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Death to the polluters

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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.

Solutions

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.

Headwinds

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.

Tailwinds

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.

Opportunity

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.

Further reading:

World’s largest CO2 emitter, China, to set climate targets by 2016

China: economic supremacy at any cost or global environmental leadership

US and China to co-operate in tackling greenhouse gas emissions

Asia overtakes Europe in decarbonisation race

Study shows boost in international climate change policies

Articles, features and comment from WHEB Group, an independent investment management firm specialising in opportunities created by the global transition to more sustainable, resource efficient economies. Posts are either original or previously featured on WHEB's blog or in its magazine, WHEB Quarterly.

Environment

5 Eco-friendly Appliance Maintenance Tips

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Eco-friendly Appliance
Shutterstock Photos - By Punyhong | https://www.shutterstock.com/g/punyhong

Modern day society is becoming ever more conscious about the effects of human consumption on the environment & the planet.

As a collective, more people are considering taking action to positively counteract their environmental footprint. This is accomplished by cutting down on water consumption, recycling and switching from plastic to more sustainable materials. Although most people forget about the additional things that can be done at home to improve your individual eco footprint.

Appliances, for example, can be overlooked when it comes to helping the environment, despite the fact they are items which are found in every household, and if they are not maintained effectively they can be detrimental to the environment. The longer an appliance is used, the less of an impact it has on the environment, so it is essential for you to keep them well maintained.

If you’re considering becoming more eco-conscious, here are 5 handy appliance maintenance tips to help you.

Don’t Forget to Disconnect From Power First

General maintenance of all your appliances start with disconnecting them from power; microwaves, washing machines and ovens all use residual energy when plugged in, so it’s essential to unplug them.

Disconnecting the plugs can help keep them in their best condition, as it ensures no electrical current is running through them whilst they are supposed to be out of use. Additionally, this can help you save on energy bills. By doing this you are minimising your energy footprint.

Here we break down 4 tips to keep the most popular household appliances maintained.

Eco-Friendly Oven Maintenance

Ovens generally require very little maintenance, although it is essential to stay on top of cleaning.

A simple task to make sure you don’t have any issues in the future is to check the oven door has a tight seal. To do this ensure the oven is cold, open the oven door and use your hands to locate the rubber seal. You can now feel for any tears or breaks. If any have occurred simply replace the seal. More oven tips can be read here.

Eco-Friendly Refrigerator Maintenance

When keeping a fridge in good condition, don’t forget about exterior maintenance. Refrigerator coils, although an external fixture, can cause damage when overlooked.

Refrigerator coils can be found either at the front or rear of a fridge (check you user manual if you are unsure of its location). These tend to accumulate various sources of dust and dirt over a substantial time-period, which clog refrigerator coils, causing the refrigerator to have to work twice as hard to stay cool. An easy tip to solve this is to periodically use a vacuum to get rid of any loose dirt.

Eco-Friendly Washing Machine Maintenance

Most people tend to remember the basics tasks for maintaining a washing machine, such as not to overload the machine, not to slam the door and to ensure the washing machine is on a solid and level platform.

In addition, it is necessary to routinely do a maintenance wash for your washing machine. This means running an empty wash on the highest temperature setting and letting it complete a full wash to erase any build up and residue. You should repeat this task at least once a month.

Try to schedule this task around your bulk wash load times to save on water consumption.

This will help keep your washing machine in peak working condition.

Eco-Friendly Dishwasher Maintenance Tips

Dishwasher maintenance can be simple if implemented after every wash cycle.

To keep your best dishwasher hygiene standards, scrape away excess food whilst making sure to keep the filter at the bottom of the cavity empty between cycles. This simple task can be highly effective at preventing food build up from occurring in your dishwasher.

If you need additional tips or tasks you, can reference your manufacturer’s guidebook to check for a full breakdown. You can also head to Service Force’s extensive database of repair and maintenance manuals – including extensive troubleshooting guides for all of the critical appliance maintenance procedures.

In conclusion, you can save both money and energy by keeping your appliances in peak condition. The steps outlined in this guide will help us all preserve the environment and reduce industrial waste from discarded appliances.

