‘Guidelines for Environmental Protection’

On 1 March 2013, the Ministry of Commerce and the Ministry of Environmental Protection of the People’s Republic of China announced that they had issued Guidelines for Environmental Protection in Foreign Investment and Co-operation, applying to all enterprises operating outside of China. As the Guidelines are relatively new it is not yet clear what the mechanism for applying them is and to what extent the implementation is taking place, however they constitute a starting point for communication on expectations of company behaviour.

Among the most notable Articles relevant to coal projects are the following:

Article 4
Enterprises shall, adhering to the concept of environmental friendly and resource conservation, develop low-carbon and green economy, and implement sustainable development strategies, so as to realize a “win-win” situation of corporate self-interests and environmental protection.

Article 5
Enterprises shall understand and observe provisions of laws and regulations of the host country concerning environmental protection.

For projects invested in the construction and operation by enterprises, application shall be filed to local government for permits with respect to environmental protection in accordance with laws and regulations of the host country.

In potential EU countries this can also be argued to include EU Directives.

Article 6

Enterprises shall include environmental protection into their enterprise development strategies as well as production and operation plans, establish corresponding rules and regulations for environmental protection, and reinforce management of enterprise’s environment, health and production safety. In addition, enterprises shall be encouraged to utilize integrated environmental services.

In most cases it is unknown what rules and regulations enterprises have developed for environmental protection, but it may be worth asking.

Article 8
Enterprises shall, in accordance with requirements of laws and regulations of the host country, conduct environmental impact assessment on their development and construction as well as production and operation activities, and take reasonable measures to reduce possible adverse impacts based on the findings of such environmental impact assessment.

Again, the need for an environmental impact assessment to take place in line with national laws can be interpreted as the need to comply with the EU’s EIA Directive in potential EU countries. Most of the countries have anyway committed to follow this Directive through the Energy Community Treaty[link:www.energy-community.org].

Article 9
Enterprises are encouraged to take full into account of the impacts of their development and construction as well as production and operation activities on the social environment such as historical and cultural heritages, scenic spots and folk customs, and to take reasonable measures to reduce possible adverse impacts.

Article 10
Enterprises shall, attending to the requirements of laws, regulations and standards of the host country concerning environmental protection, construct and operate pollution prevention installations, carry out pollution prevention work, and ensure that the emission of exhaust gas, waste water, solid wastes or other pollutants meet the standards of the host country for pollutant emission.

Here it is important that the pollution control measures are in line with the EU Industrial Emissions Directive (2010/75/EU), which will become binding for new plants in the Energy Community countries by 2018. Considering that new power plants take several years to build, any planned now are unlikely to enter operation before 2018 and therefore may be illegal even before they enter operation. Yet several plants planned in the Western Balkans appear to be being planned only with the older and less strict Large Combustion Plants Directive (2001/80/EC) in mind. For guidance on the implications of this requirement, contact Bankwatch (pippa.gallop@bankwatch.org).

Article 11
Enterprises are encouraged to, prior to construction of the project, conduct environmental monitoring and evaluation for the proposed construction site, obtain understanding of the environmental background situation of the place where the project is located and its surrounding areas, and put the environmental monitoring and evaluation results on record.

Enterprises are inspired to conduct monitoring on main pollutants discharged, be aware of the pollution situation of enterprises at all times, and put the monitoring results on record.

This is ambiguous as to whether it actually means that the results should be disclosed, but one can always ask…

Article 12
Enterprises are advocated to carry out environmental due diligence on the target enterprise before acquiring overseas enterprises, focusing the evaluation on the hazardous wastes formed in its historical operation activities and the soil and underground water pollution, as well as environmental debts of the target enterprise related thereto. Encourage enterprises to take favorable environmental practices for the purpose of reduction of potential risks of environmental liabilities.

This may be useful to mention in the context of many of the power plant plans in the Western Balkan regions, as most are on brownfield sites with environmental legacy problems such as ash dumps, unstable spoil tips, water pollution etc.

Article 13
Enterprises shall make management plans for hazardous wastes that may be generated during production, the contents of which shall include measures to reduce the amount and hazard of hazardous wastes, as well as measures to store, transport, utilize and dispose these hazardous wastes.

Article 14
For potential risks of environmental accidents, enterprises shall formulate contingency plans for environmental accidents and other emergencies based on the nature, features and possible environmental hazards of the same, and set up a system of reporting to and communication with local government, regulatory authority of environmental protection, the general public that may be affected and the headquarters of Chinese enterprises.

Contingency plans shall include the organizational system and responsibilities of emergency management work, prevention and early warning mechanism, handling procedures, emergency guarantees, and recovery and reconstruction after the emergency. Encourage enterprises to organize emergency drills and make timely adjustments to the plans, as well as to take such measures as covering environmental pollution liability insurance to reasonably disperse risks of environmental accidents.

Article 15
Enterprises shall carefully consider the ecological function orientation of the area where the project is located, and they may, with the coordination of the government of the host country and the community, have priority to take such measures as in-place and nearby conservation of animal and plant resources that worth conservation and may be affected, to reduce adverse impacts on local biodiversity.

For ecological impacts caused by investment activities, enterprises are encouraged to carry out ecological restoration in accordance with requirements of laws and regulations of the host country or common practices in the industry.

Article 16
Encourage enterprises to conduct clean production, promote recycling, reduce pollution from the source, improve the resource use efficiency, and reduce generation and emission of pollutants in the course of production, service and product use.

Article 18
Encourage enterprises to post their environmental information on a regular basis, and publish their plans on implementation of laws and regulations on environmental protection, measures taken, and environmental performance achieved, etc..

Article 20
Advocate enterprises to establish a way of communication and dialogue mechanism for enterprises’ environmental social responsibilities, take the initiative to strengthen their contacts and communications with their communities and relevant social groups, and take opinions and suggestions with respect to environmental impacts of their construction projects and operation activities through forums and hearings according to requirements of laws and regulations of the host country.

Article 21
Enterprises are encouraged to actively participate in and support local public benefit activities for environmental protection, publicize the concept of environmental protection, and build a good enterprise image in respect of environmental protection.

Article 22
Encourage enterprises to research and learn from the principles, standards and practices with respect to environmental protection that are adopted by international organizations and multilateral financial institutions.

Although the language is only ‘encouraging’, the standards used by multilateral financial institutions can be useful as most of them now have policies strictly limiting coal investments (see sections on the World Bank, EBRD and EIB). In addition the environmental policies of these institutions can offer some useful standards in areas such as resettlement.