Original Title: Notice of the General Office of the People’s Government of Shandong Province on Issuing Several Measures to Support the Development and Utilization of Geothermal Energy (Lu Zheng Ban Zi [2023] No. 95)

To the People’s Governments of All Cities, the People’s Governments of All Counties (Cities, Districts), and All Departments and Directly Affiliated Agencies of the Provincial Government:

The “Several Measures on Supporting the Development and Utilization of Geothermal Energy” have been approved by the Provincial Government. They are hereby issued to you for earnest implementation in accordance with local conditions.

(This document is publicly released)

Several Measures to Support the Development and Utilization of Geothermal Energy

To implement the deployment requirements of the Provincial Party Committee and the Provincial Government, support the development and utilization of geothermal energy, adjust and optimize the energy structure, and accelerate the construction of a pilot zone for green, low-carbon, and high-quality development, the following measures are hereby formulated in light of the actual conditions of our province.

I. Supporting Geothermal Exploration and Orderly Utilization

1. Support for geothermal energy surveys, assessments, and exploration. Governments at all levels shall strengthen the coordination of funds, increase support for geothermal exploration, and provide financial guarantees to further clarify the province’s resource inventory.Priority support shall be given to the survey, evaluation, and detailed exploration of medium- and deep-level geothermal fields in geothermal-rich areas such as Dongying, Dezhou, Liaocheng, Binzhou, Heze, and the northern part of the Jinan-Zibo-Weifang region, as well as in geothermal-abundant regions including Yantai, Weihai, Linyi, and Jining. Support shall also be provided for the survey and evaluation of shallow geothermal resources within the urban development boundaries of key counties (cities, districts), and for the survey and evaluation of hot dry rocks in areas with potential.(Led by the Provincial Department of Natural Resources, with cooperation from the Provincial Department of Finance, the Provincial Department of Water Resources, the Provincial Bureau of Geological Exploration and Development, and the Provincial Bureau of Coal Geology)

2. Support the promotion of shallow geothermal heating (and cooling). Support cities in actively promoting ground-source heat pump systems for heating (and cooling) based on local heating (and cooling) needs, provided that the thermal balance of the rock and soil is maintained. Shallow geothermal projects utilizing ground-source heat pump technology that do not involve water extraction are exempt from obtaining water abstraction permits and mining permits. (Led by the Provincial Energy Bureau and the Provincial Department of Housing and Urban-Rural Development, with support from the Provincial Department of Water Resources and the Provincial Department of Natural Resources)

3. Support the orderly advancement of medium- and deep-level geothermal energy development and utilization. Provided that groundwater protection measures are properly implemented, the development and utilization of medium- and deep-level geothermal energy shall not be restricted by groundwater restricted extraction zones or prohibited extraction zones. In regions suitable for geothermal energy development, priority shall be given to development and utilization methods that involve “undisturbed heat exchange within the wellbore and heat extraction without water extraction”; where water extraction is indeed necessary, the “equivalent-volume reinjection at the same level and heat extraction without water consumption” technology shall be implemented to promote groundwater protection.Geothermal energy development and utilization projects that follow the “heat extraction without water withdrawal” principle are exempt from obtaining water withdrawal permits. Commercial development projects that extract geothermal water for hot spring bathing must undergo strict administrative licensing and be subject to limited extraction. (Led by the Provincial Department of Water Resources and the Provincial Department of Natural Resources; in coordination with the Provincial Department of Ecology and Environment, the Provincial Department of Housing and Urban-Rural Development, and the Provincial Energy Bureau)

II. Optimizing Resource Allocation and Approval Services

4. Optimize resource allocation. Guide geothermal-rich cities to formulate specialized geothermal resource development plans based on territorial spatial planning and overall mineral resource planning, rationally arrange the layout of geothermal mining rights blocks, and support the development of local geothermal energy industries.Organize the formulation of annual concession plans to systematically allocate geothermal mining rights, encourage large-scale exploration and concession of blocks, and promote the large-scale and intensive development and utilization of geothermal energy. Support eligible mining right holders in completing the approval and registration procedures for geothermal mining rights in accordance with the law. (Led by the Provincial Department of Natural Resources, with support from the Provincial Department of Water Resources)

5. Optimize mining rights approval processes. Encourage cities to consolidate the preparation and review of mineral resource development and utilization plans, mine geological environment protection and restoration plans, and green mine construction plans according to local conditions, thereby improving review efficiency and reducing the burden on geothermal mining enterprises. (Led by the Provincial Department of Natural Resources)

