New energy law finally revealed

Dec.5 - China has unveiled a draft of its long-anticipated energy law, calling for a more market-oriented pricing system and requiring oil companies to set up inventories to supplement state strategic reserves.

The landmark law aims to create a sustainable and clean energy-supply system, improve energy efficiency and ensure self-sufficiency. It will also pave the way for the establishment of a new state energy ministry.

The draft, posted on the Website of the Office of the National Energy Leading Group on Monday, said an energy authority under the State Council will lead the nation's research and development.

"It seems to me that an energy ministry will come," said Lin Boqiang, a professor at the China Energy Research Center of Xiamen University. "China needs a unified entity to oversee the sector." China doesn't have a separate energy ministry, with power in the sector divided among various departments and major corporations.

For example, the National Development and Reform Commission is responsible for planning, project approval and price setting, the Ministry of Land and Resources controls mining-license issuance and the State Electricity Regulatory Commission covers power.

The draft will solicit public opinion until February 1. Ye Rongsi, deputy chief in the drafting team, said the law will be enacted in 2009 at the earliest, after being approved by the National People's Congress.

China will allow the market a heavier say in pricing for energy products that have tough competition, although the government will retain its role in the mechanism, the draft says.

Pricing has to reflect the scarcity of resources and the costs on the environment. The draft orders petroleum companies to set aside reserves that are for state strategic purposes, a move analysts said could affect oil firms' profits.

In addition, the draft pledges a more environmentally friendly energy push. It says China will increase support for clean-energy development and cuts in emissions.

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