On Jan. 10, the State Environmental Protection Administration unleashed its third environmental protection storm, targeting 82 projects in 22 provinces and cities, in sectors such as steel, power generation and metallurgy. In an unprecedented move, SEPA slapped "regional permit restrictions" on four cities (Tangshan, Luliang, Laiwu and Liupanshui) and four major power companies (Datang International, Huaneng, Huadian and Guodian), suspending approval of any new projects until they bring their existing facilities into compliance with environmental regulations.

On Jan. 11, SEPA dispatched four teams of inspectors to Hebei, Shanxi, Inner Mongolia and Guizhou to conduct site inspections, collect evidence and direct the enterprises to begin rectifying the problems. Southern Weekend accompanied the inspection teams to Hebei and Shanxi.

As part of its comprehensive coverage of the current environmental storm, Southern Weekend also conducted an exclusive interview on Jan. 15 with Pan Yue, the second-highest-ranking official at SEPA. According to Chinese media reports, Pan Yue was recently promoted to the post of SEPA deputy director. However, Mr. Pan pointed out that while he did move forward in the ranks due to the retirement of two senior officials, there is no post of deputy director within SEPA. Pan Yue, dubbed "Hurricane Pan," has worked at the vice-ministerial level in various ministries for the past 13 years.
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Reporter: In the environmental protection storm of 2007, you are making use of the severe measure of regional permit restrictions. How did you come to that decision?

Pan Yue: We got the idea as early as 2005, when we first began really enforcing the Environmental Impact Assessment Law. At that time, it would have been unrealistic to take such action because nobody knew very much about the EIA law, and imposing regional permit restrictions on offenders would have been too harsh. So, as a first step, we decided to launch a public education campaign about the legislation.

We were over-optimistic last year in setting goals to reduce energy consumption by 4 per cent and pollutants by 2 per cent annually during the 11th Five Year Plan [2006-2010]. Unfortunately, the emission of major pollutants continued to rise last year, with an average of one pollution accident occurring every other day. In addition, environmental authorities had to handle 30 per cent more complaints from the public about environmental problems and 52 per cent more instructions on these issues from central government leaders than in 2005.

We realized that the rapid expansion of highly polluting and energy-intensive industries would not abate unless strict measures were imposed. This is a first for SEPA, which has never before taken such resolute steps in its entire 30-year history.

SEPA, the National Development and Reform Commission, the Ministry of Land and Resources, and the State Administration of Work Safety have reached a consensus that a policy of imposing regional permit restrictions will gradually be introduced. SEPA is taking the first step and testing the policy before it is employed more widely by the other ministries.

Reporter: The government, as we know, has promised to act on the country's environmental problems and has launched a series of campaigns. These initiatives have included the "scientific concept of development" worked out at the third plenum of the 16th Central Committee meeting of the Communist Party [held in October 2003], at which targets were set for reducing emissions of major pollutants. And yet, last year is regarded as the grimmest year for China's environment. What is the crux of the problem? You've criticized local officials who are intent on launching new projects as having a distorted view of what constitutes achievement in political life. The central government does not approve of these projects and, for example, has punished the company and local officials who were behind the Xinfeng Power Plant in Inner Mongolia.

Pan Yue: I have repeatedly stressed that the environment deteriorates because of officials' skewed concept of political accomplishment. But now, powerful interest groups and officials' distorted view of what constitutes political achievement have joined forces, to the environment's detriment.

The presence of powerful interest groups stems from the frenzied expansion of highly polluting and energy-consuming industries. On the one hand, local governments are intent on pushing ahead with large industrial projects as they pursue quick, short-term results. On the other hand, encouraged and protected by local governments, the enterprises concerned do everything in their power to turn the natural resources that are owned by all the people into their own personal property, regardless of the consequences. This has not only undermined the central government's macroeconomic policies but has also gone against the interests of ordinary people, and led to social unrest.

I worked at economic management agencies such as the State-owned Assets Administration Bureau and the Economic Restructuring Office of the State Council while reforms of finance and state-owned assets were being carried out. And I saw how powerful interest groups were responsible for huge losses in the course of the reforms. In my opinion, after the experience of the reforms in those sectors, which were not entirely successful, natural resources and the environment are the last line of defence, the last strategic reserves the people of China have left in an increasingly turbulent and globalized world. How can the nation hope to achieve prosperity if its "original capital" [natural resources and the environment] has been exhausted? And so the policy of "regional permit restrictions" is aimed at dealing with the presence of these powerful interest groups.

Reporter: Is there a link between local governments' inability to implement central government economic regulations effectively and the presence of the powerful interest groups? It's interesting that SEPA's enforcement of the EIA law has targeted sectors such as steel, power generation and metallurgy that are also the focus of central government economic regulations. It appears that your objectives go beyond environmental protection. Is that correct?

Yes, our actions are linked to macroeconomic regulations. Environmental protection is strongly connected with the scientific concept of development and can be seen as an instrument through which to implement macroeconomic policies. Since the first environmental protection storm in 2005, the EIA law has helped transform the project-approval process from a rubber-stamp operation and also served as a means of implementing macroeconomic policies. Enforcement of the EIA law alone has halted proposed projects worth a total of 770 billion yuan RMB (US$100 billion), half of which were in highly polluting and energy-intensive industries.

