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Mainland’s Energy-Efficiency Gains More Than Doubled

Plant closures help to more than double energy-efficiency gains

Eric Ng – Updated on Feb 28, 2008 – SCMP

The mainland’s energy-efficiency gains more than doubled last year after the country shut more inefficient power plants than targeted and more economical ones started operating.

The mainland used 3.27 per cent less energy to generate 10,000 yuan of gross domestic product last year, compared with a reduction of 1.33 per cent in 2006, Xu Dingming, the deputy director of the National Energy Leading Group, told Bloomberg.

The better result came after the mainland failed to reach a 4 per cent reduction target set for 2006, raising concerns about whether it could achieve the 20 per cent cut between 2006 and 2010.

The mainland generates about 70 per cent of its energy from coal, and the electricity sector accounts for about 50 per cent of national coal consumption.

No official goal was published for last year, but given a 3 per cent year-on-year reduction in the first three quarters of the year, a greater saving was achieved in the fourth quarter.

To promote energy conservation, Beijing has ordered banks to curb lending to energy-intensive and pollution-prone sectors. It has also cancelled export tax rebates on some products and raised pollution charges for coal-burning.

“The power sector is a major contributor” to energy efficiency, said Gary Chiu, ABN Amro head of Asian utilities research. “Last year the government set a goal to close 10 gigawatts of small and inefficient plants, but it actually shut 14GW.

“The power sector should exceed the 13GW small plant closure target this year. It could meet the broad objective of an annual 4 per cent unit energy reduction this year.”

Annual energy savings of almost 6 per cent will be needed between this year and 2010 to achieve the 20 per cent target. Power demand grew 15 per cent last year, faster than GDP growth of 11.4 per cent.

China Huaneng Group, the parent of listed Huaneng Power International and the nation’s top power producer, said earlier it saved one million tonnes of coal by cutting its use by 2.24 per cent to 337.37 grams per kilowatt-hour last year. It aimed to cut it a further 9 per cent by 2010.

The newest generation of 1,000 MW generation units deployed by Huaneng’s Yuhuan plant in Zhejiang province consumes only 283 grams per kilowatt-hour.

Energy savings also were reported in the oil and gas and metal smelting industries.

China National Petroleum Corp, the parent of listed PetroChina, said it saved 1.5 million tonnes of coal in 2006, up from 940,000 tonnes in 2005, and aimed to conserve a total of 4.38 million tonnes between this year and 2010.

Aluminum Corp of China said it saved 427,000 tonnes of coal by improving its energy efficiency in last year’s first half. Electricity costs account for about 35 per cent of its direct production cost.

Additional reporting by Bloomberg

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