China closes factories as green deadline looms

China closes factories as green deadline looms
Published: 23 August 2010

China, facing the risk of embarrassment if it misses a looming environmental deadline, has ordered thousands of companies to close high-polluting plants as its leadership vies to retool economic growth.

Beijing has pledged to slash China’s energy consumption per unit of gross domestic product by 20 per cent between 2006 and 2010, as the world’s biggest greenhouse gas emitter seeks to reduce pollution and clean up its environment.

Official data suggest China is likely to miss the year-end deadline – potentially causing red faces for top leaders who have trumpeted efforts to curb emissions growth and develop renewable energy.

Beijing this month ordered 2087 firms producing steel, coal, cement, aluminum, glass and other materials to close their old and obsolete plants by the end of September -- or risk having bank loans frozen and power cut off.

Authorities in the eastern province of Anhui have reportedly already cut off electricity to more than 500 factories for a month after they failed to meet emission reduction targets.

But only about a dozen factories will be closed entirely, with the rest ordered to shut down specific production capacity, according to the government order.

Tianjin Tiangang Union Iron and Steel Co in northern China, for example, has been told to close two furnaces while Chaofeng Construction Materials Co., also based in northern China, has been told to shutter two production lines.

The move comes after China in July scrapped preferential power rates for energy-intensive industries, which had reduced their electricity bills by an estimated CNY15bn (US$2.2bn), according to state media.
Leaders in Beijing have been keen to promote their green credentials.

Ahead of global climate talks in Copenhagen last year, they pledged to reduce China’s carbon intensity -- the measure of greenhouse gas emitted per unit of economic activity -- by 40-45 per cent by 2020 based on 2005 levels.

China has earmarked US$738bn to invest in developing clean energy over the next decade as it seeks to meet a target of generating 15 per cent of its energy from renewable sources – mainly wind and water – by 2020.

It will host an extra round of climate talks in October before a UN summit in Mexico at the end of the year, as nations attempt to devise a successor to the Kyoto Protocol, whose binding targets expire in 2012.

At the end of 2009, China had reduced its energy consumption per unit of GDP by 14 per cent, analysts said. But in the first six months of this year, it rose 0.09 per cent – the first YoY increase since 2006.