Chinese rural enterprises -- big polluters in the country -- are finding ways of reducing energy consumption and greenhouse gas (GHG) emissions under a new project.

Funded by the Global Environment Facility (GEF), a technological transformation program is helping 100 rural enterprises save China 451,000 tons of coal and reduce carbon dioxide emissions by 1.13 million tons annually, vice minister of agriculture Wei Chaoan said Thursday.

Only eight firms signed up for the project in March 2001 when it was launched with a fund of 8 million U.S. dollars from GEF.

The project aims to help Chinese rural enterprises in the brick-making, cement, foundry and coking sectors reduce GHG emissions by improving their production methods.

Statistics show rural enterprises in the four sectors account for 16.7 percent of China's carbon dioxide emissions and use up 56 percent of the energy consumed by all Chinese rural firms.

China has 23 million rural enterprises, producing 30 percent of the country's gross domestic product (GDP) and providing 143 million unskilled farmers with job opportunities.

"These enterprises used to be bedeviled with environmental problems such as low energy efficiency, high consumption and heavy pollution", said Wang Xiwu, an official with the Project of Energy Efficiency and GHG Emissions Reduction for Chinese Rural Enterprises.

The 100 rural enterprises were chosen as "role models" to encourage more firms to take part in the program, as well as to exhibit the government's resolution in reducing greenhouse gas.

According to Wei, an increasing number of rural enterprises have voluntarily signed mid- and long-term pledges with local governments, promising to reduce energy consumption and GHG emissions, said Bai Jinming, an official with the Ministry of Agriculture.

The government in turn have allowed them to enjoy preferential policies in tax payments, fund raising and technological research, said Bai.

As a developing country, China is not obligated to meet targets set by the Kyoto Protocol, under which 38 industrialized countries must reduce their GHG emissions by an average of 5.2 percent below 1990 levels, during the period 2008 to 2012.

But the Chinese government realized it must do its part to slow global warming as the country has become the world's second largest carbon dioxide emitter and is likely to overtake the United States in the near future.

Carbon dioxide is produced by burning coal, oil and gas for heat, power and transportation and scientists believe it is a major contributor to global warming.

Chinese Premier Wen Jiabao said earlier this year "the current macro-control policy must focus on energy conservation and emission reduction in order to develop the economy while protecting the environment".

The challenge of reducing energy consumption and GHG emissions has proved arduous as China's economy grew 11.1 percent in the first quarter but power consumption surged 14.9 percent, suggesting there had been no major changes in the country's overall emissions trend.

China has set a target of reducing energy consumption for every 10,000 yuan (1,298 U.S. dollars) of GDP by 20 percent by 2010, while pollutant discharge should drop by 10 percent.

But energy consumption fell only 1.23 percent last year, well short of the annual goal of four percent.

The Chinese government has vowed to advance reforms in the pricing of natural gas, water and other resources, raise the tax levied on the discharge of pollutants, establish a "polluter pays" system and severely punish those who violate environmental protection laws.

"Without an efficient method of economic growth, China's natural resources and the environment will not be able to sustain its economic development", said Wen.

"We have no choice but to develop in an economical, clean and safe way", he said.