(Adopted at the 14th Meeting of the Standing Committee of the Tenth National People’s Congress on February 28, 2005)

Contents

Chapter I General Provisions

Chapter II Resources Surveys and Development Plans

Chapter III Guidance for the Industry and Technical Support

Chapter IV Promotion and Application

Chapter V Price Control and Expenses Sharing

Chapter VI Economic Incentives and Supervisory Measures

Chapter VII Legal Responsibility

Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1 The Law is enacted in order to promote the exploitation of renewable energy, increase energy supply, improve the energy structure, ensure energy safety, protect the environment, and attain the sustainable development of the economy and society.

Article 2 For the purposes of this Law, renewable energy means non-fossil energy, including wind energy, solar energy, water energy, biomass energy, geothermal energy and ocean energy. Application of this Law to hydropower generation shall be subject to regulation by energy administration department under the State Council and approval by the State Council. This Law is not applicable to utilization of straw, firewood, excrement, etc. through direct burning in low-efficiency stove.

Article 3 This Law is applicable in the territory of the People’s Republic of China and the sea areas under its jurisdiction.

Article 4 In energy development, the State gives first priority to the exploitation of renewable energy and promotes the establishment and expansion of the market for renewable energy by setting objectives for the total volumes of the renewable energy to be exploited and taking appropriate measures. The State encourages economic entities of various ownerships to participate in the exploitation of renewable energy and protects the lawful rights and interests of the exploiters of renewable energy in accordance with law.

Article 5 The energy administration department under the State Council exercises unified control over the exploitation of renewable energy nationwide. The relevant departments under the State Council are responsible for administration of the work related to the exploitation of renewable energy within the limits of their respective duties. The energy administration departments of the local people’s governments at or above the county level are responsible for the administration of exploitation of renewable energy within their respective administrative areas. The relevant departments of the local people’s governments at or above the county level are responsible for administration of the work related to the exploitation of renewable energy within the limits of their respective duties.

Chapter II Resources Surveys and Development Plans

Article 6 The energy administration department under the State Council is responsible for organizing and coordinating surveys of renewable energy resources throughout the country, and work with the related departments under the State Council to lay down technical specifications for resources surveys.

The relevant departments under the State Council are responsible for related resources surveys of renewable energy within the limits of their respective duties and submit the results of the surveys to the energy administration department under the State Council.

The results of the surveys of renewable energy shall be released to the public, with the exception of the contents which should be kept confidential according to State regulations.

Article 7 The energy administration department under the State Council shall, on the basis of the demand for energy and the actual conditions of the renewable energy resources throughout the country, set medium-to-long term objectives for the total volumes of the renewable energy to be exploited nationwide, which shall be embarked on and released to the pubic upon approval by the State Council. The energy administration department under the State Council shall, on the basis of the objectives for total volumes mentioned in the preceding paragraph and the economic development and the actual conditions of the renewable energy resources of the provinces, autonomous regions, and municipalities directly under the Central Government, work with the people’s governments of the provinces, autonomous regions, and municipalities directly under the Central Government to set medium-to-long term objectives for the exploitation of renewable energy in the different administrative areas and release the objectives to the public.

Article 8 The energy administration department under the State Council shall, on the basis of the medium-to-long term objectives for the total volumes of renewable energy to be exploited throughout the country, work with the relevant departments under the State Council to draw up a national plan for exploitation of renewable energy which shall be carried out upon approval by the State Council. The energy administration departments of the people’s governments of provinces, autonomous regions, and municipalities directly under the Central Government shall, on the basis of the medium-to-long term objectives for the exploitation of renewable energy in their own administrative areas, work with the relevant departments of the people’s governments at the corresponding level to draw up plans for the exploitation of renewable energy in their own administrative areas, which shall be carried out upon approval by the people’s governments at the corresponding levels.

The approved plans shall be released to the public, with the exception of the contents which should be kept confidential according to State regulations.

Where an approved plan needs to be modified, the matter shall be subject to approval by the original approving authorities.

Article 9 For drawing up a plan for exploitation of renewable energy, opinions of the relevant units, specialists and the public shall be solicited, and scientific demonstration is necessary.

Chapter III Guidance for the Industry and Technical Support

Article 10 The energy administration department under the State Council shall, in accordance with the national plan for exploitation of renewable energy, compile and publish a development guidance catalogue of the renewable energy industry.

Article 11 The administrative department for standardization under the State Council shall set and publish the technical standards of the State for grid- connected power generation with renewable energy and other standards of the State for the technology and products related to renewable energy, for which the technical requirements need to be uniform throughout the country.