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Environment

Two Ancient Japanese Philosophies Are the Future of Eco-Living

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Eco-Living
Shutterstock Photos - By Syda Productions | https://www.shutterstock.com/g/dolgachov

Our obsession with all things new has blighted the planet. We have a waste crisis, particularly when it comes to plastic. US scientists have calculated the total amount of plastic ever made – 8.3 billion tons! Unfortunately, only 9% of this is estimated to have been recycled. And current global trends point to there being 12 billion tons of plastic waste by 2050.

However, two ancient Japanese philosophies are providing an antidote to the excesses of modern life. By emphasizing the elimination of waste and the acceptance of the old and imperfect, the concepts of Mottainai and Wabi-Sabi have positively influenced Japanese life for centuries.

They are now making their way into the consciousness of the Western mainstream, with an increasing influence in the UK and US. By encouraging us to be frugal with our possessions, (i.e. using natural materials for interior design) these concepts can be the future of eco-living.

What is Wabi-Sabi and Mottainai??

Wabi-Sabi emphasizes an acceptance of transience and imperfection. Although Wabi had the original meaning of sad and lonely, it has come to describe those that are simple, unmaterialistic and at one with nature. The term Sabi is defined as the “the bloom of time”, and has evolved into a new meaning: taking pleasure and seeing beauty in things that are old and faded. 

Any flaws in objects, like cracks or marks, are cherished because they illustrate the passage of time. Wear and tear is seen as a representation of their loving use. This makes it intrinsically linked to Wabi, due to its emphasis on simplicity and rejection of materialism.

In the West, Wabi-Sabi has infiltrated many elements of daily life, from cuisine to interior design. Specialist Japanese homeware companies, like Sansho, source handmade products that embody the Wabi-Sabi philosophy. Their products, largely made from natural materials, are handcrafted by traditional Japanese artisans – meaning no two pieces are the same and no two pieces are “perfect” in size or shape.

Mottainai

Mottainai is a term expressing a feeling of regret concerning waste, translating roughly in English to either “what a waste!” or “Don’t waste!”. The philosophy emphasizes the intrinsic value of a resource or object, and is linked to hinto animism, the notion that all objects have a spirit, or ‘kami’. The idea that we are part of nature is a key part of Japanese psychology.

Mottainai also has origins in Buddhist philosophy. The Buddhist monastic tradition emphasizes a life of frugality, to allow us to concentrate on attaining enlightenment. It is from this move towards frugality that a link to Mottainai as a concept of waste can be made.

How have Wabi-Sabi and Mottainai promoted eco living?

Wabi-Sabi is still a prominent feature of Japanese life today, and has remained instrumental in the way people design their homes. The ideas of imperfection and frugality are hugely influential.

For example, instead of buying a brand-new kitchen table, many Japanese people instead retain a table that has been passed through the generations. Although its long use can be seen by various marks and scratches, Wabi-Sabi has taught people that they should value it because of its imperfect nature. Those scratches and marks are a story and signify the passage of time. This is a far cry from what we typically associate with the Western World.

Like Wabi Sabi, Mottainai is manifested throughout Japanese life, creating a great respect for Japanese resources. This has had a major impact on home design. For example, the Japanese prefer natural materials in their homes, such as using soil and dried grass as thermal insulation.

Their influence in the UK

The UK appears to be increasingly influenced by thes two concepts. Some new reports indicate that Wabi Sabi has been labelled as ‘the trend of 2018’. For example, Japanese ofuro baths inspired the project that won the New London Architecture’s 2017 Don’t Move, Improve award. Ofuro baths are smaller than typical baths, use less water, and are usually made out of natural materials, like hinoki wood.

Many other UK properties have also been influenced by these philosophies, such as natural Kebony wood being applied to the external cladding of a Victorian property in Hampstead; or a house in Lancaster Gate using rice paper partitions as sub-dividers. These examples embody the spirit of both philosophies. They are representative of Mottainai because of their use of natural resources to discourage waste. And they’re reflective of Wabi-Sabi because they accept imperfect materials that have not been engineered or modified.

In a world that is plagued by mass over-consumption and an incessant need for novelty, the ancient concepts of Mottainai and Wabi-Sabi provide a blueprint for living a more sustainable life. They help us to reduce consumption and put less of a strain on the planet. This refreshing mindset can help us transform the way we go about our day to day lives.

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