China Boosts Energy and Emissions Goals After Record Smog

China will step up efforts to cut its emissions and improve energy efficiency this year after record air pollution in Beijing, where the national legislature opened its annual meeting today.

The government will reduce carbon emissions and energy use per unit of gross domestic product by at least 3.7 percent in 2013 and carry out carbon-trading trials, the National Development and Reform Commission said in a report today. China’s top economic planning agency said carbon intensity fell 5 percent, and energy use per unit of GDP slid 3.6 percent last year, beating targets of 3.5 percent.

The goals add to evidence that Premier Li Keqiang is preparing to rein in smog and squeeze more out of China’s energy supply when his administration takes over from Wen Jiabao this month. China’s cabinet, the State Council, estimates it may spend 2.37 trillion yuan ($380 billion) on conservation and emissions cuts in the five years through 2015. The nation’s oil companies have announced plans for billions of yuan of refinery upgrades that will produce cleaner fuels.

“The energy-intensity and carbon-intensity targets for this year will probably be met,” Charlie Cao, an analyst at Bloomberg New Energy Finance in Beijing, said by phone today. “The five-year targets by 2015 are more challenging to achieve especially if economic growth eases in the following years.”

Renewable Targets

The report from the NDRC said that China added 15 gigawatts of wind energy capacity last year and 3 gigawatts of solar. It endorsed targets to add 21 gigawatts of hydroelectric capacity, 18 gigawatts of wind and 10 gigawatts of solar this year.

Official measurements of fine particles in the air measuring less than 2.5 micrometers, which pose the greatest health risk, rose to a record 993 micrograms per cubic meter in Beijing on Jan. 12, compared with World Health Organization guidelines of no higher than 25.

The nation plans to reduce energy consumption per unit of GDP by 16 percent and carbon intensity by 17 percent in the five years ending 2015.

“We will make greater efforts to conserve energy and resources and protect the environment,” the NDRC said. “We will continue to reduce the discharge of major pollutants.”

Price Mechanism

The government will introduce reforms to the pricing mechanisms for oil products and natural gas, the report showed. The NDRC started trial gas-price programs in Guangdong and Guangxi provinces in southern China in December 2011 and said they would be extended nationwide after an evaluation.

Oil-product pricing reforms may be announced after the National People’s Congress, Neil Beveridge, a senior research analyst at Bernstein in Hong Kong, said Feb 25. China may let oil companies set fuel prices according to guideline rates posted by the government, the official Xinhua news agency reported March 28, citing Peng Sen, a former vice chairman at the NDRC.

Recent environmental concerns, a “tight” gas market with strong demand growth and the country becoming more dependent on pipeline and liquefied natural gas imports point to an acceleration of reforms this year and prices may increase, Scott Darling, an analyst at Barclays Plc in Hong Kong, said in a report Jan 24.

China maintained its economic growth target at 7.5 percent for this year, according to Premier Wen Jiabao’s work report in Beijing today before his final opening address to almost 3,000 lawmakers at the annual meeting of the NPC. GDP expanded 7.9 percent in the fourth quarter compared with 7.4 percent in the previous period, snapping a seven-quarter slowdown, government figures showed Jan. 18.

— With assistance by Penny Peng

(Updates with renewables from fifth paragraph.)
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