Pollution in China has reached such extreme levels that the authorities have proposed executing polluters, writes Clare Brook of WHEB Asset Management.
A recent piece of legislation which was announced on Wednesday June 19, aims to impose “harsher punishments” and tighten “lax and superficial” enforcement of the country’s environmental protection laws, the official Xinhua news agency reported (June 20 2013). “In the most serious cases the death penalty could be handed down“, it said.
Hitherto, attempts at tackling China’s pollution crisis have had little success; in particular, enforcement is a problem at the local level, where provincial authorities often rely on tax receipts from polluting industries under their jurisdiction.
But the ruling Communist party is coming under pressure from a groundswell of public opinion. In the first quarter of 2013, Beijing experienced the worst environmental data on record. Levels of dangerous particles less than 2.5 micrometres across, known as PM2.5s, were 22 times what the World Health Organization considers safe.
There was widespread public anger and protests, which led to a short-term measure of reducing road traffic, but may also be persuading the Communist party to introduce tougher legislation.
The increasingly affluent urban population is starting to object to China’s policy of ‘growth at all costs’ which has fuelled China’s economy over the last three decades, with little concern for the environment, and for those living in it. Anecdotal evidence speaks of families who are able to moving away from Beijing and Hong Kong to Europe because levels of pollution are unbearable.
Measures proposed by the state council include cutting emissions per unit of GDP in key industries by at least 30% by the end of 2017, as well as curbing the growth of high-energy-consuming industries such as cement, steel, glass and aluminium. The authorities also promised legal action against those industries that fail to upgrade pollution controls and introduce emissions standards.
In addition to curbing emissions from high-polluting industries, the Chinese government is also aiming to address the problem by reducing the proportion of coal in China’s installed power capacity, replacing it with nuclear, solar and wind power, with wind providing around 13% of the energy mix by 2020. Indeed, wind may provide as much as 200 gigawatts (GW) of power by 2020, with solar, growing faster, but from a lower installed base, providing around 50GW by 2020.
The wind sector in China has been held back in the last few years by several major issues. The first is that there hasn’t been sufficient power infrastructure in place to connect the wind power plants in the north to the transmission network. The second is that because China’s grid is designed for coal dominated power production, it is relatively inflexible. Wind producers were forced to shut down or go off grid because they produced too much energy at the wrong times. Rapid progress in the development of the grid, plus battery storage technology, means that this issue of ‘grid curtailment’ is gradually being overcome.
Finally, the Clean Development Mechanism, or CDM, which gave a slightly artificial boost to Chinese wind developers’ revenues and profits, has declined due to the collapse in the carbon price. Historically CDM income was as much as 25% of wind farm profits. This has declined to less than 5%, so there is no longer significant risk from changes to the CDM system. These issues caused wind farm earnings to decline by more than 40% in some cases, but there is now scope for growth to recover from here.
Another piece of legislation that has been introduced, albeit one that is less draconian than proposing the death penalty for polluters, is an emissions trading scheme or carbon trading scheme. Launched on June 18, and with the first pilot in the city of Shenzhen, the scheme will extend to six other cities, including Beijing. Companies will be issued with permits, and those who pollute more than their permits allow will have to buy credits from companies that reduce emissions below government-set targets.
These targets are impressively ambitious: China as a whole has set a target of reducing its emissions intensity by 40% from 2005 levels by 2020. In Shenzhen specifically, the newly introduced carbon trading scheme covers 635 industrial companies and some public buildings that account for about 40% of the city’s carbon emissions. Here, the carbon intensity, or the amount of carbon produced per unit of gross domestic product, of these firms in 2015, will slump 32% from levels in 2010, according to the Shenzhen Carbon Exchange.
All in all, we see latest developments in Chinese legislation as both significant and encouraging for companies providing a route to a low-carbon economy.
Because of the more favourable legislative background, combined with a long period of under-performance that seems to have halted, the WHEB team recently reviewed the Chinese wind farm sector to identify our preferred investment opportunities based on growth prospects, competitive position and financial stability. The sector offers potentially high growth, but this is offset by a number of companies having poor disclosure on environmental and governance issues and over-stretched balance sheets.
