Policies for the Circular Economy in China

Dr. Bing Zhu

Professor and Executive Deputy DirectorInstitute of Circular Economy, Tsinghua University, ChinaGuest Research ScholarEnergy Program, IIASA, Austriabingzhu@tsinghua.edu.cn

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Global Forum on EnvironmentTowards quantifying the links between environment and economic growth

24-25 October 2016, OECD Paris

Circular Economy is defined as the ‘the reducing, reusing and recycling activities conducted in the process of production, circulation and consumption,’ according to Circular Economy Promotion Law of the People's Republic of China (2009)

Reducing

Reusing

Recycling

Start of Government Efforts on Circular Economy in China

2Source: Worldbank

GDP2004 2015

DMC(Domestic Material Consumption)

2004 2015

Relative Decoupling

No. 6

No. 2

In 2004, the 1st national meeting on Circular Economy was organized by National Development and Reform Commission of China (NDRC)

China’s economic growth and resource consumption since 2004

Source: Tsinghua University

• Resource Utilization prior to end-of-life and Waste Management are equivalently important

• Still in the middle stage of industrialization

• Encountered the complex economic and environmental problems

• Increasing resource efficiency in terms of full life cycle

• A comprehensive policy instrument: not only for the governance measures but also for economic reconstructuring and transition

Input

Reducing the consumption of

resources

In the process of production

Increasing efficiency

Output

Reducing the production of wastes

and increasing circulation

Connotation of China’s Circular Economy

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China’s Action: Promoting Circular Economy in a Comprehensive and Systematic Way

4

Promotion of green

consumption

Promotion of demonstration

pilots

Marcoguidance

Improvementof policy

mechanism

Implementation of circular economy

assessment

Constructionof institutional

system

Technology innovation and

support

Reinforcementof supports

from laws and regulations

Promotion of industrial layout

optimization and cluster

development

Integration of circular economy

and regional development

Optimization of top-level design and overall plan

Give full play of the role of

market

China’s Practice (1): Legislation and Institutions System Construction

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Circular Economy Promotion Law (2008)

Administrative Measures for Pilot Remanufacturing

of Automobile Parts &

Accessories (2008)

Administrative Measures for the Determination of

Resources Comprehensive

Utilization Encouraged by the

State (2006)

…

Local Measures of Shanxi, Shaanxi, Guangdong, Guizhou, Shandong Provinces and Dalian, Wuhan, Changchun Cities etc.

the 11th ,12th and 13th Five -Year Plans for National Economic and Social Development of P.R.C.• Including specific chapters, columns

and sections for Circular Economy

Circular Economy Development Strategy and Near-Term Action Plan (2013)

The Leading Plan for Circular Economy (2016)

…

Most provinces have specific circular economy development plans

Laws & Regulations Development Plans

National Level

Specific Measures &

Plans

Local Level

• Extended Producer Responsibility• Promotion of Renewable Products and Raw Materials• Restrictions on the use of disposable goods

• Assessment of Circular Economy• Standard Certification for Circular economy• Credit Rating …

Institutional Support & Promotion

178 pilot units: including 11 provinces, 16 cities and 33 industrial parks, covering 11 key industries (iron and steel, nonferrous metals, coal, electricity, chemicals, building materials, light industry, textile, machinery manufacturing, agricultural products processing and agriculture)

China’s Practice (2): Pilot and Demonstration

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2005-2010 Pilot Exploration Stage

Industry

Agriculture

Services

① Pilot Projects for Circular Transformation of Industrial Parks (100 parks)② Remanufacturing Pilots (42 enterprises)③ Pilot Projects for Comprehensive Utilization of Resources (34 bases and 38 enterprises)④ Recycling Technology Industrialization (about 60 cases)⑤ Synergic Recycling Wastes in the Production Process Pilots (about 60 enterprises)

