Since the 1980s, China's Environmental Impact Assessment (EIA) program established the requirements regarding environmental emissions and discharges for new and modified industrial operations. Construction of a proposed project (new site or processes) could only be started after the EIA application was approved by the authority. Then, the completed project could begin normal operation only after receiving the acceptance approval from the local authority. In addition, as compared to similar U.S. scenarios, China's regulations prescribed very little to no specific compliance requirements. However, in 2015, China's Ministry of Ecology and Environment (MEE), formerly the Ministry of Environmental Protection (MEP), promulgated a Discharge Permit Program that established a platform for specifying and enforcing environmental requirements. This new permitting program creates great uncertainty for all industrial operations in China including U.S. companies with operations there. This article provides an overview of the new permitting program and its potential impact to companies with significant operating assets in China. 2018_Fall_EQ_China chart 1.jpg

Developing China's Discharge Permit Program

The “Overall Plan for the Reform of the Ecological Civilization System” was reviewed and approved at the Central Political Bureau meeting on September 11, 2015. The plan outlines changes that can bring improvements to the Pollutant Discharge Permit System by establishing a unified and fair system that covers all stationary pollution sources across the country. Under the new program, the discharge permit is issued for specified discharge pollutants, and unapproved discharges are prohibited.

November 10, 2016

On November 10, 2016, the State Council issued the Implementation Plan for Controlling the Pollutant Discharge Permit System. Then the MEP piloted this plan with two industries: Thermal Power Plants and Pulp Paper Mills. These two industries were chosen because of the amount of emissions these industries produce, and because facilities in these industry segments were already engaged in environmental management measures.

April 2017

In April 2017, MEP consolidated three functions of total control, emissions trading, and discharge permit into the newly established Office of Pollution Discharge Permit and Total Control. This change further solidified the foundation for the system integration of the fixed pollution source system.

Then in the same year, MEP drafted and published departmental regulations and discharge permit management regulations, and issued pollutant discharge permits for more than 10 industries. Guidance documents, such as the Classification Management List,established a unified national management information platform. By the end of 2017, 15 key industries across the country had become subject to pollutant discharge permitting under the new program.

January 2018

In January 2018, MEP issued the Measures for the Administration of Pollution Discharge Permits which stipulated the procedures for issuing emission permits and refined the legal responsibilities of provincial environmental protection departments, pollutant discharge units, and third-party professional organizations (i.e.., consulting).

June 2018

In June 2018, the Central Committee of the Communist Party of China, the State Council on Strengthening Ecological Environment Protection, and the Resolutely Fighting Pollution Prevention and Control organizations issued an opinion that the following processes should be accelerated:

  • Time to implement permitting
  • Full-process management of fixed pollution sources
  • Coordinated control of multiple pollutants according to the industry, areas, time limits issued and emission permits
  • Comprehensive implementation of corporate pollution control responsibilities
  • Strengthen post-certification supervision and punishment
2020

By 2020, the permitting system is expected to become the core system for stationary source environmental management, and the “one-permit” management system will be implemented.

Preparing for Permit Applications

Companies planning to commence operation entities in China should be aware of some key steps to ensure success in preparing for the permit application.

Review Existing Approved Limits

Prior to obtaining a discharge permit, a company must ensure that a site has approval for its operation and discharge limits granted by the authorities based on the EIA program. If a site does not have EIA approval and, depending on local policy and environmental conditions, a company can be forced to shut down unauthorized operations and emission sources until approval can be granted.

Two common situations for sites without proper EIA approval are: 1) the site did not apply for the discharge permit for the current (or designed) capacity and discharge limits; and 2) permitted limits were not properly established by the site's original EIA.

In both cases, EIA application can be a significant hurdle for the site. In many severely polluted areas, authorities most likely will not approve EIA applications for sites in the first situation. A new EIA for sites in the second situation may also be denied if the site does not have a strong technical justification for the corrections.

