China Environmental Law

In our continuing look at the newly amended Energy Conservation Law, today we’ll look at those provisions of the law which apply to manufacturing operations. There are several provisions which apply to the construction of manufacturing facilities (which we will address in a subsequent post). From an operational standpoint, the Law imposes obligations upon manufacturers of products which require significant energy to produce (Article 16), “energy consuming entities” (Articles 24 - 28), the “industrial sector” (Articles 29 - 33), and “key-energy-using entities” (Articles 52 - 55). Depending upon how much energy its uses, a facility may be subject to all of these obligations.

If a facility produces a product which requires a lot of energy to produce, it “shall comply with the standards of energy consumption limits on unit product” (Article 16).

“Energy-consuming entities” (which are not further defined) must (Articles 24 - 27):

• Formulate and implement plans and technical measures for energy conservation, and reduce energy consumption
• Establish an accountability and incentive system for achieving energy conservation targets
• Carry out education and on-the-job training in energy conservation
• Install and use an approved device for energy measurement, and
• Establish a system for collection and analysis of energy consumption statistics

Entities which operate in the “industrial sector” are “encouraged” (Article 31) to adopt:

• Efficient and energy-saving equipment including motors, boilers, furnace, fans and pumps
• Technologies such as combined heat and power generation, residual heat and pressure utilization, clean coal and advanced energy consumption monitoring and control.

Electric grid companies are required to allow cogenerated power onto the grid (with the threat of penalties if they do not take the power, Article 78) at prices “subject to relevant State rules.” (Article 32).

“Key energy-using entities” are defined as (1) entities with annual energy consumption > 10,000 tons of standard coal (tce) or (2) entities with annual energy consumption between 5,000 tce and 10,000 tce that have designated by the relevant authorities.  Key energy-using entities shall (Articles 53, 55):

• Submit yearly reports on “energy use status,” including energy consumption, energy use efficiency, achievement of energy conservation targets, analysis of energy conservation benefits, and measures for energy conservation.
• Establish an “energy management” position within the organization which will have responsibility for, among other things, the analysis and evaluation of the entity’s “energy use status.”

The Law contemplates that regulations will be promulgated to advance its goals particularly with respect to “major energy-consuming industries including, electric power, steel, non-ferrous metal, building materials, oil refinery, chemical and coal industries” (Article 30) and key energy-using entities (Article 52).

Our next post on this topic will address the regulations currently in force (there aren’t many) and contemplated to implement these provisions.  I’ll leave you with this hope: that somewhere in China there is a university churning out “energy management” graduates.