Beroe Advisory on implications of Beijing Smog

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Beijing’s Smog: ‘Red Alert’ 001 | December | 2015
Beijing’s Smog: ‘Red Alert’ - Implications

2. Beijing Smog: ‘Red Alert’ 001
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On Monday, 7th December, the Beijing municipal government issued a “red-alert” for pollution, forecasting smog to intensify from its
current levels of high particulate matter (PM 2.5) until Thursday, 10th December.
This is by no means the worst air quality for Beijing this year (Beijing is actually less polluted than New Delhi, India) .In fact, the red-alert is
the municipal government’s reaction to public outcry for issuing an orange alert for worse conditions at the end of November this year.
However, this is a sign that the government is responding to public pressure and is willing to encounter the economic costs that come with
issuing red-alerts. While the WHO sets a safe level of 25 μg/m3
for PM 2.5, Beijing’s air over 2015 has averaged double that amount, up to
October. It has crossed the severely polluted levels of 250 μg/m3
over a 100 times (measured hourly) in the first 10 months this year.
It is therefore not an overstatement to say that such instances could be expected up to 2-3 times a year.
(A red-alert is theoretically issued if environmental agency expects air quality index to be over 200 for 72 hours. As such, the requirement for an alert can
be open to interpretation).
Source: US Department of State Air Quality Monitoring Program
-100
0
100
200
300
400
500
600
700
800 Jan/2015
Jan/2015
Jan/2015
Jan/2015
Feb/2015
Feb/2015
Feb/2015
Mar/2015
Mar/2015
Mar/2015
Apr/2015
Apr/2015
Apr/2015
May/2015
May/2015
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May/2015
Jun/2015
Jun/2015
Jun/2015
Jul/2015
Jul/2015
Jul/2015
Aug/2015
Aug/2015
Aug/2015
Aug/2015
Sep/2015
Sep/2015
Sep/2015
Oct/2015
Oct/2015
Oct/2015
μgrams/m3
Beijing PM 2.5 Pollution Levels (Jan - Oct 2015)
Severely Polluted

3. Beijing Smog: ‘Red Alert’ 001
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Short-term plan: Restrictions
As knee-jerk measures, the government has the following restrictions in place for such instances:
Industrial Restrictions:
 Outdoor construction is brought to a complete halt.
 All operations of heavy-pollution industries are stopped.
 Restriction of vehicles based on number plates (even-odd). This affects roughly 5.6 million vehicles, of which 5.3 million are
estimated to be civilian.
Impact on industries:
 Delay in logistics can be expected with restriction of vehicles on the road.
 Heavy pollution industries (including coal-powered factories, and chemical industries) and construction activities are expected to be
closed.
Source: Beijing 2014 National Economic and Social Development Statistics Bulletin
77.9%
21.4%
0.7%
Beijing - Contribution to GDP by Sector (2014)
Services Manufacturing Primary Industry (Agriculture & Mining)

4. Beijing Smog: ‘Red Alert’ 001
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 Services sector could be affected by difficulties in commute faced by employees.
 Of the 21.4% GDP contributed by manufacturing sector, 17.6% is from regular industries which could have varied impact based on
pollution levels.
 The remaining 4.3% is generated by the building industry is estimated to lose CNY 2.5 million (in terms of loss of economic output)
for each day of red-alert status.
 Petroleum processing, coking and nuclear fuel processing industry (24% of industrial output), Chemical materials and chemical
products manufacturing (21%) and Electricity, heat production and supply industry (18.1%) are expected to be affected during red-
alerts.
Other Restrictions:
 Schools are closed during this period.
 Cars are restricted with even and odd numbered license plates allowed on alternate days.
 Ban on fireworks and Outdoor Barbecuing (affecting a large portion of street food).
 30% of government vehicles are taken off roads.

5. Beijing Smog: ‘Red Alert’ 001
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Factors related to long-term pollution management:
 State and city agencies are expected to bring about strong pollution emergency response plans, with punishments for improper
implementation promised by Environmental Protection Minister Chen Jining.
 Beijing’s air quality has,in fact, improved over its position over the same period of 2014. In addition, China is committing major
investments in renewable sources of energy. In addition, its President Xi Jinping has promised to take action over its emissions in the
global summit in Paris.
Impact on industries:
 The majority of revenue in Beijing is generated by Services sector, and is unlikely to be affected to a great extent by long-term
environmental-friendly policies.
 A reduction in coal consumption and a related slowdown in Chinese industry are expected over the long term.
 Relocation of heavy industry: China plans to reduce carbon emissions in major cities and shift heavy industries from the wealthy
eastern cities to the arid northern and western regions to drive economy in those regions.
 Reduction in competitiveness: Greater enforcement of emission standards leading to costlier emission treatments, and movement
away from cheap coal as a source of energy is expected to drive production costs higher in China. To maintain its manufacturing
industry and exports, the government could try to use currency controls.

6. Beijing Smog: ‘Red Alert’ 001
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References
http://www.ft.com/cms/s/0/e666bf2c-9d51-11e5-b45d-4812f209f861.html#slide0
https://www.washingtonpost.com/news/worldviews/wp/2015/12/07/beijing-issues-first-red-alert-for-air-pollution-but-theres-a-silver-
lining-in-the-smog/?tid=sm_tw
http://www.nytimes.com/2015/12/08/world/asia/beijing-pollution-red-alert.html?_r=0
http://blogs.wsj.com/chinarealtime/2015/12/07/beijing-issues-first-ever-red-alert-for-hazardous-smog/
Pollution Data: http://www.stateair.net/web/historical/1/1.html
Economic Data: http://www.bjstats.gov.cn/xwgb/tjgb/ndgb/201502/t20150211_288370.htm
http://qz.com/197786/six-years-of-bejing-air-pollution-summed-up-in-one-scary-chart/
http://epi.yale.edu/the-metric/liveability-ranking-ignores-environment
http://www.bbc.com/news/world-asia-china-35026363
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