The “iCET News Express” section provides updates on the progress of some of our exciting programs. We hope you enjoy these updates in addition to the regular news briefing we offer.

iCET and CNIS Seek Public Comments on Transport Fuel Lifecycle GHG Emission Assessment Methodology Standard

iCET and the China National Institute of Standardization (CNIS) have been working together for nearly two years to produce two standards related to the assessment of lifecycle GHG emissions from transport fuels. Since December, 2009, the first of the two standards, The principles and requirements of LCA for transportation fuel greenhouse gas emission has been available to the public for comment. The public comment period closes on March 2, 2010.

The documents are available in Chinese on the CNIS website at http://www.cnis.org.cn/wzgg/bgsgg/200912/t20091228_5501.shtml and an English language, unofficial translation of the introductory document is available by contacting info@icet.org.cn.

iCET East Coast Blazing Tour - Washington DC and New York City

January 10^th – 16^th, 2010, the iCET US team took a seven days blazing tour to Washington DC and New York City. The team visited US governmental departments, multilateral organization, Foundation and NGOs, which include United States Environmental Protection Agency (USEPA), United States Department of Commerce (USDOC), United States Department of Energy (USDOE), United States Department of State (USDOS), World Bank, Clinton Global Initiative (CGI), Council on Foreign Relations (CFR), Transportation Research Board (TRB), World Research Institute (WRI), Solar Energy Industries Association (SEIA), Alliance for Climate Protection and Carbon Disclosure Project. iCET team presented its current work and project areas, exchanged ideas and discussed issues with partners on environment, energy, climate change, transportation and other related areas. Future potential collaborations were also discussed. The following are main activities conducted by iCET during the ⁱ

our.

^{General Energy Issues}

Wen heads 'super ministry' for energy

An overarching government agency has been set up to take charge of the country's energy policy for better coordination in formulating strategy and planning development.

Premier Wen Jiabao will head the agency, called the National Energy Commission (NEC), and Vice-Premier Li Keqiang will be the deputy, the State Council, or the Cabinet, announced yesterday.

The commission will be responsible for drafting national energy development plans, reviewing energy security and coordinating international cooperation, it said yesterday.

The NEC has 21 members, including ministers from various organizations such as the National Development and Reform Commission (NDRC), and the Ministry of Finance, as well as a representative from the central bank.

Industry insiders said the move means energy has been identified as key to the future development of the country, which is now the world's second-largest energy consumer.

"The establishment of the NEC shows the government has raised energy issues to an unprecedented level," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. "Such a super ministry, which centralizes the powers of different ministries, can help China make better use of its energy resources."

Energy has become a complex issue and cannot be managed by one single ministry, said Lin, citing domestic energy companies' overseas development as an example.

Chinese oil companies have stepped up their overseas profile in recent years but the issue has to be dealt with by different ministries such as the NDRC and foreign affairs.

"We need to pool all our efforts to achieve sustainable development in the energy sector," he said.

Lin' views were echoed by Zhang Jianyu, China program manager of the US Environmental Defense Fund, who said energy will be the top priority in China's future strategies.

"The establishment of the NEC will provide a better mechanism for China's energy sector, optimizing the country's energy portfolio as well as coordinating supply and demand," said Zhang.

The government last year set a hefty target of reducing the intensity of carbon dioxide emissions per unit of GDP by 2020 by 40 to 45 percent from the 2005 levels; and Zhang said the NEC could coordinate with different ministries to exchange ideas and expertise to achieve the target.

"Some analysts say the 45 percent plan is ambitious, and some even think it could be a constraint on economic development. But I believe with the NEC, we can turn the target into a new opportunity for the economy," he said.

The setting up of the NEC is part of continuous efforts in administrative reform, which are aimed at orienting various functions of different departments toward higher efficiency, said analysts.

A Ministry of Energy was established in 1988 but it was disbanded five years later because its administrative functions overlapped with other departments.

Facing increasing energy shortages, the government set up an Energy Bureau under the NDRC during administrative reforms in 2003.

The National Energy Administration (NEA) was set up in 2008 but it lacks the power to carry out many of its assigned tasks as responsibility for the energy sector is currently spread among a number of departments.

For instance, prices of petroleum products and electricity are still decided by the NDRC.

(http://www.chinadaily.com.cn/cndy/2010-01/28/content_9388315.htm)

China stresses development of energy-saving industries

Vice-premier Li Keqiang Thursday underscored the development of energy-saving industries and pushing for advancement in optimization of energy structure to ensure the country's energy supply and safety.

Li made the remarks while visiting the China Shipbuilding Industry Corporation, one of the country's major ship manufacturers.

He also stressed the importance of improving energy technology and energy equipment development, and called for efforts to step up transfer of economic development mode to maintain stable and relatively fast economic growth.

Li said a country's energy safety and development depend on advanced technologies and equipment. "We should step up innovation and grab the commanding height in energy development and international competition."

Li praised achievements in energy field that China has made in the past years, urging efforts to further upgrade energy consumption structure, and to develop renewable and clean energy, and establish a stable, safe and clean energy supply system.

He also stressed the policy support to energy development and called for wide application of energy-saving technologies and products, as well as expanding energy technology consultations to foster new economic growth area.

He also urged efforts to ensure energy supply to meet people's needs and production demand for coal, gas, and oil in cold weather.

China established the first batch of national energy development and research centers on Wednesday. The 16 centers will research and study technologies of nuclear power equipment, wind power, and smart grid, among others.

Zhang Guobao, head of the National Administration of Energy, said these research centers play important role in establishing the country's energy technology system, and meeting China's demand to upgrade energy consumption structure.

(http://www.chinadaily.com.cn/bizchina/2010-01/08/content_9288833.htm)

Energy sector turns crisis into opportunities

In Chinese, the word "crisis" reflects both "risks" and "opportunities". China's energy sector has successfully turned its adversity into opportunity while resisting the international financial crisis and giving people a profound enlightenment.

When the crisis arrived, China's energy demand was obviously weakened. From June 2006 forward, energy supply in the country was tense for six straight years, but there was negative growth in 2008 that extended to June 2009. Consequently, all refined oil depots were filled, and a portion of the oil wells had to shut down for the first time in decades.

Daily electric power consumption was 8.5 billion kilowatt-hours in the last quarter of 2008 due to the financial crisis. However, daily electricity use reached 11 billion kWh after November 2009 and, in the first 15 days of this year, daily consumption reached the maximum of 12 billion kWh. This provides strong evidence of rapid economic recovery.

In the past year, China has adopted the following measures to turn adversity into opportunity.

First, the nation envisioned its long-term development and made huge efforts to boost demand for domestic growth. Three nuclear power projects have started over the past two years. A total of 20 nuclear power units are currently under construction. If the average per-kilowatt generating unit is estimated to cost 12,000 yuan ($1,760), the direct investment could amount to 250 billion yuan at the least.

The 11.7-billion-yuan of funds arranged under the central budget for nuclear power projects is expected to drive or attract more than 40 billion yuan of social capital. From January to November last year, the fixed asset investment in electric power, coal and oil industries reached a little more than 1.4 trillion yuan, a rise of 17 percent over 2008.

Second, the nation seized the opportunity to adjust the energy structure and do away with outdated production capacity. By the end of 2009, China had closed small power-generating units with a total of 60.1 million kilowatts, which could save 64 million tons of raw coal and reduce 128 million tons of carbon dioxide emissions.

With the acceleration of mergers and reorganization of the coal industry, China shut down more than 1,000 small-coal mines in 2009 and, with the hastened development of natural gas, its natural gas pipeline has reached 34,000 km. Moreover, hydropower and wind power account for 32.3 percent of China's new energy-generating capacity for the year.

Third, it capitalized on the global energy slowdown in demand in the financial crisis and a declining trend in the demand for energy resources. China vigorously carried out the "going-out" energy strategy. In 2009, it was active with its energy diplomacy and greatly enhanced its right to speak in the international energy realm; it conducted a dialogue on its energy policy with the United States and built good momentum for an overall development of energy cooperation with Russia in various fields.

After more than a decade of arduous negotiations, China's crude oil pipeline project has been settled and it is slated for operation at the end of 2010 with an annual transport volume of 15 million tons. Furthermore, the Central Asia Natural Gas Pipeline Project is expected to supply 5 billion cu m of natural gas this year.

Fourth, scientific and technological work has been strengthened in the energy sector, and has netted gratifying achievements. To date, China has issued 116 new standards and set up 16 testing centers in the energy industry, and substantial results have been attained in its natural gas pipeline and offshore wind power projects.

In a nutshell, China's energy sector responded adequately and satisfactorily in responding to the global financial crisis. The nation's energy industry has now reportedly entered the world's top ranks in terms of both quantity and quality.

The author is head of the National Energy Bureau under China's National Development and Reform Commission.

(http://www.chinadaily.com.cn/china/2010-01/28/content_9388755.htm)

China Leading Global Race to Make Clean Energy

TIANJIN, China — China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the world’s largest maker of wind turbines, and is poised to expand even further this year.

China has also leapfrogged the West in the last two years to emerge as the world’s largest manufacturer of solar panels. And the country is pushing equally hard to build nuclear reactors and the most efficient types of coal power plants.

These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.

“Most of the energy equipment will carry a brass plate, ‘Made in China,’ ” said K. K. Chan, the chief executive of Nature Elements Capital, a private equity fund in Beijing that focuses on renewable energy.

President Obama, in his State of the Union speech last week, sounded an alarm that the United States was falling behind other countries, especially China, on energy. “I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either,” he told Congress.

