Eliminating Plastics in the Era of Food Delivery: The PRC’s Solutions on Reduce, Reuse, and Substitute

Ten years ago, online food delivery services barely existed in the People’s Republic of China (PRC). In 2020, it grew to become a $51.5 billion industry representing half of the global market share. The PRC is not alone. The Southeast Asian market tripled in 2020 accelerated by the coronavirus pandemic.

Although the booming industry has powered economic activity and brought unparalleled convenience to hundreds of millions of consumers, it has also generated a significant amount of waste that litters cities, chokes rivers, and threatens wildlife.

Figure 1: Ecosystem Services of Nature-Based Solutions.

Source: China Dialogue.

In the PRC, we estimated that 37 billion plastic containers were discarded in 2020, based on the 17.12 billion online food orders made. 1 If we were to line up each piece, this would be equivalent to about 37 times the distance between north to south pole. As disturbingly, the containers take centuries to biodegrade, but about an hour to use.

In response, companies in the PRC have adopted innovative ways to combat environmental and health issues created by plastic waste.

Reduce—Immediate Solutions

In 2017, Meituan, the PRC’s leading food delivery giant with 628 million active users and 7.7 million merchants, became the first company to launch the “opt-out for disposable cutlery” feature on its app. Users who choose this option are given points that can be donated to a green initiative fund.

Other food delivery platforms have since followed suit. And the feature has received widespread acceptance. For example, more than 70% of the average 1.2 million daily orders received by Meituan in Shanghai use this feature.

Ele.me, another food delivery platform, has experimented with edible cutlery (Figure 2). The chopsticks are made of flour, sugar, milk, and butter, which customers can eat as desserts. And they come in three tasty flavors: matcha, wheat, and taro. Each pair is covered by recycled paper.

Within the first six months of its launch, Ele.me had attracted more than 100 participating restaurants and distributed 10 million pairs of chopsticks.  

Figure 2. Ele.me’s Edible Chopsticks.

Source: Adrien Goris.

Reuse—Midterm Solutions

In addition to the reduction efforts, businesses have experimented with reusable containers. ShuangTi, a startup based in Shenzhen, created an intelligent “shared lunchbox” business model. It employs reusable containers made of highly durable polypropylene with a microchip inserted to track location and usage time.

After an order is placed on the app, the food is delivered to a heat-insulated smart locker (Figure 3) for collection. When it is finished, customers return the containers to the locker. The containers are then gathered, sanitized, and reused for another delivery.

Figure 3. ShuangTi’s Heat-Insulated Lockers.

Source: Tencent News.

Since 2017, ShuangTi has delivered over 30 million orders mostly to university students. They estimate that if the project is introduced to 500 campuses, around 5,000 ton of plastic waste could be eliminated each year.  

YIKO Eats, a community kitchen startup in Beijing, takes a similar approach by reusing ceramic containers (Figure 4). Customers select a timeslot to return the containers when they place an order. YIKO Eats’ popularity has grown among busy young professionals, who enjoy the coziness of dining in fine china, but dislike the hassle of cooking and cleaning up.

Figure 4. YIKO Eats’ Meals in Reusable Containers.

Source: Yuchen Wen, YIKO Eats.

Recycle and Beyond—Long-Term Solutions

Worldwide, only 1%  of polypropylene (the plastic mainly used in delivery containers) is recycled. Oily stains and food residue make the process difficult and costly as the material must be separated and cleaned. As such, containers placed in the recycling bin often end up in landfills or incinerators, representing a major source of pollution.

To address this, Meituan and top chain restaurants have established 350 recycling sites  close to customers, typically near office buildings, communities, and campuses, where most orders are placed. The most successful site has a 74% recycling rate.

To turn the waste collected into other useful products, Meituan works with factories to make bicycle baffles (Figure 5), handbags (Figure 6), and cups.

Figure 5. Bicycle Raffles Made from Recycled Containers.

Source: Polypropylene People.

Figure 6. Handbags Made from Recycled Plastic Cups.

Source: Market.com.

Companies have also raced to find a substitute for plastic. Much of this has followed after the government announced to ban the use of disposable plastic in e-commerce, express delivery, and takeaway food by end 2022.

Figure 7. Packaging Film for Cornstarch Containers.

Source: Hualong Packaging Materials Co.

Cornstarch container is biodegradable and a popular substitute, but it is not leak and less oil resistant—less suitable for Chinese food. A smart solution offered by Hualong Packing Materials Co. is to insert a film, made of polyethylene and done by a machine, onto the containers (Figure 7). After a meal is finished, customers can easily remove the film and clean it. Both the film and container can be recycled.

Meanwhile, other companies have also innovated using paper-based materials. Zhongshan Dongyu New Materials Co. has worked with BASF to launch specially designed paper containers (Figure 8).

Figure 8. Zhongshan Dongyu-BASF’s Paper Food Containers.

Source: BASF Trade News.

Stora Enso, a global paper manufacturer, has made containers that are heat and oil resistant (Figure 9). Its products won top honors in Meituan’s Food Delivery Packaging and Incubation Competition in 2021.

