Papers Delivered at International Conference on Cleaner Production
Beijing, China -- September 2001 -- Paper 18 of 30

PROMOTING CLEANER PRODUCTION IN CHINA

Tianzhu Zhang and Jining Chen
Department of Environmental Science and Engineering, Tsinghua University, Beijing 100084, China

ABSTRACT In parallel to a rapid industrialization over the last two decades, China is facing critical challenge to reduce industrial pollution and protect her environment. Beginning with a summary of both industrial and pollution development, this paper presents a systematic review of current cleaner production (CP) practice in China. In general, CP can be viewed as two stages, i.e., CP training/auditing demonstrations and CP policy study/formulation. This paper is also devoted to the discussion of CP policy mechanism, which is regarded as the key for effective industrial pollution prevention in the future. A policy framework for promoting CP is thereafter proposed and it is expected that the focus change of China’s industrial environmental management policy towards CP would enhance significantly its regulatory capacity.

KEYWORDS: industrial environmental management, cleaner production, policy, China

INTRODUCTION

China is experiencing a rapid industrialization process over the last two decades. In addition to its economic and social benefits, industrialization creates in parallel enormous environmental problems because of the traditional industrial growth patterns characterized by a high consumption of resources and energy and large pollution discharges. It has been a critical challenge for China to promote economic development and protect the environment at same time.

This paper begins with the introduction of China’s industrial development and environmental pollution including its environmental management system. Although it is acknowledged that existing environmental management system has played an important role in controlling industrial pollution, this system was established on the philosophy of  “command and control” with emphasis on the end-of-pipe treatment rather than pollution prevention. The current strategic change in China’s industrial environmental management towards pollution prevention and sustainable development is then examined. Based on a review of the CP practices and policy development in China since 1993, this paper proposes and discusses an integrated policy framework for promoting CP implementation in China, composed of compulsory, economic incentive, social pressure, and supportive mechanism. It is believed that the incorporation of CP policy would considerably improve China’s industrial pollution prevention and environmental management.

CHINA’S INDUSTRIAL DEVELOPMENT AND ENVIRONMENT

Since the economic reform in 1980s, China has been experiencing rapid industrialization at an economic growth rate around 9%. This continuous industrial growth has been the core of economic development. Throughout the 1990s industrial output accounts approximately for 70% of China’s GNP. This growth, however, is mostly achieved via substantial expansions of production scales and small enterprises, as well as the heavy consumption of resources. The consequence is thus the generation of enormous quantities of pollutants, and the industrial pollutants discharged account for 60-70% of national total pollutant loads in the last two decades. The statistics of SEPA showed that over 19.2 billion tons of wastewater, 7.04 million tons of organic pollutants in terms of COD (chemical oxygen demand), 16.12 million tons of SO2, 9.53 million tons of soot, 10.92 million tons of powder dust, and 31.83 million tons of industrial solid waste were released by industrial sectors in 2000.

In terms of energy availability, China is also of natural disadvantage for her environment. In the last five years, the annual consumption of coal accounts for 70% of the total energy resources in China, which is far higher than the average level of 23.7 % in the world. Moreover, the coal-dominated energy structure would not be considerably changed in the next two decades. Air pollution caused by coal combustion is thus an inevitably serious challenge to China, not only in the past but also in the long run.

The rapid expansion of small and medium-size enterprises (SME) plays an essential role in both economic development and environmental pollution in China. Until 1998, of the total 468,506 industrial enterprises in China, SME has accounted for 99.79% and the small-size enterprises alone 97.83% of the total. Since most of the small-size enterprises are township and village industrial enterprises (TVIEs), they are mostly equipped with outdated technologies and facilities. This thus results in their significant overuse of energy and raw materials, and extremely low productivity. For example, the technologies of textile industry are only at a level equivalent to those of the 1970’s and 1980’s in Europe and American. In general, industrial energy consumption per unit of product in China is about 1 to 2 times higher than that in developed countries while the average production efficiency is only 1/3 to 1/8 of the level of the developed countries. Given the fact that most TVIEs release their pollutants into environment without any treatment due to lack of environmental awareness, technologies and management resources. TVIEs have generated a substantial proportion of the total industrial pollution loads. In 1998, for instance, TVIEs account for 21.2% of the national industrial wastewater, 36.08% of COD, 28.72% of SO2, 45.75% of soot, 62.99% of powder dust and 67.33% of industrial solid wastes.

