"China is currently in a period of industrialization and urbanization," said Zhou. "The secondary industry is continuously gaining weight in the national economy. Amid concerns of an irrational industrial structure and the sluggish development of the energy-saving tertiary industry, China faces difficulties in discarding its energy-consuming and polluting industries."

Stronger encouragement

This year is the most critical year for China to realize its 2010 targets for its emission reduction campaign.

On January 21, the Office of the State Council Working Group on Energy Conservation and Emission Reduction vowed to strengthen its efforts in the campaign. Eight enforceable measures also came into being, including intensifying the target responsibility system, checking and implementing the Comprehensive Working Program on Energy Saving and Emission Reduction, adopting calculation, inspection and examination methods, implementing the stern responsibility system and the one-veto-down system, improving the inspection system for the elimination of emissions and consolidating the examination and enforcement of the campaign.

According to Li Pumin, Director of Policy Research Office with the NDRC, in 2008 China will forge ahead with a general campaign of energy conservation and emission reduction. Promotional efforts will also increase to propel the development of an ecological civilization. By September 1, 2007, 17 departments of the Central Government and some regional organizations had launched promotional activities, fostering a sound social climate.

The elimination of outmoded production capacity will also continue, with efforts such as disabling small thermal power units of 13 million kw and cement, steel and iron productivity capacity of 50 million, 6 million and 14 million tons, respectively.

Special attention will be paid to enterprises and projects that include crafting an energy efficiency benchmark and launching an energy audit system and a supervisory system for clean production. With regard to the treatment of urban wastewater, efforts will be made to accomplish the collection and disposal of wastewater in 36 large and medium-sized cities around the country.

Last year was the start of China's energy conservation and emission reduction campaign, and a total input of 29.8 billion yuan ($4.2 billion) was implemented to finance key projects and the construction of treatment facilities for urban wastewater. Li projected increased investment in key projects this year. When completed, these projects will be endowed with the capability to save as much energy as over 30 million tons of standard coal.

Investments in individual energy conservation and emission reduction will also grow. In the next five years, China is expected to pump $300 billion into the campaign, making up 30 percent of the world's total capital input for energy conservation projects.

This year the Chinese Government will further perfect the taxation system in favor of energy saving and emission reduction and cultivate a rational system for the use of energy and resources more efficiently.

According to Li, in 2008 China will expand the objects of its resource tax, revise upward its tax rate, and link the resource tax directly with market prices, which are all aimed at paying for the use of state-owned resources.

Relevant departments are exploring an environmental tax system out of considerations for environmental protection. Taxation leverage will be made use of to advance the creation of an energy-saving and environment-friendly society. The price leverage can also help with a rational pricing mechanism to cover the costs of pollution controls.

"China will be endowed with a better environment for energy conservation and emission reduction in 2008," said Li.

Many experts have predicted that in 2008 China will likely log an annual decrease of 4.4 percent in energy consumption per unit of GDP.