China's energy conservation and emission reduction plans for this year and next have been released Energy conservation and environmental protection development is accelerating
On May 26, the General Office of the State Council of China issued the "Action Plan for Energy Conservation, Emission Reduction and Low-Carbon Development (2014-2015)," which set forth specific targets for energy conservation, emission reduction and carbon reduction for this year and next. Industry analysts believe that the energy conservation and environmental protection sector is expected to benefit from this.
The Action Plan sets forth the following specific targets for energy conservation, emission reduction, and carbon reduction for the next two years: In 2014-2015, energy consumption per unit of GDP, chemical oxygen demand, sulfur dioxide, ammonia nitrogen, and nitrogen oxide emissions will decrease by more than 3.9%, 2%, 2%, 2%, and 5% respectively each year.
The Action Plan outlines 30 specific measures in eight areas to promote energy conservation, emission reduction, and carbon reduction. These include: 1) vigorously promoting industrial restructuring; 2) accelerating the construction of energy conservation, emission reduction, and carbon reduction projects; 3) focusing on energy conservation and carbon reduction in key sectors; 4) strengthening technological support; 5) further strengthening policy support; 6) actively promoting market-oriented energy conservation and emission reduction mechanisms; 7) strengthening monitoring, early warning, and supervision; and 8) implementing target responsibilities. The plan also proposes that by 2015, the total output value of the energy conservation and environmental protection industry will reach 4.5 trillion yuan.
Energy conservation and emission reduction have always been important tasks for the Chinese government. The 12th Five-Year Plan clearly set binding targets for reducing energy consumption per unit of GDP and carbon dioxide emissions, as well as reducing total emissions of major pollutants. However, it is noteworthy that the achievement of some targets from 2011 to 2013 lagged behind the required timelines. Xu Shaoshi, Director of the National Development and Reform Commission, recently pointed out in a report to the Standing Committee of the National People's Congress on the State Council's work on energy conservation and emission reduction that, based on an average annual GDP growth of 7.5% from 2014 to 2015, achieving the 12th Five-Year Plan's energy conservation targets would require saving 320 million tons of standard coal equivalent in the latter two years.
Liu Xinyan, an investment advisor at China First Capital Securities, believes that the aforementioned action plan offers some insights for A-share market operations. Firstly, the coal industry's downturn is not yet over, and coal stocks may experience intermittent oversold rebounds. Secondly, listed companies developing environmental protection technologies deserve close attention. Thirdly, air pollution control in the Beijing-Tianjin-Hebei region has always been a priority, and related regional governance measures are expected to be introduced successively; therefore, environmental protection stocks in the Beijing-Tianjin-Hebei area deserve close attention.
Given China's lagging performance in meeting some targets over the past three years, energy conservation, emission reduction, and carbon reduction will be key priorities for both the central and local governments this year and next. Small and medium-sized enterprises (SMEs) in China are encouraged to actively develop energy-saving, emission-reduction, and carbon-reducing technologies to enhance their industrial competitiveness and potentially export their technologies or products to the Chinese market.
Sources: People's Daily Online (2014-05-27)
