Four Questions on Environmental Access Requirements for Modern Coal Chemical Industry: Are the Critical Provisions Unclear?

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Four Questions on Environmental Access Requirements for Modern Coal Chemical Industry: Are the Critical Provisions Unclear? Author/Source: Date: 2016-04-13 Clicks: 9 It has been nearly 4 months since the release of the \"Environmental Access Requirements for Modern Coal Chemical Industry Projects\". However, many industry professionals still report that they are not sure about some of these terms, and there are differences and disputes in how different people understand them. Industry experts suggest that more detailed and explicit policy documents should be issued following the \"Access Conditions\". Answers and clarifications are provided to relevant questions, so that enterprises and local authorities can better comply with all regulations related to modern coal chemical industry, including the \"Access Conditions,\" and thus avoid unnecessary detours and losses. Which specific provisions of the \"Access Requirements\" are causing confusion? The author has made an overview. Should the standard for determining the protection distance be the gas storage capacity or the gas generation rate? The \"Access Requirements\" stipulate that protective distances must be established in accordance with ** and local regulations; in addition, coal-to-gas facilities must also meet the requirements set out in the \"Hygienic Protective Distances for Coal-to-Gas Industries\" (GB/T17222-2012). According to GB/T17222-2012, a coal gasification unit refers to a device that uses various coal gasification technologies to produce gases containing combustible components. Since coal gasification technology is required to produce raw coal gas or hydrogen in several approaches of modern coal chemical industry, the pyrolysis furnaces used for the differentiated utilization of coal also generate raw coal gas, which means that this regulation covers almost all modern coal chemical projects. In other words, all modern coal chemical projects must meet the requirements regarding health protection distances specified in GB/T17222-2012. GB/T17222-2012 specifies that when the daily storage volume of gas in a enterprise does not exceed 100 tons, the required health protection distance is 2.2 kilometers ； The daily gas storage capacity is 100–500 tons, and the required safety distance is 3.8 kilometers ； The daily gas storage capacity exceeds 500 tons, and the required safety distance is 4.4 kilometers. The focus of debate in the industry is whether the storage capacity mentioned here refers to the gas production volume of the gasification furnace or the amount of gas stored in the company’s gas storage tanks. If referring to the output of the gasifier, the gasification capacity of a coal-to-methanol plant with an annual production capacity of 100,000 tons is sufficient to meet the requirement of a 4.4-kilometer health protection distance. Since the annual production capacity of modern coal chemical projects is generally above 100,000 tons of methanol, this means that the health protection distance for all such projects must be more than 4.4 kilometers. If the gasification unit of a project is located right at the center of a certain area, it means that within a radius of 4.4 kilometers, covering an area of over 60 square kilometers, there must be no environmentally sensitive sites such as schools, hospitals, or residential areas. In that case, there are very few areas in the inland provinces suitable for locating modern coal chemical projects, and many of these projects will have to be built in uninhabited regions such as the Gobi and deserts. However, if it refers to the gas storage capacity of storage tanks, given that chemical plants operate continuously, with very few coal-to-natural gas companies as an exception, few enterprises build large-scale storage tanks separately; in such cases, the aforementioned regulations are of little significance or even redundant. Can provinces with a net coal import volume develop coal chemical industries? According to the \"12th Five-Year Plan Guidelines for the Petroleum and Chemical Industry\" issued by the China Petroleum and Chemical Industry Federation on May 27, 2011, as well as the \"Notice of the National Development and Reform Commission on Regulating the Orderly Development of the Coal Chemical Industry\" dated March 23, 2013 (Document No. Fa Gai Chan Ye [2011] 635), provinces that rely on coal imports are subject to strict restrictions; in other words, the development of modern coal chemical industries is prohibited, and this has become an unspoken understanding and consensus among all parties involved. However, apart from requiring that \"in areas where no environmental capacity remains for the development of modern coal chemical projects, economic structural adjustments and measures such as replacing coal consumption with equivalent or reduced amounts must be carried out first to free up environmental capacity, and advanced process technologies and pollution control techniques must be employed to minimize pollutant emissions,\" as well as stipulating that \"strict controls should be imposed on the establishment of new modern coal chemical projects in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Pearl River Delta, and water-scarce areas,\" the \"Access Conditions\" do not address whether provinces with a net import of coal can develop modern coal chemical industries, a matter that has sparked considerable debate within the industry. According to industry experts such as You Xiti, Executive Vice President of Shaanxi Coal and Chemical Industry Group Co., Ltd., Yang Zhanbiao, General Manager of Shenmu Fuyou Energy Technology Co., Ltd., and Tang Hongqing, Technical Advisor at Zhongke Synthetic Oil Technology Co., Ltd., the provisions of the \"Access Conditions\" indicate that it is permissible to establish modern coal chemical projects in provinces that import coal, provided that these provinces have the environmental capacity and water resources necessary to support the development of such industries. However, industry experts such as Sun Runlu, deputy general manager of Hubei Jingzhou Coal, Electricity, Chemicals and Development Co., Ltd., do not agree. In their view, the fact that the \"Access Conditions\" do not specify that provinces with a net import of coal are not allowed to launch modern coal chemical projects does not mean that this regulation has become invalid. Because the former is stipulated by departments such as the National Development and Reform Commission, and there has been no clear indication to date that it should be abolished. The \"Access Requirements\" are regulations set by the Ministry of Environmental Protection regarding coal chemical projects from the perspective of environmental access, and they do not represent the intentions and approaches of the National Development and Reform Commission. Li Zhijian, assistant to the director of the Petroleum and Chemical Industry Planning Institute who was involved in the discussions on the access criteria, explained