"It will take three years to ascertain how much pollution is discharged all over the country," Zhou Shengxian, minister of the State Environmental Protection Administration (SEPA), told the first national work conference on environmental policies and the legal system, which was held on Wednesday in Beijing.

A list of products likely to cause heavy pollution is being drafted. The list is expected to provide a reference for the government to exclude certain items from export rebates, levy higher customs duties on them or set limits on imports.

Zhou said the number of complaints and protests from the public over pollution accidents had increased at an annual rate of 30 per cent in recent years mainly due to slack law enforcement.

Ministry figures show that pollution caused losses of 511.8 billion yuan (US$64 billion) in 2004, which was 3.05 per cent of the 16 trillion yuan (US$2 trillion) gross domestic product (GDP) that year.

The victims, government and society had to endure most of the losses because of inadequate compensation.

To better protect the interests of environmental victims and help enterprises share the risks, SEPA plans to promote environmental insurance in co-operation with the China Insurance Regulatory Commission.

"We will monitor industries of high risk and heavy pollution or factories located in environmentally fragile areas," said Bie Tao from the department of policies, laws and regulations of SEPA. "Enterprises of hazardous chemical products will be obliged to buy insurance."

The People's Insurance Company of China (PICC) confirmed that promotion of environmental insurance is under development.

"Some of our liability insurance already covers compensation for environmental accidents, but PICC will put forward a special environmental insurance," a researcher with the liability department of PICC said.

Zhang Jianyu, a visiting scholar to Tsinghua University, said, however, that without a clear and enforceable regulatory framework to help quantify risks, insurance companies might be reluctant to offer such insurance policies.

Normally, the fine for non-compliance is capped at 200,000 yuan (US$25,300), according to the current air pollution law, regardless of its seriousness or duration.