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Favourable tax policies will also be established to boost coal bed gas exploration, the cabinet announced on Sunday.
“Subsidies from central government shall be raised in the sector, with full consideration on costs and prices in extracting coal bed gas”, said the government’s website.
The Chinese government had planned a total of five billion cubic metres of coal-bed gas to be surface mined in 2010. However, only 1.5 billion cubic metres was achieved, less than one third of the planned volume.
The specific subsidy standards will be fixed jointly by departments including the Ministry of Finance, the National Development and Reform Commission and the National Energy Administration.
These policies are also expected to improve workplace safety which has been poor in recent Chinese history.
In 2011, China’s mine gas explosions caused 533 deaths, the highest figure in the world.
The Asian nation has large coal bed methane reserves of 36.8 trillion cubic metres, accounting for 15 per cent of the world’s total.
China’s annual coal output has already exceeded three billion tonnes, allowing for some 20 billion cubic metres of coal-bed gas into the air every year.
Statistics showed that coal accounts for 70 per cent of the gross energy output and consumption in China. The proportion of natural gas is 20 percentage points lower than the average level of the world, with unconventional gas even lower.
Experts says better utilisation of coal bed gas would sharply improve the country’s energy structure.