China plans to spend Yuan 41.8 billion ($5.89 billion) on energy efficiency and greenhouse gas emission reduction schemes this year, an increase in funding of 78% from 2007, the Ministry of Finance said Monday. 

Although China has not ratified the Kyoto Protocol, Beijing has set targets for the country to reduce its emissions discharge by 10% from 2006 to 2010, and cut energy consumption by 20% for every Yuan 10,000 of gross domestic product during the period. 

In addition, local banks have been warned against lending to businesses with poor records of energy and environmental conservation, the ministry said.

From the environmental fund, Yuan 7.5 billion has been set aside for 10 energy-saving programs comprising technology upgrades in certain factories, substituting the use of oil with other types of fuels where possible, and replacing old lighting equipment with energy-saving ones.

Beijing will spend Yuan 4 billion on closing inefficient coal-fired power and steel smelting plants, and Yuan 5 billion on raising water safety standards in major rivers and lakes. 

China's emissions of sulfur dioxide and chemical oxygen demand have been on the rise, propelled by its high economic growth rates. Sulfur dioxide causes acid rain, which is harmful to aquatic organisms and plant life.  Chemical oxygen demand is the amount of organic pollutants found in lakes and
rivers, and is used as a measure of water quality.