The slow pace of restructuring industry has become a hurdle that China needs to overcome in order to further improve its energy efficiency, a senior legislator said.

Targets will need to be set to transform the country over the next five years from an industrial to a service oriented economy, Hua Jianmin, vice-chairman the Standing Committee of the National People's Congress (NPC), said at a bimonthly legislative session that started on Monday.

In 2009, industry accounted for 46.3 percent of the country's total economic growth, a rate much higher than the world average, while the service sector added 43.4 percent, a contribution that was about 20 percentage points lower than the world average, Hua said.

"Within the industrial sector, heavy industry was responsible for 70.5 percent of the total output last year, up from 60.2 percent in 2000," he said. "That ratio is even higher than the peaks recorded by developed countries as they underwent industrialization."

Meanwhile, excess production and the use of backward technology in some heavy industries have led to a significantly higher rate of energy consumption, according to research conducted by the NPC.

For example, the lead-smelting industry in China consumes about 50 percent more energy than elsewhere in the world when best practices are engaged. Ethylene and cement also use 60 percent and 30 percent more energy to produce.

The country consumed the equivalent of 3.1 billion tons of standard coal in 2009, of which industry used 71.3 percent, with heavy industry accounting for more than half the amount, official figures show.

More effort will be required to conserve energy if the country is to meet its target for 2020 of domestically reducing carbon emissions from 2005 levels by 40 to 45 percent for each unit of economic output, Hua said.

The current mechanisms used to price coal, electricity and natural gas do not reflect their scarcity as resources or the market relation between supply and demand, which makes it difficult to encourage energy conservation, he said.

The NPC recommended that long-term mechanisms be drawn up to price energy and for the market to adopt a conservation strategy, instead of relying on administrative orders, as in the case of power cuts.

The insufficiency of the energy auditing system also poses a challenge to improving energy efficiency. There are no statistics available on the consumption of energy in the transport and construction sectors, which, once again, makes it difficult to encourage energy conservation, Hua said.

(China Daily December 21, 2010)