A revamped pollutant discharge policy requires all stationary sources of pollution in China to have discharge licenses by 2020.
"Air and water quality in many regions have failed to meet standards for a long period, which is directly linked to emissions from stationary pollution sources," said Sun Youhai, head of Tianjin University law school.
The policy comes as China's environmental management is failing to adapt to new circumstances.
Companies have been required to obtain pollutant discharge license since the late 1980s, but the results have proved unsatisfactory due to poor supervision by environmental agencies, according to Zhao Yingmin, deputy minister of environmental protection.
The new policy means companies and institutions may be more likely to meet their obligations.
"As pollutant emissions from enterprises and government-affiliated institutions have long been one of the primary sources of pollution, it is vital to reduce total emissions by cutting pollutants from enterprises and government-affiliated institutions," minister for environmental protection Chen Jining said in a bylined article carried by the "Economic Daily."
Specific items such as the variety, concentration and amount of pollutants will be included in the license, and those in breach of the policy may face penalties ranging from suspension of operations to criminal charges.
The policy will come into force by the end of 2016 in thermal power stations and paper-making enterprises, and in steel and cement operations in the Beijing-Tianjin-Hebei region.
"The new license will be the only administrative permission for enterprises and government-affiliated institutions to discharge pollutants," Chen said.
Environmental protection agencies will verify and issue the licenses, and stricter sanctions will be enforced should businesses exceed their limits.
"Pollutants covered by the license will be more than those currently monitored by environmental agencies," said Luo Jianhua of the China Environment Chamber of Commerce.
In addition, an information platform to be established by 2017 will manage licenses, applications, verification and supervision, which will be made public and enable enterprises and law enforcers to share information.
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