Chinese Firms Want More Tax Breaks for Going Green

A new global survey by workspace solutions provider Regus has found that 88% of companies in China have declared that government tax breaks are required to accelerate green investment take up. However, finger-pointing by mature economies appears unjustified as 34% of companies monitor their carbon foot print compared to the 19% global average.


The Regus survey reveals that only 37% of companies worldwide actually measure their emissions and less than a fifth of companies (19%) measure the carbon footprint left by their activities.  Of companies globally, 46% declare that they will only invest in low-carbon equipment if the running costs are the same or lower than those of conventional equipment. A disappointing 40% have invested in low-carbon equipment and only 38% have a company policy to do so.


In China specifically, the survey found that monitoring of energy efficiency and carbon foot print were much more wide-spread than elsewhere in the world.  Only 34% of companies monitor their carbon footprint but a higher number - 56% - monitor their energy consumption. A full 58%, however, had no company policy to invest in energy efficient equipment. Running costs were found to be much more important than the global average with 75% of companies declaring that they would only invest in low carbon equipment if it were cheaper or the same to run as conventional equipment. Finally a full 88% of companies declared that if government offered tax incentives to invest in energy efficient or low-carbon equipment, businesses would significantly accelerate their green investments.


Small companies throughout are below average on their actual and predicted level of green investment, indicating that smaller businesses are harder pressed to select low-carbon equipment when this comes at a marginally higher price, as short-term needs are more urgent than long-term investment. In China, only 30% of small businesses monitor their carbon foot print compared to 39% of medium to large businesses. However take up of green equipment is similar among small and large businesses with 45% of large actually having a policy in place to invest in low carbon equipment, compared with 42% of SMEs. A striking 91% of smaller businesses advocate tax breaks to improve green investment take-up signalling that ambitious government targets are evidently not taking into account the difficulties involved in purchasing expensive green equipment for smaller businesses.


The survey also analysed sector differences. As Chinese, Brazilian, Russian and Indian combined primary energy consumption is expected to grow by 72% between 2005 and 2030, compared with 29% in OECD countries (OECD, Environmental outlook to 2030, 2008), it is reassuring to find that 96% of manufacturing companies monitor their energy efficiency. While 46% of manufacturing companies measure their carbon foot print, only 31% of companies in the consultancy sector do so confirming OECD findings that indicate how large companies are more likely to obtain environmental certifications and firms in industries considered more environmentally damaging, like manufacturing, are more likely to disclose, and therefore measure, environmental information. (OECD, China Investment Policies Review, 2008) The Chinese consultancy sector, on the other hand, is on global average with 38% of companies having a policy to purchase green equipment although only 31% have actually done so.


“Take-up of green equipment and monitoring initiatives is still disappointingly low, particularly for smaller companies," says Raymond Zhang, Area Director, Regus Area Director for Beijing, Chengdu, Dalian, Guangzhou, Shenzhen. "If government is serious about supporting growing Chinese investment in clean energy which grew by 50% in 2009, then it needs to further incentivise the change. At the moment, low-carbon business technology is often limited in range and sold at premium pricing.  This is proving an obstacle for businesses to invest. Tax breaks will help enormously, as our survey shows, and by accelerating take-up will also help to create a mass market where unit prices fall."


Zhang notes that environmental investments are not limited to technology alone, but need to be applicable to all effective and measurable environmental initiatives, such as the minimisation of premises under-occupancy. Conservative estimates hold that 38% of office space is unoccupied at any given time, yet that space is still being heated, cooled and lit, generating tonnes of unnecessary carbon emissions each year.  Reducing office under-occupancy should therefore be just as eligible for tax breaks as low-energy equipment.”


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