Chinese companies caught falsifying environmental data

State-owned companies that receive tens of millions of yuan in subsidies are consistently faking their emissions data

Two years after environmental groups reavealed that Inner Mongolia’s Duolun Coal Chemistry Company was dumping its industrial waste, the company has again been found guilty of illegal pollution, according to a report in Securities Daily.

The company, which is owned by China Datang Corporation and uses brown coal to produce the polymer polypropylene, was last month penalised by China’s environment ministry for failing to take adequate measures to reduce the plant’s sulphur dioxide emissions. The company’s sulphur scrubbers were found to have been switched off for a total of 174 days last year.

State-owned enterprises like Duolun have been repeatedly found guilty of breaching environmental regulations. But their willingness to fake environmental data is perhaps even more shocking.

In mid-June, the Ministry of Environmental Protection (MEP) and the National Development and Reform Commission publicly named 19 companies it was penalising for faking desulfurisation figures. China’s five major electrical power companies, PetroChina and Shenhua (China’s largest state-owned coal producer) all appear on the list. For none of them was this the first violation.

The notice published by the government reveals that three subsidiaries of China Resources Group (CRG) were penalised and put under supervision. CRG benefits from a substantial electricty price subsidy for desulfurisation – the three companies in question receive more than 100 million yuan each year (about US$16 million). Nonetheless, MEP investigators found their collective annual sulphur-dioxide emissions exceeded 30,000 tonnes.

Shenyang’s China Resources Thermal Power Corporation, for example, falsified emissions data, despite receiving a yearly subsidy of tens of million yuan. Local residents complain bitterly about the fumes and bad smells created by the plant, according to press reports.

In May last year, the environment ministry imposed sanctions on a number of subsidiaries of state-owned enterprises that were found to have faked their sulphur-dioxide emissions data. A number of those companies have reappeared on the latest list. Despite the authorities curbing their subsidy, implementing financial penalties and setting concrete deadlines for improvement in 2013, these “leading national companies” are once again in the spotlight.

MEP statistics show that central and local governments have invested more than 100 million yuan (US$16.1 million) in an online monitoring system to improve supervision of environmental performance. The system can monitor over 10,000 sources of pollution. But is it enough? Companies can cheat on the data in a plethora of ways, including modifying equipment operating parametres and damaging sampling systems.

Unannounced inspections have shown that some companies only turn their pollution monitoring equipment on when they know they’re being watched – normally they don’t even touch it. These are often the same companies that also receive tens of million yuan in state subsidies and tax reductions.

Zhang Bin, a commentator for China National Radio’s ‘Voice of the Economy’, said that the problem is inadequate penalties – the costs of breaking the law need to be higher and the ability of officials to keep their jobs linked to their environmental performance.

Criminal prosecution should also be an option, Zhang Bo, director of Shandong’s environmental protection bureau, told People.cn. "Once counterfeiters not only face fines, but also arrest and detention, things will change dramatically.”