Contract Energy Management Accounting Issues To Explore

Contract energy management is a very innovative energy-saving mechanism based onmarket. The company which has low energy efficiency always looks for a suitable energyservice company to get improvement. Before the energy-saving project start, the energyservice company and its client company usually sign a contract about the amount of energysaving. Then the energy service company will provide professional energy-savingtechnologies and equipment. After the target of energy saving has been reached, energyservice company will get certain proportion of energy-saving revenue, energy consumingcompany will not only improve energy using efficiency, but also to get benefits from theenergy-saving. In this energy-saving mechanism, energy service companies obtainreasonable reciprocation while energy consuming companies reduce energy consumption.Meanwhile the natural environment gets improve due to the reduction of industrialemissions.This is a win-win business model. Now China ’s environment faces serioussituation: sometimes hazy weather lasts for several days and air quality is always very low.It is clear that energy management contract will have a positive significance on improvingour environment.The first country to emerge contract energy management is the United States. So far,this new model has grew mature in the United States and helped a lot for the United Statesto reduce energy consumption and improve energy consumption efficiency. In recent years,energy service companies have also been introduced into the domestic market to improvethe status of low energy consuming efficiency. However, there are many problems thateffects the popularization of contract energy management. One of them is the accountingproblems.Based on the current research from both China and foreign countries, this articledescribes the definition characteristic and type of both the contract energy managementand energy service companies. By comparing the status of development of various countries, this article raises theme: how to solve the problem that current accountingissues effects the energy management contract’s development in China. Then author listsand analyses different accounting treatment of energy management contract. Based on theanalysis, there are many unstandardized operation during accounting treatment. Then theauthor raises the different academic ways to solve this problem and chooses the suitableway for China based on the special situation of China.