Research on the Development Mechanism of Green Industry in

Research on the Development Mechanism of Green Industry in
Binhai New Area
ZHU Chunhong, YANG Fan, WANG Shenshen
School of Economics, Tianjin Polytechnic University, P.R.China, 300387
[email protected]
Abstract: The establishment and innovation of mechanisms for green development are crucial for the
development of regional green industry. The paper researches the development mechanism of green
industry in Binhai New Area by taking the price mechanism, investment mechanism, ecological and
environmental compensation mechanism as the focus, and then proposes some countermeasures to
establish a extended system of producer responsibility and consumer payment system.
Keywords: Binhai New Area, green industry, development mechanism
1. Introduction
In the development process of regional green economy and green industry, the establishment and
innovation of development mechanism are the keys to decide whether they can develop sustainably or
not. However, the recently researches on green economy and green industry development in Binhai New
Area are mainly in regard to the summarizing of problems and security system, the researches for the
development mechanism are less, and they are lack of systematic, innovativeness and maneuverability.
Based on this, this article focuses on following three areas.
2. The establishment of price mechanism
The innovation of resource price mechanism is to provide a institutional guarantee through a series of
system innovation such as sounding market-oriented resources price mechanism, improving resource
pricing mechanism and establishing resource price compensation mechanism to break through the
system obstacles of green economy and green industry development, in order to thoroughly transform
the traditional extensive growth model, enhance the economy consciousness of whole society improve
utilization efficiency of resource and accelerate the development of the green economy and green
industry. The basic goal is to establish a mechanism of production factors and resource price in order to
reflect the market supply and demand, resource scarcity and environmental damage costs.
，
2.1 Improving the resource pricing mechanism
In order to promote the reform of resource prices, the resource pricing mechanism is the most important.
Most of the prices of natural resources can be identified through the market transactions. However, the
self-identified natural resource prices in market do not include the entire composition, so that the value
of resource is not completely achieved, it does not reflect the true price of all resources. Therefore, the
regulatory agencies of government should base on formation of prices to adjust the market price of
resources timely and appropriately.
2.2 Establishing the resource price compensation mechanism
Only start from the market-oriented reform of resource price can not provide a fundamental mechanism
for the full realization and reasonable compensation of resource value. The property value of resource,
the intra-generational and inter-generational compensation values and the external compensation value
to the ecological environment need to achieve by the reform of resource tax system. Therefore,
establishing the resource value compensation mechanism should also be the core to improve the tax
system of resource and environment.
3. The establishment of investment mechanism
122
At present, China's environmental protection investment system has undergone reforms, it has basically
formed an investment system that has diversified investment entity, diversified investment and financing
channels, the investor will benefit, and those who create pollution should administer. However, due to
the deep impact by years of planned economy system, China should further deepen the reform of
investment system. The green industry development in Binhai New Area should take advantage of
policy advantages, as soon as possible to establish their own investment mechanism.
3.1 Reforming sewage charges and governing charging system
The system of sewage charges and consumer payment system in many countries in the West are the
most used systems for environmental protection, they have a positive effect to protect environment and
increased investment on environmental protection. China has also implemented a charging system, but
the consumer payment system has not yet to be established and improved. Currently, the payment
standards of consumers are less than the cost of pollution abatement, and the financial subsidies are
large. Therefore, Binhai New Area should reform charging system, making the charging standards to
ensure environmental protection enterprises can gain average profit under the premise of compensating
for the cost when dealing with pollution. At the same time, it should enhance the attractiveness of social
capital investment in environmental protection enterprises and expand social investment in
environmental protection.
3.2 Actively pursuing a variety of investment
Diversified investment approach is the path to absorb social capital and expand private investment.
Investment in environmental protection can be implemented by many ways, the form can adopt sole
proprietorship, joint venture, cooperation and BOT investment etc., the manner that could be taken
Build-operate-transfer, build-mandatory administration, transfer operation, commission processing and
so on. Different ways has their own characteristics and scope of application, the investors should choose
what they need. At the same time, under the premise to ensure government can control essential
facilities, the government should encourage private capital to participate in environmental investment;
private investment can enter the fields including environmental protection facilities, pollution treatment
facilities, and waste recovery and comprehensive utilization facilities. In terms of green investment
operations, the government can select carefully from Table 1 according to the requirements of
objectives.
