China’s Soil Ten

By Debra Tan, Dawn McGregor 17 June, 2016

New Soil Ten Plan completes China's pollution plan trifecta. See which industries are hit & how tight deadlines are

Next 2-3 years to focus on large-scale monitoring and finalising plans & laws; reining in chems & heavy metals key
8 polluting industries targeted but agri, extractives & plastic to be impacted too; provincial location changes impact
Little mention of financing in Plan, may cost RMB5 trn; Soil Ten is an “extension” of Water Ten; there's no quick fix

Finally State Council released the ‘Soil Pollution Prevention and Control Action Plan’ or “Soil Ten Plan” on 31 May 2016. With all the three pollution “Ten Plans” now issued (Air Ten: Dec 2013; Water Ten: April 2015 and Soil Ten: May 2016), China’s triage of plans to tackle air, water & soil pollution as part of the official war on pollution declared in 2014 is now complete.

With the Soil Ten Plan, China’s triage of plans (air, water & soil) to tackle pollution is now complete

The Soil Ten Plan couldn’t have come sooner. According to the latest data from the Ministry of Environmental Protection and the Ministry of Land and Resources, 16.1% of China’s surveyed land is polluted by heavy metals like cadmium, arsenic, lead and mercury. Additionally, 19.4% of surveyed arable land had pollution levels higher than the national standard. Moreover, according to the 2015 State of Environment Report, China’s overall environment quality deteriorated during the year.

Basically, the Soil Ten Plan aims to improve soil quality and ensure safe agricultural products resulting in a healthy living environment for China’s population. In total, there are 231 specific actions involved. Deadlines are given, although not as tight as those in the other two plans. Some of the key targets set by the Soil Ten Plan are as follows:
Key targets:

  • To curb worsening soil pollution by 2020, and control soil pollution risks by 2030, with the aim to create a virtuous cycle in the ecosystem by 2050; and
  • To ensure that over 90% of contaminated land can be utilised safely by 2020, and to increase this to 95% by 2030.

231 specific actions but longer deadlines …
… as soil pollution is the most difficult to tackle

The Soil Ten Plan like the Air & Water Ten before it, has a holistic approach. As such, it was encouraging to see that more than 18 Ministries and government departments were involved the Plan including: MEP, NDRC, MoST, MIIT, MoF, MLR, MWR & many more. Actions are also assigned to various government departments, although not as clearly as the Water Ten Plan.

Much of the commentary on the Soil Ten Plan so far has said it is less action packed than the other two pollution plans. This is likely because there isn’t any big action targets until 2020 when correlated laws will be issued. Until then, there will be massive-scale monitoring, which is a big and crucial undertaking but is not as flashy as some of the Water Ten’s shutdown actions by the end of this year.
But is it is weaker than the Water Ten?

Well, soil pollution is the most difficult to tackle amongst the three; plus possibly the most expensive. Also, it is not possible to tackle soil pollution without addressing water pollution. Untreated wastewater can contaminate soil and conversely pollutants in soil can be washed into surface & groundwater sources contaminating them.
From the key actions to be taken, the government is signalling that it only intends to get a handle on the total area of contaminated farmland by 2018 and to only establish soil prevention & control related laws by 2020:
Key action timeline:

  • By 2016, local governments need to finalise detailed work plans for submission to the relevant ministries;
  • By 2017, to set up national-level soil environmental quality monitoring points and monitoring networks;
  • By 2017, provincial soil remediation planning to be finalized and soil remediation result assessment methods to be issued;
  • By 2018, to finalise investigation of total area of contaminated farmland and assessment of impacts on agricultural products;
  • By 2020, soil environmental quality monitoring points to cover all the cities and counties; and
  • By 2020, to establish soil pollution prevention & control related laws and regulation system.

Soil Ten’s looser framework is “sensible”

With increasing monitoring points, a better picture of the real status water pollution is emerging; only then is a better assessment of soil pollution is possible. Many experts have previously commented that the official soil pollution numbers are on the low side – see here.

We therefore see the looser framework of the Soil Ten Plan as “sensible” and set within a more realistic timeframe.

