beyondbrics

Beijing has set an ambitious target to reduce the intensity of energy use in China – and so desperate is the desire to meet it that in one town in Hebei thousands of traffic lights were shut off for more than a week this year.

Now, after months of similar extreme power cuts, Beijing’s bureaucrats are able to breathe a sigh of relief: it looks like China is back on track to meet the goal of reducing energy use per unit of gross domestic product by 20 per cent from where it was five years ago.

That was the word from a top climate change official, Xie Zhenhua, who said China has seen a three per cent reduction in energy intensity during the first three quarters of 2010.

China is largest consumer of energy in the world by some measures and it has been scrambling to achieve the 20 per cent reduction by the end of this year. The goal was set during the last five-year plan (2006 to 2010) and has become a national priority, leading local authorities to shut down factories, close mills and in some cases cut power to their districts in an effort to meet the goal.

Wednesday’s announcement was the first concrete signal that the extreme measures adopted this autumn are paying off. In some counties, the planned power outages have cut into the balance sheets of local businesses and prompted local business owners to protest. Across the country, the rush to buy diesel generators to fuel factories and businesses through the power cuts has sparked a diesel shortage and sent generator prices up.

According to Xie, the energy goal is now within reach and China has already surpassed its emissions goal. China reduced energy intensity by 15.6 per cent during the first four years of the current five-year plan, but was thrown off track by the infrastructure-intensive stimulus at the beginning of this year.

In the first six months of this year, China’s energy intensity actually increased by 0.09 per cent, reversing the trend of the previous four years and throwing energy officials into a panic. But now, according to Xie, energy intensity fell by three per cent in the first nine months of the year, implying a very sharp drop in energy use in the third quarter of the year.

Xie says that China’s spending on energy and emissions reduction efforts during the current five-year plan totals Rmb 1,600 bn, with Rmb 200 bn of that coming from government spending. As part of the energy saving efforts, 100m tonnes of capacity had been shuttered at old steel plants and 260m tonnes of cement-producing capacity had been taken off line.

“I don’t think it will be that challenging for China to meet the energy goal now because they’ve done all these crazy things to the system,” says Zhou Xizhou, associate director at IHS Cera in Beijing. Reaching the energy target in the next five-year plan might be more difficult though since China would be starting from an artificially low base at the end of this year, he noted.