MIIT raises old-capacity elimination levels in China to enable new capacity projects

China has unveiled stricter draft rules for new cement plants, increasing the amount of old capacity that producers need to retire as they propose new capacity. The tougher regulations intensify a three-year-old programme intended to reduce CO₂ emissions.

Under the new rules, cement producers must retire at least 2t of outdated capacity for every tonne of new capacity in areas classified as environmentally sensitive, up from the current 1.5:1 ratio, says the Ministry of Industry and Information Technology (MIIT). In non-environmentally sensitive areas, at least 1.5t of obsolete capacity should be retired for every tonne of new capacity, up from the current ratio of 1.25:1. 

“As the new draft rules are still open for public comment, cement companies are rushing to get cement capacity-swap projects approved under the current, more lenient requirement before the new, more expensive rules take effect,” said Wang Qi, a cement industry analyst at commodity market information provider Sublime China Information Co. “The higher capacity-swap hurdle will cost manufacturers hundreds of millions of yuan,” Mr Wang added.