2. Environmental governance and Taiwan’s EAF steel industry
2.4 Public sector factors
sector governance initiative anyway.
2.4 Public sector factors
Taiwan has benefitted immensely from the international predecessors to its own environmental protection schemes. Many of the programs described below were modeled on similar initiatives started elsewhere that were later updated and tweaked to suit unique conditions on the island. Public sector influence on levels of environmental investment in EAF steel firms can be roughly analyzed according to regulations, resource sharing and incentive-based projects.
These factors operate more on the periphery of EAF steelmaking than the technological,
environmental and economic constraints detailed above. In other words, although its impact may be substantial, government pressure is not a part of the day-to-day realities of producing recycled steel for domestic and international markets.42 Thus, with some historical and theoretical context, the explanation that follows describes public sector environmental governance in only as much detail as the issue of EMS development in the steel industry requires. This information was gathered primarily via personal interviews and through publications from TSIIA General Secretary (and former Industrial Development Bureau official) Jerry Huang as well as content from the Environmental Protection Administration’s (EPA) English-language websites.
First, Taiwan’s environmental regulation comes from a bureaucracy that functions on two main levels: the central government, and the county/municipal level.43 The central government carries out the bulk of standard-setting, while their enforcement capabilities are delegated to regional centers of power.44 The EPA, of course, is not the only government agency with
System are two examples, have wielded their proxy-voting powers to influence corporate
business practices, most social fund shareholders do not command a big enough market share to exert much influence. Third, to date most social funds accept the corporation’s unsubstantiated reports of responsible behavior. Without subjecting these reports to a reliable external audit, their validity becomes questionable.
42 As my interview subjects confirm, government regulation and regulatory monitoring in particular inform corporate decision making at key points in the facility design and maintenance process, but this influence is not felt so strongly at other times when economic concerns are paramount.
43 In 1998, Taiwan nullified the political power of the provincial level to streamline government and enhance administrative effectiveness.
44 These two levels of governance and administration don’t always cooperate seamlessly. For instance, in a 2009 case involving dioxin contamination from steel furnace slag, the EPA
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environment-related responsibilities. The Industrial Development Bureau under the Ministry of Economic Affairs (MOEA) has played an important role in building a sustainable future for Taiwan. In addition, the United States Environmental Directories Inc. have published online45 a list of nine more government agencies charged with special environmental responsibilities and initiatives: the Aviation Safety Council, the Central Weather Bureau, the Council of Agriculture, the Council of Indigenous Peoples, the National Parks of Taiwan agency in the Ministry of the Interior, the Taiwan Forestry Research Institute, the Taiwan Water Corporation and the Water Resources Agency under the MOEA. Taiwan’s environmental bureaucracy and programs, however, started developing well after the steel industry’s rise to industrial fame and dominance in the 1970s.
Huang (2001) divides Taiwan’s environmental policy development into three basic stages, each with special significance for Taiwan steel. First, in the initial development phase between 1974 and ’79, the country witnessed the emergence of its first three cornerstone environmental laws: the Water Pollution Control Act (1974), the Solid Waste Disposal Act (1974) and the Air Pollution Control Act (1975). These laws, inspired by the Clean Air Act and other policies in the U.S., were initially written loosely and were accompanied by very relaxed enforcement efforts. Steel firms were not under tremendous pressure to comply at this time, however, they could easily forecast that stricter regulations were on the horizon, and those with the requisite capital and expertise started upgrading their facilities to prepare for these future demands. Things started to change in the 1980s with the next stage in environmental
policymaking.
Huang marks the second stage in Taiwan’s environmental protection efforts between 1980 and ’89. The government tightened for the first time each of the cornerstone laws from the preceding period, the Solid Waste Disposal Act in 1980, the Air Pollution Act in 1982 and the Water Pollution Act in 1983. The revisions divided Taiwan into control zones with specialized criteria for environmental management; the Air Pollution Control Act, for example, divides Taiwan into three classes — national parks and protected areas, areas that meet air quality standards, and areas that do not meet standards — and enacts local policy and administrative allegedly said they needed to wait on the local environmental bureau before they could act. See Chao, V.Y. (2009). Lawmakers criticize EPA over duck scare. Taipei Times (Nov. 17, 2009).