Figure 9. Stora Enso’s Paper Containers.

Source: Stora Enso.

Moving forward, the end of takeaway plastic containers in the PRC is near even amid rising demand for food delivery. More new ideas and products will surely surface as the country strives toward achieving the goal of greener and higher quality development. As in other areas of e-commerce, the PRC’s rich experience provides useful lessons for other developing countries facing similar challenges.

1 The estimate was also based on the average number of plastic containers used for an order (3.27 pieces), how common is plastic container used for food ordered online (over 80%) , and the plastic recycling rate (17.6% for all types). 

Authors
 Hsiao Chink Tang

Hsiao Chink Tang

Senior Economist, ADB

Xiaowei Zhuang

Xiaowei Zhuang

Knowledge Analyst, RKSI, ADB

Green Bonds, Air Quality, and Mortality: Evidence from the PRC

Leading the Way to Green Development

The Yangtze River flows through the Three Gorges Dam in Yichang, Hubei province (photo by Li Tao, China Daily).

During the last few decades, the Chinese people’s well-being and quality of life have significantly improved on the back of rapid economic growth. However, before higher-quality green development found its way into national policies that success came at a high cost to the environment.

The PRC has urbanized and industrialized at an extraordinary pace and scale to become a commendable development success story. In February 2021, the Chinese government officially announced that absolute poverty had been eradicated by the end of 2020.

Recognizing the environmental challenges, including pollution to air, water and soil, the PRC has over the past decade pivoted and is prioritizing greener, more environmentally sustainable development. Now heeding the government’s call for a “green recovery” from the novel coronavirus pandemic, the country is pursuing an integrated approach that protects the environment, transforms its rural economies, and greens its cities, all while actively adapting and mitigating the effects of climate change.

One example of such an integrated approach is the Yangtze River Economic Belt, a basin management effort that replaces “big development with big protection”. Launched in 2016, it introduced the geographic concept of a “belt” that encompasses economic, social and ecological linkages around the Yangtze River. The plan’s centrepiece balances socioeconomic growth and environmental sustainability, with the intent of restoring and safeguarding the Yangtze River’s ecosystems.

The Nanchang section of the Yangtze River.

The Yangtze River Economic Belt is just one example. Across the PRC, other green development projects have been activated over the last decade. A key example is the Yellow River Ecological Corridor, with a geographic focus in the country’s second-largest river basin. Basin-wide approaches such as those being put forward for the Yangtze and the Yellow rivers can distil useful lessons for wider application.

Hukou Waterfall of the Yellow River.

First, strengthening institutional capacity, collaboration and coordination is a prerequisite for success across projects. Governments must develop the capacity to formulate and implement innovative policies and instruments. Local and regional governments must foster collaboration, both vertically and horizontally.

Second, governments must actively engage with a wide set of stakeholders early on and continuously throughout a project to foster acceptance, mitigate concerns and monitor social and environmental progress. Systemic planning may also include leveraging green development as an opportunity for education and training in rural areas to create the scope to improve livelihoods that benefit the economy, society and nature.

Third, providing adequate, flexible, and long-term financing is necessary. Many green development projects require support for several years before they reach maturity and can gain profits off the natural capital that has been (re-) built. Developing tailored financing approaches is key to unlocking and scaling up investments in green development projects. And since projects in rural areas can be particularly difficult to finance, agriculture and forestry restoration activities, from a financial sustainability perspective, should be part of carbon credit markets to provide incentives for conservation practices.

Embracing high-quality green development will mark a shift from mere economic growth to sustainability-oriented development that focuses on improving people’s lives and livelihoods within healthy environments.

Sharing the PRC’s progress in greening development can spread and deepen awareness and knowledge about the challenges, innovations and best practices in pursuing a more environmentally sustainable future. Lessons learned are important not only for the PRC, but also for other developing countries pursuing greener development pathways in Asia and the Pacific.

The 15th Conference of the Parties to the UN Convention on Biological Diversity (COP 15) held in Kunming in October took a step toward reaching a global deal for nature-known as the post-2020 global biodiversity framework. The PRC, as host nation, is ushering the convention forward as a road map for biodiversity conservation for the coming decade and beyond.

Opening Ceremany of the Ecological Civilization Forum in COP 15 (photo by RKSI).

So more broadly, the greening-of-development approach offers opportunities for global learning and knowledge sharing that can help the global community reach its goals coming out of COP 15. This can set the scene for a future that banks upon global green development, while protecting biodiversity and safeguarding its ecosystems and people.

Authors
M. Teresa Kho

M. Teresa Kho

Director General, East Asia Regional Department, ADB

This Op-Ed is reproduced from China Daily.

Cleaning up Xin’an River to Unleash a New Era of Growth in the PRC

Pollution threatens the Xin’an River, a river system within the Yangtze River Economic Belt that provides water supply to millions of households.

To clean up the Xin’an River, ADB, and KfW are helping the PRC build new water supply, sewage, and stormwater facilities and pilot green financing mechanisms in the urban and rural areas along the river.