The United States and other countries are offering incentives to develop their own renewable energy industries, and Mr. Obama called for redoubling American efforts. Yet many Western and Chinese executives expect China to prevail in the energy-technology race.

Multinational corporations are responding to the rapid growth of China’s market by building big, state-of-the-art factories in China. Vestas of Denmark has just erected the world’s biggest wind turbine manufacturing complex here in northeastern China, and transferred the technology to build the latest electronic controls and generators.

“You have to move fast with the market,” said Jens Tommerup, the president of Vestas China. “Nobody has ever seen such fast development in a wind market.”

Renewable energy industries here are adding jobs rapidly, reaching 1.12 million in 2008 and climbing by 100,000 a year, according to the government-backed Chinese Renewable Energy Industries Association.

Yet renewable energy may be doing more for China’s economy than for the environment. Total power generation in China is on track to pass the United States in 2012 — and most of the added capacity will still be from coal.

China intends for wind, solar and biomass energy to represent 8 percent of its electricity generation capacity by 2020. That compares with less than 4 percent now in China and the United States. Coal will still represent two-thirds of China’s capacity in 2020, and nuclear and hydropower most of the rest.

As China seeks to dominate energy-equipment exports, it has the advantage of being the world’s largest market for power equipment. The government spends heavily to upgrade the electricity grid, committing $45 billion in 2009 alone. State-owned banks provide generous financing.

China’s top leaders are intensely focused on energy policy: on Wednesday, the government announced the creation of a National Energy Commission composed of cabinet ministers as a “superministry” led by Prime Minister Wen Jiabao himself.

Regulators have set mandates for power generation companies to use more renewable energy. Generous subsidies for consumers to install their own solar panels or solar water heaters have produced flurries of activity on rooftops across China.

China’s biggest advantage may be its domestic demand for electricity, rising 15 percent a year. To meet demand in the coming decade, according to statistics from the International Energy Agency, China will need to add nearly nine times as much electricity generation capacity as the United States will.

So while Americans are used to thinking of themselves as having the world’s largest market in many industries, China’s market for power equipment dwarfs that of the United States, even though the American market is more mature. That means Chinese producers enjoy enormous efficiencies from large-scale production.

In the United States, power companies frequently face a choice between buying renewable energy equipment or continuing to operate fossil-fuel-fired power plants that have already been built and paid for. In China, power companies have to buy lots of new equipment anyway, and alternative energy, particularly wind and nuclear, is increasingly priced competitively.

Interest rates as low as 2 percent for bank loans — the result of a savings rate of 40 percent and a government policy of steering loans to renewable energy — have also made a big difference.

As in many other industries, China’s low labor costs are an advantage in energy. Although Chinese wages have risen sharply in the last five years, Vestas still pays assembly line workers here only $4,100 a year.

China’s commitment to renewable energy is expensive. Although costs are falling steeply through mass production, wind energy is still 20 to 40 percent more expensive than coal-fired power. Solar power is still at least twice as expensive as coal.

The Chinese government charges a renewable energy fee to all electricity users. The fee increases residential electricity bills by 0.25 percent to 0.4 percent. For industrial users of electricity, the fee doubled in November to roughly 0.8 percent of the electricity bill.

The fee revenue goes to companies that operate the electricity grid, to make up the cost difference between renewable energy and coal-fired power.

Renewable energy fees are not yet high enough to affect China’s competitiveness even in energy-intensive industries, said the chairman of a Chinese industrial company, who asked not to be identified because of the political sensitivity of electricity rates in China.

Grid operators are unhappy. They are reimbursed for the extra cost of buying renewable energy instead of coal-fired power, but not for the formidable cost of building power lines to wind turbines and other renewable energy producers, many of them in remote, windswept areas. Transmission losses are high for sending power over long distances to cities, and nearly a third of China’s wind turbines are not yet connected to the national grid.

Most of these turbines were built only in the last year, however, and grid construction has not caught up. Under legislation passed by the Chinese legislature on Dec. 26, a grid operator that does not connect a renewable energy operation to the grid must pay that operation twice the value of the electricity that cannot be distributed.

With prices tumbling, China’s wind and solar industries are increasingly looking to sell equipment abroad — and facing complaints by Western companies that they have unfair advantages. When a Chinese company reached a deal in November to supply turbines for a big wind farm in Texas, there were calls in Congress to halt federal spending on imported equipment.

“Every country, including the United States and in Europe, wants a low cost of renewable energy,” said Ma Lingjuan, deputy managing director of China’s renewable energy association. “Now China has reached that level, but it gets criticized by the rest of the world.”

(http://www.nytimes.com/2010/01/31/business/energy-environment/31renew.html)

China on the road to low-carbon economy

Developing a low-carbon economy has become inevitable for China in coping with climate change. As a responsible developing country, China has internalized low-carbon economy into its overall development strategy and is making unremitting efforts to realize objectives of temperature control and sustainable development.

At the end of 2009, the Central Economic Work Conference, which put forward climate change and greenhouse gas emissions control objectives, demonstrated that the Chinese now have clearer ideas of how to proceed along the road toward a low-carbon economy.

Achievement not coming easily

Greenhouse gas emissions come mainly from the combustion of traditional fossil energy (coal, petroleum and natural gas), so the essence of a low-carbon economy is to cut greenhouse gas emissions --particularly carbon dioxide.

In China's energy production and consumption composition, coal accounts for approximately 70 percent, mainly in electric power generation. The concern is: How will China manage to cut carbon emissions given its present stage of industrialization?

"Since it adopted its policy of reform and opening up, China has always been committed to working on coal fired generation efficiency and purification levels" - this is not the judgment of a single person but a statement in the Policy on Sustainability of Coal and Pollution Control issued by the China Council for International Cooperation on Environment and Development in 2009.

Statistics support this assertion: By the end of 2008, China's electric power installed capacity had reached 792 million kw, of which 600 million kw came from coal power. In the area of coal power, large-scale units with a capacity of more than 300,000 kw already accounted for more than 50 percent. China also raised average efficiency in thermal power. By 2008, the amount of coal necessary to produce each kw/h of electric power had dropped to 349 grams of standard coal, lower than the United States and Germany in 2005.

Its coal-centered energy production together with accelerated industrialization and urbanization have made it impossible for China to realize low-carbon coal consumption practices overnight. It has not been easy for China to reach the level it is at today.

While increasing coal efficiency and purification levels, China is also making great efforts to develop clean power from sources such as wind, the sun, hydropower, nuclear power and biomass energy. By the end of 2008, clean energy made up 9 percent of China's primary energy consumption. Its hydropower installed capacity, the scale of current nuclear power development, heating generated through colar power and its accumulated capacity of solar energy photovoltaic power generation ranked the world's first while the installed capacity of wind power ranked the world's fourth.

Forest carbon sinks work

China's leaders repeatedly mention planning to increase forest carbon sinks. By 2020, China's forest coverage will have increased by 40 million hectares compared to 2005 and forest volume increased by 1.3 billion cubic meters from 2005.

Experts believe that to cope with climate change, we need to "walk two paths." One is emissions reductions in industry, construction and traffic, and the other is forest carbon sinks. A forest carbon sink refers to the process of forests absorbing carbon dioxide from the atmosphere and storing it in plants or the earth, so as to reduce its density in the air. Compared with direct emissions reductions in industry, forest carbon sinks are a kind of indirect emissions reduction. They make little demand in investment and costs, but provide comprehensive benefits. Therefore, it's quite a practical and economical way to reduce emissions. Every hectare of forest is able to absorb between 20 and 40 tons of carbon dioxide.

In November 2009, China's State Council announced the 7th general forest inventory, which showed China's national forest coverage had reached more than 1.95 trillion hectares and the country's forest coverage rate jumped to 20.36 percent. At the 2007 APEC conference, China made a commitment to the world to increase forest coverage rate to 20 percent by 2010, which was realized well ahead of time.

It's worth mentioning that the interval between this forest inventory and the previous one was five years. During this period, the net growth of China's forest coverage was more than 20.54 million hectares, forest stock increased by more than 1.12 billion cubic meters and the national coverage reached 20.36 percent from 18.21 percent. A 2.15 percent growth seems like nothing, but given huge annual demand for timber, unavoidable felling in the forests and a relatively low survival rate of new planting, the growth was a big plus.

During the 25 years from 1980 and 2005, thanks to the continuous efforts of tree planting, forest operations and control over felling, some 5.11 billion tons of carbon dioxide were absorbed or otherwise reduced.

Low-carbon life starts in daily life

In 2008, the World Wildlife Fund launched the "China low-carbon city development program," with Shanghai and Baoding city in Hebei Province selected as the first pilot cities. From then on, being a "low-carbon city" has become increasingly popular. Cities such as Zhuhai, Hangzhou, Guiyang, Jilin and Nanchang have all put forward their plans to develop themselves into low-carbon cities.

Shanghai is now busy preparing for the 2010 World Expo. It is trying to put into practice the concept of a low-Carbon World Expo?for traffic in its central garden, where various clean energy technologies such as wind power, photoelectric power, light heat, geothermal heat and river water-sourced heat, will be extensively used to power super-capacity trolleybuses and fuel-cell vehicles, so that there will zero carbon emissions within the garden.

In order to realize the dream of low-carbon cities, people are becoming more supportive of environment-friendly ways of life by recycling, conserving water, electricity and paper, producing less rubbish; and walking, cycling and taking buses more than using private cars. The public has responded strongly to the call of "starting from little changes to make big improvements."

(http://www.chinadaily.com.cn/m/hangzhou/e/2010-01/14/content_9322613.htm)

China Snaps Up California Solar Market

China’s rise as a major solar module maker has been meteoric, but perhaps nowhere has its ascension been faster than in California, the United States’ largest solar market.

