To achieve the imperative goal of environmental protection, the
Chinese authorities should not only press enterprises hard to save
energy and cut pollution. They should also prepare to rapidly
minimize the damage of environmental accidents which tend to occur
more frequently nowadays.
Introduction of an environmental liability insurance is crucial
to fulfillment of the later task. By requiring enterprises to
insure against potential environmental disasters they may cause,
such a "green insurance" will hugely help cement our hard-won
progress on environmental protection.
The State Environmental Protection Administration and the China
Insurance Regulatory Commission recently issued a roadmap for
introduction of the long-anticipated "green insurance".
The new initiative came only half a year after implementation of
a "green credit" policy based on enterprises' environmental
performance. This effort to bring into place another green economic
policy is a clear evidence of Chinese policymakers' resolution to
step up environmental protection.
While the economy has been surging ahead at double-digit growth
rates for years, the government has tried very hard to shift the
growth pattern toward an energy-saving, less-polluting and
sustainable one.
However, alongside the country's slow and steady progress on
curbing daily pollution, there looms an increasingly bigger risk of
frequent environmental accidents.
It is estimated that more than 80 percent of the country's 7,555
key heavy chemical industrial projects are located in
environmentally-sensitive areas which are either densely populated
or close to rivers. And 45 percent of them are major sources of
environmental risks.
In the absence of a "green insurance", when an accident of
serious environmental damage occurs, the enterprise usually cannot
afford to compensate the affected people timely and adequately and,
later, the government will also have to pay dearly for repairing
the environment.
The new environmental liability insurance, an economic
instrument that goes with the grain of the market system, may kill
several birds with one stone. It can save enterprises from
bankruptcy in case of environmental accidents, but it also goads
them to continuously improve environmental performance with a
punitive insurance premium for foot-draggers. It can facilitate
compensation for the public while alleviating the government's
fiscal burden on environmental restoration.
(China Daily, February 19, 2008)
