China mulls tax on excess emissions

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China's emissions are expected to peak around 2025

China's emissions are expected to peak around 2025

CHINA’S STATE COUNCIL has released a draft law on new environmental taxes which proposes business taxes for pollutants, solid waste and noise. The purpose of the release is to gauge public opinion on these taxes. The release of the draft laws also coincides with a report by the London School of Economics (LSE) which proposes that China will reach peak emissions by 2025, possibly sooner.

The new proposed taxes are set at Rmb1.2 for a stipulated quantity of air pollutants, Rmb1.4 for a stipulated quantity of water pollutants, and a range of Rmb5 to Rmb30 per ton of solid waste. The draft also includes rates ranging from Rmb350 to Rmb11,200 on various types of industrial  noise. The rates will be doubled if emissions exceed the stipulated amount while concessions are made for those that are below half the national standard. Provincial-level administrators may adjust rates depending on the local environmental conditions.

Polluters in China currently pay a "Pollutant Discharge Fee". Although the rates are roughly similar to the draft taxes, regulation and monitoring is complex. The draft taxes will also give provincial governments more flexibility in the administration of environmental issues.

A report released last week by the LSE points out that China’s international commitment to peak Carbon emissions around 2030 should be seen as a conservative upper estimate (report PDF). Realistic estimates put the date for peak emissions at around 2025 or sooner.

Meanwhile, the impact of China's emissions peaking in 2025 will be profound. The LSE report believes that China's action increases the chances of keeping the world within the 2C (3.6F) temperature rise estimated to give a good chance of avoiding widespread damage to the climate.

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