The new water and sewage facilities and green investments will help clean up the Xin’an River, secure a reliable water supply for millions of residents, and improve people’s livelihoods.

The Yangtze River Economic Belt (YREB) holds a key place in the economy of the PRC. It accounts for more than 40% of the country’s population, 40% of its freshwater resources, and about 45% of its economic output. This resource, though, is under threat. Increasing pollution, degraded natural resources, and limited transport connectivity are constraining the growth of the YREB.

Pollution, in particular, is a threat to the Xin’an River, a river system within the YREB. Running from Huangshan city in Anhui province through Hangzhou municipality, the capital of Zhejiang province, the Xin’an River is life to the residents living along its banks—about 10 million people rely on it for water supply.

“The Xin’an River is an important source of drinking water and a strategic reserve water source for the whole Yangtze River Delta,” says Principal Water Resources Specialist for East Asia Mingyuan Fan. “Without a clean-up in and around the Xin’an River, water security in Huangshan and Hangzhou will be but a distant dream.”

Huangshan’s urban wastewater and sanitation facilities and sewage collection infrastructure is unable to control the pollution seeping into the river. Sewerage and stormwater overflow go directly to the river and its streams and waterways. Because of the sewer’s poor quality, groundwater likewise infiltrates the wastewater treatment systems. Rural wastewater also contaminates the river. About 75% of Huangshan’s 889 administrative villages lack wastewater treatment facilities. Thus, pollutants such as nitrogen and phosphorus from agriculture activities are discharged into the river, contaminating the water supply.

Cleaning up the Xin’an River

“The Xin’an River needs to be protected and conserved,” says Mr. Fan. “Without intervention, its deterioration would deprive millions of people of quality water supply.”

ADB, along with KfW, has embarked on a project that would ensure the YREB’s sustainable growth by promoting the ecological protection and green development of the Xin’an River. Through the Anhui Huangshan Xin’an River Ecological Protection and Green Development Project, ADB and KfW will be assisting the PRC in cleaning up the Xin’an River by addressing its major sources of pollution: insufficient urban sewerage systems and unsustainable agricultural practices.

New Infrastructure

To address pollution coming from urban sources, the project is upgrading sewage and stormwater facilities. It aims to repair wastewater sewers in Huangshan’s central district as well as in its other four county urban areas. It will also install stormwater drainage pipes. To complement this work, the project will be constructing river embankments to control floods. For rural areas, the project will be building decentralized wastewater treatment systems that can treat a minimum of 2 cubic meters per day. Moreover, it will install and repair rural water supply pipes to provide tap water to rural residences.

Green Approaches

The Anhui Huangshan Xin’an River Ecological Protection and Green Development Project will introduce innovative, and sustainable approaches to manage water pollution. These include helping farmers switch to improved organic fertilizers and biological pesticides. New green financing mechanisms will provide farmers financial incentives whenever they achieve pollution control targets using sustainable farming practices. It will also establish a green incentive fund to help small and medium-sized enterprises engaged in green businesses such as ecotourism and ecological agriculture.

Expected Results

By 2026, the project would have installed 176 kilometers (km) of water sewers and 71 km of stormwater drainage pipes in Huangshan’s urban areas. By project completion, it is also expected to construct 10 km of river embankments to mitigate floods. During their construction, about 465 jobs would be created, while 226 more jobs will be available during their operation. By the end of the project, the rural areas should see 85 decentralized wastewater treatment systems completed and connected to about 14,700 households. The project will also construct and repair a total of 100 km of rural water supply pipes that will be connected to about 3,250 households. As in urban areas, these activities will also generate jobs in rural areas—about 288 during construction and 140 during their operation.

The project is envisioned to infuse innovation into the protection and management of the Xin’an River by piloting green financing mechanisms. When completed, the project aims to provide green incentive mechanisms via cash grants to tea farmers who have achieved pollution control targets through the adoption of sustainable farming practices, and a green incentive fund to support small- and medium-sized enterprises involved in green business development that would give them further impetus to venture into and expand to ecological agriculture, eco-tourism, and pollution control.

Cleaning up the Xin’an River is a daunting but necessary task. This initiative would mean a reliable water supply for millions of people for years to come, a green development that ensures public health, and a robust economy for the PRC.

Author
 Graham Dwyer

Graham Dwyer

Principal Communications Specialist, Department of Communications, ADB

This article is reproduced from Asian Development Bank.

基于生态系统的综合生态保护与绿色发展模式案例:中国黄山项目

Asia’s Eating Habits are Changing and the Environmental Impact Could be Huge

These charts illustrate the environmental impact of agriculture in Asia and the need to move toward sustainable and healthy diets that are also environmentally friendly and affordable.

The critical role of agriculture to Asia and the Pacific’s development can hardly be overstated. In the 1960s, food supply was a severe problem with most economies in the region struggling to feed their growing population. Many economies depended on food aid, while shortages and speculation prompted food crises in a few others.

The adoption of green revolution technologies in the 1960s increased agriculture productivity and not only allowed the region to meet increasing food demand, but also release labor to contribute towards vibrant manufacturing and services sectors.

