Environmental Technologies Industries

Environmental Technologies Industries

Market Plans

Taiwan Environmental Export Market Plan

Chapter 3 - Legal and Regulatory Review

Overall Policy Direction
Taiwan's environmental regulatory framework began forming in the 1970s. In the early to mid-1980s, environmental responsibilities were centered within a small bureau of the National Health Administration. On the whole, there were few individuals with extensive environmental expertise, and Taiwanese universities had yet to establish environmental engineering departments. In 1987, as a result of increasing concern over the island's environmental degradation, the Taiwan Environmental Protection Administration (TEPA) was formed as a cabinet-level agency. In 1992, the government launched a six-year “green plan,” giving high priority to environmental projects and measures to encourage private firms to install environmentally beneficial systems and develop environmental technologies to build domestic capacity to deal with environmental problems.

In the 10 years since establishing TEPA, the agency has grown into a highly professional organization of over 400 people. To date, TEPA has promulgated over 280 laws and regulations that cover water, air, and noise pollution; solid and hazardous waste; and public nuisance disputes. Legislation is currently pending in the areas of soil and groundwater pollution relating to recycling and resource recovery.

Taiwan's major regulations are modeled primarily after the U.S. statutory and regulatory framework. For example, industrial solid waste regulations are modeled on the Resource Conservation and Recovery Act, incorporating the act's cradle-to-grave philosophy for assigning chain-of-custody liability. However, over the last few years, TEPA has also looked increasingly toward Western Europe and Japan for alternative regulatory models in areas such as recycling. Taiwan's willingness to borrow regulatory systems used overseas has allowed its regulatory structure to develop very quickly.

Despite TEPA's rapid growth and a generally complete and quite stringent set of environmental laws, the administration has been criticized for importing systems that are functional overseas but may not be suitable to Taiwan's environment or are beyond the administration's ability to enforce. Industrial and environmental groups have com-plained that TEPA enforcement of environmental policies has been spotty. Local governments have been empowered with the responsibility to enforce the regulations promulgated by the central government, but they too often lack the resources and the training to do the job adequately.

As a result, industry generally plays the odds in complying with environmental compliance (i.e., if you see the inspector coming, switch on the treatment system!). The reality is that many small, illegal factories simply do not invest in any form of pollution control equipment.

However, to compensate for its lack of resources and uneven enforcement, TEPA has been moving away from traditional command-and-control regulations since the mid-1990s toward innovative programs that encourage companies to internalize environmental costs and compliance procedures. The new self-reporting systems were meant to reduce the need for direct inspections of facilities to ensure compliance.

Over the past three years, TEPA has initiated permitting systems for air and water effluents. Under these systems, factories are required to regularly submit test results to TEPA, demonstrating compliance with the effluent standards. TEPA then randomly chooses facilities for unannounced inspections. In the newest development, TEPA is also considering implementing a tradable quota scheme for air pollution.

In addition to establishing permitting systems, TEPA is now also moving aggressively to develop a series of pollution fees. TEPA hopes that the fees will provide an incentive for companies to perform beyond the base standards required by law. The fees will also significantly expand TEPA's ability to fund environmental projects. The Executive Yuan (central government) and the Legislative Assembly are currently reviewing proposed regulations to establish discharge fees for air and water emissions. Overall, TEPA expects that air pollution and water discharge fees will generate $240 million in 1998 alone. A mandatory recycling program that requires manufacturers of 18 different specified items to recycle their products has been in place since 1988.

Increased regulatory demands have created a need to strengthen Taiwanese industry's environmental capabilities. Until recently, many firms did not have environmental departments and had minimal experience with environmental technologies. The Taiwanese Industrial Development Bureau (IDB) and TEPA work closely together to develop training programs for local companies to assist them in establishing internal environmental management systems. IDB has established a special technical services guidance group, and TEPA has cosponsored numerous workshops and seminars on clean production and waste minimization. TEPA hopes to improve compliance by strengthening companies' internal environmental management systems. Overall, environmental management will become more professional as increasing numbers of environmental engineers graduate from local environmental engineering programs or return from overseas training.

With the full democratization of the political system, TEPA has been forced to increase its efforts to communicate with outside groups. In the past, TEPA made decisions with limited consultation with stakeholder groups. Over the last two years, environmental groups, local communities, legislators, and industry groups have become increasingly vocal. As a result, TEPA has increased its outreach efforts and has begun making basic reforms to its regulatory process to increase transparency.

The Four Administrators of TEPA

Since its inception in 1987, TEPA has gradually evolved from a small, fledgling agency to a well-established office in the government. TEPA has seen four administrators. Each administrator has managed a different phase of TEPA’s development, moving TEPA from a small organization grappling with low public awareness and the need to grow to an established, professional environmental regulatory agency.