The current market leader in the sector, in our view, is China Longyuan. Its portfolio is diversified geographically and it has a strong balance sheet after its share placement in 2012. We have therefore recently acquired a holding in the company for the IM WHEB Sustainability Fund. China Longyuan is less affected by grid curtailment issues than its competitors, but nonetheless we see improvements in the grid (helped by companies such as ABB, also held in the portfolio) as a key driver of the sector’s continued recovery.
Clare Brook is founding partner at WHEB Asset Management. For a fully referenced version of this article, see WHEB’s blog, where it originally appeared.
How Home Automation Can Help You Go Green
The holidays are an exciting, nostalgic time: the crispness in the air, the crunch of snow under your boot, the display of ornate holiday lighting up your home like a beacon to outer space, and the sound of Santa’s bell at your local Walmart.
Oh, yeah—and your enormous electric bill.
Extra lights and heating can make for some unexpected budgeting problems, and they also cause your home to emit higher levels of CO2 and other pollutants.
So, it’s not just your wallet that’s hurting—the planet is hurting as well.
You can take the usual steps to save energy and be more eco-conscious as you go about your normal winter routine (e.g., keeping cooler temperatures in the home, keeping lights off in naturally lit rooms, etc.), but these methods can often be exhausting and ultimately ineffective.
So what can you actually do to create a greener home?
Turn to tech.
Technology is making waves in conservation efforts. AI and home automation have grown in popularity over the last couple of years, not only because of their cost saving benefits but also because of their ability to improve a home’s overall energy efficiency.
Use the following guide to identify your home’s inefficiencies and find a solution to your energy woes.
Monitor Your Energy Usage
Many people don’t understand how their homes use energy, so they struggle with conservation. Start by looking at your monthly utility bills. They can show you how much energy your home typically uses and what systems cost you the most.
The usual culprits for high costs and energy waste tend to be the water heater and heating and cooling system. Other factors could also impact your home’s efficiency. Your home’s insulation, for example, could be a huge source of wasted heating and cooling—especially if the insulation hasn’t been inspected or replaced in years. You should also check your windows and doors for proper weatherproofing every year.
However, waiting for your monthly bill or checking out your home’s construction issues are time-consuming steps, and they don’t help you immediately understand and tackle the problem. Instead, opt for an easier solution. Some homeowners, for example, use a smart energy monitor such as Sense to track energy use in real time and identify energy hogs.
Use Smart Plugs
Computers, televisions, and lights still consume energy if they’re left on and unused. Computers offer easy cost savings with their built-in timers that allow the devices to use less energy—they typically turn off after a set number of minutes. Televisions sometimes provide the same benefit, although you may have to fiddle with the settings to activate this feature.
A better option—and one that thwarts both the television and the lights—is purchasing smart plugs. The average US home uses more than 900 kilowatts of electricity per month. That can really add up, especially when you realize that people are wasting more than $19 billion every year on household appliances that are always plugged in. Smart plugs like WeMo can help eliminate wasted electricity by letting you control plugged-in items from your smartphone.
Update Your Lighting
Incandescent lightbulbs can consume and waste a lot of energy—35% of CO2 emissions are generated from electric power plants. This can have serious consequences for increased global warming.
To reduce your impact on the environment, you can install more efficient lightbulbs to offset your energy usage. However, many homeowners choose smart lights, like the Philips Hue bulbs, to save money and make their homes more energy efficient.
Smart lights can be controlled from your smartphone, and many smart light options come with monthly energy reporting so you can continue to find ways to reduce your carbon footprint.
Take Control of the Thermostat
Homeowners often leave the thermostat on its default settings, but defaults often result in heating and cooling systems that run longer and harder than they need to.
In fact, almost half the average residential energy use comes from energy-demanding heating and cooling systems. As an alternative to fiddling with outdated systems, eco-conscious homeowners use smart thermostats to save at least 10% on heating and roughly 15% on cooling per year.
