Market can spark energy efficiency

After the outbreak of the global financial crisis, several countries sought to reinvigorate their economies with the development of new energy sources. Breakthroughs in solar technology and shale gas, among others, now have the potential to reinvent the energy sector.

Authorities in China have recently moved energy reforms to the top of their own agenda. China, as many know, is the world's largest energy consumer. Policies aimed at lowering carbon emissions will help safeguard the country's energy security, promote sustainable economic growth and ease pressures on its natural environment.

Past government interventions deserve much credit for the country's current energy woes. Administrative distortions of coal, gas and electricity prices threw off the market's natural balance. This promoted waste and gave industries little incentive to pursue alternative sources of energy.

At this point, exposing energy commodities to market forces is vital to encouraging efficiency gains. But such changes must be carried out in accordance with national laws, which are still incomplete when it comes to crude, coal, natural gas and nuclear energy.