In 2018, daily calorie intake per capita in the region, which is now home to more than half of the world’s population, had increased from 1245 kilo calories (kcal) in 1961 to 1914 kcal. Despite this progress, different forms of undernourishment such as stunting and wasting of children persists, even as obesity is rising in many parts of the region.

Today agriculture in the region faces a different kind of food supply challenge. Higher incomes and increasingly urban lifestyles have changed the needs and preferences of consumers. Instead of a diet heavy on traditional staples such as rice and wheat, consumers today prefer a more diverse diet. Per capita consumption of rice has leveled off; while that of fruit, vegetables, eggs, dairy products, as well as meat and seafood is increasing.

Although the consumption of cereals in developing countries in Asia increased between 1961 and 2018, its overall share in the diet decreased. The share for meat and animal products increased from 1% to 4%. This represents a more than six-fold increase in protein intake from animal meat from 1.5 grams to 10 grams per person per day. Still, this is well below the 34.6 grams average in advanced economies outside of the region.

In the PRC daily calorie intake more than doubled between 1961 to 2018, reaching 3205 kcal in 2018. Cereals only make up 46% of the diet, while the share of meat and animal products increased from a mere 3% in 1961 to 21% in 2018. This represents a 20-fold increase in per capita intake from 1.1 grams in 1961 to 19.7 grams in 2018.

To meet these changing food preferences, agriculture in the region will have to reorient from a traditional focus on the production of food staples to high-value crops such as fruit and vegetables, as well as livestock and aquaculture. This will mean a more resource-intensive production as well as rising greenhouse gases. As figure 3 shows, animal-based products have a much larger resource footprint, especially with regard to greenhouse gas emissions and water use.

To reduce the environmental impact of agriculture, it is important to move toward sustainable and healthy diets that are also socially acceptable and economically accessible for all. Some ways to achieve this are to promote mostly plant-based diets, reduce red meat consumption, promote fish obtained from sustainable stocks, and reduce food loss and waste throughout the supply chain.

This blog post is based on data from the recently published Asian Development Outlook Update 2021 Theme ChapterTransforming Agriculture in Asia.

Author
Manisha Pradhananga

Manisha Pradhananga

Economist, Economic Research and Regional Cooperation Department, ADB

Daryll Naval

Daryll Naval

Research Associate, Economic Research and Regional Cooperation Department, ADB

This blog is reproduced from Asian Development Blog.

How to Meet Climate Targets with Carbon Capture and Storage

The Asia and Pacific region is responsible for about half of global carbon emissions. Photo credit: ADB.

With the PRC and Indonesia as centers of excellence, a regional program demonstrates how the technology can reduce carbon intensity.

Overview

The PRC and Indonesia produce copious amounts of carbon dioxide (CO2), mainly because their power generation systems are hugely dependent on fossil fuels. The two countries’ carbon emissions are among the highest in the world, and both are keen on becoming carbon neutral as part of their commitments to the Paris Agreement.

Since the turn of the millennium, the PRC and Indonesia have been exploring ways to decarbonize their economies. But much still needs to be done in terms of coordinating oversight for research and development and scaling up deployment of CO2 capture and storage (CCS) technologies.

In 2019, ADB completed a technical assistance to support the PRC and Indonesia in improving their capacity for CCS research and development. Financed by the ADB-administered Carbon Capture and Storage Fund under the Clean Energy Financing Partnership Facility, the CCS program’s objective is to create a stronger strategic architecture and more coordinated research and development for accelerating and scaling up CCS development and deployment, as well as dissemination of best practices on CCS in Asia. The project under review initially concentrated on PRC and Indonesia and later on expanded its activities to Bangladesh, India, Mongolia, and Viet Nam.

Project information

48282-001: Promoting Carbon Capture and Storage in the People’s Republic of China and Indonesia

Project snapshot

      • Approval date: August 2014
      • Closing date: August 2019
      • Total project cost: $3.3 million. Total financing from the Carbon Capture and Storage Fund under ADB’s Clean Energy Financing Partnership Facility
      • Executing agency: Asian Development Bank
      • Financing: 
        • Global Carbon Capture
        • Storage Institute, United Kingdom

Challenges

The PRC is among the world’s largest consumers of coal, accounting for over half of global consumption. Its power generation sector uses more than half of that coal to provide about 80% of the country’s electricity and emits over 4 gigatons of CO2 (GtCO2) per year, 95% from coal-fired power generation. Continued economic growth is projected to drive energy consumption surges for the next several decades. With primary energy coming from coal and the expectation that this reliance on coal will persist for decades to come, PRC will likely continue as one of the world’s largest CO2 emitters for some time. Therefore, wide deployment of CCS in PRC over the long term will be necessary to significantly reduce national emissions. The PRC has announced it would become carbon neutral by 2060 at the United Nations General Assembly in September 2020.

