China Power's Strategies of Environmental Protection

As the national economy is growing rapidly, the problems of environmental quality are increasingly obvious and the State has put more efforts on environmental protection. The "Twelfth Fifth Year Plan" of the State indicated that the proportion of the consumption of non-fossil energy sources to primary energy consumption will increase to 11.4% by 2015. The energy consumption per unit of GDP and the emission of carbon dioxide will decreased by 16% and 17% respectively, and the total discharge of major pollutants will decreased by 8% to 10%. As a power company, in addition to fulfilling the national basic demand of electricity, the Group will also actively make responses to the environmental protection measures of the State and fulfill its social responsibilities. In 2010, in pursuit to a low-carbon society, China Power was devoted to energy conservation and emission reduction and finding out more appropriate ways to survive in the industry so as to step towards a low carbon era.

Energy Saving and Environmental Protection Measures in 2010

1. Optimization of the Structure of Assets and the High Capability of Energy Conservation of Hydro-power Assets

In 2010, the power generation of China Power amounted to 48,558,685 MWh, in which, the hydro-power generation amounted to 10,932,935 MWh, accounting for 22.51%, 13.98% and 44% of the total power generation of the Group, the total power generation in Hunan Province (unified dispatching power plants) and total hydro-power generation in Hunan Province (unified dispatching hydro-power plants) respectively. As hydro-power is a renewable clean energy with a higher power generation, various governments support the hydro-power development. The Chinese Government has also made more investment in the development of hydro-power. Thus, developing hydro-power projects will be a major development strategy of the Company.

2. Emphasizing the Environmental Management of Coal-fired Power Generation Units

All coal-fired power generation units of China Power have been already equipped with desulphurization devices . As a result, the total volume and performance of pollutant discharging has reduced constantly and the desulphurization rate reached 93.93%. The Company completed the re-making works of the electric dust wipers for furnace No.1 of Pingwei Power Plant, furnace No.2 of Yaomeng Power Plant and furnace No.3 of Yaomeng Power Plant successfully. The dust wiping rate was over 99.93%. The smoke and dust discharging concentration was significantly reduced to lower than 30mg/Nm3, which was in a leading position in the PRC.

3. Emphasizing Environmental Protection relating to Hydro-power Development

Wu Ling Power places great emphasis on ecological restoration relating to hydro-power development. It adopts various measures to protect the ecological environment at the different stages of its projects.

At the planning and designing stage of a hydro-power project, Wu Ling Power focuses on conducting environmental impact assessment to minimize the negative impact on the environment. During the construction process of hydropower, Wu Ling Power carries out environmental protection tasks such as water and soil preservation, maintaining water quality of reservoirs, preservation of cultural and historical relics, etc. strictly in accordance with the requirements of the environmental authorities of the country to minimize the environmental impact of construction works. It has also adopted various measures such as breeding and freeing of fishes, transplanting and planting of valuable and rare plants to maintain the ecological balance.

4. Effective Measures to reduce the Energy Consumption of Generation Units

Through setting up a technology exchange platform, China Power promoted the utilization of advanced technologies and organized domestic and foreign experts to carry out onsite inspection for energy conservation in units to find out defects in the management of energy conservation. Aiming to meet the benchmarking of production and operation, China Power refined the management assessment and carried out reformation of generation unit No.1 of Pingwei Power Plant and generation unit No.3 of Yaomeng Power Plant for energy conservation, and the expected targets were achieved. The Company refined the energy consumption of other generation units through maintenance and repairing and optimization. In addition to increasing the profitability of coal-fired power generation units, the improvement of energy consumption also reduced the emission of pollutants.

5. Continuing Improvement of Environmental Protection through Benchmarking Management

In 2010, China Power made reference to domestic outstanding power operators and actively introduced the management experiences in advanced equipments relating to environment protection based on the current situation of production and operation of the Company. The Company also cooperated with relevant technical consulting departments and was devoted to the reformation of environmental protection equipment, so as to ensure the safety and stability of environmental protection equipment. As the newly equipped desulphurization devices in coal-fired power generation units and the generation units were put in operation, inspected and approved by the Government and granted the power price compensation for desulphurization concurrently, the environmental risks of the Company have been effectively managed.

Accomplishments Relating to Environmental Protection in 2010

1. Breakthroughs in Energy Consumption Indicators

Through the technological refinement and the optimization of operation, the energy consumption in power generation was reduced. In 2010, the coal-fired power generation units of China Power had an average coal consumption rate of 324.51g/KWh, representing a decrease of 5.34g/KWh from 2009, which has been the most significant since its operation. The standard coal consumption reduced by approximately 189,000tons for the entire year and the fuel costs reduced by approximately RMB92,910,000.

2. Apparent Result in Energy Conservation from Hydro-power Assets

In 2010, the sales volume of hydro-power of Wu Ling Power amounted to 10.82 billion KWh, which could be interpreted as a decrease in a standard coal consumption of 3.576 million tons in terms of 330 grams of coal consumption, a reduction in sulphur dioxide emission by 180,230 tons, a reduction in carbon dioxide emission of 9,921,900tons, a reduction in nitrogen oxide emission of 47,600 tons and a reduction in smoke and dust discharging of 43.28 billion standard cubic meters.

3. Significant Improvement in the Indicators of Environmental Protection

China Power successfully reduced the emission of waste gases from power generation in 2010. The Company continued to reduce its emission of waste gases on the basis of its gas emission in 2009: emission of carbon dioxide decreased by 378,000 tons; sulphur dioxide decreased by 8,098 tons; nitrogen oxide decreased by 100 tons; smoke and dust decreased by 603 tons. The pollutants emission per unit further decreased, with a sulphur dioxide emission of 0.45g/KWh, a nitrogen oxide emission of 1.79g/KWh and a smoke and dust emission of 0.37g/KWh.

4. Further Decrease in Sewage Charge

In 2010, the standards of pollutants charges were tightened by the Chinese Government. Power generation companies under China Power paid an aggregate of approximately RMB68,590,000 of sewage charge, representing a decrease of RMB420,000 as compared to the previous year. This decrease was mainly due to the effective measures adopted by China Power to reduce the discharge of pollutants and the pollution caused to the environment and the decrease of the pollutant discharge caused by the power generation.

5. Effective Environmental Protection Works Recognized by the Society

China Power achieved outstanding results in environmental protection in 2010, realistically carrying out its environmental protection obligations. The Company was highly appraised by the Ministry of Environmental Protect of the State after various strict examinations. The effective environmental protection work done by China Power was recognized by both its parent company and the society.

Social Donations of China Power in 2010

In 2010, initiated by Ms. Li Xiaolin, Chairman of the Board of China Power, the Company actively fulfilled its social responsibility and successively held three fund raising initiatives for donation to disaster areas in Southwest drought, earthquake in Yushu, Qinghai and landslide in Zhouqu, Gansu. The staff of the Company has responded actively and the donation from the staff from the headquarters of China Power and its subsidiaries exceeded RMB110,000 and RMB780,000 respectively.

Since 2008, 14 employees from the headquarter of China Power have agreed to support orphans from areas affected by the Sichuan earthquake to subsidize them to complete the nine-year compulsory education and three years of high school education. In 2010, the subsidies raised for orphans amounted to above RMB20,000.

China Power devoted to organizing "Yingshanhong" donation campaign for education in which many young employees of the Company actively participated. In 2010, 3,016 employees from the headquarter and subsidiaries of the Company donated a total amount of RMB64,522 to "Yingshanhong" campaign.