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Chinas Total Emission Control Policy: a Critical Review

Ge Chazhong1, Chen Ji2, Wang Jinnan1, Long Feng3
1. Chinese Academy for Environmental Planning, Beijing 100012, China; 2. University of Dundee Dundee, DD1 4HN, Scotland, UK; 3. University of Science and Technology Beijing, Beijing 100083, China

Abstract: As part of a comprehensive environmental management

system, many countries establish emission control targets for mass emissions of a pollutant. Such targets are often the key objective of an environmental policy, such as an emission trading program. In China, however, it is more than just an objective of one particular policy; it has become a concept that has influenced many national environmental policies and activities. The objective of this article is to review the implementation of the total emission control policy in the past 10 years and explore emerging issues in its implementation. The article has three sections: a summary of the implementation experience, issues with the design and implementation of the policy, and policy recommendations.
Key words: total emission control, critical review, recommendations

Introduction

The total emission control (TEC) policy has been a part of Chinas environmental toolkit for more than 10 years. The concept of limiting total mass emissions was first implemented in 1996 in the Ninth Five Year Plan for the National Economy and Social Development and the Compendium of Long-term Objectives for 2010. The TEC policy fundamentally changed the approach of controlling pollution in China and it has been the foundation for subsequent environmental policies; more than 10 years after its introduction, the policy has become the most important component of Chinas pollution control system and will continue to play an important role in the future.

(SEPA), the national environmental regulator, proposed implementing a TEC approach in conjunction with the dominant pollution control policyemission concentration standards. In 1996, eight years later, the TEC policy was included in the Ninth Five Year Plan for Environmental Protection and Environmental Targets for 2000. According to the Plan, 12 pollutant discharges or transfers, namely sulfur dioxide (SO2), chemical oxygen demand (COD) of discharge water, mineral oil (in sewage), smoke, particulates (industrial sources), cyanide, arsenic, mercury, lead, hexavalent chromium, cadmium and solid waste (industrial sources), were regulated using the TEC policy. Before the introduction of the TEC policy, Chinas pollution control efforts centered on emission concentration standards. In China, concentration standards are set by governments at all levels and select industries. Chinas environmental management system, including a number of policies and measures, was based on these standards. The TEC policy, by contrast, controls pollution by setting maximum authorized levels of total mass emissions of regulated pollutants. As Song (2005) summarized, the TEC policy includes three criteria: temporal, spatial and volume; the policy describes the total authorized emissions within a given area and a given period. Following the TEC, the focus of pollution control in China gradually changed from concentration to total loadings of pollutants. Research has shown several benefits of the TEC approach (Song, 2000; Song, 2005):

Implementation experience

2.1.1

Environmental certainty

2.1 Transitioning from concentration standards to total mass emissions

The TEC approach was first introduced in 1988 at the Third National Conference for Environmental Protection where the State Environmental Protection Administration
Corresponding author: Long Feng (hnlongfeng@126.com)

Earlier policies required that each industrial facility emit at a concentration at or below relevant standards. However, the quality of the environment is not a function of emission concentrations, but of total loadings. Under a concentration standard, longer operating periods, increased production and new emitters will increase total emissions. Therefore, it is hard to

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determine whether the environmental quality will improve even when all facilities meet the concentration standards. This uncertainty is a key shortcoming of managing air and environmental quality with emission concentration standards.

target to enterprises, collecting emission data, and enforcing the rules of the program.

2.2.1

Setting the national emission target

2.1.2

Flexible and cost-effective compliance options

The TEC policy is focused on company-wide compliance while the concentration standards are focused on each industrial facility. The TEC policy establishes an emission limit for each company and gives the managers of the company the flexibility to comply with the standard in a costeffective manner. It does not establish uniform standards for each source. Requiring that each industrial facility achieve a uniform concentration standard may provide a simpler approach, but it is likely to come at a much greater overall cost to industry. Another disadvantage of uniform, nationwide concentration standards is that they fail to consider local conditions, such as meteorology, vegetation, topography and land use that can heavily influence the capacity of an environment to recover. The TEC provides companies with the flexibility to prioritize investment in pollution controls for different types of pollutants at different facilities. Under a concentration standard, each industrial facility must address all emissions. Because of limited pollution control budgets and other various reasons, there are high rates of non-compliance with concentration standards in China. The TEC approach provides companies with the flexibility to choose the most appropriate pollution control methods as each industrial facility at its full swing. The result is a more cost-effective approach to achieving the emission and environmental goal.