Similarly, Indonesia has a heavily fossil fuels-based economy, consuming coal, oil, and gas produced domestically plus imported petroleum. As the world’s largest coal exporter and a substantial liquefied natural gas exporter, the country is confronted by increasing CO2 emissions from growing domestic consumption of indigenous coal and fossil fuels. It has significant requirements for the deployment of large-scale, low-carbon technology in the long term. Moreover, the government has been increasingly vocal about climate change and its impacts on the developing world.

Both the PRC and Indonesia have been considering the creation of legal and regulatory frameworks for advancing CCS.

Context

The Asia and Pacific region is responsible for about half of global CO2 emissions. Primary energy demand in the region is expected to increase by about 24% by 2030. Despite the rapid increase in renewable energy supply, trends suggest that this increase in demand will still translate into increased consumption of fossil fuels and CO2 emissions in the region. The PRC and India accounted for 27% and 7% of the global CO2 emissions in 2017.

While experiencing rapid growth and development, Asia and Pacific remains one of the most vulnerable regions to climate change. It faces the risk of losing its development gains to climate change impacts if mitigation and adaptation actions are not put in place.

CCS is identified as one of the technologies and practices that can help meet climate targets. The International Energy Agency’s Carbon Capture and Storage Roadmap highlighted the significant role that CCS will need to play in achieving an atmospheric CO2 concentration stabilization of 450 ppm (parts per million) by 2050. CCS will provide about 14% of the total CO2 emissions reductions out to 2050. Achieving this contribution of emissions reductions will require an ambitious CCS growth-path, with 100 projects needed globally by 2020 and over 3,000 by 2050. In both 2020 and 2050, major developing countries, including Indonesia and the PRC, will need to contribute to CCS deployment.

Solutions

ADB’s technical assistance, approved in 2014, initiated a support program for CCS research and development (R&D) with the institutes in PRC and Indonesia serving as centers of excellence.

The CCS program was administered by ADB to assist in the establishment of the research centers in the PRC and in Indonesia. They are expected to act as local knowledge hubs in this emerging technology. The CCS centers are to implement R&D programs on CCS technologies in the region and organize activities to develop the capacity to enable widespread deployment in both countries and in the region.

Other program activities included conferences, workshops, dialogues, study visits, and other initiatives to foster regional cooperation, establish new partnerships with other institutes in and outside the region, and strengthen leadership in CCS-related capacity development.

Results

The CSS program established three research centers to improve R&D activity on CCS in Guangdong and Shanghai in the PRC and Bandung as well as Jakarta in Indonesia.

Under the CCS program, the activities of these research centers help the host countries adopt CCS technology, create necessary regulations, and obtain financial access for developing projects. They are also expected to foster regional cooperation on these aspects and build capacity in the PRC and Indonesia.

The program also started exploring CCS as a tool to reduce greenhouse gas emission for hard-to-decarbonize industries in the steel, cement, and petrochemical sectors. It produced a background study to help prepare industries for decarbonization by utilizing and not just storing captured carbon. The paper also investigates the financing requirements and mechanisms, as well as policy drivers and recommendations, to advance readiness to shift to a low-carbon era.

The CCS program bridged the gap between policy, technology, and finance mechanisms, and supported the development of demonstration of CCS projects in Indonesia. It expanded activities beyond the PRC and Indonesia and explored possibilities of implementing carbon capture, utilization, and storage in Bangladesh, India, Mongolia, and Viet Nam, creating an opportunity for further engaging these countries.

Lessons

The CSS program offers the following lessons:

Local knowledge and capacity building are important.

Support to research centers should include capacity building to ensure that they are well-equipped to successfully carry out studies and demonstration projects that will pave the way for the deployment of large-scale technologies. More experts are needed to enhance local capacities in developing and implementing demonstration projects, especially in countries that have indicated continued high dependence on fossil fuels to sustain their economic growth.

Ensure government and other stakeholders’ participation. 

Government involvement was found to be critical for the sustainable operation of the research centers, especially in the implementation of large-scale demonstration projects. Future programs supporting these centers should involve government and important stakeholders in their operation right from the start. Coordination with national and local governments, in addition to financial, technical, and administrative requirements, is critical in demonstrating large-scale projects.

Partnerships can be beneficial. 

Partnership with organizations from various disciplines have enhanced information and knowledge sharing, which is important in advancing R&D and deployment of technologies.

Author
Kee-Yung Nam

Kee-Yung Nam

Principal Energy Economist, Sustainable Development and Climate Change Department, ADB

This blog is reproduced from Development Asia.

Subsidizing Ecofriendly Practices in E-Waste Recycling in the PRC

High ownership of household electrical appliances in the PRC means large volumes of scrapped electronics will need to be recycled. Photo credit: ADB.

Electronics manufacturers are held accountable for the full life cycle of their products but receive incentives for proper disposal.

Overview

Households and workplaces in the People’s Republic of China (PRC) generate a large amount of waste from electrical and electronic equipment (WEEE or e-waste). Valuable resources, such as metals and plastics, can be recycled from this waste. However, e-waste recycling businesses in the PRC were competitive only when operated at harmfully low environmental standards that considerably reduced their production costs. This practice caused soil, air, and water pollution.

