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China targets wasted production in critical sectors to curb pollution, ease overcapacity

  • Four industrial sectors are singled out – steel, petrochemicals, non-ferrous metals, and building materials – with new capacity strictly prohibited or restricted in some subsectors
  • Reducing energy consumption and waste has moved high on Beijing’s agenda as it aims to cut carbon emissions and encourage a production-centric structural shift among big emitters

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Beijing’s new plan puts added emphasis on curbing pollution, reducing coal consumption and improving the consumption capacity of renewable energy. Photo: AFP
Ji Siqiin Beijing

Beijing on Wednesday pledged to weed out China’s “backward production capacity” with high levels of energy consumption and pollution – a move set to meet its carbon-reduction goals and also ease industrial-overcapacity concerns voiced by Western politicians.

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The country will also raise the share and utility rate of renewable energy in its electricity grid by enhancing power storage capacity, while “strictly and reasonably” controlling coal consumption, according to the 2024-25 Energy Saving and Carbon Reduction Action Plan issued by the State Council.

It said the plan has been formulated to “adopt pragmatic and effective measures”, and “make every effort to complete the binding targets for energy conservation and carbon reduction in the 14th five-year plan”.

That long-term economic-development template, rolled out in 2020, set an 18 per cent reduction target for carbon dioxide emissions per unit of GDP from 2021-25.

The new action plan specifically named four industrial sectors in which wasted production capacity should be wiped out: steel, petrochemicals, non-ferrous metals, and building materials, with new capacity strictly prohibited or “strictly restricted” in specific subsectors.

China is experiencing a steel-production glut while demand from the domestic real estate sector has decreased significantly
Dong Xuyang, Climate Energy Finance

“More specific quantitative targets and thresholds are set in this plan with an emphasis on energy-saving of manufacturing activities and reducing energy consumption and waste,” said Jingwei Jia, associate director of ESG Research at Sustainable Fitch.

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