China's Energy Conditions and Policies

III. All-round Promotion of Energy Conservation

China is a developing country with a large population but deficient resources. To attain sustainable economic and social development, it must take the path of conserving resources. China started energy conservation work in a planned and organized way in the early 1980s, and achieved the goal of quadrupling economic growth while doubling energy consumption by the late 1990s by implementing the policy of "stressing both development and saving, with priority given to saving." To further promote energy conservation, the Chinese government made conservation of resources a basic state policy, and issued the Decision of the State Council on Strengthening Energy-conservation Work. The Chinese government has always regarded energy conservation as a major factor in macro control and as breakthrough and driving force for transforming the pattern of economic development and optimizing economic structure. While advancing the work of saving energy and reducing emissions, the Chinese government depends on structural adjustment as the fundamental approach, on scientific and technological advances as the key, on improved administration as a crucial measure, on the strengthening of law enforcement as an important guarantee, on the deepening of the reform as an internal motive force, and on public participation as the social foundation. It promulgated and implemented the Medium- and Long-term Special Plan for Energy Conservation, setting the goal for energy consumption reduction during the 11th Five-Year Plan period (2006-2010) and sharing out the tasks and responsibilities to the various provinces, autonomous regions and municipalities directly under the central government, as well as key enterprises. China is perfecting the index system of energy consumption per-unit GDP. It will incorporate energy consumption into the overall evaluation of economic and social development and the annual performance evaluation of regional governments. It will adopt an announcement system for this index, implement a target responsibility and accountability system for energy conservation and build an energy-conserving industrial system to effect the fundamental transformation of the country's pattern of economic development.

Energy conservation is a realistic choice for China to alleviate the pressure of energy shortage. It is a long and arduous strategic task to keep promoting energy conservation in the course of the country's economic and social development. China will advance energy conservation in all aspects, with the government playing the leading role, the market forming the basis and enterprises playing a major role, with participation of the whole society. China will establish an energy- and resource-saving industrial structure, development pattern and consumption mode by taking improvement of energy efficiency as the core, and transforming the mode of economic development, adjusting the economic structure and accelerating technological advance as the foundation. China will establish an energy-saving industrial system and practice a target-responsibility and performance-evaluation system in this regard. It will improve the mechanism for spreading energy-saving technologies, and encourage R&D of such technologies and products. It will deepen the reform of the energy system, improve the energy pricing mechanism and give full play to economic policies, including fiscal and taxation ones, in promoting energy conservation.

To promote all-round energy conservation, China will take the following measures:

-- Pushing forward structural adjustment. The major reasons for low efficiency of energy utilization for a long time have been the extensive mode of economic growth and a high proportion of high energy-consuming industries in China. The country will put the transformation of the development pattern and the adjustment of the industrial structure and of the internal structures of industries in the key place for the energy-conservation strategy, and work hard to bring into being a pattern of economic development with "low input, low consumption, less emission and high efficiency." China will accelerate the optimization and upgrading of its industrial structure, make energetic efforts to develop high- and new-tech industries and the service trades, set strict limits on the development of high energy-, material- and water-consuming industries, and eliminate industries with backward productivity, so as to fundamentally change the pattern of economic development and put in place an energy-saving industrial system on an early date.

-- Improving energy conservation in industry. Industry is a major sector of energy consumption in China. The country is determined to take a new road to industrialization characterized by high scientific and technological content, good economic returns, low resource consumption, minimum of environmental pollution, and full use of human resources. To achieve this, China will accelerate the development of high-tech industries and transform traditional industries with high- and new-technologies, as well as advanced and applicable ones, and in turn upgrade the overall industrial standard. Industries with high energy consumption, such as steel, nonferrous metals, coal, electricity, petroleum and petrochemicals, chemical engineering and building materials, will be the target sectors for saving energy and reducing energy consumption. The Chinese government has launched an energy-conservation drive among 1,000 enterprises, with the focus on tightening control over those consuming 10,000 tons of standard coal or more each year. It will readjust the product mix, speed up technological reform, improve management and economize on energy. It will support a group of key and demonstration projects aiming to conserve energy and cut consumption so as to rally industries to enhance their energy-saving level. It will continue to raise the standards for energy efficiency of industry, eliminate backward and high energy-consuming products, and perfect the market access system.

-- Launching energy-saving projects. China is carrying out ten key energy-saving projects, including petroleum substitution, simultaneous generation of heat and power, surplus heat utilization and the construction of energy-saving buildings. The Chinese government supports key and demonstration energy-saving projects, and encourages extensive application of high-efficiency, energy-saving products. China will make vigorous efforts to construct energy- and land-saving buildings, actively promote the energy-saving renovation of existing buildings, and extensively use new walling materials. China will continue to implement petroleum substitution and develop substitute fuels in a scientific way. It will speed up the elimination of old automobiles and ships, actively develop public transport; set limits on high oil-consuming automobiles, and develop energy-saving and environment-friendly automobiles. It will accelerate the innovation of coal-fueled industrial boilers (kilns), regional simultaneous generation of heat and power and surplus heat and pressure utilization, and improve the efficiency of energy utilization. It will save more energy in the sphere of electrical machinery and optimize energy systems, so as to improve the efficiency of both. It will carry out the Green Lighting Project, and spread more rapidly high-performance electrical appliances. It will also spread technologies for firewood- and coal-saving stoves and energy-saving houses in rural areas, and eliminate old, high energy-consuming farm machinery and fishing boats, so as to promote energy conservation in agriculture and the rural areas. It will urge government bodies to save more energy, giving full play to the role of the government in leading energy conservation. It will put in place at an early date the system of energy-conservation monitoring and technological support, strengthening energy-conservation monitoring and establishing new energy services platforms.

-- Strengthening the administration of energy conservation. The Chinese government has established a system of compulsory government procurement of energy-saving products, actively advocating energy-saving (including water-saving) products as a priority for government procurement; and included some products with outstanding results and stable performance on the list of compulsory procurement. It will give full play to the role of governmental purchase in policy guidance and in encouraging all sectors of society to produce and use energy-saving products. It will study and formulate fiscal and taxation policies to encourage energy conservation, implement preferential taxation policies for those effectively making comprehensive use of resources, and set up an energy-saving mechanism with multi-channel financing. It will deepen the reform of energy prices to introduce a pricing mechanism favorable for energy conservation. It will put in force an evaluation and examination system in respect of energy conservation in fixed assets investment projects and strictly control increase of energy consumption at the roots. It will set up a new energy-conservation mechanism for enterprises, adopt an energy efficiency labeling mechanism, and promote contract-based energy management and voluntary energy-conservation agreements. It will improve the legal framework regarding energy conservation, and strengthen energy-conservation management by law. It will improve the overall quality of energy-conservation managerial personnel, and step up efforts in law enforcement, supervision and examination.

-- Advocating energy conservation in society. The Chinese government energetically advocates the significance of energy conservation by various means, constantly strengthening the public awareness of the importance of resources conservation. It will promote the culture of energy conservation, and work hard to bring into being a healthy, civilized and economical mode of consumption. It will incorporate energy conservation into the system of elementary education, vocational education, higher education and technical training, and publicize and popularize relevant knowledge by means of mass media. It will enhance the energy-conservation week campaign, and mobilize all sectors of society to participate in it. All these measures will help to build a long-term mechanism of energy conservation with the participation of all sectors of society.