2.1.3

Easier to monitor

Pollutant concentration standards require continuous monitoring of emissions to ensure that a facilitys emissions do not exceed the standard. For some pollutants, however, a policy based on total emissions can be implemented more simply using engineering calculations based on fuel quality and quantity. However, if pollution control equipment (e.g., flue gas desulphurization units) is used, continuous monitoring is essential to ensure that emission data are accurate and complete (Schakenbach et al., 2006).

2.2

Implementation of TEC

Implementation of the TEC includes several components: setting the national emission target, allocating the

The target for Chinas TEC is based on total emissions during the previous Five Year period. For example, the Tenth Five Year Plan (20012005) stipulated that the pollution control target for the period was 10% below the actual 2000 emission levels. Therefore, it is essential to have a complete and accurate inventory from the previous Five Year period in order to set the total target for the next Five Year period. For many reasons, however, this is among the most challenging elements of the TEC policy. Emissions are typically estimated through one or more among the following three programs: application for pollution permits (APP), environmental statistics (ES) and pollution charge data (PCD). For the APP program, industrial facilities must self-report their total annual emissions by January of the following year. It is difficult for industrial facilities to have accurate estimates of emissions by the reporting deadline so estimates are often based on overall production levels, not fuel use and quality. The ES data are collected at the end of the year based on inspections by local and provincial Environmental Protection Bureaus. These data are often based on periodic in-stack/in-pipe measurements of emissions. The PCD are calculated based on the revenue from the pollution levy system (i.e. pollution tax). Many researchers and government analysts believe that the ES data are the most accurate among the data sets. Among the three measurement approaches, the largest emission estimate generally comes from the APP calculation followed by the calculations for ES; PCD has the lowest emission estimate. Using the APP calculation, enterprises typically submit information for a full-production scenario assuming all facilities are used for production. In practice, however, most of enterprises do not fully utilize their facilities. Therefore, the estimated emissions are larger than actual pollution. The PCD estimates are used for levying emission charges and they therefore provide an incentive for underreporting by enterprises and, in some instances, local governments interested in promoting economic development. Therefore, the authors believe that the emission data calculated using the PCD usually have less accuracy than the figures calculated using the other two methods. As Tian et al. (2003) discussed, the ES emission data

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are usually used as the official benchmarks to evaluate an enterprises environmental performance while the APP data are used to set the target for the next compliance period.

2.2.2

Emission target allocation

Allocating the emission targets, an important and complex process, is accomplished by first distributing targets from the central government to provincial and local governments. The provincial and local governments then allocate targets to polluting enterprises within their administrative regions. This process often includes considerable negotiations between parties.

2.3

Progress of the TEC

The TEC has been implemented for two complete Five Year Plan periods (i.e. Ninth and Tenth Five Year Plans), and is now in its third. The program has been updated periodically during this time with the expectation that it would result in a better environmental outcome. The description below demonstrates the aim and actual effectiveness of the policy in the three compliance periods.

2.3.1 The Ninth Five Year Plan period (19962000)

1) Plan The description in this sector draws mainly from the National Plan for Total Emission Control on Major Pollutants during the Ninth Five Year Plan period. The TEC policy was first introduced in 1996 in the Ninth Five Year Plan for National Economy and Social Development and Compendium for Long-term Objectives for 2010. The emission goal (see Table 1) was to limit total emissions of 12 regulated pollutants to the levels of year 1995 in 2000. These pollutants include three atmospheric pollutants [sulfur dioxide, smoke and particulates (industrial sources)], eight waterborne pollutants [COD of discharge water, mineral oil (in sewage), cyanide, arsenic, mercury, lead, hexavalent chromium, cadmium and industrial solid waste]. The principles of the policy included: The allocations of the target should ensure pollution reductions in key areas. In key areas identified by the government, emission sources are required to reduce emissions. These areas include the two control zones for acid rain and SO2 emissions, watersheds of the Wei, Hai and Liao Rivers, and watersheds of Tai Lake, Dian Lake and Chao Lake.