Over the last three years, China’s share of the California market, in terms of supplied megawatts, has risen to 46 percent, from 2 percent, according to a preliminary report by Bloomberg New Energy Finance, a research and consulting firm.

At the same time, the share supplied in California by American companies has declined to 16 percent, from 43 percent.

“The ascendancy of Chinese manufacturers would be noteworthy regardless of market conditions, but is particularly telling in a time when purse-strings are still tight,” the report said.

At the beginning of 2009, Chinese solar companies supplied 21 percent of the market; by year’s end their stake had more than doubled.

This is not necessarily a zero-sum game, however. The California solar market has continued to rapidly expand through the recession, growing by a third last year. The state accounts for 40 percent of the American solar market.

Solar module prices have also fallen precipitously in the past year, a period that has coincided with China’s push into the California market. Those companies’ lower manufacturing costs gave them an edge over competitors, according to Bloomberg New Energy Finance.

A Chinese module maker with little name recognition in the United States, Yingli, has captured 27 percent of the California market thanks to low pricing, the report said. Suntech, China’s leading module-maker, has a 10 percent share in California.

“The main factor behind Yingli’s dominance is a spate of commercial rooftop project applications,” Nathaniel Bullard, a solar analyst with Bloomberg New Energy Finance, wrote in an e-mail message.

The report noted that the solar module market was volatile and that “this quarter’s league leader could well be next year’s also-ran.”

With Chinese companies subject to the vagaries of United States-China trade relations, both Suntech and Yingli have moved in recent months to locate manufacturing plants in the Southwest, close to the California market.

(http://greeninc.blogs.nytimes.com/2010/01/14/china-snaps-up-california-solar-market/)

Thin-film's solar challenge to coal

Will solar energy replace coal as a powersource in electricity production in the future?

Yes, but only with a new technology that is more energy efficient than conventional solar power cells, according to a Chinese technology supplier to the manufacturing of thin film solar modules.

Apollo Solar Energy Technology Holdings (Apollo) told China Daily that it expects to realize "grid parity" by 2011, when solar electricity generated during the middle of the day at a time that sunlight is most abundant will involve costs comparable to and competitive with conventionally generated electricity.

Peng Libin, executive director of Apollo, said, however, a government subsidy will still be necessary when grid parity is finally achieved. He said his company's products mark a milestone in the usage of inexhaustible solar energy as a green power supply.

The Chinese government has already looked ahead to that prospect. In view of the current negligible electricity output generated from solar energy, the government has announced several major subsidies for solar power generation in 2009, including a "Golden Sun Project", which offers a 50 percent upfront rebate for on-grid systems and 70 percent for off-grid.

Peng is optimistic the new environment-friendly solar technology, particularly thin-film solar energy, will become the main renewable energy source for China in the future. He said sufficient sunshine and vast spaces in western China has made the provinces of Xinjiang, Qinghai, and Gansu hot spots among electricity suppliers looking to enclose lands for future solar energy development.

"Nevertheless, 95 percent of the orders in our company at this moment are still from abroad. (The level of) solar energy utilization in China is relatively low. The solar energy market these days is still dominated by crystalline silicon (c-Si), but its growth is restricted by inherent technological limitations," said Peng.

Peng said c-Si has struggled to compete with other sources of energy, because of its complex manufacturing process and high production costs. Most importantly, in consideration of environmental impact, c-Si itself consumes too much traditional energy.

"It will take five to seven years for the c-Si to produce the amount of electricity it consumed during its own production, while for thin film, it takes only a year," Peng said.

Thin-film modules are constructed by depositing extremely thin layers of photosensitive materials onto a low-cost backing, such as glass, stainless steel or plastic, which results in lower production costs compared to the more material-intensive crystalline technology.

Peng noted that the thin film has recently been well received and recognized in solar energy production areas. Compared with c-Si, thin film is able to absorb a wider spectrum of sunlight wavelengths, which creates much higher absorption efficiencies under different environment and sunlight intensities, not to mention its smaller capital investment and lower production costs.

"In a sunny day, thin film is able to take in solar energy from 8 am to 6 pm, while c-Si works only from 10 am to 3 pm. When it is cloudy or raining, even though a thin film's absorption will be reduced somewhat, c-Si is almost totally disabled."

Peng is proud Apollo has achieved 8 percent post-degradation conversion efficiency with modules manufactured with its thin film, making it a leader among its global peers.

"When we eventually achieve efficiency gains above 12 percent, solar energy will be very promising to replace the traditionally utilized coal as the main source. I am very confident success is just around the corner," said Peng.

(http://www.chinadaily.com.cn/hkedition/2010-01/15/content_9323473.htm)

^{Automobile and
Transportation}

Chinese auto market overtakes US as world's largest

China's passenger vehicle market ended last year with a 59 percent year-on-year sales increase to surpass the United States as the world's largest auto market for the first year, thanks to the central government's stimulus package.

The domestic sales of cars, sports-utility vehicles (SUV), minivans and multi-purpose vehicles (MPV) hit 10.26 million units last year, surging from 6.4 million units in 2008, said Rao Da, secretary-general of the China Passenger Car Association on Friday.

The growth is also the highest in the country's auto history, with total automobile sales expected to surge 44 percent year-on-year to 13.5 million units in 2009.

Statistics from the US consulting institution Center for Automotive Research showed that new car sales in the US last year plunged 21 percent year-on-year to a 27-year low of 10.43 million units, more than 3 million behind China.

The China Association of Automobile Manufacturers (CAAM) is expected to release detailed market figures of the country's automobile industry on Monday.

The spike in vehicle sales was largely boosted by the government's stimulus policies for lifting market demand, which included tax cuts on small-displacement automobiles, subsidies for trade-ins and subsidies for farmers to buy vehicles.

A low comparative base in 2008, when car sales growth slowed to 6.7 percent with 9.38 million vehicles sold, also helped boost 2009 figures.

To further support the world's fastest growing auto market, the Chinese government said last month it will extend stimulus measures in the automobile industry for one more year.

The purchase tax for smaller cars will be lifted from the current 5 percent to 7.5 percent of the total vehicle price. The government also decided to raise the subsidy for trade-in cars from between 3,000 and 6,000 yuan ($440 to $880) to between 5,000 yuan and 18,000 yuan per vehicle.

The government's continued support for the industry promises to fuel its rise for the coming years.

Automobile industry consulting firm Sinotrust predicted that vehicle sales will reach 15.13 million units this year, with a year-on-year growth rate of 15.2 percent.

According to the Ministry of Public Security, until the end of last year, almost 200 million Chinese people are able to drive a vehicle, making up about 15 percent of the country's 1.3 billion population.

"Natural demand will continue to expand in the next few years," said Lang Xuehong, chief auto industry analyst at Sinotrust.

Chinese automakers launched a record 221 new passenger vehicle models last year, with a majority of them upgraded models and less than half being new ones, according to the latest statistics from the CAAM.

Chinese automakers are expected to launch about 100 new models this year.

The brisk sales have also brought challenges to China's appeal for a green society.

However, a number of analysts said the sales may also speed up automakers' efforts to develop next-generation energy-efficient and emission-free vehicles.

Moreover, "the revised policy for this year, with tripled subsidies to encourage the replacement of outdated vehicles with high emissions and unstable driving performance, will contribute to an environmentally friendly society in which the automobile industry has a heavy responsibility," said Yale Zhang, director of the Greater China Vehicle Forecasts for US auto industry consultancy CSM Worldwide.

Still, Chinese cities may face worsening traffic as the car boom puts an increasing number of people behind the wheel, with a number of local governments already expressing concern about the rising number of cars.

Zhang Gong, director of Beijing's municipal commission of development, said the capital will enter the "automobile age" when every 100 families own 66.1 cars.

The capital is rated in a Sohu.com survey of more than 5,000 Web users as the most crowded Chinese city in November.

(http://www.chinadaily.com.cn/bizchina/2010-01/09/content_9292112.htm)

World's top auto market keeps expanding

Shen Lu just bought herself a red Mazda 3 as a new year present.

"It looks beautiful and has large space. I bought it to replace my old car, a small Chery QQ," said the 27-year-old IT practitioner.

"Cars with displacement of 1.6 liters, like the Mazda 3, are cheaper with reduced purchase tax," she added.

Shen's Mazda is one part of the mushrooming auto fleet that expands by 1,500 new vehicles every day in Beijing, a city that already has 5.7 million drivers and over four million automobiles.

The young white collar represents a consumer group that is pushing China, the newly-crowned world's top auto maker and market, to become a even larger auto market in the coming years.

China's auto sales rose 46.15 percent year-on-year to 13.64 million units last year, and output went up 48.3 percent to 13.79 million units in the same period, according to data from the China Association of Automobile Manufacturers.

Younger,easier and faster

Shen Lu can still remember how she envied her classmates whose families had cars when she was still a school girl, and now she had already bought her second car.

"Car has become a part of my life," she said.

"It is more convenient to go shopping or go out on picnics with a car. Most of my friends have cars or are planning to buy one," she explained.

To some urban Chinese, especially the young white collars, cars are no longer luxuries, but commonplace consumer goods, said Xie Liang, a senior editor of an auto magazine in Beijing.

"In China, it has become easier for people to find vehicles to their taste, and they are quick to decide," he said.

Lin Meiying, an accountant who worked in Hangzhou, southeastern China, said it only took her a month from planing to actually buying a car, a Mitsubishi Lancer.

"It (buying a car) is not a small expense, but to buy one is not a very big deal nowadays," she said.

