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Renewable Energy Given Priority

An eagerly anticipated law on the usage of renewable energy will come into force in January 2006. The Law of Renewable Energy was recently passed by the NPC.


Feng Zhijun is vice-chairman of the Committee on Environmental and Resources Protection of the National People's Congress (NPC) and a member of the group which drafted the law. He believed it will significantly promote the development of renewable energy in China.


"By setting out the rights and responsibilities of all related parties, the law will boost market demand for renewable energy and improve the confidence of investors," said Feng in an interview with the People's Daily.


The "renewable energy" mentioned in the law is non-fossil energy, such as wind, solar, hydro and geothermal energy.


The law stipulates that the State will list the development and usage of renewable energy as a priority in energy development. And the State will also take the necessary measures to promote development in this regard.


It is also stressed that all players are encouraged to participate in exploring and developing renewable energy. Investors' rights and interests will be protected. Both statements serve as an explicit "go-ahead" signal for would-be investors.


The law is interesting too because it talks about getting electricity from renewable sources.


Electricity generated in this way usually costs more to make for various reasons including limits in technology or the small scale of production.


This is the major obstacle preventing sourcing electricity from renewable sources.


It is nearly impossible for the electricity to be sold if it has to compete with electricity from traditional sources like hydropower stations or thermal power plants. As a result, electricity companies using renewable energy do not survive in the market.


Now, according to the Law of Renewable Energy, the central government will set prices for electricity from renewable sources according to the source types.


Power grid operating companies will have to buy the electricity generated in their neighbouring renewable energy power houses.


Any extra costs incurred by the grid companies will be added to the price of electricity generated by all means and shared by all electricity users.


These arrangements are in line with widely-accepted practices around the world and have proven to be effective ways to promote the development of renewable energy.


Zhou Fengqi, the former director of the Energy Research Institute under the National Development and Reform Commission, said the price arrangements are conducive to the law's promotion of the use of renewable energy.


"The law has mapped out a market for renewable energy with mandatory legal stipulations," Zhou said. "Under such arrangements, extra costs will be paid by all electricity users and the electricity from renewable energy will have a considerable market. This way, the renewable energy power houses will be able to develop better technology, reduce production costs and realize further development."


Zhou added that the fast boom of renewable energy in the European Union has a lot to do with similar tactics in countries there, especially Germany, Spain and Denmark.


Detailed rules of implementation are currently being worked out by the State Council and related departments. These will be legally binding when done.


One of the most anticipated issues to be addressed by the rules is what proportion of China's energy consumption should come from renewable energy by 2020.


Some media reports say the figure will be around 10 percent, with the current figure being about 3 percent. Some of the consumption is in a traditional way, such as the burning of straw and firewood, which is not encouraged for its negative environmental impact.


The target of what proportion of energy will be renewable energy was not included in the Law of Renewable Energy, because legislators thought the law should be consistent and as stable as possible rather than be revised from time to time, according to Zhou Fengqi. Therefore, the specific target will be dealt with in the rules of implementation.


When the Law on Renewable Energy was still under discussion, there were voices saying the development of renewable energy would get more substantial support if the proportion target was specified by law.


Li Lailai, a social scientist working with an environmental NGO, the Institute of Environment and Development, who was invited to one of the discussions on the draft, said the proportion should have been included in the law itself.


"Only when it is stated clearly in the law can people follow the path towards the target and reach it," Li said.


Li and many other experts who want the specific ratio included in the law are probably afraid the development of renewable energy will not have substantial support without a solid target that does not change.


Their worries are understandable given the difficulties in implementing some existing laws and regulations.


But the authorities are believed to have worked out pragmatic measures to realize the target in the rules.


Many other issues are left unsettled in the law, including the legal position of hydropower, expenditure settlement plans among different grid companies and the licensing mechanism for renewable energy projects.


The answers to these problems and many others may have to rely on a balance of different interest groups, which is impossible to strike with just one law.


But as long as we have the basic law, many minds will be seeking answers to the already-raised problems, which can only make legislation better.


(China Daily March 23, 2005)

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