The central government is working on a long-term plan to increase the use of alternative fuels to reduce the dependence on oil.
Coal gas and renewable energy sources such as biomass and solar power are expected to become "major alternatives," according to the National Development and Reform Commission (NDRC).
Wu Yin, a senior energy official with NDRC, said at a weekend meeting that the recommendations of a national leading group from several cabinet departments are part of an "oil alternative strategy."
He said "the essence of the report" will be incorporated in China's 11th Five-Year Plan (2006-10), which will be discussed at the annual session of the National People's Congress the supreme legislature next month.
China aims to raise the ratio of renewable energy in total consumption to 13 per cent by 2020, up from the current 7 per cent.
Zhang Guobao, vice-minister of the NDRC, said the key to achieve the goal is to increase the use of nuclear, wind and solar energy so that dependence on coal and oil could be cut.
The use of renewable energy has been growing at more than 25 per cent in China the highest in the world and Zhang said solar power consumption in the country accounted for 40 per cent of the global total at the end of 2004.
The government has decided to significantly raise the availability ethanol as vehicle fuel, which is currently being used in five provinces. Corn, wheat, potatoes and sugarcane are major raw materials for the alternative fuel.
Given the abundance of reserves in the country, coal liquefaction a clean and relatively efficient way of producing synthetic products is also high on the agenda.
China Oil News reported last week that the government plans to spend US$15 billion to build plants that annually manufacture 16 million tons of oil products from coal in the next five to 10 years.
The plants will be located in coal-rich Shanxi, Shaanxi and Yunnan provinces, as well as the Inner Mongolia Autonomous Region.
According to earlier reports, Shenhua Group, the nation's largest coal producer, is building a 24.5 billion yuan (US$2.96 billion) coal liquefaction plant in Inner Mongolia, the first of its kind in the country.