Appendix: Interim Measures for the Management of Financial Incentives for Contract Energy Management Chapter 1 General Provisions Article 1 In accordance with the Notice from the General Office of the State Council Transmitting the Opinions of the National Development and Reform Commission and Other Departments on Accelerating the Adoption of Contract Energy Management to Promote the Development of the Energy Conservation Services Industry (State Council Document No. 25), the central government allocates funds to provide appropriate incentives for contract energy management projects (hereinafter referred to as “financial incentive funds”). These measures are formulated to standardize and strengthen the management of financial incentive funds and improve the efficiency of their use. Article 2 Energy performance contracting as referred to in these measures means that an energy service company and an energy-consuming entity agree on energy-saving targets through a contract; the energy service company provides the necessary services, while the energy-consuming entity pays for the company’s investments and reasonable profits based on the energy-saving benefits achieved. This approach primarily supports energy-saving benefit-sharing contract energy management. An energy service company is a specialized firm that provides services such as energy consumption diagnosis, as well as the design, financing, renovation, and operation management of energy-saving projects. Article 3: Financial incentive funds are allocated from the central government’s budget, and management shall be carried out in an open and fair manner, subject to public oversight. 1 Chapter 2: Targets and Scope Article 4: Targets for support. Financial incentive funds are provided to energy service companies that implement energy-saving contract energy management projects based on shared savings. Article 5 Scope of support. Financial incentive funds are used to support energy-saving renovation projects in industries, buildings, transportation, and other sectors, as well as in public institutions, which are implemented through contract energy management. Contract energy management projects that are already eligible for **other relevant subsidy policies are not included within the scope of support under these measures. Article 6 Energy-saving service companies that meet the support criteria are subject to a system of review and registration, as well as dynamic management. The energy-saving service company submits an application to the provincial energy-saving authority where the company is registered. The provincial energy-saving authority, together with the financial department, conducts a preliminary review before submitting the application to the **Development and Reform Commission and the Ministry of Finance. **After organizing expert evaluations in conjunction with the Ministry of Finance, the Development and Reform Commission publishes the list of energy service companies along with their scope of operations. Chapter 3 Support Conditions Article 7 Contract energy management projects applying for financial incentive funds must meet the following conditions: (1) The energy-saving service company shall invest more than 70%, and the method for sharing energy-saving benefits shall be specified in the contract ; (II) The annual energy savings for a single project (referring to its energy-saving capacity) is less than 10,000 tons of standard coal but 100 tons of standard coal or more (inclusive); for industrial projects, the annual energy savings are 5002 tons of standard coal or more (inclusive) ; (III) The energy measurement devices are complete, and there are sound systems for energy statistics and management; energy savings can be measured, monitored, and verified. Article 8: Energy-saving service companies applying for financial incentive funds must meet the following conditions: (1) They must have independent legal person status, operate primarily in energy-saving services such as diagnosis, design, renovation, and operation of energy-saving measures, and have been approved and registered by the **Development and Reform Commission and the Ministry of Finance ; (II) Registered capital of 5 million yuan or more (inclusive), with strong financing capabilities ; (III) Good operating conditions and credit record, with a sound financial management system ; (IV) It has qualified full-time technical personnel and energy management professionals, enabling it to ensure the smooth implementation and stable operation of the project. Chapter 4 Support Methods and Reward Standards Article 9 Support methods. The finance department provides a one-time reward for contract energy management projects based on the annual energy savings achieved and specified standards. The incentive funds are primarily used for expenditures related to contract energy management projects and the development of the energy-saving services industry. Article 10 Reward standards and cost-sharing methods. The incentive funds are shared by the central government and provincial governments; the incentive amount provided by the central government is 240 yuan per ton of standard coal, while the incentive amount provided by provincial governments is not less than 60 yuan per ton of standard coal. Where conditions permit, the reward standards can be appropriately increased as appropriate. 3 Article 11: The Ministry of Finance allocates certain funds for operational purposes to support relevant local departments and central agencies in carrying out tasks such as project evaluation, review and registration, as well as supervision and inspection related to contract energy management. Chapter 5: Application for and Allocation of Funds Article 12: The Ministry of Finance, in conjunction with the **Development and Reform Commission, takes into account factors such as the energy-saving potential of various regions, the progress of contract energy management projects, funding requirements, and the scale of the central government’s budget, in order to determine the annual amount of financial incentives available for each province (region, city). The Ministry of Finance allocates the incentive funds that should be covered by the central government to local authorities in a certain proportion. Article 13: Upon the completion of a contract energy management project, the energy-saving service company shall submit an application for financial incentives to the provincial finance department and the energy-saving oversight authority in the location of the project. The specific application format and requirements are determined by the local authorities. Article 14: The provincial energy conservation authorities, in conjunction with the financial departments, organize the review of the submitted projects and contracts, and determine the