By WAYNE MA
BEIJING -- China's environmental watchdog on Thursday took
the unusual step of halting new projects at the country's two
largest refining companies after they missed
pollution targets, a sign that Beijing is stepping up
environmental scrutiny of state-owned enterprises amid growing
public discontent over pollution.
The temporary ban on new construction at China National
Petroleum Corp. and China Petrochemical Corp., known as
Sinopec Group, is the most wide-ranging since 2009, when a
similar ban was instituted by China's Ministry of Environmental
Protection against two of China's largest state-owned
electricity producers after they built a number of projects that didn't comply with
"It's good news and significant action," said Fuqiang Yang,
a senior adviser at the National Resources Defense Council, an
environmental group. "It's a sign that the MEP is getting more
firm and tough on state-owned enterprises as environmental
A Sinopec spokesman said the company planned to boost
investment in environmental protection to ensure compliance.
The spokesman said while more than 120 of its facilities meet environmental
requirements, it has made slow progress at subsidiaries in the
cities of Luoyang, Anqing and Shanghai and in the southwestern
province of Sichuan. Sinopec plans to spend a total of 22.9
billion yuan ($3.7 billion) on 803 environmental projects over the next three years,
CNPC and its listed unit PetroChina didn't respond to a
request for comment.
The environmental ministry said Thursday CNPC missed a
target to reduce chemical oxygen demand, an indicator of water
pollution. Sinopec missed a target last year to reduce nitrogen
oxide emissions, a metric for air pollution. The targets refer
to pollution generated by their refineries, which together
account for more than three quarters of China's total refining capacity, it said.
The ministry is temporarily suspending approvals of
environmental impact assessments for new refining projects and the renovation
and expansion of existing refineries, it
said. Those approvals are needed before a project can move
forward. Projects aimed at reducing emissions and improving
fuel standards will still be reviewed, the ministry said.
"The length of the temporary suspension will be based on the
MEP's assessment of their corrective measures," said Tang
Dagang, director of the Vehicle Emission Control Center, a
policy research group also affiliated with the ministry.
Even if the ban lasts for six months, it won't have a major
impact on China's immediate refinery expansion plans next year, said Li
Li, head of research and analytics at consultancy ICIS C1
Energy. "New project approvals need at least a two-year head
start, which would mean an impact only on projects in 2016."
Ms. Li said the MEP's latest move is a sign China wants to
focus on the quality of its refineries, rather than on the
speed of their expansion.
CNPC and Sinopec have resisted costly upgrades to reduce
pollutants at refineries due to Beijing's tight control over
fuel prices, which has made it difficult to pass on higher
costs to consumers. However, the Chinese government unveiled
major changes to the fuel-pricing system this year, which has
improved bottom lines and made it easier for other reforms.
A number of episodes in recent months have added to growing
public concern over the environment in China, including severe
air pollution in January in Beijing and several other places,
as well as the discovery of cadmium-tainted rice in supplies in
southern China's Guangdong province.
Growing evidence suggests China's programs to cut emissions
from coal-fired power plants -- traditionally a major source of
its pollution problems -- have had some success. But that is
being partly undermined by rapidly rising industrial output,
such as coal-fueled steel production, and lagging fuel
standards for China's ballooning numbers of cars and
While CNPC and Sinopec have sped up efforts to produce
cleaner fuels, there hasn't been much attention paid to the
pollutants generated from their facilities. Last year, Sinopec
temporarily shut three subsidiaries and promised to conduct
company-wide inspections only after a state television report
accused the subsidiaries of posing environmental hazards.
Dow Jones Newswires