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Shandong releases management plan for high-carbon and high-energy projects: The replacement ratio for coal-consuming projects must be at least 1:1.2. Author/Source: Gasification World. Date: July 7, 2021. Clicks: 278. Shandong Province has recently issued a notice on strengthening the management of high-carbon and high-energy projects, stipulating that for aluminum electrolysis projects, the replacement ratio in terms of reduced production capacity must be at least 1:1.5, while for all coal-consuming high-carbon and high-energy projects, the replacement ratio must be at least 1:1.2. This involves a total of 16 industries, including steel, ferroalloys, electrolytic aluminum, cement, lime, building ceramics, flat glass, coal power, oil refining, methanol, coking, nitrogen fertilizers, acetic acid, chlor-alkali products, calcium carbide, and asphalt waterproof materials. The Notice states that for new high-capacity and high-emission projects, strict systems for reducing and replacing capacity, coal consumption, energy consumption, carbon emissions, and pollutant emissions must be implemented. Reduced-quantity alternative sources must be monitorable, countable, and verifiable; otherwise, they shall not be regarded as alternative sources. To thoroughly implement the **concepts of ecological civilization, carry out the central government’s key decisions and arrangements regarding carbon peak and carbon neutrality, deepen the initiatives of “removing excess capacity, reducing emissions, lowering costs, and strengthening support,” promote the strategies of “reducing four aspects and increasing four others,” firmly curb the uncontrolled development of high-energy-consuming and high-emission projects, accelerate the optimization of the industrial structure and the transition to new forms of productivity, and drive green and low-carbon development in the economy and society, in accordance with regulations such as the “Regulations on the Approval and Filing of Enterprise Investment Projects” (State Council Order No. 673) and the “Notice from the General Office of the Shandong Provincial People’s Government on Further Regulating Industrial Investment Projects in Industries with Excess Capacity and High Energy Consumption and Strengthening Supervision During and After Project Implementation” (Lu Zheng Ban Zi [2020] No. 40), and with the approval of the provincial Party committee and government, the following measures are hereby issued to strengthen the management of high-energy-consuming and high-emission projects (hereinafter referred to as “high-energy-consuming and high-emission projects”): 1. Define the scope of high-energy-consuming and high-emission industries and projects. The high-energy-consuming industries referred to in this notice mainly include the “six major high-energy-consuming industries” specified in the Statistical Bulletin on National Economic and Social Development issued by the **Statistics Bureau, namely the petroleum, coal, and other fuel processing industry, the chemical raw materials and chemical products manufacturing industry, the non-metallic mineral products industry, the ferrous metal smelting and rolling processing industry, the non-ferrous metal smelting and rolling processing industry, and the electricity and heat production and supply industry. “The “Two Highs” projects refer to 16 investment projects in industries with high energy consumption and high emissions, which are included in the “six major high-energy-consuming industries”: steel, ferroalloys, electrolytic aluminum, cement, lime, building ceramics, flat glass, coal-fired power generation, petrochemical processing, coking, methanol, nitrogen fertilizers, acetic acid, chlor-alkali industry, calcium carbide, and asphalt waterproofing materials. II. Strictly implement **industrial policies**: For new projects of the \"high-energy-consuming and high-polluting\" type (including new construction, expansion, and technical upgrades; with the exception of technical upgrades that do not increase production capacity, such as environmental protection and energy-saving improvements, safety facility upgrades, and improvements to product quality – the same applies hereafter), it is necessary to strictly adhere to the requirements set out in the **Guidance Catalogue for Industrial Structure Adjustment**, as well as comply with relevant regulations regarding national and provincial industrial planning and park management. Investment in the construction of new projects involving products, processes, technologies, equipment, etc., that fall under the category of restricted or phased-out items is strictly prohibited. Financial institutions shall not provide loans for such projects. Departments including development and reform, industry and information technology, natural resources, ecological environment, emergency management, market regulation, and administrative approval shall not process any related procedures. Continuously optimize the industrial layout. Encourage capacity integration through measures such as “replacing smaller facilities with larger ones” and “substituting lower