The allocations of the target should account for level of development. The economic development is in significant inverse proportion to environmental quality. For example, eastern China has stronger economic growth, but significant environmental degradation. The government has chosen this area to take greater action to reduce emissions relative to that of year 1995. By contrast, the economy of western China is less developed and, therefore, received a target that allows some regions to increase emissions relative to that of year 1995. Different pollutants should be treated differently. Pollutants that could cause serious damage to health and environment, such as cyanide and arsenic, are required in greater reductions relative to that of year 1995. Allocations to emission sources are dependent on meeting standards. Authorities should verify that emission sources have complied with relevant standards when allocating targets. 2) Effectiveness Thirty provinces and municipalities enacted specific implementation plans for the TEC policy and 27 provinces and municipalities allocated targets to lower level of governments. Some municipalities even integrated their TEC

2.3.2 The Tenth Five Year Plan period (20012005)

1) Plan The Tenth Five Year Plan for National Economy and Social Development reduced the number of pollutants under
Table 1 Targets of TEC for the Ninth Five Year Plan period Pollutants 1995 (Year) Smoke (1000 tonnes) 17 440 Industrial particle (1000 17 310 tonnes) SO2 (1000 tonnes) 23 700 COD (1000 tonnes) 22 330 Mineral oil in Sewage 84 370 (tonne) Cyanide (tonne) 3 495 Arsenic (tonne) 1 446 Mercury (tonne) 27 Lead 1 700 Cadmium 285 Hexavalent chromium 670 Industrial solid waste 6 170 2000 (Year) 17 500 17 000 24 600 22 000 83 100 3 263 1 376 26 1 670 270 618 5 995 Increase rate 0.37 1.80 3.82 1.49 1.5 6.4 4.8 3.7 1.9 5.4 7.7 2.9

Source: the Ninth Five Year Plan for National Economy and Social Development and Compendium for Long-term Objective in 2010.

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Table 2 Environmental protection areas Pollution indicators

Results of TEC for the Ninth Five Year Plan period Actual emissions in 1995 37.29 76.8 Target for year 2000 48.0 74 25 7 680 22 000 80 14 780 8 380 18 910 14 050 6 390 17 500 16 500 24 600 22 000 17 000 1.11 0.64 42.9 0.93 45 50 22 420 60 000 0.82 51.8 N/A 32 000 Yes Yes Yes Actual emissions in 2000 41.5 95 N/A 14 450 N/A 11 650 9 530 19 950 16 120 11 620 Yes Yes Yes Yes Yes Yes Achieve the target? Yes Yes

Amount of waste water discharge (1 billion tonnes) Percentage of controlled Waste water prevention industrial waste water (%) and control Percentage of controlled household waste water (%) COD (1000 tonnes) Percentage of controlled industrial emissions (%) Smoke discharge (1000 tonnes) Atmospheric pollution prevention and control Industrial smoke discharge (1000 tonnes) SO2 emissions (1000 tonnes) Industrial SO2 emissions (1000 tonnes) Industrial particle (1000 tonnes) solid waste generated (1 billion tonnes) Industrial solid waste generated (1 billion tonnes) Solid waste prevention and control Reuse rate of industrial solid waste (%) Percentage of detoxing household waste in urban area (%) Industrial solid waste discharge (1000 tonnes)

Source: Chinas Environment Report (2000), Year Book of Chinas Environment (2001).

the TEC from 12 to 6. The six pollutants remained are SO2, smoke, particulates (industrial dust), COD, ammonia and nitrogen (NH3N) and industrial solid waste. The specific targets where expressed as necessary reductions below the levels of the year 2000. The specific targets were: 10% reduction of SO2 emissions, 9% reduction of smoke, 17.7% reduction of particle emissions, 10% reduction of COD discharges, 10.1% reduction of NH 3N discharges and 10.2% reduction of industrial solid waste discharge. In the Two Control Zones, the plan required 20% reduction of SO2 emissions. The other seven pollutants were removed from the TEC because they were well controlled during the Ninth Five Year Plan period. Although they were removed from

the TEC of the Tenth Five Year Plan period, the relevant pollution standards for those pollutants still applied. In addition to the inclusion of NH3N, the plan also included provisions for local governments to include additional pollutants to address local environmental issues. The TEC during the Tenth Five Year Plan period once again stressed the importance of accounting for differences among local environmental quality and economic and social development. Areas where environmental quality does not meet standards, the targets should require reductions from the levels of year 2000 while other regions may have targets that allow for limited emission growth. 2) Effectiveness