ENVIRONMENTAL REGULATORY FRAMEWORK

Facing the huge environmental pressure, industrial pollution prevention and control has been one of the most important components of China’s environmental management and part of a national strategy towards sustainable development. Following the promulgation of the state Environmental Protection Act (Trial Law) in 1979, China began to systematically establish her environmental regulatory system with focus on industrial environmental management. In 1983, with environmental protection being defined as a national basic policy, three principles for environmental protection in China were proposed, which include “prevention first then control”, “polluter responsible for pollution control” and “strengthening environmental management”. Subsequently, a national regulatory framework composed of a series of environmental laws, regulations, standards and measures was progressively formulated as shown in Figure 1. Generally, in terms of compliance with minimum performance requirements to emissions from enterprise’s operation, this environmental regulatory system has played an important role in controlling industrial pollution, but it was established and implemented on the basis of “command and control” with emphasis on the end-of-pipe treatment rather than pollution prevention despite the general recognition given to pollution prevention.

Figure 1. China’s national regulatory framework for environmental management

CLEANER PRODUCTION IN PRACTICE

CP, as the environmental preventive practice and win-win approach, came into China systematically from the 90s. In response to the United Nations Conference on Environment and Development in 1992, China has devoted herself fully to the sustainable development strategy including the preventive CP approach. It was then formulated in its national “Ten Policies for Environment and Development” and declared that a reorientation towards CP was the irrevocable path to construct a modern industrial system in 1993. In China’s Agenda 21 published in 1994, CP was further regarded as the key strategy for achieving national goals of sustainable development, from which CP was introduced in China and began to be implemented in industrial sectors, though mostly as demonstration projects. Generally, the CP practice in China can be viewed as two phases. The first one, from year 1992 to 1997, focused on the introduction of methodology, personnel training and demonstration; while the second one, from year 1997 up to now, is directed towards policy study and formulation.

Phase I (1992-1996)

Following the B-4 project, which is the first systematic CP practice in China, a series of CP projects were carried out during the first phase and the major achievements can be summarized below.

1. CP training and awareness raising: Publicity and training materials were specifically developed for the Chinese users. The influencing ones include the monograph of “Cleaner production – concept and practice”, “Manual for cleaner production auditing” and “Guideline for implementing cleaner production”. In addition, training programs, which were often incorporated with CP demonstration projects, had been carried out for managers and technical staffs in enterprises and industrial sectors.
2. Institutional formation: A preliminary institutional framework had been established for promoting and coordinating CP practices in China. It consists of a two-tiers of structure, i.e., the national China Cleaner Production Center and the regional CP institutions. But the latter is currently only available in Beijing, Shanghai and Tianjin City, and Shanxi, Shandong, Jiangsu, Liaoning and Heilongjiang provinces. On the other hand, however, the CP institutions were also created in such industrial sectors as petrochemical, chemical, metallurgical, and light industry etc.
3. CP auditing and demonstration: Implementation of demonstration projects, based on CP auditing at enterprise level, was the major activity in Phase I. But these projects were mostly carried out via bilateral cooperation, which included the USA, UK, Australia, Canada, EU and UNDP, though they were implemented in different geographical areas of China.

Phase II (1997-now)

In spite of the high willingness to CP and the significant benefits and potentials from CP as illustrated by the CP demonstration projects and activities, dissemination of CP has been far less effective as expected due to existence of barriers inside and outside the enterprises. In order to promote CP over the long term, it is essential to establish a policy mechanism to overcome these barriers. During the first phase, the only CP policy study was via the B-4 project, in which a package of policy options for CP promotion was proposed, based on the barriers identified from the demonstration projects and the policy reviews in terms of environmental, industrial, and technological innovation policies. Although in many aspects the results of the policy study required further refinement and validation in practice, it nevertheless formed the basis for, and initialized the incentive to, follow-up policy studies. CP policy activities draw intensive attentions from 1997, which marked the beginning of the second phase characterized by a transform from the practice focusing on training and audit activities at enterprise level to the practice focusing on the CP policy study and formulation at governmental level. The major progress is made through four CP policy study projects except B-4 project in the first phase.

