China Environmental:Long-awaited Soil Pollution Control Plan unveiled

　　Soil pollution control plan unveiled

　　After the market closed on 31 May, the State Council released the Soil Pollution Control Plan, which is another ground-breaking environmental policy after the release of the Air Pollution Control Plan in 2013 and the Water Pollution Control Plan in 2015. The plan has set clear timetables and fixed responsibility for the various initiatives to be launched. The resulting new investment and market opportunities bode well for leading environmental players under our coverage. In particular, CTEG and CEI are likely to benefit more, given their business focus and the fact that untreated industrial wastewater and solid waste landfills are sources of soil pollution.

　　Nationwide soil pollution issue draws attention

　　According to MEP/MLR, 16.1% of all the land across China does not meet environmental standards, while contaminated farmland has risen to 19.4%. The recently reported pollution in a school of Changzhou has drawn significant public attention and highlighted the importance of soil pollution treatment.

　　Clear target and timetable set

　　The plan calls for a thorough investigation of the quality of soil environment with a focus on farmland and key industrial land. By end-2018, the area, distribution of contaminated farmland and impact on agriculture products would be ascertained. By end-2020, local governments would determine the key industries’ polluted land distribution and corresponding environmental risks. The plan aims to achieve a safety utilization rate for contaminated farmland and polluted land at 90% by 2020 and more than 95% by 2030.

　　More explicit and stringent protection and monitoring measures

　　Explicit pollution protection and monitoring measures will be rolled out, based on the degree of soil contamination. By end-2017, soil environmental monitoring points would be set up to form a national monitoring network. By end-2018, a basic database of soil environment would be set up. By end-2020, the monitoring points would cover all regions (including city/county level).

　　Soil protection responsibility assigned to local governments

　　Local governments will be responsible for carrying out the plan and closely monitoring any misconduct in environmental regulation. By end-2016, the State Council will sign a Responsibility Statement with each local government (provincial, city/county). The annual assessment results will be an important reference for performance evaluation of local government leaders.

　　To strengthen fiscal spending and encourage private capital to invest

　　Both central and local governments would provide stronger fiscal supports to the plan. Meanwhile, a comprehensive incentive policy would be established and the PPP (public-private-partnership) model will be encouraged to introduce more private capital to invest in soil pollution treatment.

　　Listed players with soil remediation exposure

　　There are a few A-share listed players that have more direct involvement in the soil remediation market, such as Yonker (300187 CH, NR), GeoEnviron (603588 CH, NR) and Bossco (300422 CH, NR). While there are few existing contracts on hand, the overseas-listed environmental players will likely enter this emerging market through M&A or organic development.