Introduction
Although large sectors of China's economy have already entered the "new normal" growth phase, the chemical industry continues to show appreciable year on year growth. The aggregated industry growth rate for chemical enterprises with annual sales revenue of over 5 million RMB is 9.5%. On the other hand, China's chemical industry (next to its energy sector) is seen as a chief culprit in its current environmental crisis. Criticism centers on allegations of government and industry corruption stymieing effective regulation, supervision and enforcement. This means China still faces difficult choices and major challenges as it tries to effectively regulate this industry, foster sustainable and ecofriendly growth without suffocating economic development.
In this article, Chemlinked editor Paul O’Brien interviews Jane Zhou to share understanding of China’s chemical environmental management system and recent regulatory updates. This article is the second part of the feature “Are China's Environmental Issues the Root Cause of its Food Industry Woes?” which was originally published on LinkedIn.
Q1. Jane in the most concise way you can, outline how China regulates its chemical industry?
A. China has numerous laws and regulations specifying regulatory requirements for the chemical industry. The most important piece of legislation specifically targeting the chemical industry is State Council Decree 591. From here China assigns regulatory and legislative responsibility for the various elements of the chemical supply chain to 8 departments under the central government and multiple subordinate agencies. For the purpose of simplicity we will only discuss the two most important authorities namely the Ministry of Environmental Protection (MEP) and the State Administration of Work safety (SAWS).
Fig 1. How China Regulates for Environmental Protection
Like many other countries, China regulates chemicals using inventories. Each inventory is regulated differently with varying degrees of regulatory stringency, compliance requirements, supervision and enforcement for the chemicals that comprise that inventory with a view to commensurately regulating chemicals based on the relative risks and hazards posed. New chemical substances are substances not listed in the Inventory of Existing Chemical Substances in China (IECSC). To manufacture or import new chemicals requires notification and assessment similar to EU’s REACH regulation which is now the world’s gold standard for regulation of chemicals. Among the 45,000+ existing chemicals, some 3000 chemicals are empirically listed in the Inventory of Hazardous Chemicals and thus earmarked for enhanced supervision through their lifecycle and especially in manufacture, import, use, operation, transport and storage to achieve the goal of Environmental, Health and Safety (EHS).
There are many other smaller regulatory lists such as Catalog of Hazardous Chemicals of Priority Environment Concern (HCPEC), List of Toxic Chemicals Severely Restricted for Import and Export in China, List of Hazardous Chemicals Prohibited from Inland Waterway Transport, etc. Each of them is subject to specific degrees of regulatory compliance requirements and supervision. For end products, there are industry-specific environmental regulations and pollutant discharge standards they should abide by.
Q2. The chemical industry is a notorious polluter and producer of toxic waste byproducts. How does China regulate this area?
With regard to waste disposal, China has prioritized solid hazardous wastes for regulatory control since 1996. The new Law on the Prevention and Control of Atmospheric Pollution entered into force on Jan 1st, 2016. The "Action Plan on the Prevention and Control of Water Pollution" was finalized in 2015 and will be followed by the action plan for soil pollution, blueprinting future environmental regulatory developments related to the chemical industry.
In the recent years, China is attempting to rely more on market forces in improving the environmental impact especially through application of taxation on pollutant discharge. On Dec 5th 2014, MEP released the Comprehensive Improvement Plan on VOC Emission of Petroleum Chemical Industry, which requires the petroleum industry to establish a VOC monitoring system and sets the goal of reducing the total VOC emission by 30% at the year of 2017 in addition to imposing proportionate taxation based on the levels of emissions for each enterprise. Beijing and Hunan Province has already launched local implementation schemes. According to the first draft of Environmental Protection Tax Law published in Jun, 2015, tax will be imposed on enterprises and organizations that directly discharge atmospheric pollutants, water pollutants, solid wastes, construction noises, industrial noises and other specified pollutants into the environment.
Q3. A consistent theme I see in global criticism of China’s environmental issues is the lack of enforcement. Although I feel China has a well-developed regulatory system aligned with international best practices it is often asserted that China fails to practically enforce these regulations. Can you comment on any improvements in enforcement of regulations and any high profile industry scalps China’s regulators have claimed during enforcement activities?
A. China is making continuous efforts to fix the legislative loopholes and build up its law enforcement capacities. The revised Environmental Protection Law represents China’s toughest attitude towards environmental pollution ever. MEP disclosed statistics on national law enforcement activities from Jan ~ Jul, 2015. (See Fig. 2) The total fines according to the daily fine policy accumulated to more than 280 million RMB for 348 cases.
