Chinese local governments step up production curbs to achieve target for energy use control

Chinese local governments are stepping up restrictions on production in high energy-consuming industries as part of efforts to achieve the target for the country’s so-called “dual control” of energy consumption and energy intensity.

Authorities in Southwest China’s Yunnan province have instructed aluminium producers to keep their monthly output during September-December period below actual production in August. 

On September 17, Henan Shenhuo Coal & Power said in a statement that, due to the impacts of the “dual control” measures, the subsidiary Yunnan Shenhuo Aluminium will continue to implement production restrictions on its 750,000 tonnes of capacity and thus will not be able to achieve its full-year production target of 800,000 tonnes set out at the start of the year.

It warned that Yunnan Shenhuo’s output is expected to be cut by about 200,000 tonnes, accounting for 11.8 per cent of the annual capacity.

Yunnan Aluminium, another major producer of the metal, estimated that the restrictions will reduce its electrolytic aluminium production capacity by 770,000 tonnes, accounting for 24.8 per cent of its total annual capacity.

Yunnan Aluminum’s actual output during September-December will be much lower than the guidance it set out at the beginning of this year, expecting its 2021 production to fall to around 2.36 million tonnes. It produced 2.4063 million tonnes of aluminium in 2020, up by 27 per cent from a year earlier.

The firm’s subsidiary Haixin Aluminium has failed to put the second phase of a production line with 380,000 tonnes a year capacity into production as scheduled because of the energy curbs. The company will try to offset the impact of the power rationing by carrying out equipment maintenance, optimising the production process and rationally scheduling output, it said.

Companies in East China’s Jiangsu province are seeing similar situations. On September 7, Jiangsu provincial government conducted an inspection on local companies whose overall energy consumption this year had exceeded 50,000 tonnes, involving 323 companies and 29 “two high projects” (high energy-consuming and high-emission projects).

After that, several steelmakers and aluminium makers in Jiangsu were forced to limit or suspend production. For instance, Jiangsu Changhua Aluminium, which has an annual capacity of 50,000 tonnes, said on September 16 that it would suspend production in the period of September 18 – 30 due to energy control. On the same day, Jiangsu Xugong Iron and Steel Group, which has an annual capacity of 3 million tonnes, said it sill suspend production for half a month.

Some regions in southern China’s Guangdong province have also started to impose production limit to control energy use. In Dongguan city, some manufacturers have been notified to use power in an off-peak mode. Some parts of the city are asking industrial power users to suspend production for four days this week and high energy-consuming ones are require to suspend production for a whole week.

The measures came after the National Development and Reform Commission (NDRC), China’s top economic planner, in August released a list of provinces that failed to meet the targets aimed at controlling energy use. Nine provinces saw energy intensity rise in the first half and eight provinces saw energy consumption increase during the period, according to the NDRC.

Last week, the state planner NDRC reiterated that China will firmly control energy-hungry and high-emission projects in a plan that aims to improve China’s “dual control system” on energy consumption and energy intensity, or the amount of energy consumed per unit of GDP. 

The dual control, first set in the country’s 11th Five-Year Plan (2006-2010), has taken on added significance since Chinese President Xi Jinping in September 2020 committed the country to peaking carbon emissions by 2030 and becoming carbon neutral by 2060. 

According to the plan, China will set a five-year target of energy consumption and energy intensity for different regions, in an effort to reasonably manage indicators of total energy consumption and energy intensity.

The plan also clarified a series of phased goals of China. By 2025, the dual control system will be more complete, with a more reasonable allocation of energy resources and sharply improved energy utilization efficiency. 

By 2030, with a further improved dual control system, the intensity of energy consumption will continue to drop significantly, the total energy consumption be reasonably controlled and the energy structure be more optimized. 

By 2035, the optimal allocation of energy and the comprehensive conservation system of resources will be more mature and finalized, which will strongly support the achievement of the goal of steadily reducing carbon emissions after reaching the peak.