Laws of the People's Republic of China

(Promulgated on January 12, 1986 by the State Council)

CONTENTS

CHAPTER I GENERAL PRINCIPLES

CHAPTER II ENERGY CONSERVATION MANAGEMENT SYSTEM

CHAPTER III FUNDAMENTALS OF ENERGY CONSERVATION CONTROL

CHAPTER IV MANAGEMENT OF ENERGY SUPPLIES

CHAPTER V CONTROL OF ENERGY CONSUMPTION IN INDUSTRY

CHAPTER VI CONTROL OF THE USE OF ENERGY IN URBAN-RURAL LIFE

CHAPTER VII PROMOTING TECHNOLOGICAL PROGRESS

CHAPTER VIII REWARDS AND PENALTIES

CHAPTER IX POPULARISATION AND EDUCATION

CHAPTER I GENERAL PRINCIPLES

   Article 1. These Regulations are formulated in order to implement the State policy on attaching equal importance to tapping and conserving, to use energy resources rationally, reduce energy consumption, boost economic benefits and ensure the sustained, steady and co-ordinated development of the State economy.

   Article 2. All urban and rural enterprises and institutions, as well as all organs, armed forces, group organisations and individuals shall abide by these Regulations.

   Article 3. Energy resources mentioned in these Regulations refer to coal, crude oil, natural gas, electric power, coke, gas, steam, petroleum, kerosene, diesel oil, fuel oil, firewood, etc.

The term "energy conservation" referred to in these Regulations means obtaining the greatest economic benefits with the least energy consumption in such ways as improved technology, rational use, scientific management, rationalisation of the economic structure, etc.

CHAPTER II ENERGY CONSERVATION MANAGEMENT SYSTEM

   Article 4. The State Council is responsible for establishing a meeting schedule for discussions on energy conservation work, for studying and examining the guiding principles, policies, legislation, plans and reform measures that are concerned with energy conservation and arranging and co-ordinating the work tasks of energy conservation. The State Planning Commission and the State Economic Commission are each responsible for the daily routine work in their respective areas.

   Article 5. The various People's Governments of the provinces, autonomous regions and directly administered municipalities and the relevant departments of the State Council shall designate key personnel to be in charge of energy conservation work, and may establish a meeting schedule for discussions on energy conservation work. The administrative body for energy conservation will be responsible for routine affairs.

Major energy consumption departments,bureau, districts and cities of the various provinces, autonomous regions and directly administered municipalities shall appoint key personnel to be in charge of energy conservation work and designate their corresponding administrative bodies.

Local and departmental administrative bodies for energy conservation will be mainly responsible for the implementation of the guiding principles, policies, legislation and standards of the State on energy conservation. They will formulate policies and plans on energy conservation technology for their respective districts, businesses or departments, organise and direct technical development and innovation in energy conservation work, inspect, supervise and promote the improvement of energy conservation management by their respective districts, businesses or enterprises and other units of their departments, and fulfil the task of energy conservation work through overall planning and co-ordination.

   Article 6. Enterprises with an annual overall energy consumption in excess of the equivalent of 10,000 tonnes of standard grade coal (hereinafter referred to as major energy consumption enterprises) shall appoint key personnel to be in charge of energy conservation work, and designate corresponding administrative bodies. In the case of enterprises with an annual energy consumption of less than the equivalent of 10, 000 tonnes, regulations will be made by their respective regions and departments according to their specific circumstances to the above provisions.

The energy conservation administrative bodies of enterprises are mainly responsible for the implementation of the guiding principles, policies, legislation and standards of the State on energy conservation and regulations on energy conservation promulgated by respective regions and departments, as well as being responsible for formulating and organising the implementation of technical measures for energy conservation, for the improvement of scientific management of energy conservation, for minimising the energy consumption per product unit and fulfilling energy conservation work tasks.

   Article 7. Localities, departments and enterprises must develop a responsibility system for all energy conservation work.

Energy conservation administrative bodies at the various levels shall be manned by cadres and technicians who have professional knowledge and who are capable and devoted to energy conservation work.