Prepare Discharge Permit Application

All local permitting agencies are working under the guidance established by the MEE for the discharge permit application. Permit applications must include extensive process and equipment information related to stated environmental limits that include production limits, energy, water resources, air emissions, and wastewater discharge. Per current MEE guidance, the following items are typically required in all permit applications:

  1. Basic Information for permit applicant
    1. Description of permit entity
    2. Site specific products and capacities
    3. Source descriptions of the pollutant discharge units
    4. Raw and auxiliary materials, energy resources (e.g., fuels)
    5. Production specific discharge of pollutants and pollution control equipment
  2. Air pollutant emissions
    1. Description of emission sources: pollutants, and control equipment for each pollutants
    2. Point source emissions and corresponding emission limits
    3. Fugitive emissions and corresponding emission limits
    4. Special event emissions (e.g., start-up, shutdown, temporary changes, maintenance, etc.)
    5. Total allowable emissions for each pollutants for projected five years
  3. Wastewater
    1. Wastewater discharges to receiving waterbody, effluent flow rates, and qualities
    2. Wastewater discharges to receiving wastewater treatment plant, effluent flow rate, and quality
    3. Effluent standards for pollutants of each discharge point
    4. Annual discharge limits for each pollutant at each discharge point including all source data and calculations methods
  4. Environmental management requirements for compliance demonstration
    1. Source monitoring plans, including:
      1. Monitoring parameters (e.g., flow rate, pollutants, temperature, pH, etc.)
      2. Monitoring methods and equipment specifications for continuous monitoring system
      3. Monitoring methods and frequencies for manual monitoring process
    2. Recordkeeping and reporting for permit related data
  5. Management content required by local environmental protection authorities
  6. Corrective actions for deviations to discharge permit conditions

Within each of these sections of permit application requirements, there are extensive data to be collected and compliance strategies to be specified. Discharge permit applications are submitted electronically and, unlike permit applications in the U.S., there may not be opportunities to revise information provided in a permit application once it is submitted. To ensure proper limits to be included in the permits, the applications must be carefully prepared, requiring significant resources and effort.

Compliance Requirements for Operating Permits

As of the third quarter of 2018, local authorities have issued some permits in major industries such as coal-fired power plants, steel mills, petroleum refineries, petrochemical complexes, pharmaceutical plants, and pulp and paper mills. Any site that has received its permit must start addressing the following requirements:

  • Monitoring of pollutants in concentration limits and mass limits
  • Sampling and testing on specified frequencies (e.g., daily, weekly, monthly, annual, etc.)
  • Quarterly, semiannual, and/or annual reports for monitoring data, air emissions, and wastewater effluent discharge data
  • Record-keeping requirements for all monitoring and testing data, operational data, and source emissions or discharge data to demonstrate compliance with permitted limits
  • Progress of corrective actions for compliance requirements
  • Emissions trading activities and records (if applicable)

The new permits will require a significant amount of reporting of both operational data and emissions and discharge inventories to environmental authorities. As planned by MEE for the new permitting program, sites will be inspected by authorities based on the new discharge permits. MEE and local authorities also plan to use this data to establish enforcement programs to impose further pollution control measures on industrial operations. These new requirements will significantly increase operation costs and therefore will need to be considered during annual budget planning for companies with operations in China.

In Summary

All industrial operations in China have been or will be required to obtain new discharge permits by the MEE's deadlines, which differ per industry. The new program has had a drastic impact on industrial plant operations in China for environmental compliance. Companies that have not filed for a discharge permit application should start the process as soon as possible with clear understanding of the permitting requirements.

Since 2006, Trinity Consultant's China offices have supported facilities regarding EIA and compliance audits. Trinity has been involved in the development of the permitting program and the initial pilot permit templates with permitting authorities since 2015. For example, our local team in China worked closely with the Hainan Environmental agency since the beginning of the discharge permit program development and published a book entitled, “200 Q&As for U.S. Environmental Permitting,” which provided permitting principles for Chinese environmental authorities.

A webinar on new permitting requirements in China will be scheduled for Spring 2019. For more information, please contact Dr. Weiping Dai at wdai@trinityconsultants.com.