China Ramps Up Efficiency Drive, Eyes Fuel Tax
Date: 28-Jul-06
Country: CHINA
Author: Emma Graham-Harrison
The energy-policy setting National Development and Reform Commission (NDRC) held a top-level meeting on Wednesday to discuss progress towards a goal of making a 20 percent cut by 2010 in the energy consumed to generate each unit of national income.
Regional leaders and representatives from 14 of the country's major firms signed pledges to meet specific targets, the Commission said in a statement on its Web site (www.sdpc.gov.cn), without giving the company names.
China wants to crack down on the country's energy appetite to tackle a growing dependence on imported oil and the impact of fossil fuels on its increasingly battered environment.
It is targeting energy-intensive industries such as steel, power generation, petrochemicals and construction and also encouraged small-scale domestic savings such as turning up the temperature in air-conditioned buildings and installing solar water heaters.
But the official China Securities Journal reported that growth in energy consumption had outpaced soaring first-half economic expansion of nearly 11 percent, suggesting an uphill struggle to hit the target.
"In the first half of the year... the speed of increase of energy consumption out-paced the speed of gross domestic product growth," the paper said, without giving a source or a specific figure for the increase in energy use.
"This means that there is a large question mark over whether we will meet this year's target for a 4 percent cut in energy efficiency," the paper added.
China's energy use for each dollar of national income generated is 3.4 times the world average, the official Xinhua news agency said.
Beijing has added energy-saving to the list of criteria used to decide officials' career prospects, in a bid to reverse decades of exhortations to promote economic growth at any cost, and some officials are promoting wider use of market mechanisms.
"China still labours behind (other countries) on energy efficiency," Chen Deming, vice chairman of the NDRC, told an Asian energy forum in the Laotian capital, Vientiane, on Thursday.
FUEL TAX NEEDED
Vice Finance Minister Liao Xiaojun told the meeting China should offer tax breaks for efficient equipment and focus on using market mechanisms to discourage wasteful use.
"China should closely track changes in international oil prices and prices, and actively create conditions to promote the introduction of a fuel tax as soon as possible," the China Securities Journal said in a summary of Liao's comments.
The government keeps tight control over diesel and gasoline markets, but has raised pump prices twice this year.
Beijing has touted the possibility of a fuel tax for years, but with drivers already grumbling about an increase of 15 percent in state-set prices since the start of 2006, officials have shied away from implementing the unpopular idea.
With worries spreading about rapid economic growth, stricter controls on energy use could offer a way to rein in both industrial expansion and property development, however.
"The meeting... (offered) yet another sign that the tightening campaign is ramping up and that authorities are melding their policy objectives of curbing runaway investment growth and improving energy efficiency," the Eurasia Group said in a research note.
The NDRC has also threatened to cut off electricity to energy-intensive firms that "blindly expand" their capacity, the report added, signalling a tougher approach in a campaign that has until now been based more on slogans than actions.
(Additional reporting by Neil Chatterjee in Vientiane)
