“Comply or Close”- the New Reality for Industrial Facilities in China

Chinese Authorities are increasingly shifting their focus from permitting of industrial facilities to ensuring operational compliance.

Recent State Council reforms have pursued the parallel objectives of simplifying “green tape” associated with environmental permitting of new industrial developments while at the same time implementing supervision measures to promote operational compliance with environmental regulations for existing facilities.

These changes mark a significant departure from the Ministry of Environmental Protection’s (MEP) long-standing policy of focusing on permitting and approvals for new facilities with minimal monitoring of environmental compliance over the operational life of industrial facilities.

Plant Managers at industrial facilities in China have long known that failing to abide by environmental standards set by MEP is unlikely to land them in hot water. With few resources available to monitor facilities themselves, local authorities have generally left industrial facilities to self-report discharges to the environment with minimal supervision. The result has been a steady deterioration in the environment that has accompanied China’s industrial development. That changed earlier this year. Self-reporting is out and Central Government Inspections are in as China’s MEP gets tough on polluting facilities.