The thriving auto market is seen as a result of an increase income and relatively stable prices of auto vehicles, said Xie.

"Urbanization and favorable tax policies on cars also contributed to the booming," he said.

To spur the use of clean and fuel-efficient cars, the government cut the purchase tax to 5 percent on vehicles with a displacement of less than 1.6 liters last year. The tax cut incentive has been extended to this year, with purchase tax being raised to 7.5 percent.

According to Jia Xinguang, an independent auto industry analyst, to follow the fashion was also a reason that more and more young people bought cars.

"These young people like fancy looking, cheap cars that look like racers or SUVs. For some of them, to look fashionable is the main reason of purchase," he said.

"And more parents, who might not be able to afford a car at a early age, are willing to buy cars for their children as gifts," Jia said.

Vast rural market

Another notable phenomenon in China's expanding auto market is that China's rural residents have begun to cast their eyes on cars.

According to the Foton Chinese Index for Mobility of 2009, an annual survey jointly conducted by the Beijing-based Beiqi Foton Motor Co Ltd and Horizon Research Group and aimed at offering an insight into Chinese people's mobility, rural demands for cars increased.

According to the survey, 12.4 percent of interviewees in small towns and 11.5 percent of interviewed villagers have expressed interests in buying a car.

Last year, China had started to subsidize vehicle buyers in rural areas with 10 percent of price of the vehicle.

Boosted by the stimulus policy, sales of light truck, which are widely used in rural areas, increased by 17.35 percent to 1.13 million units year-on-year in the third quarter last year, according to the China Automobile Dealers Association.

According to the Foton Chinese Index for Mobility, of all the farmer interviewees that planned to buy a car in the next year, 17.4 percent of them had moved up their plans because of the subsidizing program, while 11.5 percent of them had decided to have cars because of the program.

Data from the Ministry of Finance showed that by the end of 2009, China had provided 8.7 billion yuan ($1.27 billion) of subsidies to rural auto purchases, covering 5.83 million auto vehicles.

Shao Qihui, honorary chairman of the Society of Automotive Engineers of China, said that in 2009, vehicles in rural areas could only meet 30 percent of the total demand for rural transportation.

Relatively low income in the rural areas compared with cities hampered rural vehicle consumption, and trucks, tractors and even horse carts were used to for passenger transport in the countryside, he said.

"However, as inhabitants in rural areas accounted for almost three fourths of the country's population, the potential of the rural market can not be overlooked," he said.

New energy car

New energy cars have also brought fresh impetus to China's auto market with cheaper prices and low emission.

The Foton Chinese Index for Mobility showed that 23 percent of the interviewees were willing to buy automobiles of hybrid power, the figure for electric vehicles was 10.1 percent.

Up to 36.5 percent hope that the government would subsidize new energy car purchases, said the survey.

Jia said that the government should promote new energy cars, and develop low speed ones.

"In cities, a car with an average speed of about 25 miles per hour is enough for people to go back and forth between homes and work places," Jia said.

He is quite confident in the future development of the new energy car market. "Low speed new energy cars are cheap and power saving. They are environmental friendly and has huge market potential."

(http://www.chinadaily.com.cn/bizchina/2010-01/23/content_9367078.htm)

China to tax vehicle emissions

Drivers in China may be taxed on the level of emissions produced from their vehicles in the future, according to an official with Beijing Development and Reform Commission (BDRC), the Beijing News reported today.

"The central government is researching the subject of environmental tax reform of vehicles, including a measure to tax vehicles owners according to vehicle emissions," said Zhang Yanyou, deputy head of BNRC.

People buying higher output vehicles will pay more tax when the scheme takes effect.

"The more distance your car covers, the more you will pay," said an unnamed official with China’s Ministry of Environmental Protection.

When and how the taxation will be conducted is not known yet, the report said.

(http://www.chinadaily.com.cn/china/2010-01/27/content_9384311.htm)

Government policies pivotal in historic 2009 car market

At the beginning of 2009, it looked from our vantage point that difficult economic conditions would finally stall the development of China's automotive industry. Falling exports, rising unemployment and global turmoil were combining to dampen consumer confidence and reduce vehicle demand.

Vehicle sales fell in four of the last five months in 2008, and would fall again in January 2009.

Seemingly unshaken, Chinese policymakers then announced a determined plan to achieve, among other targets, 7 percent growth - sales of 10 million units - for the year.

They overachieved in spectacular fashion.

Subsidies for light commercial vehicles, reduced taxes on small cars and an enormous economic stimulus plan worked to lift the spirits of consumers and boost light vehicle demand by a staggering 48 percent.

China added 4.3 million light vehicles - passenger vehicles and commercial vehicles under 6 tons - above the 8.6 million units delivered in 2008 for a total just under 13 million units.

The explosion in vehicle demand, coupled with the decline of the US market, made China the largest, arguably most important, automotive market in the world in 2009.

According to our projections at JD Power Asia Pacific, we expect China to remain the world's largest automotive market in 2011 and 2012, though a recovery in the US economy and automotive demand will likely return the US to the No 1 spot in 2013. Consistent growth and a leveling off of the recovery in the US will ensure China captures the top rank for good by 2015.

Smaller vehicles

Besides igniting demand, government actions in 2009 moved buyers into smaller vehicles. Compacts, sub-compacts and minibuses accounted for more that 68 percent of the growth in China's light vehicle demand.

Government policy was instrumental in shaping the trend. A reduction in the sales tax on vehicles equipped with engine displacement below 1.6 liters boosted small car demand, while subsidies across inland markets supported minibus sales.

This trend will continue in 2010 as policymakers take aim at environmental concerns and a rising dependence on imported oil.

It is increasingly accepted that demand grew fastest last year in new markets, the so-called second- and third-tier cities. Development of rural areas is a longstanding objective of government policy.

It is hard to find more than anecdotal evidence supporting this conviction. But the anecdotal evidence is compelling. The subsidies for commercial vehicles were available only in rural areas. Many manufacturers report good sales from expansion of dealer networks in rural areas. And government infrastructure investment was strongest in newly developing regions.

With government support, rural consumption may continue to add to the country's total, but it's hard for us to accept that these areas will displace traditional wealth centers as the key drivers of new vehicle demand in China in 2010 and beyond.

Domestic brands

The hottest brand in China for 2009 was BYD Auto. Building on good momentum established in 2008, and great publicity surrounding its expertise in electric vehicles, BYD Auto expanded its sales by 161 percent in 2009. The F3 compact became the top-selling model in China with 280,000 delivered for the year. In the US market, only the Toyota Camry sold more than 280,000 units in 2009.

We expect gravity to catch up with BYD Auto in 2010 and bring its growth in line with the overall market.

Lead by the success of BYD Auto, Chinese brands reversed a downward trend in share of the passenger vehicle market. In the aggregate, Chinese brands grew by 61 percent last year, 13 basis points faster than the market.

While the aggregate data suggests growing competitiveness among Chinese companies, a closer look tells a different story. Most of the growth for Chinese passenger cars came as a result of new brand and new model introductions - pointing to increasing market fragmentation and likely decreased competitiveness in an industry defined by scale.

The concern is that growing sales are only the result of a rising tide, not improved competitiveness. For a measure of competitiveness in this environment look for existing models conquering share from established competitors.

Industry consolidation

Encouragement for industry consolidation arrived in early 2009 with a vision of the "Four Big" and "Four Little" automotive companies. That vision moved one step closer to reality when Chang'an Automotive acquired the automotive assets of China Aviation Industry Group.

Progress in this merger will tell us a lot about the potential of the vision. A measure of success to watch for is the degree of integration in operations and simplification of brand structure

In 2009, China also looked abroad for merger and acquisition targets. Beijing Automotive Industry Corp acquired SAAB's assets from General Motors. Geely Auto gained the inside track on acquiring the Volvo brand from Ford Motor. It also acquired a transmission company from Australia.

Of all the merger and acquisition activity in China in 2009, the most significant may have been the smallest. Shanghai Automotive Industries Corp added a 1 percent stake in Shanghai General Motors to the 50 percent stake it already owned. The additional share gives SAIC majority control over the future of Shanghai GM in China.

In hindsight, 2009 confirmed one thing: The automotive industry is a pillar industry for China, today and in the future. Progress might come in fits and starts, but policymakers will take every measure to meet the stated targets.

(http://www.china.org.cn/business/2010-01/25/content_19300309.htm)

Citroens out, electric cabs in, for city's taxi fleet

The last 200 Citroen taxis will leave the city's streets by May with electric taxis tipped to be introduced into the market according to proposals at the Beijing municipal people's congress.

Citroen taxis were brought into use in Beijing more than 10 years ago. From 2003, the local government gradually reduced the number and substituted them with Hyundai Sonata and Elantra cars.

"The proposal was brought up two days ago but the details are still under discussion," a spokesman from the municipal commission of transport told METRO Thursday.

Currently, there are 60,000 taxis in Beijing putting out pollution every day, according to Wang Dawei, director of the atmospheric division of the Beijing municipal environmental protection bureau.

"Since taxi drivers are driven by money, they will take more trips than private cars and the harm is greater," he said.

Wang suggested the government use "high-end cars" with lower emission rates as taxis.

"Most Citroens have already been phased out," said Hu, manager of an unstated taxi company.

Hu has been involved in the taxi business for more than 30 years."From the outside, a Citroen looks okay. But actually, it burns more gas and emits more fumes than any other taxi on the street," he said.

Hu said most of the remaining Citroen taxis belong to United Crescent Taxi Company and Yiyang Taxi Company.

A worker from United Crescent Taxi Company, who refused to be named, said they are still using a considerable number of Citroens, but wouldn't release the number.