Table 1 Operation of green investment
1
Operation of
green investment
Construction and
Operation
Integration
main feature
Open tender, unify the investment,
construction and the subject
operation
The ownership and management of
facilities are separated,,
commission other business to
operate
Government sells facilities,
recover the investment and the
transfer operation rights
2
Commission
operation
3
Transfer operation
4
Partly Transfer
operation
Government transfers partly the
equity of facilities to operate
BOT
Sole proprietorship and joint
ventures of domestic and foreign
enterprises, operate and transfer
with deadlines
5
3.3 Actively open up new investment channels
123
sphere of application
directions
New capital
construction projects
Construct and operate
demutualization
The environmental
protection facilities
which have been built
Operate
demutualization
The environmental
protection facilities
which have been built
The environmental
protection facilities
which have been built
New capital
construction projects
Demutualization
Shareholding system
operation
Can absorb foreign
investment and private
capital
At present, there are mainly 8 kinds of green investment channels widely used in our country: First, the
“three simultaneous” system of infrastructural construction projects; Second, 7% of the new
reconstruction funds used for pollution control; Third, the use of special fund originated in taxes of
urban construction and maintenance for urban environmental infrastructure construction; Fourth, the use
of 80% fees from exceeding the allowed pollution standard for Enterprise's pollution control; Fifth,
comprehensively utilized the three wastes product's profits, which is not delivered but left to enterprise
to use in pollution control in 5 years; Sixth, the enterprises are allowed to control pollution by loan.
Seventh, all levels of government use fiscal to establish a corresponding special fund, financing the
pollution treatment in key contaminated areas and sources; and eighth, the environmental protection
department establishes its own funds.
The eight investment channels talked above have played a certain role in carrying on the green
investment. However, along with the investment organizational reform and market mechanism's
establishment, especially the Binhai New Area's rapid economic growth, the original investment
channels have been difficult to meet the need for environmental protection, and there are many issues
need to be changed and innovated. Therefore, the investment channel innovation's mentality of the
Binhai New Area should be as follows:
First, is should take full advantage of the stock market, through release environmental protection stocks
and bonds, widely absorb the social fund, and then invest in the environmental protection projects.
Second, it should establish venture capital fund, encourage venture capital funds invest in environmental
protection domain. Third, it should establish the ecological fund, encourage the ecological environment
investment. Ecological Fund is an important form of eco-finance, which is currently developing rapidly
in western countries, while, in China, ecological fund is still in the research stage. Fourth, it should
establish a mechanism of utilizing foreign investment for environmental protection. The use of foreign
capital is such an important way that we make up the insufficient total green investment. As regard of
this issue, we can learn from a number of countries such as Argentina, Russia, and so on, they have
achieved significant performance experience in using foreign capital to protect the environment and
resources, through international cooperation.
Consequently, Tianjin Binhai New Area can take advantage of the Government's credit resources to
seek for international financial organizations, foreign government preferential loans and aid, but also to
attract foreign investment in environmental projects via providing preferential policies for foreign
capital investment in environmental protection in China.
3.4 Actively develop social responsible investment funds
In many developed countries and regions in the world, social responsible investment funds (SRI) have
developed rapidly in recent years, becoming an important force to promote green investment. This is a
model basing on environmental criteria, social norms and the principles of financial return on
investment. In order to measure the degree of corporate commitment to social responsibility, some
countries have researched and mapped out the social responsibility indicators, among which, the main is
environmental protection indicators, for it is relatively easy to measure and we can make a distinction
over the extent of corporate commitment to environmental responsibility. In order to promote the
enterprise to undertake the community responsibility, basing on the analysis community responsibility
indicator, the community responsibility investor has established the related financial commodity ecology fund (eco fund). The Ecological Funds main purpose is, when the investor establishes the
investment portfolio, simultaneously, taking into account the investment objectives of the environmental
performance and financial performance. Socially responsible investment (SRI) is important content and
form of eco-fund.
