MARCH 2013

Issued December 31, 2012

The action plan requires that all national goals for control of greenhouse gases must be achieved by 2015, and that CO2 emissions-per-unit-of-added-industrial-value must be reduced by 21% compared with 2010 levels.

By 2015, the following industries must reduce CO2 emissions-per-unit-of-added-industrial-value by at least the following percentages, compared with 2010:

Chemical engineering−17%

Construction materials−18%

Electronics and information−18%

Iron and steel−18%

Light−20%

Machinery−22%

Non-ferrous metals−18%

Petrochemicals−18%

Textiles−20%

As the per-unit CO2 emissions from major industrial products decline steadily, industrial carbon produc-tivity will be greatly increased. By 2020, CO2 emissions-per-unit-of-added-industrial-value must be reduced by approximately 50% over 2005 levels.

NEWS FROM ENVIRON CHINA

Action Plan for Industry Response to Climate Change (2012–2020)

Action Plan for Industry Response to Climate Change

The Twelfth Five-Year Plan for Prevention of Atmospheric Pollution

Interim Regulations for Announcements on Entry to the Lead Storage Battery Industry

Administrative Rules for Comprehensive Utilization of Fly Ash

Circular Summary: Ensuring Environmental Safety of Redevelopment and Reutilization of Industrial Sites

Arrangements for Near-Term Soil Protection and Overall Remediation Work

Administrative Rules for Kitchen Waste in Hebei Province

Administrative Guidelines for Major Wastewater Pollutant Permits in Shanghai

Shanghai City Regulations for Elimination and Prevention of Workplace Accidents

Overall Emissions Standards for Atmospheric Pollutants in Chongqing City

China Update

Note: The regulatory information contained herein is current as of March 2013.

The Twelfth Five-Year Plan for Prevention of Atmospheric Pollution in Key AreasPromulgated October 29, 2012

This plan document was issued by the Ministry of Environmental Protection, the National Development and Reform Commission (NDRC) and the Ministry of Finance, and reviewed and approved by the state council. It covers 47 cities, including cities under direct central control, such as Beijing, Shanghai, Tianjin and Chongqing, as well as additional cities throughout 15 provinces. The plan will strictly limit high-pollution projects in the iron and steel, cement, petrochemical, chemical engineering and non-ferrous metals industries.

A ban is placed on new construction, renovation and expansion projects for coal-fired power plants—with the exception of thermal-electric projects—unless the project involves the “pressure on the small;” in other words, shutting down smaller, ineffi-cient plants in favor of larger, more efficient ones. In built-up urban areas and the above-mentioned municipalities under direct central control, new construction of high-pollution projects—such as coal-fired power plants, or various construction undertaken for the iron and steel, building materials, coking, non-ferrous metals, petrochemical or chemical engineering industries—are prohibited.

The plan establishes 13 focal areas for atmospheric pollution prevention (called the “three areas and ten groups”), including Beijing-Tianjin-Hebei Province; the Yangtze River delta; the Pearl River delta; central Liaoning; Shandong; Wuhan and bordering

areas; Chang(sha)Zhu(zhou)(Xiang)tan; Chengyu; the western bank of Haixia; central and northern Shanxi; Shaanxi Guanzhong; Ganning; and Urumqi in Xinjiang.

The plan does not completely prohibit high-polluting projects within the focal control areas; however, the entry threshold for the petrochemical industry is raised, and emissions standards for that industry are made stricter. In the future, a volatile organic compounds item will be added to the emissions standards for the petro-chemical industry, and special emissions limits requirements will be established for petrochemical projects to achieve greater reductions in petrochemical industry emissions.

The plan also creates three new policies for management of the atmospheric environment, which:

• make pollutant discharge quantities a prerequisite for environmental impact studies, and evaluate a project based on total emissions.

• control total coal consumption in the three zones and ten groups of cities, and make the use of natural gas or other clean ener-gies a prerequisite for the expansion of energy.

• institute an “offset measure” requiring that newly produced emissions be offset by a larger reduction in emissions from other projects. For example, if a new project adds one ton of pollutants, exist-ing projects must simultaneously reduce emissions by 1.5 or two tons, creating a net reduction.

Further requirements include the estab-lishment of an environmental assessment and business opportunity system that

CHINA UPDATE | MARCH 2013 2

addresses thermal power, petrochemical, iron and steel, cement, non-ferrous metals and chemical engineering projects that would have an impact on the atmospheric environment. Such projects must be evaluated through an environmental assessment and a subsequent impact assessment. Results of these assessments must be made public, and opinions must be solicited from both area residents and municipal departments.

