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China to charge more to subsidize green energy

China will raise tariffs on power to collect subsidies for renewable energy from September 25 in a bid for better quality air, the country’s economic planner said on Friday.

The price adjustment will exclude residential and agricultural power, the National Development and Reform Commission (NDRC) said.

The additional charge on power for clean energy will be 0.015 yuan (0.0024 U.S. cents) per kilowatt-hour from current 0.008 yuan per kilowatt-hour.

The cost for renewable energy is relatively high and international practice is to subsidize the sector at its outset, Li Caihua, deputy head of pricing at the NDRC, said.

China has charged a levy on wholesale power to build subsidy funds for renewable energy and the charging standard has increased from 0.001 yuan per kilowatt-hour in 2006 to 0.008 this year.

The NDRC can collect an additional 20 billion yuan (3.24 billion U.S. dollars) annually now, but there has been a shortfall in recent years as renewable energy has been growing quickly.

The fund reported a shortfall of 10.7 billion yuan at the end of 2011 which was forecast to hit 33 billion yuan in 2015, Li said.

The NDRC also announced on Friday it would improve subsidies for power plants on denitration from 0.008 yuan per kilowatt-hour to 0.01 yuan per kilowatt-hour and add a new subsidy of 0.002 yuan per kilowatt-hour to power plants which cut dust emissions below 30 milligram per cubic meter.

The pricing will mainly be made at wholesale levels and retail prices will not be affected as coal prices have been falling, Li said.

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