More policy tools are being worked out to encourage energy conservation and the use of renewables to propel the development of China's energy-saving industries, an official from the National Development and Reform Commission (NDRC) said.

Speaking at an energy conference, Xie Ji, deputy director of environmental protection and resource conservation division at the nation's top economic planning agency, outlined the policies it is drafting for the 12th Five-Year Plan (2011-15).

Policy tools tailored to energy service industry are likely to include a national fund sponsored by the central government; a set of tax incentives, such as tax exemptions and tax breaks; an improved accounting system with regard to energy conservation expenses; and at the regional level, more energy-related special-purpose services from financial institutions.

Unparalleled progress has been made in energy conservation and emissions reduction thanks to rising central government support and public awareness across the nation, the official said. The momentum will continue and generate new achievements.

During the 11th Five Year Plan (2006-10), while average annual gross domestic product (GDP) growth was 10.72 percent, annual energy consumption growth remained at 6.51 percent. In other words, the ratio of energy consumption in proportion to GDP was 0.75 on average, "significantly lower" than during any of the previous five-year plans, Xie said.

In the meantime, a "responsibility system" has been developed to hold various government agencies to account for national and regional targets in energy saving and emission reduction. As a result, they have rolled out their own policies and matching technological solutions, Xie said.

Nationwide, 10 programs have resulted in a total energy saving capacity of up to 260 million tons of standard coal since 2006, exceeding the original goal of 240 million tons of standard coal. In a separate effort, large companies in nine energy-intensive industries have accumulated a total energy saving capacity of 130 million tons of standard coal.

Efforts in the last four years will leave an institutional legacy for the 12th Five-Year Plan, the official said, to promote energy saving and green energy under market economy conditions.

Those efforts have not only changed the trend in energy use against GDP growth for a country still in a rapid process of industrialization, he said. They are also helping China develop many new industries and thereby transform its entire economy, "to make the goal of a sustainable society more achievable".

However, tough challenges remain for the next stage of development, Xie pointed out, such as growing pressure on greenhouse gas emission cuts, rising green tariffs in the global market, and fiercer competition, in various forms, in the name of energy conservation and environmental protection.

Energy-related new services also face difficulties and restrictions, most noticeably a lack of funds, a high tax burden, policy failures, and competition barriers, he said.