China's draft energy law to up reserves

(Agencies)
Updated: 2007-12-04 19:14

Shanghai -- China has released a draft of a long-awaited energy law that calls for the country to keep larger reserves of oil, uranium and other key resources and to set up a new government department.

China has no separate energy ministry of its own, and the lack of unified policies for the industry is viewed as one factor behind recent fuel shortages, price gouging and other problems.

The new law is intended to help the country better develop the strategically vital energy sector. The government will collect opinions on the draft until Feb. 2 and later is expected to present it to the National People's Congress for approval.

The draft law calls for setting up an energy department directly controlled by the State Council, or Cabinet, to oversee related industries.

According to local media reports on the law, the department would exercise stronger control over market entry and pricing than the energy division that's part of China's main planning agency, the National Development and Reform Commission, or NDRC.

China, the world's second largest consumer and importer of oil after the United States, has made improved management of its energy sector a strategic priority.

"China definitely needs a unified, agreed-upon energy department. Otherwise everyone will carry on according to his own agenda and that doesn't benefit the country's energy strategy," Shanghai Securities News quoted Yan Luguang, a scholar at the China Academy of Science, as saying.

Article V of the proposed law calls for China to adjust its energy use to help protect the environment. The government would support recycling, emissions reductions and development of "clean" energy resources such as solar, wind and tidal power and other changes "effective against climate change," according to a copy of the draft distributed online by the Shanghai Securities News.

The law takes the form of broad guidelines that would be later implemented through more detailed administrative regulations and does not specify any detailed measures for emissions reductions and other environmental issues.

One major focus of the new law is energy security -- an obsession for a country growing increasingly dependent on imports of oil, coal and other key commodities.

Major investments in energy industries must be controlled by the state, the draft says.

The draft law requires Chinese oil companies to build their own government-managed reserves to supplement government stockpiles that began filling last year.

Such a plan would add to pressures on China's oil and refining companies, whose profits already have been squeezed because government price controls prevent them from passing surging costs for crude oil on to consumers.



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