China's energy intensity rises 3.2 pct in Q1

BEIJING May 6 (Reuters) - China's energy use in generating each dollar of gross domestic product rose 3.2 percent in the first quarter from a year earlier, state media cited a cabinet statement as saying on Thursday.

The increase, which reversed steady declines in the previous years, poses severe challenges for China to meet its goal of reducing energy intensity by 20 percent from 2005 to 2010, Premier Wen Jiabao said, according to the People's Daily.

From 2005 to 2009, China has brought its energy intensity -- the amount of fuel needed for generate each dollar of national income -- down by 14.38 percent.

"This greatly increased the difficulty of our work for the last three quarters of this year," Wen was cited as telling a cabinet work meeting on Wednesday.

To that end, China will earmark 83.3 billion yuan ($12 billion) this year to help improve the country's pollution-easing capacity and encourage development of environmentally friendly firms, the paper said.

China will shut down small thermal power plants with total capacity of 10 million kilowatt this year and eliminate outdated steel making capacity of 6 million tonnes, it added. (Reporting by Eadie Chen and Chen Aizhu; Editing by Ken Wills)

(eadie.chen@reuters.com; +8610 6627 1268; Reuters Messaging: eadie.chen.reuters.com@reuters.net))