Prioritising EIA Reform in China

By Feng Hu 9 June, 2014

China needs to prioritise its EIA reform to make it an effective tool to prevent construction of polluting projects

China’s EIA system is comparable to the US & HK but lacks enforcement resulting in substandard reporting
Unaccountable EIA agencies & assessors will not only be disqualified, but may also face criminal liability charges
MEP issues new policies to reform the EIA process whilst Beijing encourages crackdown on implementation

On 26 May the State Council announced the “Energy Saving and Low Carbon Development for 2014-2015” Action Plan. Aside from setting the overall pollutant reduction targets by 2015, it specially emphasizes the importance of EIA as the key in the approval process of projects. So far, the EIA hasn’t been an effective tool in preventing polluting projects. Fraudulent & substandard reporting, lack of public participation and inadequate information disclosure let some polluting projects get through (read more in “China: Roadblocks to Effective EIA”).

“EIA should be prioritized in the reform of environmental management system and environmental strategic transformation.”

– MEP Vice Minister Xiaoqing Wu, National EIA Working Conference
9 May 2014

4 June 2014, the MEP’s 2013 State of Environment Report revealed that the overall environmental quality is stable, but the groundwater has deteriorated whilst some urban rivers are heavily polluted. As such, the government will keep pushing for pollution control & prevention in its “war on pollution”. One of the steps is to reform the EIA. 
Several new regulations have been issued to reform the system since 2013.  At the national EIA Working Conference on 9 May 2014, Mr. Xiaoqing Wu, the Vice Minister of the MEP, explained that the EIA reform aims “to implement the most stringent source protection system, to fully play its role in optimizing economic development, pollution prevention and ecological damage, and to enhance the effectiveness and management of the EIA”.

The recently amended Environmental Protection Law gives the MEP new teeth to put daily fines and criminal sentences to non-compliant companies. It also encourages litigation against high polluting companies. But if the EIA is effective, these can be prevented at the first place.

China’s EIA regulatory system is not bad: comparable to the US

If we compare China’s EIA regulation and reporting requirements with those of Hong Kong & the US, the EIA regulatory system in China is actually quite comprehensive (See the table below – click on table to enlarge). 
EIA Law & Regulation China US HK Comparison
In addition, the MEP has also provided specific technical guidelines for different industries, such as coal mining, hydropower, groundwater, and Development area (including industrial parks). If the regulatory system is actually not bad, then why is the EIA still not an effective tool?

EIA agencies & assessors to be hold accountable

Inappropriate incentive structure ties the EIA assessor to the project developer and sometimes leads to fraudulent or substandard reporting

EIA agencies and assessors, as the party to provide technical support and technical services in the assessment process, have the direct impact on the EIA result through their reports. However, in China, inappropriate incentive structure ties the EIA assessor to the project developer (more in “China: Roadblocks to Effective EIA”) and sometimes leads to fraudulent or substandard reporting.
On 3 March 2014, the MEP pointed out the key issues of EIA agencies in its Opinions on Strengthening the Management of Environment Impact Assessment Agencies:

  • Uneven qualities Lack of big professional EIA agencies; some local agencies are seriously inadequate in their abilities;
  • System failure – imperfect internal management & quality audit system. The assessor liability system is often a formality; and consistent contract management & filing system are not in place;
  • Fraud & deceit – some agencies did not visit the sites; or carry out environmental conditions survey; or analyze the reliability and representativeness of the data during the EIA reporting. Some even fabricated information; and
  • Exceeding scope of practice – some agencies practiced beyond the scope of their EIA qualifications, leased or lent out their qualifications, or even obtained the qualifications by deceptive measures such as providing false materials.

Over the past years, the MEP conducted several nationwide inspections and also named & shamed a few EIA agencies & assessors. The latest one was in November 2013:

  • 34 EIA agencies faced sanctions such as disqualification, rectification or warning, 24 of which are not allowed to conduct any EIA work during the rectification period;
  • 58 EIA assessors were deregistered, disqualified or publically name & shamed for providing fake materials during registration or obtaining qualification.

With all the public naming & shaming, MEP’s determination to “clean” the EIA agencies and assessors1, is one of its strategic actions to sharpen the “sword”, in order to wage a successful “War on Water Pollution”. Furthermore, the above mentioned issues could also lead to legal liability for EIA agencies and assessors according to the amended Environmental Protection Law.

“Environmental impact assessment agencies….that resorts to deception when providing environmental service, and are responsible for the environmental pollution and ecological damage as a result of their fraud, shall bear joint liability with others responsible for pollution and damage, in addition to punishment pursuant to relevant laws and regulations.”