annual energy savings generated by these projects. Article 15: The provincial financial departments shall, based on the audit results, disburse the central government’s incentive funds as well as the corresponding provincial financial incentives to the energy-saving service companies. Within 10 days after the end of each quarter, they shall prepare the \"Quarterly Statistical Table on the Allocation and Use of Financial Incentives for Contract Energy Management\" (format available in Appendix 1) and submit it to the Ministry of Finance and the **Development and Reform Commission. Article 16 **The Development and Reform Commission, in conjunction with the Ministry of Finance, shall organize inspections of the implementation status of contract energy management projects, the energy-saving effects achieved, as well as the compliance with the terms of the contracts. Article 17: By the end of February each year, the provincial finance departments shall, based on information such as the implementation of contract energy management projects and the energy-saving results in their respective provinces (regions, municipalities) during the previous year, the allocation and remaining amounts of central government funding for rewards, as well as the local financial contributions, prepare a \"Annual Settlement Statement for Central Government Funding for Rewards in Contract Energy Management\" (see Appendix 2 for the format), and submit it to the Ministry of Finance in written form. Article 18 The Ministry of Finance shall settle the financial incentive funds in accordance with the facts, based on the information submitted by local authorities and the results of special inspections. The central government’s incentive funds for local surpluses are carried over to the following year for allocation and use. Chapter 6 Supervision, Management and Penalties Article 19 The Ministry of Finance, in conjunction with the **Development and Reform Commission, shall organize a comprehensive evaluation of the implementation of contract energy management at the local level as well as the efficiency of fund utilization, and use the results of such evaluations as one of the bases for determining fund allocations for the following year. Article 20 Local financial authorities and energy conservation authorities shall establish and improve supervision systems, and strengthen the tracking, verification, and oversight of energy performance contracting projects as well as the use of financial incentive funds, to ensure the safe and effective utilization of financial resources. Article 21: The energy-saving service company is responsible for the authenticity of the application materials for financial incentives. Energy-saving service companies that engage in fraud or mislead others to obtain financial incentives will have their eligibility to apply for such incentives revoked, in addition to having the funds awarded to them recovered. Article 22: Financial incentive funds must be used for their designated purpose, and no entity shall withhold or misappropriate them under any pretext or in any form. Those who violate the regulations shall be dealt with in accordance with relevant provisions such as the Regulations on Penalties and Sanctions for Financial Violations (Decree No. 427 of the State Council). Chapter VII Supplementary Provisions Article 23 Localities shall formulate specific implementation rules in accordance with the provisions of these measures and the local actual conditions, and submit them to the Ministry of Finance and the **Development and Reform Commission for the record in a timely manner. Article 24 These measures shall be interpreted by the Ministry of Finance in conjunction with the **Development and Reform Commission. Article 25 These measures shall come into force as of the date of issuance. Appendix 1: Fill-in unit: Provincial (regional, municipal) Department (Bureau) of Finance. Total investment: Of which, investment by the energy-saving service company. Amount of electricity saved, oil saved, gas saved, coal saved; total converted to standard coal. Total revenue: Of which, revenue shared by the energy-saving service company – share for the first year, share for the second year, share for the third year, shares for subsequent years. Total investment: Of which, investment by the energy-saving service company. Amount of electricity saved, oil saved, gas saved, coal saved; total converted to standard coal. Total revenue: Of which, revenue shared by the energy-saving service company. Units of measurement: 10,000 yuan, 10,000 yuan, kilowatt-hours, tons, cubic meters, tons, tons, 10,000 yuan, 10,000 yuan, 10,000 yuan, 10,000 yuan, 10,000 yuan, 10,000 yuan, 10,000 yuan, kilowatt-hours, tons, cubic meters, tons, tons, 10,000 yuan, 10,000 yuan, tons of standard coal, 10,000 yuan, 10,000 yuan, 10,000 yuan. Total: * * * * * Of which: Funds allocated as central government incentives. Actual performance in fulfilling obligations. Project completion date. Terms stipulated in the contract. Annual amount of energy saved (energy-saving capacity). Methods for monitoring and measuring energy-saving effects. Allocation and usage of incentive funds. Amount of funds due as incentives. Funds already allocated. Amount of energy saved confirmed by local authorities. Annual amount of energy saved (energy-saving capacity). Energy-saving benefits. Project investment. Actual investment received. Energy-saving benefits. Quarterly statistics on the allocation and usage of financial incentives for contract energy management (Q1 2011). Project name and main contents. Contract number. Energy-saving service company. User entity.
Appendix 2: Fill-in unit: Provincial (regional, municipal) Department (Bureau) of Finance. Total investment: Of which, investment by the energy-saving service company. Amount of electricity saved, oil saved, gas saved, coal saved; converted to standard coal. Total revenue: Of which, revenue shared by the energy-saving service company. Subtotal: Central government incentives. Local government contributions. Subtotal: Central government incentives. Local government contributions. Units of measurement: 10,000 yuan, 10,000 yuan, kilowatt-hours, tons, cubic meters, tons, tons, 10,000 yuan, 10,000 yuan, 10,000 yuan, 10,000 yuan, 10,000 yuan, 10,000 yuan, 10,000 yuan. Total: * * *. Main contents of project renovation. Project completion date. Project investment. Annual settlement statement of central government incentives for contract energy management (2011). Energy-saving service company. Energy-consuming entity. Remaining balance of central government incentive funds at the end of the year. Annual amount of energy saved by the project (energy-saving capacity). Energy-saving benefits of the project. Amount of incentives due. Amount of incentives already allocated