ENERGY EFFICIENCY

“Policies put in place by the [Chinese] government to improve efficiency have been one of the most important factors in limiting the growth of energy-related CO2 emissions anywhere in the world over the past decade.” — IEA Energy Efficiency Market Report 2016[1]

Background

China’s economy is energy intensive. In 2018, only 11 countries in the world used more energy per unit of GDP than China. China used 82% more energy per unit of GDP than Germany, 66% more than Japan, 59% more than India and 15% more than the United States.[2]

The energy intensity of China’s economy is due to several factors, including the high share of heavy manufacturing in China’s economy and lack of market signals to motivate energy efficiency in some sectors.[3]

The energy intensity of the Chinese economy has improved dramatically in the past several decades. According to the World Bank, between 1980 and 2010, China’s GDP increased by 18 times while Chinese energy consumption increased by only five times. During this period, the energy intensity of the Chinese economy per unit of GDP fell roughly 70%. Except for several years between 2001 and 2005 when energy intensity increased, gains have been steady. Energy intensity improvements have been especially strong in recent years (3%–6% annually).[4]

The steady improvement in China’s energy intensity has been caused by (i) energy efficiency gains as a result of technological improvements, policy mandates or both, and (ii) structural shifts in the Chinese economy (in particular from manufacturing to services). According to the International Energy Agency (IEA), energy efficiency gains have been by far the most important, although structural changes in the economy are expected to play a greater role in the years ahead.[5]

China’s energy efficiency gains have had an enormous impact on emissions of heat-trapping gases. According to IEA, energy efficiency improvements since 2000 reduced China’s 2017 emissions by nearly 1.2 Gt CO2e (roughly equal to Japan’s 2017 emissions).[6]

Policies

In 2017, more than 60% of China’s energy use was covered by mandatory energy efficiency policies—more than any other nation in the world.[7]

Improving energy efficiency is a long-standing goal of the Chinese government. Most Five-Year Plans since the 1980s have included energy intensity goals for the Chinese economy. The 11th Five-Year Plan (for the period 2006–2010) contained especially strong provisions, with a mandatory national target to reduce energy intensity 20% below 2005 levels by 2010. The 12th Five-Year Plan (for the period 2011–2015) contained a mandatory national target to reduce energy intensity 16% below 2010 levels by 2015.[8]

China’s current Five-Year Plan continues in this tradition. The 13th Five-Year Plan (for the period 2016–2020) contains a mandatory national target to reduce energy intensity 15% below 2015 levels by 2020.[9]

These targets are implemented through four main policy tools: (1) annual goals, (2) provincial targets, (3) government spending and (4) regulations and standards.

  1. Annual goals.The Five-Year Plan targets for energy intensity are supplemented with specific annual goals. In March 2017, for example, NDRC announced a goal of reducing the energy intensity of the Chinese economy by 3.4% during 2017. (In February 2018, the National Bureau of Statistics reported that energy intensity had fallen by 3.7% during 2017.)[10]
  2. Provincial targets. As part of the process for implementing China’s Five-Year Plans, each province is required to meet specific energy intensity targets. Under the 13th Five-Year Plan, these targets vary from a 17% improvement (for eight provinces, including Beijing, Shanghai and Guangdong) to 10% (for Xinjiang, Tibet and Qinghai). The process of allocating energy intensity targets is overseen by NDRC and reflected in plans issued by the state council. NDRC and other ministries monitor progress toward meeting these targets, releasing quarterly reports on the results. Those results are used to evaluate the job performance of provincial officials and included in the central government’s performance management system.[11]
  3. Central government spending.The central government spent more than $35 billion on energy efficiency programs during the 12th Five-Year Plan (2011–2015). Provincial governments spent at least $7 billion. These funds were spent on projects to demonstrate energy efficient equipment, upgrade coal-fired boilers, recover waste heat, implement energy managements systems and more. Financial tools used in these projects included direct funding, subsidized loans and credit guarantees. The IEA estimates that Chinese government funding leveraged over $211 billion of private spending on energy efficiency.[12] These programs have a long history. During the 11th Five-Year Plan (2006–2010), the central government spent more than $20 billion on energy efficiency programs, leveraging an additional $100 billion in private spending. In the 1980s and early 1990s, more than 200 Energy Conservation Centers were established to help companies conduct energy audits, implement demonstration projects and train energy managers.[13]
  4. Regulations and standards.The Chinese central government has issued dozens of regulations standards to promote energy efficiency across a range of sectors. NDRC, the Ministry of Industry and Information Technology (MIIT), the Ministry of Housing and Urban-Rural Development (MOHURD), the Ministry of Commerce (MOFCOM), and other ministries all have roles. Among the most important are:  
  • Efficiency standards for coal-fired power plants.All new coal plants must use supercritical or ultra-supercritical technology. There are long-standing programs to retire small and low-efficiency coal boilers.[14]
  • The Top 10,000 Energy-Consuming Enterprises program.Companies within the program are required to appoint energy managers, prepare energy conservation plans and achieve specific energy consumption targets.These 10,000 companies account for roughly half of industrial energy demand.[15]
  • Appliance standards and labels.The Chinese government’s appliance energy efficiency standards and labeling programs date back many years. More than 220 energy efficiency standards were issued during the period of the 12th Five-Year Plan (2011–2015). NRDC and MIIT each publish catalogs of recommended energy-saving products and promote their use through public education. NDRC runs an Energy Efficiency Leaders program to recognize top products in different categories.[16]
  • Building standards.All new urban residential and public buildings must meet energy-saving design standards established by MOHURD. MOHURD has also developed a Green Building Action Plan, with green building evaluation standards and a labeling program. As of September 2016, roughly 4500 buildings in China had received green building labels.​​​​​​[17]