The primary mandate of the first administrator, Eugene Chien, was to develop the administration and raise public awareness. Under Chien, TEPA launched a number of educational initiatives, including placing “space bubble” recycling receptacles on the streets.

After Chien, Jau Shau Kong took over the agency. Jau had a reputation as a feisty politician and launched TEPA on a program of tightening regulations and enforcement. After roughly a year and a half, Jau stepped down in the wake of fierce complaints by industry.

Hoping to obtain a more “reasonable” approach to balancing environmental and economic needs, the government turned TEPA over to Chang Lung Sheng. Chang was formerly a member of the Council for Economic Planning and Development and had a long background in development policy. Chang continued to expand the recycling programs launched by Jau and Chien and also initiated the first stage of air pollution control fees on sulfur content in fuels.

The current administrator, Tsai Hsung Hsiung, took up the reins following the first presidential election. Tsai has a strong background in economics and also formerly served on the Council for Economic Planning and Development. Tsai has worked to internationalize TEPA and launched several policy initiatives, including a new national recycling plan, increased use of pollution fees, and reforms to the environmental impact assessment process.

Regulatory Framework
Taiwan's environmental regulations are based on four basic principles: polluter pays, privatization, pollution prevention, and public participation.
• Polluter Pays--In general, this principle requires that parties responsible for generating pollution contribute to the costs of managing or cleaning up the effects of their pollution. In recent years, TEPA has increasingly begun promoting the use of environmental taxes or fees under the polluter pays principle. Examples include air and water discharge fees, recycling fees, etc. It should be noted that in Taiwan the definition of “polluter” is extended to include the manufacturer, not just the consumer, and in many cases the burden of the manufacturer is greater than that of the consumer.
• Privatization--Although its efforts are still in the early stages, TEPA has begun to promote privatization of environmental services as a way to reduce the direct cost of providing environmental protection services. To date, the main examples are the build-operate-own (BOO) and the build-operate-transfer (BOT) incinerator projects, private testing laboratories, and the certification of recycling.
• Pollution Prevention--Like many countries, Taiwan is promoting a shift from end-of-pipe treatment to pollution prevention through clean production and other techniques. On a broader level, this principle has spurred development of a series of environmental impact assessment regulations to ensure that the potential social and environmental impacts of development plans are considered during the permitting process.
• Public Participation--Originally, public involvement focused on promoting civic responsibility in protecting the environment by providing a means for redress on environmental grievances. Over the last two years, this principle has also spurred efforts to involve the public more directly in environmental management. Recently, TEPA established community environmental centers.

All draft legislation in Taiwan must be approved by the Legislative Assembly--an elected body comprised of representatives from each voting district in Taiwan. Environmental draft legislation usually originates within TEPA. Bills are then forwarded to the Executive Yuan for approval before being sent onward to the Legislative Assembly. Once in the Assembly, bills must pass through three readings before becoming law.

In general, laws in Taiwan tend to lack detail and merely assign jurisdiction for a given issue to specific government branches. It is then the responsibility of the appointed agency to develop detailed implementation regulations. While laws must be approved by the Legislative Yuan, regulations only need the approval of the Executive Yuan. Regulations usually are subject to a public hearing process, but the opinions expressed during public hearings are not binding on TEPA.

Major Regulations
Most of Taiwan's major environmental laws, which establish the basis for Taiwan's numerous environmental regulations, were passed in the late 1980s and early 1990s. Between 1989 and 1994, the number of pages of environmental regulations more than doubled to 1,562. Emissions regulations initially set basic standards with long-term plans to phase in increasingly stringent standards.

Taiwan's major environmental laws include the following:
• The Solid Waste Act (1988)--Modeled on the Resource Recovery and Conservation Act in place in the United States, the Solid Waste Act governs the management of municipal and industrial solid waste as well as recycling. The act establishes classifications of waste and responsibilities of waste generators.
• The Water Pollution Act (1991)--This act is modeled after the U.S. Federal Water Pollution Control Act and wastewater permitting system. Prior to beginning operations, factories must submit a water treatment plan to TEPA. Once operating, factories are responsible for regularly submitting effluent test results to verify compliance with standards issued by TEPA. Failure to comply can result in fines or shutdowns. Standards are based on concentration levels. In addition to standards, the act requires TEPA to establish a system of discharge fees.
• The Air Pollution Act (1993)--This act established an air permitting system based on the U.S. model. It is currently being amended to clarify how TEPA will implement the right to collect air pollution fees from nonmobile pollution sources. Regulations would also establish air control zones with caps on the amount of pollution allowed in each zone.
• The Noise Control Act (1992)--This act categorizes noise control zones and sets acceptable noise volume levels.
• The Environmental Impact Assessment Act (1994)--Requiring environmental impact assessments (EIAs) for development projects that meet certain criteria, this act effectively gives TEPA the right to veto projects that may have an adverse impact on the environment. New regulations also require certain government policies to undergo an EIA if they are suspected of adversely impacting the environment.
• The Toxic Substances Control Act (1988, revised 1997)--This act establishes four categories of toxic chemicals and a manifest system for tracking use. New amendments will require companies to publicly disclose use of chemicals listed as toxic.