The first was conducted by the China Council of International Cooperation on Environment and Development (CCICED) via its specifically established CP working group. The mission of this group was designed to promote CP through policy study. Based on extensive investigations and policy reviews, the working group suggested that pilot projects of CP policy study at the local level, rather than national level, be first under trial due to the complexity of the issue. This proposal obtained a swift response from Taiyuan City of Shanxi Province and was later supported by the State Economic and Trade Commission, SEPA and UNEP. This project was officially initialized in March of 1998 and consisted of three major objectives, i.e., formulating CP local regulations, outlining both short and long-term CP plans, and building a CP indicator framework. So far the regulations have been officially approved by both the Taiyuan City Council and the People’s Congress of Shanxi Province.

The second policy study is a component of the CP project funded by Canadian International Development Agency (CIDA). Its objective is to assist China in implementing CP in priority industrial sectors, consistent with Agenda 21’s priority program. Although this study is still underway, a proposition is emerging, which will emphasize promoting mechanism that lead to CP and the incentives for CP application through such policies as investment, industrial and technological renovation etc.

The third study is supported by the Asian Development Bank (ADB), in the context of “Technical Assistance Cluster Project for the CP Promotion of Clean Technologies”. The fundamental objective of the project is targeting at improving national policies, institutional capacity and financing mechanisms for the promotion and application of CP. This project composes of 6 subprojects, which include policies for CP promotion, national network for cleaner technology transfer, legislative support for CP, cleaner technology development, environmental management and financing mechanism for CP in TVEs. Although only three subprojects are presently in operation, it is highly expected that this project will make great contributions to the establishment of CP policy, as several key governmental departments have been involved with.

The least one is part of the EU-China Liaoning Integrated Environmental Programme (LIEP) which includes seven subprojects, i.e. environmental awareness, urban planning, water resource management, capacity building and air quality monitoring, energy management, industrial restructuring and investment promotion, and cleaner production. The objective of CP subproject is to promote CP in industrial sectors by building consensus, establishing a CP centre, carrying out 10 up to 20 CP demonstration projects (enterprises), and conducting a policy study to integrate CP into existing industrial development and environmental policies. Currently, this programme is still at the beginning of the implementation, however, the CP policy study component will be a great help to the formulation of CP policy.

IMPLICATIONS OF THE CP POLICY STUDIES

Of the policy studies outlined above, especially, based on the B-4 project, CCICED project, and China-Canada project, a wider range of policy options has been or is being developed and an integrated policy framework is taking shape based on the identification of the barriers in CP implementation through surveys, case studies and reviews from China’s current environmental and industrial policies and regulations, as well as its technological renovation policies and strategies. The CP policy framework, which composes of compulsory, incentives, pressure and supportive mechanisms, can be descried in Figure 2.

The compulsory mechanism is widely recognized as the most essential element for China’s CP policy given that China is under a transit economy. The role of compulsory mechanism is to provide basic yet essential CP requirements for enterprises via direct interventions. The proposed interventions include, for instance, the forceful elimination of heavily polluting production processes and equipment’s, in particular in small enterprises; restricted use of toxic and harmful substances; and requirements for adopting waste abatement plan and releasing environmental report etc.

The incentive mechanism refers to market-based policy measures to attract and stimulate enterprises to implement CP. The current considered options include reduced tax on cleaner process and products, preferential policies for access to loans and funds in favor of CP, price reforms and other financial supports. These indirect instruments aim at influencing the environmental behavior and performances of enterprises by combining the economic interests of enterprises with CP requirements.

The pressure mechanism refers to using pressures from government, contractors, social groups, consumers and the public to encourage CP implementation in firms. For instance, this could include releasing environmental information of firms, greener government purchasing, voluntary agreements etc. Social pressure is also an important force to be used for CP promotion, given that the number of environmental NGOs and public environmental concerns are rapidly increasing in China.

