Opportunity knocks for companies making efforts to reduce pollution

The State Council recently issued the PRC 12th Five-Year Plan for Environmental Protection (the Plan), which sets out policies for China’s emissions reduction, pollution control and environmental risk management from 2011 to 2015. The Plan contemplates stronger enforcement of environmental regulations, increased regulatory requirements and new environmental economic policies that will pose challenges, but also provide new investment opportunities, for foreign investors and their subsidiaries in China.

According to the Plan, China will close down outdated production facilities and raise market-entry thresholds for companies in highly polluting, energy-intensive industries including steel, non-ferrous metals, building materials, chemicals, electricity, coal, paper, printing and dyeing, and tanning. Companies that produce heavy metals, hazardous waste and persistent organic pollutants or dangerous chemicals will be subject to environmental risk investigation and assessment, as well as stricter supervision. For example, companies engaged in heavy metals-related industries will be subject to intensive clean-production examinations every two years.

China is also welcoming private investment in emissions reduction, pollution remediation, rural environmental protection, ecological protection, nuclear and radiation security and environmental infrastructure projects. Companies may be able to enjoy certain incentives, such as tax breaks, subsidies or other preferential policies if they are engaged in environmental protection, clean production or energy saving activities such as sewage and wastewater treatment, refuse disposal, desulphurisation or sludge treatment.

Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mail at danian.zhang@bakermckenzie.com