[Chinese Mainland] Two Months into the Implementation of the Ecological Environment Code: Sewage Treatment Fees Must Cover Sludge Disposal Costs, and Reclaimed Water Is Upgraded from "Encouraged" to "Shall Be Coordinated"

Key Facts: 2026年8月15日, the Ecological Environment Code of the People's Republic of China officially came into effect. On the same day, ten laws including the Water Pollution Prevention and Control Law and the Environmental Protection Law were repealed. Article 302 of the Code specifies that sewage treatment fees shall be used for facility construction, operation, maintenance, and harmless sludge treatment and disposal, and shall not be diverted for other purposes; Article 183 requires governments at or above the county level to coordinate the construction of sewage resource utilization infrastructure and incorporate unconventional water such as reclaimed water into the unified allocation of water resources. This is the most top-level legal framework change in China's water environment governance.

I. Ten Laws Repealed Simultaneously: Why This Code Warrants Re-Study by the Industry

2026年3月12日, the Fourth Session of the 14th National People's Congress adopted the Ecological Environment Code of the People's Republic of China, scheduled to take effect on 2026年8月15日—the sixth National Ecology Day. This is China's second law named as a "Code" after the Civil Code, and the world's first code named after "ecological environment." The Code consists of five parts, 1242 articles, and approximately 16万 characters, with Part Two "Pollution Prevention and Control" comprising 9 sub-parts, among which water pollution prevention and control is included.

Unlike previous "patchwork" legislation, this is a wholesale replacement: ten laws—the Environmental Protection Law, the Environmental Impact Assessment Law, the Marine Environment Protection Law, the Atmospheric Pollution Prevention and Control Law, the Water Pollution Prevention and Control Law, the Soil Pollution Prevention and Control Law, the Solid Waste Pollution Prevention and Control Law, the Noise Pollution Prevention and Control Law, the Radioactive Pollution Prevention and Control Law, and the Cleaner Production Promotion Law—were simultaneously retired. Meanwhile, separate laws such as the Yangtze River Protection Law, the Yellow River Protection Law, and the Wetland Protection Law remain in effect, forming a hierarchical relationship where "the Code serves as general law and separate laws serve as special law." For practitioners, this means that when encountering water-related issues in the future, one should first check whether there is a specialized law; if not, return to the Code—the starting point for compliance research has changed.

II. The First Real Change: Sewage Fees Will Finally "Cover" Sludge

Article 302 of the Code stipulates: operating units of urban centralized sewage treatment facilities that provide paid sewage treatment services to dischargers and collect sewage treatment fees—the sewage treatment fees collected shall be used for the construction, operation, maintenance, and harmless treatment and disposal of sludge at urban centralized sewage treatment facilities as well as other related matters prescribed by the State Council, and shall not be diverted for other purposes.

Article 304 further supplements: operating units and harmless sludge treatment and disposal units shall conduct harmless treatment and disposal of sludge, ensure that the treated and disposed sludge meets national standards, and track and record the flow direction, use, and quantity of sludge, reporting to the urban drainage authority and the ecological environment authority.

The significance of this article lies in the fact that in the past, sewage plants managed effluent, while sludge destination was long a "muddled account," with "insufficient funding and unclear responsibility" repeatedly written into industry research reports. Now it has been enshrined in two dimensions: fee usage and ledger obligations—money must be specifically set aside, and accounts must be tracked all the way to the final destination. For the entire industrial chain, segments such as sludge drying, anaerobic digestion, incineration, and resource utilization will usher in a more certain payment mechanism.

III. The Second Real Change: Reclaimed Water Moves from "Encouraged" to "Shall Be Coordinated"

In terms of sewage resource utilization, the Code clearly states that the state encourages and supports sewage resource utilization, and local people's governments at or above the county level shall coordinate planning and construction of sewage resource utilization infrastructure; meanwhile, they shall strengthen sewage treatment and reuse based on local water resource conditions, and incorporate unconventional water such as reclaimed water, harvested rainwater, seawater and desalinated seawater, mine (pit) water, and brackish water into the unified allocation of water resources.

"Encourage" and "shall" carry two different weights in legal provisions: the former is a call, the latter is a statutory duty. This provides legal support for the construction of reclaimed water pipe networks, pumping stations, elevated water tanks, and distributed reuse facilities, and also gives "reclaimed water reuse" projects a stronger legal basis in project approval, fiscal funding applications, and water price verification.