The PRC adopted the extended producer responsibility (EPR) scheme, which provides incentives for producers to address the environmental impacts of their products over the full life cycle. Manufacturers of electricals and electronics receive subsidies for collecting and disposing their products themselves or outsourcing the work to others. Disposal procedures must meet high environmental standards. Or they can contribute to a national fund that subsidizes environmentally friendly recyclers.

The EPR scheme has promoted the proliferation of standardized disposal and recycling procedures that mitigate environmental impacts and urged manufacturers to adopt environmentally friendly design features that help reduce disposal costs.

Context

The PRC produces and uses electronics on the largest scale in the world, and it is the biggest market for refurbished and recycled electronics. As shown in Figure 1, the quantity of electrical and electronic products owned by households alone has remained high. Figure 2 shows the number of scrapped electronics estimated from their stocks, assuming a fixed scrapping rate for each year of their lifespan, which is referred to as the “theoretical scrap rate.”

Figure 1: Number of Electrical and Electronic Items Owned by Households

Source: People’s Republic of China (PRC) Household Electronics Appliance Research Institute. 2016. White Paper on the Development of WEEE Recycling Industry 2016 [in Chinese]. Beijing.

Figure 2: Number of Theoretically Scrapped Electrical and Electronic Items

Source: PRC Household Electronics Appliance Research Institute. 2016. White Paper on the Development of WEEE Recycling Industry 2016 [in Chinese]. Beijing.

E-waste has been frequently referred to as “urban minerals,” which reflects its significant value as a resource. However, its recycling and dismantling, if unregulated, could cause considerable damage to human health and the environment. For example, in Guiyu Town, Guangdong province, the dismantling of waste electrical appliances began to flourish as a highly profitable business in the 1990s. Small workshop-type businesses tended to discharge wastewater, waste gas, and solid waste without restriction. This caused soil, air, and water pollution that threatened the health of humans, animals, and plants (NetEase 2009).

Solutions

The PRC addressed the externalities of the profit-seeking dismantling industry by regulating the WEEE recycling industry and promoting environmentally friendly practices creating incentives.

Legislations on recycling

Three laws provide the legal basis and financial incentives for developing a resource- and environment-friendly e-waste recycling industry in the PRC. These are the Circular Economy Promotion Law, Regulations on the Administration of the Recycling of Waste Electrical and Electronic Equipment, and Administrative Measures on the Collection and Usage of the Waste Electrical and Electronic Equipment Processing Funds.

The development of the WEEE recycling industry in the PRC has gone through three stages. In the first stage, which lasted until 2009 when the Circular Economy Promotion Law was implemented, collection, dismantling, and disposal of e-waste were largely undertaken by voluntary, yet unregulated, actors despite the existence of a small number of state-financed recycling plants that were intended to demonstrate standardized procedures and techniques. In the second stage (2009 to 2011), the waste was mostly collected by retailers and manufacturers who were backed by state subsidies under the home appliance trade-in policy. This policy also gave rise to more than 100 officially sanctioned and recognized recycling plants that adopted standardized techniques. In the third stage (from 2012 onward), the regulations and the WEEE processing funds, which were implemented in 2012, replaced the trade-in policy as the main legal framework and incentive mechanism for recycling. By the end of 2016, 109 plants received the WEEE processing funds (PRC Household Electronics Appliance Research Institute 2016).

Extended producer responsibility (EPR)

The EPR scheme encourages producers to enhance the environmental performance of their products from design to transportation, consumption, recycling, and disposal.

The WEEE processing funds subsidize the recycling of this type of waste. Producers and importers of electrical and electronic equipment are obliged to pay for disposal costs. In 2015, four government ministries, including the Ministry of Industry and Information Technology, issued a notice that urged producers to contribute to recycling and called for the launch of an EPR program. In December 2016, the State Council issued an action plan for implementing this scheme.

Under the program, manufacturers have four areas of responsibility: (i) designing environmentally friendly products; (ii) using recycled materials; (iii) standardizing recycling procedures; and (iv) promoting information disclosure. They can do the recycling and disposal themselves, engage the services of recyclers, or contribute to the WEEE processing funds.

Results

Updated subsidies

From 1 January 2016, subsidy rates of the WEEE processing funds were updated. The rates for television sets and microcomputers were reduced from CNY851 These include newly added renewables to support the phasing out of coal-fired power plants by 2030, industry energy efficiency improvement technologies, and electric vehicles.   to CNY60–CNY70 and the rate for air conditioners was raised from CNY35 to CNY130, whereas rates for refrigerators and washing machines remained unchanged at CNY80 and CNY35 (single tub unit) and CNY45 (double tub unit), respectively.