   Article 8. Energy conservation administrative bodies of local People's Governments and the relevant departments of the State Council, together with supervisory organs within their respective areas of jurisdiction or enterprises will implement these Regulations.

Local and departmental energy conservation administrative bodies, apart from carrying out their supervisory duty as stipulated in Article 5 of these Regulations, may also commission energy conservation technical service centres or other relevant units to conduct monitoring and inspection of the consumption of energy in production and daily life within their respective areas of jurisdiction or enterprises.

CHAPTER III FUNDAMENTALS OF ENERGY CONSERVATION CONTROL

   Article 9. The State Statistical Bureau shall establish and improve energy statistical systems. The statistical departments at various levels, together with the departments in charge within enterprises, shall properly carry out energy statistical work.

Enterprises shall establish and strengthen their daily energy consumption records and accumulative statistical records. In accordance with The Statistics Law of the People's Republic of China and other State regulations on statistical work, statistical statements concerning energy shall be regularly submitted to statistics departments. energy conservation administrative bodies and departments in charge within enterprises.

   Article 10. In accordance with The Weights and Measures Law of the People's Republic of China and other State regulations on weights and measures, enterprises shall be equipped with energy measuring equipment to strengthen control over work concerning the measurement of energy.

   Article 11. The State Bureau of Standardisation shall organise the formulation of various basic energy standards, energy management standards and standards concerning energy consumption with regard to the production of goods. Local regions and departments shall formulate local and departmental energy conservation standards in accordance with State standards and in conjunction with their specific circumstances. Enterprises should conscientiously implement the various energy conservation standards.

   Article 12. The department in charge within an enterprise shall, in conjunction with an energy supply department, regularly formulate up-to-date and feasible energy consumption quotas for the enterprise's major energy consumption products, in accordance with the overall energy consumption testing quota and individual consumption quotas set by the departments in charge under the State Council, and conduct careful assessments. Enterprises shall distribute and explain the various energy consumption quotas to all workshops, teams and machine operators and establish a responsibility system for the utilisation of energy.

   Article 13. Enterprises shall conduct energy consumption analysis and balance energy use with needs. The major energy consumption enterprises shall establish an examination system of overall energy consumption and individual consumption.

CHAPTER IV MANAGEMENT OF ENERGY SUPPLIES

   Article 14. In conjunction with energy supply departments and departments in charge within enterprises, the local energy conservation administrative bodies shall organise enterprises to correctly supply energy requirements and carry out conservation work. Energy will be supplied in accordance with an enterprise's energy management standards, energy consumption rates for the production of goods and overall economic benefits, and the best qualified enterprises will have priority supply. Enterprises with energy mainly acquired through State allocation shall, according to the individual circumstances, contract a fixed quantity or quota. Any energy allocation conserved will be retained by the enterprise for future use.

   Article 15. The coal industry shall develop coal screening and process washing and sorting, improve the quality of the coal supplied and carry out the planned supply of coal to the correct parties.

Coal production departments and communications and transportation departments shall organise the supply of coal of a pre-determined quality and quantity, in accordance with the distribution schedule and the enterprises' supply, marketing and transportation contracts. As for the use of coal by large scale metallurgical, electric power, chemical industry and construction enterprises, and by railway locomotives, coal will be supplied according to the specific needs of the different users and supply stations will be established progressively to cater to users at various localities.

Urban fuel companies shall supply coal as a power supplement in accordance with the requirements of medium and small scale enterprises.

   Article 16. The price of coal supplies will be set on the basis of quality. The price of steaming coal will be based on calorific value.

Concerning the quantity of coal, a system of commodity coal being measured according to its actual weight and standard coal being evaluated according to its reduced mass will be gradually implemented.

   Article 17. The system of planned electricity supply and consumption will be strictly implemented. The scope of rights and obligations on the part of both the suppliers and consumers of electricity will be enforced in accordance with the Rules on the National Supply and Consumption of Electricity, drawn up by the departments in charge under the State Council.