45 See earthdirectory.net/china#taiwan
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measures accordingly. For instance, the Air Pollution Act sets emissions limits for several key environmental pollutants applicable to EAF facilities, including sulfur dioxide, particulate matter, and volatile compounds. Still, before the mid-1980s, most environmental laws and amendments arose in direct response to obvious and troublesome environmental issues. There was still no bureaucratic office expressly dedicated to these issues until 1986 with the
inauguration of the Executive Yuan’s Environmental Protection Task Force, which matured into the Environmental Protection Administration (EPA) the following year. This period also gave rise to the Noise Control Act (1983) and the Toxic Substance Management Act (formalized in 1986). Finally, this stage witnessed the increase in public sector environmental management manpower and enforcement, which subsequently led to some of the first industrial investments in pollution control equipment.
Huang’s third and final stage marks Taiwan’s emergence as an environmental standard bearer on par with leading industrialized nations. 1990 saw the adoption of the Environmental Impact Assessment (EIA) Law, which held that certain environmental standards must be met before new development could be undertaken, as well as a full-scale review and revision of all preceding environmental policies. By the mid-2000s, Taiwan’s budget for environmental protection reached a high point in the hundreds of millions of New Taiwan dollars (Williams &
Chang, 2008). This coincided with a rise in influential political parties identifying environmental protection efforts as a keystone in their electoral platform, as when former President Chen Shui-bian (2000-2008) and his Democratic Progressive Party vocalized their intent to refashion Taiwan into a “Green Island.”
Generally speaking, Huang identifies two separate approaches to Taiwan’s environmental governance in the public sector: preventive and administrative. Among the preventive measures are EIA policy and other approval protocols that predate industrial development — for instance, the air and water pollution prevention plans and the plan for waste clearing and disposal that firms must submit before an EIA inspection or audit clears them to break ground on a new facility or expand an existing one. Also, in the name of prevention firms must have someone on staff with specialized training in handling issues related to the air, water and toxic substances laws. Administrative laws, by contrast, are executed on a more regular basis and include
measures such as in-house monitoring and reporting as well as random inspections conducted by operatives from the central or local governments.
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Whereas failure to comply with a preventive law renders companies unable to legally develop their business, administrative transgressions can result in warnings, fines, or even a suspension of operations or an operational shutdown in especially egregious cases. These serious cases might also subject a firm to criminal prosecution, not to mention further loss of reputation and sanction from the public.
Taiwan’s EPA is responsible for promulgating environmental regulations (and approving regulations devised by environmental protection bureaus at the regional level). In the past decade the EPA has put forth some key standards specifically related to steel production with electric arc furnaces. For instance, the Steel Smelting Industry Electric Arc Furnace Particulate Pollution Control and Emission Standards (煉鋼業電爐粒狀污染物排放標準) first came on the scene in 1993 and complements the broader Air Quality Standards (revised May 14, 2012) in setting forth limits and control strategies for particulate matter (PM2.5) from steel production off-gases.
According to the latest English press releases available on the EPA website in December 2014, the agency is also conducting research to make existing emissions limits more strict, based in part on the rapidly developing pollution control technologies coming on the market. Like other industrial regulations, the latest particulate standards are to be implemented in two stages to encourage firms to gradually transition. All EAF facilities are expected to decrease their
particulate emissions from 50 mg/Nm3 to at most 30 mg/Nm3 in the first stage before decreasing to 15 mg/Nm3 in the final stage by Jan. 1, 2017.
The EAF particulate control standards are more ambitious than just emissions limits; they also cover production guidelines and protocols for in-house environmental impact monitoring.
For example, these regulations are undergoing further revisions to stipulate that furnace lids must remain closed and cannot be removed during the melting process, except to add raw materials or extract the molten steel (two procedures that take less than six minutes each). In addition, the EPA is considering standardizing a more rigorous method of taking pollution samples based on the U.S. EPA’s Method 5D protocols.
The EPA has also announced that it is weighing the possibility of standardizing dust extractor systems for EAF facilities in revisions to the Iron and Steel Basic Industry Dust and Ash Storage Extension Application Review Working Guidelines (鋼鐵基本工業集麈 貯存延長申請
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審查作業要點). These laws were last revised on June 30, 2009;46 whereas the previous guidelines focused on best available techniques for storing the waste prior to treatment, the revised
guidelines also call for annual waste treatment targets. The EPA’s website states that, owing to the limited capacity of landfills, “recycling should be the first priority for this dust and ash,”47 and the department has strengthened its inspection protocols and GPS tracking systems to prevent illegal dumping. Furthermore, they have taken (unspecified) steps to increase the efficiency of recycling and treatment “organizations” to facilitate more responsible waste disposal.
