A Clear Opportunity

By Asia Society 

Air pollution continues to pose a major health threat in China. China’s recent Air Pollution Prevention and Control Law and Atmospheric Pollution Prevention Action Plan demonstrate the government’s resolve to significantly improve air quality.,

A rapid and extensive deployment of clean air technologies and an enabling regulatory environment that encourages manufacturing innovation and technology adoption is necessary. With appropriate planning, this large-scale deployment of clean air technologies could reduce China’s greenhouse gas emissions, helping achieve the country’s longer-term climate policy goals.

China and the United States have a long history of collaboration on air quality and climate policy, driven by common interests. Air pollution from China affects parts of the United States, providing an impetus for federal and state agencies in the United States to work with their counterparts in China on air quality issues. The US-China Climate Change Working Group and other bilateral initiatives reflect recognition by both countries that their joint leadership is critical for mitigating climate change. Cooperation on air quality and climate change has become a pillar of the US-China relationship.

The benefits of continued collaboration will grow over the next decade. As China seeks to achieve dramatic improvements in air quality, regulatory experience from the United States could play an important supporting role. In turn, regulators in the United States will have much to learn from China’s experience as it struggles with its own air quality challenges. Greater harmonization of longer-term air quality and greenhouse gas regulations between the two countries would provide an important signal for investments in clean technology innovation. A common, competitive market for these technologies would be vast, resulting in lower costs.

The Asia Society, the Clean Air Alliance of China (CAAC), the Energy Foundation China, and an extensive group of advisors and experts, drafted a report that explores the potential for continued US-China collaboration on clean air technologies and policies. It seeks to identify priority areas for collaboration on clean air technologies, enabling regulations, and market facilitation. Cleaning the air will also support broader efforts between the US-China collaboration to mitigate climate change.

China is entering a new phase of air quality management, transitioning from an era in which the main concern was primary pollutants (sulfur dioxide, large particulate matter) emitted directly from industrial smokestacks to one in which secondary pollutants (fine particulate matter, ozone) resulting from a diverse combination of stationary and mobile sources are a larger concern, particularly in large urban areas. This transition occurred over several decades in the United States. In China, the speed at which it has occurred—less than 20 years—is requiring equally rapid transformations in technology and regulation.

China’s longer-term emission reduction goals reflect this new reality and the scale of air quality problems. China, for instance, required that all cities should strive to meet the national annual emission standard for fine particulate matter (PM2.5) by 2030. Achieving this and other air quality targets will require reducing primary PM2.5, sulfur dioxide (SO2), and nitrogen oxide (NOX) emissions by more than 50 percent below 2013 levels over the next 15 years. These emission reduction goals can only be realized through a dramatic increase in clean technologies, from diesel pollution controls to renewable energy, which will create the world’s largest market for many of these technologies.

To support this technological transformation, in 2015 CAAC inaugurated a Bluetech Award aimed at identifying key technologies that could have transformative effects in improving air quality and human health in China. For its 2016 Bluetech Award, CAAC identified five priority areas based on its analysis of needs for meeting longer-term national air quality goals. These five areas, the focus of this report, include the following:

• Diesel vehicles and equipment;
• Sources of volatile organic compounds (VOCs);
• Coal-fired power plants;
• Residential and industrial coal use; and
• Air quality monitoring and indoor air purifiers.

For the first four of these categories, there are strong synergies between efforts to improve air quality and efforts to reduce greenhouse gas emissions. For instance, it may be more economical to replace older coal-fired generation with non–fossil fuel generation than to retrofit it with advanced emissions control equipment. For cars and buses, vehicle electrification may be a more cost-effective approach to meeting air quality and long-term climate goals than focusing on emissions control equipment for internal combustion engine vehicles.

Priority areas for collaboration on clean air technologies

The United States is a technology leader in a number of the five Bluetech areas. Based on a review of emerging technologies, we identified five priority technology areas for China-US collaboration on clean air technologies:

• Advanced air quality monitors   Emerging air quality monitoring technologies are enabling a clearer picture of the timing, location, and exposure effects of air pollution. In China, careful deployment of these technologies would enhance understanding of the sources of air pollution, enable more effective air quality and emissions standards based on a deeper understanding of pollution exposure and health impacts, and allow regulators to prioritize strategies that reduce the most harmful sources of pollution.
• Integrated designs and clean fuels for heavy-duty vehicles   Federal regulations in the United States have spurred a new generation of heavy-duty vehicles able to meet stringent emissions limits while improving fuel efficiency and performance; California and other US states are exploring longer-term alternative fuel sources for heavy-duty vehicles. In China, new engine and pollution control designs for diesel heavy-duty vehicles would enable lower emissions standards for new vehicles, while planning for cleaner fuels for heavy-duty vehicles would help achieve longer-term air quality and climate goals.
• Electrification of passenger vehicles and buses   China and the United State have been leaders in supporting the early development and deployment of electric cars, buses, and short-haul, heavy-duty vehicles that have no tailpipe emissions. When combined with renewable or nuclear electricity generation, these vehicles can have zero total emissions. New technologies for vehicles and charging infrastructure can lower the cost of transportation electrification as an air quality and climate policy strategy in China.
• Low environmental impact solvents   Solvents—used in paints, lubricants, inks, adhesives, and cleaning products—are a major source of urban ozone pollution and may contribute to ozone depletion, toxic air, and climate change. An emerging generation of solvents is able to meet multiple environmental standards, which will help China achieve a range of environmental goals.
• Leak detection and repair for refineries, chemical plants, and pipelines   Remote sensing technologies are enabling more accurate detection and lowering cost control of fugitive pollution and greenhouse gas emissions from refineries, chemical plants, and pipelines. In China, advanced leak detection and repair technologies would enable regulators to rapidly and cost efficiently achieve significant emissions reductions from these sources.

