Monday, August 27, 2007

The Toothless Dragon: New Chinese Environmental Regulations

Two more articles that are suggestive of an increase in the stringency of environmental regulations in China.

There is some telling text in this short piece. The most pertinent is that current water pollution fines are below that cost of installing and operating remedial equipment. Not a great incentive. In addition, the cost of a "bribe" to a local official is also likely to be substantially below the equipment cost.

The structure of the Chinese government and the powers given to local officials means that there is a fundamental disconnect between the apparent stringency of environmental regulations and what is actually enforced.

The most telling quote is this:

"Starting in 2000, there was a big push to install emissions control equipment in enterprises nationwide. But over time, we have found many don't bother to turn them on," Zhao told the conference.

The question we need to ask is WHY don't they turn them on? Are they profit maximising taking into account the risk and cost of getting caught or it merely a result of poor management and a lack of information or education?

China Mulls Law to End Caps on Water Pollution Fines
BEIJING - China could soon adopt reforms that remove caps on fines for firms that dump waste into water, a change that would put more pressure on polluters to stop polluting.

China currently caps the amount that polluters can be fined, in some case at a level lower than the cost of installing and operating remedial equipment. Once polluters max out the fines, there is also little incentive for them to stop.
Legal revisions to remove the cap and otherwise strengthen the hand of the State Environmental Protection Administration will be submitted to top lawmakers on Sunday, SEPA's vice director of emissions control, Zhao Hualin, said on Saturday.

"When we had the massive spill in the Songhua River, we could only fine them 1 million yuan (US$132,200), so we fined them 1 million yuan. But after the revisions to the law, there will be basically no cap," he told a conference on emissions reduction on Saturday.

China's leaders are increasingly paying attention to environmental problems, as pollution darkens the air in cities and endangers water supplies. They were spurred to action by an 80-km (50-mile) benzene slick in the Songhua River in late 2005, which endangered drinking water supplies to millions in China and Russia.


The environmental watchdog's bite has been softened by China's governmental structure, which gives it little authority over well-connected companies or local governments eager to boost their region's economy.

SEPA has recently had some success in shutting non-compliant plants, but is struggling to keep alive an initiative to assess local government officials' performance based on "Green GDP" -- a matrix of factors that takes in environmental damage as well as economic growth.

The national agency has recently set up five regional bureaus, each with dozens of staffers, that allows it to extend authority into the provinces.

But its provincial offices are still subordinate to their local provincial government, which severely limits their power to enforce rulings that counteract local interests.

Any change in that relationship would have to await a broader government restructuring, and would have to be approved by the annual full meeting of the nation People's Congress in March.

Meanwhile, SEPA faces an uphill battle.

"Starting in 2000, there was a big push to install emissions control equipment in enterprises nationwide. But over time, we have found many don't bother to turn them on," Zhao told the conference.

As many as 80 percent of enterprises in China's industrial northeast may have non-compliant emissions equipment, Zhao said, based on informal assessments by SEPA teams. Nationwide, that figure is probably at least one-half.

China Drafts Laws to Curb Pollution
BEIJING - China began deliberating a draft law aimed at boosting energy saving and emissions reductions on Sunday, its latest effort to curb widespread resource waste and degradation.


The draft law on a "circular economy" -- China's watchword for sustainability -- stipulates that governments at all levels should control energy use and emissions, strengthen management of resource-intensive companies and divert capital into environmentally-friendly industries.


China's average energy consumption per unit product for industries such as steel, electric power and cement was 20 percent higher than that of "the advanced international level", he said.


The government under President Hu Jintao and Premier Wen Jiabao has strengthened environmental legislation but laws and regulations often go unenforced at the local level, where officials typically prioritise economic growth over environmental protection.


China has promised to cut emissions of major pollutants by 10 percent between 2006 and 2010, but last year failed to meet the annual goal.

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