China has increased requirements for its energy saving vehicle subsidy in an effort to curb fuel consumption and roll back stimulus measures. The government has been subsidizing fuel saving cars since June 2010, with additional subsidies for hybrid and electric cars in certain cities. However, the Ministry of Finance announced that cars would only be eligible for the 3,000 Yuan subsidy if they consume 6.3 liters of gas or less per 100 kilometers, compared to the previous 6.9 liter standard. The number of weight classes for eligible vehicles has also been reduced.

China's Industrial Bank Co. signed an agreement with the Shanghai Environment and Energy Exchange to finance the city's planned carbon emissions market. China, which has pledged to reduce carbon output by as much as 45% of 2005 levels by 2020, plans to launch a carbon trading pilot program in Shanghai in 2013 and to expand it nationally by 2015. The Industrial Bank will provide liquidity and supervise trading funds for the exchange's platform.

Four major Chinese airlines are set to jointly sue the European Union over its plans to charge carriers for carbon emissions, an official with the country's industry group announced last week. "There is no way the emission charge can be justified. It violates the basic principles of international law and infringes on other nations' sovereignty," said Cai Haibo, deputy secretary-general with China Air Transport Association. The Chinese suit would differ from one launched by U.S.

Air pollution in Beijing hit levels hazardous to human health a majority of days in the past few weeks, and severe smog led to hundreds of flight cancellations and road closures last week. In some cases, traffic jams stretched as long as 30 miles and drivers were given emergency food and water handouts as they waited for visibility to return. Stores sold out of face masks and air purifiers, and bloggers posted photographs of the thick haze over the city blaming the Chinese government for failing to inform the public of the threat posed by air pollution. The U.S.

A maritime court in the northern coastal city of Tianjin accepted a case of compensation claims last Friday from aquaculture farmers who believe oil leaked from ConocoPhillips-operated oil field platforms in Bohai Sea resulted in their business losses. The Tianjin Maritime Court took up the lawsuit filed by a group of 29 aqua-farmers against ConocoPhillips China and the China National Offshore Oil Corporation (CNOOC). The Penglai 19-3 oil field, where the leak had first been reported in June from platforms B and C, is being operated by ConocoPhillips China, a subsidiary of the U.S.

China's state planning agency ordered seven provinces and cities to set caps on greenhouse gas emissions last Friday as part of a plan to cut carbon intensity by 17% over the 2011-2015 period. China requested the cities of Beijing, Chongqing, Shanghai, Shenzhen, and Tianjin, and the provinces of Hubei and Guangdong, to set targets and submit proposals for target allocation. Guangdong's plan has already been approved by the country's cabinet and commits the province to increasing non-fossil fuel use to 20% of total energy consumption by 2015.

Chinese authorities have announced plans to force major cities to monitor fine particulate matter emissions, acknowledging that the move is partially in response to online activism. "A stirring campaign on the country's social network websites since last autumn seemed to have gained a satisfying response from the country's policymaker," said the Xinhua news agency. The plan involves stricter pollution monitoring in 27 provincial capitals, the Beijing, Chongqing, Shanghai, and Tianjin megacities, and three major industrial belts.

A Chinese official called the Three Gorges Dam a "failure," saying that the project had failed to consider its impact on the environment and has contributed to lower water levels in bodies downstream.While parts of central and southern China are suffering from severe droughts as water levels continue to fall across the country and fish stocks dwindle, a devastating drought in the north and the pollution of the Yellow River--so thick that the river can no longer serve as a drinking supply--has threatened the nation's farmland.

The deputy director of China's Ministry of Land and Resources said that the country may begin shale gas production within the next five years to "meet rising demand for cleaner-burning fuels," according to Reuters. Deputy director Che Changbo said that China wants to triple the use of natural gas to help cut its reliance on coal. According to a U.S. Energy Department report, shale reserves in China that are "technically recoverable" stand at about 1,275 trillion cubic feet, about 19 percent of the world's 6,622 trillion and about 12 times the amount of conventional gas reserves.

Five days of mass protests around the upper Yangtze River failed to stop China Three Gorges' planned Xiangjiaba hydropower project last week, and the corporation's website still lists June 2012 as the expected start date of electricity generation. Some 2,000 villagers blocked a main road and a bridge over the Yangtze and hurled bricks and stones at police to protest the valuation of the forcible land acquisition for the 40,000 people who are being displaced to make way for the dam, joining green groups that have long opposed the project.