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Table 3 Effectiveness of implementing TEC in the Tenth Five Year Plan period (1000 tonnes) SO2 2000 (Year) 2001 (Year) 2002 (Year) 2003 (Year) 2004 (Year) 2005 (Year) Increase from 2000 to 2005 (%) 19 950 19 478 19 262 21 587 22 549 25 493 28 SO2 emissions in the Two Control Zones 13 164 N/A 11 062.5 12 810 11 355.25 N/A Smoke 11 650 10 698 10 127 10 487 10 950 11 825 1.5 Industrial Particle 10 920 9906 9410 10 210 9048 9112 16.6 COD 14 450 14 050 13 669 13 336 13 392 14 142 2.1 NH3N 1 835 1 252 1 288 1 297 1 330 1 498 18.4 Industrial Solid waste discharge 31 861 28 940 26 350 19 410 17 920 16 547 48

Source: Chinas Environment Annual Report (20002005).

The targets of the TEC for the Tenth Five Year Plan period were generally not met. SO2 emissions and COD discharges showed the worst results: SO2 emissions increased 28% while COD discharges had been reduced by only 2%. Both pollutant targets required a 10% reduction from the levels of year 2000 (see Table 3).

2.3.3 The Eleventh Five Year Plan period (20062010)

The Compendium of the Eleventh Five Year Plan for National Economy and Social Development sets general targets for Chinas environmental protection from 2006 to
Table 4 Allocations of TEC for COD Discharges for the Eleventh Five Year Plan period Provinces/mu- Total discharges Discharge target nicipals Beijing Tianjing Shanxi Shanghai Jiangsu Shandong Guangdong Hainan Chongqing Sichuan Tibet Qinghai Xinjiang in 2005 (1000 tonnes) 116 146 387 304 966 770 1058 95 269 783 14 72 271 for 2010 (1000 tonnes) 99 132 336 259 820 655 899 95 239 744 14 72 271 Reduction rate (%) 14.7 9.6 13.2 14.8 15.1 14.9 15.0 0 11.2 5.0 0 0 0

2010. The National Plan for Total Emissions Control of Major Pollutants during the Eleventh Five Year Plan Period spells out the detail about TEC implementation. The TEC plan stipulates that only two pollutants are controlled by the TEC policy during the Eleventh Five Year Plan period, namely SO2 emissions and COD discharges. The TEC target requires SO 2 emission reductions from 25.49 million tonnes (2005 levels) to 22.94 million tonnes (10% below the levels of year 2005). The COD discharge targets require reductions from 14.14 million tonnes (levels of year 2005) to 12.73 million tones (10% below the levels of year 2005). The TEC plan does not include targets for other pollutants but encourages local governments to establish independent TEC plans for other pollutants. The TEC plan included very detailed allocation plans for each province and municipality (see Tables 4 and 5). IIn March 2007, SEPA created a leadership team and a special office with the responsibility to implement and oversee the TEC policy for the whole country. The leadership team is led by SEPA Minister Zhou and includes directors of most SEPA departments and affiliated institutions. Following the establishment of a TEC office in SEPA, many local Environmental Protection Bureaus created special offices to implement and oversee the TEC policy in their administrative areas.

Notes: 1. For information of other areas, see National Plan for Total Emissions Control of Major Pollutants during the Eleventh Five Year Plan period. 2. Target for COD discharge reductions is 12.728 million tonnes. The aggregate of the allocations is 12.639 million tonnes. The remaining 89 000 tonnes is withheld for use in a pilot programme of tradable permits.

3 Issues with the design and implementation of the policy

Many issues arose during the implementation of TEC. These issues in essence can be categorized into design is-

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Table 5 Allocations of TEC for SO2 Emissions for the Eleventh Five Year Plan period Provinces/municipals Beijing Tianjing Shanxi Shanghai Jiangsu Guangdong Hainan Chongqing Sichuan Tibet Qinghai Xinjiang Total emissions in 2005 (1000 tonnes) 191 265 1516 513 1373 1294 22 837 1299 2 72 519 Emission target in 2010 (1000 tonnes) 152 240 1304 380 1126 1100 22 737 1144 2 72 519 Power sector emission target in 2010 (1000 tonnes) 50 131 593 134 550 554 16 176 395 1 166 Reduction rate (%) 20.4 9.4 14.0 25.9 18.0 15.0 0 11.9 11.9 0 0 0

Note: Target for reduction in SO2 emissions is 22.944 million tonnes. The aggregate of the allocations is 22.467 million tonnes. The remaining 477 000 tonnes is withheld for use in a pilot program of emission trading.

sues and implementation issues.