Fig. 2 - Statistics of National Environment Law Enforcement Activities (Jan ~ Jul, 2015)
Q4. A second criticism consistently raised by China’s detractors is widespread allegations of corruption particularly in its chemical industry. From what I understand China is now adopting a zero tolerance policy on these issues. Can you comment on some scandals of the past, some recent events and high level officials China has brought to justice in recent years?
A. In early 2015, the Central Commission for Discipline Inspection announced the punishment of 13 officials from the environmental protection administrations of 6 provinces. An example, the former Deputy Director of Xiamen Environmental Protection Bureau, Fujian Province, was sentenced to 12 years for accepting bribes of more than 2 million RMB. At the end of Feb, CHEN Jining took over Minister of Environmental Protection from ZHOU Shengxian. Later, right after the Aug 12 Tianjin Explosions, YANG Dongliang, then Director of the State Administration of Work Safety (SAWS), was investigated over serious violations of Party discipline (read corruption) and Chinese law. Minister CHEN has vowed on behalf of the Party Committee to place as much emphasis on fighting corruption as is placed on combating environmental pollution. With the new leadership, increased information disclosure by government and encouragement of social coordination in environmental events, I believe the situations will get better and better.
Q5. The Tianjin Port disaster thrust China’s administration of chemicals into the global spotlight. I know you have been following this issue closely. Can you briefly outline what happened and any progress China has made since this major disaster?
After the Tianjin disaster China has accelerated the progress to relocate Hazchem enterprises from densely populated areas for safety and environmental protection purposes. The Ministry of Industry and Information Technology (MIIT) has proposed a work plan to finish relocation of enterprise in high risk areas by 2020 and the remaining relocations by 2025 in a program that is expected to cost over 800 billion RMB
The investigation report of the Aug 12 (2015) Tianjin Explosions was eventually published on Feb 5th, 2016. According to the official report, the disaster caused 165 deaths, 8 missing and 6,866 million RMB in direct economic losses. The initial fire broke out as nitrocellulose (CHNO, a flammable, explosive and chemically unstable material) auto-ignited due to drying out of its wetting agent. The fire further detonated explosives such as ammonium nitrate. Two major explosions occurred. The first one was equivalent to 15 tons of TNT and the second much more destructive one equivalent to 430 tons of TNT.
Analysis shows at least 129 chemical substances combusted, exploded, leaked or emitted, leaving more than 100 chemical residues and secondary pollutants. The atmosphere, water and soil environment was polluted to different degrees. Air quality indicators went back to normal as of Sep 4, 2015. The major water pollutants were deadly cyanides. Up to Oct 31, 2015, nearly 0.8 million tons of polluted water was treated, eliminating approximately 65 tons of cyanides (equivalent to 121~129 tons of sodium cyanide). There was residual water in the explosion crater when the report was published and the cause for underground water pollution is being investigated. The marine environment at Bohai Gulf was not greatly influenced because proper and effective emergency response measures were taken. Concentrations of cyanides and arsenic in the soil at the central area of the accident exceeded relevant national standards, and several other organic pollutants were identified. Monitoring and remedial work continues. Due to the extreme complexity of the chemical residues and pollutants involved, the accident area requires medium and long term environmental and health risk assessment and establishment of pollution control and environment remedy solutions.
Q6. In closing what do think are the most significant improvements China has made in recent years to regulate and sustainably grow its chemical industry and what improvements can we expect over the next several years?
The most significant change has been realized in the revised Environmental Protection Law. Major breakthroughs in clarification of government responsibilities, increased punishment of illegal pollution discharge and other environmental violations and increased information disclosure by government and encouragement of social coordination are the highlights of the new law.
China has also made headway in a risk assessment system for both new chemicals and hazardous chemicals under priority environmental concern. This includes revision of China New Chemical Substance Notification Guidance and the Guidance for Compiling the Environmental Risk Assessment Report for HCPEC. The basic idea is to streamline administrative procedures, adopt more scientific approaches and provide more feasible guidance to the industry. There is a big push for full implementation of the globally harmonized system for chemical labeling (GHS), and (physical) hazard identification is being continued.
Furthermore, to develop a more integrated management strategy, China’s White Paper on Chemical Management Policy is being formed by referencing the Strategic Approach to International Chemicals Management (SAICM) and borrowing from the experience of more developed chemical regulatory frameworks around the world. The document is regarded as China’s chemical management roadmap and will underpin the future development of China’s regulatory system. At present the first draft has been completed and awaits further review opinions.