The supportive mechanism aims at providing expertise, information, technologies and funds for CP. It contributes to improving the willingness and capacity of the enterprises to implement CP and catalyze the establishment of a self-continuous cleaner production oriented towards a systematic environmental management system in the enterprises.

Figure 3 Structure evolution of Integrated CP policy mechanism

In view of the fact that each policy mechanism has his own advantage, only will a combination of the mechanisms be effective in implementing CP. Given the current acceptability of CP in China, the supportive policies should be given the priority to improve enterprises’ CP capacity and willingness. Meanwhile, the compulsory policies, especially the legislation and regulations as a basis to other policy instruments, need to be under fully debate and studies. From a longer perceptive, however, it is expected that the emphasis will be changed from compulsory towards economic and social pressure policies in order to promote a self-regulatory system of CP in the enterprises (Figure 3).

CP POLICY ACTIONS OF THE GOVERNMENTS

The government is of a fundamental role in converting policy study into policy formulation. Currently, the Chinese government is pushing the realization of CP policies although the initiatives on CP are largely at early stages. This can be illustrated by Table 1, which summarizes the governmental actions at national level. Of the efforts, “Instructions to promote CP in China” issued by SEPA and the Law on CP (draft) prepared by The Committee for Environment and Resources of NPC are two substantive documents. In addition, the actions for promoting CP are steadily increased through local governments and departments. The important ones include the “CP regulations in Taiyuan City” and “Instructions to Speed up CP” in Jiangsu province. The discussions and comparison of three existing policy documents except the drafting Law are given below.

The “Instructions to promote CP in China” by SEPA

• As the first CP policy document at national level, this document attempts to integrate CP concepts into current environmental policies and management, and requires or encourages regional or local Environmental Protection Bureau (EPB) at all levels to promote CP via,
• Enhance local capacity to implement CP, including the formulation of action plan, establishment of indicator system, development of training programs and demonstration projects in major industrial sectors etc;
• Reform China’s current environmental management policies by incorporating CP. The modified policies include the environmental impact assessment, the three synchronization measures, and the pollution discharge license system based on total emission loads;
• Formulate environmental economic policies that are encouraging the implementation of CP. This includes the priority given to CP projects financed via national environmental funds, and the issues of products certification with environmental or ecological labels.

Table 1 National CP policies and government actions

The “Instructions on speeding up implementation of CP ” by Jiangsu Province

The above document was jointly released in 1999 by nine governmental departments of Jiangsu Province. The nine departments are the Planning Commission, EPB, the Commission for Science & Technology, Department of Finance, State Tax Bureau, Local Tax Bureau, Price Bureau, Nanjing Customhouse, Nanjing Branch of China People’s Bank. This was the first policy paper in China, which focused on economic instruments for CP promotion as outline below.

• Provide financial support for CP projects via the funds of technology renovation;
• Increase bank loans for CP projects and give priority to R&D projects of CP;
• Offer tax incentives to CP projects;
• Encourage CP activities and R&D by awards;
• Consider CP options first when using returned pollution discharge fees.

The “CP Regulation of Taiyuan City” by Taiyuan City

Taiyuan is the first city in China selected by the CP Working Group of CCICED for pilot project. In 1999, the Taiyuan municipal government issued the “CP Regulation of Taiyuan City”, serving as the legal base for CP promotion in Taiyuan. The Regulation aims to create a favorable external environment and to encourage enterprises to implement CP as their own initiatives. It requires the government departments to support and guide CP activities through,

• Integrating CP plan with the social and economic development plans of Taiyuan City;
• Regularly issuing CP project guidelines and green products catalogues;
• Guiding the enterprises to conduct CP audits, and setting CP evaluation standards;
• Establishing special funds for CP projects;
• Offering tax incentives and price incentives in favor of CP;
• Issuing certification of products with environmental labels;
• Encouraging greener government purchasing; and
• Carrying out CP-related publicity, education and training, and encouraging the public participation

Although this regulation is on a voluntary basis, it clearly stipulates some restrictions on industrial practices, the important ones of which include,

• Enterprises with heavy pollution must implement CP;
• The production, sales, importation and utilization of highly energy and materials consuming, and high polluting production processes and equipment are prohibited;
• The CP consideration is required in the stage of pre-feasibility study and environmental impact assessment for new project approval; and
• Enterprises are required to report their CP implementation plan and environmental performance.

