(Unofficial translation, original text appears below)
Notice of the Ministry of Finance and the National Development and Reform Commission on Issuing the Administrative Measures for the Financial Incentive Funds for Energy Conservation Technology Retrofits
(No. 367  of the Ministry of Finance)
The public finance departments (bureaus) and the development and reform commissions (economic commissions, economic and trade commissions, commissions of economy and information technology, industry and information technology commissions, and industry and information technology departments) of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning; the Public Finance Bureau and the Development and Reform Commission of Xinjiang Production and Construction Corps; and the relevant central enterprises:
To accelerate the promotion of advanced energy conservation technologies, improve the efficiency of energy utilization, and realize the binding target of reducing energy consumption per unit of GDP by 16% during the “12th Five Year Plan” period, and in accordance with the Energy Conservation Law and the Outline of the 12th Five Year Plan for National Economic and Social Development, the Central Treasury shall, by means of “replacing subsidies with rewards,” continue to arrange special funds to provide appropriate support and rewards for enterprises to carry out energy conservation technology retrofits.
To strengthen the administration of financial funds and improve the efficiency of fund utilization, we have formulated the Administrative Measures for the Financial Incentive Funds for Energy Conservation Technology Retrofits for your compliance and implementation.
Ministry of Finance
National Development and Reform Commission
June 21, 2011
Annex: Administrative Measures for the Financial Incentive Funds for Energy Conservation Technology Retrofits
Chapter I General Provisions
Article 1 In accordance with the Energy Conservation Law of the People’s Republic of China and the Outline of the 12th Five Year Plan of the People’s Republic of China for National Economic and Social Development, the Central Treasury shall, during the “12th Five Year Plan” period, continue to arrange special funds to provide appropriate support and rewards (hereinafter referred to as the “incentive funds”) for energy conservation technology retrofit projects by means of “replacing subsidies with rewards” for purposes of accelerating the promotion of advanced energy conservation technologies and improving the efficiency of energy utilization. These Measures are hereby formulated for the purposes of strengthening the administration of financial funds and improving the efficiency offund utilization.
Article 2 To guarantee the actual results regarding energy conservation technology retrofit projects, the incentive funds shall be linked to the amount of energy conserved, and entities undertaking projects shall be rewarded if they complete the expected targets.
Article 3 The incentive funds shall be provided under the principles of openness and transparency and be subject to supervision by all aspects of society.
Chapter II Projects to be rewarded and conditions for rewards
Article 4 The incentive funds shall be provided to projects which carry out energy conservation technology retrofits for existing production processes and equipment.
Article 5 To apply for incentive funds, an energy conservation technology retrofit project must meet the following conditions:
(1) has completed examination, approval or archival filing in accordance with relevant provisions;
(2) the main body under retrofit meets national industrial policies and has been operated for three years or more;
(3) the energy conservation amount is 5,000 tons of standard coal equivalent or more;
(4) the amount of annual comprehensive energy consumption of the project entity is 20,000 tons of standard coal equivalent or more before retrofit; and
(5) the project entity has sound measures for energy measurement, statistics and management, and the energy conservation amount arising from the project can be monitored and verified.
Chapter III Standards for Rewards
Article 6 For an energy conservation technology retrofit project in the eastern region, a onetime reward of 240 yuan per ton of standard coal equivalent shall be granted on the basis of the amount of annual energy conservation achieved after the completion of the project, and for a project in the central and western regions, a onetime reward of 300 yuan per ton of standard coal equivalent shall be granted.
Article 7 Provincial public finance departments shall arrange sufficient funds which shall primarily be used to pay examination fees to third party institutions and other fees.
Chapter IV Application for and Allocation of Incentive Funds
Article 8 For an eligible energy conservation technology retrofit project, the project entity (including an enterprise directly under the Central Government) shall provide an application report for incentive funds (see Annex 1 for specific requirements), and submit it to the competent energy conservation department and public finance department at the place where the project is located after it is signed by the entity’s legal representative. The competent energy conservation department and public finance department at the provincial level shall organize experts to conduct preliminary examination of the application report for project funds. The provincial public finance department and the competent energy conservation department shall authorize a third party institution (which must be included in the list of third party institutions published by the Ministry of Finance and the National Development and Reform Commission) to conduct onsite examination of the project that has passed preliminary examination, and the third party institution shall issue an examination report (for format, see Annex 2) on the amount of energyconservation of the project, the verification thereof and other relevant circumstances.
Article 9 A competent energy conservation department and public finance department at the provincial level shall, on the basis of the examination results issued by a third party institution, summarize the eligible project fund application reports and examination reports and submit them to the National Development and Reform Commission and the Ministry of Finance (for format, see Annex 3).
Article 10 The National Development and Reform Commission and the Ministry of Finance shall organize experts to review the fund application reports and examination reports submitted by all competent energy conservation departments and public finance departments at the provincial level; the National Development and Reform Commission shall issue project implementation plans according to the results of the review, and the Ministry of Finance shall budget for 60% of the reward amount according to the project implementation plans.
Article 11 Public finance departments at all levels shall allocate funds to project entities in a timely manner in accordance with relevant provisions of the treasury management systems.
