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China to crack down on green subsidy fraud by power plants

Source: Reuters - Tue, 7 Jan 2014 09:59 GMT
Author: Reuters
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A worker cycles past a thermal power plant in Nanjie village in China's central Henan province, Sept. 25, 2012. REUTERS/Jason Lee
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BEIJING, Jan 7 (Reuters) - China has urged local government and environmental officials to crack down on power producers who fraudulently claim subsidies for cutting emissions, the country's top economic planner said on Tuesday.

Beijing has established a wide array of laws and rules to battle the environmental consequences of three decades of unchecked growth, but weak monitoring and negligible punishment make it tough to get powerful industrial interests to comply.

The subsidy scheme, introduced last year, was part of Beijing's plan to encourage power plants to cut air pollution.

But China's influential economic planning agency, the National Development and Reform Commission (NDRC), launched a nationwide probe last year amid claims that dozens of firms were cheating the system by falsifying data.

On Tuesday, the agency issued a notice saying that firms engaging in fraud to qualify for subsidies would face severe penalties and suffer public exposure.

The firms were exploiting a scheme that paid a higher price for power sold to the grid by power plants that had installed expensive equipment to cut pollutants such as sulphur dioxide and nitrogen oxide.

The NDRC said the probe showed many power firms had failed to install equipment properly, falsified emissions data or tampered with automatic emission sensors to trick authorities into granting the subsidy.

Last August, the NDRC raised tariffs for environmentally-compliant power plants to help utilities pay for expensive equipment to cut emissions, and promised to get tough on fraud in the sector.

Amendments to China's environmental law, expected to be passed in March, will make the supply of fraudulent emissions data a criminal offense, and will provide for heavier fines to be imposed on law-breaking firms.

The Ministry of Environmental Protection is also spending 40 billion yuan ($6.61 billion) over the period from 2011 to 2015 to boost its real-time pollution monitoring capacity. ($1=6.0526 Chinese yuan)

(Reporting by David Stanway; Editing by Clarence Fernandez)

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