Green is gold: can waste be transferred to energy? A perspective on new energy laws in China - CWG

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Stone B Guo
Yingke Law Firm, Shanghai
guobochuan@yingkelawyer.com

‘Green waters and clear mountains are mountains of gold and silver’ is a great political slogan advocated by President Xi Jinping under the policy of ‘eco-civilisation’ in China.

The slogan stems from an existing one – ‘to obtain mountains of gold and silver from greens waters and clear mountains’ – created by the government 20 years ago. In the past two decades there has been therefore seen a huge reversal in priority from the economy to the environment. In line with this change, laws governing waste are also changing from an emphasis on disposal to recycling.

In practice, the legal framework regulating the waste can put into two categories: policy and legislation.

Even if the policy in China is not deemed as legislation, it still plays a significant role in the process of energy regulation. In the area of waste, the Announcement on Amending Catalogues of Imported Wastes Management (the Announcement)^[1] divides solid waster into three categories:

• forbidden to import into China;
• restricted import that can be used as raw materials in China; and
• automatic licensing that can be used as raw materials in China.

Even if it is not a regulation, the Announcement is highly specific on waste exported to China. Waste that can be reused or recycled are encouraged to imported, such as wood, paper and various metal, and are therefore automatically allowed.^[2]

In terms of legislation, the National People’s Congress (NPC) has enacted the Environmental Protection Law (EPL).^[3] Article 37 of the EPL mandates that all levels of local government shall adopt measures to organise the categorised disposal and recycling of domestic waste. Article 40 suggests that enterprises reduce pollutant generation and give priority to the use of technologies for integrated waste use and the decontamination of pollutants.

The Law of the People's Republic of China on the Prevention and Control of Environmental Pollution Caused by Solid Wastes ('Law of Solid Wastes')^[4] can be understood to be the main direct regulation on solid waste. It states that the adoption of centralised solid waste disposal measures are beneficial for environmental protection, and Article 3 promotes the development of the industry for prevention and treatment of environmental pollution caused by solid waste.

However, there are no clauses tackling the waste from energy productions. As a result, on 3 April 2020 the Chinese National Energy Administration released a draft seeking public opinion on a new 117-term Energy Law. It is made up of 11 chapters, ranging from the general principle in Chapter I, specific regulations in Chapters II to V, and supplementary information in Chapter XI.

Energy Law regulates energy resource exploitation, market access and international co-operation. However, it is hard to find a definition of ‘energy’ in the draft. It is a somewhat problematic that a legal document with the word in the titles does not sketch out the concept.

Though Energy Law does not define exactly what energy is, other Chinese legislation does. The Energy Conservation Law describes energy as ‘coal, petroleum, natural gas, biomass energy and electricity, thermal power and all other kinds of resources where usable energy may be obtained directly or through processing or transformation’. The Renewable Energy Law covers the non-fossil perspective, including wind energy, solar energy, water energy, biomass energy, geothermal energy and ocean energy.

Despite the change in direction burning waste to generate electricity is becoming more and more popular in China. According to a third-party report , China's processing plants were in an upward trend from 2012 to 2016.

In 2012, there were 138 incineration plants in China. This increased to 166 in 2013; to 188 in 2014; by 16 per cent to 219 in 2015; and to 250 in 2016. The total processing capacity was 238,000 tons a day, and the total installed capacity was about 4,906MW.^[5] By the end of 2016, the total processing capacity of domestic waste incineration plants was 238,000 tons a day. The total processing capacity of incineration powerplants using grate furnaces was 165,000 tons a day, and  using fluidised beds 7.3m tons a day.

It is not difficult to find the gap between the new Energy Law and the waste industry. Even so, the open discussion about the scope of the law does leave a window for revision of the final version, based on the dynamic evolution of the waste industry.

The draft of the Energy Law should also provide a position on waste burning, even if the waste can neither be classified as fossil energy nor renewable energy.

Considering the development of the waste industry market, it is clear that China has given full play to the decisive role of the market in resource allocation, established a market structure and a market mechanism with effective competition, formed a mechanism in which the waste price is mainly determined by the market in the competitive fields, and developed an effective waste regulatory system.

If waste is covered under the Energy Law, those investing, operating and managing the development and utilisation of waste must be allowed to compete fairly, and their legitimate rights and interests must be protected by law.