Priority areas for collaboration on enabling regulation

Regulation—from emissions standards to technology mandates—plays a critical role in enabling the development and deployment of clean air technologies. The United States has more than 50 years of experience in developing regulatory frameworks to encourage clean air technologies. This experience has been and could continue to be a valuable reference for regulators in China, as they plan and develop implementation programs to meet local and national air quality goals. In turn, regulators in the United States will be able to learn from emerging practices in China.

Our identification of priority areas for regulatory collaboration draws on a review of three regulatory areas in California:

• The Diesel Risk Reduction Plan, which seeks to reduce particulate matter from all diesel emissions sources by 85 percent by 2020;
• Regulations for controlling VOC emissions, focusing on regulations for solvent emissions; and
• Joint planning for air quality management and greenhouse gas emissions reductions, which have enabled better integration between the state’s efforts to achieve compliance with federal air quality standards and its goal of reducing greenhouse gas emissions by 80 percent by 2050.

Across these three areas, we distill a number of regulatory design considerations that may be valuable for regulators in China. These include the importance of the following:

• A science and technology foundation that provides a firm basis for air quality management;
• Stakeholder engagement that builds the consensus, trust, and commitment necessary to enable manufacturing innovation and technology adoption;
• Long-term vision and clear goals that provide long-term visibility and certainty on forthcoming regulations to manufacturers, equipment owners, government agencies, and the general public;
• Integrated planning that enables goals for multiple pollutants (PM2.5, ozone, SO2) and greenhouse gas emissions to be met simultaneously and at lowest cost;
• Incentives that encourage adoption of clean air technologies, as well as a source of funding to pay for incentives; and
• Proactive enforcement that uses the latest available technologies, matches enforcement programs to compliance strategies and technologies, imposes meaningful penalties for noncompliance, provides performance guarantees through warranties, and encourages transparency through accurate labeling and certification.

Priority areas for collaboration on innovation and market facilitation

As part of this study, we conducted a small survey of 18 clean technology manufacturers in the United States to gauge their interest and experience with the market for clean air technologies in China. The survey included interviews with manufacturers in most of the five Bluetech areas.

Survey respondents identified five areas where support from governmental and nongovernmental organizations could facilitate smoother market entry into the Chinese market for clean air technologies:

• Assistance in building local partnerships;
• Stronger protection of intellectual property rights;
• An enhanced regulatory framework that provides stronger enforcement, clear incentives, greater transparency, and clearer roles and responsibilities;
• Greater public awareness of air pollution issues; and
• Greater international harmonization of air quality and greenhouse gas standards and the technologies used to meet those standards.

Recommendations

Going forward, we recommend three kinds of activities in which continued collaboration between China and the United States could produce transformative results:

• Joint collaboration on strategies for meeting long-term air quality and climate goals   By coordinating planning on longer-term air quality and greenhouse gas emissions goals, China and the United States can provide manufacturers, financial institutions, and entrepreneurs with greater certainty regarding the technologies and the potential size of markets for different technologies needed to meet these goals.
• Deeper collaboration on enabling regulations   Deeper collaboration on enabling regulations for clean technologies would allow more in-depth exchange on the details of US regulatory experience to support China’s air quality goals. It would also build a foundation for engagement that enables regulators in the United States to learn from China’s experience over the next decade, as US regulators look for solutions to longer-term air quality challenges in the United States.
• Joint efforts to facilitate market entry, innovation, and healthy competition    Promoting open markets for clean air technologies in both countries would facilitate innovation and competition, lowering the costs of meeting longer-term air quality and climate goals. By harmonizing the requirements and timing of regulations, such as emissions standards, the two countries would create a much larger market for clean air technologies.

About the author: Asia Society is the leading educational organization dedicated to promoting mutual understanding and strengthening partnerships among peoples, leaders and institutions of Asia and the United States in a global context. Across the fields of arts, business, culture, education, and policy, the Society provides insight, generates ideas, and promotes collaboration to address present challenges and create a shared future.