that one important reason why the access criteria no longer emphasize the requirement that \"provinces with a net import of coal should not establish coal chemical projects\" is that the balance between coal supply and demand has reversed, making such a requirement unnecessary. From 2006 to 2011, coal prices continued to rise sharply, and coal supply and transportation capacity were extremely strained in various regions; **it was therefore necessary to strictly prohibit the establishment of modern coal chemical projects in provinces that relied on coal imports. The situation is very different now: there is an oversupply of coal, prices continue to fall sharply, and there is ample transport capacity, so there is no issue of competition for coal between modern coal chemical industries and power plants. Furthermore, with the significant reduction in costs for raw material procurement and transportation, it may be more economical to develop a modern coal chemical industry in areas that do not produce coal but are located close to consumer markets. At this point, **it is meaningless to further restrict the development of modern coal chemical industries in provinces that rely on net coal imports, and it also goes against the principles of a market economy. Li Zhijian added that, on the other hand, most coal-producing provinces and regions have fragile ecosystems, limited environmental capacity, scarce water resources, and severely insufficient or even no water bodies available for wastewater discharge. If it is continued to be stipulated that only these provinces are allowed to develop modern coal chemical industries, it will exacerbate environmental degradation and water scarcity, leading to serious consequences. Based on these considerations, when discussing the \"Access Conditions,\" experts recommended that there should be no further restrictions on provinces with a net coal import volume from developing modern coal chemical industries. In other words, **the relevant authorities have allowed provinces with a net coal import volume to develop modern coal chemical industries. In response to this, the industry suggests that **official documents should be issued at the appropriate level to clearly stipulate whether provinces with a net import of coal can develop modern coal chemical industries, thereby clarifying the situation. This not only facilitates decision-making and planning for everyone, but also helps to prevent certain departments or experts from acting arbitrarily and exercising excessive discretion during project approval, thereby avoiding artificial unfairness. Should coal-based chemical industries be banned in regions such as Beijing, Tianjin, and Hebei, or allowed under certain conditions? The \"Access Conditions\" stipulate that \"new modern coal chemical projects should be strictly controlled in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Pearl River Delta, and water-scarce areas.\" Does \"strictly controlled\" mean a ban, or is it allowed under certain conditions? There are also divergent interpretations of this in the industry. According to Li Zhijian’s explanation, this regulation is primarily aimed at achieving the goals of controlling and reducing coal use in the Beijing-Tianjin-Hebei region. “In fact, as long as a company can adequately demonstrate that modern coal chemical projects represent an efficient and clean way of converting coal, one that allows for increased coal use without an increase in pollution or even leads to a reduction in pollution, experts will accept such projects during the environmental impact assessment process and approve them. ”Li Zhijian said. But the relevant companies don’t think so, and they don’t dare to ‘test the law against themselves’. They are worried that if a great deal of preliminary work is done, environmental assessment experts might reject the project on the basis of this regulation, resulting in enormous losses. As a result, the industry hopes that it should be made clearer whether construction of modern coal chemical projects is absolutely prohibited in these areas, or whether such projects can be carried out under certain conditions; and whether modern coal chemical projects can be established as long as coal consumption increases without an increase in pollution. Who should bear the losses from a company’s initial investments? Since many projects are located in **planned industrial parks at various levels, after the issuance of the ‘Access Requirements’, it was found that the environmental assessments and plans for many of these parks did not meet the requirements, necessitating reforms or even complete reconstructions. The companies had previously completed all the necessary procedures to enter the park legally and carried out preliminary work (some of them even obtained permits), but now, due to problems within the park, the projects have to be relocated or even aborted. Who should bear this loss? The industry hopes that this issue will be handled carefully **in accordance with the principles of fairness, impartiality, rationality, and support for the development of the real economy**. Many industry insiders also pointed out that in recent years, **there has been increased support for environmental protection, which is originally a positive development for both the country and its people. However, in practice, as soon as certain regulations are introduced, they require that all completed, under-construction, and new projects comply with them uniformly. This is clearly unfair, and it also greatly increases the cost and difficulty of making corrections. Previously, they also designed and built in compliance with relevant regulations; now, with stricter regulations to be implemented without any transition period, this often leaves companies in a state of chaos and at a loss as to what to do. What’s worse, the requirements set by relevant regulations are becoming increasingly strict, and the policy-making agencies do not make public the plans or timelines for introducing new regulations or standards. As a result, the constant stream of new standards and regulations forces companies to work like firefighters, constantly making adjustments to meet the new requirements. In an effort to minimize losses, some companies simply wait until the strictest environmental regulations are introduced before deciding whether to launch new projects, which severely affects their normal operations and investment decisions, and even impacts the development of the real economy. Therefore, the industry recommends that **plans and schedules for formulating and issuing relevant regulatory standards should be clearly defined and made public; through scientific models, key pollution control targets as well as environmental quality indicators for environmentally sensitive areas can be determined. The public needs to be made aware of what the strictest environmental standards will be in this region over the next 5–10 years, or even for an even longer period, so that local governments and businesses can plan ahead when making investment decisions, thereby avoiding constant adjustments due to new environmental regulations.