…Soil Ten should be seen as an “extension” of the Water Ten

The Soil Ten Plan should also be seen as an “extension” of the Water Ten Plan. It should complement the Water Ten Plan and have an outlook over longer horizon than the Water Ten Plan. This would explain longer and “softer” deadlines in the Soil Ten Plan, but do not be fooled, the plan is by no means soft.

China’s “Hateful Eight”: polluting industries under the spotlight

The Soil Ten Plan singles out 8 specific industries:

  1. Non-ferrous metal extraction & processing
  2. Non-ferrous metal smelting
  3. Oil exploration
  4. Petroleum processing
  5. Chemicals
  6. Coking
  7. Electroplating
  8. Tanning

This “hateful eight” list is hardly a surprise as the eight have featured in previous “most-polluting heavy industries lists”. What’s new is that from 2017, in areas where construction projects involve key polluting industries, the company will need to sign a pledge agreement with the local government for soil pollution prevention & control, which will be made public.

Soil Ten points to industry consolidation and lists key pollutants & heavy metals to be monitored

We said earlier in our 5 Trends for 2016, that when it comes to monitoring, monitoring a few is easier than monitoring many” and that “for this reason alone, we see Beijing moving to consolidate some industries –textiles, cement, steel, coal and fertiliser to name a few”. Not only do the key industries named in the Soil Ten Plan reiterate this direction, so do the key pollutants highlighted. Key pollutants to be monitored are heavy metals (cadmium, mercury, arsenic, lead & chromium) and organic pollutants (PAHs & petroleum hydrocarbons).

Curbing chemical love with nowhere to hide

Clearly affected are the most polluting industries: Agriculture, chemicals & textiles…

  • Less chemicals please: by 2020, to achieve zero increase of fertilizer and pesticide use in major crops with coverage of fertilizer application based on soil sampling to reach 90% and above. This makes sense since excessive use of fertiliser and pesticides means that they are leached into the soil when it rains.
    Cotton as one of the “dirtiest” crops will clearly be affected: cotton’s chemical love sees this crop suck up 24% of global insecticides and 11% pesticides. This along with removal of subsidies in the North China Plain will see China move towards recycling cotton;
  • Nowhere to hide: By 2020, >75% of large scale livestock farms is expected to be equipped with waste handling facilities. We have said previously here – that this together with the new large livestock breeding standards would severely discourage small farmers to partake in large livestock breeding. Then what happens to by-products such as hides? By the way, China produces 19% of global hides. Is this the end of leather or can China just import more leather; after all it already imports 13%?
    Yes but no: the tanning industry made it to the hateful eight list. Not convinced? Two points: 1) China only introduced a leather tanning standard in December 2013 with existing factories only having to comply by 31 December 2015, and 2) a third of global hides are either likely “grown” in China or dyed in China – more on this here.

Heavy metals – banging against a wall

Industrial pollution has also lead to rampant pollution. China expects to complete investigation of distribution and environmental impacts of contaminated industrial land use by key industries by 2020 for the above mentioned polluting industries. An assessment will be needed for the change of any land use for either residential or public service as of 2017. Specifically, heavy metal emissions from these 8 polluting industries are expected to drop 10% from the 2013 level by 2020.
Yangtze Flows -Pollution & Heavy Metals

A heavy metal pollution hotspot is the Yangtze River. Reining in heavy metal pollution is thus clearly crucial to ensure a healthy living environment for those living along the river.
Specifically, heavy metal emissions from key polluting industries are expected to drop 10% from the 2013 level by 2020. Implications of this is covered in detail in a separate dedicated article “Yangtze Flows: Pollution & Heavy Metals”.
Water-nomics - Trade-offs Along the Yangtze

Key takeaways from the brief on managing trade-offs between pollution and development can be found here or check out the full report here.
It boils down to this: rapid industrial development in the Yangtze River Economic Belt (YREB) now needs to be balanced with environment constraints. To this end, China

Water Risk has just co-authored a brief on this with the Foreign Economic Cooperation Office of the Ministry of Environmental Protection.

Specific provinces tagged to specific actions show understanding of balancing regional growth with environment constraints

This brings us back to holistic management: managing the river as a whole as pollution upstream just flows downstream. In 5 Trends for 2016 we warned that “provinces may well feel the heat in 2016 with the upcoming soil plan. President Xi Jinping’s recent announcement that no large-scale development projects are allowed along the Yangtze River is just the start.”