3.1
3.1.1

Design issues
Irrational emission targets

target for the Tenth Five Year Plan period was to reduce SO2 emissions by 10% from the levels of year 2000 by 2005. However, the target was based on the 20 million tonnes reported using APP methodologies.
QAPP=total loading of pollutants based on the calculation of APP QES=total loading of pollutants based on the calculation of ES Actual amount of pollutants and targets QAP

The targets of the TEC policy were largely unrealistic, unscientific and inconsistent. First, the targets were not realistic to achieve. Assessing the SO2 emission target as an example, the Tenth Five Year Plan required a 10 to 20% SO2 emission reduction from that power sector. However, because of the rapid growth in the sector and the short time horizon during which a power plant would have to assess, find, finance and install controls, it would be difficult to meet the target. Second, the targets are not based on scientific assessments of the reductions necessary to improve environmental quality. Third, the emission data used to set the target and assess compliance are not consistent. As mentioned in section 2.2, the government usually uses reports from local governments to assess compliance with the TEC, but establishes targets based on reported emissions from emission sources (which tend to be much higher than reports from local governments). As a result, there is a gap between the actual emissions of the previous Five Year Plan period and the target for the next Five Year Plan period. As Fig. 1 illustrates, there is lack of continuity of TEC targets between periods. For example, in 2000, the total SO2 emissions from the Ninth Five Year Plan period were 19.95 million tones. The

QES

Compliance periods

Fig. 1 Actual total loading of pollutants and targets setting

3.1.2 Comparison between target based control programs and environmental capacity (EC) based programs
There are essentially two ways to determine how much of a pollutant needs to be reduced politically or scientifically. The target based approach establishes an emission target based on political concerns, which could include economic impact, public perception and technical feasibility. Another approach is to focus on scientific assessment. This latter approach sometimes refers to EC. Although there is no uniform definition for the concept of EC, it is commonly

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accepted in China that EC is concerned with an environment threshold. When the total loading of certain pollutants exceeds the threshold, the environment will be significantly affected. When it comes to the TEC policy, if EC can be quantified through scientific assessment, it could make decisions to establish the TEC targets. In simple terms, this so called EC based TEC firstly needs to know a quantifiable EC and then a total loading of pollution reduction can be worked out according to the EC calculation. Both approaches have advantages and disadvantages. Target based TEC is easier to implement but harder to know if the target will improve environmental quality. The Chinese experience has shown that target based TEC shows no clear evidence that achieving the target results in improvements to environmental quality. As for EC based TEC, there are a number of challenges: 1) there is no consensus on how to measure EC, 2) data and technologies for measuring EC are not readily available across China, therefore, significant financial and technical support is required. Given that the difficulties of shifting EC based TEC may suffer and despite of some problems existing in the current practice of target based TEC, many people still agree that target based TEC should be still in the service but EC based TEC should be gradually involved in the implementation of some areas if the specific situation is appropriate.

means an authority has to know what a facility is producing and at what levels. This is very costly and resource intensive for the authority. Thus, there are few statistical data for specific pollutants. Regulating fewer pollutants may make it easier to implement the policy, but it might not provide a complete picture of what is necessary for environmental improvement. For example, in addition to SO2, NOx is a major contributor to acid rain. If the TEC does not include other pollutants, the policy may not achieve the environmental objectives.

