For the last two years, energy conservation has headed the list of major economic activities at the NDRC. For China’s current five-year economic planning period (2006-2010), the goal is to cut energy use per unit of GDP by 20 percent by 2010, averaging four percent per year.

Responses to the plan can be whimsical. This summer, suit and tie are out at CNPC headquarters in Beijing. CNPC, China’s largest oil and gas company, has been promoting casual wear among its staff in order to lower its air conditioning bills. CNPC is not alone. China has called for all government offices to keep the room temperature at 28 C in the summer.

Of course, as elsewhere, raising the summer thermostat to save energy is just a façade. For the first half of this year, the NDRC surprisingly found that energy use per GDP unit was higher than for that same period last year, forcing the NDRC to sign contracts with local officials and key industry sectors, committing them to meet their energy-saving targets by the end of the five-year planning period.

The top economic planning agency has also signed energy-saving contracts with over 1000 companies, including China’s top three energy-producing companies: CNPC, Sinopec, and CNOOC, which together accounted for 33 percent of China’s total energy consumption in 2005.

Significant transmission losses also contribute to China’s energy inefficiency. In China, 7.6 percent of transmitted power is lost en route, while developed countries lose only 5 to 6 percent.

China is still very much in the middle of its long march towards industrialization, which by its nature requires large amounts of energy. At a time when consumerism and commercialism are becoming stronger aspects of Chinese society, the country cannot rely solely on government pleas to increase energy efficiency. Legal measures will be necessary to guide the market.