Interim Regulations for Announcements on Entry to the Lead Storage Battery IndustryEffective February 1, 2013

Throughout the past year, certain areas in China have seen incidents of lead contami-nation from lead storage battery manufac-turing facilities, focusing much attention on the issue and the industry. Improving both management and remediation throughout the lead storage battery industry will help reduce pollution from heavy metals.

The regulations set a production capacity threshold of 200,000 kVA for existing production facilities, as well as production capacity thresholds of 200,000, 500,000 and 1 million kVA for new and commercial electrode plate producers.

The Ministry of Industry and Information Technology stipulated that it would implement dynamic management of businesses listed on approval and entry lists. Companies that are unable to satisfy the entry conditions will be denied entry into the market.

Administrative Rules for Comprehensive Utilization of Fly AshEffective March 1, 2013

These rules stipulate that the NDRC will be responsible for the organi-zation, coordination and monitoring/supervisory work for integrated fly ash utilization throughout China. Municipal-level environmental protection agencies and departments supervising the integrated utilization of resources will be responsible for gathering statistics and mastering data, as well as information concerning the production, storage, flow, utilization and disposal of fly ash in their areas. The Environmental Protection Agency (EPA) and local department responsible for integrated resource utilization for each province (area, municipality) is to submit their annual statistical data to the EPA and the NDRC prior to the end of June of each year.

The rules require that facilities producing fly ash must apply for regis-tration as required by the People’s Republic of China Solid Waste Environmental Pollution Prevention Law, and in accordance with relevant environmental protection regula-tions. They must also simultaneously submit filing information with the department tasked with integrated resource utilization. In the case of new and expanding coal-fired power plants, project feasibility study reports and project application reports must contain an integrated fly ash utili-zation plan, to include utilization and disposal strategies.

monitoring reports are required to be filed with the city level or above environ-mental authority.

• Effective Prevention of Site Contamina-tion: For new, expansion and modifica-tion construction projects approved after the issuance of this circular, EIAs shall in-clude soil and groundwater investigation and risk assessment and provide meas-ures, such as leaking prevention, monitor-ing, etc., to prevent soil and groundwater contamination. Prevention measures shall be inspected and approved by the Project Completion Inspection and Approval program. When the ownership of the land use right is to be changed, soil and groundwater investigation and remediation shall be conducted as per the regulatory requirements if contamination is identified.

• Addressing Relevant Responsible Party: In line with the “polluter pays” doctrine, the entity causing site contamination will be responsible for site investigation, risk as-sessment and site remediation (hereafter referred to as “Relevant Responsibility”). If ownership of the contaminated site has changed, the entity that inherited site lia-bilities after the transaction shall bear the Relevant Responsibility. If the entity that caused the contamination of the site has been terminated, the local government at the county level or above shall bear the Relevant Responsibility. If ownership of the site land use right is transferred, the party that receives the land use right shall bear the Relevant Responsibility. Costs for site investigation, risk assessment and site remediation can be included in the entity’s relocation, restructuring or land remediation expenses.

• Strengthening Relevant Supporting Works: MEP and other relevant

authorities shall be responsible to develop relevant regulations, standards and guidelines to support the site investiga-tion, risk assessment and site remediation projects.

• Strengthening Organization and Leader-ship: Government environmental protec-tion, industrial, economic, land, con-struction and urban and rural planning departments at all levels shall enhance the management of these issues under the leadership of the local government.

Local government departments are required to develop their own enforcement measures based on this circular’s require-ments and local needs. For industrial sites that have already been redeveloped or are being redeveloped, the local government shall enhance environmental management and monitoring to avoid any impact on human health.

CHINA UPDATE | MARCH 2013 3

Circular Summary: Ensuring Environmental Safety of Redevelopment and Reutilization of Industrial Sites (Huan Fa# [2012]140)Effective November 26, 2012

On November 26, 2012, the Ministry of Environmental Protection (MEP), the Ministry of Industry and Information Technology (MIIT), the Ministry of Land Resource (MLR), and the Ministry of Housing and Urban-Rural Construction (MOHURD) jointly published the Circular on Ensuring Environment Safety of Redevelopment and Reutilization of Industrial Sites (Huan Fa# [2012]140) to the provincial (district, city) environmental protection bureaus, industrial and information departments, and land resource administrations.

