Energy

Experts: Firm measures vital for policy success

By Wan Zhihong (China Daily)
Updated: 2010-05-07 09:11

BEIJING - China should consider introducing some market-based mechanisms like resources taxes and carbon taxes to help the nation better achieve energy conservation and emissions control targets, said analysts.

The introduction of such measures, rather than administrative orders, would help the nation better implement its energy saving efforts and make a more reasonable blueprint for the sector, they said.

Premier Wen Jiabao on Wednesday said the nation would strive to achieve the 20 percent energy reduction targets it had envisaged in the 11th Five-Year Plan, which runs till 2010.

Official statistics showed that energy intensity fell by 14.38 percent from 2006 to 2009.

The country's energy intensity rose 3.2 percent year-on-year in the first quarter, adding pressure to cut energy intensity for the rest of the year.

Analysts differed on whether the country can realize the 20 percent target. Although some expressed pessimism, others said the nation is well on track to achieve its targets.

"High-energy consuming industries still account for a big part in China's economy. It is natural for China to face some challenges in energy reduction," said Zou Ji, China country director of World Resources Institute (WRI).

There still exists "some uncertainties" for the country to achieve the energy reduction target, said Yang Fuqiang, director of global climate solution at the World Wildlife Fund (WWF).

China achieved energy intensity reduction of 4.28 percent in 2009, amid an economic slowdown. This year the country will face bigger pressure in the area amid strong economic recovery, he said.

Jiang Kejun, a researcher with Energy Research Institute (ERI) under the National Development and Reform Commission (NDRC), said: "We are doing good enough in the area. Don't forget we have achieved over an 14 percent reduction while maintaining rapid GDP growth."

However, most analysts believe that it is better for China to adopt more market-based mechanisms in making and realizing energy reduction targets. "Some economic policies, for instance, like the taxes system are needed to bolster the enforcement of energy reduction in industrial activities," said Zou with WRI.

Enterprises should take more charge in energy reduction implementation, he added.

According to a recent report by the United Nations Development Program (UNDP) in partnership with Renmin University of China, introducing an evolutionary low-rate carbon tax system in sectors where costs of carbon reduction are not high or perhaps even negative and then earmarking the revenue to subsidize R&D on state-of-the art technologies, is one of the urgent policies needed in China.