Total subsidies jumped by 4.5 times from CNY750 million in 2013 to CNY3.39 billion in 2014 and increased to CNY5.4 billion (about $833.3 million) in 2015. The number of subsidized firms reached 109 within 3 years. As firms that meet higher environmental standard incur substantially higher recycling costs, they rely on the WEEE funds for profitability and competitiveness. However, the funds have been largely financed by governmental subsidies rather than manufacturers’ contributions. In 2014, the fund’s deficit amounted to CNY2.5 billion ($385.8 million) and was predicted to continue to soar in light of the continuing growth of e-waste (Gu et al 2017). As such, manufacturers were presumed to be inclined to contribute to the fund or turn to less costly recyclers or recycling procedures that have adverse environmental impacts, rather than pay environmentally friendly recyclers the full cost.

Static efficiency

The home appliance trade-in policy was terminated by the end of 2011, but the enhanced producer responsibility system, which was launched in early 2011, did not specify the subsidies until mid-2012. During the gap between the two policies, there was an immediate drop in the volume of WEEE at disposal plants that adopted standardized, yet costly, procedures. However, after the subsidies for producers kicked in, these disposal plants gradually reclaimed and expanded their share of the recycling market.

Efficacy in reaching environmental target

From the outset of EPR implementation in 2012, the value of e-waste as a resource began to materialize. Figure 3 shows that quantities of iron, copper, aluminum, and plastic recycled from waste climbed rapidly from 2013 to 2016.

Figure 3: Resources Recycled by Waste Electrical and Electronic Equipment Processing Plants

Source: [People’s Republic of] China Household Electronics Appliance Research Institute. 2016. White Paper on the Development of WEEE Recycling Industry 2016 [in Chinese]. Beijing: [People’s Republic of] China Household Electronics Appliance Research Institute.

The EPR system has promoted the proliferation of standardized disposal and recycling procedures that mitigate environmental impacts and also urged manufacturers to adopt environmentally friendly design features that help reduce disposal costs. It has delivered a broad range of environmental benefits, such as the reduction of heavy metal emissions and other forms of pollution. Table 1 shows that the discharge of refrigerants from the dismantling of discarded refrigerators and air conditioners has been reduced. Refrigerant emissions are an important source of greenhouse gas (GHG). After the rise in the subsidy rate in 2016, carbon dioxide-equivalent emissions from the dismantling of discarded air conditioners were reduced by almost 30 times compared with 2014.

Table 1: Reductions of Refrigerant Emissions 2013–2016

Source: [People’s Republic of] China Household Electronics Appliance Research Institute. 2016. White Paper on the Development of WEEE Recycling Industry 2016 [in Chinese]. Beijing: [People’s Republic of] China Household Electronics Appliance Research Institute.

1 These include newly added renewables to support the phasing out of coal-fired power plants by 2030, industry energy efficiency improvement technologies, and electric vehicles.

Lessons

Zou et al. (2009) argued for the need to subsidize private recycling businesses to mitigate their environmental impacts by adopting standardized techniques. In the PRC, e-waste recycling is profitable because of loosely enforced environmental regulations, cheap labor, and other contextual factors. Recyclers were reluctant to adopt environmentally friendly yet costly practices. When households sell e-waste to recyclers, these recyclers were bound to pursue maximum profits at the cost of the environment. Subsidies provided the incentive to recyclers to curb environmental damage.

Some argue that EPR may add to the burden of manufacturers. However, Zhou’s (2014) study accentuated the benefits of this system to manufacturers by reducing production costs with the use of recycled materials.

Zhao et al. (2008) believed that many adverse environmental impacts of e-waste disposal are rooted in product design. It is necessary not only to adopt advanced disposal methods but also to design environmentally friendly product features. Before the launch of the EPR scheme, manufacturers were likely to choose a design that reduces production costs or boosts sales but may increase consumer costs at the disposal stage. A subtle merit of the EPR system is that holding manufacturers responsible for the disposal process will make them adopt optimal design features that account for disposal costs, such as designs that may increase production costs but save more in the disposal stage. Manufacturers play a decisive role and are better positioned than any other actor to explore and develop optimal designs.

In addition, complementary policies and regulations can help uphold environmental quality standards and encourage further investments in waste management and recycling infrastructure to effectively implement the EPR system. The PRC’s Catalogue of Solid Wastes Prohibited from Importation includes e-waste in its list of prohibited waste categories, which is complemented by the Prohibition of Foreign Garbage Imports: The Reform Plan on Solid Waste Import Management that bans 24 categories of waste. With restrictions on importing e-waste, many small and informal processors and recyclers saw their operations stifled. Instead, preference was given to larger facilities using state-of-the-art processing and recycling technologies, leading to the development of over a hundred firms specializing in e-waste recycling, many of which belong to major electronics groups of companies (Schulz 2020).

References

Government of the People’s Republic of China [PRC], Ministry of Ecology and Environment. 2012. Administrative Measures on the Collection and Usage of the Waste Electrical and Electronic Equipment Processing Funds (in Chinese). Beijing.

Government of the PRC, Ministry of Finance, Ministry of Ecology and Environment, National Development and Reform Commission, and Ministry of Industry and Information Technology. 2015. Subsidy Standards for Waste Electrical and Electronic Products Treatment Fund (in Chinese). Announcement No. 91 (2015). Beijing. 

NetEase. 2009. Largest Village Buried in E-Waste: Guiyu, Guangdong Province.