According to the requirements of the Opinions of the State Council on Strengthening Key Environmental Protection Works, the following nine issues are highlighted:

• Screening of Contaminated Sites: When planning closure, shutdown, merger, transfer, bankruptcy or relocation of their local industrial facilities, local government departments are required to provide a list of those facilities to other departments (EPB, land authority, construction and ur-ban and rural planning department, etc.) so as to organize site investigation. For already closed, shut down, merged, trans-ferred, bankrupt or relocated chemical, metal smelting, pesticide, electric plating, and dangerous chemical production, storage and use facilities planned for redevelopment, and other facilities listed by the local authorities as key industrial facilities, local government departments

are required to organize site investigation and risk assessment to understand site baseline information and screen contami-nated sites to help set up contaminated site database and environmental manage-ment information systems.

• Reasonable Planning of Land Use of Contaminated Sites: Sites identified as “contaminated” cannot be redeveloped into residences, schools, hospitals, etc. before they are remediated to meet cer-tain criteria.

• Strict Control of Transfer of Contaminated Sites: Sites that are closed, shut down, merged, transferred, bankrupt or relocat-ed and sold to obtain new land, must be investigated before the sale of the site. It is prohibited to transfer the contaminated sites without site investigation, risk assess-ment and identification of responsible parties for remediation.

• Carrying out Remediation on Contaminat-ed Sites: Local government departments are required to organize remediation of sites identified as contaminated. It is pro-hibited to redevelop contaminated sites without remediation.

• Strengthening Management of Environ-mental Risk Assessment and Remediation: MEP will develop qualification criteria for those that are to conduct site investiga-tion, risk assessment and remediation. Before the criteria are issued, local gov-ernments can establish their own criteria based on local needs. Establishment of an expert panel review mechanism to review site investigation, risk assessment and remediation is required. Establish-ment or improvement of documentation management programs also is required. All site investigation, risk assessment and remediation-related documentation and

Arrangements for Near-Term Soil Protection and Overall Remediation WorkEffective January 23, 2013

These arrangements require that a soil environment study be conducted in China by 2015. They also require the creation of a rigorous soil-based environmental protection system focused on arable land and concentrated sources of drinking water.

The objective is to ensure that the quality of at least 80% of the nation’s arable soil tests are at or above standard. A system of regular surveys and scheduled monitoring will be established, in addition to a basic soil quality monitoring network, both of which will provide scheduled monitoring for at least 60% of arable land and concentrated drinking water sources serving populations of 500,000 or more. A comprehensive upgrade of integrated soil environment monitoring capabilities is also included.

Controls will be developed through rollout of pilot and demonstration projects that will gradually establish a system of policies, legislation and standards to protect the soil environment. The national soil environment protection system is meant to be complete by 2020, and will be responsible for the following:

• Strict control of further soil contamination

• Establishment of priority areas for soil protection

• Enhancement of environmental risk con-trol for already-contaminated soil

• Carrying out soil pollution remediation and restoration

• Upgrading to integrated soil monitoring capabilities

• Faster construction of soil protection projects

• Enhancement of organizational leadership

• Development of a sound input system

• Comprehensive and well-conceived legis-lation and policy

• Enhanced scientific and technical support

• Encouragement of public participation

• Strict auditing of targets

CHINA UPDATE | MARCH 2013 4

Administrative Guidelines for Major Wastewater Pollutant Permits in ShanghaiEffective December 25, 2012

The guidelines were established in order to enhance the supervision and management of key pollution sources, controlling and reducing the total quantity of pollutant discharges, and regulating discharge activities. They were developed based on relevant regulations in the Shanghai Municipal Environmental Protection Regulations, and in consideration of current conditions in the city.

These guidelines apply to the review, issuance and management of key pollutant emissions permits for municipal and county-level organizations under emissions regulatory units within the city of Shanghai.

Review and issue of emissions permits will be completed in stages. Organizations that do not obtain an emissions permit in accordance with the regulations may not discharge guidelines-determined key pollutants. These include SO2, NOx, COD and NH3-N.

For organizations that hold a Shanghai Business Organization Permit for Pollution Emissions and are listed in the catalog of pollutant permits, the original permit will become null and void on the issue date of the new permit. For organizations not listed in the catalog, the original permit remains in effect until the end of 2012, at which time it expires and is invalid. After the original permit becomes invalid, pollutant discharges must be in line with environ-mental assessments, final acceptance of approval documents and other regulations of the environmental protection department.

