Chinese Premier Wen Jiabao has vowed the government will apply “a full range of economic levers, such as pricing, government finance, taxation and credit” to ensure China will meet its 2010 energy saving and pollution control targets.
Wen’s comments came at the opening of the full session of the National People’s Congress (NPC), where he delivered a report outlining the government’s failure to meet the first-year targets of its 11th Five Year Plan period (2006-2010).
The Chinese government set the goal of reducing energy consumption per unit of gross domestic product by 20% and chemical oxygen demand (COD)/SO2 pollutant discharge by 10% over the 11th Five-Year Plan period. To be on track to meet these targets, the government had planned to cut energy consumption per unit of GDP by 4% and discharge of chemical oxygen demand and SO2 by 2% by the end of 2006.
But, Wen said, energy consumption per unit of GDP dropped just 1.2% in 2006, while COD and SO2 emission rose 1.2% and 1.8% respectively.
Wen blamed slow industrial restructuring and over-heated growth of heavy industry for the missed targets.
Nevertheless, he pledged the overall 11th Five Year Plan targets would be met. “The  targets can’t be revised and we must work resolutely to reach them,” Wen said.
Enforcement, not political will, is Wen’s biggest challenge. “Lots of outdated production facilities are still in operation,” he said. “Meanwhile, some local governments and companies failed to strictly comply with laws, regulations and standards on energy saving and environmental protection.”
He noted that the State Council, or cabinet, will begin annual reporting to the NPC on the progress made in saving energy and reducing major pollutants discharge, culminating in an overall report of the progress made in the 11th Five Year Plan period.
Wen pointed out that China will not approve any new projects that fail to pass the government’s energy saving and environmental impact assessment, and will close down any businesses that fail to comply with the energy saving and pollution control standards.
The State Environment Protection Administration (SEPA) has already beefed up its enforcement. It will create three new watchdogs to ensure local governments comply with regulations and to end the “protectionism” of local governments towards local industry.
“SEPA has set up two regional environmental watchdogs in Guangzhou and Shanghai and will launch another three in Chengdu, Xi’an, and Shenyang over the next four months to ensure local governments abide by environmental protection laws,” said a deputy director of SEPA, Zhang Lijun, earlier this week.
In addition, SEPA plans to cut off polluters’ financing – its new database of “blacklisted” polluters will be sent to the People’s Bank of China, and blacklisted firms will be unable to obtain credit.
In February the government announced plans to shut down 50GW of small coal-fired power generation units, upping the capacity of coal plant on death-row from its June 2006 target of 15GW. Premier Wen has also pledged to shut down outdated production facilities in steel, cement, electrolytic aluminum, ferrous alloy, coke and calcium carbide industries.
The government, he said at the NPC opening session, will deepen the reform of pricing system for major resource products and charges for pollution emissions, improve the system of taxes on resources and strengthen the compensation system for mineral resources exploitation. “It will take time for the relevant policies and measures to produce the desired results,” he said.