IEEJ: March 2013 All Right Reserved
Special Bulletin
A Japanese Perspective on the International Energy Landscape (122)

March 1, 2013

Serious Deterioration of Air Pollution in China and Need for Energy Measures
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
Air pollution in China has been deteriorating growingly. In the morning of February 28,
the density of the particulate matter (PM) 2.5 pollutant reportedly reached a little more than 500
micrograms per cubic meter, about 14 times as high as Japan's maximum allowable limit of 35
micrograms on a daily average basis. The rise in the PM 2.5 density pushed up the air quality index
in Beijing to the worst level among its six levels, indicating a serious pollution incident. Even central
Beijing was filled with smog enough to affect visibility. Some flights to and from Beijing Airport
were cancelled and expressways were shut down at various locations.
Air pollution had eased temporarily during the Chinese New Year holiday week. But thepollution is believed to have deteriorated rapidly as economic and civic activities returned to normal,
with plants near Beijing resuming operations and with normal vehicle traffic restored, underunfavorable weather conditions after the holiday week. This is because the PM 2.5 pollution issuspected as stemming from sulfur and nitrogen oxide emissions accompanying coal and oil
consumption. In the metropolis of Beijing, emissions from vehicles are the biggest pollution source.
In January, the Chinese government announced that the PM 2.5 pollution had spread over
1.43 million square kilometers (about four times as large as Japan's land area). Tiny PM 2.5 particles
can invade the lungs and other respiratory organs and are expected to increase the risk of respiratory
diseases. The PM 2.5 density rise or growing air pollution has become a grave environmental
problem posing threats to Chinese citizens' daily life. Before noon on February 28, strong winds
blew smog away from Beijing. Instead, a yellow dust storm hit the Chinese capital and was coupledwith the PM 2.5 pollution to deal a double punch to the city. The problem is that the air pollution,
which has grown more serious for China, could have caused cross-border pollution affecting Japanand other neighbors. PM 2.5 density increases have been reported in western Japan including
Kyushu since January, leading Japanese people to grow more concerned over the problem.
As noted earlier, the PM 2.5 density rise is closely linked to consumption of fossil fuels
including coal and oil. Chinese fossil fuel consumption has increased rapidly due to remarkableeconomic growth and rising levels of living, leading to deteriorating air pollution as anenvironmental problem. The situation is similar to what was seen in Japan in the 1960s, including a1

IEEJ: March 2013 All Right Reservedserious pollution problem amid high economic growth. As Japan began to tackle pollution in afull-fledged manner after seeing the problem's deterioration, China may have to address the air
pollution problem more seriously in the future.
In this sense, environmental measures are expected to grow even more important in China,
prompting energy measures to be implemented in a full-fledged manner as well. Specifically, China
will further promote energy conservation and accelerate the diffusion of clean energy technologies.
China has given priority particularly to energy conservation under its energy policy. In March 2011,
it announced its 12th five-year development plan seeking to reduce energy consumption per GDP
unit by 16%, nitrogen oxide emissions by 10% and sulfur oxide emissions by 8% by 2015. While
working to steadily achieve these targets, China may even accelerate energy conservation efforts.
Regarding clean energy, China may undoubtedly enhance efforts to replace coal, which
accounts for a great share of energy supply in that country, with other energy sources (to cut coal’sshare of energy supply) and promote cleaner use of coal. These efforts had been given priority even
before the air pollution problem became serious. Now that the problem has become so serious, China
may not remain satisfied with the past efforts. Particularly, expectations may grow stronger onnatural gas as a cleaner fuel to replace coal. If China enhances a shift to natural gas to help solve theair pollution problem, it may exert various impacts on Asian and global natural gas/LNG markets.
Therefore, we may have to pay attention to such Chinese move. It is also important to closely watchthe possibility of China expanding renewable energy and nuclear power generation amid its efforts
to strengthen measures against air pollution.
China will also have to improve quality specifications of petroleum products

to help

reduce pollutant emissions from automobiles. Regarding the quality of gasoline and diesel oil, China
has toughened regulations on sulfur contents. But Standard V (limiting the sulfur content in gasoline
to 10 ppm), which relates to the European Union’s EURO5 standard, has yet to be implemented in
the whole of China excluding such major cities as Beijing. On February 6 amid the current
deterioration of the air pollution problem, however, the State Council decided to fully introduce thestandard by 2018. Over the coming five years, oil and auto industries will be required to implement
massive investment to improve fuel quality.
The deterioration of environmental problems serves a driver to enhance energy measures.
Rather than long-term efforts to tackle the global warming problem, urgent efforts to address air
pollution and other environmental problems that visibly affect human life and health are apt to begiven top priority. Energy measures to help solve such urgent problems tend to be promoted morestrongly. This is the case with the current deterioration of China’s air pollution problem, which could
provide a turning point for China’s improvement of the energy supply/demand structure. The
improvement has a potential to dramatically change international energy supply and demand,
attracting much attention.
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IEEJ: March 2013 All Right Reserved

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