BEIJING, May 6 (UPI) -- Chinese Premier Wen Jiabao urged all levels of China's government to work with an "iron hand" to reach energy efficiency targets.
Wen's announcement Wednesday followed a State Council report showing the country's energy intensity -- the amount of energy used to produce each dollar of gross domestic product -- rose 3.2 percent in the first quarter of this year following a decline of 14.38 percent during the previous four years to 2009.
The State Council said the increase was due to the rapid growth in six energy-intensive sectors: thermal power, iron and steel, nonferrous metal, building materials, petrochemicals and chemical industries.
The rise in energy intensity is a setback for China's "five-year plan" laid out in 2006 and that aims for a 20 percent drop during the five years ending in 2010.
Noting that the task of fulfilling the goal was still tough, Wen said, "We can never break our pledge, stagger our resolution, or weaken our efforts, no matter how difficult it is," state-run news agency Xinhua reports.
McKinsey, in its "China's Green Revolution" report published in February, said that China could reduce its energy intensity by 17-18 percent every five years.
Wen called for stricter control over high-energy-consuming and high-polluting sectors and for more action to reduce the use of outdated capacity as well as in curbing new projects in industries with overcapacity.
"Local officials and executives of enterprises will be taken to task if their specific energy-efficiency targets are not met by the end of the year," he warned.
The premier announced that within this year China -- the world's top emitter of greenhouse gases -- would phase out 10 million kilowatts of small coal-fired power generators, 25 million tons of outdated capacity in the iron-smelting industry, 6 million tons in the steel sector and 50 million tons in the cement sector.
China will allocate $12.2 billion for energy efficiency and pollution treatment projects by the end of this year, the State Council said in a statement.
The statement also said that China would draft regulations to promote ecological compensation, a market-based mechanism to balance economic development with nature conservation.
Under the mechanism, regions and industries that benefit from the exploitation of natural resources should pay for the damage they cause to the environment and ecosystem, Ge Chazhong, an expert on environment economics with the China Academy of Environmental Planning explained to China Daily.
"The regulations are expected to work out a clear set of methodologies for ecological compensation to answer the question of who should pay how much for what," Ge said.