Appliances Subsidies Contradict Energy Efficiency Drive

As China pledges to curb power consumption and air pollution, it is finding old subsidy habits hard to break.

Soon after ending a two-and-a-half year stimulus program for electric appliance makers, officials announced plans to replace it with new subsidies to “boost consumption,” the official English-language China Daily reported on Jan. 4.

The breaks for power-consuming appliances would tap a market of 10 million affordable housing units started in construction last year. The government plans seven million more in 2012.

The government has spent 30 billion yuan (U.S. $4.75 billion) on subsidies since mid-2009 to offer 10-percent discounts on new gadgets, including refrigerators, washing machines, air conditioners and computers.

Counting tax rebate pilot programs since late 2007, the program spurred sales of over 200 million appliances by November, the Ministry of Commerce said.

The trade-in scheme is separate from subsidized discounts for rural dwellers that generated sales of another 103 million appliances valued at 264 billion yuan last year, the Ministry of Commerce said.

Most often, the promotions for perhaps a half-billion new power-consuming appliances have seemed at odds with government campaigns to cut energy waste, which led to blackouts of whole neighborhoods at the end of 2010.

“If you want to make more air conditioners, then you need more factories using more energy to make more air conditioners,” said Philip Andrews-Speed, a China energy expert at the German Marshall Fund of the United States. “All the way down the line, you’re using more energy.”

Since then, the drive for energy savings has suffered increasingly from economic slowdown fears.

“Energy efficiency seems to have dropped down in the order of priorities and boosting consumption seems to have moved up,” Andrews-Speed said.

The NDRC has tried to deal with the problem by ordering moderate rate hikes and caps on coal prices. But coal traders “are evading the rules” and withholding supplies, the paper said, predicting prices will jump when the controls expire.

The government appears to be pulling in different directions on economic, energy and environmental policies.

Liu Tienan, director of the National Energy Administration (NEA), said the government will establish an “integrated system” to control energy use of the under the current five-year plan, state media reported. The NEA has provided few details, but steps are said to include consumption limits for provinces.

- Read the full article at Radio Free America