Cleaner Production Program in China

Promotion of Cleaner Production in the PRC

Date posted: 
Nov 17 2008

Industrial growth is the primary driver for the rapid development of China. However, the growth experienced in the industrial sector was accompanied by heavy consumption of resources, resulting to generation of pollution. Interestingly, large firms were not solely responsible for the generated pollution in the country. Small and medium-scale enterprises (SMEs) located in villages and towns also contributed to the pollution problem. The pace of development and the growth of the industries put pressure in China’s resource use. Air pollution also is a threat due to coal combustion.

Responsible Party: 
Compliance
I. Objectives or Impact: 

Industrial growth is the primary driver for the rapid development of China. However, the growth experienced in the industrial sector was accompanied by heavy consumption of resources, resulting to generation of pollution. Interestingly, large firms were not solely responsible for the generated pollution in the country. Small and medium-scale enterprises (SMEs) located in villages and towns also contributed to the pollution problem. The pace of development and the growth of the industries put pressure in China’s resource use. Air pollution also is a threat due to coal combustion.

The Cleaner Production Law promotes cleaner production, efficiency of the utilization rate of resources, and reduction and avoidance of generation of pollutants. The law mainly addresses the problems caused by overuse of resources due to utilization of outdated technologies and facilities. The law particularly helps small and medium-scale enterprises to shift production practices. This is quite important in the country since SMEs play an important role in economic development. However, these firms also have a substantial share in industrial pollution loads.

The law also identifies the key role of local governments in providing solution to the problem. This is quite critical since SMEs are more often than not, are clustered together. Most of the SMEs are township and village enterprises which uses outdated technologies and facilities.

II. Description of the Good Practice (Outputs): 

The Cleaner Production program is touted as the key strategy for achieving sustainable development. The application of the program started from the conduct of demonstration projects in industrial sectors. The program also has a long history in the country. It started laying foundation by focusing on the introduction of the methodology, personnel training, and demonstration. This initial phase extended from 1992 to 1997. From 1998 to 2002, efforts were geared towards the study and formulation of the law.

From the policy formulated, it was identified to use compulsory mechanisms. This came in the form of direct restriction of toxic and harmful substances, particularly for SMEs. It also required the industry to adopt waste abatement plans and release environment reports.

Support mechanisms were also provided by the law. This came in the form of provision of expertise, information, technologies, and funding for cleaner production practices. Various incentives are given to firms in order to induce them to shift production practices. Products produced from wastes and materials reclaimed from wastes benefit from reduced taxation or exemption from value-added tax. Costs incurred for cleaner production auditing and training are also allowed to be booked as operating costs for the firms. Funds from the Small and Medium-Sized Enterprise Development Fund are also set aside to support cleaner production for SMEs. In some provinces, R&D programs supportive of cleaner production are given priority in application of bank loans.

III. Outcomes or Results: 

Interestingly, in provinces where the local economy is more developed, firms responded positively on economic incentives. In some provinces and cities, more stringent regulations are required because of the severity of environment problems. There are a number of cases where firms and enterprises failing national standards on environmental standards become compliant given the clean production law. Firms initially started with pursuing cleaner production by looking at end-of-pipe treatment. Eventually, some firms realized that disposal costs increases production costs and creates negative image for the entire company.

One firm, HeNan Lotus Monosodium Glutamate Group Limited, showed gains on profit margins when it adopted cleaner production techniques. Initially, pollution control was pursued via end-of-pipe treatment efforts. Eventually, the firm combined this effort with material substitution and recycling. Interestingly, the procedure they applied for end-treatment resulted to the production of solid fertilizers which yields considerable profit for the company (annual profit of RMB 280 million yuan).

The firm also integrated environment targets in the production management level. Bonuses are distributed according to conditions of cleaner productions. Specifically, with outstanding achievements, staff bonuses can be elevated by five percent. On the other hand, non-attainment of environment targets results to cutting down of bonus by one percent and five percent for staff and leaders respectively.

IV. Essential Elements for Success: 

Policy Framework: Enabling Policy, Regulation, Inter-agency/Multiparty Agreements

The Cleaner Production law is a product of careful promotion, awareness campaigns, and demonstration projects.  In its initial stage, cleaner production was integrated with the existing environment policies of the country.  Support from the regional and local Environment Bureaus was solicited.  Modified policies supportive of cleaner production were also introduced, namely: policy on environmental impact assessment and pollution discharge licensing system. 

Provinces also promoted cleaner production by pursuing supporting activities at the local level.  These activities came in the form of establishment of funds for cleaner production processes, setting evaluation standards, promotion of the use of environmental labels in products, IECs, and offering of tax and price incentives.

Human Resources and Skills

Since the cleaner production promotes eventual shift of production approaches, training and awareness raising were conducted on the earlier stages.  Training programs came in the form of demonstration projects.  These primarily targets managers and technical staff directly involved in the production management.  Cooperation with other countries during the demonstration projects was present during the demonstration projects. 
   
Material and Resources & Institutional Support

Since a shift of production techniques can be costly for a firm, support for cleaner production efforts is necessary.  The establishment of funding mechanisms supportive of cleaner production is necessary.  Tax and price incentives play a key role in assisting firms.  Economic departments and local governments also adopted policies that encourage cleaner production.  Specific endeavors like material replacement, conventional technologies process innovation, solid fertilizer production, and methane utilization are encouraged.

V. Further Information: 

Tianzhu Zhang and Jining Chen. Promoting Cleaner Production in China. 2008 (http://www.chinacp.com/EN/PolicyDetail.aspx?id=41)

Case Studies of Cleaner Production in China http://www.chinacp.com/EN/Case.aspx

Cleaner Production in China (Environmental Legislation) http://www.chinacp.com/EN/PolicyDetail.aspx?tp=Law&id=38

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