Specific provinces tagged to specific actions highlighted in the Soil Ten Plan shows that central government understands this.

Controlling flows from province to province

There are special target regions depending on the industry. Pay attention, because which region matters for certain industries – here are risks & opportunities to watch out for:

  • Extractives: watch out for rare earths! Special emission limit values of key pollutants will be adopted by 2017 in major mining provinces. These include Henan, Hubei, Hunan, Guangdong, Guangxi, Sichuan, Guizhou, Jiangxi, Yunnan, Shaanxi, Gansu, Inner Mongolia and Xinjiang. Although many will recognise the coal/oil-base regions in this list (Shaanxi, Gansu, Inner Mongolia & Xinjiang), what’s less obvious are the rare earth mining provinces.
    Inner Mongolia and Sichuan account for 97% of China’s light rare earth production quotas, while Guangxi, Guangdong, Hunan, Jiangxi, and Yunnan account for almost 90% of China’s medium & heavy rare earth production quotas. Rare earth mining is highly polluting, oftentimes with radioactive discharge.
    Is the rare earth industry a target? Yes, in China, rare earths are included in “Non-ferrous metal extraction & processing”. Should we pay attention? Absolutely, 85% of global rare earths are still sourced from China. We won’t go into this here as we are publishing an in-depth report on this next month – so sign up for our newsletter!
  • Clean farmland: remediate soil – Provinces with large areas of contaminated farmland will be prioritized for soil remediation. Interestingly these are: Jiangxi, Hubei, Hunan, Guangdong, Guangxi, Sichuan, Guizhou and Yunnan. With the exception of Guangdong & Guangxi, the other six are part of the YREB.
    Another point of note is that these affected provinces lie along either the Yangtze or the Pearl Rivers. But the newly released 2015 State of Environment Report has both these rivers at significantly better quality than rivers in the North. Could it be that as highlighted in “Yangtze Flows: Pollution & Heavy Metals” that it is the persisting Grade V+ pollution in the tributaries of these rivers that are causing the contamination of farmland? Or is it the other way around – that the overuse of fertiliser and pesticide has made this water unusable?
  • Circular future for plastics & packaging The Soil Ten encourages recycling of electronics, plastic and packaging waste. For example, in 2017, the first pilots for pesticide packaging recycling will be launched in Jiangsu, Shandong, Henan and Hainan. The aim is that pesticide packaging recycling will grow to cover 30% of major grain production counties and all the key vegetable productions counties by 2020.
    In a similar vein, China would like to see full recycling of plastic field film by 2020 for Hebei, Liaoning, Shandong, Henan, Gansu and Xinjiang. For more on how such film cause contamination, check out “Biodegradable Films: Save Water & Soil”. For more on the future of plastics, check out key takeaways from the 5th annual Plasticity Forum held in Shanghai this year from its founder here.

The Soil Ten reiterates that Beijing-Tianjin-Hebei, Yangtze River Delta and Pearl River Delta are expected to lead on co-treatment of wastewater & sludge, soil pollution control & remediation planning, as well as soil remediation pilot districts.

Money & Time

Unlike the Air & Water Tens the Soil Ten Plan does not really mention an amount to be set aside to clean-up. Analysts have estimated that the soil remediation market could be worth as much as RMB1 trillion, but authorities have struggled to determine who should pay for rehabilitating contaminated land. Many of the inland provinces targeted are not as rich as coastal regions and much of the responsibility for the costs now lies with the impoverished local governments.

Estimates to clean up soil range from RMB1-5 trn…
… there’s no quick fix

Reuters, on the other hand, estimates the cost of making all of China’s contaminated land fit for crops or livestock to be around RMB5 trillion (USD760 billion), based on average industry estimates of the cost of treating one hectare.
There is no quick fix for soil pollution. The longer China takes to get a handle on preventing and controlling water pollution, the longer it will take to rein in soil pollution; and the costlier it will be.
If we want clean soil, we must clean water; there is no way around it.