Change your home’s story by employing a smart thermostat such as the Nest, ecobee3, or Honeywell Lyric. Smart thermostats automatically adjust your in-home temperature by accounting for a variety of factors, including outdoor humidity and precipitation. A lot of smart thermostats will also adjust your home’s temperature depending on the time of day and whether you’re home.
Stop Wasting Water
The average American household uses about 320 gallons of water per day. About one-third of that goes to maintaining their yards. Using a smart irrigation systems to improve your water usage can save your home up to 8,800 gallons of water per year.
Smart irrigation systems use AI to sync with local weather predictions, which can be really helpful if you have a garden or fruit trees that you use your irrigation system for water. Smart features help keep your garden and landscaping healthy by making sure you never overwater your plants or deprive them of adequate moisture.
If you’re looking to make your home greener, AI-enabled products could make the transition much easier. Has a favorite tool you use that wasn’t mentioned here? Share in the comments below.
Working From Home And How It Reduces Emissions
Many businesses are changing their operating model to allow their employees to work from home. Aside from the personal convenience and business benefits, working from home is also great for the environment. According to GlobalWorkplaceAnalytics.com, if employees with the desire to work from home and compatible jobs that allowed for this were allowed to do so only half the time, the reduction in emissions would be the equivalent of eliminating automobile emissions from the workforce of the entire state of New York. Considering the stakes here, it is vital that we understand how exactly working from home helps us go green and how this can be applied.
Reduction of automobile emissions
Statistics by the United States Environmental Protection Agency (EPA) show that the transportation sector is responsible for about 14% of the total Global Emissions of greenhouse gases, which is a very significant percentage. If employees work from home, then the need to travel to and from their workplace every other day as well as other business trips are reduced considerably. While this may not eliminate the emissions from the transport sector altogether, it reduces the percentage. As indicated in the example above, a move to work from home by more businesses and industries cuts down automobile emissions to as much as those from an entire state.
Reduction of energy production and consumption
According to Eurostat, electricity, gas, steam and air conditioning accounted for as high as 26% of the Greenhouse gas emissions from the EU in 2014. EPA stats are also close at 25% of the total emissions. This makes energy production the single largest source of emissions. Working from home eliminates the need for large office spaces, which in turn reduces the need for electricity and heating. Similarly, the need for electrical office equipment and supplies, such as printers and computers, is also greatly reduced, which reduces the emissions from energy production in offices. Additionally, most households are now adopting green methods of energy production and implementing better ways of energy usage. The use of smart energy-efficient appliances also goes a long way in reducing the energy production and consumption levels from households. This, in turn, cuts down emissions from energy production from both the home and office fronts.
Reduced need for paper
Paper is also a huge source of emissions, considering that it is a carbon-based product. EPA stats show that carbon (IV) oxide from fossil fuel and industrial processes accounts for 65% of the total greenhouse gas emissions. Working from home is usually an internet-based operation, which means less paper and more cloud-based services. When everything is communicated electronically, the need for office paper is reduced considerably. Moreover, the cutting down of trees for the sake of paper production reduces. All these outcomes help reduce the emissions and individual carbon footprints.
While businesses make an effort to recycle it is not as effective as homeowners. Consider everything from the water you drink to office supplies and equipment. While working from home, you have greater control over your environment. This means that you can easily implement proper recycling procedures. However, at the office, that control over your personal space and environment is taken away and the effectiveness of recycling techniques is reduced. Working from home is, therefore, a great way to go green and increase the adoption of proper recycling.
Even though the statistics are in favor of working from home to reduce emissions, note that this is dependent on the reduction of emissions from home. If the households are not green, then the emissions are not reduced in the least. For instance, if instead of installing a VPN in the router to keep the home office safe, an employee buys a standalone server and air gaps it, the energy consumption is not reduced but increased. Therefore, it is necessary that employees working from home go green if there is to be any hope of using this method of operation to cut down on the emissions.