Pending Laws
Currently, there are two major draft environmental laws awaiting submittal to the Legislative Assembly: the Soil Pollution Control Act and the Resource Recovery Act. The Soil Pollution Control Act is highly sensitive because of Taiwan's potentially large soil and groundwater pollution problems. The original draft of the act languished in the Assembly for over two years before being recalled by TEPA. The draft is currently under revision and is not due to be completed until mid-1999. So far, TEPA has not made a final decision on any of the key issues regarding liability. TEPA is currently reviewing the feasibility of establishing a Superfund-style foundation to handle cleanup of sites when the polluter cannot be found.

Table 8 presents recent amendments to environmental laws.

Table 8 - Recent Amendments

Pollution	Amendments
Water	Promulgated new discharge standards and began collecting discharge fees in 1998.
Air	Will begin collecting air emissions fees based on total quantity of airborne pollutants.
Solid	Waste Established recycling management committees and new recycling system.
Toxic Substances	Introduced new system for categorizing toxic substances and community right-to-know requirements.
Environmental Impact Assessments	Promulgated standards for government environmental impact assessments.

Institutional Structure for Promulgating and Implementing Environmental Regulations
Taiwan has a three-tiered system of government composed of a central government, a provincial government, and local/county governments. The central government manages international affairs and handles planning on a national level. Future direction for all development ranging from basic infrastructure to macroeconomic development is under the aegis of the central government (see figure 2).

The provincial government works directly with local governments and supervises the detailed design work and implementation of plans developed by the central government. Technically, this detailed design work is supposed to be done by local governments. However, in reality, local governments often lack the resources and the expertise, forcing the provincial government to take over project management.

Actual project implementation is supposed to be handled at the local level by the county government's Environmental Protection Bureau. Communications with the local level are handled strictly through the provincial government. The exceptions are the city governments of Taipei and Kaohsiung, which are equal to the provincial government in the hierarchy.

Since the early 1990s, the system has widely been criticized as being inefficient and cumbersome. In 1997, Taiwan's two major political parties finally came to a consensus on eliminating the provincial government. Plans are under way to phase out the provincial structure by the year 2000. Most of the current functions and individuals will be redistributed among local governments.

Prior to TEPA’s establishment, responsibility for developing environmental protection policies was divided among the National Health Administration, the Ministry of Economics Administration (MOEA), and the Council for Agriculture (COA). Currently, institutional responsibility at the central government level for policy development regarding Taiwan's environmental issues remains divided among TEPA, the COA, and the MOEA. Issues related to industrial-or human-generated pollution were turned over to TEPA upon its inception, but many important areas related to resource management and conservation remain at least partially under the umbrella of other agencies.

Under the direction of the central government, the provincial government and the local county governments have established Environmental Protection Bureaus (EPBs). The local EPBs are responsible for implementing the policies and regulations promulgated by the central government. In addition to local government agencies, there are a number of additional quasi government foundations, research institutes, and similar organizations that have been developed to assist in policy implementation as well as to offer guidance to industry on environmental issues.

Enforcement Trends
TEPA will continue to shift its emphasis toward self-reporting systems and increased use of economic instruments. As a result, many local industries are beginning to actively respond to environmental issues. Additionally, many of the larger Taiwanese companies are realizing that environmental pressures, as evidenced by the continuous flow of regulations, will not go away.

Figure 2 - Taiwan's Government Structure

	Executive Yuan (Central Government)
	\|
	Environmental Protection Admin. (Central Government)
\|--------------------	--------------------\|-------------------	--------------------\|
Taiwan Provincial Government	Taipei City Government	Kaohsiung City Government
\|	\|	\|
Department of Environment Protection	Environmental Protection Bureau	Environmental Protection Bureau
\|
Environmental Protection Bureaus in 21 Cities and Counties

Unfortunately, enforcement has traditionally been a weak point in Taiwan's environmental management system and is
further hampered by shortages in trained manpower. It is not likely that local governments will be able to significantly upgrade their resources and capabilities to enforce environmental legislation. Lack of resources and training will continue to hamper enforcement efforts in the short to medium term. As a result, TEPA may turn increasingly toward professional certification companies for assistance.

