Solutions

All of the challenges should be tackled under an integrated solution system, in which government will play a major role in terms of policy formulation and coordination, emphasized Stigson, who is a member of the China Council for International Cooperation on Environment and Development, a high-level advisory body conducting research and providing policy recommendations to the Chinese government. He is also co-chair of the body's Low Carbon Economy Task Force.

The task force has just submitted a report to the State Council, offering some practical policies for decision-makers preparing the 12th Five Year Plan (2011-2015) and beyond.

Leading the suggestions is a call to start the development of a low-carbon economy as early as possible, incorporating the concept into the plan and introducing CO2 emission intensity as a binding target in the plan.

Reforming energy pricing to reflect market demand and supply, resource shortages and environment cost are also highlighted.

For instance, the price of coal, the No 1 industrial energy resource in China, should reflect production, administrative and environmental costs, and electricity and oil and gas should move towards market-based pricing, calibrated with a resources tax.

The report also suggests the building of a green tax system and increasing fiscal expenditure on the development of the low-carbon economy.

Some specific measures involve incorporating the costs of environmental damage and resource depletion in energy pricing through adjusting taxes and fees during early resource exploration, implementing "polluter pays" principles - pollution fees replaced by resource taxes collected as a percentage of the market price, as well as reducing export tax rebates for energy-intensive products.

Aggressive support, such as a combination of direct support, tax incentives and institutional support for technological innovation, diffusion and international cooperation are recommended.

It proposes the establishment of an open national energy research institution with the ability and facilities to carry out research, deliver pilot projects, and carry out trails, testing and certification. The institution, a systematic technology innovation support unit, will be open to businesses, universities and other research institutes, and work to make up for the lack of common technology in the new energy sector.

Other recommendations involve improving legislation and regulations and strengthening enforcement, enhancing the quality of energy and carbon statistics and measurement, and including low carbon economy requirements in urban planning.