By Fu Jing (China Daily)
Updated: 2008-02-04 14:51

It's for sure - the long-expected draft of energy legislation won't be ready in time for lawmakers to read at the annual session of the National People's Congress in March.

Some observers believe it is still pending because the government might reshuffle its diverse energy administrations to form a powerful single energy ministry, while others say the consolidation is impossible in the near future due to "complicated" reasons.

Yet the law is still in the works. Officials and experts have reached some consensus on tasks of the new energy governing body no matter when it is established: it should perform better in saving energy and improving efficiency, rather than only helping dig up more resources to feed the demand of rapidly developing China.

"When drafting the new law we have to always bear in mind the latest developments and trends worldwide," Ye Rongsi, deputy head of energy law drafting team under the National Energy Leading Group, tells China Business Weekly.

The most important factor, Ye notes, is that the world is entering a high-price cycle and moving from fossil fuels to an era of renewable energy.

"The draft will facilitate China to adapt to new developments," says Ye, insisting that a new energy law should address the financial system, climate change, pricing deregulation, market incentives and scientific research.

The widely circulated draft emphasizes a unified management system to plan and supervise China's energy sector, which is currently managed by a number of government departments and agencies.

"We need to set up an overarching agency to take responsibility for China's challenging energy sector," says Ye, adding that improving energy efficiency and guaranteeing energy security are among the law's top goals.

Feng Fei, industry policy department director under the State Council Development Research Center, a think-tank directly responsible to the central government, stresses the urgency of establishing a unified national agency to oversee China's energy sector.

"We should not only emphasize unified management, but also pay close attention to independent supervision and regulation of the energy sector," says Feng, who adds that "strict supervision over energy management" should be a key to the legislative framework.

Industry observers contend that China lacks a systematic means to manage all its energy industries and standards across the country. Thermal electricity generation, nuclear power, oil and gas, coal mining and renewable energy all have different management systems.

The National Energy Leading Group under the State Council currently has temporary responsibility for energy policy research and long-term planning, while the Energy Bureau under the National Development and Research Commission (NDRC) is responsible for project design and approval.

China has an electricity regulatory body to supervise the country's State-owned grid companies, but there is no regulatory body for oil, coal and natural gas companies.

"The experience from developed economies shows that effective supervision and regulation can help reduce or curb abuses in positions of monopoly," says Feng.

Despite the high expectations of experts and officials for a cabinet-level ministry to improve energy administration, the delay of the new energy law is likely to rule out discussions on a unified national energy body at the parliamentary session in March, as there is still no legislative framework.

Dong Chaojie, deputy department director at the State Council's Legislative Affairs Office, says the timetable was still up in the air despite the fact that it's been in the draft stage for two years.

"We haven't discussed it yet," says Dong. Under the legislative process, Dong's office can decide when to submit drafts for the National People's Congress to read and vote on.

She says it was "complicated" to weigh the interests of all stakeholders and parties governed by the energy legislation.

"It will take further time" to consolidate input from all stakeholders, she says.

Ye from the drafting team says the "year 2009 is the earliest possible date for the legislative body to read and vote on the draft".

But no matter when it will be, "a unified energy administrative body" should be the result, he says.

Barbara Finamore, president of the China-US Energy Efficiency Alliance, says the nation's energy agencies have struggled with few employees and an unusual division of responsibilities that have made consolidating authority difficult.

"Given the background, significant institutional restructuring may be required in order to administer a cohesive national energy plan," says Finamore.

New task of energy ministry

Finamore adds that energy conservation should be the major task of a new energy ministry, as that is what was stressed in a recent national energy White Paper.

While official discussions on the governing structure for the future energy ministry continue behind closed doors, sources close to planners tell China Business Weekly that saving energy will be a key task.

The National People's Congress announced last month that reform of the administrative branch of the government will be on the agenda of its coming annual session, although it did not specify the matters for discussion.

Whether or not the proposed ministry of energy is soon established, there will be a "major increase in human resources" to help the country implement its policy of energy conservation and emission reductions, according to the sources

When releasing the central government's White Paper on energy last month, the NDRC spokesman did not touch on the issue of the proposed new government agency. But sources say the NDRC has a shortage of staff devoted to energy issues. "It's a long-time headache," says one.

Beijing has set mandatory goals to lower the nation's energy intensity by 20 percent and cut major emissions by 10 percent during the 2006-2010 period compared to the nation's 2005 levels.

After they fell short of their targets in 2006, officials at all levels have been told by Beijing to make a better effort in 2007- or risk their careers.

The existing government teams that oversee energy efficiency and emission cuts are likely to form the mainstay of the new ministry of energy, one source says.

But its relationship with large national energy corporations is still to be decided. The energy giants are now all under the management of the State-owned Assets Supervision and Administration Commission.

Finamore says the draft energy law has many good provisions. "If it becomes law and is fully implemented, China will have more opportunities to save energy."