China's Draft Energy Law to Up Reserves

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.

But the draft law makes scant mention of measures needed to counter soaring emissions of greenhouse gases linked to global climate change.

Beijing 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. 1 and later is expected to present it to the National People's Congress for approval.

The official Xinhua News Agency on Tuesday cited a legal scholar, Ye Rongsi, as saying that the law would take effect in 2009 at the earliest. The current draft is the fourth so far, it noted.

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

China created an Energy Ministry in 1988, but abolished it in 1993 during a bureaucratic overhaul. An energy bureau, within the main planning agency, the National Development and Reform Commission, was set up in 2003 to oversee oil and gas, coal, electricity and alternative energy sources, but power over those sectors is divided between various ministries and state-run corporations.

In 2005, the government set up an energy "working group" of top leaders from various ministries, headed by Premier Wen Jiabao.

While not of ministry status, the energy department proposed in the current draft law would exercise stronger control over market entry and pricing and would be under the aegis of the State Council.

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," the state-run newspaper 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.

As it rivals the U.S. as the world's leading emitter of greenhouse gases, China has pledged to raise efficiency and reduce emissions.

China relies on heavy polluting coal for three-quarters of its electricity. It has fallen short of its national targets to boost efficiency and cut emissions and has shied away from binding international commitments such as the Kyoto Protocol, saying such requirements would interfere with its economic development.

The draft energy law takes the form of broad guidelines that would be later implemented through more detailed administrative regulations. It appears not to 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 up 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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