China Cracks Down on Energy Intensive Industries

In an attempt to decrease its carbon footprint, China is asking its energy-intensive industries to reduce their energy consumption by a greater percentage than previously mandated.  These efforts by China are also a result of growing domestic and international pressure to decrease its reliance on fossil fuels.  Last year, China’s industries fell short of the government’s goals for lowering energy intensity and pollutant emissions, but the government is optimistic about firms meeting this year’s targets due to new and improved policies and controls.

The steel and textile industries are two of the more energy-intensive industries, and are therefore receiving a lot of the focus.  By 2015, steel, chemical, textile, and other energy-intensive producers must reduce the amount of energy needed to produce a unit of gross domestic product by an average of 20%.  This is an increase of approximately 4% to last year’s energy reduction targets.  If such goals are met, China would undoubtedly become more energy-efficient; however, total greenhouse gas emissions could still increase due to China’s growing economy.

There is no question that these mandates will put a financial strain on Chinese firms.  As a result, the Chinese government is willing to soften the blow by offering credit lines to help these firms develop more energy-efficient methods of production.  These credit lines will primarily be intended for state-owned companies because these firms are the main targets for the new energy requirements. 

Sustainability and cutting greenhouse gas emissions are topics that continue to receive more and more international attention.  In multinational climate talks, China has refused binding greenhouse gas emission cuts, and has instead adopted a more voluntary approach which is highlighted above.  Do you think that China’s approach can be successful in decreasing pollutant emissions and lowering energy intensity?