3.1.4 Allocations
The current allocation system in TEC grandfathers emissions based on historic emission data. This means of allocation is simpler than many other approaches, but most significantly it provides a disincentive to reduce emissions more than required or to install more effective pollution control equipment. Better performance results in lower allocations for subsequent periods and, therefore, greater costs to meet the target. Another problem that the current allocation system brings up is about the compatibility with tradable permits program in some areas. As discussed earlier, the first tier of allocation is from the central government to local governments, i.e. the permitted volume is allocated to different administrative areas. Since the pollution permits in most cases are seen as scarce source, local governments usually do not want to see them being traded out of their administrative areas. Therefore, it becomes an obstacle for the implementation of this market based program. The problem becomes particularly serious when it comes to tradable permits program for water pollution control. Water system usually covers more than one administrative area. It is not difficult to imagine that when all the involved areas hold their permits and do not allow their enterprises to trade with enterprises in other provinces or municipals, the effectiveness of tradable permits program for the water system could be considerably impaired. In addition, the existence of negotiation throughout the whole process of allocation admittedly jeopardizes the fairness and justice of implementing TEC. There is lack of clear and rational allocation methods, especially in the process from local governments to polluting enterprises. This leaves a space of negotiation which could give rise to many implementing problems.

3.1.3

Number of regulated pollutants

An interesting trend in the TEC policy during the three Five Year Plan periods is the number of affected pollutants. In the Ninth Five Year Plan period, there were 12 pollutants subject to the policy nationwide. The number declined to six in the Tenth Five Year Plan period and only two in the Eleventh Five Year Plan period. There are two justifications for removing some of the other pollutants from the national plan: 1) some pollutants are well controlled and therefore no longer pose a nationwide problem; 2) it is very difficult to obtain reasonably accurate statistics for some pollutants. The latter issue is because of the heavy reliance on self-reported measurements, i.e. the APP. Taking water discharges as an example, there are two types of discharges that were historically included in the TEC: COD discharges and specific pollutants (e.g. NH3N, cyanide, arsenic and heavy metals). Unlike COD, which could be created by any type of industrial production, these special water pollutants are only released from the operation of specific processes. This

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3.2
3.2.1

Policy implementation issues

Difficult to monitor

Monitoring whether polluting sources control their pollutants within the scope of allowed loadings is a very difficult task. The difficulty exists mainly for two reasons: (1) equipments for pollution monitoring are mostly outdated and few of them are connected with network; (2) local Environment Protection Boards (EPBs) often suffer the shortage of manpower to conduct on-site monitor. Therefore, in practice, it is hard to monitor the actual loading of regulated pollutants. It is reported that in many occasions EPBs are sure that some polluting enterprises release more pollutants than they are permitted, but since EPBs have no clear evidence the non-compliance behavior can hardly be controlled.

to favor the economic growth in the areas. It is reported that in some areas the governments connive with polluting enterprises to cover the fact of their non-compliance and moreover some governments even directly intervene the law enforcement associated with environmental protection.

3.2.4

Lack of flexibility to achieve target

3.2.2 Verifying whether the target is achieved

It is also a complex task to verify whether the pollution control target is achieved. There are usually thousands of polluting enterprises in an administrative area, which probably means far more polluting indicators need to be evaluated. Moreover, under the rules of some areas, verifying process should be conducted on a yearly and even monthly basis. In addition, for different enterprises, since they have different production processes, use different techniques and apply different ways to treat pollution, EPB staffs are usually confronted with enormous difficulties to obtain accurate information. Information publicity of enterprises could assist authority to obtain concerning information, but it is only at the beginning of the process with only some largescale and state-owned enterprises involved and it is at least at present not the source that the authority could rely on.

The TEC only puts forward a target but it does not provide flexible mechanism to assist polluting enterprises to accomplish their assignments. Given the fact that there are huge differences among areas in China, providing flexibility to polluting enterprises, it is imperative that they can choose the most suitable measures to control pollution by themselves. Tradable permits system is the policy instrument that is generally believed to be able to provide such flexibility. However, after more than 10 years study and practice in trial program in some areas, there are still many problems to overcome and actually introducing such a system in China still needs many more years according to many experts.

3.2.5

Small enterprises compliance

3.2.3

Law enforcing

Protecting environment in some areas is still seen as impeding economic growth. This causes the difficulty in law enforcing due to local protectionism. Many existing problems of Chinas environmental regulatory system contribute to this difficulty. First, legal system, especially environmental legal system, which is under its way of development and improvement, needs to be implemented from many aspects. Therefore, it is doomed to be deficient at present. Second, the admittedly irrational relationship between local EPBs and local governments makes law enforcement of environmental protection in China usually very soft in order

Polluting enterprises with small scale, as many believe, usually stand out of the regulation of TEC. These enterprises are usually privately owned or with ownership of township. Most of them have a short history of production but a long history of heavy pollution due to their poor production conditions and outdated facilities. Since pollutants loading allocation are only among key polluting enterprises, which normally cover those large-scale and state-owned ones, small-scale enterprises are therefore logically out of TECs regulation. However, these small enterprises are also a huge source to environmental degradation and if they are still out of TECs control, the effectiveness of the policy will be undoubtedly jeopardized. In fact, many believe that since the difference of marginal mitigation costs between small polluting enterprises and large-scale polluting enterprises is very large, if more small enterprises are involved in the regime, market based environmental policies could be more cost-effective and as a result, the target of TEC could be achieved more successfully.