A number of different prices for electricity will be implemented and enterprises will be encouraged to use electricity during periods of abundant water when excess is being discharged and during off-peak loading periods when the demand for electricity is at its lowest. The calculation of electricity costs will be done in accordance with the Provisional Regulations on Encouraging the Generation of Electrical Power through Pooled Resources and the Implementation of a Number of Different rices for Electricity which has been approved by the State Council and passed on to the State Economic Commission and other departments.

   Article 18. The burning of oil will be strictly controlled. Where new oil burning enterprises are established, approval procedures shall be carried out in accordance with relevant State regulations. Enterprises which have decided to replace oil with coal must undertake the changeover within a given time.

Parity price crude and fuel oil for use in boilers and industrial kilns will have a special oil burning tax levied in accordance with Tax Law provisions.

   Article 19. The use of oil in diesel generators will be strictly controlled. Apart from the use of electricity in production operations carried out in non-power resource areas and in border regions and pastoral areas, together with areas where a power supply unit is essential, such as hospitals, broadcasting, post and telecommunications and scientific research, no guarantee will be given for the supply of oil to other diesel generators.

   Article 20. Petroleum supply departments shall join with the relevant departments to rationally plan the construction of urban and rural petrol stations and ways to reduce wastage involved in the storage and transportation of oil products.

CHAPTER V CONTROL OF ENERGY CONSUMPTION IN INDUSTRY

   Article 21. In the construction of industrial enterprises, natural energy resource conditions, the regional balance between production and sales of energy resources and their appropriate destination shall be taken collectively into consideration so that a rational layout can be implemented. In areas deficient in energy resources, plans to consuming industrial projects will not be permitted unless they are priority requirements of the State.

It is prohibited to restore or develop small scale blast furnaces, converters, electric furnaces, rolling mills and thermal electricity, or to undertake the smelting of non-ferrous metals, electrolysis and other high energy consuming production except in areas with abundant energy resources or where communications are inconvenient, in which case production will be allowed after approval is given by the People's Government of the province, autonomous region or directly administered municipality or by their authorised organs.

   Article 22. As long as social needs are guaranteed, the structure of industry, enterprises and products shall be adjusted in accordance with the principle of the rational use of energy.

   Article 23. Enterprises shall act in accordance with the principle of rational use of energy in order to organise production in a balanced, stable, centralised and co-ordinated fashion and to avoid losses or wastage of energy.

   Article 24. The circulation and control of heat supply systems and the use of leftover heat by enterprises shall be carried out in accordance with the relevant provisions of the Guiding Technological Principles on Estimation of the Rational Use of Heat Within Enterprises, formulated by the State Bureau of Standardisation.

   Article 25. It is prohibited to expand the capacity of boilers without authorisation. Should an enterprise need to expand its evaporative capacity due to newly added boilers or the rebuilding of old ones, it must report in advance to the local energy conservation administrative body which, in conjunction with the department in charge of the enterprise, the labour department and the fuel supply department, will grant approval after examination.

   Article 26. The departments in charge of the enterprises shall conduct regular inspections and appraisals of the major kilns of their respective enterprises and raise the grade of the kilns in accordance with the examination standards of their particular industry regarding the grading of kilns.

   Article 27. Coking by indigenous methods is strictly prohibited. However, in special circumstances these methods may be retained with the approval of the respective provincial, autonomous region or directly administered Municipal People's Governments or their authorised organs where the enterprise is located.

   Article 28. Electricity departments shall undertake the rational construction and reform electricity networks in order to raise the capacity of electricity supplies and to ensure the quality of supply. Measures shall be adopted to make rational use of water energy and highly effective firepower electrical units to produce electricity and to strengthen the economic management of the electricity network so as to minimise the consumption of water and coal and to economise on fuel.

The technical requirements for the supply and use of electricity in enterprises will be handled in accordance with the relevant provisions of the Guiding Technological Principles on Estimation of the Rational Use of Electricity Within Enterprises, formulated by the State Bureau of Standardisation.

