By Zhang Qi (China Daily)
Updated: 2008-01-07 11:43

"The power generation capacity of existing small coal-fired power plants in China is more than 100 million kW, more than twice the capacity we planned to slash before 2010," says Hu Yihong, an energy expert from China National Coal Association.

Once the existing small coal-fired power plants are replaced by large, energy-efficient thermal power plants, China cut at least 90 million tons of raw coal consumption, and 220 million tons of CO2 and 1.8 million tons of SO2 discharge, says CCII's Huang.

"The large number of small power units is a major culprit for high energy consumption and heavy pollution in the power industry," Huang says.

The phase-out also benefits the local economy.

The government has adopted a policy of "encouraging larger units, and slashing small ones". New installed power units above single capacity of 300,000 kW are given priority for government approval.

"Closing down small power plants will not affect China's power supply and large power enterprises as it is coordinated with the replacement of large and energy-efficient power units," Hu says.

"Because large units are more energy-efficient, they are likely to increase profit for power enterprises."

The small power enterprises that are shut down will receive electricity allowances so they can continue for three years. They are not allowed to produce any electricity but they can sell the allowances to large power enterprises, says the NRDC's Hao.

"Besides the government's hard push, the economic incentive might also explain the overfulfilled job," Hu says.

China's top five power enterprises, local investment corporations and local state-owned enterprises account for 73.1 percent of the total, with 10.5 million kW generating capacity being shut down, while private enterprises share the remaining 26.9 percent.

East China's Shandong Province shut down 1.71 million kW of generation capacity last year, topping the list, followed by Henan and Guangdong provinces, which reduced 1.5 million kW and 1.3 million kW, respectively.

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