3.2.6

Lack of effective punishment mechanism

There is lack of effective punishing mechanism against non-compliance of polluting enterprises. The financial penalty for non-compliance at present is too low to have actual

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influence on enterprises behavior.

Conclusion and recommendation

Despite of some deficiency emerged in years of practice, it is generally agreed that TEC has by far made significant contribution to Chinas environment and indeed provided a solid policy foundation for many other environmental policy instruments. What is almost certain is that the policy will continue to serve China and play an important role for the countrys environmental protection, while what is not quite certain is that in which form it will continue its services. However, no matter which form it will be in, so long as it overcomes its current disadvantages, it will certainly have a brighter future in China. Having reviewed the 10 years operation of TEC, the authors would like to provide the following recommendations to the policy-makers for the future practice of the policy. Following suggestions may assist to overcome the problems of the irrationality of target setting: (1) conduct more investigation based upon scientific researches and attempt to make the target more realistic to be implemented; (2) integrate the concept of EC in the process of target setting, which can be accomplished in accordance with specific situation of different areas; (3) apply the same set of data to verify enterprises environmental performance in previous compliance periods and set the target for the next compliance period so the continuity of targets can be ensured. Enhancing EPBs capacity of monitoring and supervisingas mentioned earlier, EPBs are usually lack of capacity to monitor the pollution situation of enterprises and in many cases it is difficult to enforce enterprises to comply with their obligations. The problem is attributed to many factors and mainly because of the shortage of advanced equipment and lack of manpower. It is therefore imperative to enhance the capacity of EPBs in these fields. Improving Chinas existing environmental management systemTEC only provides the targets for pollution control but to actually achieve these targets, China needs to improve its overall environmental management system. Fortunately, the central government, particularly the SEPA, has realized the importance of establishing and improving such a system and begins to make real progress in this field. Mr. Zhou, the minister of the SEPA, recently further explained

that there are three key systems pivotal to Chinas environmental management system, including rational discharge standards system, accurate monitoring system and sever pollution control regulatory system. It is also reported that the Ministry of Finance will pump into 2 billion yuan RMB to strengthen the establishment of these three systems. Strengthening the capacity of law enforcingseveral measures can be applied to strengthen the capacity of law enforcing for implementing TEC in China: (1) whether or not the local TEC targets are achieved can be considered as a criterion for evaluating the administrative performance of government officials; (2) further develop Chinas legal system for environmental protection, particularly clarify responsibility of each entity in environmental protection activities and introduce the mechanism of accountability for the relevant administrative action; (3) make environmental protection agencies more independent from local authority in order to avoid the local protectionism; (4) strengthen transparency during the process of law enforcing; (5) improve the professional ability of staff in charge of law enforcement; (6) facilitate the public to have the access of information, i.e. improving government information publicity. More flexibility should be provided to achieve the targetTEC policy should be complemented by many other policy instruments that could provide more flexibility to help enterprises accomplish their targets. It has been proved in theory that instruments, such as emissions trading and voluntary programme, could definitely make huge difference in implementing TEC policy.

References
Schakenbach J, Vollaro R, Forte R, 2006. Fundamentals of successful monitoring, reporting, and verification under a cap-and-trade program. Journal Air and Waste Management Association, 56: 1576 1583 Song G, 2000. Chinas total emission control and concentration control systems. Environmental Protection, (6): 1113 (in Chinese) Song G, 2005. A more appropriate total load control policy for Chinas market-oriented economy. Environmental Economy, 21:4144 (in Chinese) Tian R S, Zhou S M, Zhang Z M, et al., 2003. Consideration and suggestion on total pollutants amount emission control. Shanghai Environmental Sciences, 22(7): 483494 (in Chinese)

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