December 9, 2015 / 10:17 AM / 3 years ago

China offers bonus to coal power plants to meet emissions rules

BEIJING (Reuters) - Getting China’s cash-strapped coal-fired power industry to comply with tough emissions rules and tackle choking smog that has recently blanketed the capital and other major cities will take incentives as well as fines.

Chimneys of coal-fired power plant are seen next to residential houses in the night in Shijiazhuang, Hebei province, China, January 28, 2015. REUTERS/Kim Kyung-Hoon

In a change in tack after years of fining rule-breaking firms, the government said on Wednesday it will pay bonuses from Jan. 1 to those meeting coal efficiency standards.

The measures reflect increasing pressure on the world’s biggest consumer of energy as leaders meet in Paris to hammer out a global climate deal and a new push to encourage companies to invest in clean, efficient technology to curb air pollution.

“It will help to cut coal use and emissions from the sector. And some outdated facilities will be phased out that will ease the power oversupply,” said Lin Boqiang, energy researcher with Xiamen University.

Coal-fired power accounts for three-quarters of China’s total generation capacity and is a major source of pollutants such as sulfur dioxide and nitrogen oxides, but the country has struggled to enforce its rules on debt-laden generators as economic growth has slowed.

Plants that open after Jan. 1 and meet the government’s environmental requirements will get an 0.005 yuan per kilowatt hour on top of the basic grid tariff, said an official statement from the National Development and Reform Commission (NDRC).

Those already in operation will get an extra 0.01 yuan per kilowatt hour, which would equate to about 42 million yuan ($6.5 million) if all thermal power output last year had been produced at plants meeting the coal efficiency standards.

The higher tariffs will take effect in January and last until the end of 2017, when the government will reassess the rate, the NDRC said.

Last week, the government said the country will cut emissions of major pollutants in the power sector by 60 percent by 2020 and reduce annual carbon dioxide emissions from coal-fired power plants by 180 million tonnes.

Even with the incentives, keeping tabs on hundreds of power plants across the country will remain a key problem, Lin said.

Beijing has spent billions of yuan creating a surveillance system to monitor companies around the clock. In 2013, the state launched a nationwide crackdown after the Ministry of Environmental Protection accused plants of trying to cut costs by turning off or manipulating emissions control equipment.

($1 = 6.4270 Chinese yuan renminbi)

Reporting by Kathy Chen and David Stanway; Editing by Tom Hogue and David Evans

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