The Shanghai Municipal Development and Reform Commission jointly announced with the Shanghai Municipal Finance Bureau and Shanghai Environmental Bureau that it is charging enterprises emission fees.
Citing Shanghai-based news portal thepaper.cn, the Global Times reported that the city will adopt three phases of pilot measures where it will collect fees for emitting volatile organic compounds (VOCs), considered as the main sources of smog and other airborne particles.
The standard charge will increase in each phase, the report stated.
The new scheme targets 12 industries including automobile manufacturing, furniture manufacturing, petrochemicals and shipbuilding.
The first phase, which kicked off on Oct. 21, charges 10 yuan per kilogram of VOCs. A 5-yuan increment will be charged on the second phase which will start on July 1, 2016 and on the third phase which will start on Jan. 1, 2017.
Institute of Public and Environment Affairs Ma Jun said that VOCs comprise the main sources of PM2.5 that cause hazardous smog in key Chinese cities. PM2.5 are airborne particles with a diameter of less than 2.5 micrometers.
According to analysts, the local government is implementing financial incentives as a way to strengthen its campaign against air pollution.
"Instead of relying on administrative orders, Shanghai is trying to resort to financial incentives to force enterprises to control pollutant emission," Zhang Zhen, an expert from the Department of Environmental Science and Engineering at Fudan University, said.
The announcement stated that companies that will reduce their emissions to 50 percent below the city's threshold, provided that they have not been previously punished by environmental protection officials for the past year, can decrease their emission fees by half.
Zhang added that the new "policy has [also] set an example for other cities."