These guidelines shall remain in effect from December 25, 2012, through December 31, 2015.

Administrative Rules for Kitchen Waste in Hebei ProvinceEffective February 1, 2013

The rules stipulate that, beginning February 2013, no organization or individual may engage in kitchen waste collection, shipping or disposal activities without the approval of relevant authorities. Kitchen waste collection, shipping and disposal costs will be incorporated into city household garbage processing fees, and any additional monies required shall be supplemented as deemed appropriate by the local People’s Government.

Kitchen waste is defined as food waste and oil from food processing, food and beverage services, collective dining activities, and waste other than that resulting from the normal, everyday activities of residents. The rules state that the sale of kitchen waste to food product producers, or the reuse of kitchen waste for processing into food products is prohibited. The use of un-sterilized food waste as livestock

feed is also prohibited. At the same time, the government must support the construction of kitchen waste disposal facilities. Initiatives are aimed at imple-menting various methods to encourage cleaning of food before sale, the improvement in food processing techniques, and energy and food conservation to reduce the production of kitchen waste. No organization or individual may engage in the disposal of kitchen waste without approval pursuant to these rules.

Departments are now required to provide oversight and supervision to establish a mechanism for complaints and reporting, in order to encourage the public to submit reports concerning illegal kitchen waste production, collection, shipping and disposal activ-ities, and keep the identity of the person submitting the complaint or report confidential. After the complaint or report has been received, the relevant departments must make a timely on-site inspection and response. In addition, they must inform the complainant of results within 15 working days.

CHINA UPDATE | MARCH 2013 5

Shanghai City Regulations for Elimination and Prevention of Workplace HazardsEffective January 1, 2013

These regulations stipulate that organiza-tions engaged in production must set up comprehensive systems for preventing workplace risk and accidents, as well as for reporting, response, remediation and safety incentives. Organizations must also implement resource protection, monitoring measures and monthly analyses. Organizations constructing or operating buildings must have a comprehensive management process in place.

Based on the regulations on the Elimination and Remediation of Workplace Hazards from the State Administration of Workplace Safety, the severity of the hazard and the difficulty and time required to eliminate it are the bases for classification of hidden accident risks and judgments concerning standards and details of handling procedures. Organizations engaged in production or operations will be required

to establish a classification system for—and specific measures for the elimination of—targeted hidden risks, as well as for imple-menting routine, scheduled checks.

Further, organizations engaged in production and operations are required to establish various systems to promote workplace safety, as well as assume primary responsibility if an accident does occur.

The regulations detail responsibilities that fall to the responsible person in an organi-zation. They also lay out the administrative penalties to which the primary responsible person will be subject if an organization is in violation of the law. In cases of illegal actions with regard to the elimination of hidden hazards, the regulations also define the management of the entire process, from determination of liability for the hazard through determining liability for an accident. The liability will be entered onto an individual’s credit history and made public.

For organizations that do not commit to the task of remediation of hidden hazards, and that are liable, the supervisory agency shall make an entry on the credit histories of both the responsible person and the organi-zation. It will also make an announcement to the public either via its own website or through the news media.

Supervisory responsibilities of government oversight agencies are also enhanced under these regulations. Additionally, the regulations establish categories of illegal, punishable actions, and define the rules for penalties. Legal liability for supervisory agencies that fail to comply with the regula-tions—or that do so in what is determined by relevant authorities to be a haphazard fashion—is also addressed.

Overall Emissions Standards for Atmospheric Pollutants in Chongqing City (DB50/418-2012)Effective December 1, 2012

These standards stipulate maximum permis-sible emissions limits for three types of key atmospheric pollutants—sulfur dioxide, NOx and particulates or soot—for boilers (affecting the thermal power industry), industrial kilns (affecting the cement industry) and industrial processes.

The standards apply to the management of existing fixed pollutant emissions within Chongqing City, as well as emissions management for environmental impact studies, facility environmental protection equipment design, inspection upon completion and other post-production items for new construction and renovation and expansion projects.

For more information, please contact: Mr. Xiao-Jian Zhou, Managing Director ENVIRON China Tel: +86 21 6473 6885 xiaojian_zhou@environcorp.com

We prepare China Update to apprise clients of major EHS regulatory developments in China. It is not intended to constitute legal advice and should not be relied upon as such.

IN TOUCH