What to make of news, reported by AFX, that parliament has passed a draft law to make industry less wasteful of energy?
Typically, little more than the intent is defined. Companies will face an energy audit to see if they comply with as yet unknown energy-saving targets. There will be caps on unit energy consumption for energy hogging producers such as steel and aluminum plants and local officials will be held accountable for energy waste. But the regulations remain unwritten and the enforcement unknown beyond a broad threat to close down enterprises that don’t meet the new requirements.
Energy efficiency and moving industry up the technology ladder is a policy priority for China. Environmental degradation is a political raw nerve, but the new law seems intended mainly to bolster official efforts to close down antiquated plant, a process that has already seen some small scale power generation and steel making shuttered. It has also just announced plans to cut 6.5 million tons of paper-making capacity and 1.6 million tons of ethanol production by 2010,
Beijing’s goal is to cut energy consumption per unit of GDP by 20% by 2010. Last year, it managed barely 1%, well below the needed 4% to be on track.