volumes for higher ones”. Concentrate efforts on building steel bases, petrochemical complexes, casting and forging centers, etc., so as to improve the level of process equipment and energy utilization efficiency, and promote the clustered and intensive development of the industry. (The Provincial Development and Reform Commission, the Provincial Department of Industry and Information Technology, and other relevant departments are responsible in accordance with their respective duties.) III. Resolutely implement reduction and substitution: For new projects that are high in energy consumption and pollution emissions, a system of reduction and substitution regarding production capacity, coal consumption, energy consumption, carbon emissions, and pollutant emissions must be strictly applied. Reduced-quantity alternative sources must be monitorable, countable, and verifiable; otherwise, they shall not be regarded as alternative sources. **If there are separate provisions for the overall planning, those provisions shall apply. 1. In terms of reducing production capacity as a substitute. The replacement ratio for reduction in cement grinding plant projects shall be no less than 1∶2 ； For projects involving cement clinker, petrochemical processing, electrolytic aluminum production, and coal-fired power generation (excluding back-pressure cogeneration), the ratio shall be no less than 1∶1.5 ； For steel, coking, calcium carbide, and chlor-alkali projects, the ratio shall be no less than 1∶1.25 ； The ferroalloy ratio should be no less than 1∶1.2 ； The flat glass project should be at a ratio of not less than 1∶1.1 ； The nitrogen fertilizer ratio should be no less than 1∶1.05. (The Provincial Department of Industry and Information Technology and the Provincial Energy Bureau take the lead respectively, with the support of the Provincial Development and Reform Commission, the Provincial Department of Ecology and Environment, the Provincial Emergency Management Department, and the Provincial Market Regulation Bureau.) 2. In terms of reducing coal consumption through substitution. For all coal-consuming projects under the ‘Two Highs’ initiative, the replacement ratio must be no less than 1:1.2, and lignite shall not be used as a replacement source. (Responsible by the Provincial Development and Reform Commission) 3. In terms of reducing energy consumption and substituting alternatives. The proportion of reduction and replacement for cement, petrochemical, electrolytic aluminum, and coal-fired power projects shall be no less than 1:1.5 ； For industries such as steel, coking, ferroalloys, calcium carbide, lime, methanol, nitrogen fertilizers, acetic acid, chlor-alkali, construction ceramics, flat glass, asphalt waterproofing materials, and back-pressure CHP projects, the ratio should be no less than 1:1.2. For clean energy generation methods in the high-emission and high-consumption industries, such as hydroelectric, nuclear, wind, solar, biomass, geothermal, tidal, thermoelectric, and wave power generation, as well as for investment projects in areas like power grid infrastructure and heating pipelines, no substitution of energy consumption is required. The policies regarding energy consumption substitution for other industries are to be established by each city itself; it is essential to ensure that the total amount of energy consumed in these high-emission and high-consumption industries decreases rather than increases. (Provincial Development and Reform Commission; people’s governments of various cities are responsible according to their respective duties.) 4. In terms of replacing carbon emissions with lower-emission alternatives. The proportion of reduction and replacement for cement, petrochemical, electrolytic aluminum, and coal-fired power projects shall be no less than 1:1.5 ； For industries such as steel, coking, ferroalloys, calcium carbide, lime, methanol, nitrogen fertilizers, acetic acid, chlor-alkali, construction ceramics, flat glass, asphalt waterproofing materials, and back-pressure CHP projects, the ratio should be no less than 1:1.2. (Sponsored by the Provincial Department of Ecology and Environment) 5. Reduction and substitution of pollutant emissions. In cities where the annual average concentration of environmental air quality did not meet the standards in the previous year, as well as in cities and counties (cities, districts) where water quality failed to meet the required standards, the proportion of new \"high-emission\" projects that need to be replaced by lower-emission alternatives must be at least 1:2 (with the exception of coal-fired power generation units whose emissions of air pollutants meet ultra-low emission standards) ； In cities where the annual average concentration of fine particulate matter (PM2.5) fails to meet the standards, the four pollutants of sulfur dioxide, nitrogen oxides, soot and dust, and volatile organic compounds are replaced in a ratio of not less than 1:2 ； For those that meet the standards, equivalent substitution is applied. (The Provincial Department of Ecology and Environment is responsible for this.) Cities can, in light of local conditions, establish