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Energy-saving measure

(China Daily)
Updated: 2010-10-27 08:10
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Chinese policymakers insisted that the latest hike in domestic gasoline prices was only meant to reflect fluctuations in the global oil market.

A 3 percent rise in gasoline prices at the pump is surely in line with global oil prices that have increased by more than 4 percent since the end of September.

The official explanation will help sell the ostensibly unpopular price hike to the booming number of drivers whose enthusiasm to buy cars unexpectedly enabled China to replace the United States as the world's largest auto market in 2009.

Yet, by appeasing this fuel-thirsty group, the Chinese authorities are wasting a much-needed chance to drive home a key message to the public: The country has to deal with its enormous energy challenge with more price rises because the alternative options will only be more painful.

In the rush to meet its energy saving target by the end of this year - a 20 per cent reduction in energy use per unit of gross domestic product from the 2005 level - China has recently witnessed growing panic among local governments, some of which cut electricity supplies to citizens and businesses to meet their energy efficiency target.

The National Energy Administration announced that the country's power consumption in September fell 12 percent month-on-month to 349.8 billion kilowatt-hours (kWh).

It may be true that, as the monthly energy figure indicates, growth in energy demand eased in the third quarter and is expected to slow as local governments step up efforts to save energy and cut emissions. But the fact that, in the first nine months, China's electricity consumption amounted to 3.14 trillion kWh, 18 percent more than in the same period last year, is anything but reassuring.

Given that the country has merely managed to arrest the decline in energy efficiency during the first half of this year, it is hard to predict what desperate measures local officials will take as a last-ditch attempt to complete their mandatory energy conservation. The sacrifice that both enterprises and local residents may be required to make is likely to be far more painful than the pinch car-drivers are feeling now.

Gasoline or electricity price rises will make a dent in the pockets of Chinese consumers who are supposed to play a greater role in boosting economic growth.

Nevertheless, compared with massive power blackouts and fuel shortages, gradual price rises are a more desirable way for the country to ease its immense energy pressure. More such price hikes will not only urge consumers to adapt to the dire energy reality but also encourage corporate innovation to profit from addressing the long-term energy challenge.

Chinese policymakers should seize every chance to make the whole country aware of their energy-saving responsibilities.

(China Daily 10/27/2010 page8)