China to subsidize use of energy-efficient vehicles

Shanghai, February 6 (Gasgoo.com) China will subsidize the use of energy-efficient and new-energy vehicles in 13 cities, the Ministry of Finance has announced. The government subsidy is intended to encourage the manufacture and use of "greener" energy-efficient vehicles, xinhuanet.com reported today.

According to a recent joint statement of the Ministry of Finance and the Ministry of Science and Technology, the central government will offer a one-off subsidy for buying hybrid, electric and fuel-cell vehicles. The subsidy will vary with the difference between the prices of new-energy vehicles and those powered by traditional fuel.

A hybrid car that can cut fuel consumption by 40% or more will get a one-off subsidy of 50,000 yuan ($7,320), and a city bus that is more than 10 meters long and save fuel by 100% can be subsidized as much as 500,000 yuan. The statement said that all hybrid PVs (passenger vehicles) must be energy-efficient by at least 5% over conventional ones, and hybrid buses by more than 10%.

The subsidy program will be carried out as a pilot project in public transportation, taxi sector, and postal and urban sanitary services in 13 cities of Beijing, Shanghai, Chongqing, Changchun, Dalian, Hangzhou, Jinan, Wuhan, Shenzhen, Hefei, Changsha, Nanchang and Kunming. Local governments are required to allocate funds for the creation and maintenance of related facilities.

The program will speed up upgrades in technologies and structural optimization of China's auto industry. The central government has pledged to provide 10 billion yuan over the next three years to automakers to help update their technology and develop alternative energy vehicles.

China urges the making and use of new energy vehicles as its fast growing auto ownership poses a big pressure on environmental protection and energy resources. The Chinese hybrid market is much smaller than Western markets, with less than 1,000 hybrid cars sold in 2008.