   Article 29. The co-ordinated production of heat and power must be developed. Where the amount of steam used in production by a consumer of heat reaches a certain level, and a steady thermal load is maintained throughout the year, the electricity department and local areas shall carry out the co-ordinated production of heat and power in accordance with the principle of "determining electricity by heat".

Enterprises must be encouraged to generate electricity from surplus heat and voltage. Electricity departments shall follow State provisions in rendering support to enterprises' self-provided thermal power stations, as well as locally built small thermal power stations, in their sale of electricity through the electric power network.

   Article 30. In areas where industry is relatively concentrated, the local economic administrative department shall organise, in a planned way, the professional production of heat treatment, electroplating, casting, forging and oxygen production in order to maximise the rate of energy utilisation.

   Article 31. Ignitable gases diffused by metallurgical, petroleum, chemical and coal industry enterprises shall be actively recovered and appropriately used.

Collieries and nearby industrial enterprises shall develop the comprehensive use of gangue where economically viable. In areas rich in bone coal, poor quality coal and oil shale resources, the local low grade heat fuel shall be put into comprehensive use in accordance with economic benefits.

CHAPTER VI CONTROL OF THE USE OF ENERGY IN URBAN-RURAL LIFE

   Article 32. The range of coal resources for civilian use shall be extended by progressively introducing the use of moulded coal for coal consumption in daily life and popularising the use of honeycomb briquettes, together with actively developing smokeless combustion technology for soft coal.

   Article 33. Forests for firewood and charcoal will be actively developed and stoves which make economical use of firewood and coal should be popularised. Areas with the necessary conditions will actively develop and make positive use of new energy sources such as methane, solar energy, wind power and geothermal energy.

   Article 34. Urban gas will be developed by utilising various gas resources. Departments of urban and rural construction and environment protection shall formulate plans, in conjunction with the relevant departments, to progressively promote the use of gas in urban areas.

   Article 35. On the premise that an appropriate interior living environment is ensured, comprehensive measures shall be adopted in the design of building structures to appropriately determine the type of building and its positioning, improve the structure of protective enclosures, select low energy consuming facilities and make full use of natural light sources to minimise the use of energy for lighting, heating and refrigeration.

   Article 36. Central heating will be developed. All newly constructed residences and public buildings with heating systems shall be uniformly planned, and central heating adopted. With regard to the decentralised heating system currently in use, measures must be actively adopted to gradually eliminate low efficiency boilers and to implement central heating.

According to the principle of economic rationale, heating facilities for buildings shall use or be converted to hot water heating systems.

   Article 37. Meters shall be installed to collect fees for the amount of electricity, water and gas used by urban and rural residents and the system of one set fee and free transferral of supplies will be abolished.

CHAPTER VII PROMOTING TECHNOLOGICAL PROGRESS

   Article 38. Newly built, renovated and extended engineering projects must adopt up-to-date technology and facilities with a rational energy consumption which should not exceed the advanced domestic target. Relevant departments in the course of formulating or modifying design specifications, norms and regulations within their respective industries, must meet specific requirements for energy conservation. Feasibility studies and initial designs of engineering projects must include special proof of rational energy use. Where engineering projects do not conform with energy conform with energy conservation requirements set out in the design specifications, norms and regulations, examining and approval units will not grant approval for construction.

   Article 39. Local areas, departments and enterprises shall draw up medium and long-term plans and annual schedules for the improvement of energy conservation, in accordance with the particular industry's technological policies for energy conservation, and organise implementation. Major energy consumption enterprises shall construct, in a planned way, a group of technically advanced, economically viable and easily popularised projects demonstrating energy conservation.

   Article 40. Funds to be used by an enterprise for the technical improvement of energy conservation will primarily come from the enterprise's depreciation fund and remaining production funds. Should a key energy consumption enterprise consume more energy than the average for that particular industry during the production of its major products, energy conservation must become the main target in its technical innovation, and priority must be given to its inclusion in the plan for the arrangement of funds.