When asked about electric cars, Hu said that although they were expensive, the long-term savings justified the cost.

"Electric cars put out zero emissions in the atmosphere, so they are also beneficial to the environment," Wang said.

But Hu expressed concern.

"I'm afraid these cars cannot make the long distance between battery charge stations," Hu said. "The highest speed is only 120 km per hour."

Chen Ligong, a member of the municipal science and technology commission, said in an interview with Beijing Evening News that 50 electric buses were already operating in Beijing.

"The next step is to try electric taxis within the Fifth Ring Road," Chen said.

"If the test run proves successful, it will be promoted to other areas of Beijing," he said.

(http://www.chinadaily.com.cn/bizchina/2010-01/29/content_9398525.htm)

Chinese Maker Hopes to Offer Electric Car for U.S. by Year-End

DETROIT — After a disastrous year for the auto industry, carmakers are working hard to exude optimism and confidence at this year’s auto show.

Skip to next paragraph On that score alone, the winner may be the Chinese company BYD Auto, which created a stir on Tuesday by announcing that it plans to start selling an electric car in California by the end of this year. That would make BYD the first company to sell Chinese-made vehicles in the United States.

It also would require the company to overcome numerous hurdles, including crash and emissions testing that can sometimes take years, not to mention arranging a network of dealers.

But BYD, which was founded just seven years ago, is fond of setting ambitious goals. An introductory video played before the company made its announcement said, almost as a side note, that BYD intends to be the largest automaker in the world by 2025.

“We’ve been talking for years about the imminent arrival of the Chinese, and it still seems to be imminent,” said Jeremy Anwyl, chief executive of Edmunds.com, a Web site that gives car-buying advice to consumers. “It always seems to be ‘later this year.’ ”

But Mr. Anwyl said BYD and other Chinese carmakers were making rapid progress, to the point that the quality and styling of their vehicles were less problematic than the difficulty of breaking into a large, mature market like the United States.

“They’ve got a long-term view, and they’ve certainly got the will,” he said. “When they do come, it’s going to almost be as disruptive as when the Japanese came.”

The rest of the auto industry is closely watching China. Many carmakers already have become familiar with BYD and other Chinese manufacturers by competing against them in that country, which overtook the United States as the world’s largest automobile market last year with sales of 13.6 million vehicles.

General Motors, the Ford Motor Company and others know it is only a matter of time before those companies begin challenging them in the United States, too. Later this year, China’s biggest automaker, Geely, expects to close a deal to buy the Volvo brand from Ford, and G.M. could conclude a sale of its Hummer brand to a Chinese industrial equipment maker.

“China’s going to be a force going forward,” Ford’s chief executive, Alan R. Mulally, said at the Automotive News World Congress, a conference being held near the auto show on Tuesday.

BYD executives said the first vehicle they wanted to sell in the United States was a battery-powered, five-passenger crossover vehicle called the e6. The company claims it would have a 205-mile range, and drivers would charge the vehicle’s battery by plugging it into an outlet at home or at fast-charging stations, which do not exist yet.

The e6 costs about $40,000 to make, so government incentives would be important to making it affordable at first, said Henry Li, the general manager of BYD’s auto export trade division. American consumers would buy the vehicle at stand-alone BYD dealerships, which have not been established, Mr. Li said.

Under repeated questioning by skeptical reporters, Mr. Li said that none of the obstacles would be insurmountable for BYD, which counts Warren E. Buffett among its investors.

“I think the market now is looking for electric cars,” he said. But he cautioned, “We don’t expect high volumes.”

Mr. Li said that the e6 complied with all Chinese vehicle standards and that executives were confident it would ultimately meet far more stringent United States regulations.

“In the design, we already considered these requirements,” he said.

This is BYD’s third consecutive trip to the Detroit auto show. A year ago, the company listed 2011 as its target for selling the e6 in the United States, and it listed a higher range, acceleration and top speed for the vehicle.

Other Chinese automakers have visited Detroit in the past, only to find that their vehicles — like the rhombus-shaped sedan with wheels on three axles and a bamboo interior in 2007 — were not were not taken seriously, and they have not returned.

Many of the Chinese contenders seemed to market themselves on the idea that they could undercut competitors on price, regardless of quality or design.

That is not the strategy at BYD, which already makes many of the batteries used in mobile phones and other electronics.

“The product,” Mr. Li said, “has to be good.”

(http://www.nytimes.com/2010/01/13/business/13auto.html)

World carmakers battle for green leadership

The 2010 North America International Auto Show (NAIAS) at the U.S. auto city of Detroit is a lot smaller and greener as the industry adapts to a world reshaped by recession and environmental worries.

In the 39,000-square-foot showroom of the COBO Center at deep heart of Detroit, the global automotive community comes together to catch up on the latest with 60 new vehicle premieres.

Electric, hybrid and small cars have grabbed center stage at the auto show this week. Some global automotive companies unveiled new electric and hybrid cars at the auto show as car companies battle for green leadership and strive to meet stringent new fuel economy and emission requirements later this decade.

Toyota Motor Corp. announced here it plans to expand the Prius into a family of vehicles with cars both smaller and larger than its flagship hybrid. The Japanese company unveiled a concept car called the FT-CH, a vehicle about 500 millimeters shorter than the Prius that is to become a model on the road within three years.

German carmaker Volkswagen AG unveiled a concept car code-named the New Compact Coupe that combines a hybrid motor with a turbocharged, 1.4-liter engine. The company believed this hybrid model will be on the road this spring.

Japanese carmaker Honda Motor Co. Ltd., also unveiled at the auto show a hybrid sports coupe, the new CR-Z which will go on sale in the U.S. market this summer.

The hybrid version of Ford Motor Co.'s Fusion sedan won car of the year at the annual Detroit show. According to Mark Fields, the president of Ford, the new Ford Fusion Hybrid Sedan will be competitive among the other all-electric vehicles.

Ford Motor Co's Alan Mulally stated positively that "the efficiencies generated by our new global C-car platform will enable us to provide Ford Focus customers with an affordable product offering quality, fuel efficiency, safety and technology beyond their expectations."

The South Korean carmaker Hyundai, which aims to extend last year's triumph in budget-conscious models, has displayed a number of small-size electric cars at the auto show this year.

U.S. automakers GM and Chrysler also vowed to start fresh with electric vehicles but also try to boost their small-car credibility.

Meanwhile, Chinese electric carmaker Build Your Dream (BYD), bent on becoming one of the world's largest automakers, launched a series of ambitious projects that it hopes its electric cars will reach the streets before larger, well-established carmakers.

At the Detroit Auto Show, BYD stepped onto center stage with plenty of interesting product, including the world's first dual- mode plug-in hybrid. BYD's F3DM and e6 which debuted at last NAIAS in Detroit, were brought to this year's Detroit auto show again.

The Chinese electric cars have attracted thousands of visitors and reporters at the auto show. BYD Chairman and President Wang Chuanfu told Xinhua that both vehicles could hit the American and other foreign markets by 2011.

Analysts in Detroit said the abundance of hybrid, electric and other environmentally friendly vehicles shows the auto industry believes it must meet stringent fuel economy goals through technology.

(http://www.china.org.cn/environment/2010-01/13/content_19225646.htm)

^{Oil and gas}

China depending more on imported oil

China's oil imports will continue to see solid growth this year, with more than half of the country's total oil consumption coming from abroad, industry insiders said.

It is inevitable for the country - the world's second largest oil consumer - to see a robust increase of imports, as domestic production cannot keep up with rising demand, they said.

China's oil dependency reached alarming levels last year with imports accounting for 52 percent of total consumption, China Business News reported yesterday, citing Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission.

Importing more than 50 percent is a globally recognized level for an energy security alert.

The country's oil imports in 2010 are expected to grow five percent from a year earlier, and the proportion of imported oil consumed may further rise to 54 percent this year, said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

"Domestic production is already at its peak," he said. "Although domestic companies have accelerated their overseas expansion, the resources they already gain are still limited."

Customs figures showed that China imported 204 million tons of oil last year, while the country's total production was 190 million tons.

Lin's views are echoed by Han Xiaoping, chief information officer of china5e.com, a leading energy website in the country, saying oil imports would maintain a brisk growth in the future. However, importing too much would hurt energy security, he added.

According to a report by the Chinese Academy of Social Sciences (CASS), 64.5 percent of China's oil consumption is likely to be met by imports in 2020, with the gap between domestic consumption and production as the main reason.

Statistics from CASS showed that China's oil production is expected to stand at 177 to 198 million tons in 2010, and the figure would reach 182 to 200 million tons in 2015.

China's oil production will see a gradual decline after 2020, according to CASS.

China National Petroleum Corp, the country's largest oil and gas producer, said in a commentary in its online newsletter yesterday that the country's oil imports would be affected by many factors, such as rising global competition and volatile energy prices.

Chinese companies should avoid competing with their domestic peers in the international market, said the report.

Analysts said that China should further diversify its sources for importing oil to find a more sustainable supply. At present the Middle East, Africa and the Asia-Pacific are the three main regions that supply oil for China.

(http://www.chinadaily.com.cn/bizchina/2010-01/20/content_9350058.htm)

Expired LNG deal has limited impacts on China

China will not face a natural gas shortage despite an expired $40 billion LNG deal between its largest oil and gas producer and Woodside Petroleum, Australia's second biggest, Chinese experts said.

China National Petroleum Corporation (CNPC), announced late Tuesday that the initial accord between its listed arm PetroChina and Woodside, which was signed in 2007, is no longer valid due to project delay.

