13:43 31.10.2019

China Unveils Penalties for False Industrial Air Pollution Data

Source: Bloomberg
China Unveils Penalties for False Industrial Air Pollution Data

China’s new penalties for companies that cheat on air pollution monitoring are unlikely to deter data manipulation unless the government adds stricter oversight, some analysts said.

A draft regulation released last week by the Ministry of Ecology and Environment includes penalties of $28,000 for companies that tamper with emissions monitoring systems or falsify data, with penalties for individuals caught falsifying data as high as two years’ worth of their salary.

“To put 200,000 yuan [$28,000] in scale, the extra [costs] for meeting the NOx emissions limits can easily come out to tens of millions of yuan per year for a large coal-fired power plant,” said Lauri Myllyvirta, lead analyst at the Greenpeace Air Pollution Unit.

“It always boils down to the equation of how easy it is to cheat, how likely you are to get caught, and how large the punishment is,” he said. “But unless the authorities manage to visit every plant multiple times per year it seems that this fine is unlikely to eliminate the incentive to cheat.”

Emissions Trading Questions And the unreliability of the emissions data could undermine the credibility of China’s pending carbon emissions trading program, which will cover the entire coal-fired power sector, said Myllyvirta and Jeremy Schreifels, a visiting fellow at Resources for the Future.

Schreifels said the problem is the accuracy of continuous emissions monitoring systems (CEMS) set up at coal-fired power plants, incineration units, and other major industrial sites. In the U.S. and European Union, emissions monitoring systems are required to be installed in the smokestacks under specific conditions. But China’s standards are not as specific on placement of monitoring equipment, actual technical calibrations, or details on upkeep.

“One of the other things we noticed with the Chinese systems was the calibrations,” said Schreifels, whose research focuses on China’s energy and environment issues. “Just like you might calibrate your scale in your bathroom, these CEMS need to be continuously calibrated.”

‘Tapestry of Monitoring Regulations’ Better monitoring systems will be important for whether the carbon emissions trading program—expected to officially begin next year—functions or falters, and whether anyone outside of China will trust green bonds that back so-called ultra-low-emission coal-fired power plants, said Schreifels, who is working for a nonprofit research institution based in Washington, D.C.

“The monitoring is what provides the credibility for the systems, so it is important to get that right and provide a level of transparency and confidence to the system and the emissions data so people have confidence in those markets,” Schreifels said.

“This regulation, while still vague on some aspects of monitoring, will add to the tapestry of monitoring regulations and hopefully help to improve the quality of data,” he said. “But there’s still a lot that needs to be done to have quality data that will build confidence within the market, and also with the international community believing in the progress that is being made.”

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