Reversal of Energy Intensity Trend Ilicits Iron Resolve

State Council presses for accountability for urgent energy conservation measure; NDRC issues 12-point circular to deepen economic reform.

If China is to achieve its 20 percent reduction in energy intensity in the current five year period, it will have to undertake some drastic actions in the months that remain.

And drastic action is just what the Premier has ordered.

Last month, the central government announced that energy intensity for the first quarter of this year rose 3.2 percent (from what baseline is not clear, although the press is saying its from Q1’09 rather than Q4’09).  This represents a reversal of a downward trend-the first time since first half of 2006 that energy intensity has actually risen.  This news also comes in a month after it was announced that China’s first quarter GDP grew by a remarkable 11.9% year-on-year, signaling that a recovery from the financial crisis is in full swing and stoking fears of inflation.

At the end of 2009, the government reported that China had achieved a 14.38 percent reduction in energy intensity from 2005 levels, putting it slightly behind pace (16 percent) to achieve its 2010 target of 20 percent.  That said, no one I’ve spoken to about China’s energy intensity numbers understands how the government arrives at its statistics.  Recall previous guest post on this issue, and this more recent reflection.  At best, China is at 8 percent energy intensity reduction, folks tell me.  But whether its 8 percent or 14 percent, the admission by the government that energy intensity has started to go up means that it will be extremely difficult under any circumstance to hit that cherished 2010 target.

The rise in energy intensity is attributed to the resurgent heavy industry sectors that were the beneficiaries of the economic stimulus program.  So much for all that hype about China having the greenest stimulus in the world.  (As I recently pointed out, the reality about China’s “green stimulus” is much more complicated.)

But now, Premier Wen and the State Council have apparently had enough.  In a nationally televised videoconference, Premier Wen used very strong language, saying that energy conservation is a “fundamental national policy” that concerns the “survival and development of the Chinese people.”  Government communications have gone on to attribute Premier Wen as using the vivid metaphor of needing to use an “iron hand” (“采取铁的手腕“) to eliminate backward heavy industrial production capacity.

Wen went on to describe seven broad points of urgent action (in Chinese).  These seven points were a subset of 14 points outlined by the State Council (in Chinese), which consist of the following headings:

1. Strengthen the sense of urgency and responsibility for energy conservation. Read the full story