A system allowing companies to trade water-pollution permits
will be tested around Taihu Lake, China's third-largest lake, from
The Ministry of Finance and State Environmental Protection
Administration (SEPA) recently decided to allow the Jiangsu
provincial government to carry out a pilot trading system among
factories around the Taihu Lake, which provides drinking water to
30 million Chinese people.
Under the system, which will function as a cap-and-trade
program, the government will sell the permits to enterprises, which
will be allowed to trade among themselves when they need additional
Trading prices will be nearly twice the waste treatment cost,
according to a plan drawn up by the provincial environmental
The discharge permits of chemical oxygen demand (COD), a key
measure of pollution, will be the first to be traded in 2008, and
the scheme will be expanded to ammonia, nitrogen and phosphorus in
2009, the plan says.
Serious water pollution by paper mills and petrochemical plants
caused an algae outbreak at the end of May, which rendered tap
water undrinkable for about 10 days for more than 1 million
residents in Wuxi, a city in Jiangsu Province.
The new system, with prices set by the market, would force
enterprises to conserve their limited emission permits and reduce
waste discharge more effectively, said an official with the
provincial environment watchdog.
"The cost you pay should equal the environmental resources you
use or destroy. The system reflects the idea very well," the
Earlier reports said that chemical plants around Taihu Lake
would be charged 10.5 yuan (1.4 U.S. dollars) per kilogram of COD.
Prices of COD per kg for dyeing, paper-making and brewing factories
were set at 5.2 yuan, 1.8 yuan and 2.3 yuan, respectively.
These costs are expected to force more than 1,000 small chemical
plants to close. Currently, polluting factories only need to pay
about 1 yuan for waste treatment by special plants.
(Xinhua News Agency December 27, 2007)