S. Zou and L. J. T. Wu. 2009. Research on Reverse Logistics Mode of Private WEEE in City (in Chinese). Technoeconomics & Management Research. 4. pp. 102–105.

Y. Gu et al. 2017. To Realize Better Extended Producer Responsibility: Redesign of WEEE Fund Mode in [the PRC]. Journal of Cleaner Production. 164. pp. 347–356.

Y. Schulz. 2020. Chinese Engagement Abroad in the Scrap Business. China Perspectives. 2020 (4). pp. 49–-57.

Y. Zhao, C. Wu, and Z. Fu. 2008. Review on Research Progress and Implications of Selecting Responsible Main Part for EPR Based on the Circular Economy Development (in Chinese). Science Research Management. 72 (2). pp. 111–118.

Y. Zhou. 2014. Research on Reverse Supply Chain of Waste Electrical and Electronic Products Recycling Based on Incentive Strategies (in Chinese). (Master). Hangzhou: Zhejiang University.  

Author
Jintao Xu

Jintao Xu

Professor of Economics, Peking University

 Isao Endo

Isao Endo

Environment Specialist, Environment Thematic Group, Sustainable Development and Climate Change Department, ADB

This blog is reproduced from Development Asia.

Greening Development in the PRC

These Policies Will Put the PRC on the Path to a Green Economic Recovery

The pandemic is an opportunity for the PRC to develop “greener” policies.

To rebuild greener and address climate challenges, the PRC should “green” its investments, financing tools and fiscal spending while at the same time developing a robust monitoring and evaluation framework.

Thanks to strict virus containment measures and an array of supportive monetary and fiscal policies, the PRC rebounded quickly from the shock of the pandemic. The country’s fiscal and monetary stimulus policies to mitigate the adverse impact of COVID-19 on the economy have amounted to $2.3 trillion, or 16.1% of gross domestic product (GDP) by the end of August 2021. The economy is now forecast to grow 8.1% in 2021 and 5.5% in 2022.

The government’s policy priorities must move from rescue to the recovery mode, from short-term stabilization measures to long-term economic recovery. In addition to rescue measures, the government announced recovery measures amounting to around $407 billion. However, the “green” share of the recovery spending – that which is likely to reduce greenhouse gas emissions, reduce air pollution and/or strengthen natural capital – only reached 12%, which was comparatively low compared to those of countries such as Canada (75%), Germany (47%), and France (38%).

The PRC already has ambitious long-term targets on environment and climate, such as peaking carbon emissions before 2030 and reaching carbon neutrality before 2060. Ensuring these targets are met requires policies that address climate challenges to ensure a green recovery from the COVID-19 shock.

At the same time, Organisation for Economic Co-operation and Development research shows that well-designed green stimulus measures can bring critical economic and environmental benefits. Also, thanks to falling technology costs, which enable more choices of green investments, green measures would support the economy and employment more strongly than in recovery from the 2008 Global Financial Crisis.

The PRC already has ambitious long-term targets on environment and climate.

Rebuilding greener requires the following policy actions:

Align public investment with long-term environmental goals. 

To boost public infrastructure development and to support economic recovery, the quota for new local government special bonds reached CNY3.75 trillion in 2020 and CNY3.65 trillion in 2021. This significant financial support to public infrastructure highlights the opportunity to allocate public resources toward sectors supporting the environment, such as renewable energy, biodiversity, and water management.

Leverage green finance. 

The PRC would need annual investment in energy transformation equivalent to 2%–2.5% of GDP from 2020 to 2050 to achieve a long-term low carbon transition pathway (2-degree transition pathway), according to a report by Tsinghua University’s Institute of Climate Change and Sustainable Development.

By the end of 2020, the sizes of outstanding green loans and green bonds were the world’s largest and second largest, respectively. Despite this rapid expansion of the green finance sector, a large financing gap remains. Thus, more capital needs to be mobilized to fund green infrastructure, which requires more private participation and broader funding base in addition to a well-designed and implemented public policy such as tax incentives, grants, legislation, and regulation.

Budget green.

The environmental impacts of the government’s budget choices are important to consider when designing policies. While public debt needs to be consolidated, public expenditure on social protection and green projects should be prioritized. The government can increase fiscal revenue by taxing emissions and polluting activities. International experience shows that green budgeting commonly involves tagging budget measures according to their climate and environment impacts. For example, 30% of the budget in France was allocated to green recovery measures in September 2020 based on this framework.

Monitor and evaluate the policies.

The government needs to identify and monitor the environmental impacts of its policies to ensure their alignment with climate and sustainability goals. Currently, such assessment is not fully in place yet, and there are only few databases to track and assess the environmental impact of government policies. Defining clear criteria and indicators for different policy areas and disclosing related results would be a good starting point.


The PRC has a historic opportunity to craft a “green” recovery from the pandemic if the right policies are put into place.

Author
Wen Qi

Wen Qi

Associate Economics Officer, PRC Resident Mission, ADB

This blog is reproduced from Asian Development Blog.

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