more stringent measures for reduction and substitution. IV. Improve and implement the mechanism for reserve management of key resources. The Provincial Development and Reform Commission should refine the mechanisms for the collection, storage, and trading of coal consumption and energy consumption indicators, and explore the implementation of similar mechanisms for capacity indicators. Priority should be given to supporting those projects that are crucial for the overall productive structure of the province as well as for its economic and social development. Cities should fully explore the potential of various indicators related to economic factors. While ensuring that the total energy consumption in industries with high energy intensity remains unchanged or decreases, they should work to implement large-scale and high-quality projects that facilitate the transition from old to new forms of productivity and promote high-quality development. Intensify the phase-out of outdated and inefficient production capacity. Enterprises that fail to meet mandatory standards regarding safety, environmental protection, energy conservation, and quality must make corrections within a specified timeframe in accordance with laws and regulations; those unable to comply will be shut down and phased out ； For enterprises that fail to meet the established industry-leading standards in terms of safety, environmental protection, energy efficiency, water consumption, and profitability, differentiated policy measures are implemented to force the withdrawal of inefficient production capacity. Research and introduce supportive policies, vigorously promote energy-saving technologies and equipment, carry out energy-saving technological upgrades, regularly organize special energy-saving inspection campaigns, and improve the metering equipment and technologies related to coal and energy consumption. Actively promote the control of production capacity and output in key industries such as steel and coking, strengthen the monitoring and management of raw materials, electricity consumption, as well as production and sales volumes, so as to help these key industries reach their carbon peak at an earlier date. V. Strict control over project approval: The Provincial Development and Reform Commission shall strengthen the analysis and early warning of overcapacity in projects that are high in energy consumption and emissions, as well as the analysis of existing levels of energy and coal consumption in various cities. It should also enhance coordination with industry authorities and administrative approval agencies, provide guidance on new projects of this type, thoroughly assess their necessity and feasibility, and carefully evaluate their impact on overall energy consumption, carbon emissions, the high-quality development of industries, and environmental quality. When necessary, third-party evaluations should be commissioned; projects that lack such guidance or evaluation shall not be approved or registered, nor shall they be included in the list of key projects at the provincial, municipal, or county level, nor in relevant industrial plans at these levels. When approving or registering projects under the \"Two Highs\" initiative, nuclear approval authorities at all levels must conduct a thorough review to determine whether such projects comply with industrial policies, industrial plans, the \"Three Lines and One List\" guidelines, as well as requirements related to environmental impact assessment. They must also ensure that capacity replacement is carried out in accordance with relevant laws and regulations; projects that do not meet these requirements or fail to implement such replacement shall not be approved or registered ； **Where the province has specific regulatory requirements for project approval, the approval and registration authorities at all levels shall not grant approval or carry out registration beyond their statutory authority. When establishing new high-tech and high-value projects, advanced industry technologies and processes, as well as green and energy-saving equipment, should be employed to improve energy efficiency and reduce carbon emissions and pollutant discharges. Project approval and registration authorities at all levels shall guide the project sponsors to determine the industry to which the project belongs in a manner consistent with the national economic industry classification, and to fill in project information objectively, accurately, and completely, so as to ensure that it can be monitored, statistically analyzed, and reviewed. Project information should include production capacity, coal usage, energy consumption, carbon emissions, pollutant emissions, as well as information on reduction and substitution measures. This includes details such as the number of new installations and those that are substituted, the sources of substitution, the specifications and models of the replacement equipment, and the substitution ratio ； The content and scale of the project construction must specify the production scale, product specifications, process technology and flow, main equipment and their selection, raw