Since the EPA came forth with data pointing to Taiwan’s steel smelting facilities as the country’s main source of dioxins,48 both central and local government agencies have tackled the issue with emissions standards. The EPA came out with their policy solution in June 2004: the Steel Industry Smelting Plant Dioxin Controls and Emissions Standards (鋼鐵業燒結工場戴奧辛管 制及排放標準). Kaohsiung City, which houses the highest concentration of EAF facilities in the country, also drafted a new policy to complement emissions limits set by the central government while addressing the unique conditions of the region; the Kaohsiung City Steel Smelting Plant Dioxin Controls and Emissions Standards in accordance with the Air Pollution Control Act were ratified by the EPA on Aug. 14, 2008 and went into effect in 2010. In addition to setting forth strict regulations for future steel smelting facilities, these standards also apply to existing facilities.
Some regulations are based not on laws formulated in other nations like the United States but on international agreements. Because of Taiwan’s sensitive diplomatic status, the country is generally unable to participate in international environmental treaties. Still, in large part to build its soft power and to ease its ability to integrate into global production cycles, Taiwan has made efforts to follow the spirit of international treaties without being a formal party to them. A few of these efforts are documented online at English-language websites such as the “Towards
46 This revision was likely in response to the findings of the EPA’s southern region inspection squad, which in March 2009 revealed to the public its discovery of 40 cases — some involving steel production facilities, some involving aluminum — in which EAF dust was not disposed of in accordance with existing regulations. See Lu, M. (2009). Firms ignoring dust regulations.
Taipei Times (March 17, 2009)
47 See http://oldweb.epa.gov.tw/en/NewsContent.aspx?NewsID=1377
48 See http://oldweb.epa.gov.tw/en/NewsContent.aspx?NewsID=816
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UNFCCC” (The United Nations Framework Convention on Climate Change) site,49 which emphasizes that “Taiwan is willing to contribute (to the) global community.” For instance, the same EPA-sponsored English-language website states that Taiwan has endeavored to control and reduce POP emissions in line with the Stockholm Convention, and the country’s dioxin
emissions had decreased 78% in 2008 since POP controls came into effect in 1997. Taiwan has also controlled ozone-depleting substances in accordance with the Montreal Protocol since 1994, and it ratified the Waste Import and Export Management and Basel Convention Implementation Plan in 2000, despite not being full-fledged participants in these treaties.
The Executive Yuan-established National Council for Sustainable Development (NCSD) was a bureaucratic outgrowth of the Agenda21 agreement and the Rio Declaration put forward at the 1992 United Nations Earth Summit in Rio de Janeiro, Brazil. It was upgraded to legal council status in November 2002. Adopting the ethos of “Think Global, Act Local,” the NCSD organizes working groups (for instance, the Green Economy Task Force convened in Sept. 2012) to bring together experts from a variety of departments in the public sector along with academics and civil organization representatives. These groups tackle Taiwan’s sustainability issues via policymaking efforts and by crafting annual reports and promoting guidelines such as the
“Action Plan for Sustainable Development” (2002) and the annual “Taiwan Sustainable Development Indicators.” “Taiwan Agenda 21” (2004), for example, supports the continued restructuring of Taiwan’s economy away from heavy industries like steel, cement and petrochemicals production and “toward a high knowledge- and technology-intensive service-based modern knowledge economy.” The NCSD also presents the Taiwan Sustainable Development Awards on a yearly basis.50
The R.O.C. Annual Enterprise Environmental Protection Awards have been part of the public sector’s incentive-based initiatives since 1992. China Steel has been a prominent recipient in the past among the 10-20 other enterprises selected for recognition each year. Under the awards scheme, enterprises undergo evaluations based on their records of environmental
protection planning and management, their achievements in environmental protection, and their promotion of environmental protection to the public. In 2014, no enterprises earned an award in the category for small- and medium-sized enterprises.