With regard to those technical requirements which are not covered by the standards of the State as mentioned in the preceding paragraph, the relevant departments under the State Council may establish relevant industrial standards, which shall be submitted to the administrative department for standardization under the State Council for the record.

Article 12 In scientific and technological development and in the department of the hi-tech industries, the State gives first priority to scientific and technical research in, and the industrialized development of, exploitation of renewable energy, includes such research and development in the national plan for scientific and technological development and the development of the hi-tech industries, and allocates funds for scientific and technical research in, and application, demonstration and industrialized development of, the exploitation of renewable energy, so as to promote technical advancement in the exploitation of the same, reduce the production cost of renewable energy products and improve product quality.

The administrative department for education under the State Council shall include knowledge and technology of renewable energy into the curriculum of general and vocational education.

Chapter IV Promotion and Application

Article 13 The State encourages and supports grid-connected power generation with renewable energy.

For construction of projects for grid-connected power generation with renewable energy, administrative license shall be obtained, or the matter shall be submitted for the record, in accordance with law and the regulations of the State Council.

Where there are more than one person that apply for construction of the same project for grid-connected power generation with renewable energy, for which administrative license need be obtained, the licensee shall be determined through bid invitation according to law.

Article 14 The power grid enterprise shall sign a grid-connection agreement with the enterprise of power generation with renewable energy that has legally obtained an administrative license or has submitted the project to be constructed for the record, and buy the entire quantity of the grid-connected power generated with renewable energy within the coverage of their power grids, and provide grid-connection services for the generation of power with renewable energy.

Article 15 The State supports construction of independent system of power generated with renewable energy in areas not covered by power grids, so that power services shall be provided for local production and people’s daily needs.

Article 16 The State encourages clean and efficient exploitation of biological fuel and the development of energy crops.

Where gas and heat produced with biological resources conform to the technical standards for connection with urban gas pipeline networks or heat pipeline networks, the enterprises operating gas pipeline networks and heat pipeline networks shall accept them into the networks.

The State encourages production and utilization of biological liquid fuel. Petroleum sales enterprises shall, in compliance with the regulations of energy administration department under the State Council or people’s governments at the provincial level, include biological liquid fuel that conforms to State standards in their fuel-selling system.

Article 17 The State encourages units and individuals to install and use solar energy utilization systems, such as solar water-heating system, solar heating and cooling system and solar photovoltaic system.

The administrative department for construction under the State Council shall work with the relevant departments under the State Council to formulate technical and economic policies and technical specifications for combination of solar energy utilization system with buildings.

In the design and construction of buildings, real estate development enterprises shall, in compliance with the technical specifications mentioned in the preceding paragraph, provide the necessary conditions for the utilization of solar energy.

For the existing buildings, the residents may, on condition that the quality and safety of the buildings are not affected, install solar energy utilization system that conforms to the technical specifications and product standards, unless the parties have agreed otherwise.

Article 18 The State encourages and supports exploitation of renewable energy in rural areas.

The energy administration departments of local people’s governments at or above the county level shall, in light of local economic and social development, the need for comprehensive improvement of ecological protection and public health and other actual conditions, work with the relevant departments to draw up plans for development of renewable energy in rural areas, in order to promote the wide use of the technologies for conversion of biomass energy like marsh gas, for household solar energy, small-scale wind energy and small-scale hydraulic energy.

People’s governments at or above the county level shall provide financial support for renewable energy utilization projects in rural areas.

Chapter V Price Control and Expenses Sharing

Article 19 Grid-connected power price of renewable energy power generation projects shall be determined by the price administration department under the State Council in light of the characteristics of power generated with different types of renewable energy and the conditions of different areas and on the principle that it is beneficial to the promotion of exploitation of renewable energy and that it is economically reasonable, and timely readjustment shall be made along with the development of technology for exploitation of renewable energy. The price for grid-connected power shall be made known to the public.

The price of grid-connected power generated by renewable energy power projects decided on through bid invitation as stipulated in the third paragraph of Article 13 of this Law shall be the bid-winning price; however, it shall not exceed the price level of grid-connected power of similar renewable energy power generation projects determined in accordance with the provisions of the preceding paragraph.

Article 20 Where the expenses incurred by a power grid enterprise in the purchase of grid-connected power generated with renewable energy at the price as determined in accordance with the provisions of Article 19 of this Law are in excess of the expenses for the purchase of grid-connected power generated with conventional energy, calculated at the average price, the difference shall be added to the selling price by way of sharing. The specific measures in this regard shall be formulated by the price administration department under the State Council.