materials, etc. VI. Strengthen supervision during and after project implementation: The Provincial Development and Reform Commission, in conjunction with relevant departments, shall establish a reporting and complaint mechanism as well as a list management system for “two-high” projects. It shall regularly disclose to the public information regarding newly constructed “two-high” projects in various cities, thereby enhancing social oversight. All cities must promptly report details of any newly initiated “two-high” projects to the Provincial Development and Reform Commission ； Third-party agencies are commissioned to monitor newly established industrial projects across the province, and regular monitoring reports are prepared to prevent the illegal construction of projects with high energy consumption and high emissions ； Promote the inclusion of “two high” projects in the online energy consumption monitoring system for key energy-consuming entities. Municipalities must, in accordance with the principle of “whoever approves shall supervise, and whoever is in charge shall oversee”, strengthen their supervisory responsibilities and enhance relevant measures. They should intensify full-process supervision over “two-high” projects; in particular, they must focus on monitoring aspects such as production capacity, coal consumption, energy consumption, carbon emissions, and the replacement of pollutant emissions. It is also necessary to establish a sound mechanism for precise measurement and monitoring, as well as improve the level of informatization, so as to ensure that these projects are constructed in compliance with laws and regulations ； Fully leverage the online approval and supervision platform for investment projects, strictly implement the information reporting system, and guide and urge project owners to promptly report information regarding approval, construction, as well as supervision (penalties). VII. Organize the verification and cleanup of projects: All municipalities must conduct individual verifications and comprehensive cleanups of “two high” projects. Any project that does not comply with industrial policies, fails to meet the requirements for reduction and substitution as stipulated, or whose main products have an energy efficiency level lower than the allowable limits set for that industry, shall have its construction suspended for rectification; construction may not resume until the required corrections are made ； For projects that have been completed and put into operation, those with potential for energy conservation and emission reduction should be upgraded; those representing outdated production capacities should be phased out as quickly as possible ； For projects that have been suspended, the project owners are required to implement reduction and substitution in accordance with the requirements of this notice, except for those where coal or capacity substitution has already been carried out in line with the original policies and approved by the relevant authorities. The progress of project cleanup and rectification in various cities should be reported to the Provincial Development and Reform Commission in a timely manner. The Provincial Development and Reform Commission, together with relevant industry authorities, conducts on-site spot checks on the cleanup and rectification efforts in various cities. VIII. Strengthen supervision, inspection, and accountability. All cities must attach great importance to strictly controlling the political sensitivity of projects with high energy consumption and high emissions. They should take on their political responsibilities in promoting the green and low-carbon development of industries, accelerating the transition to new forms of energy, and optimizing the industrial energy structure, thereby ensuring effective implementation of relevant policies. Departments and units that fail to implement policies effectively, have numerous issues with investment management, have inadequate information system management, fail to fulfill their regulatory duties in accordance with the law, or provide insufficient supervision shall be subject to discussions and notifications in accordance with discipline and law, and the relevant personnel shall be held strictly accountable. The Provincial Development and Reform Commission shall, in conjunction with the relevant industry authorities, conduct supervision and inspections of various cities, and report the inspection results to the provincial ** in a timely manner. Environmental protection, audit, and statistics departments should strengthen supervision and inspection. Discipline inspection and supervision organs must intensify their oversight efforts and strictly hold accountable those who violate regulations. “The scope of “two high” projects shall be dynamically adjusted by the Provincial Development and Reform Commission in conjunction with relevant departments, in accordance with **regulations and the actual conditions of our province ； “The specific list of “two high” projects shall be stipulated separately by the Provincial Development and Reform Commission in conjunction with relevant departments.