Economy

Markets

Industries

Insights

Reports

Events

Energy: Long way to go on energy conservation

By Sun Xiaohua (China Daily)
Updated: 2008-07-29 10:05

Although China is moving forward on the road to energy conservation, it still has a long journey ahead if it is to hit its five-year goal of reducing energy consumption and waste by 20 percent, statistics and expert views reveal.

Figures from the first four months of 2008 released this month from the National Bureau of Statistics, National Development and Reform Commission (NDRC) and National Energy Administration paint a gloomy picture of the national and local energy conservation efforts last year.

In 2007 China consumed 1.16 tons of coal equivalent when it produced 10,000 yuan of GDP, a 3.66 percent year-on-year decrease, far below the target annual level of 8 percent set in 2005 as the base year for the country's 11th Five-Year Plan (2006-2010).

"The figures can prove China's efforts to improve energy efficiency, but it's not enough," says Zhuang Jian, senior economist with the Asian Development Bank in Beijing. "China still has a hard time hitting the goal because the economic structure, as well as energy consumption pattern, is difficult to change in a short term."

Authorities also released 2007 energy consumption by provinces.

Beijing took the lead in developing a sustainable mode, as it burned the least amount of coal equivalent, 0.714 tons for 10,000 yuan of GDP last year, a 6.04 percent year-on-year reduction. However, Hainan, with its economy buoyed by tourism, sat at the bottom of the list. It reported a slight 0.8 percent cut.

Central authorities are now holding local officials accountable for their efforts to increase energy efficiency and environmental protection when compared to the goals set by the government.

The central government asked local officials to lower energy consumption per unit of GDP by 4 percent annually until 2010.

"The assessment index should be flexible, not just focusing on the 4 percent annual goal," Zhuang says.

For example, although Hainan only reduced its energy intensity by 0.8 percent, its energy consumption per 10,000 yuan of GDP was less than 0.9 tons of coal equivalent, a very low level compared with other provinces.

"Each province has a special industrial structure, which decides how much potential it has to improve in energy efficiency," Zhuang says.

Many experts and governmental officials pin more hope on 2008, the third year of the five-year plan, and expect China to reach the average level of energy conservation - a 12 percent reduction from the plan's base year of 2005.

The figures also show the country's industries are not on track to shift to an energy efficient sustainable mode.

The productivity of high energy-consuming industries increased overall compared to the same period last year.

Auto manufacturing increased 21 percent, construction of power plants was up 9 percent, crude steel production rose by 21 percent and cement production also jumped 14 percent.

Because of the growing industrial demands, power generation also saw a growth of nearly 16 percent, mostly from coal-burning power plants.

According to NDRC figures, increased investment in high energy consuming industries also saw a rise in pollution emissions in the first four months.

Dai Yande, deputy director of the Energy Research Institute under the NDRC, says: "Rising investment in heavy industries leads to more heavy industries and will make it more difficult for China to lower its energy consumption with industrial restructuring."

The country has also failed to get on track to replace outdated polluting plants because many Local governments are still pursuing short-term economic interests partly because new environment and energy accountability system has yet to be finalized, Dai said.

The accountability system will be added to the development goals and standards that officials are expected to meet or exceed in order to keep their jobs.

For China, which is undergoing rapid industrialization, hitting these goals will also inevitably cause many economic pains, experts said.

For instance, the country will close small inefficient polluting power plants with a combined generation capacity of 13 million kilowatts this year and replace them with larger, more energy-efficient plants

That involves not only a huge investment but also the loss of many jobs.

Though the six-month statistics on GDP and energy consumption are not available yet, policymakers say these preliminary figures point to a worrying trend that calls for a greater sense of urgency.

Worse, as domestic demands have pushed large industries to grow, an increase in heavy exports is stalling the country's progress towards sustainable development.

From January to April, due to rocketing international steel prices, China exported more than 21 million tons of steel, a 132 percent rise over the same period last year. Zinc exports exceeded 160,000 tons, up year-on-year by 198 percent.

Experts say tougher government measures are needed to correct the trend.

They say new taxes, such as fuel taxes and natural resources taxes need to be levied to make better use of natural resources and to reduce energy consumption.