Tables 9 and 10 present numbers and amounts of inspections and fines TEPA has administered from 1991 to 1996.

Table 9 - Number of Inspections and Fines

Year	Total Number of Inspections	Total Number of Fines	Amount of Fines ($ thousands)
1991	692,564	170,892	20,817
1992	686,035	148,348	27,741
1993	594,640	126,325	25,082
1994	728,646	140,443	25,672
1995	627,650	146,526	24,747
1996	1,798,135	151,727	23,302

Source: TEPA (NT$28.6 =$1)

Table 10 - Number of Fines by Pollution Area

Year	Water	Air (Mobile)	Air (Fixed)	Noise	Industrial Waste	Municipal Solid Waste	Toxic Chemicals
1991
1992
1993
1994
1995
1996

Source: TEPA

TEPA has now completed its legal foundation, and over the next few years, it will most likely focus on refining regulations. Standards will be gradually tightened, and tracking systems will be upgraded. For example, TEPA recently promulgated a new definition of hazardous waste that dramatically increased the types of wastes defined as hazardous. In addition, it began implementing an air emissions permitting program and promulgated volatile organic compound emission standards for the automotive and coatings industries. The completion of air and water quality monitoring stations will also help provide TEPA with more of the basic environmental data needed to develop and enforce regulations.

The Major Environmental Institutions in Taiwan

Central Government
Taiwan Environmental Protection Administration (TEPA) -- TEPA is charged with developing policies to regulate and manage the impact of pollution in Taiwan. In addition, TEPA also supports development of Taiwan's environmental monitoring networks, training of environmental personnel, and coordination with international environmental organizations and forums such as the Asian Pacific Economic Council.

Ministry of Economics Administration (MOEA) --

Industrial Development Bureau - IDB is located within MOEA and coordinates industrial development policies. IDB works closely with industry to encourage improved environmental performance through technical training, low-cost loans for pollution control equipment, and the promotion of management schemes such as ISO (International Standards Organization) 14000. IDB is also responsible for managing Taiwan's 95 industrial parks.
Bureau of Commodity Inspection and Quarantine - This bureau is responsible for building accreditation and certification systems for ISO 9000 and 14000 compliance.
National Bureau of Standards - This bureau has taken the lead on developing and promoting ISO 14000 standards in Taiwan. However, actual guidance for industry adherence of the standards is provided through IDB.

Council of Agriculture (COA) -- In addition to managing agricultural policy, COA is also responsible for managing Taiwan's national parks and ecosystem conservation plans.

Ministry of the Interior (MOI) -- Although not formally charged with environmental protection responsibilities, some environmental infrastructure projects, such as sewage system construction fall under MOI.

Council for Economic Planning and Development (CEPD) -- CEPD is the advisory body given much of the credit for engineering Taiwan's economic miracle. CEPD guides the planning of Taiwan's overall economic development and assists in coordinating the policies of different government agencies. The council does not have actual implementation powers, but CEPD can still exercise a considerable amount of influence.

Provincial
Provincial Environmental Protection Bureau (EPB) -- The provincial EPB is responsible for overseeing the work of local EPBs and serving as a communications channel to the central government. In practice, the provincial EPB often takes on responsibilities for tasks that local governments are unable to complete.

Local (City/County)
City/County Environmental Protection Bureau -- Actual implementation of environmental regulations and initiatives is the responsibility of local city and county EPBs. Implementation responsibilities include inspecting factory facilities, collecting fines, and preparing local infrastructure development plans (such as sewer systems) for approval by the provincial and central governments.

Quasi Government/Research Institutions
Industrial Technology Research Institute (ITRI) -- Originally formed to help guide Taiwan's industrial transformation, ITRI has become Taiwan's leading industrial research institute. In recent years, ITRI has devoted an increasing amount of resources to researching industrial pollution control and environmental technologies. In 1995, ITRI became home to the National Clean Production Center to research application of clean production techniques to Taiwanese industry. Previously, ITRI also headed numerous environmental projects for the government, including the establishment of Taiwan's eco-labeling system, research on electric vehicle technology, and adaptation of pollution control technologies to Taiwan. The bulk of ITRI's funding comes from the MOEA, but ITRI has been working to become more self-supporting by providing private consulting services to industry.

Development Center for Biotechnology (DCB) -- The DCB is similar in nature to ITRI, but focuses strictly on the development and adaptation of biotechnologies to Taiwan.

Industrial Pollution Control Corps (IPC) -- The IPC provides consulting services to industry on behalf of numerous government agencies.

Taiwan Water Supply Corporation (TWSC) -- Located in Taichung, the TWSC is charged with managing Taiwan's drinking water system.