China is joining hands with the World Bank for the sustainable development of an energy-saving industry operating under the country's fostering market economy, sources with the State Economic and Trade Commission disclosed.

Seeking a new energy-saving mechanism, the commission reached a consensus with the World Bank to improve the efficiency of energy consumption through carrying out an energy-saving and clean energy promotion program.

The program, funded by the World Bank and technically supported by the Global Environment Fund, is aimed at introducing the world's latest energy-saving concepts, demonstrating their effects and popularizing them throughout China.

Under the program, a variety of energy management companies promoting energy-efficient projects are expected to mushroom.

The companies will feature contracted management, which is designed to provide various services enabling enterprises to adopt energy-saving technologies and corresponding management.

Under the previous planned economy the popularization of energy-saving technology used to be operated under a trinity made up of the government, agencies responsible for energy-saving services and enterprises.

However, the framework is collapsing due to the readjustment of government administrative functions and inadequate government financing as the country embarks on a market path, experts say.

China has, since 1996, set up three joint-stock companies adopting contracted management for energy-saving projects in Beijing, Liaoning and Shandong provinces respectively.

To date, these companies have succeeded in bringing 107 energy-saving projects into effect in the fields of boilers, electrical engineering and heating with some 160 million yuan (US$19.3 million) of investment.

Experts with the commission said that the commercialization of China's energy-saving efforts can be realized under the model with superior financing and technology capabilities.

As profit-making professional businesses, these companies have not only further developed themselves by sharing the profits gained from the projects they have sponsored, but have also attracted more investors to participate in such projects.

More similar companies are expected to be set up in the country with the help of the commission, including management training and the introduction of loans provided by commercial banks.

Under such a model, enterprises can use profits gained from energy saving to upgrade their existing equipment and lower operating costs.

Such a mechanism is expected to save funds usually raised by enterprises themselves for improving their energy-efficient projects, experts say.

To ensure the smooth development of an energy-efficient industry, the State Economic and Trade Commission will set up a special agency for the administration of energy-saving projects operating under the model.

Using donations from the World Bank as initiating funds, the agency will establish a credit pooling mechanism to support energy management companies.

(China Daily 10/07/2000)