New Energy and Environment Digest 新能源与环保参考

Outsourcing Toxic Dumping, in the Name of the Environment?

evan071Does the Obama administration have the will to face the prospect that a low cost approach might be inimical to a low carbon strategy, and ensure careful planning and responsible oversight? Or will US officials, keen on building a strong bilateral partnership, overlook the consequences of a business-as-usual scenario in China, permitting environmental degradation as the means to ambitious political ends?

US-China alignment on energy and the environment may sound like just the formula capable of delivering real solutions on climate issues. China’s abundant scientific R&D resources and manufacturing capacity not only help carbon sink testing and scaling up of renewable energies become more feasible, but also less costly. But the potential cost effectiveness of reducing emissions in China could prove more of a liability than a benefit, where the environment is concerned. Toxic runoff from China’s growing solar industry and imported electronic waste recycling offer just two examples of the difficulty of managing and preventing environmental degradation and guaranteeing public health in a developing country context.

The recent release of a joint report from the Asia Society and Pew Center on Global Climate Change, followed by Secretary of State Clinton’s trip to China, have generated considerable US interest in enhancing US-China coordination on energy and the environment.

Could grand bilateral collaboration help reduce the rate of growth of emissions in both countries and bring much needed efficiency improvements to China’s outdated power production and transmission infrastructure? Undoubtedly. Would a powerful US-China nexus held break post-Kyoto gridlock in Copenhagen come December? Maybe. Is a partnership between the world’s largest carbon dioxide emitters likely to be a holy grail for preventing further environmental degradation? Not likely. Though full of promise, the China advantage comes with pitfalls.

The China Advantage

The China advantage, from the perspective of an emissions mitigation-minded policymaker, is development and deployment of clean technologies more cheaply than in the US. This is due to several factors. First, as a 2007 McKinsey report demonstrated, building new, cleaner power plants – in China, say – is usually cheaper than retrofitting old plants – namely, those in the US.

Second, savings come from lower legal costs. Legal considerations that would stall or altogether prevent certain activities in the US are absent in China. For example, attempts to test clean technologies in the US are often riddled with logistical, political and legal obstacles. Nascent and feeble private property laws in China de facto enable the government to exercise eminent domain without significant legal pushback or the same expense as in the US. This makes China a comparatively attractive place to test new technologies, including ambitious clean energy demonstrations of carbon capture and sequestration and an advanced electric grid. However, the lack of legal barriers can present significant environmental liabilities. For instance, the structure of the Chinese legal system makes it difficult or impossible for individuals to file and succeed in a lawsuit against the state or a private company; and, further, the Rules of Civil Procedure do not permit individuals to file class action lawsuits. In the absence of individual legal recourse, there is little incentive for the private or state actors involved to minimize the risk of pollution associated with such demonstrations.

Finally, China’s manufacturing sector offers a cost-cutting strategy. It is no secret that China’s manufacturing capacity far outstrips the US, in terms of cost, across many industries. As an eco-optimist, I often fantasize about the conversion of China’s existing widget factories into production sites of clean energy and energy efficiency equipment. Having spent a considerable amount of time in Chinese factories, however, I am all too familiar with the reality that China’s manufacturing sector offers a cost advantage precisely because environmental costs, like treatment of industrial waste, are often not factored in to the cost of production. This is due, in part, to lax government monitoring and enforcement of environmental regulations. Indeed, instances of environmental negligence have already surfaced in China’s emerging clean energy industry.

A New Gold Rush: Polysilicon Dreams

One very appropriate example is in China’s budding photovoltaic (PV) industry. Insufficient production capacity of polysilicon, the intermediate good needed to make PV panels, has stunted a scaling up of solar manufacturing in the last few years and driven up the cost of panels. China has aimed to meet that demand by bringing facilities online in just a year, shaving one to two years off the industry standard. A2008 Washington Post article reports:

In China, polysilicon plants are the new dot-coms. Flush with venture capital and with generous grants and low-interest loans from a central government touting its efforts to seek clean energy alternatives, more than 20 Chinese companies are starting polysilicon manufacturing plants.

