The government has given conservation top priority in its long-term energy policy, with the country feeling the pinch of supply shortages since last year.

The new philosophy represents a distinct shift from a previous focus solely on energy exploitation.

The transformation, however, will be a decade-long and challenging campaign that requires an overhaul of the whole economic structure, huge investment in upgrading oil refineries and power plants, and cultivation of energy-saving habits.

Last week, the State Council approved a draft of China's energy development program for 2004 to 2020. It is the nation's first long-term energy policy in almost half of a century.

Remarkably, the program lists energy conservation as its first concern, along with other principles such as optimization of the energy consumption mix, promotion of environmental protection and energy security.

"The mode of economic growth should be transformed. Efforts should be made to foster an energy conservation-oriented economy and society," Xinhua News Agency quoted the State Council report.

Experts said the concept of energy conservation has always been more symbolic than a serious consideration of the matter.

"Now, the government has reached consensus following the current energy shortfall," said Hu Jie, an engineer with a research institution of the China National Petroleum Corp. "Reliance on heavy energy consumption to drive the economy is not sustainable."

China at present is suffering from the most serious energy crunch since the late 1980s.

Two-thirds of the nation's area have been afflicted with brownouts and regular blackouts since last year. Supply failure is attributed to insufficient construction of new plants in the past years, and rampant consumption rises in energy-intensive industries such as steel, aluminum, cement and chemicals.

The electricity shortfall has triggered a chain reaction in the supply of coal and oil: the coal stockpile dropped to a two-decade low in April, while crude oil imports rose by a record 59 percent year-on-year in May.

Government officials have started to worry that the energy shortage and increasing imports would become a bottleneck hindering economic growth, as well as a threat to the environment and to national security.

China has ample room to improve efficiency in energy consumption to alleviate the impact of the supply shortfall. According to a report by the State Council's Development and Research Center, China spends 13 percent of its GDP on energy, almost double the level of the United States.

As an important move for energy conservation, Ni Weidou, a thermal engineering professor with the Chinese Academy of Engineering, said China should optimize the economic structure, relying less on energy-intensive industries such as steel and aluminum.

"There should be a balance between industrialization and energy consumption," said Ni.

Meanwhile, new investment should be poured into improving efficiency in power generation, transportation and housing.

Coal consumption per kilowatt-hour in Chinese power plants is 22 percent more than that in the United States, according to Ni.

In the booming housing sector, only 2.5 to 5.0 percent of new housing meets energy conservation standards.

The Development Research Center's report indicates that China could decrease its energy consumption from 3.2 billion tons of coal equivalent to 2.4 billion tons by 2020, should effective energy-saving approaches be taken.

The challenge, however, is that there is a lack of economic incentives and legal systems to make energy conservation efforts rewarding. For example, the cost saved by increasing coal-use efficiency may not justify a huge investment in energy-saving facilities, said Ni.

Education in energy-conservation consciousness is also lagging.

"This is not an overnight strike, but long-term hard work," said Hu.

(China Daily July 5, 2004)