4. The establishment of ecological compensation mechanism
To evade the prominent ecological and environmental problems happened in Binhai New Area in the
past decades, for instance, in agriculture, the vegetation in many areas was damaged. The problem of
soil and water and lakes and wetlands loss was enhanced. All these issues above were due to reclaiming
124
land from lakes and the reclamation plant which were carried out for the policy of take grain as the key
link. The abuse of fertilizer and pesticide caused the decline of land function and plants can not survive.
In industry, the emission of the “three wastes” destroys the physical geodesy of integrated environment.
In water resources, Binhai New Area has abundant water resources, but short for fresh water resources.
Hence, it should aware the importance of the establishment of ecological compensation mechanism by
learning experience in ecological construction from other countries and other provinces or cities in
China, and on the basis of economic law, accelerate establishment of ecological compensation
mechanism; extended system of producer responsibility and consumer payment system, to ensure the
ecological environment construction has a stable fund resource. It also should assess the ecological
environment impactive project in correct way, and formulate the expenses standard in scientific way.
Specifically:
4.1 Strengthening the Collection, use and management of work for resource fees and enhancing its
function of ecological compensation
The collection, use and management method of resource fees for water, land, minerals, forests and
environment should be further improved. Increase the proportion of ecological compensation in the use
of resource fees and turn it towards to the important ecological function areas, drinking water sources
and nature reserve. The collection, use and management of pollutant charge should be further
standardized, and ensure the revenue of pollutant charge. The use of pollutant charge has to ensure the
funds demand for major polluting sources prevention and control, and uplift the funds support for
pollution prevention and its new technologies development and application.
4.2 Strengthening the pollution prevention and improving the economic compensation system for
the ecological environment damager step by step
Carrying out the control plan for total emissions of major pollutant, severely punish the excessive
discharge. The funds get from punishment could enrich the special funds for environmental remediation
and environmental law enforcement-capacity building funds by the financial departments. It should
establish the economic compensation system for the ecological environment damager progressively,
accelerative research on making implementation measures about economic compensation for pollution.
And it should also charge the beneficiary who used to developed or utilized the resources and the
environment, especially the beneficiary who damaged to the environment when they were taking
economic and social activities, punish them to recover the damaged the ecological environment, and
compensate to the sufferer.
4.3 Attempting the ecological compensation mechanism of “2-combine” bases on the situation of
Binhai New Area and the experience of foreign countries
“2-combine” means the combination of direct compensation and indirect compensation, the combination
of the compensation lead by government and the compensation lead by market. Ecological
compensation is public welfare. The government is the spokesman of public interests. Thus, the
government leads ecological compensation by Public finance system, ecological compensation fund and
grain for green subsidy system. However, there is a large amount of ecological compensation funds;
government is not the unique representative of the public interest, and the government compensation has
time delay and low efficiency. All these problems have decided that compensation lead by government
is just a kind of mode. It must combine with the compensation lead by market. The compensation leads
by market is a concrete manifestation of the beneficiaries compensation principle in environmental law.
In market economy, government, regions, units and even individuals should be as beneficiaries “pay the
bill”. This is an ecological compensation with market incentive-type, its means of compensation could
use environment, property rights trading system, Eco-fund, environmental liability insurance
Compensation for the environmental protection industry contracts and so on.
5. Conclusion
125
To sum up, implementing innovative mechanisms, establishing price, investment and compensation
mechanism and building a government actively promoting, the market effectively driven and the masses
to participate in the mechanism are the key points for the development of Binhai New Area. Among
them, price mechanism includes improving the pricing mechanism of natural resources, resource
mobilization and the final product price ratio. Putting the green industry in the investment plan, provide
major projects investment and financial subsidies or subsidized loans and the banks provide credit
support. All these are contained in the investment mechanism. It should establish the compensation
mechanism for ecological and environmental protection, and improve the extended system of producer
responsibility and consumer payment system.
References
[1]. Ma Xiaohong, Chen Xinchuan. The summary of Research on China’s green industrial development.
Economic Review. 2005.12(in Chinese)
[2]. He Lifeng. Binhai New Area-- the first green economy zone. Port Economy. 2009.8(in Chinese)
[3]. Zeng Jianmin. The development of China’s green industry. Jianghan Tribune. 2002.10(in Chinese)
126