It was just a small step, yet it cost almost 18 billion yuan a year.

This would be the amount China would earn had it not decided to phase out 10,000 megawatts of capacity in wasteful and heavy polluting small thermal power plants.

The phase-out occurred on October 26, two months ahead of schedule, with the demolition of 46 small thermal power units, accounting for a total of 1,100 megawatts, in central China's Henan Province. The demolition was supervised by central government officials.

"This was an important step forward in the way of energy efficiency and emission control," says Zhao Xiaoping, a senior energy official from the National Development and Reform Committee (NDRC), China's top economic policy-making agency.

In fact, the 18 billion yuan in annual revenue that the small thermal power plants would otherwise generate is a price that China has paid for burning at least 14.5 million tons less of raw coal, and cutting 247,000 tons of sulphur dioxide (SO2) emissions, as well as 29 million tons of carbon dioxide (CO2), every year, officials point out.

More importantly, it is a necessary test of the government's will to meet its promise of cutting 10 percent of energy consumption per unit of GDP and 20 percent discharge of key pollutants between 2006 and 2010.

China's power industry is a major culprit of pollution. In 2005, it consumed 1.11 billion tons of raw coal, accounting for nearly half of China's coal use that year. It also released about 50 percent of the SO2, a major atmospheric pollutant.

China decided earlier this year to phase out 50,000 megawatts of power generation capacity in small thermal power plants before 2010, including 10,000 megawatts this year alone. China also decided to shut down oil-burning units from 7,000 to 10,000 megawatts.

After these targets are met, the country plans to save around 14.5 million tons of raw coal on a yearly basis while cutting down to 250,000 tons of SO2 emissions and 29 million tons of CO2.

The country will also replace small power plants with large, energy-efficient power generation units while introducing clean and renewable energy.

Zhao of the NDRC said energy efficiency and emission intensity depends on the size of thermal power generation units.

Larger power generation units may consume 290 to 340 grams of coal per kilowatt-hour of electricity it generates, while medium and small-sized units need 380 to 500 grams. The old and "backward" small units - the type that were demolished in Henan in October - required as much as 440 grams.

To generate the same amount of power, small power units use 30 to 50 percent more coal, compared with large and efficient units.

In 2005, China's small thermal power plants discharged 35 percent of the SO2 and 53 percent of soot in the thermal power industry.

"The big number of small power plants is the main reason for high energy consumption and heavy pollution in power industry," Zhao has previously told Chinese media.

Once the existing small units are replaced by large energy-efficient units, 90 million tons of coal can be saved annually, cutting 2.2 million tons of SO2 and 220 million tons of CO2 emissions, Zhao says.

In the NDRC plan, the definitions of small power generation units include:

Conventional power generation units of single capacity below 50,000 kilowatts.

Conventional power generation units of single capacity below 100,000 kilowatts and already running for 20 years.

Conventional power generation units of single capacity below 200,000 kilowatts but reaching the designed life span.

Other high coal-consuming and heavily polluting units.

All newly launched power plant projects, as required by the NDRC, should adopt super-critical or ultra super-critical power generation units of at least 600 megawatts in capacity.

The NDRC also encourages local governments to build new, large power plants after they promise to close down old smaller ones.

"Closing down small power plants will not threaten China's power supply. The large and energy-efficient power generation units will be enough to cover the demand," Zhao says.

By the end of 2006, China's total power generation capacity had reached 622 gigawatts, he adds.

(China Daily November 5, 2007)