⑦ Urban Mine Demonstration Bases (49 bases)⑧ Pilot Cities for Recycling Harmless Treatment of Restaurant Waste (100 cities) ⑨ Demonstration Project of Recycling System of Renewable Resources (about 80 cities, 100

waste products recycling sorting gathering areas, 100 enterprises)⑩ Circular Service Industry Demonstration (about 100 catering and accommodation enterprises,

1000 retail enterprises)

⑥ Demonstration Project of Agricultural Circular Economy (all 13 main grain producing areas)

Ten-Hundred-Thousand Demonstrative Action(10 key projects, 101 key cities, over 1000 key enterprises or parks)

2011-2015 Demonstration Guiding Stage

China’s Practice (3): Construction of Circular Economy Friendly Market System

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Improving the market system continuously and enabling the incentive effect of market mechanism to achieve full potentials

• Addressing market externalities led by governments (by monetary policy), and supporting the market system of circular economy (e.g. Green Credit)

• Using fiscal policies (e.g. price, tax etc.) to promote long-term development of circular economy.

• Setting up special funds (e.g. Industrial Policy Fund) to guide and encourage the industries to formulate the regulated development and to promote the best practices.

Green Credit

21 main banks and financial agencies

involved

Up to 7.26 trillion RMB (till June 2016)

Pricing tools

Differential electricity price

Punitive electricity price

Ladder water pricing

Tax Preference Policy

Environmental friendly projects & equipment

Cogeneration projects

…

Circular Economy in China: Effectiveness

Resource efficiency has been significantly improved

Energy structure have been continuously optimized

Resource utilization structures have been continuously effective

Play a positive role in environmental improvement and climate change issue

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The Effects of Recycled Resources

in 2014

is equivalent to the reduction of

=

2.89hundred

million tonsstandard coal

90.3hundred

million tonswaste water

6.94hundred

million tonsCO2 emissions

15.58hundred

million tonssolid wastes

11.3hundred million tons Raw Materials Saved

Energy consumption has increased by 18.1%, and led GDP increased by 36.3%

From 2010 to 2015, resource productivity raised by more than 20%

Output value of resource recycling industry exceeds 1.5 trillion RMB

The Leading Plan for Circular Economy (2016-2020)

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• Following and requested by 13th Five -Year Plans for National Economic and Social Development of China

• Drafted by NDRC

• Now this Plan just finished its consultation stage and expected to be implemented at the end of 2016 to lead the circular development in the following half-decade

Chapter 43: Promoting Resource conservation and intensive use

Section V: Vigorously Develop the Circular Economy - To implement The Leading Plan for Circular Economy

The Leading Plan for Circular Economy （2016-2020）

13th Five -Year Plans for National Economic and Social Development of China

Indicator System for The Leading Plan for Circular Economy (2016-2020)

The Leading Plan for Circular Economy (2016-2020)

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2 Core Indicators

•Resource productivity•Recycling rates of wastes

3 Recycling Developments

•Industrial recycling system•Urban recycling system•Resource recycling industry

Industrial symbiosis

Industry and agriculture

combination

Recourse Recycling and

Utilization Base

Comprehensive Utilization Base of Industrial Wastes

Internet Plus

Beijing-Tianjin-Hebei Region CE

Projects

Renewable products and

Remanufacturing

Recycling technology &

innovation

Pilot institutional innovation

Best Practices Promotion

10 Special Action Projects

FactsheetExtended Producer

ResponsibilityPromotion of

Renewable Products and

Raw Materials

Restrictions on the Use of Disposable

GoodsAssessment of

Circular Economy

Standard Certification for

Circular economy

Credit Rating

6 Institutional Supports

Concluding Remarks

• China’s circular economy is relatively unique due to its specific stage of socio-economic development

• China’s top administration heightened attention on and highly propelled the policies for circular economy

• Pilot programme is a significant feature of China’s policy implementation

• The Leading Plan for Circular Development (2016-2020) is expected to achieve further accomplishments of China

• International exchange and cooperation on circular economy is crucial for improving global resource efficiency

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Thanks for your attention!

Special thanks to Mr. Xin Yao from NDRC, and Dingjiang, Meng, Tao and Bomin from our Tsinghua team