The government has earmarked 6 billion yuan (US$774 million) to pay for energy conservation projects to be launched before the end of this year, a senior official from the top economic planner said yesterday.

"The special funds will support 10 major energy-saving projects, such as reducing the use of petroleum and developing petroleum substitutes and green lighting technology. It is hoped these developments will help the country use less energy," Xie Zhenhua, vice-minister of National Development and Reform Commission (NDRC), said at the China Energy Saving and Emission Reduction Forum 2007.

"Incentives have been devised to encourage enterprises to save energy. Enterprises will receive financial aid according to the energy they can save while reducing emissions."

Xie said the central government has also set aside an additional 2 billion yuan to compensate local governments and enterprises for eliminating excess production capacity in the latter half of this year.

The government has set a target of reducing energy consumption per unit of GDP by 20 percent between 2006 and 2010, with annual cuts of 4 percent. However, the decrease was only 1.33 percent last year compared with 2005.

"If we cannot reverse this situation in a timely manner, it will be difficult to meet this year's energy-saving target, which could have an unfavorable effect on the energy-saving and emissions-reduction targets in the 11th Five-Year Plan," Xie said.

To prevent this from happening, the government will accelerate the elimination of obsolete production capacity in 13 sectors.

He also said the NDRC and the State Environmental Protection Administration will soon organize a conference on the recycling economy in Chongqing.

The government will guide the price of power from small thermal power plants, and raise excise taxes on resource-consuming products such as refined oil, automobiles and solid wood floors.

(China Daily November 19, 2007)