Evaluating the implementation of cleaner production audit demonstration projects

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    Katherine Kao CushingUniversity of California, Berkeley

    Peter L. Wise and Janet Hawes-DavisIllinois Environmental Protection Agency

    Cleaner production audit demonstration projects were carried out in two Chi-nese case factories as part of a project co-sponsored by the Illinois Environmen-tal Protection Agency and Chinas State Environmental Protection Administra-tion. Audit results at both factories were characterized by implementation ofpredominantly low- or no-cost options, notable reductions in water pollution,and incomplete financial benefit analyses. Two reasons explain the financialbenefit analyses apparent weakness. First, factory audit teams were inexperi-enced in the techniques and procedures used to determine the economic benefitsof cleaner production options. Second, motivations project personnel had forparticipating in the demonstration projects were not centered on attaining themonetary benefits of implementing cleaner production. Instead, other factorsrelated to the international nature of the project, such as a high degree of statelevel oversight and prestige, were more influential in affecting the behavior ofproject personnel. 1999 Elsevier Science Inc.


    The Chinese governments formal efforts to promote cleaner production(qingjie shengchan) began in the early 1990s. A central component of theseefforts has been implementing cleaner production audit demonstration proj-ects with the assistance of bilateral and multilateral aid agencies. Since 1992,Chinas government has conducted cleaner production audit demonstrationprojects with organizations including the World Bank, the United NationsEnvironment Programme (UNEP), the Overseas Development Agency of

    Address requests for reprints to: Katherine Kao Cushing, 990 Lundy Lane, Los Altos, CA 94024,USA. kcushing@gateway.net

    ENVIRON IMPACT ASSESS REV 1999;19:569586 1999 Elsevier Science Inc. All rights reserved. 0195-9255/99/$see front matter655 Avenue of the Americas, New York, NY 10010 PII S0195-9255(99)00027-X


    Britain, and the Canadian Ministry of Foreign Affairs (NEPA and CNCPC1996). This research examines one such projecta cooperative effort be-tween the Illinois Environmental Protection Agency (IL EPA) of theUnited States and the National Environmental Protection Agency (NEPA)1

    of China.This project, International Diffusion of Pollution Prevention Technolo-

    gies through Outreach, Assessments, Demonstrations, and Evaluations forthe Metal Finishing, Petrochemical, and Pharmaceutical Industries inChina, hereafter referred to as the IL EPA-NEPA project, includedcarrying out cleaner production audits in six large state-owned factories.The IL EPA-NEPA project team selected two factories in each of thesesectors (i.e., metal finishing, petrochemical, and pharmaceutical) to partici-pate in the audits. This paper follows the progress of the two Chinesepharmaceutical factories, Xinhua and Huabei, that participated in the ILEPA-NEPA project through a 10-month audit implementation process. Itassesses the environmental and financial impacts of audit implementation,explains those results, and relates the studys findings to the larger issueof promoting cleaner production via demonstration projects in China andother industrializing countries.

    Definition and Process

    Cleaner production is one of several terms used to describe an environmen-tal management strategy that focuses on waste minimization. Accordingto the Chinese National Cleaner Production Center (CNCPC), a leadingauthority on cleaner production in China, cleaner production in the Chinesecontext is defined as follows:

    Cleaner production is the continuous application of an integrated preven-tative environmental strategy to processes and products to reduce risksto humans and the environment.

    For production processes, cleaner production includes conserving rawmaterials and energy, eliminating toxic raw materials, and reducing thequantity and toxicity of all emissions and wastes before they leave aprocess.

    For products, the strategy focuses on reducing impacts along the entirelife cycle of the product, from raw material extraction to the ultimatedisposal of the product. Cleaner production is achieved by applying know-how, by improving technology, and by changing attitudes (Duan 1996).

    Based on this broad definition, cleaner production encompasses numer-ous activities, ranging from instituting a periodic valve maintenance system

    1 Since the time of the project, NEPA has been elevated in organizational status and renamed the StateEnvironmental Protection Administration (SEPA).


    to installing equipment to recover solvents in the manufacturing process.Examples of cleaner production activities commonly used by US pharma-ceutical factories include using water-based cleaning solutions instead ofsolvent-based solutions, automating a material handling and transfer systemto reduce the likelihood of spilling raw materials, and recovering acetoneor other solvents from a wastestream for re-use in a chemical reactor (USEPA 1991).