A fixed proportion shall be withdrawn annually from the depreciation funds held by localities and departments for use by enterprises undertaking energy conservation measures, and the proportion of funds withdrawn for energy receiving areas and key energy consumption departments must not be lower than 20 per cent of the depreciation fund held by their respective areas and departments.

   Article 41. Preferential rates of interest will be given to energy conservation loans listed within the State credit plan and relevant departments in charge may also grant discounts on interest in accordance with State regulations. Enterprises which receive such loans are permitted to repay them with newly generated profit prior to the payment of income tax.

Relevant departments in charge, in accordance with the State regulations, may grant partial or full exemption from repayment of the principal and interest to energy conservation projects where capital construction costs have changed from appropriation to loans and where such undertakings would be more beneficial to society than to the enterprise.

Concerning the capital construction of State planned energy conservation projects, the State will offer part of the investment and will encourage local areas, departments and enterprises to pool resources for use in the construction of such projects.

Measures such as the invitation and submission of tenders shall be adopted in the construction of energy conservation projects.

   Article 42. For major energy conservation projects a design and consulting unit approved by energy conservation management bodies must produce technical and economic proof or a feasibility study. The design and consulting units shall follow the provisions of the contracts and bear corresponding legal liabilities for the technical reliability and economic rationality of the projects under construction.

   Article 43. Major technical development projects for energy conservation shall be included in the State's key scientific research plan. The energy conservation management bodies of local areas and departments shall actively organise the study and popularisation of applied technology in energy conservation.

   Article 44. Following examination and approval by the department in charge under the State Council, goods produced with obvious energy-saving results and which are in great demand by society will be given a preferential price for being of high quality.

In accordance with the Provisional Regulations on Several Policies in Promoting the Technological Progress of State Owned Enterprises, approved by the State Council and passed on to the State Economic Commission and other departments, new energy-saving products appraised and approved by the relevant departments will be exempt from Product Tax and Value Added Tax for a fixed period.

   Article 45. Where overseas technology and equipment are introduced, the technical conditions, economic benefits and level of energy consumption must all be comprehensively taken into consideration. Preference will be given to the introduction of those with high energy-saving results, and restrictions will be placed on those with high energy consumption.

   Article 46. Energy-saving machinery and equipment, testing apparatus, instruments, etc., that are introduced for use in an enterprise's technical upgrading, will be exempt from Import Duty and Product Tax (or Value Added Tax) in accordance with the provisions of the State Tax Law.

   Article 47. Manufacturing enterprises must within the stipulated time period cease manufacturing and selling mechanical and electrical products that have been pronounced obsolete by the State.

Mechanical and electrical products that have been pronounced obsolete by the State and facilities that over reach energy consumption standards but which are still in use in an enterprise in accordance with the provisions of the department in charge, must be withdrawn from use within a given time or be subject to replacement or renovation, and their transferral to other uses is also prohibited.

   Article 48. Local areas and departments shall actively develop a market for energy-saving technology and carry out compensatory technology transfer. According to needs and conditions, energy-saving technology service centres may be established to offer services in consultancy and information, energy resource assessments and other matters to enterprises.

CHAPTER VIII REWARDS AND PENALTIES

   Article 49. The State will hold regular activities where advanced energy-saving units are chosen through public appraisal and incentive awards are presented to the units that have achieved outstanding results in energy conservation.

   Article 50. The State will encourage people to take part in energy conservation. Units which have benefited from adopting a rationalisation proposal for energy conservation will give incentive awards in accordance with the economic benefits and State provisions to persons who put forward such proposals. The State will protect the legal rights of persons who criticise energy wastage and no vindictive retaliation will be permitted.

   Article 51. All State-owned industries and communications enterprises which comply with Articles 9, 10, 11 and 12 of these Regulations, following approval by the energy conservation management bodies and other relevant departments, may draw energy conservation bonuses in accordance with the relevant State provisions on incentive awards for the conservation of specific fuels and raw materials.