Woodside made the same announcement on its official website on Monday, indicating that the deal was supposed to create a potential sale of 2 to 3 million tons a year of liquefied natural gas (LNG) from its Browse LNG Development to PetroChina.

The deal was estimated to worth up to over 40 billion, as the LNG supply was supposed to start between 2013 and 2015 for 15 to 20 years, according to the expired accord.

The deal expiration had given rise to market worries over the increasing possibility of natural gas shortage in future, as China had been grappling with shortages of natural gas since late 2009 triggered by the extraordinarily freezing winter weather.

However, Liu Xiaoli, deputy director of the Center for Energy Research Institute of the National Development and Reform Commission (NDRC), said there is no need to over-worry, as China will not face such shortage in the near future with increasing sources of natural gas supply.

"The deal expiration is largely a commercial practice, as failing to reach an agreement after the initial accord is so common in business," she said.

Concerns over over-supply

The two parties did not reach an agreement to extend the deal since "the Browse LNG Development is postponed, and Woodside would not be able to provide the supply by the time agreed in the previous accord," said CNPC in a statement on its website.

The statement did not elaborate on the reason of the project delay, but Australian local media said it was because Woodside and its partners would not give a final investment decision on Browse Development until 2012, pushing the beginning of the proposed gas export two years after that.

Liu Yijun, a professor with the China University of Petroleum, said an estimation of the future global market will face an oversupply of natural gas was one of the reasons that had made Australian investors "cautious and prudent".

A recent report from the International Energy Agency on the world energy outlook said the over-capacity of gas pipelines and LNG termimals will increase to at least 250 billion cubic meters by 2015, more than four times of the 2007 level.

However, such prediction should be dealt with caution, said Liu Yijun, as China, India and their neighboring countries are all facing huge natural gas demand, which had not been fully revealed due to the lingering economic crisis.

Diversified gas supply

Analysts had also pointed out that the expired deal would have limited impact on China's domestic gas supply as the supply from Woodside is not crucial and the country has been exploring more ways to meet its demand.

According to Liu Yijun, a supply of 2 to 3 million tons LNG would bring China 4 billion cubic meters of of natural gas each year, accounting for only 4.5 percent of China's estimated annual consumption of 90 billion cubic meters in 2009.

"Considering that China's natural gas market would further expand in 2013, the loss of supply from Woodside would not have a significant impact on China's domestic supply," he told Xinhua.

Besides, China's structure of natural gas supply is witnessing improvements with rising domestic production, import from Central Asia, Myanmar and Russia, and imported LNG as its major sources, said Liu Xiaoli.

A 1,833-kilometer natural gas pipeline linking China, Turkmenistan, Kazakhstan and Uzbekistan started operation last month, which will be providing over 30 billion cubic meters of natural gas annually from Turkmenistan to China when reception terminals in China get fully prepared.

Progresses in the construction of the China-Myanmar oil and gas pipelines and the planned project between China and Russia would also help ease the shortage, said Liu Yijun without giving further details.

According to BP Statistical Review 2009, China's natural gas output in 2008 was 76.1 billion cubic meters, as compared with its consumption of 80.7 billion cubic meters in the same period.

"Based on current progress, China would enjoy an abundant supply of natural gas in three years," said Liu Yijun.

Cooperation to continue

Despite the expired deal, China's cooperation with Australia concerning natural gas and other energies would continue, considering Australia as a growing power in the global natural gas industry, said Liu Yijun.

In August 2009, PetroChina signed an agreement with ExxonMobile to purchase 2.25 million tons of LNG annually from the Gorgon field in Australia for 20 years, while in May, China National Offshore Oil Corp. also inked an agreement with United Kingdom-based BG Group on a LNG development project in Queensland, Australia.

In the Woodside announcement, the company also stated that the two parties had agreed to "keep each other informed of progress in their respective LNG export and LNG import projects", and would continue to "negotiate in good faith to progress a detailed LNG supply agreement".

(http://www.chinadaily.com.cn/bizchina/2010-01/06/content_9275122.htm)

Bright prospects ahead for petrochemical firms

The country's petrochemical industry may see a 13 to 15 percent year-on-year growth in turnover this year, thanks to the economic recovery, an industry association said yesterday.

Full-year profit for the sector will rise 8 to 10 percent, according to China Petroleum & Chemical Industry Association (CPCIA).

"The solid rebound in the petrochemical industry is mainly due to the economic recovery," said Feng Shiliang, deputy secretary of CPCIA. With forecasts indicating a robust industrial recovery, the petrochemical industry is all set to achieve the target, he said.

The automobile, textile and building material industries are all expected to post double-digit growth this year. Demand for petrochemical products, which are widely used in these industries, will also see a rapid increase, Feng said.

The crude oil price, which has a decisive impact on the industry, is expected to be around $80 per barrel this year, according to the National Development and Reform Commission. The reasonable crude prices would also have a positive impact on the sector.

An executive with China's largest refiner Sinopec said yesterday that the company would record its best business performance when oil prices are around $80 per barrel.

The petrochemical industry has experienced V-shaped growth since July 2008. Turnover in the sector touched a record high of 683.74 billion yuan last month, said Feng.

However, there still exist some problems constraining the development of the industry, including overcapacity, oversupply, and the impact from imported products, he said.

"Restructuring of the industry and technology upgrades would be the main focus for the sector in the long term," said Feng.

Total investment in the petrochemical industry is expected to grow by 15 percent this year, he said.

China's petrochemical industry including oil and gas extraction, oil refining, chemicals production and equipment manufacturing, posted a turnover of 6.63 trillion yuan in 2009, up 0.3 percent from a year earlier, according to statistics from CPCIA.

(http://www.chinadaily.com.cn/bizchina/2010-01/29/content_9396014.htm)

China car craze won't dent gasoline exports

BEIJING (Reuters) - Gasoline demand in China this year is forecast to grow half the rate at which citizens drive shiny new cars out of showrooms, but refineries will be more than able to keep pace, and exports will mop up the excess fuel.

Tax incentives are expected to fuel sales of a record 11.9 million new cars in 2010, after last year's jump of 53 percent, but there will be few queues at petrol pumps because many models have small fuel-efficient engines, or don't use gasoline at all.

Besides, China's total fleet of cars has not yet reached the critical stage that will stop refiners from meeting new demand.

China's move last year to set retail fuel rates in line with global prices of crude triggered a surge in refinery runs that yielded so much gasoline, exports rose despite the surge in sales of new cars that consume 90 percent of the fuel.

"So long as China raises crude runs, the configuration of Chinese refineries will mean increasing supplies of gasoline that will outpace, or at best, be on par with gasoline demand," said Kang Wu, a senior fellow at the Hawaii-based East-West Center.

Net gasoline exports rose to 4.9 million tonnes, or 114,000 barrels per day (bpd) in 2009, from 46,618 tonnes (1,000 bpd) in 2008 left over from a stockpile built for the Olympic games.

And in a signal for production this year, China exported almost 1 million tonnes of gasoline in December, easily the biggest monthly volume ever, with refiners forecast to process 560,000 bpd more crude than the 7.5 million they did in 2009.

Early in 2009, China began adjusting retail fuel prices on a 22-day moving average if global crude prices rise or fell more than 4 percent, something that happened eight times last year and gave refineries guaranteed margins.

With crude now below $75 a barrel, gasoline prices, at 7,900 yuan per tonne (0.83 U.S. cents per liter) are higher than at a time of peak global crude prices near $137 in June 2008, when China's subsidy regime held prices at 6,980 yuan ($73.7 cents).

Analysts said China's surplus situation was unlikely to change soon, despite the robust car sales and downward pressure on the global light distillates' crack spread.

"Gasoline demand will grow at a faster pace than in 2009, but not in tandem with the nominal rate of car sales," said Dai Jiaquan, a senior market researcher at China National Petroleum Corp, China's biggest oil firm.

China's total gasoline demand will grow by 7.8 percent in 2010 to 72.2 million tonnes, 2.2 percentage points faster than 2009 growth, Dai estimated, slightly higher than the 6.2 percent growth envisaged by a Reuters calculation.

China's automobile sales are forecast to grow 15 percent in 2010 to 11.9 million cars following a jump in sales above 10 million last year.

Those vehicles are ushering in lifestyle changes for people like publishing house employee Liu Xiao and his wife, who spent three years of savings last year to buy a small car for $11,000.

"All my friends and colleagues have bought cars," said Liu, who had tired of riding Beijing's breathlessly crowded subway at rush hour. "I can't lose face. I can afford it anyway."

FOCUS ON THE TOTAL

Rapid car sales growth has not overwhelmed gasoline supply because the total number of passenger vehicles in China amount to just about a fifth of those in the United States, for example.

"Reading data on car stocks is a more reliable approach than checking the car sales figures. That makes the growth gap with gasoline use much narrower," said Yan Kefeng, a senior analyst at Cambridge Energy Research Associates (CERA).

China had a total of 39.2 million gasoline-fueled cars by the end of 2008. Assuming a retirement rate of 2 percent, there were about 48.7 million cars at the end of 2009, 24 percent more than 2008, according to CERA estimates.

By comparison, there are more than 250 million passenger vehicles on the road in the United States.

While the 2010 sales forecast implies 20 percent more cars in total in just one year, a record 70 percent of cars sold in 2009 had engines of 1.6-liter size or smaller, thanks to government incentives for energy efficient cars, CERA says.

A change in the majority of car buyers, to households from businesses, has also affected demand.

"On average, household cars drive only a fifth as much as corporate or government cars and a tenth of the distance covered by taxis," said another CERA analyst, Wang Xiaolu.

