China’s Game Changer: The Environmental Protection Law Amendments

Yesterday, the Standing Committee of China’s National People’s Congress announced its first revisions to the Environmental Protection Law in 25 years, which will be implemented starting January 1, 2015.  This game changer is the first product of Premier Li Keqiang’s “war on pollution,” mentioned in a previous blog post. Historically, China’s environmental agency, the Ministry of Environmental Protection (MEP), has been seen as a toothless institution with little enforcement capacity. However, with the following changes, the MEP can lead the government’s “war on pollution.”

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Penalty System Reform. Environmental regulators can now fine pollution violators for each day the violation continues, rather than the previous “one-off fine system.” For example, under the previous system, if a developer ignores the completion of an environmental impact assessment, they are required to complete a make-up assessment. Only if they do not complete the assessment can the developer be fined a maximum of US $25,000 (a small fraction of the overall project cost). The new system stipulates that fines can now begin the day after the corrective order is issued by the MEP. Additionally, actions such as skirting environmental impact assessments, failure to obtain a pollutant discharge permit, forging monitoring data, and refusing to cease production after being issued a ban are all given harsher penalties (some including detention) under the new amendments.

Performance Assessment System. The amendments formalize the current official promotion system which blends the official’s environmental protection record and responsibility for economic growth. Spending on environmental infrastructure has had a visible impact, but officials have often focused on more short-run, tangible economic growth rather than long-run, intangible climate change policies. Thus, how Beijing plans to bolster environmental protection in relation to economic growth as a weight in cadre promotion remains to be seen.

NGO Involvement. Chinese non-governmental organizations (NGOs) are now allowed to take legal action on behalf of the public against polluters. China’s environmental law landscape is relatively young (only beginning in 1979 with the draft Environmental Protection Law), but these amendments will allow NGOs to serve in cases where there might be no plaintiffs (such as damage to national forests) alongside cases with clearer victims.

The law’s amendments cover a wide range of pollutants –air, water, and soil- but how exactly does it strengthen the MEP’s greenhouse gas emissions enforcement if CO2 is not defined as a pollutant in China? In spite of this fact, amendment provisions such as real-time pollution data monitoring can easily be expanded into CO2 monitoring if the MEP develops the necessary enforcement capacity. While the ministry is plentiful with rules and regulations, actual enforcement has been much harder to achieve. For example, in some regions, enforcement officials have practiced “quiet days” (sometimes up to 25 days out of the month) in which they do not inspect factories but instead depend on an honor system for reporting. With the central government’s support for pollution reduction, the MEP could now push through its own enforcement reforms and build a more respected reputation among industries.

Furthermore, the Environmental Protection Law’s new pollution policies could be used to build domestic and international confidence in Beijing’s other emissions-related programs. For example, China’s carbon trading pilot programs require confidence that Beijing is taking the environment seriously. Otherwise, the carbon market will be unable to stabilize a reliable and accurate carbon price.  Because China plans to establish a national emissions target by 2020 and then deploy a national carbon-trading system by 2025, time is running short for the government to earn and maintain this confidence.

One thing that is certain, however, is that Beijing is moving ahead of its own population in environmentalism. So far, most environmental protests have been local rather than national, with demonstrators focusing on this or that city’s air qualities. On the other hand, the government has essentially labeled pollution a national discussion with these amendments. At the same time, China has demonstrated its resilience in reducing its BAU greenhouse gas emissions. Previously, Chinese politicians thought that carbon emissions would rise until 2050. However, mainstream Chinese opinion now says emissions will peak between 2030 and 2040, and some say this will occur even earlier. Nonetheless, other action areas exist which have had enormous environmental impacts and are not being addressed by policy makers in the amendments. China’s water and fertilizer prices are set too low. This intensifies agricultural waste and emissions and discourages the saving of water resources. As China seeks to access its natural gas reserves (possibly through water-intense fracking), scarce water resources in the north will prove a hindrance. Thus, revisions to the Environmental Protection Law has produced a great change in how China can tackle greenhouse gas emissions, but it also points to where further discussion could commence.

Travis Clayton is a first year Masters of Global Policy Studies and Asian Studies student with a B.A. in Economics and Chinese from the University of Texas. His interests lie in Chinese energy policy and international finance. He has foreign experience living in Taiwan and interning at a consulting firm in Shanghai, China.

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