Article 65 of the amended Environmental Protection Law

Strengthening the EIA administration & supervision

From 2013, the MEP started withholding new project approvals for polluting companies and provincial governments seemed to be stepping up anti-polluting measures (see “Groundwater Crackdown: Hope Springs”). Meanwhile, the MEP has set the following policies and regulations to strengthen its administration & supervision, and enhance the effectiveness and transparency of the system:

  • 15 November 2013: Notice on Strengthening Supervisory and Management of Environmental Impact Assessment: It specifically states the need “to strengthen the supervisory and management of EIA in heavily polluting industries including thermal power, steel, cement, non-ferrous metallurgy, petrochemical, paper and dyeing, and construction projects with significant ecological impacts including water conservancy and hydropower, mining, road, railway, airport, urban railway system and power transmission. Moreover, it sets clear penalties against violations of EIA agencies and assessors and shows “zero tolerance” towards fraud of EIA agencies & assessors.
  • 15 November 2013: Notice on Delegation of EIA Examination and Approval authorities for Certain Construction Projects. It delegates its power on EIA examination and approval to provincial level of environmental protection authorities for 25 types of construction projects, such as coal development project with newly added annual capacity of <1.2 million tons inside state-planned coal bases. Such delegation aims at enhancing the efficiency on the environmental management, and streamlining its administration at central and provincial level. Meanwhile, it gives the MEP the ability to better oversee the EIA of cross-region strategic planning, and enhance decision making.

Let the EIA play its role

MEP 2014 World Environment Day PosterOn 4 June 2014, the MEP launched ad campaign for the “World Environment Day” encouraging the public to “act together” for a better environment.

EIA reform is the first step towards the long-awaited MEP reform & is necessary for China to win its war on water pollution

Meanwhile, the MEP also issued a guidance to promote public participation in environmental protection. An effective EIA will help to eliminate those polluting business operations from the start. EIA reform is the first step towards the long-awaited MEP reform & is necessary for China to win its war on water pollution.
Now many of the necessary regulations are in place. The central government will send eight inspection teams across the country during 25 June to 5 July 2014 to investigate the implementation of 19 central policies policies issued since July 2013. Ecological and environment protection will be key areas of focus. It’s time for China to get serious on policy implementation to make EIA, the effective tool it can be.

1Now their information and qualifications can be checked on the MEP Data Center website. As of May 2014, there are in total 1,158 EIA agencies (including 192 Class A agencies and 966 Class B agencies) and 10,683 qualified EIA assessors.

Further Reading:

  • Roadblocks to an Effective EIA – Chinese NGO, Green Stone Environment Action Network shares its report on the currently ineffective EIA assessment process in Jiangsu and says that proper EIA disclosure and public participation can help
  • The War on Water Pollution – Premier Li has just declared war on pollution. Tan expands on the government’s stratagems & offensives and fundamental changes required to shore up the MEP’s arsenal in order to wage a successful war
  • MEP Reform: From Mountaintop to Ocean? – The MEP is currently regarded as too weak to punish polluters due to dispersed authority & overlapping functions. Given the ‘war on pollution’, is reform to make a Super MEP necessary to improve China’s ‘mountains, water, forest, farmland & lakes’?
  • China Water Risk’s 5 Trends for 2014 – With environmental risk cited as one of the top risks most likely to derail economic growth, check out our top 5 trends in water for the year of the Green Horse
  • More Power to Enforcement – Debra Tan gives a run down of upcoming “agencyal innovations” discussed at the 2013 Beijing Forum and why the path-of-more-enforcement is still full of “areas of confusion”
  • Groundwater Crackdown: Hope Springs – The economy slows down but the Chinese government speeds up groundwater crackdown with increased transparency, blacklists at both central and provincial levels
  • Time to Enforce China’s Environmental Law – With the new guard in place, is it time to update China’s environmental law? Professor Wang gives a candid take on China’s environmental laws & enforcement – past, current and future
Feng Hu
Author: Feng Hu
Having previously led CWR’s work on water-nomics, Feng now sits on our advisory panel to help us push the conversation on integrating water considerations in planning sustainable transition and mobilising finance toward climate and water resilience. Feng currently works on ESG advisory at a regional financial institution. Prior to that, Feng worked as Sustainable Finance Research Manager APAC at V.E, part of Moody’s ESG Solutions. During his time at CWR, he initiated and led projects for CWR including the joint policy briefs with China’s Foreign Economic Cooperation Office of the Ministry of Environmental Protection on the water-nomics of the Yangtze River Economic Belt. Feng expanded the water-nomics conversation beyond China by co-authoring CWR’s seminal report “No Water No Growth – Does Asia Have Enough Water To Develop?”. He has given talks on water-nomics and other water issues at international conferences, academic symposiums, corporate trainings and investor forums. Previously, Feng also sat on the Technical Working Group of the Initiative for Climate Action Transparency (ICAT) and worked as a senior carbon auditor on various types of climate change mitigation projects across Asia and Africa. Feng holds two MSc degrees – one in Finance (Economic Policy) from SOAS University of London and the other in Sustainable Resource Management from Technical University of Munich – and a BSc degree in Environmental Science from Zhejiang University.
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