China Environmental Law

The 3R substantive heart of China’s new Circular Economy Law is found in Chapter Three, which deals with “reduction,” and Chapter Four which deals with “recycling and reuse.”  They contain a hodgepodge of requirements which seem to have been somewhat arbitrarily thrown together.

Reduction (Chapter Three)

Another catalogue, this one entitled the Catalogue of the Encouraged, Restricted and Eliminated Techniques, Equipment, Materials and Products will be developed.  It should come as no surprise that when something makes it into the “eliminated” category, it is prohibited to produce, import, sell, or use it (Article 18).

The use of recycled water is specifically encouraged. “Areas with the conditions for using recycled water shall restrict or forbid the use of tap water for urban road cleaning, planting and landscape purposes” (Article 27).

Reuse and Recycling (Chapter Four)

Regional governments are required to engage in rational industrial zoning and should “reasonably readjust the industrial structure and compel enterprises to cooperate in such areas as the comprehensive utilization of resources so as to realize the efficient utilization and recycling of resources” (Article 29).

The law encourages the establishment, after the completion of an environmental impact assessment, of industrial parks or zones where the “utilization of exchanged wastes, cascade utilization of energy, intensive utilization of land, classified and recycled utilization of water, and joint use of infrastructure and other relevant facilities” be employed (Article 29).

The establishment of an “industrial waste information exchange system” is supported, and wastes which can not be used by the producing entity shall be offered “to those that have the conditions to make comprehensive utilization” (Article 36).  “Waste recycling outlets and trading markets” are encouraged (Article 37).

Regional governments are to make plans and build facilities for the “sorting collection and recycle of domestic wastes” and improve the “rate of recycling domestic wastes.” 

The balance of the chapters Three and Four consists of a laundry list of provisions imposing specific requirements on a host of disparate entities and activities.  These requirements will be addressed in tomorrow’s post.

Incentives (Chapter Five)

A number of incentives to encourage the “development of a circular economy” are proposed, including:

• Funds to support R&D (Article 42).
• Tax preferences to promote the development and use of circular economy technologies and products (Article 44).
• “Priority” loans and other credit support for energy-saving, water-saving, land-saving, and material-saving projects (Article 45).
• A price policy that contributes to the conservation and reasonable utilization of resources so as to guide entities and individuals to save and reasonably use water, electric power, gas and other resource products, including restrictive price policies to the restricted items in industries of high resource consumption (Article 46).
• Incentive-based pricing for grid-connected power generation projects using waste products as energy sources (Article 46).
• Imposition of fees for the discharge of wastes, with the proceeds used exclusively “for sorting, collecting, transporting, storing, utilizing and disposing of refuse” (Article 46).
• A government procurement policy which gives preference to “energy-saving, water-saving, material-saving and environment-friendly products and recycled products” (Article 47).

As with most of the requirements of this law, implementing regulations will be required before any of these incentives become “operational.”

Legal Liabilities (Chapter Six)

The liability provisions in the law are the standard set of provisions found in most environmental laws in China.  Failure to undertake some of the enterprise specific activities are specifically referenced and penalty ranges established.  The maximum penalty is 1,000,000 RMB which can be imposed where an entity attempts to import “any equipment, material or product” designated as “eliminated” in the Catalogue of the Encouraged, Restricted and Eliminated Techniques, Equipment, Materials and Products (Article 50).

Effective Date: January 1, 2009.