The government will revise coal legislation to include a strategic coal reserve by 2015, as it tries to tackle soaring prices.
Industry analysts said the strategic reserve would help to keep the coal price down.
The revised legislation will outline the process, supervision and penalties involved in the proposed reserve.
The coal reserve legislation was put forward under the scheme to establish a Chinese legal system for coal, which aims to develop a framework to ensure sustainable development of the industry.
The scheme is in the public consultation stage until late September, administered by the China National Coal Association (CNCA) and China Coal Information Institute.
The National Energy Administration plans to create a policy framework to manage the strategic coal reserve.
Two strategic oil reserves are already in operation in Zhejiang province, with a capacity of 5 million tons each.
Two other oil reserves are planned for Huangdao in Shandong province and Dalian in Liaoning province. The Dalian reserve should be ready by the end of the year.
But there are currently no strategic coal reserves in China.
Setting up a strategic reserve tops the list of 10 items put forward for the revised coal legislation, Huang Shengchu, president of the China Coal Information Institute, said.
The amended Law on the Coal Industry will outline how many reserve sites should be created and their scale, he said.
CNCA sources said strategic coal reserves are more complicated to set up than oil reserves.
It's not clear whether the coal reserve will be spot or resource, but a CNCA source said it will mainly be a resource reserve.
He said the strategic coal reserve will include some rarer types of coal, and a detailed list will be released soon.
Wang Xianzheng, president of the CNCA, said coal would soon become another concern for China's energy strategy as the economy continues to boom.
Over 69 percent of China's total energy needs are met by coal, and about 75 percent of that coal is consumed by the power sector.
(China Daily September 2, 2008)
