SHANGHAI (Reuters) - China will launch a pilot electric vehicle battery recycling scheme in 17 cities and regions, the industry ministry said, with Beijing keen to head off an emerging pollution threat.

The Ministry of Industry and Information Technology said in a notice published on its website late on Wednesday the cities and regions would encourage car producers to establish recycling service outlets and cooperate with battery producers, used car dealers and scrap merchants to build regional recycling systems.

It said the entire industrial chain needed to be fully mobilized in order to ensure that EV batteries were recovered. It would strictly control the number of new enterprises involved in battery recycling and make full use of existing recycling bases in China in order to promote sustainable development in sector.

The ministry also promised to draw up policies to support battery recycling, making full use of existing tax incentives and creating innovative new financing methods.

The ministry has already published draft rules to create a “traceability management platform” aimed at tracking the entire life cycle of electric car batteries from production to disposal.

China aims to bring annual electric vehicle output up to around 2 million by 2020 but it has recently taken action to curb “blind” growth in manufacturing capacity, with as many as 102 firms producing 355 different models of vehicle by the end of March.

Data published by the industry ministry this week showed that China produced 413,200 new energy vehicles (NEV) in the first six months of this year, up 94.9 percent compared with a year earlier. Sales more than doubled to 412,000 units over the period.

State news agency Xinhua said in a separate report late on Wednesday China produced 37.35 million kilowatt hours of NEV batteries last year, with overall prices declining by a quarter to about 1.45 yuan ($0.2143) per watt-hour.

Experts have warned that annual lithium battery waste could reach around 170,000 tonnes by 2020.