Members of the Standing Committee of the National People’s Congress (NPC) of China have approved a new law designed to promote renewable energy. The Law on Renewable Sources, which upholds renewable energy as a priority in China’s energy strategy, will see renewables make up a bigger share of China’s energy resources.

The new law, which comes into force in 2006, orders power grid operators to purchase resources from registered renewable energy producers within their service domains and at government-fixed prices. The extra costs incurred will be shared throughout the overall power network.

The law also offers financial incentives, such as a national fund to foster renewable development, and discounted lending and tax preferences for renewable projects. The law was fast-tracked through the legislature in recognition of the growing energy crisis facing the country, where about 60% of China’s 768 million rural residents still use open fires to cook on and 20,000 or so remote villages housing about 30 million people are still without power supplies.

“The development and use of renewable energy has special importance because China is a developing country with severe energy shortages,” Standing Committee member Li Congjun is quoted as saying.