References

[1] IEAEnergy Efficiency Market Report(2016) at pp.47–48.

[2] BP Statistical Review of World Energy 2019(June 2019) at p.8 (primary energy consumption);International Monetary Fund, “GDP, current prices, purchasing power parity,”IMF Data Mapper(accessed August 16, 2019) (GDP data); Enerdata, Global Energy Statistical Yearbook 2019-China(accessed August 16, 2019).

[3] On energy efficiency in China generally, see IEA, Energy Efficiency 2018at pp.145–149; Lynn Price et al., Reinventing Fire: China—the Role of Energy Efficiency in China’s Roadmap to 2050(2017).

[4] World Bank, Bringing China’s Energy Efficiency Experience to the World: Knowledge Exchange with Asian Countries (June 27, 2014); IEA, Energy Efficiency Market Report(2016) at pp.38, 41; NDRC, China’s Policies and Actions for Addressing Climate Change(2016) at pp.16–17; “China becomes more efficient, cleaner in energy use” Xinhua News (January 30, 2017); National Bureau of Statistics, Statistical Bulletin on National Economic and Social Development in 2017 (February 28, 2018).

[5] IEA, Energy Efficiency Market Report(2016) at p.43.

[6] IEA, Energy Efficiency 2018 at p.145.

[7] IEA, Energy Efficiency 2018 at p.147.

[8] People’s Republic of China, Third National Communication on Climate Change(December 2018) at pp.107–121; Ye Qi and Tong Wu, “The Politics of Climate Change in China,”WIREs Climate Change, at n.3; Lisa Williams, “China’s Climate Change Policies—Actor and Drivers,”Lowy Institute(2014) at p.2; State Council, 国务院关于印发节能减排“十二五”规划的通知” [Energy Conservation and Emission Reduction 12th Five-Year Plan](2012).

[9] See 中华人民共和国国民经济和社会发展第十三个五年规划纲要[Outline of 13th Five-year Plan for National Economic and Social Development],(March 17, 2016) at chap. 2 (item 19); 能源系统效率——单位国内生产总值能耗比2015 年下降[13th Five-year Plan on Energy Development]at p.14.

[10] L. Wang, “China targets 3.4 pct cut in energy intensity in 2017,”CCTV (March 5, 2017). “China to slash coal consumption by 160mn tons in 5 years”(March 6, 2015).

[11] For breakdown of provincial targets, see 21st Century Business Herald. See also NDRCChina’s Policies and Actions for Addressing Climate Change(2016) at pp.10–11.

[12] IEA, Energy Efficiency Market Report(2016) at pp.51–52; China Energy Efficiency Report,ABB(February 2013); see also NDRC, Climate Policies and Actions for Addressing Climate Change(2013)at p.19.

[13] See IEA, Energy Efficiency Market Report(2016)at p.50; Jonathan Sinton, Mark Levine, David Fridley, Fuqiang Yang, and Jiang Lin, Status Report on Energy Efficiency Policy and Programs in China,Energy Analysis Department, Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory (December 1999).

[14] 13th Five-Year Plan for National and Social Development of the People’s Republic of China (2016-2020),Central Compilation & Translation Press; ABB, China Energy Efficiency Report(February 2013) at p.4,

[15] ABB, China Energy Efficiency Report(February 2013) at p.5.

[16] NDRC,China’s Policies and Actions for Addressing Climate Change(2016) at p.10–11; Hermann Amecke et al., Buildings Energy Efficiency in China, Germany, and the United States(Climate Policy Initiative, April 2013); “The 13th Five-Year Plan for National and Social Development of the People’s Republic of China,”Central Compilation & Translation Press(2016–2020).

[17] MOHURD, Chinese Green Building Evaluation website(accessed August 16, 2019); People’s Republic of China, Third National Communication on Climate Change(December 2018) at p.118;Wei Feng et al., The Evolution of Building Energy Codes and Standards in China,Lawrence Berkeley National Laboratory (2017).

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