49 See http://unfccc.epa.gov.tw/unfccc/english/index.html
50 This and more information about NCSD is available on their website, www.ncsds.org.
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Participation in a European emissions trading system (ETS) is another prominent incentive-based public sector initiative. Like the awards, this initiative has to develop further to fully penetrate industrial SMEs. Briefly, ETS, known as cap and trade in the United States, works by creating a system of credits based on corporate GHG emissions levels and allows enterprises to trade these credits for their market value — i.e., based on whether they need to buy credits to offset high emissions or whether they can sell credits based on their success at GHG reduction. For ETS to work, a variety of systems must work cooperatively, including emissions standards (the “cap” in cap and trade), reporting protocols, a registry system and a trading platform. EPA documents also stress the importance of a legal foundation for ETS that
incorporates the Energy Management Act (2009) and the Renewable Energy Development Act (2009), the Greenhouse Gas Reduction Bill (introduced to the Legislative Yuan in 2006, revised in 2008 and still awaiting approval) and the Energy Tax Bill (also pending). In lieu of these bills making it through the Legislature, the government took executive action to establish a third-party verification system in 2009 and an emission credit system in 2010. There has also been progress in linking Taiwan’s ETS to international cap and trade programs in Europe. Still, there’s a long way to go before ETS makes an indelible mark on Taiwan and EAF firms in particular.
Moving on to public sector initiatives based on resource sharing, Corbett and Kirsch (2000) focus on financial subsidies for enterprises seeking ISO 14000 certification. In 2000, the Industrial Development Bureau contributed 40-60% of ISO 14000 preparation costs annually to as many as 50 SMEs engaging in “demonstration projects” that might result in innovation worth sharing domestically. Generally speaking though, EAF firms are most likely to benefit from government subsidies only indirectly, when these funds are funneled into research and development (R&D).
By the early 2000s, the government’s R&D budget was subsidizing about a quarter of all expenditures on industrial technology innovation nationwide (Hsu and Chang, 2001). This infusion came mostly via the Ministry of Economic Affairs, which evaluates domestic industry and strives to enhance its competitiveness. Before 1996, the bulk of R&D initiatives took place in non-profit research institutes such as the acclaimed Industrial Technology Research Institute.
Since that time, competent members of the private sector have picked up the slack (e.g., the private sector initiates outlined in the previous section) and the role of government expertise has
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shrunk to a more supportive role.51 Still, the key resource that the government shares to boost environmental protection is not money but information. The environmental protection awards are one example of these efforts that aim to proliferate environment-oriented R&D. The NCSD Annual Report for 2010 mentions the efforts of the Industrial Development Bureau (under MOEA) in conducting GHG inventories of 380 energy-intensive manufacturers (in the fields of steel, petrochemicals, paper, synthetic fibers and cotton printing and dying) and providing guidance on reducing firms’ carbon footprint. The EPA also coordinates training for required corporate environmental specialists as needed and, of course, maintains an accessible online database of environmental law and news.
Finally, the significance of environmental progress in the public electoral processes is worthy of mention. Particularly at the local level and in regions afflicted by environmental damage (see Figure 14), candidates commonly seek (re-)election on platforms that include a strong stance toward environmental health and regulation. Indeed, independent parties at the grassroots level sometimes organize to challenge seemingly industry-centric parties in the mainstream (as in Green Party Taiwan) or even to counter specific and localized environmental destruction (as in the Trees Party, which splintered from Green Party Taiwan in 2014). Still, the mainstream DPP and KMT parties have a record of addressing environmental issues in policy and rhetoric, with the progressive party enjoying a distinct edge in this regard.
In sum, the public sector has various tools at its disposal to coerce and encourage EAF steel companies to increase their investment in environmental solutions. These tools can be roughly categorized as resource sharing (in the form of research and development subsidies) and information sharing; incentive programs like environmental awards and ETS; and regulations.
Environmental regulations put forth at both the central and local government levels are the primary means for impacting industrial EMS, and the efficacy of these measures depends on administrative protocols like in-house reports on environmental monitoring and especially periodic inspections conducted on behalf of the government. The above summary also highlights certain limitations to public sector policymaking and praxis such as the potential for polluting facilities in less concentrated industrial areas to evade the pressures of control zone-based
51 On Nov. 16, 2011, however, National Taiwan University opened a steel research center on campus dedicated to developing advanced steel technologies. See Anonymous. (2011). NTU opens center to create advances in steel technology. Taipei Times (Nov. 17, 2011).
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initiatives. Other limitations include the possibility that new laws will affect future but not
existing facilities, potential regulatory loopholes arising from reliance on firm-generated data and
existing facilities, potential regulatory loopholes arising from reliance on firm-generated data and