The central government has also issued several documents emphasizing that investment in projects in highly polluting and energy-intensive sectors should be restricted by raising environmental standards. This would promote industrial restructuring and help with the implementation of macroeconomic policies. And so introducing these regional permit restrictions is aimed at exploring new methods of economic regulation.

Lose one round after another, but battle on

Reporter: Why is the environmental situation deteriorating even though the environmental storms are becoming bigger and more intense? Are the storms that you and SEPA have unleashed battles that will culminate in eventual victory, or ultimately futile struggles?

Pan Yue: It's more a case of losing a round, but battling on. SEPA fought desperately hard last year. Take desulphurization, for example. We forced companies to increase the desulphurization capacity of their power plants and, as a direct result, as much capacity was added last year as in the past 10 years combined. We used a variety of tactics, from private persuasion to public "naming and shaming," from suspending projects to getting companies to sign agreements to take remedial action, but overall there seemed to be little progress. Why? I think one department plugging away at this issue cannot do much in the absence of a comprehensive transformation of the pattern of economic growth in the country.

Reporter: We've noticed that the particular stick you've wielded during each successive environmental storm is not the same every year. Do you have a magic solution for next year if there is to be another storm?

Pan Yue: No. I believe the regional permit restrictions are the strictest administrative measure we have at our disposal. If there was anything else we could do, it would be to investigate who should be held accountable [for environmental violations], but we have no such power.

Reporter: Many people are dazzled by the various tricks up SEPA's sleeves, but believe that it has failed to deliver a fatal blow [against China's environmental problems]. The storms are obviously not a normal, everyday way to tackle the problems, so why don't you try to address them in a more systemic fashion?

an Yue: I have attached the greatest importance to building a new system. At the moment, the reality is that the current environmental laws look good on paper, but that's by and large where they remain because our power to punish offenders is pretty limited. In terms of the administrative measures in our arsenal, we don't have the power to close down offending companies or to remove the local government officials who should be held accountable, or even to perform our management functions of environmental monitoring and enforcement of environmental protection laws in a top-down manner.

To move the system forward, we're playing a kind of game: We enforce a new environmental law -- and the other side retreats a bit, and we advance a bit. So we're getting some things done through legislation, whereas in the past just holding meetings had achieved nothing significant.

For example, before the first environmental storm of 2005, when the EIA law was really enforced for the first time, enterprises knew nothing about it. But now all the big companies are willing to abide by its procedures when they seek approval for key projects from the National Development and Reform Commission. Last year, in the aftermath of the public hearing on the Old Summer Palace incident and announcement of the provisional guidelines on public participation in EIAs, proposed projects worth a total of 160 billion yuan RMB (US$20 billion) were rejected because the public said no to them.

We hope that a strengthening of the EIA law will take it from the project level to the deeper level of planning. Legislation on this is still under review by the legal office of the State Council, and is expected to be issued in the first half of this year. And we hope the regional permit restrictions we have just introduced can be normalized so they become a routine part of the system, and are not just brought out once a year but are available for use any time to deal with regions and enterprises that break the rules. Most importantly, our goal in the long run is to build a new and effective environmental protection system.

Reporter: We heard that you received many calls after the latest storm. Unleashing a storm means, in effect, grabbing many people by the throat, cutting off their opportunities for wealth and blocking officials' path to promotion. Do you feel under any pressure?

Pan Yue: Since enforcement of the EIA law really began two years ago, my colleagues and I have been at the centre of the storm. Frankly, we face pressure from both inside and outside because we're dealing with proposed projects worth 2,000 billion yuan RMB (US$250 billion) that involve the interests of many parties. I don't want to go into this topic any further though.

Reporter: Some people, observing you over the past few years, have come to the conclusion that you are not actually as tough as you've been portrayed in the media. It seems that you're performing your duties under a great deal of pressure. In the previous storms, for instance, Datang International was on the blacklist and yet was still violating regulations before the current storm began earlier this month. It appears that some people are not afraid of you. Is that true?

Pan Yue: But why should I be afraid? SEPA has no power to suspend proposed projects, nor to remove officials who should be held accountable, nor even to manage the local environmental bureaus. If we want to impose a penalty, the maximum fine at our disposal is just 200,000 yuan (US$25,000). But we're doing what we should be doing, no matter what the media say. That's the reality.

In the past three years, I've been saddened by what I've seen -- companies that bend the rules and try every means possible to delay compliance with environmental legislation; new highly-polluting projects that break the law and bend the rules in the name of "not allowing the state to suffer losses." But I don't allow myself to indulge in feelings of hopelessness. I believe that we can create new approaches and methods in the space provided by the legal and institutional systems now in place. The current situation should not be used as an excuse for accomplishing nothing, but simply seen as the conditions under which we can do our job and go forward.

And, by the way, I'd like to point out that Datang International has actually pledged now to comply with SEPA's orders and make all the necessary changes.

Reporter: Compromise is a useful tool in politics. Are you going to make some appropriate compromises in the future?

Pan Yue: It depends on the value of the compromise. If a compromise helps us build a new system, then I will compromise. But if we are required to abandon our principles and go with the evil flow -- never!

Source: Southern Weekend