6. Optimize environmental impact assessment (EIA) services. Implement a service list system for key geothermal energy utilization projects, providing “one-on-one” targeted services and establishing a green channel to ensure immediate review upon submission; for geothermal heating projects of the same type located within the same municipal or county administrative area, implement “bundled” EIA approval. (Led by the Provincial Department of Ecology and Environment)

7. Optimize filing and registration. Large-scale geothermal energy utilization projects (with an installed capacity of 1,000 kilowatts or a heating area of 10,000 square meters or more) shall be managed through filing by local filing authorities; geothermal heating (and cooling) projects below this scale shall be registered with local energy authorities. Medium- and deep-level geothermal energy projects shall obtain water extraction and mining permits in accordance with laws and regulations. Projects already in operation shall register directly with local energy authorities.(Responsibility lies with the Provincial Development and Reform Commission, Provincial Department of Natural Resources, Provincial Department of Water Resources, and Provincial Energy Bureau according to their respective duties)

III. Encouraging Scientific Research and Platform Development

8. Efforts to advance scientific and technological research shall be encouraged. Support shall be provided for research and development of key technologies such as medium- and deep-level geothermal energy exploration and development, “geothermal energy plus” multi-energy complementarity, cascaded utilization, and reinjection of tailwater. Research and application of key technologies and equipment—including ultra-long gravity heat pipes, phase-change materials, and high-efficiency heat extraction and heat exchange technologies—shall be strengthened. Eligible key projects shall be included in provincial-level science and technology programs for support.Units achieving major breakthroughs and individuals playing a leading role shall be granted corresponding rewards in accordance with laws and regulations. (Led by the Provincial Department of Science and Technology; supported by the Provincial Department of Human Resources and Social Security, the Provincial Department of Natural Resources, the Provincial Department of Water Resources, the Provincial Energy Bureau, the Provincial Bureau of Geological Exploration and Development, and the Provincial Bureau of Coalfield Geology)

9. Encourage the establishment of innovation platforms. Encourage qualified enterprises and institutions to establish key laboratories for geothermal resource exploration and development, as well as innovation platforms such as geothermal energy research and promotion centers and technology innovation centers. Provide support and services in areas such as major technological breakthroughs and the recruitment and cultivation of high-end talent. (Led by the Provincial Department of Science and Technology and the Provincial Department of Natural Resources; supported by the Provincial Energy Bureau, the Provincial Bureau of Geological and Mineral Exploration and Development, and the Provincial Bureau of Coalfield Geology)

IV. Strengthening Resource Support and Reducing Costs to Enhance Efficiency

10. Strengthen land use guarantees. Support eligible geothermal energy utilization projects to be included in the province’s major projects, with land quotas coordinated and guaranteed by the provincial government in accordance with relevant regulations. For geothermal mining land that meets the conditions for direct transfer of mining rights and can clearly define the specific land use scope, there is no need to apply for preliminary land use review; instead, applications for the conversion of agricultural land to construction land and land expropriation may be submitted directly.Incorporate geothermal heating (and cooling) into urban infrastructure development; land for urban geothermal heating facilities, such as geothermal heating networks and heat pumps, may be supplied through land allocation. Rural community geothermal heating construction projects may use collectively-owned construction land in accordance with laws and regulations. (Led by the Provincial Department of Natural Resources, in coordination with the Provincial Development and Reform Commission and the Provincial Department of Housing and Urban-Rural Development)

11. Strengthen forest land use guarantees. Strengthen forest land use guarantees for key provincial-level or higher geothermal energy projects. For projects involving infrastructure construction, public utilities, and public welfare, forest land use shall be fully guaranteed; for projects requiring temporary use of forest land, guarantees shall be provided in a timely manner. (Led by the Provincial Department of Natural Resources, with support from the Provincial Development and Reform Commission)

12. Implement electricity price support. For shallow geothermal energy projects in newly constructed urban and rural residential communities that adopt ground-source heat pump technology with buried pipes, have a heating (or cooling) area of 10,000 square meters or more, and meet green building standards, the municipal-level energy authorities, in conjunction with housing and urban-rural development departments, shall review the projects and submit them to the provincial-level energy authorities to apply for inclusion in the provincial-level shallow geothermal energy key project database. Projects included in the database shall be subject to residential electricity rates in accordance with relevant procedures.(Responsibility lies with the Provincial Development and Reform Commission, the Provincial Department of Housing and Urban-Rural Development, and the Provincial Energy Bureau according to their respective duties)

