Suyalatu, a shepherd in northern China's Inner Mongolia, interpreted China's emission control policy in his own way: it saved him the trouble of combing soot off his sheep.

"I was glad to see those nearby factories closed for environmental concerns. Their choking fumes used to dirty my sheep and made my cashmere difficult to sell," said Suyalatu.

The 53-year-old Mongolian lives in Hangjing Qi, a county in Ordos City that is notable for three things: cashmere, coal, and clean energy sources.

But as China tightened its emission control policies, the county has witnessed the fall of coal-powered industries and the rise of a new energy sector.

"We're now turning to the green potentials of Hangjing Qi, which has gathered most categories of new energy sources you can find in China," said Amu, the party secretary of Hangjing Qi.

According to Amu, the wind resources in Hangjing Qi have an estimated capacity tantamount to the Three Gorges Dam; the local solar resources also rank among Chinese regions.

Moreover, the Yellow River, the fifth largest in the world, falls 100 meters nearby, creating possibilities for massive hydropower development.

But such potentials had long been submerged by the survival needs of the impoverished county, which had relied on highly polluting silicon-based factories to churn out a marginal budget.

"We invited those energy consuming factories to 'pay the electric fees' as our thermal power, fueled by the coal output, was cheap but difficult to be transmitted elsewhere," said Bao Shengrong, former party secretary of Hangjing Qi.

But starting in 2007, China asked its cities and regions to cut emissions to achieve the reduction of 20 percent in carbon intensity and 10 percent in sulfur dioxide discharges, a national goal set in the 11th Five-Year Plan (2006-2010).

Hangjing Qi received its share of 1,026 tons in SO2 reductions, a task that left the county no choice but to close those tax-contributing heavy "smokers."

"When we sent off those budget earners, we were risking our own salaries," said Bao, noting that the closing of factories in 2007 wiped out half of the budgetary income that year.

But meanwhile, its repository of clean energy opened another window for Hangjing Qi.

First Solar, a leading U.S. manufacturer of solar components, has planned to build a 2-gigawatt solar power plant, the world's largest in construction, in Hangjing Qi and will soon start the first phase of 30 megawatts of demonstration project in 2011.

Other new energy giants such as State Grid and China Datang Corporation have also flocked in, bringing in investments that helped increase local revenues.

Experts say China's ever tougher emission control policy has played a large part in "coercing" many regions to steer away from the "dirty" mode of development, while sending good news to clean energy industries.

"The pressure on China's emission control will be greater for sure, but it also means greater opportunities for green technologies," said Zhang Junkuo, a senior official with the Development Research Center of the State Council.

China aims to have at least 15 percent of its power generated by non-fossil fuel by 2020 in a bid to honor its commitment of a 40-45 percent decrease in energy consumption per unit of GDP.

Across China's windy and sunny north and west, forests of wind turbines are springing up, including six wind farms generating over 10 gigawatts in provinces and autonomous regions of Gansu, Hebei, Jiangsu, Xinjiang, and Inner Mongolia.

Further, China has promised new subsidies to promote its solar power industry, which is expected to install a capacity of 1.8 gigawatts by 2020.

But the aggressive expansion now faces obstacles such as weak infrastructure support and higher prices, as exemplified in Hangjing Qi.

"The relatively small-scale production in Hangjing Qi added to the difficulties for locally generated power to enter the grid," said Amu, noting the resultant high price has limited its competitiveness.

Mike Ahearn, CEO of First Solar, also said the government's feed-in tariff was needed to drive down the cost of solar electricity so it is closer to traditional energy sources.

"The new energy sector in Hangjing Qi still relies on government subsidies," said Amu. "It takes years for the industry to enlarge to a profitable scale."