One of those companies is Luoyang Zhonggui Hi-Tech Company, located in China’s Henan province, and a key supplier of polysilicon to the country’s solar poster child and a leading solar company globally, Suntech Power. One of the ways that Luoyang Zhonggui, and likely its competitors, have found it possible to bring manufacturing facilities online so fast and cheaply, according to the same Washington Post article, is by managing pollution recovery constraints by simply not managing them at all: dumping the toxic by-product silicon tetrachloride liquid, four tons of which is generated for every one ton of polysilicon, on surrounding farmland.

A recent white paper published by Silicon Valley Toxics Coalition (SVTC), a watchdog group that monitors and advocates against contamination associated with the high-tech industry, highlighted the importance of responsible supply chain management in the solar industry. The paper points out that lacking environmental oversight associated with the electronic industry’s growth in previous decades has left a legacy of toxic pollution in communities both near and far.

The exportation of electronic waste to China and other developing countries, and the informal recycling industry that has cropped up around it, presents a significant problem to public health and wreaks significant havoc upon the environment long after the product’s use cycle. A 2007 study published in the journal Environmental Health Perspectives found that lead levels in the blood of children in Guiyu, the epicenter of e-waste recycling in China, were twice the level deemed acceptable by the US Center for Disease Control & Prevention (CDC).

While the EU and most OECD countries have ratified a 1992 international agreement on restricting trade in hazardous waste known as the Basel Convention and taken additional measures to prevent e-waste exporting, the US lags behind. In January 2007, EPA rules against exportation of one specific stream of electronic waste – cathode rays tubes (CRTs) found in TV and computer monitors – took effect. Since then, a Government Accountability Office (GAO) sting operation and report revealed that illegal exporting continues to occur, even to a large degree. In fact, the US Department of Commerce estimates that between 50 and 80 percent of e-waste collected for recycling ends up in China and other developing countries.

While the wave of toxic e-waste remains a formidable problem, and toxic dumping concerns have already arisen in China’s solar industry, the SVTC nevertheless contends that the solar industry can still develop in a sustainable manner. In order to deliver a “truly clean and green” sector, however, oversight must occur throughout the product’s lifecycle.

Looking Ahead

Washington is beginning to wake up from an eight-year slumber and consider international solutions appropriate for a truly international problem. The new administration has already demonstrated its intentions to take decisive action on climate policy; namely, by including one of the world’s major stakeholders and partner-in-crime emitters. Early in his campaign, Barack Obama indicated support for federal laws on e-waste. His implicit admission that Americans are responsible for what happens to goods after we use them represents a markedly different approach to the global dimensions of consumption and waste. However, we have yet to see whether he will take steps to ensure that the pre-use — or manufacturing – phase is closely monitored and regulated, particularly in the environmental industry.

The nature of the US-China engagement currently under discussion demands the establishment and enforcement of standards more stringent than those governing other bilateral arrangements, such as trade agreements. Already, China has sent an encouraging signal of a commitment to making progress on environmental protection through legislation. Earlier this week, the State Council, China’s cabinet, signed into effect legislation on the management of electronic waste. The new law delineates manufacturer responsibility for safe production and collection of e-waste. Standards such as these, if properly enforced, would eliminate some of the cost advantage that makes China an appealing partner on energy and climate collaboration. But the hypocritical alternative – maintaining a lax regulatory environment and outsourcing environmental degradation – would constitute a cost of wholly greater proportions, which neither the environment nor humanity is prepared to bear.

If you like what you see here, check out Stepping up Efforts to Control E-Waste: China Passes Electronic Disposal Law and Clinton to Address Climate Change, Energy in China.

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  1. […] of GOOD or SEED magazine) has already published eight posts, covering a variety of topics from toxic dumping to clean tech business […]


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