IV. The Third Real Change: Operating Units Bear "Lifelong Responsibility" for Effluent Quality

Article 303 of the Code stipulates: discharge of water pollutants to urban centralized sewage treatment facilities shall comply with water pollutant discharge standards; operating units of urban centralized sewage treatment facilities shall be responsible for effluent quality; the ecological environment authority shall supervise and inspect effluent quality and quantity. Article 298 clearly states that enterprises discharging industrial wastewater shall conduct pretreatment in accordance with national regulations, and may only discharge after meeting the treatment process requirements of the centralized treatment facility.

Together, these two articles end the long-standing space for shifting responsibility in the industry:

• Whoever operates must bear the ultimate responsibility — The Dongwu Phase II project in Ningde, Fujian was put into operation before acceptance. During operation, pH exceeded the standard in discharged wastewater. The enterprise shifted responsibility with the excuse of "government decision-making and public welfare," but the regulatory authority rejected this defense and determined that the operating unit is the legally responsible entity.
• Pollution-generating enterprises cannot transfer responsibility — A metal company in Songjiang, Shanghai outsourced its grinding process along with the operation of environmental protection facilities to a third party. The wastewater treatment facility was shut down, causing pollutants to overflow. The enterprise argued that "the operators were not our people," but was still held responsible for environmental pollution, fined 23.5万 yuan, and its general affairs manager was transferred to public security for detention.
• A commissioned relationship does not change the responsible entity's identity — Handing wastewater over to a downstream treatment plant does not mean untreated wastewater can be discharged directly; if downstream facilities collapse due to excessive influent, the pollution-generating enterprise is still held responsible.

V. Three Practical Impacts on the Industry

• Cost structure reshaped — The Measures for the Administration of Collection and Use of Wastewater Treatment Fees in Tianjin (issued on 2026年9月15日) has taken the lead in clarifying that collection standards should be formulated according to the principle of "covering the normal operation of wastewater treatment facilities and sludge treatment and disposal costs while allowing reasonable profit," and those below the required level should be gradually adjusted into place. Sludge costs have formally entered water price accounting.
• Operation and maintenance model upgraded — As the amendment to the Discharge Standard of Pollutants for Municipal Wastewater Treatment Plants (GB 18918-2002) adds instantaneous value limits for four major pollutants — COD, ammonia nitrogen, Total Nitrogen, and Total Phosphorus — starting from 2026年3月1日, the determination window for non-compliant effluent has narrowed from "daily average" to "real-time," making precise aeration, intelligent dosing, and online monitoring essential needs.
• Business model expanded — Revenue from Reclaimed Water, revenue from resource recovery products, and value-added services from smart operation and maintenance will stand alongside wastewater treatment service fees, and "integrated investment-construction-operation" models such as EPCO and concession operations will further increase their appeal for existing water utility assets.

VI. TIANYI TECH's Viewpoint

TIANYI TECH believes that the deepest change brought by the Ecological Environment Code is that it locks down once and for all the three matters of "where the money comes from, who is responsible, and where it goes." The past model of one-time settlement based on project delivery will accelerate its replacement by long-term operation services, and enterprises capable of simultaneously providing technical and cost answers to the four goals of "compliant discharge + harmless sludge treatment + Reclaimed Water Reuse + smart operation and maintenance" will seize the initiative in this round of institutional transition.

About TIANYI LIMITED

TIANYI LIMITED focuses on the fields of wastewater treatment, Reclaimed Water Reuse, and water resource recycling, providing one-stop services from process consulting, solution design, equipment integration, and engineering implementation to smart operation and maintenance. The company is committed to promoting wastewater resource recovery through technological innovation, helping industrial enterprises and municipal clients achieve multiple goals including water conservation and carbon reduction, compliant discharge, and sustainable development.

Source: Sohu News (2026年9月28日), Yunfu Daily Ecological Environment Code Legal Popularization Column (2026年9月22日), Ningyang County People's Government Code Interpretation (2026年9月14日), Tianjin Municipal Finance Bureau Measures for the Administration of Collection and Use of Wastewater Treatment Fees in Tianjin (issued on 2026年9月15日) — compiled from multiple sources