting coal transport from road to rail, closer monitoring of vehicle exhaust and replacement of coal for heating with electricity and gas.

The plan was issued jointly by the MEP, the Ministry of Finance, the National Development and Reform Commission, the National Energy Administration and the provincial-level governments, China Daily said.

Temporary benefits at best

Implementation in the provinces including Hebei, Henan, Shanxi and Shandong seems bound to have a beneficial effect on Beijing's winter smog.

But the seasonal nature of the measures may make the benefits temporary at best.

Given their past performances, steel and cement makers seem likely to compensate for the four months of cuts with increased production in the rest of the year. The result may simply shift the time frame for emissions and smog.

"If you're going to make up all that production in the same area in the other months of the year in the spring, summer and fall, you're going to load a lot of extra pollution into those seasons," said Mikkal Herberg, energy security research director for the Seattle-based National Bureau of Asian Research.

The seasonal suspensions could also play havoc with power plant utilization rates, which are already too low.

Conversely, if the steel and cement industries try to make up for lost time by boosting summer production, supplies of power and fuel could be seasonally squeezed.

The ups and downs in demand are likely to frustrate plans to deal with China's overcapacity problems in the coal, steel, cement and power industries.

"It sounds like a classic administrative mandate-oriented way of doing things," said Herberg.

"You try to move a bunch of levers to control one thing, but then you create all kinds of distortions and collateral effects in other things that you're trying to do," he said.

Philip Andrews-Speed, a China energy expert and principal fellow at National University of Singapore, called the seasonal smog plan "amazing" and the "ultimate administrative instrument."

Among the complications, Andrews-Speed sees trouble for industrial profits and employment in one-third of the year.

"Companies will face real financial losses, as will the workers, I guess," Andrews-Speed said by email.

Plant efficiency depends on operating at or near full capacity all the time, he argued.

"So, if they close and then ramp up, the full advantages of these technologies will be lost," Andrews-Speed said.

The scheduling disruptions could have ripple effects for suppliers, trade and the entire economy.

"These plants are at the front end of long supply chains, which will also be affected," Andrews-Speed said. "Do the intermediate manufacturers have to become seasonal, too? Should they build up huge stocks of inputs in the summer, or do they instead import the inputs?"

Chimneys at a factory discharge smoke in heavy smog in Taiyuan, northern China's Shanxi province, Jan. 6, 2017.
Chimneys at a factory discharge smoke in heavy smog in Taiyuan, northern China's Shanxi province, Jan. 6, 2017.
Credit: ImagineChina
Fake emissions data

The complications of the smog crisis coincide with reports of widespread noncompliance with the central government's environmental restrictions, raising questions about whether the winter plan can be carried out at all.

In February and March, the MEP sent 260 inspectors in 18 teams to check on 8,500 emissions sources in the northern region, including factories, mines and heating providers, the South China Morning Post reported.

At least 3,119 of the sources had either "faked emissions data" or resisted the inspections, the paper said, suggesting a noncompliance rate of more than 36 percent.

According to a ministry statement, the inspectors found a litany of violations including entire areas that lacked systems to curb production during declared smog alerts.

In an economic development zone of Hebei province's Tangshan city, antipollution plans from another region were randomly copied along with incorrect place names, the paper said.

The inspections in nearby regions have become a standard reaction to the outbreaks of smog in Beijing.

On April 4, the MEP sent inspection teams to seven northern cities following an orange alert, the second-highest level, in the capital during that week.

The inspectors again found glaring violations, including falsified pollution data and a Tangshan steel mill that had turned its pollution detector off.

Those responsible were detained by local police, Xinhua said, citing the MEP. But it is unclear whether government regulators are having any effect on compliance rates.

In another case, a furniture plant in Hebei's Xingtai city simply refused to be inspected, Xinhua reported.

On April 3, the ministry said it had summoned officials from seven districts in Beijing, Tianjin and cities in Hebei and Shanxi to reprimand them for poor environmental enforcement. The officials pledged to submit rectification plans within 20 days, China Daily said.

The prevalence of noncompliance gives little confidence that the winter smog plan will work, although there could be significant consequences if it does.

The issue also raises the question of why central government authority has had such a limited effect on local officials and industry with regard to smog at a time when President Xi Jinping has exercised increasing political power.

"It just demonstrates how complicated this economy is and how difficult it is to keep managing it," said Herberg.

"There's tremendous power of the provincial and local governments to ignore edicts from Beijing," he said.


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