INCENTIVES AND GLOBAL WARMING

China plans more tax incentives in 2010 to support its auto industry and its cash-for-clunkers car rebates will rise to 5,000-18,000 yuan ($732-$2,635) from 3,000-6,000 yuan in 2009.

Increasingly new car sales in China feature models that don't require gasoline at all.

China's best-selling car in most of 2009 was the F3 sedan, made by BYD Co Ltd (1211.HK), a battery maker 10 percent owned by U.S. investor Warren Buffett's Berkshire Hathaway (BRKa.N), which can run on electricity, gasoline or natural gas.

China also aims to expand a pilot scheme to subsidise clean-energy vehicles for public transport to between 13 and 20 cities this year and give rebates to private green vehicle buyers in five cities.

(http://www.reuters.com/article/idUSTRE60S0QW20100129)

Sino-Kazak pipeline transports 20m tons of oil to China

The Sino-Kazak Pipeline has piped more than 20 million tons of crude oil from Kazakhstan to China since it became operational in 2006, according to the regional government of Xinjiang.

Last year, the pipeline carried 7.73 million tons of crude oil into China, up 26 percent year-on-year, the inspection and quarantine bureau in the northwestern Xinjiang Uygur autonomous region said in a press release Monday.

The volume makes up about 4 percent of the country's crude imports, which is estimated at around 204 million tons last year.

The Sino-Kazak pipeline runs 2,798 km from Atasu in Kazakhstan to the country's largest oil refinery plant in Dushanzi, in Xinjiang, via the Alataw Pass.

It was jointly developed by the China National Petroleum Corporation and the Kazakh state energy company, Kazmunaigaz, and is designed to transport 20 million tons a year.

It has linked China with the oil fields of the Caspian Sea and helped ease China's reliance on the Strait of Malacca, a traditional route for 80 percent of the country's imported oil.

Last year, China's reliance on foreign oil for the first time topped 50 percent.

(http://www.chinadaily.com.cn/bizchina/2010-01/25/content_9374000.htm)

CNPC accelerates commercial oil reserve construction

China National Petroleum Corp (CNPC), the country's largest oil and gas producer, has started to fill its commercial oil reserve tanks in Dalian, Shanghai Securities News reported on Wednesday.

CNPC, parent of PetroChina, also plans to build an oil hub in Chongqing municipality. All these moves mark CNPC's enhancement of its commercial oil reserve program.

The new oil reserve project in Dalian, with a total storage capacity of 240,000 cubic meters, required an investment of 257.4 million yuan, the report said.

The project comprises five 20,000-cubic-meter gasoline tanks, four 30,000-cubic-meter diesel oil tanks and a 20,000-cubic-meter diesel oil tank.

According to the report, CNPC's several other commercial oil reserve projects have started construction, and will be operational later this year.

The construction of CNPC's oil reserve project in Chongqing started on January 10, 2010, and was scheduled to be operational by the end of August.

The 400-million-yuan project was designed to become the largest oil hub in Southwest China, with a total storage capacity of 3,000,000 cubic meters.

CNPC's commercial oil reserve program is not part of China's national strategic oil reserve program, but will supplement it.

"Both enterprises' commercial oil reserve and the country's national strategic oil reserve are modes to ensure China's oil security", said Deng Yusong, an official with the Development Research Center of the State Council.

(http://www.chinadaily.com.cn/bizchina/2010-01/20/content_9350407.htm)

West China oilfield sees rise in reserves

West China's Tarim Oilfield registered a record 497 million tons of 3P (proved, probable and possible) reserves of oil and gas in 2009, the company has announced.

Last year was the fourth consecutive year that the field in Xinjiang Uygur autonomous region, China's largest natural gas supplier, developed more than 400 million tons of 3P reserves, said Li Baozhong, publicity officer with the PetroChina Tarim Oilfield Company.

The reserves would guarantee the oilfield as a "significant factor" in supply central and eastern China with much-needed energy, he said.

He would not disclose Tarim's specific gas output this year, only saying that the amount would hinge on downstream demand and overall supply planning for China's second West-East natural gas pipeline.

The 8,653-kilometer-long pipeline, starting from Horgos in Xinjiang, through Shanghai and Guangzhou, and ending in Hong Kong, is to enter full operation by the end of 2011.

But the western section between Horgos and Zhongwei in northwestern Ningxia Hui autonomous region has been in use since mid-December.

The pipeline will supply homes in Beijing by mid-January.

Company statistics show the Tarim Oilfield had stabilized its annual oil and gas equivalent production at around 20 million tons. In 2009, its crude oil output was 5.54 million tons while natural gas output reached 18.1 billion cubic meters, up 700 million cubic meters year-on-year and accounting for about 25 percent of China's total.

Li denied a report from Nanfang Daily this week that the company was to invest 10 billion yuan ($1.5 billion) in oil and gas exploration, but he admitted there would be an investment this year and the amount was confidential.

A company statement said the company had explored 27 oil and gas production areas with expected reserves of 3.5 billion tons since it began operating in China's fourth largest oil production base 20 years ago.

Its accumulated oil output was 78 million tons and gas production was 73.6 billion cubic meters over the past two decades.

Tarim, covering 560,000 square kilometers, has about 16 billion tons of oil and gas reserves, but only 12 percent have been proved.

Over the past five years, it has supplied 60 billion cubic meters of gas via a major pipeline to more than 3,000 businesses and 300 million people in 80 cities, including Beijing and Shanghai.

In 2020, Tarim is expected to produce 50 million tons of oil and gas, including 50 billion cubic meters of natural gas.

China consumed 80 billion cubic meters of natural gas in 2008, about 3.2 percent of the total consumption of primary energies. In developed countries, the rate is about 25 percent.

Gas demand is expected to hit 110 billion cubic meters in 2010.

(http://www.chinadaily.com.cn/bizchina/2010-01/08/content_9290340.htm)

^{Climate Change and Air Pollution}

Climate change: Chinese adviser calls for open mind on causes

China's most senior negotiator on climate change said today he was keeping an open mind on whether global warming was man-made or the result of natural cycles.

Xie Zhenhua said there was no doubt that warming was taking place, but more and better scientific research was needed to establish the causes.

Xie, Premier Wen Jiabao's special representative on climate change, was speaking in Delhi at the end of a two-day meeting of ministers from four of the most powerful emerging economies – China, India, Brazil and South Africa.

The four countries, known as the Basic group, called on rich nations to ensure that $10bn pledged to combat climate change was handed over before the end of the year. South Africa's environment minister accused the US of lagging behind at Copenhagen and said it had a moral obligation to take a lead on the issue.

The group pledged to pass on details of their own voluntary actions on the environment to the UN framework convention on climate change by 31 January.

Xie's comments caused consternation at the end of the post-meeting press conference, with his host, the Indian environment minister, Jairam Ramesh, attempting to play down any suggestions of dissent over the science of climate change.

Ramesh refused to accept China had stepped out of line, although he conceded: "We still need more science to understand whether global warming is causing glacial melt or whether it is the natural cycles."

Responding to a question about the controversy over the melting of Himalayan glaciers and to fresh doubts cast on the link between global warming and extreme weather events, Xie said there were still "disputes" in the scientific community over the causes.

"Now the mainstream view is according to the review reports by the IPCC," he said. "There is one starkly different view, that the climate change or climate warming issues is caused by the cyclical element of nature itself. I think we need to adopt an open attitude to the scientific research, that we need to have as inclusive as possible all kinds of views concerning this aspect, because we want our views to be more scientific and to be more consistent."

Asked later to clarify his remarks, he said: "It is already a solid fact that the climate is already warming. The scientists have already shown that te global climate is warming.

"Due to the climate change influences, the countries that have been actively impacted most are those developing countries, in particular those small island countries. And the major reason of this climate change issue is the unconstrained emissions produced by developed countries in the process of their industrialisation. That is the mainstream view and we need to make responses concerning these views. There are some uncertain views but our attitude is open, that we need to have more studies. But this shall not impede our efforts in combating the climate change."

The Basic group played a key role in drawing up the Copenhagen accord in December. Ramesh said they had agreed that rich nations should demonstrate their credentials by ensuring that the $10b pledged at Copenhagen was paid this year.

"That is the basic minimum," he said. "If $10bn as promised in the Copenhagen accord does not flow to Africa, to small island states and to the LDCs [least developed countries] we believe that frankly the developed countries are not serious. That is the first milestone that has to be achieved. You have to put money on the table, you have to identify the projects and money has to start flowing."

(http://www.guardian.co.uk/environment/2010/jan/24/china-climate-change-adviser)

New pollution reduction targets listed

China published new targets for the reduction of major pollutants yesterday as it ran into the final year to realize its green goals.

The country will meet its binding targets to reduce emissions of sulfur dioxide (SO2), the major cause of air pollution, and chemical oxygen demand (COD) - the main indicator of water pollution - by 10 percent from 2005 levels in 2010, the Ministry of Environmental Protection (MEP) said yesterday.

The authorities also aim to reduce another 400,000 tons of SO2 and 200,000 tons of COD beyond the targets, which were set in its 11th Five-Year Plan (2006-10).

In order to achieve that, the ministry will strive to increase urban wastewater treatment capacity by 10 million cu m, and install sulfur removers for power generators with a total capacity of 50 million kw this year.

Preliminary calculations show that China had already realized its SO2 reduction goal by the end of 2009, one year ahead of the schedule, the ministry said at the annual national conference on environmental protection held in Beijing yesterday.

By the end of 2008, total emissions of sulfur dioxide and COD had dropped by 8.95 percent and 6.61 percent, respectively, from 2005 levels.

