Intensifying nationwide environmental enforcement is affecting foreign company supply chain management, compliance, and reporting procedures in China. New rounds of environmental inspections have already led to increased supply chain disruption and, in some cases, factory shutdowns for months. This pervasive nationwide trend has important implications for companies as they approach environmental compliance.
Facing ongoing pollution challenges and a push to diversify energy sources, China’s energy planners kicked off 2017 by announcing an array of 13th Five-Year Plans (13FYPs). Offering quantifiable short-term goals for limiting reliance on coal in favor of oil and gas, these plans collectively focus on emissions cuts, renewable energy development, and improved energy industry efficiency, while encouraging technology solutions such as data centers.
China’s energy planners seek to increase production, distribution, and consumption of renewable energy as a means to diversify energy supply. However, as China attempts to transition from coal to other energy sources, it struggles to utilize existing renewable capacity. This inefficiency, caused by overcapacity and grid limitations, has hindered the country’s ability to achieve renewable sector development goals.
As the world braces for an expected shift in US climate policy under Trump, China will suddenly be in position to take the lead in the global fight against climate change. This is a complex proposition, as China has proven both its impressive renewable energy development capabilities, as well as its current inability to control pollution.
Growing public dissatisfaction toward rampant pollution in China is putting pressure on Beijing to craft a national development agenda that more comprehensively takes into account environmental considerations.
As the United Nations Conference on Climate Change commences this week in Paris, no country faces graver challenges than China.