China's first law on renewable energy is likely to debut in the second half of next year at the earliest, according to an official involved in its drafting.

This is part of the government's efforts to promote the share of renewable energy, such as hydropower, wind power, bio-mass and solar energy, in the total consumption mix to 10 per cent by 2020 from current figure of less than 1 per cent.

The government's effort to promote renewable energy comes as it endeavours to slow soaring demand for conventional fuels such as oil, gas and coal, which is hampering economic development.

The government also hopes that replacing some coal and oil consumption with renewable energy will cut pollution.

Wang Zhongying, director of the renewable energy development centre of the Energy Research Institute under the National Development Reform Commission, said the draft law is being circulated among ministries and major State-owned corporations for review.

A revised draft will be submitted next month to the Standing Committee of the 10th National People's Congress for its first reading, said Wang, who was involved in drafting the bill.

"According to normal procedures, the bill may be passed in the second half of the next year," said Wang.

According to the draft, the electricity generating capacity of renewable energy is expected to more than double to 120,000 megawatts by 2020.

The proportion of renewable energy in total electricity generation will increase from the current 8 per cent to 12 per cent by that time.

The capacity of small hydropower stations will more than double to 70,000-80,000 megawatts by 2020 from the current 31,000 megawatts. Small hydropower stations are those with a capacity lower than 50 megawatts.

The wind power capacity is expected to increase to 20,000 megawatts from 560 megawatts, while bio-mass will increase to 20,000 megawatts from the current 2,000 megawatts.

The capacity of solar energy is to rise to 1,000 megawatts from the current level of just 50 megawatts.

China largely relies on conventional energy to satisfy its consumption needs.

Coal now accounts for two-thirds of the total energy consumption mix with oil making up a quarter.

Renewable energy takes less than a 1 per cent of the total share mainly because it tends to be much more expensive due to higher production costs.

The costs of wind farms, for instance, would be twice as much as coal-fired power plants.

According to the draft, the government will impose higher electricity tariffs on renewable energy to cover their costs.

Grid companies are obliged to purchase all of their electricity from qualified renewable energy, and pass on the higher electricity price to the end users with some government subsidies.

Renewable energy producers may enjoy favourable policies such as tax cuts.

On the supply side, it is mandatory for large power companies to build some renewable energy capacity, said Wang.

Those failing to meet their quotas will be severely fined.

The government has also established special funds to support and promote the development of renewable energy technology.

But Wang indicated that it is likely that the draft bill will not be passed in its entirety.

Some analysts said a major difficulty is to convince grid companies to accept higher prices from renewable energy producers.

Wang said: "Promote the renewable energy is the responsibility of all of society. All have to share the costs."

Promoting renewable energy consumption is part of the government's medium and long-term energy development programme (2004-20).

Wang said it is important for the government to explore the renewable energy and prepare for a future in which conventional energy will run out.

"If we do not start out now, it is too late," said Wang.

"The potential to increase renewable energy production is vast, but only if it is supported by the government," Wang said.