The ministry also said it will intensify the fight against heavy-metal pollution and an overall plan for heavy-metal pollution prevention will be released by the end of June.

China has been faced with an increasing number of major heavy-metal pollution incidents. Several lead poisoning cases involving thousands of children across the country sparked protests last year.

As the country is poised to meet its 11th Five-Year Plan targets, a number of policymakers and academics have also started planning for the next five-year period.

The ministry said two new pollution indicators - nitrogen oxide (NOx), which is discharged from vehicles and power plants and causes acid rain; and ammonia nitrogen, another major measure of water quality - were introduced into the emission control list during the 12th five-year plan (2011-15).

The authorities will also need to find new mechanisms to reduce pollutants, as current projects-based measures to curb pollution have reached their limits, reducing the future capacity for emission reduction, said Zhao Hualin, director of the total emission control department from the ministry.

For instance, China required all its coal-fired power plants to install sulfur scrubbers to reduce SO2 emissions. By the end of 2008, more than 60 percent of China's thermal power generating units had been equipped with such facilities, compared with 12 percent in 2005.

"The remaining capacity is lessening, forcing us to find new battlegrounds for emission reduction. For instance, the sintering process at steel mills is also a major SO2 emitter," Zhao said.

(http://www.chinadaily.com.cn/bizchina/2010-01/26/content_9376178.htm)

China says 2010 pollutant targets already met

BEIJING, Jan 26 (Reuters) - Chinese has already reduced emissions of major pollutants by 10 percent below 2005 levels, meeting its target a year ahead of schedule, the official Xinhua news agency said on Monday.

China set a binding national target to reduce 2005 emission rates of sulphur dioxide, which causes acid rain, by 10 percent by the end of 2010. The greenhouse gas nitrous oxide, along with chemical oxygen demand, a measure of water pollution, was also to be reduced by 10 percent over the five-year period.

Zhou Shengxian, the minister of environmental protection, said much of the target was met thanks to the mandatory installation of scrubbers at more than 411 gigawatts of coal-fired power capacity up to the end of last year, which reduced SO2 emissions by 24.6 percent compared to 2005.

Emissions of SO2 fell by 10.4 percent in 2009 alone, and would be reduced by a further 400,000 tonnes this year, he said.

Reducing chemical oxygen demand, which is considered a reliable indicator of the amount of chemical waste discharged into rivers, has proven more difficult, Zhou said, with progress varying greatly among regions.

The Ministry of Environmental Protection is not responsible for China's campaign to reduce carbon dioxide emissions, which is led by the National Development and Reform Commission.

The country's carbon emissions have not yet peaked, but China plans to reduce carbon intensity -- the amount of CO2 produced per unit of GDP -- by 40-45 percent by 2020.

http://www.reuters.com/article/idUSTOE60O09L

China reaffirms to fulfill emission mitigation plans

China on Tuesday reaffirmed its determination to fulfill its emission mitigation plans, adding it was considering reporting its recent emission cuts progress to the Secretariat of the UN Framework Convention on Climate Change (UNFCCC).

Foreign Ministry spokesman Ma Zhaoxu made the remarks at a regular press briefing in response to a question concerning a January 31 deadline set by the Copenhagen Accord for all parties to outlining emission cut goals for 2020.

"We believe currently priority should be given to the two-track negotiating process under the UNFCCC, and to convene the meeting of the two main negotiating groups as soon as possible to address existing disputes, in a bid to ensure positive progress from the UN climate change meeting in Mexico at the end of the year," said Ma.

The two-week-long Copenhagen negotiations mandated the two ad hoc working groups on long-term cooperative action under the UNFCCC and on further commitments for developed countries under the Kyoto Protocol to complete their work at the next climate conference in Mexico.

The Copenhagen Accord, a non-legally binding document, was adopted after the Copenhagen conference, which asked developed countries to submit to the UNFCCC Secretariat their compulsory emission cuts goals for 2020 before January 31 this year. Developing countries were required to submit their voluntary mitigation actions for 2020 before January 31.

"China supports the Copenhagen Accord, and believes it embodies all parties' political willingness to address climate change, and uphold the principle of 'common but differentiated responsibilities' as well as the dual-track mechanism of the Bali Road Map negotiations," said Ma.

"It has also laid foundation for cementing international cooperation on climate change and injected impetus for future negotiations," he said.

Prior to the Copenhagen climate change conference, the Chinese government announced a goal to cut emissions intensity per unit of GDP by 40 to 45 percent by 2020 from the 2005 level.

(http://www.chinadaily.com.cn/china/2010-01/26/content_9380581.htm)

China says it achieved its goal in Copenhagen climate deal

Chinese negotiators achieved their goal at Copenhagen climate talks in ensuring financial aid for developing nations was not linked to external reviews of China's environmental plans, its top climate envoy said today.

Britain, Sweden and other countries have accused China of obstructing the climate summit, which ended last month with a non-binding accord that set a target of limiting global warming to a maximum 2 degrees Celsius but was scant on details.

China would never accept outside checks of its plans to slow greenhouse gas emissions and could only make a promise of "increasing

transparency," Xie Zhenhua, deputy head of the powerful National Development and Reform Commission, said at a forum.

Developed nations' promise of $100 billion (£60bn) in financial aid by 2020 to help poorer countries adapt to climate change offered a good stepping stone for negotiations, he said.

"Next time, we can talk about when will they pay the money and how much each country will pay," he said.

Xie also said that China was well on track to meeting its goal of cutting energy intensity - or the amount of energy consumed to produce each dollar of national income - by 20 percent over the five years through 2010.

It had already made a 16 per cent cut as of the end of last year, he said.

"As long as we continue to make efforts, we are likely to achieve the targeted 20 percent cut this year," he said.

Xie added that China was drafting tough guidelines for reducing the carbon intensity of its growth in its next five-year plan for economic development, which will cover the 2011-2015 period.

China has pledged to cut the amount of carbon dioxide produced for each unit of economic growth by 40-45 per cent by 2020, compared with 2005 levels.

(http://www.independent.co.uk/environment/climate-change/china-says-it-achieved-its-goal-in-copenhagen-climate-deal-1862709.html)

China to continue effort in pollution, emission control

The government and enterprises should continue to step up efforts in pollution and emission control to ensure targets set previously are met, according to a meeting of the State Council.

The government should "slack no efforts" to cut pollutants and emissions to meet the targets as the situation remains "grave", according to a statement issued Wednesday after the councils' executive meeting chaired by premier Wen Jiabao.

The government set the goal to cut emissions of major pollutants, sulfur dioxide and chemical oxygen demand (COD) by 10 percent from 2006 to 2010, the 11th Five-Year Plan period.

According to the meeting, the central task at present is to ensure pollution treatment facilities run normally.

Vigorous efforts should be made to cut pollution from sectors including thermal power, iron and steel, non-ferrous metal, cement, paper making, chemical, brewing and printing and dyeing, it said.

The statement said the toughest standards should be applied in the management of water resources to ensure safe drinking water for people.

Emissions of sulfur dioxide in China dropped 10.4 percent last year compared with that of 2008, Minister of Environmental Protection Zhou Shengxian said Monday.

Zhou said the country's COD and emissions of sulfur dioxide fell for four consecutive years after the targets were set at the beginning of 2006.

(http://www.chinadaily.com.cn/bizchina/2010-01/28/content_9392342.htm)

Copenhagen resolution spurs launch of first green industry fund

In the wake of the climate conference in Copenhagen late last year, China's first environmental industry fund was launched on Dec 28 in Beijing. This is the first fund of its kind in China and is to come under the auspices of the China General Technology Investment Fund Management Corp.

As part of a bid to promote investment in the country's environment-related sectors, the fund is expected to raise 2 billion yuan ($292.95 million) in its first phase. A parallel $300 million offshore fund will also be established, serving the water, solid waste disposal, renewable energy, energy conservation and emission reduction sectors. This fund will be introduced before the second quarter of 2011.

The fund manager, the China General Technology Investment Fund Management Corp, is located in Beijing's Lize financial business zone. It is now established as the major stockholder and lead partner for the funding initiative.

Xie Zhenhua, deputy director of the National Development and Reform Commission and team leader of the Chinese delegation to the Copenhagen conference, sent a congratulatory message to the mangers of the new project, which was read out at the launch ceremony.

Both He Tongxin, chairman of China General Technology Group, and Li Dang, its general manager, emphasized that the fund has been set up to remedy the increasingly contradictory needs of economic development and environmental sustainability. This, they said, was particularly apparent with regard to the shortage of capital and the inefficiency of investment in sustainable development initiatives.

The two underlined their hope that the China General Technology Group would grow alongside the environment industry, making full use of its pioneering advantages, whilst exploring new patterns of investment and finance for environmental protection and infrastructure projects. They also pledged to maximize the cooperative usage of the fund both at home and abroad, while maintaining a distinct market orientation.

Li said: "As a central-level corporate entity, the China General Technology Group should seek to shoulder its requisite social responsibility and focus on transforming and upgrading the Group itself through this initiative."

This new fund has been welcomed by a number of environmental experts, particularly for its timeliness and its commitment to the resolutions of the Copenhagen conference. The Chinese government has now undertaken to reduce carbon dioxide emission per unit of gross domestic product by 40 percent to 45 percent by 2020 compared with the levels generated in 2005.

Many commentators see great opportunities for China's environmental industry and believe that fund-raising and investment projects within the sector may now be undertaken in a more mutually supportive atmosphere. As a result of the new initiative, the risks of fund-raising, investment, management, and refunding are said to have been minimized.

(http://www.chinadaily.com.cn/bizchina/2010-01/19/content_9343434.htm)