   Article 52. Incentive awards given for urban water conservation and hydroelectricity will be formulated separately by the Ministry of Urban and Rural Construction and Environment Protection and the Ministry of Water Resources and Electric Power and will be promulgated for implementation following examination and approval.

   Article 53. Any unit or individual who violates these Regulations will be criticised and educated by energy conservation management bodies if the case is not very serious but, if otherwise, punishment will be dealt in accordance with the severity of the case, based on the following principles:

(1) Where an enterprise violates the first provision of Article 18 by continuing to burn oil after the stipulated time period, oil supplies will be cut. The decision to halt supplies will be given by the organ in charge of reducing the burning of oil, and it will notify fuel supply departments to implement the decision.

(2) Where an enterprise violates the second provision of Articles 21 and 27 by restoring and further developing high energy-consuming small blast furnaces, converters, electric furnaces, rolling mills and firepower electricity, or undertaking smelting of non-ferrous metals, electrolysis and other such production, together with enterprises which continue to retain indigenous coking methods, the local energy conservation management body will decide whether to halt energy supplies and the administrative departments of industry and commerce will revoke the business licence.

(3) Where an enterprise violates the provision of Article 25 through the unauthorised expansion of boiler capacity, a fine will be imposed by the local energy conservation management body and fuel supply departments will not provide energy resources to supply boilers that have without authorisation had their capacity expanded.

(4) Where an enterprise violates the provisions of Article 47 by continuing to produce, sell, use or transfer mechanical and electrical products and equipment referred to in that Article, the bank will cease to grant loans and the local energy conservation management body will decide whether to halt energy supplies and impose a fine.

(5) Where an enterprise has violated the provisions of the above-mentioned Articles, with resulting serious energy wastage, apart from the above-mentioned penalties, energy conservation management bodies shall also assist the relevant departments in investigating the administrative responsibility of the persons in charge of the enterprise and others directly responsible.

Having been dealt the above-mentioned penalties does not exempt the unit or individual from continuing to fulfil the relevant obligations stipulated in these Regulations.

   Article 54.. An enterprise that has consumed energy in excess of the quota shall be charged a higher price for the extra energy used. This additional expense is not permitted to be included in calculation of expenditure for production costs and non-operating expenses. The extra income arising from the raised price will be held by the local energy conservation management body for use in undertaking energy conservation measures.

An enterprise that has made an extra payment for over-using energy is not excluded from the responsibility of paying fines for violation of these Regulations.

CHAPTER IX POPULARISATION AND EDUCATION

   Article 55. Propaganda departments shall actively propagate the guiding principles, policies and technical knowledge concerning energy conservation by making full use of broadcasting, television, newspapers, periodicals, lectures and other forms of dissemination so as to heighten the awareness of the whole nation about energy conservation work and to enhance scientific and technological standards.

   Article 56. Education departments shall actively develop their multi-layered energy conservation talents. Universities and polytechnic schools shall carry out planned training for high and middle rank administrative personnel involved in energy conservation.

High schools and primary schools shall pay attention to instilling in children, knowledge of energy and nurturing their awareness of energy conservation.

   Article 57. Factory directors in charge of energy conservation work in enterprises, administrative personnel of energy conservation bodies and the relevant operating workers shall receive systematic training in energy conservation. Examination results of such training shall be regarded as part of the all round examination of staff and workers.

   Article 58. The People's Governments of the various provinces, autonomous regions and directly administered municipalities, the relevant departments of the State Council and the armed forces may formulate detailed implementing rules in accordance with these Regulations.

   Article 59. The State Economic Commission will be responsible for the interpretation of these Regulations.

   Article 60. These Regulations are effective from April 1, 1986.

From the date these Regulations become effective, the Directive of the State Council on Reducing the Amount of Oil Burnt in the Various Boilers and Industrial Kilns, the Directive of the State Council on Electricity Conservation, the Directive of the State Council on the Conservation of the Amount of Coal Used in Industrial Boilers and the Directive of the State Council on the Rational Use of Energy through the Development of Coal Washing and Sorting Processes shall immediately become invalid.