China Environmental Law

The newly amended Energy Conservation Law governs the construction of commercial and residential structures-areas that were not covered in the original act which dealt primarily with industrial facilities.  Now, any “fixed asset investment” project (industrial, commercial, or residential) is subject to “a system for evaluation and examination of conservation” (Article 15):

The authorities charged with project examination or approval according to law may not approve the construction of any projects not in conformity of statutory standards for energy conservation. In this case, the construction entities may not commence construction, or if the construction has been completed, it may not be put into operation or use. Specific measures for this process will be formulated by the department of the State Council in charge of energy conservation jointly with relevant departments of the State Council.

The term “fixed asset investments” is not defined in the Law, but the National Bureau of Statistics (NBS) has a rather detailed definition of the term. Basically, pursuant to the NBS definition, a fixed asset investment includes an investment of more than RMB500,000 by an enterprise, institution or authority in a new construction project, expansion project, renovation project or project designed to enhance production ability or project efficiency.  Informal inquiries to the NDRC confirmed that the NDRC intends to utilize this definition in applying the Law (if anyone has heard of the use of a different definition, please let me know). This is a pretty low threshold so if you are constructing any building in China, assume that the Law applies.

The “statutory standards for energy conservation” which the project must be in conformity with will be the subject of a subsequent post, but some of these are already on the books and more are planned. Article 14 encourages local governmental entities “in light of local actual situations, [to] formulate local standards for energy conservation in the construction sector stricter than national or industrial standards.” Just to be clear, Chinese laws often refer to what is usually translated as the “construction sector,” and this can be confusing to some who may think the regulations only apply to those in the construction business or simply the procedures of construction. They usually do apply to these procedures but in addition they more broadly apply to the “substance” of what is being constructed as well. In other words, they usually provide requirements as to how buildings should be designed and what types of equipment should be incorporated in them during their construction. Failure to comply with these regulations could theoretically lead to a situation where the building is not given an occupancy or use permit.

Articles 34 to 40 specifically address “Energy Conservation in the Building Sector.” The Ministry of Housing and Urban-Rural Construction (or its local bureaus) is in charge of administering and supervising energy conservation regulations during the building construction phase (Article 34), while Article 35 repeats the provisions of Article 15 quoted above, and encourages periodic administrative oversight throughout the construction process:

the commencement of construction projects that are not compliant with the standards for energy construction in the building industry [shall not be approved]. If any such construction has commenced, the departments shall order the construction to be stopped and corrections to be made. If any construction has been completed, the buildings may not be sold or used.

The department in charge of construction shall strengthen supervision and inspection of the compliance of in-progress construction projects of standards for energy conservation for the building industry.

In one of the more specific provisions of the Law, Article 36 requires that

When selling houses, real estate development enterprises shall demonstrate to buyers information on measures for energy conservation, term of warranty for warm-keeping projects, and shall state the same in House Purchase and Sale Contracts, Letter of Quality Guarantee and Users’ Guide, and shall be responsible for the authenticity and accuracy thereof.

Articles 37 through 38 address issues that are fairly unique to the Chinese experience. They require “indoor temperature controls” for “public buildings that use air-conditioners for heating and cooling,” and individual unit heating and cooling controls for apartment complexes (existing centralized heating systems, shall “by stages” install individual metering). The traditional practice has been to charge for heating on a square foot basis regardless of heat consumed, which obviously does not encourage conservation. Article 39 urges the strengthening of controls over “energy consumption by “public facilities” (which in China covers almost all commercial and institutional buildings including those privately owned) and decorative lighting of large-sized buildings.

Article 40 provides

The State encourages to use such energy-saving building materials and equipment as new-type walling materials in new construction and energy conservation reform of existing buildings, and to install and use systems for utilization of such renewable energy as solar energy.

Article 17 of Renewable Energy Law also encourages solar be incorporated in the design and construction of new buildings and, where “quality and safety” permit, in existing buildings:

Construction authorities of the State Council shall cooperate with relevant authorities of the State Council in establishing technical economic policies and technical standards with regard to the combination of solar energy utilization system and construction.

Real estate development enterprises shall, on the basis of the technical standards in the previous paragraph, provide necessary conditions for the  utilization of solar energy in the design and construction of buildings.

For buildings already built, residents may, on the condition that its quality and safety is not affected, install solar energy utilization system that conform to technical standards and product standards, unless agreement has been otherwise reached between relevant parties.

Next time, we’ll address the policies and regulations which cover energy conservation in new industrial, commercial, and residential construction