China to Promote Green Car Production

China is preparing a new scheme to encourage auto makers and consumers to use electric and hybrid vehicles, learning lessons from California's efforts to promote a similar switch, the head of a major state-owned carmaker said on Thursday.

The central government could implement such a policy in the first half of next year, said Xu Heyi, chairman of Beijing Automotive Group Co Ltd, parent of listed BAIC Motor Corp Ltd.

China has set fuel economy standards that grow increasingly aggressive through 2020 to relieve heavy air pollution in much of the country, but it has yet to specify how such a plan will be enforced.

The new scheme to promote "new energy" cars, which generally refers to all-electric battery cars or heavily electrified plug-in hybrids, gives automakers credits for producing and selling such vehicles, which help them meet new and more stringent fuel-economy rules.

"Relevant national departments are currently studying and drawing lessons from the U.S. state of California's methods to encourage the use of new energy cars" to tackle vehicle emissions, said Xu, who as leader of a major state-owned company is also a high-ranking Communist Party official.

There would be two schemes, one for auto makers and one for consumers, to promote green cars in China, Xu told reporters at a media event at its headquarters in Beijing.

Automakers would be given the most credits for making all-electric battery vehicles, fewer for plug-in hybrids and the least credits for traditional gasoline-electric hybrids.

Traditional gasoline powered cars that do not meet the new fuel economy requirements would get negative points, he said.

Car makers failing to meet the new national fuel economy requirements could then buy credits from over-achieving companies to make up the difference.

Meanwhile, consumers would get credits redeemable for money based on the distance they drive in full electric mode, while those drivers using gasoline would be required to pay an additional fee for the distance driven. (Reporting by Jake Spring