Rewarding green efforts

Energy-saving retrofitting of existing facilities in China will receive expanded official incentives and support under implementing rules expected to be issued soon by four major Chinese governmental institutions, in accordance with goals and policies recently outlined by the General Office of China's State Council. The rules will detail conditions under which Energy Service Companies (Escos) and their customers can enjoy clarified preferential benefits including income tax deductions, value-added tax (VAT) and Business Tax (BT) exemptions, government-encouraged financing, and direct government subsidies.

These benefits have been promised in the State Council's Opinion on Accelerating the Implementation of Energy Management Contracting to Promote the Development of Energy Saving Service Industry (the Opinion), or Guo Ban Fa [2010]No. 25 which was issued on April 2 2010. The Opinion provided for implementing rules to be issued by the National Development and Reform Commission (NDRC), the Ministry of Finance (MoF), the People's Bank of China (PBOC) and the State Administration of Taxation (SAT), all of which are also understood to have been involved in preparing the text of the Opinion.