This year’s New Year was kicked off with a warning about pollution levels. Between December 31st, 2016 and January 1st, 2017, Beijing issued a notice to all citizens regarding the high smog levels. In fact, they issued the “orange alert” the second highest level of a four-tier pollution level index, a system developed in 2014 to primarily reduce carbon emissions. While winters in China—especially the northern regions—are more prone to higher levels of pollution due to higher demand for coal energy, this “orange alert” is very alarming. This means that the current level of breathable particulate matter (PM 2.5) is above what the World Health Organization deems as acceptable.
At the surface, this may look like an environmental issue that needs to be addressed immediately. However, there are already implications in China’s economy. From this short incident alone, the airline industry was already affected. At the Beijing Capital International Airport, the smog from the pollution caused hundreds of flights to be cancelled. Beijing’s Airport is one of the busiest airports in the world. This cancellation has resulted in lost revenue for all airlines affected, including China’s own airline: China Airlines. It is unlikely that airlines will stop serving Chinese airports as a whole, but corporations will have to incur a lower bottom line, thus they may reduce fleets to China in peak pollution seasons like winter.
On ground level, effects have also been seen since mid-December, when authorities ordered coal factories to reduce production or close completely. Coal, while one of the biggest contributors to pollution, is still an integral piece in China’s energy portfolio and economy. Closures or cutbacks in production reduce profit, create unemployment in the long run, and incur higher costs for the government. Since many of these factories are state owned enterprises, less profit for them results directly in less profit for the government. With the government as a major stakeholder in these companies, current government funds will be allocated to keep the companies afloat despite little to no production. In the long run, these plants may just lay off workers if they are required to reduce production.
The above predictions may seem bleak, but it’s not far from the truth. For the weeks leading up to the last G20 summit in Hangzhou in 2016, the surrounding coal plants were completely closed. In order to incentivize the companies to comply, the government paid them and employees. On the other hand, this drastically decreased the PM 2.5 levels, hence there was no need for an alert being issued. There were clear blue skies and breathable air (within the safety parameters of the WHO). Even though this was only for a short period of time, it instilled hope and wonder into citizens. What if this could be permanent? As we ring in the new year, keep in mind the next steps that the Chinese government could take. It is established that simply paying off companies to reduce production is not sustainable, so the need for green technology is more prevalent than ever. Recently, China just surpassed United States in being the number one investor in green technology. There is so much potential for these investments to create sustainable and environmentally friendly firms that can replace the current coal firms. There has already been an increase in solar, wind, and hydroelectricity farms. So, new year’s resolution? More renewable energy and less dependency on coal. Let’s try to aim for less orange alerts this year.