China's cabinet, the State Council, said a plan to boost green industries would spur technological innovation, expand demand for energy-saving products and boost the environmental-protection service industry.

The council said environmental protection has been elevated to a "pillar industry" and it will receive government support in the form of tax breaks, China Daily reported. The sector is expected to grow by 15 percent a year, generating $735 billion by 2015.

Under the plan, Chinese companies will also be encouraged to target environmental protection projects overseas and eligible foreign-funded companies will enjoy the same preferential treatment as their Chinese counterparts, state-run news agency Xinhua reported Tuesday.

Wang Xiaokun, an energy analyst at Chinese commodities consulting firm Sublime China Information, said the new policy will bring opportunities for investors.

"The government encourages low-carbon and energy-saving development, which means business opportunities to the suppliers for such industries," Wang told China Daily.

The China Daily report cited Sinopec Group, Asia's largest refiner, for its environmental protection initiative. The company announced last month it will invest about $3.69 billion to upgrade current production equipment and operations to protect the environment and realize green development.

"Companies can make profits and protect the environment at the same time through responsible investments and production," Fu Chengyu, president of the company, was quoted as saying by the newspaper.

A China Daily editorial Tuesday said the government's pledge to boost investment in technology to save energy and tackle pollution "symbolizes a fundamental change toward more sustainable development."

"Undoubtedly, increased efforts by the government to improve environmental protection and save energy will help promote China's ongoing economic restructuring, create new areas of investment and consumption, and establish a more sustainable development mode," it stated.

Li Yan, who heads Greenpeace East Asia's climate and energy campaign, told the Australian Broadcasting Corp. Tuesday the intention of China's new policy "is to tackle environmental problems and to save energy, and make smart use of energy."

But Yan says pollution will continue to be a problem for China if there are no incentives to curb it, noting that it's cheaper for industries to discharge pollutants than to install and operate equipment that alleviates pollution.

China's success at tackling pollution and reducing carbon emissions, she said, will depend on the way it responds to future growth.

"It cannot continue its really unsustainable way of growth. So actually tackling climate change is in China's own interests," Yan said.