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Draft Law Encourages Use of Renewable Energy

A law has been drafted to boost environmental protection by helping out projects that use renewable energy.

If implemented, the draft code, submitted to the Standing Committee of National People's Congress (NPC) for a first reading, could also make money.

It will offer discount loans to renewable energy projects, value-added tax waivers to energy exploration equipment and products that consume this kind of energy, and other tax preferences for projects.

The draft is clear that renewable energy sources such as wind and solar power are "priorities" of China's energy strategy.

"There is a pragmatic approach in the draft, because without proper incentives you cannot expect many enterprises to have strong motivation to develop renewable energy," said Chang Jiwen, professor of environmental law with the Institute of Law of the Chinese Academy of Social Sciences (CASS).

But it is necessary to have detailed government decrees to execute the law's promise to the letter and punish local authorities should they fail to back new energy businesses financially, he added.

The new statute is proposed amid growing worries of the country's worsening pollution and chronic energy shortages. China's per capita possession of oil reserves is only 10 percent of the world's average.

"Fostering renewable energy sources to replace coal, oil and natural gas is a strategic mission that matters to our future generations," said NPC standing committee member Jiang Shusheng, at a recent group discussion.

The proposed law provides a host of practices to ensure renewable energy can be not only produced but also marketed and used successfully.

It orders power grid operators to purchase "in full amount" from the registered renewable energy producers within their domains. It also encourages oil distribution companies to sell biological liquid fuel on the sidelines.

The government will calculate prices of the power generated from renewable sources, and power grid operators should buy at directed prices.

The extra costs of using renewable-source-generated power will be shared out in the power network's overall price.

This, however, should not raise consumer' power spending too far, said Mao Rubai, director of the NPC Environmental and Resources Protection Committee, at a recent media briefing.

Renewable energy accounts for only a tiny proportion of the country's power consumption - about 3 percent last year, and the constant technological progress has been driving costs of renewable energy production lower, Mao said.

The draft also requires real property developers to facilitate the use of a solar power system - be it for heating or light-generation - in the design and construction of their projects.

Millions of Chinese families use solar water heaters. But some cities forbid solar panels to be fixed on new buildings for aesthetic reasons.

(China Daily January 11, 2005)

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