Article 21 The reasonable grid connection expenses paid by power grid enterprises for the purchase of power generated with renewable energy and other reasonable expenses involved may be included in the power transmission cost of the enterprise and recovered from the selling price.

Article 22 For the selling price of power for public use generated from independent renewable energy power system invested or subsidized by the State, classified selling price of the same area shall be adopted, and the part of the expenses for rational operation and management that is in excess of the selling price shall be shared in accordance with the provisions in Article 20 of this Law.

Article 23 The price of heat and gas from renewable energy that enter the urban pipeline networks shall be determined within the limits of the power of price control and on the principle that it is beneficial to the promotion of exploitation of renewable energy and that it is economically reasonable.

Chapter VI Economic Incentives and Supervisory Measures

Article 24 The State establishes a special fund for the development of renewable energy in support of the following:

(1) scientific and technological research, formulation of standards and demonstration engineering for the exploitation of renewable energy; (2) projects for the use of renewable energy in people’s daily lives in rural and pasturing areas; (3) construction of independent systems of power generated with renewable energy in outlying areas and on islands;

(4) surveys, assessments of renewable energy resources, and construction of relevant information systems; and (5) promotion of localized production of equipment for exploitation of renewable energy.

Article 25 Financial institutions may offer preferential loans with financial interest subsidy to projects for exploitation of renewable energy that are listed in the national development guidance catalogue of the renewable energy industry and meet the requirements for granting loans.

Article 26 The State grants preferential taxation to projects listed in the development guidance catalogue of the renewable energy industry. The specific measures in this regard shall be formulated by the State Council.

Article 27 Power enterprises shall truthfully and completely record and keep the data regarding the generation of power with renewable energy and shall accept inspection and supervision by power regulatory institutions. Power regulatory institutions shall conduct inspection in accordance with specified procedures and shall keep business and other secrets for the inspected units.

Chapter VII Legal Responsibility

Article 28 Where, when exercising supervision over the exploitation of renewable energy, the energy administration department under the State Council, the energy administration department of a people’s government at or above the county level, or any other relevant department commits one of the following acts in violation of the provisions of this Law, it shall be ordered by the people’s government at the corresponding level or the relevant department of the people’s government at the next higher level to rectify, and the persons in charge who are responsible and the other persons who are directly responsible shall be given administrative sanctions according to law; and if a crime is constituted, criminal responsibility shall be investigated according to law:

(1) failure to make decisions on granting administrative license according to law; (2) failure to investigate illegal activities discovered; and (3)other failures in performing regulatory duties according to law.

Article 29 Where in violation of the provisions in Article 14 of this Law, a power grid enterprise fails to purchase the entire quantity of power generated with renewable energy, thus causing economic losses to the enterprise of power generated with such energy, it shall bear the responsibility for compensation, and the power regulatory institution of the State shall order it to rectify within a time limit; if it refuses to comply, it shall be fined not more than the amount of the economic losses suffered by the enterprise of power generated with renewable energy.

Article 30 Where in violation of the provisions of the second paragraph of Article 16 of this Law, an enterprise of gas pipeline network or heat pipeline network refuses to accept into the network gas or heat that conforms to the technical standards for grid connection, thus causing economic losses to the gas or heat production enterprise, it shall bear the responsibility for compensation, and the energy administration department of the people’s government at the provincial level shall order it to rectify within a time limit; if it refuses to comply, it shall be fined not more than the amount of the economic losses suffered by the gas or heat production enterprise.

Article 31Where in violation of the provisions of the third paragraph of Article 16 of this Law, a petroleum sales enterprise fails to include biological liquid fuel that conforms to State standards in its fuel-selling system, thus causing economic losses to the biological liquid fuel production enterprise, it shall bear the responsibility for compensation, and the energy administration department under the State Council or the energy administration department of the people’s government at the provincial level shall order it to rectify within a time limit; if it refuses to comply, it shall be fined not more than the amount of the economic losses suffered by the biological liquid fuel production enterprise.

Chapter VIII Supplementary Provisions

Article 32 The meanings of the following terms used in this Law are:

(1) Biomass energy means energy converted from natural plants, excrement as well as urban and rural organic waste.

(2) An independent system of power generated with renewable energy means the system of power generated with renewable energy that is not connected to power grids and that operates independently.

(3) Energy crops mean herbal and woody plants specially planted and used as raw materials of energy.

(4) Biological liquid fuels include methanol, ethanol, bio-diesel and other liquid fuels derived from biomass resources.

Article 33 This Law shall go into effect as of January 1, 2006.