13. Enhance carbon emission reduction effectiveness. Support the use of carbon emission reductions achieved through geothermal energy projects—after verification and certification by provincial ecological and environmental departments—as carbon emission offsets for new “high-energy-consumption, high-emission” projects, and include them in the scope of carbon emission quota banking. (Led by the Provincial Department of Ecology and Environment)

V. Strengthening Fiscal, Tax, and Financial Support

14. Implement Tax and Fee Exemptions. Strictly implement national policies on tax and fee exemptions. From January 1, 2019, through the end of the 2023 heating season, heating enterprises shall be exempt from value-added tax on revenue derived from residential heating fees; for heating enterprises collecting residential heating fees, the property tax and urban land use tax on the factory buildings and land used for residential heating shall be exempted.(Led by the Provincial Tax Bureau and Qingdao Tax Bureau; supported by the Provincial Department of Finance) For geothermal enterprises that have established green mines, support will be provided when allocating fiscal funds related to enterprise development, and they will be eligible for fiscal subsidies for the operation of urban centralized heating. (Led by the Provincial Department of Finance and the Provincial Department of Natural Resources; supported by the Provincial Department of Housing and Urban-Rural Development)

15. Increase support through special bonds. Optimize the coordination mechanism for local government special bond projects; eligible geothermal heating projects in villages and towns may apply for local government special bonds to serve as capital. (Led by the Provincial Development and Reform Commission and the Provincial Department of Finance)

16. Expand green financial services. Support the inclusion of geothermal energy utilization projects that meet standards in the provincial carbon finance project database; establish a cooperation and coordination mechanism among government, banks, enterprises, and service providers to facilitate effective matching of funds, financial instruments, and projects, and provide targeted financial services.(Led by the Provincial Development and Reform Commission and the People’s Bank of China Jinan Branch; supported by the Provincial Energy Bureau, the Provincial Local Financial Regulatory Bureau, the Shandong Regulatory Bureau of the National Financial Supervisory Administration, and the Qingdao Regulatory Bureau of the National Financial Supervisory Administration) Eligible geothermal energy building application projects shall be included in the reserve project repository for green finance supporting green and low-carbon urban and rural development, and financial institutions shall be supported in providing financial services in accordance with market-oriented and rule-of-law principles.(Led by the Provincial Department of Housing and Urban-Rural Development; supported by the People’s Bank of China Jinan Branch, the Shandong Regulatory Bureau of the National Financial Supervisory Administration, and the Qingdao Regulatory Bureau of the National Financial Supervisory Administration)

17. Increase efforts to attract private capital. Fully leverage the role of the New and Old Growth Drivers Transformation Fund to attract more private capital to participate in geothermal exploration and development through market-oriented approaches. Support enterprises engaged in geothermal exploration, evaluation, and development to be given priority in obtaining geothermal resource concession qualifications. (Led by the Provincial Department of Finance and the Provincial Department of Housing and Urban-Rural Development)

VI. Guiding Application and Demonstration Projects

18. Guide the promotion of multi-scenario applications. Support and encourage construction projects within urban development boundaries, newly built rural communities, and key transportation infrastructure projects such as high-speed rail stations and airports to advance “geothermal energy plus” multi-energy complementary and cascaded utilization in accordance with local conditions, based on heating (and cooling) needs.Centralized geothermal heating projects in urban areas shall be subject to relevant policies for urban centralized heating. In regions where centralized heating franchises are in effect, newly developed distributed geothermal heating projects shall not be subject to franchise restrictions; however, geothermal heating franchise enterprises shall have priority when developing such projects on their own. Projects in rural areas that use geothermal energy to replace scattered coal burning for heating shall be eligible for relevant clean heating subsidy policies.(Led by the Provincial Department of Housing and Urban-Rural Development and the Provincial Development and Reform Commission; supported by the Provincial Department of Finance, the Provincial Bureau of Geological Exploration and Development, and the Provincial Bureau of Coal Geology)

19. Guide the establishment of demonstration projects. Encourage Party and government agencies and public institutions to adopt geothermal heating (and cooling). Incorporate geothermal energy utilization into the criteria for establishing model units for resource-efficient government agencies and public institutions, as well as into the energy-saving assessment standards for public institutions. Support qualified government agencies and public institutions in establishing model units for resource-efficient public institutions.(Led by the Provincial Bureau of Government Affairs, with support from the Provincial Department of Education and the Provincial Health Commission) Support industrial parks and communities with a solid foundation in geothermal energy development and utilization to carry out near-zero-carbon demonstration initiatives. (Led by the Provincial Department of Ecology and Environment)