China's Energy Transition

II. Promoting Green Energy Consumption

Green development is a defining feature of an eco-civilization. China firmly believes that clear waters and lush mountains are invaluable assets, and acts accordingly. It therefore plans to transition its development model to one that achieves harmony between humanity and nature as a major focus. China is moving away from the traditional path of heavy dependence on energy and resources, as the country looks to promote a green transformation in every aspect of its economic and social development.

1. Strengthening Institutional Constraints for Energy Conservation and Carbon Reduction

Staying committed to prioritizing energy conservation and reining in irrational energy use, China focuses its efforts on changing the way resources are used and improving its resource efficiency.

Maximizing the policy of dual control over energy use. Controlling both the volume and intensity of energy use is a crucial institutional measure in accelerating eco-environmental progress and pursuing high-quality development. To keep up with the dynamics in its economic and social development, China has set a binding target of lowering energy intensity and has shifted its focus from controlling the volume and intensity of energy use to controlling the volume and intensity of carbon emissions. Over the past decade, through industrial restructuring and upgrading, China has introduced energy-saving and carbon reduction technologies and industries, and raised its energy efficiency across the board. As a result of these efforts, the country’s energy intensity has decreased steadily, leading to energy savings equivalent to about 1.4 billion tonnes of standard coal and reducing carbon dioxide emissions by about 3 billion tonnes.

Building a multidimensional energy conservation management system. China fully enforces relevant laws and regulations such as the Energy Conservation Law and the Circular Economy Promotion Law. It works to establish and improve related institutional systems, including energy-saving reviews and supervision over fixed assets investment projects. Clear requirements for energy conservation management of key industries and enterprises have been set, and the energy-saving management of major energy consumers has been strengthened. China has also adopted an energy efficiency pacesetter system to incentivize various entities to conserve energy and raise efficiency. It has leveraged the role of taxation, financial and other policies to steer the entire society towards higher investment into energy conservation and efficiency improvements.

Promoting market-based approaches to energy conservation. China has improved its management of energy efficiency standards and labels, and made consistent efforts to formulate and revise standards on energy conservation, using such standards to guide players in various sectors to conserve energy and raise energy efficiency. By the end of 2023, it had released 335 national standards on energy consumption limits and the energy efficiency of products. The energy efficiency labeling system covers 44 categories of energy-using products across five major energy-consuming sectors. Additionally, China has actively applied market-oriented mechanisms such as energy performance contracting, and promoted “one-stop” comprehensive services, including energy conservation consultancy, diagnosis, engineering, financing, transformation and outsourcing. In 2023, the total output value of the energy conservation service industry exceeded RMB500 billion, doubling that of 2013.

2. Improving Energy Conservation and Efficiency in Key Sectors

To conserve energy and increase energy efficiency, China must focus on key sectors such as industry, construction, transport, and public institutions. These sectors are major energy consumers and will therefore be fundamental in improving energy conservation and efficiency. By fully applying energy conservation standards, promoting advanced energy-efficient products, and phasing out outdated production capacity, energy efficiency is continuing to rise in these key sectors.

Tapping into the potential of industry in conserving energy. Since the industrial sector plays a pivotal role in conserving energy and raising energy efficiency, China has made lasting efforts to replace outdated production capacity and drive energy-saving technological transformation. It has promoted innovation in production techniques, process reengineering, and digital and intelligent upgrading, and provided guidance for key enterprises to refine their energy management practices. Over the past decade, the energy consumption per unit of added value of industrial enterprises of designated size – with an annual revenue of RMB20 million and above – has dropped by more than 36 percent. Comprehensive energy consumption per unit of product in the steel, electrolytic aluminum, cement, glass, and other industries has lowered by more than 9 percent on average.

Promoting green, energy-efficient buildings. China is currently undergoing the world’s largest urbanization process. To avoid carbon lock-in, the country has implemented higher energy-efficiency standards for new buildings and is steadily advancing the energy-saving retrofit of existing buildings. China is also accelerating the development of buildings with ultralow or near-zero energy consumption. By the end of 2023, the floorage of energy-efficient buildings had surpassed 32.68 billion square meters, accounting for more than 64 percent of the total floor space of urban buildings, up nearly 30 percentage points from 2013. The floorage of buildings with ultralow or near-zero energy consumption has now surpassed 43.7 million square meters.