    Chinese factories can implement cleaner production in a variety of ways.For example, the study by Warren (1996) of Chinese electroplating factoriesshows how Chinese factory management may elect to adopt certain pollu-tion prevention practices in a piecemeal fashion, independent of conduct-ing a factorywide pollution prevention audit. Alternatively, factories mayimplement cleaner production in a more systematic, formal manner, inwhich factory teams follow detailed step-by-step procedures. The two casefactories in this study utilized the following formalized audit process devel-oped by the CNCPC.

    According to the CNCPC, a formalized audit should consist of the follow-ing seven steps: (1) planning and organization, (2) preassessment, (3) assess-ment, (4) option generation and screening, (5) feasibility analysis, (6) optionimplementation, and (7) continuing cleaner production (CNCPC 1995).Although there are other ways to implement cleaner production, this seven-step methodology is promoted by the CNCPC as the recommended wayto perform an audit.

    In the first two steps of the audit process, top factory management shouldassemble a multi-disciplinary audit team, and that team should conduct abasic survey of the plant sites operations to identify one particular manufac-turing area, or workshop,2 as the focus of the audit. The team shouldestablish pollution prevention goals and begin implementing low- and no-cost options as they are identified. During the third step of the audit process(assessment), the audit team is supposed to conduct an in-depth analysisof each manufacturing operation carried out in the selected workshop and,from this analysis, identify further cleaner production options that the teamshould consider implementing. In the fourth step (option generation andscreening), the audit team should implement low- and no-cost optionsidentified during the previous step as well as conduct a general analysisof medium- and high-cost cleaner production options. The CNCPC alsorecommends writing a mid-term audit report during step 4.

    In step 5, feasibility analysis, the audit team should further analyze me-dium- and high-cost options using criteria related to technical and financialfeasibility, as well as environmental benefits. Based on this analysis, theteam members determine which, if any, of the medium- or high-cost options

    2 In China, manufacturing facilities are organized into units called chejian workshops, which are product-or process-specific.


    they want to implement. In step 6, option implementation, the audit teamcarries out the medium- and high-cost options that appear feasible basedon the analysis performed in the previous step. The seventh and final stepin the process is continuing cleaner production. Here, the audit team shouldanalyze what it learned from the initial audit and develop ways to continueimplementing cleaner production throughout the factory.

    Project Background

    Market opportunities motivated a US state environmental protectionagency, the IL EPA, to become involved in an international cleaner produc-tion project. Although the US currently holds a large share of the totalworld market for environmental technology, the sales of most US companiesare domestic (IL EPA 1997). Moreover, the world market for environmen-tal technologies is expected to grow from $300 billion in 1994 to $600 billionby 2000 (US EPA 1994). The US portion of the IL EPA-NEPA projectwas funded by the US EPA Environmental Technology Initiative (ETI),a program established in 1994 to maximize US opportunities for enteringthe world market for environmental technology through a strategic use ofUS government funds and collaboration between government agenciesand private stakeholders. To implement the ETI program, the US EPAannounced a grant competition in which federal, state, and tribal entities, inpartnership with other government agencies or private industries, proposedprojects that would serve the programs purpose. The IL EPA-NEPA proj-ectled by the IL EPA in cooperation with NEPA, the World Bank, theUNEP, and the Chemical Industry Council of Illinoiswas one of the USEPAs grant competition winners.

    The IL EPA selected China as the project location for several reasons.First, China is faced with significant sustainable development issues. Thecountrys rapid industrialization, combined with and problematic enforce-ment of its environmental laws (Cushing 1998; Ma 1997; Sinkule 1993) hasled to severe environmental degradation (Edmonds 1994; He 1991; Smil1993). Thus, the perceived need for a cleaner production demonstrationproject in China was high. Second, Chinese government institutions andthe general public have become increasingly aware of and interested inenvironmental protection issues, including cleaner production. And third,the US government views China as an important potential market forAmerican environmental products and services. By conducting the projectin China, the IL EPA would be able to obtain information on the currentand future environmental technology needs of several Chinese industries.

