Agency urges China to revamp power industry

HONG KONG The International Energy Agency on Monday called for China to revamp its electric power industry, noting that waste and inefficiency contributed to China's adding new, mostly coal-fired capacity every two years equivalent to the entire electricity output of France or Canada. In a lengthy report issued at its headquarters in Paris, the agency was especially critical of China's decision to limit increases in electricity prices, saying that this encourages Chinese consumers and industries to use more energy than they need. Faced with an overheating economy in 2004, the Chinese government decided to allow few tariff increases for power companies even though global energy prices were rising. Beijing officials have largely followed that policy ever since even as world oil prices have soared past $70 a barrel and coal and natural gas prices have climbed swiftly. "Energy efficiency is not good in China because prices are too low," said the agency's executive director, Claude Mandil. The report also urged China to set minimum efficiency standards for coal-fired power plants and to enforce air pollution standards more rigorously for these power plants. Coal fuels two- thirds of China's electricity production, and China is now the world's second- largest electricity consumer, after the United States. China's heavy reliance on coal has prompted particular concern because the burning of coal releases more carbon dioxide, relative to the electricity produced, than oil, natural gas, nuclear power or renewable energy sources like wind power. Many experts have concluded that carbon dioxide is the most important gas causing global warming. Improving efficiency and reducing waste will allow China to slow somewhat its growth in emissions of carbon dioxide and toxic air pollution, by making it possible for China to burn less coal, said Jonathan Sinton, the energy agency's senior China specialist. Chinese power companies are looking for ways to improve efficiency while reducing pollution, said Liu Deyou, chief engineer at the Beijing SPC Environment Protection Tech Engineering, the sulfur-filter manufacturing arm of one of the five big, state- owned electric utilities. "Industries in China emphasize profits a lot," he said, "so they all welcome energy-efficient techniques."