Developing a clean and efficient transport system in an all-round way. As logistic and travel needs continue to grow with economic and social development, energy consumption in the transport sector will also increase. China is accelerating the development of multimodal transport, and increasing the share of railways and waterways within its integrated transport system. The country has continued to prioritize the development of urban public transport, optimize its green transport service systems, and promote new energy vehicles in urban passenger transport. It has adopted motor vehicle emission standards that align with advanced international levels, phasing out vehicles that do not meet the National IV or higher level emission standards. As a result, energy intensity in transport has fallen. The comprehensive energy consumption per unit load for railway transport in 2023 dropped by some 19 percent compared with 2013. Efforts have also been made to develop an electric vehicle charging infrastructure network and improve the distribution of hydrogen and natural gas fueling stations and related service facilities. By the end of 2023, there were almost 8.6 million charging facilities andover 450 hydrogen fueling stations nationwide.

Promoting energy conservation in public institutions. China has formulated the Regulations on Energy Conservation in Public Institutions and has initiated efforts to promote energy conservation in government departments and other public institutions. It has introduced energy efficiency retrofits through energy performance contracting and promoted the electrification of final energy consumption in public institutions. It encourages green office work and green travel, and gives priority to green, energy-efficient products in procurement. By the end of 2023, 90 percent of government departments at or above the county level had met the energy-saving standards, and 5,114 public institutions had been cited as exemplars in energy conservation. By 2023, the per capita comprehensive energy consumption in public institutions across the country had dropped by 20.4 percent compared with 2013.

3. Fostering Green Models of Energy Consumption

The Chinese government actively guides the public to prioritize green energy and carry forward the nation’s traditions of diligence and thrift. It promotes the shift towards green and low-carbon ways of life and consumption that are simple, moderate and healthy.

Encouraging the consumption of renewable energy. China has adopted a system of setting annual renewable electricity consumption targets for provincial-level administrative units, and monitoring and evaluating their performance. In addition, it has established a green electricity certification system for the consumption of renewable electricity, and uses the green electricity certificates as sole proof of an entity’s green electricity consumption and environmental-friendliness. It uses the consumption of green electricity as an important basis for assessing, certifying, and labeling green products. In this way, the government encourages the entire society to prioritize the use of green energy and purchase of green products and services. It also encourages competent enterprises to form low-carbon or even zero-carbon models of energy consumption. Both the Beijing 2022 Winter Olympic Games and the Hangzhou Asian Games in 2023 utilized 100 percent green electricity.

Advancing the electrification and low-carbon transition of final energy consumption. In the industrial sector, there has been a shift from traditional fuels to electricity for processes such as heating, drying, and steam supply. This has been achieved through the use of high-temperature heat pumps, electric heating, and other technologies. Additionally, efforts have been made to promote the demonstration and application of renewable hydrogen production in the chemical and metallurgical industries.

In the construction sector, there has been widespread adoption of solar water heaters and electric cooking appliances. In northern China, clean heating has been actively advanced, replacing coal with clean and low-carbon energy such as electricity, natural gas, biomass, geothermal energy, and industrial exhaust heat. In 2023, the share of clean heating reached nearly 80 percent in northern China.

In the transport sector, there has been a strong push for new energy vehicles, increased electrification of railways, and the use of shore power for anchored ships and parked aircraft. By the end of 2023, China had over 20.4 million new energy vehicles; the electrification rate of its railway system reached 73.8 percent; and the electrification rate of society-wide final energy consumption stood at 28 percent, an increase of about 7 percentage points from 2013.

Adopting green and low-carbon ways of life. Energy conservation and carbon reduction have been promoted throughout society. China has been actively encouraging green and low-carbon lifestyles, and has intensified its efforts to promote green living and raise the public’s consciousness of the need to conserve resources. It has made greater efforts to promote green and low-carbon products and has carried out public awareness events such as the National Ecology Day, the National Energy Conservation Week, the National Low Carbon Day, and the World Environment Day, to comprehensively promote awareness and understanding of energy conservation. Green travel is promoted as the public are encouraged to make public transport, cycling, and walking their first choices for getting around. Additionally, the government has organized a green travel campaign, in which 97 of the 109 participating cities have met the standards, with their green travel rates exceeding 70 percent.