    The pharmaceutical industry was selected as one of the IL EPA-NEPAprojects target sectors for three reasons: (1) previous initiatives by theWorld Bank and UNEP identified this sector as a major source of pollutionin China; (2) the pharmaceutical industry was the focus of previous US EPA


    pollution prevention outreach efforts, thus a substantial body of cleanerproduction research materials existed for this industry; and (3) pharmaceuti-cal companies and environmental technology vendors that support themwere prevalent in Illinois and throughout the US. The IL EPA consideredthe Chinese pharmaceutical sector in China to be expanding rapidly, withneeds for environmental technologies similar to those being utilized in the US.

    Audit Implementation Results

    The two case pharmaceutical factories that participated in the IL EPA-NEPA project, Huabei and Xinhua, are representative of the 50 very largestate-owned enterprises that form the backbone of the Chinese pharmaceu-tical industry. In total, these large firms accounted for approximately 40%of the industrys total output in 1995 (Shen 1996). Nationwide, there areabout 1,500 firms in China that produce Western pharmaceuticals (e.g.,antibiotics, cardiovascular drugs) (SPAC 1995).

    The Huabei and Xinhua audit teams conducted the majority of theiraudit work between January and October 1996. During this period, auditteam members received training and assistance from IL EPA staff, USpharmaceutical industry experts, UNEP cleaner production specialists, andCNCPC staff. On the Chinese side, two national-level Chinese organiza-tions, NEPA and the State Pharmaceutical Administration of China(SPAC), oversaw the audits implementation (e.g., by attending workshopsand visiting factories).

    Each of the case factories had several on-site manufacturing areas, orworkshops, where different types of production operations were carriedout. For example, Huabei had 10 workshops and a branch factory locatedin another area of town. Xinhua had 16 workshops under its direct supervi-sion. At both factories, cleaner production projects were conducted in asingle workshop at the main factory sitea solvent workshop at Huabeiand a caffeine workshop at Xinhua. Each of these workshops was the mainsource of organic pollution at its factory, accounting for 25% and 30% ofthe total chemical oxygen demand (COD)3 in wastewater discharges atHuabei and Xinhua, respectively.

    Both factories implemented about half of the options identified by theiraudit teams. Huabei followed through with 5 of 10 options, and they aredescribed in Table 1. All of the implemented options were categorized bythe audit team as low or no cost.4 Two of the options the team imple-mentedrecycling equipment washwater and hot wastewater, and increas-ing the quantity of distiller material recirculatedfall into the cleaner

    3 COD is a widely used indicator of the amount of organic material in wastewater.4 Typically, there are three cost categories for analyzing cleaner production options: (1) low and no cost;

    medium cost; and high cost. The ranges for each of these categories are typically determined by eachindividual audit team and often depend on the factorys size, with larger factories having larger ranges forthe cost categories.


    TABLE 1. Cleaner Production Options Implemented by Huabei

    Option No. Description

    1 Recycling equipment cleaning water and hot wastewater2 Increasing the quantity of distiller material recirculated3 Recovering butanol from wastestream4 Increasing the concentration of base added to the distillation tower5 Adding measuring equipment to economize on water consumption

    Source: Huabei Pharmaceutical Factory (1996).

    production category of recycling and reuse. The other three implementedoptionsrecovering butanol from wastestream, increasing the concentra-tion of base added to the distillation tower, and adding measuring equip-ment to economize on water consumptioninvolved efforts to optimizeoperating conditions.

    The Huabei team chose not to implement five other options identifiedthrough the audit process, and these included measures such as improvingthe waste distiller unit treatment process, recycling solid carbon dioxidefrom fermentation exhaust gas, culturing higher quality bacteria for thefermentation process, and redesigning the distillation process. In the processof screening options, these projects were eliminated for implementationbased on reasons such as the high degree of new technology required, highcost, and the length of time required to implement the project (HuabeiPharmaceutical Factory, 1996). The following excerpt from the audit teamsfinal report explains, for example, why...


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