Refineries face brunt of tax rise

"It may not fair to raise consumption tax on oil products, but a lack of regulation would worsen the environment," said Hu.

Vehicle emissions have turn out to be a major pollution source. If oil products fall sharply, customers may drive more than necessary, said Lawrence Lau, analyst of the energy industry at BOC International, in an earlier note.

The drop in oil prices will drag down sales of new-energy cars, said Liu Shangxi, director of the research institute for fiscal science at the MOF, to Xinhua.

China's energy consumption accounted for about 22.4 percent of the world's total in 2013, but its energy consumption per gross domestic product (GDP) was 3.5 times of that of the United States and seven times of that of Japan, according to Liu.

Fuel tax and pricing reform measures began five years ago, and have featured consumption tax hikes and the introduction of a pricing system more closely linked to the international market.

Consumption tax was first imposed in 1994 on consumer goods with a high energy cost and high pollution to make production and consumption more environmentally friendly and promote sustainable growth.

Over 10 countries, including Russia, Australia, New Zealand and France, have raised their oil product consumption tax since 2012 to ensure green development.