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China will fail to meet the target of reducing energy consumption per unit of gross domestic product (GDP) by 4 percent this year, Xinhua said. Energy consumption per unit of GDP actually increased by 0.8 percent in the first half of the year and indexes for major pollutants have continued to rise, it said.

Higher export taxes will be used to curb exports of energy-intensive or polluting goods, and energy-saving products could get tax preferences, in order to get back on track in 2007, Xinhua said.

The country is behind schedule in its much-publicized goal of reducing energy consumption per unit of GDP by 20 percent in the five years from 2006 to 2010, Xinhua said. It blamed local governments' resistance to "Green GDP" pilot projects.

Green GDP attempts to account for the cost of environmental degradation along with the economic growth figures that had previously been used to evaluate local officials' performance. The exact method of its calculation is still unclear.

"A lack of economic motives is the fundamental reason for the local governments' weakness in reducing energy consumption and improving environmental protection," said Chen Qingtai, vice director of the economic committee under the Chinese People's Political Consultative Conference, according to Xinhua.

Central authorities acknowledged that more efforts were needed to improve energy efficiency and issued a stark warning to uncooperative local government cadres in a recent national meeting to map out economic policies for 2007, Xinhua said.

Earlier this year, Beijing removed or reduced value-added tax rebates on many metals and other resources, to reduce the incentive to produce more than China needs. It has also very publicly cracked down on projects and on local officials in what it deems to be particularly egregious cases of wasteful growth.

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