- In February 2022, the powerful National Development and Reform Committee (NDRC) led three other ministries in issuing a guidance document on enhancing energy efficiency until 2025 in 17 energy-intensive sectors, including steel, flat glass and cement.
- China’s government sets up two benchmark levels for energy efficiency in each sector. The advanced level is benchmarked on internationally leading levels of energy efficiency, while the bottom line is the minimum level that each enterprise in China is expected to meet.
- 16 out of the 17 sectors (except oil refinery) aim to eliminate all production capacities with energy efficiency below the bottom line by 2025, and to have 20%-50% of capacity reaching the advanced level of energy efficiency.
- It is the first time the Chinese government systematically addresses the energy efficiency issue in production sectors by establishing clear targets. The efforts are driven by China’s carbon peak by 2030 target, complementing China’s parallel ambitions to achieve an energy mix dominated by renewable energy.
- However, energy efficiency benchmarks in some sectors, e.g., steel production, have not been altered by the recent guidance and in fact remain unchanged since 2013. This illustrated the at-times slow progress of enhancing energy efficiency. Future implementation of the latest energy efficiency upgrading plan will also be interrupted occasionally by conflicting policy considerations such as short-term economic growth and supply chain security.
- Nevertheless, China’s upgrade in energy efficiency, reducing the carbon intensity of many intermediary products, provides opportunities for foreign companies to lower the carbon footprint of their supply chains in China.
Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.