Energy Efficiency - China’s “first fuel” lighting up a sustainable pathway

11 Feb 2019

By Ms. SANG Jing,  Founder and Executive Director of China Council for an Energy Efficient Economy (CCEEE)

The Paris Agreement brought the world to an unprecedented consensus to achieve ambitious climate goals. As a fast-growing emerging economy and the world’s largest player in energy consumption and greenhouse gas emissions, China is facing the challenge of balancing economic and social development versus addressing the challenges of energy and climate change.

Energy efficiency is both a key solution to achieving the climate goals and a critical driving force for sustainable economic prosperity. Starting from the enactment of the country’s Energy Conservation Law in 1998, China has prioritised energy efficiency as one of its most important government agendas and established comprehensive energy conservation and efficiency management systems to enable effective actions. In that regard, China has made energy efficiency its “first fuel”, contributing to the sustainable economic growth.

According to the China Statistics Yearbooks and the China Energy Statistics Yearbooks by the National Bureau of Statistics of China, China’s overall energy intensity decreased nearly 40% between 1998 and 2017; the growth rate of energy consumption dropped 10.5 percentage points between 2005 and 2017. China achieved all these with an average GDP growth rate of 9% between 2005 and 2017.

With the objective of comprehensively digesting information about China's energy efficiency improvement work in recent years, and introducing China’s relevant policies and programmes to global audiences to benefit their work in addressing climate and energy challenges, the China Council for an Energy Efficient Economy (CCEEE) convened a group of energy efficiency experts in China to jointly develop the Energy Efficiency China 2018 report that reviews and summarises China’s energy efficiency work to date. This article presents the key messages from this report.

Achieving significant sectoral energy efficiency improvements through strong policy support

The industry sector continues to be a major enabler for energy efficiency improvement in China. After economic reform, industrial structures have changed, industrial energy intensity has decreased and the growth rates of energy consumption in heavy industries have been declining. The average annual growth rate of industrial energy consumption from 2010 to 2016 was only 1.8% whereas the industry’s share of total energy consumption in the country dropped from above 70% to 66.6%. The average annual growth rate of energy consumption from the six highest energy-consuming industries dropped from 6.8% in the 2006-2010 period to 1.2% in the 2011-2015 period.

In buildings sector, continuous rapid urbanisation makes it challenging to meet citizens’ growing demand for more and better services, while at the same time avoiding excessive energy and resource use. China has taken serious measures to promote buildings energy efficiency such as developing energy efficiency standards for new buildings and conducting energy retrofits in existing buildings. As of 2017, the energy efficiency standards for new buildings in urban areas in China have all been published, covering energy efficiency design standards for urban residential buildings and public buildings. By 2015, central heating metering and energy efficiency retrofits were carried out in 990 million m2 of existing residential buildings, benefiting more than 15 million households. As a result of such initiatives, more than 6.5 million tce of energy was saved per year. In addition, renewable energy deployment is on the rise in Chinese buildings.

Energy efficiency in the transportation sector is catching up with the world’s latest advancements. Today, China has the world’s largest market for on-road motor vehicles and is expected to have a growing freight demand by five to six times by 2050. In view of this, the Chinese government has implemented a set of energy efficiency standards and policies on light-duty vehicles (LDVs) and heavy-duty vehicles (HDVs) since 2005. Specifically, the latest LDV energy efficiency standard implemented in China in 2016 set a fleet-average fuel consumption target of 5 L/100 km in 2020, or about a 28% reduction from the 2015 level, the largest reduction among the world’s ten regulated markets. For HDVs, in 2018, China released the Phase III HDV energy efficiency standard to further the reduction of the all fleet by about 15% below the 2015 level, which will become effective in 2019. This measure is expected to help narrow the gap in new HDV fleet fuel consumption between China and advanced markets by about 10%-15%. These standards and policies, together with the world’s highest sales of electric vehicles, will ensure the high-quality and high-efficiency development of the Chinese transportation sector.

Fulfilling the demand of energy efficiency improvement by scaling up investment

The influx of private investment stimulated by the government's financial incentives has become an indispensable driving force for fulfilling the demand for energy efficiency improvement in the last decade. In 2016, China’s total investment in energy efficiency was CNY 334.6 billion, which was 38.6 times that of 2006. In 2016, investment by the national and local governments in energy efficiency was CNY 62.8 billion while investment from the private sector in 2016 reached CNY 271.8 billion, which is 4.3 times of the public funding.

Bringing global attention to the “first fuel”

China has been an active participant in and significant contributor to energy- and climate-related international exchange platforms and cooperation frameworks, including multilateral platforms such as the International Partnership for Energy Efficiency Cooperation (IPEEC), United Nations Climate Change Conference, the Clean Energy Ministerial, the BRICS Energy Cooperation, as well as bilateral exchanges such as the U.S.-China Energy Efficiency Forum, the Sino-German Energy Efficiency Working Group, and the China-Japan Energy Conservation and Environmental Protection Forum. Notably, China took the initiative to establish the G20 Energy Efficiency Leading Program in 2016 under its G20 Presidency, providing a comprehensive framework for global collaboration on energy efficiency.

Although energy efficiency is receiving more and more attention both in China and globally, there is still a long way to go to make its visibility match its significance. Having in mind China’s energy efficiency progress to date, we look forward to its even better performance on enhancing energy efficiency policies, promoting energy efficiency technologies and investment, engaging private sector and maintaining active participation in international cooperation on energy efficiency. China will continue to a contributor and a leader in global energy efficiency improvement and climate change mitigation.

For more information please consult the CCEEE’s Energy Efficiency China 2018 report in both Chinese and English.

Ms. SANG Jing
is the Founder and Executive Director of China Council for an Energy Efficient Economy (CCEEE), which was officially registered in 2016 as an integrated platform to promote multilateral collaboration and communication in energy efficiency policy, technology and financing. Prior to CCEEE, Ms. Sang Jing worked in the Energy Foundation China (EFC) for 10 years in industry energy efficiency in support of developing policy and standards, coordinating project implementation, and promoting best practices dissemination. Ms. Sang Jing serves as Deputy Chairperson and Deputy Secretary-General of Energy Economy Committee, China Energy Research Society (CERS)