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China's Pollution Insurance

Nationwide scheme aims to help polluting companies stay in business, compensate victims

by Jean-François Tremblay
February 25, 2008 | APPEARED IN VOLUME 86, ISSUE 8

China plans to introduce by 2015 a nationwide liability insurance program that will pay compensation to victims of industrial pollution.

The country's State Environmental Protection Administration (SEPA) is working to set up the program with the China Insurance Regulatory Commission, the agency that oversees the country's insurance industry.

Pan Yue, a SEPA vice minister, told Xinhua, China's official news agency, that the plan will be tested this year with companies that produce, transport, sell, or store hazardous chemicals. "Enterprises and industries that have caused serious pollution accidents in recent years will be specially targeted," he said.

Pan noted that environmental accidents happened on average every three days in China in 2007. At present, he added, it's common for companies that cause environmental disasters to go bankrupt and for victims to go uncompensated.

The insurance scheme would allow companies involved in accidents to stay in business and enable victims to get a payout. Pan added that highly polluting firms will be charged premiums that are high enough to encourage them to improve performance. "The scheme does not mean that polluting companies can [be comfortable continuing] to pollute," Pan said.

Elut Hsu, a business development executive with Asymchem Laboratories, tells C&EN that China is adopting increasingly strict measures to crack down on industrial pollution. Asymchem is a North Carolina-based custom manufacturer of pharmaceutical ingredients with laboratories, pilot plants, and large-scale manufacturing operations in northeastern China. Hsu notes that small Chinese producers of basic pharmaceutical intermediates are "disappearing" because they can't meet tougher environmental standards.



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