The law aims to "construct a stable, economical, clean and sustainable energy supply and service system, increase energy efficiency and safeguard energy security", said the draft posted on a government agency website.

The law was published on the website of Office of the National Energy Leading Group, an elite policy-making body, and will solicit opinions from the public until February 1.

China will establish energy pricing systems mainly determined by market forces but government controls will continue to play a role, it said.

It added that pricing should reflect "the scarcity of resources and costs of damaging the environment".

China currently maintains strict control over prices as it fears higher prices may lead to a spike in inflation, already at its highest level in more than a decade, and set off social unrest.

Last month, Beijing raised retail prices of gasoline, diesel oil, and aviation kerosene by around 10 percent to entice refiners to release more product to ease a wave of nation-wide fuel shortage.

According to the draft law, the government will also adopt tax policies encouraging development and use of renewable energy, energy-saving products and imports of related technologies.

It will improve the energy resource tax regime and expand consumption taxes to adjust energy consumption and promote efficient use, it added.

The office of was established in 2005 and led by Ma Kai, director of the National Development Reform Commission, the state economic planning agency that currently supervises major energy issues including prices.

State media has reported the office will eventually be upgraded to a new energy ministry in March next year.

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