The Chinese government is to introduce a seven-billion-yuan (US$933 million) reward scheme aimed at encouraging companies around the country to conserve energy and reduce emissions.

The plan comes as part of a 23.5-billion-yuan package announced Monday by the Ministry of Finance to promote energy efficiency and reduce pollution.

Zhang Shaochun, vice minister of finance, said the rewards would be granted to enterprises that fulfill the requirements in reduction of emissions and be used to support technical innovation.

"Instead of giving stipends in advance, we have chosen to subsidize only enterprises and governments that have made effective expenditures in energy conservation and reward those that have done good jobs in this regard," said Zhang.

He said the shift in strategy would help spur the enthusiasm for energy conservation at grass-roots level.

Another 6.5 billion yuan will be used to build sewerage networks in central and western cities. Official figures from last year show one third of China's 660 cities had no sewage plants, while many pipes were plagued by leakages, resulting in treatment plants operating under capacity.

Zhang said about two billion yuan would be used to compensate workers from inefficient enterprises that are closed down such as small power units and paper mills, and provide them with vocational training.

Another three billion yuan would be used to improve the collection of statistics and environment monitoring, while the remaining five billion yuan would finance treatment of the polluted Huaihe, Haihe and Liaohe rivers and Taihu, Chaohu and Dianchi lakes.

Last year's total financial investment in energy conservation and pollution reduction by the government has not been released.

Zhang said local governments had become increasingly supportive. Jiangsu Province, for instance, had channeled half its revenue increment into energy conservation. Shanxi and Shandong provinces set aside 1.5 billion yuan and 1.2 billion yuan respectively this year.

He said the government was mulling a much more effective mechanism that would use market forces to boost grassroots enthusiasm for energy conservation. Taxation and fees are expected to have a bigger leverage.

Although China aims to cut energy consumption for every 10,000 yuan (US$1,298) of GDP by 20 percent between 2006 and 2010, with emissions to drop 10 percent, the targets for 2006 and the first half of this year were missed by most provinces.

On Friday, the government put in place a system to monitor nationwide efforts to conserve energy and reduce emissions and threatened to block the promotion of officials and heads of state-owned enterprises who failed to meet the targets.

Local authorities would have rules to guide and measure efforts to meet energy and pollution targets for 2010, said a government circular.

By setting mandatory targets for officials, the government is trying to lay the foundation for the "scientific concept on development" proposed by the central leadership.

The concept advocates a greater emphasis on environment protection and the interests of the poor, even as it tries to maintain fast economic growth.

China, the world's fourth largest economy, is consuming its natural resources at a rate faster than its economic growth. To produce 5.5 percent of the world's GDP last year, China burned 15 percent of the world's coal consumption, and used 30 percent of the world's steel and 54 percent of the cement.

(Xinhua News Agency November 27, 2007)