China launches emission-cutting factory closure programme

The Chinese government has published a list of more than 2,000 factories that it plans to force to close by the end of September as it attempts to make good on Premier Wen Jiabao's recent pledge to use an "iron hand" to tackle inefficient factories.

The announcement comes just weeks after the International Energy Agency in Paris said that China surpassed the US last year as the world's largest consumer of energy – a status China disputed this week with the release of figures suggesting that it remains the second-largest energy user after the US.

Earlier this week, the Ministry of Industry and Information Technology published a list of 2,087 steel mills, cement works and other energy-intensive factories required to shut down by the end of next month.

The factories were chosen after discussions with provincial and municipal officials to identify industrial operations with outdated, inefficient technology, the ministry said.

In addition to reducing China's carbon footprint, the factory closings are consistent with the government's broader strategy to modernise production techniques, boost international competitiveness and transform an industry from "being big to being strong", the ministry said.

Previous attempts by Beijing to close aging factories have been thwarted by provincial and municipal officials. They have sought to protect older steel mills and other heavy industrial operations employing thousands, some of which have provided workers with housing, athletic facilities and other benefits since the 1950s or 1960s.

To prevent such local obstruction this time, the ministry said in a statement that the factories on its list would be barred from obtaining bank loans, export credits, business licenses and land. The ministry even warned that their electricity could be cut off.

Although analysts welcome the move, they question whether it goes far enough to achieve energy efficiency goals outlined by the Chinese authorities.

The current Chinese five-year plan calls for using 20 per cent less energy this year for each unit of economic output compared to 2005. But surging production by heavy industry since last winter has put a big question mark over China's ability to meet the target.

Zhou Xizhou, an associate director for IHS Cambridge Energy Research Associates in Beijing, told The New York Times that although the ministry's list of factory closings was a strong measure to improve efficiency, the 20 per cent goal was "still a tall order for the rest of the year".

Efficiency improved 14.4 per cent in the first four years of the current plan, only to deteriorate by 3.6 per cent in the first quarter of this year, according to official statistics. Energy efficiency was 0.09 per cent worse in the first half of this year than in the same period in 2009, according to statistics released last week.

Last year, president Hu Jintao told the UN climate change conference in Copenhagen that China would embrace more ambitious targets, pledging to reduce carbon emissions per unit of economic output by 40 to 45 per cent by 2020, compared with 2005 levels.

But according to forecasts from the IPA, rapid economic growth, increasing car ownership and the rising ownership of household appliances means that China's emissions will continue to soar overall even if efficiency improves.

The factory closure programme is the latest in a series of moves from the Chinese government designed to enhance energy efficiency. Just last week, the National Development and Reform Commission, the government's most powerful economic planning agency, said it had forced 22 provinces to halt their practice of providing electricity at discounted prices to energy-hungry industries like aluminum production.