Changes in the scope of the ‘two high’ industries in Shandong | Closed-loop management to be implemented

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Recently, the General Office of Shandong Province issued the \"Notice on Resolutely Curbing the Blind Development of High-Emission and High-Consumption Projects and Promoting the High-Quality Allocation and Utilization of Energy and Resources,\" which outlines four sections containing a total of 14 provisions. The “Notice” clarifies the scope of the “two high” industries. “The \"two-high\" industries mainly include 16 sectors such as refining and chemical processing, coking, coal-based liquid fuels, basic chemical raw materials, fertilizers, tires, cement, lime, asphalt waterproofing materials, flat glass, ceramics, steel, ferroalloys, non-ferrous metals, foundry industry, and coal power generation. This time, the scope has been further adjusted based on the original 16 \"high-value and high-tech\" industries in Shandong Province. After the adjustments, there are still 16 industries, but the content of some of them has changed. The original methanol industry has been adjusted to coal-based liquid fuels, with the addition of olefins and ethylene glycol ； The original aluminum electrolysis industry was reclassified under the non-ferrous metals category, with electrolytic copper, electrolytic lead, and electrolytic zinc added ； The three industries of chlor-alkali, calcium carbide, and acetic acid were integrated into basic chemical raw materials, which specifically include chlor-alkali, calcium carbide, acetic acid, and yellow phosphorus ； Sanitary ceramics have been added to the original ceramic industry. According to the notice, the Shandong Provincial Development and Reform Commission and the Provincial Bureau of Statistics have jointly established, and continuously update, a list of energy-consuming entities with an annual comprehensive energy consumption of 10,000 tons of standard coal or more, as well as enterprises in the \"high-energy-consuming and high-emission\" industries. Each city is required to assign energy-saving and coal-reduction tasks to these key energy-consuming entities, and to strengthen the evaluation and assessment of their goals in these areas. The notice requires strict adherence to the principle that energy and coal consumption in the 16 high-energy and high-carbon industries must not increase but only decrease. It specifies that new projects in these industries must implement measures to reduce energy and coal consumption as a substitute for it. New projects in the areas of coal-fired power generation, refining, steel production, coking, cement production (including clinker and grinding plants), and tire manufacturing are subject to enhanced approval procedures, to be carried out at the provincial level through approval or registration. New ‘high-energy-consuming and high-emission’ projects with an annual comprehensive energy consumption of over 50,000 tons of standard coal must be submitted to relevant ministries and commissions such as the National Development and Reform Commission and the Ministry of Ecology and Environment for guidance. **The energy and coal consumption quotas allocated separately for the \"two high\" projects in Shandong Province can be used for project construction in accordance with **the relevant regulations. Shandong will implement closed-loop management for industries with high environmental and safety risks. The notice specifies that the energy and coal consumption quotas freed up through the closure and upgrading of high-energy and high-carbon industries can only be used specifically for the construction of new high-energy and high-carbon projects that contribute to the advancement of the industrial base and the modernization of the industrial chain. The energy and coal consumption saved by tapping potential in industries that are not considered high-energy or high-carbon industries shall not be used for the construction of projects in these high-energy and high-carbon industries. Shandong Province has formulated and implemented a work plan to ensure energy and coal consumption levels for capacity integration in high-emission industries. It has been specified that when high-energy-consuming industries relocate across regions, the freed up energy and coal consumption quotas should be consolidated, and these quotas should be purchased and stored on a paid basis at different rates depending on the industry; relevant departments have already developed detailed plans for this. In principle, except for industries such as coking and coal-fired power generation, where provincial-level storage and municipal-level retention ratios are determined reasonably, other \"high-emission and high-consumption\" industries have these ratios set at 50% each. Shandong Province has made comprehensive plans to make efficient use of the increased energy consumption quota during the 14th Five-Year Plan period. It has specified that 35.5 million tons of this increased quota should be used in a coordinated manner, while 15 million tons are allocated to various cities; the remaining amount is reserved for use at the provincial level. The notice specifies that the provincial-level retention quotas are intended to support the development of projects that are not classified as high-energy or high-emission projects. For major high-energy and high-emission projects that contribute to the upgrading of industrial foundations and the modernization of industrial chains, support can be provided on a temporary basis, but such funds must be returned by the prescribed deadline. The notice encourages that for offshore wind power projects developed through provincial-level coordination across the province, 50% of the additional energy generated once these projects are operational shall be managed at the provincial level, while 50% shall remain with the respective cities ； For other renewable energy projects such as photovoltaic power generation, the entire increase in energy generated after they come online is retained by the city where they are located ； During the 14th Five-Year Plan period, 50% of the additional energy generated by the nuclear power units that come online will be managed at the provincial level, while 50% will remain under the control of the cities where these units are located.