Comparison of the three policy documents above

The three policy documents above represent the mainstream of current CP policy making in China though their implementation effects are subject to verification in practice. In the SEPA document, it facilitates environmental protection agencies to integrate CP into the environmental management systems. In Jiangsu Province since its market economy is more maturely developed, economic incentives instruments are thus positively responded. While in the Taiyuan City, more stringent regulations are believed essential because of its serious industrial environmental problems. Table 2 listed a detailed comparison of the three policy documents in terms of application coverage, formulating agencies, nature of document and feature of main provisions.

Table 2. Comparison of the three CP policy documents

[table 2 not available]

Along with CP policy making, a number of programs favoured CP implementation have been carried out in China. For example, in 1996, an ambitious program of total emission load control, which was expected to reduce pollutant load through production processes rather than end-of-pipe treatment only, was launched. The major contents include:

(i) Total emission loads for 12 targeted pollutants in air, water and solids in 2000 should be controlled at the same level as 1995’s;

(ii) Special attentions will be given to six strategically important surface water-bodies including the Huai, Hai, and Liao rivers and the Taihu, Chaohu, and Dianchi lakes; and

(iii) Air pollution control priority will be directed to two zones for acid rain and SO2, the geographical coverage of which takes about 8.4% and 3% of the national territory respectively.

In addition to the environmental management above, economic development policy is also of critical importance to affect industrial pollution prevention and control. For example, China has made substantial efforts to scale-control and re-construct its backward industrial sectors and stop the construction of unnecessary duplicate projects. In 1999, the State Economic and Trade Commission (SETC) publicized its first list of obsolete industrial processes and products to be phased out, which included 114 items in 10 industrial sectors covering the coal mining, black metallurgical, non-ferrous metallurgical, petrochemical, light, textile, machinery building, building material, construction and power industries, because of their economic drawbacks and harm to the environment. Later SETC issued a circular and announced another list of industrial projects in which investment was banned due to either their inefficient production capacity, serious environmental impacts or depletion of resources. The list included 201 projects from 17 sectors such as iron and steel, coal mining, petrochemicals, building materials and electronics etc.

CONCLUSION

China is experiencing rapid industrialization process. The industrial growth has benefited the economic and social development, but also has created enormous environmental problems at the same time. Resolving the conflicts between industrialization and environment is a critical challenge to China. Under the general environmental protection policies and principles, China has established a basic management system, which comprises the environmental laws and regulations, standards and management measures. Although the existing environmental management system has played an important role in industrial pollution control, its major framework is typically focused on end-of–pipe treatment rather than pollution prevention. A reorientation towards CP by adjusting existing environmental and industrial policies will be the most promising strategy for effectively dealing with the relationship between industrial development and environmental protection in China. Because the initial implementation revealed that CP could not happen automatically, it was essential to develop a package of policies to overcome the application barriers. China is thereafter starting from the initial phase, which focused on training and auditing activities in the enterprises level, to a new one that emphasizes the establishment of policy mechanisms. In general, the CP policy marking are in progress characterized by the actions from guidance to legal. Meanwhile, an integrated policy framework, composed of compulsory, economic, supportive and social pressure mechanism, is taking shape in the policy formulation under the Chinese government’s driving in both national and local levels, and across different departments. It is fair to say that China has made a great progress in developing and adopting policy instruments towards the promotion of CP although the policies is not systematic yet. It is without doubt that these policies and the efforts will speed up the implementation and dissemination process of CP and thus promote industrial sustainable development in China.

REFERENCES

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Zhang, T. and Chen, J., Industrial environmental management in China, Proceedings of international conference on industry and environment, 20-21 April, 2001, Ho Chi Minh City, Vietnam.

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