Article 12 The local competent energy conservation departments shall, jointly with public finance departments, strengthen project supervision and push for the completion of projects on schedule.
Article 13 After the completion of a project, the project entity shall file a fund settlement application with the local public finance department and the competent energy conservation department in a timely manner; the provincial public finance department shall, jointly with the competent energy conservation department, organize a third party institution to conduct onsite examination of the project and, on the basis of the examination report (for format, see Annex 2) issued by the third party institution, apply to the Ministry of Finance and the National Development and Reform Commission for the settlement of incentive funds (for format, see Annex 3) after summarizing the examination.
Article 14 The Ministry of the Finance shall, jointly with the National Development and Reform Commission, authorize a third party institution to conduct spot checks of the actual energy conservation results of projects, carry out the fund settlement with provincial public finance departments according to the applications for fund settlement from all localities and the results of spot checks by the third party institutions, and the provincial public finance departments shall be responsible for allocating or recovering the incentive funds for enterprises.
Chapter V Administration of Examination Institutions
Article 15 The Ministry of Finance shall, jointly with the National Development and Reform Commission, conduct examination, archival filing and dynamic management of third party institutions and make public the list of third party institutions.
Article 16 The third party institutions included in the filing list of the Ministry of Finance and the National Development and Reform Commission shall accept entrustment from all localities to independently conduct onsite examinations, assume full responsibility for the onsite examination process and the examination reports they issue, and at the same time be subject to supervision by all aspects of society.
Article 17 The fees for entrusted examinations shall be paid by the local treasuries by reference to the relevant provisions on the management of the payment of financial investment assessment fees and subsidies for agency services.
Article 18 Entrustment of a third party institution by the local public finance department and the competent energy conservation department must be subject to the following principles:
(1) the third party institution and its examination personnel shall not have provided consulting services for the project entity in the last three years;
(2) the examination of the energy conservation amount before and after the implementation of the project shall generally be entrusted to different third party institutions; and
(3) a robust third party institution with rich experience in project examination shall be prioritized for selection.
Chapter VI Supervision and Administration
Article 19 The local competent energy conservation departments and public finance departments shall strengthen the preliminary examination of project applications, and assume examination responsibility for the authenticity of projects. For an area with circumstances of swindling or fraudulently obtaining state funds through practicing fraud regarding projects, or repeatedly filing applications for a project, the eligibility to apply for financial incentives regarding energy conservation shall be cancelled for the project’s local area. Meanwhile, the relevant entity and personnel shall be subject to liability in accordance with the Regulation on Penalties and Sanctions against Illegal Fiscal Acts (Order No. 427 of the State Council).
Article 20 The local competent energy conservation departments and public finance departments shall strengthen the supervision and inspection over the implementation of projects, and for the areas with slow progress of the overall implementation of projects or failing to achieve the expected energy conservation results due to insufficient work levels, the National Development and Reform Commission and the Ministry of Finance shall circulate notices of criticism.
Article 21 A project applicant must truthfully provide project materials and complete the project and meet the production requirements according to plan. Where a project entity falls under any of the following circumstances, the state shall recover the incentive funds, cancel its eligibility to apply for funds from the central budget during the “12th FiveYear Plan” period as well as its eligibility to apply for financial incentives for energy conservation, and pursue the legal liability of relevant personnel.
(1) provides false materials to fraudulently apply for or claim financial incentive funds;
(2) fails to implement the project according to plan without special reason;
(3) fails, over a long term, to achieve the energy conservation results after the completion of the project; or
(4) repeatedly applies for financial funds for the same project through multiple channels.
Article 22 The Ministry of Finance shall, jointly with the National Development and Reform Commission, supervise the examinations by third party institutions and circulate a notice of criticism on a third party institution which issues a false examination report, and if the circumstances are serious, cancel the institution’s examination qualification and pursue the legal liability of relevant personnel.
Chapter VII Supplementary Provisions
Article 23 The power to interpret these Measures shall remain with the Ministry of Finance and the National Development and Reform Commission.
Article 24 These Measures shall come into force on the date of issuance, and the original Interim Measures for the Administration of Financial Incentive Funds for Energy Conservation Technology Retrofits (No. 371  of the Ministry of Finance) shall be abolished.
1. Primary Information for an Application Report of an Enterprise for Financial Incentive Funds for Energy Conservation
Examination Report on XX Project of XX Entity
3. Summary of Annual Applications for Financial Incentive Funds for Energy Conservation Technology Retrofits
Annex 1. Primary Information for an Application Report of an Enterprise for Financial Incentive Funds for Energy Conservation (Omitted)
I. Table of Basic Information on an Enterprise and Table of Basic Information on a Project (See Table)
II. Information on the Energy Management of an Enterprise
III. Energy Utilization Status before Project Implementation
IV. Energy Conservation Technology Measures to Be Adopted in a Project
V. Methods for Measurement and Monitoring of the Amount of Energy Conservation for a Project
VI. Other Matters Requiring Explanation
1. Project Feasibility Study Report
2. Archival Filing, Approval or Examination and Approval Documents of a Project
3. Reply of the Environmental Protection Department at the Corresponding Level to the Environmental Impact Report (Table) of a Project