BEIJING - China will further improve its pricing mechanism to stimulate environmental protection and green development, according to a guideline issued by the National Development and Reform Commission (NDRC) Monday.

China aims to establish a pricing mechanism and pricing policies in favor of green development by 2020. By 2025, the pricing mechanism will be further perfected and fully implemented, said the NDRC.

The pricing mechanism should "fully reflect market supply-demand and scarcity of resources, as well as ecological value and the cost of environmental damage," so as to incorporate ecological costs into economic operation and attract more social capital to the environmental protection sector, said the guideline.

"The new pricing mechanism will focus on prominent environmental issues and let polluters pay the cost," said Yue Xiuhu, head of the NDRC's price department, at a press conference Monday.

China will speed up the establishment of a pricing mechanism that can cover the cost of sewage, sludge and solid waste treatment while bringing profit to these businesses.

The government will build a system to push for garbage sorting, as well as garbage reduction, recycling and environmentally friendly waste treatment, according to the guideline.

For water use, the government aims for a new pricing mechanism that encourages better quality and more conservation to ensure sustainable use of water resources.

Regions that face water shortages and industries with high pollution, high energy consumption and overcapacity will be charged more for water use, the NDRC said.

Environmental protection enterprises will see policy support in electricity use, while high energy-consuming industries will no longer enjoy favorable electricity prices.

The guideline pointed out that ferro-alloy, calcium carbide, caustic soda, cement, steel, yellow phosphorus and zinc smelting sectors will be given different power prices, while prices for industries subject to elimination or restriction will be even higher.

China will also encourage local authorities to explore other green price policies like ecological product pricing, carbon emission trading and a compulsory renewable energy quota, it said.

Yue said the government will ensure the quality of people's livelihood during the pricing reform, and special arrangements will be made to ensure that low-income groups will not be affected.