Further Reading

  • 2015 State of Environment Report Review – China says overall environment quality has worsened in 2015 with groundwater deteriorating for the fifth year straight. It’s mixed news for rivers but lakes & reservoirs see marked improvement. Get the latest pollution status updates from the newly released 2015 State Of Environment Report
  • Yangtze Flows: Pollution & Heavy Metals – Areas along the Yangtze River dominate Chinese production but at what cost? With Grade V water in its tributaries, rapid growth in upstream wastewater plus concerns over a disproportionately large share of the nation’s heavy metals discharge, can the Yangtze River Economic Belt still flourish? CWR’s Hu takes a closer look
  • Water-nomics: Trade-offs Along The Yangtze – With significant economic, water use and pollution disparities along the Yangtze River, China Water Risk & the Foreign Economic Cooperation Office of the Ministry of Environmental Protection, publish a joint brief to explore strategies to find the right development mix. Check out some of the key findings in this review
  • Plastic, China & The Circular Economy – Can we avoid more plastics than fish by 2050? Only around 10% of plastics gets recycled, but this is where opportunities lie. Woodring, founder of Plasticity Forum, shares key points from the 5th annual forum on the circular future of plastic

Soil pollution in China

  • Water Ten: Comply Or Else – China’s new Water Ten Plan sets tough action on pollution prevention & control. While this is good for the water sector, less obvious is who or which sectors will be impacted. China Water Risk’s Tan on why China is serious about its fast & furious pollution reforms to propel China to a new norm
  • China Water Risk’s 5 Trends for 2016 – Prioritizing environment alongside employment signals a reshuffle. To show it’s serious, China will “kill a chicken to warn the monkey”. The Year of the Monkey brings with it wild swings, so check out our top 5 trends in water for 2016 for it is better to be in a position to disrupt than be disrupted
  • Heavy Metals & Agriculture – Check out China Water Risk’s overview of the status of heavy metals discharge into wastewater, priority provinces, overlap with agriculture sown lands, crops exposed and industries targeted for clean-up
  • Still Exposed! Fashion Materials in China -With 32% to 75% of global hides, wool, cotton, chemical fibre and silk either produced in or passing through China via imports, exposure is sky high. China Water Risk’s Tan expands on the future of the industry
  • Biodegradable Films: Save Water & Soil – Plastic mulch films help save irrigation water but unfortunately, the plastic residue pollutes the soil. BASF’s Dirk Staerke expands on the damage caused and how biodegradable films can be a win-win solution for both water and soil
Debra Tan
Author: Debra Tan
Debra heads the CWR team and has steered the CWR brand from idea to a leader in the water risk conversation globally. Reports she has written for and with financial institutions analyzing the impact of water risks on the Power, Mining, Agricultural and Textiles industries have been considered groundbreaking and instrumental in understanding not just China’s but future global water challenges. One of these led the fashion industry to nominate CWR as a finalist for the Global Leadership Awards in Sustainable Apparel; another is helping to build consensus toward water risk valuation. Debra is a prolific speaker on water risk delivering keynotes, participating in panel discussions at water prize seminars, numerous investor & industry conferences as well as G2G and academic forums. Before venturing into “water”, she worked in finance, spending over a decade as a chartered accountant and investment banker specializing in M&A and strategic advisory. Debra left banking to pursue her interest in photography and also ran and organized philanthropic and luxury holidays for a small but global private members travel network She has lived and worked in Beijing, HK, KL, London, New York and Singapore and spends her spare time exploring glaciers in Asia.
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Dawn McGregor
Author: Dawn McGregor
Dawn leads CWR’s work to help corporates navigate increasingly disruptive & material risks from water & climate threats, as well as transitional risks in the supply chain arising from new regulations in China. Here, Dawn engages extensively with the global fashion industry delivering on-ground workshops in China to keynotes and strategic input at European HQs. She has written at length on the end of dirty and thirsty fast fashion and her report to overcome gaps between brands and manufacturers for a clean and circular future inspired the industry to create a new wastewater tool. Dawn also works closely with the property and tourism sectors where she not only conducts strategic assessments of their exposure but builds collective action toward resilience via closed door working groups and invite-only events. Having helped build CWR, Dawn is a frequent keynote, panellist & moderator at events, including being twice selected as the lead-rapporteur at World Water Week. Her articles are cited in various industry publications including the UN’s ‘World Without Water’. Dawn previously worked in a global investment bank assessing geo-political risk, crisis management and business resiliency. She was born and bred in Hong Kong and has lived in France, England, Singapore and Beijing.
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