China MEP and China Insurance Regulatory Commission have jointly released the Guidance on Pilot Implementation of Environmental Pollution Liability Insurance (EPLI) on 21 Jan 2013. The establishment of the EPLI system is a market-oriented approach to tackle environmental pollution and to promote environmental risk control.
So far, over 10 provinces and regions have been involved in the pilot project, with more than 2,000 targeted enterprises insured for almost 20 billion RMB. The mandatory EPLI is imposed on the following industries characterized by the generation and discharge of heavy metal pollutant:
Mining of heavy non-ferrous metals (including associated minerals)
Metallurgy of heavy non-ferrous metals
Lead accumulator manufacturing
Leather and the product manufacturing
Chemical raw materials and chemical products manufacturing
Apart from some companies having been regulated into the scope of insurance according to the regional rules and regulations, the other companies with high environmental risk are encouraged to adopt the EPLI, i.e. companies involved in the following industries,
Exploitation of petroleum and natural gas, the petrochemicals and the chemicals
Production, storage, use, operation and transportation of hazardous chemicals
Generation, collection, storage, transportation, use and disposal of hazardous wastes, and the emission of dioxins
Others determined by the MEP
Companies not properly insured as requested would have a chance of failing the environmental impact assessment and the completion acceptance for construction projects, nor the issuance of Discharge Permit and the approval of Cleaner Production. Besides, those companies will suffer poor credit when applying for environmental protection related funds. On the other hand, the MEP will take incentive measures to give priority to those insured accordingly when allocating the special funds for environmental protection and heavy metal pollution control. Furthermore, banking institutions will give preferential credit support based on the insurance information.
The wide adoption of EPLI is in urgent need to tackle the severe environmental problems and is the inevitable requirement to achieve transformation of environmental management. During the period of the “12th Five-year Plan”, the environmental pollution liability insurance system is expected to roll out from experimental provinces and regions to the whole country.
