The Chinese government has issued a package of policies, including risk reserves, subsidies and tax breaks, to encourage the development of the bio-energy and bio-chemical industries, the National Development and Reform Commission (NDRC) said Thursday.

Under the new policies, enterprises should set up risk reserves, which will be used to offset their losses when the oil price is low.

When the oil price is low for a sustained period, a government subsidy regime will be triggered to cover the losses of enterprises.

The new policies were jointly issued by the NDRC, the ministries of finance and agriculture, the State Administration of Taxation, the State Forestry Administration.

The government will also provide subsidies to developers of raw material supply bases for the bio-energy and bio-chemical industries, particularly those using non-arable land.

Subsidies will also be available to model projects with significant technical innovations.

The bio-energy industry was important for environmental protection, rural development, in addition to being a new source of growth for the economy, an NDRC official said.

After years of trials in selected provinces, the government has begun pouring huge investment into the bio-energy sector.

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