China to Tax Energy Usage of Energy-Intensive Industrial Sectors

April 4th, 2011 by Mridul Chadha

China will impose a tax on energy usage of eight industrial sectors which have the highest energy usage in the country it recently announced. The eight sectors include iron & steel, aluminum and cement. The Chinese agencies have divided the industrial units into two categories, seemingly according to their energy usage and efficiency.

The units which lag others in energy efficiency and has very high energy usage will be taxed ¢20 per kWh of the electricity consumed. While the second category of relatively more efficient units will face a surcharge ¢5 per kWh of electricity consumed.

The energy tax is the latest in a series of efforts launched by the Chinese agencies. China had announced that it aims to reduce its carbon intensity (carbon emissions per unit GDP) by 20 percent by 2020 from 2005 levels. As an intermediate goal, China aims to reduce carbon intensity by 17 percent between 2011 and 2015.

Xie Zhenhua, the vice chairman of national development and reform, said that China has launched pilot carbon emission trading schemes in some of the provinces but no decision has yet been taken regarding the carbon price or the entities which would be part of the trading scheme.

Zhenhua mentioned this information while speaking at a seminar Australia. Zhenhua’s visit to Australia came at a crucial juncture. Australian government is considering to impose a carbon tax. The Australian Opposition parties, however, are opposing the carbon tax claiming that other countries are not taking any steps to control the rate of carbon emissions which could hurt the Australian economy.

India is another country all set to implement large-scale industrial-level energy efficiency schemes. The Perform-Achieve-Trade mechanism set to be rolled out soon will mandate energy-intensive industrial units in seven sectors to improve their energy efficiencies. The scheme aims to reduce 23 million tonnes of oil equivalent of fuel over five years, avoid capacity addition of 19,000 MW and reduce carbon emissions by 98.55 million tonnes annually.

These national schemes and initiatives have been implemented as part of the Nationally Appropriate Mitigation Actions that several developing countries formally announced after the Copenhagen Climate Change Summit.

Image credit: Darwinek (Wikimedia Commons)

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Tags: Australia, China, energy tax, India, Nationally Appropriate Mitigation Action, PAT Scheme

About the Author

Mridul Chadha currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.