Energy efficiency in China: accomplishments and challenges
Introduction
In a trend unparalleled in any other country at a similar stage of industrialization, the energy intensity of China’s economy has fallen rapidly since the late 1970s (Fig. 1). It has, moreover, dropped faster than in industrialized nations, where high energy costs, efficiency standards, and structural changes contributed to the decoupling of energy use and economic growth. The consequences are difficult to overstate. China’s actual primary energy consumption in 1995 was 1250 million metric tons of standard coal equivalent1 (Mtce), but if the same amount of output had been produced at the intensity prevailing in 1977 – after which year intensity began to decline – the country would have used 2740 Mtce (Fig. 2). In other words, China was using less than half as much energy by 1995 as it would have if intensity had not changed since 1977. Even with the vast improvement, China has already become the world’s second largest energy consumer and emitter of greenhouse gases, and is poised to become number one by the middle of the next century. How China achieved past efficiency gains, how it can continue to become more efficient, and how China’s experience can be applied to other countries are topics of tremendous importance, with direct relevance for policies aimed at local, regional, and global environmental problems, energy security, and trade issues (see, eg, Joint Study Team, 1994).
In this paper we first analyze the sources of the remarkable decline in China’s energy intensity, ie energy-efficiency improvements, changes in product mix, shifts in the sectoral structure of the economy, and other factors. Next we explore the causes lying behind those factors – where the impetus for efficiency changes and sectoral shifts came from. We show that China’s intensity decline owes a great deal to technical efficiency improvements, and that government policies and programs were critical to their achievement. We then describe some of the most important aspects of the state’s large-scale effort to promote energy efficiency throughout the economy, such as creating a mechanisms for investing in efficiency projects, implementing quotas for and monitoring energy intensity at factories, supporting efficiency research and development, setting up a network of energy conservation service centers, and implementing financial incentives. We point out that the structures and mechanisms to promote efficiency, mostly created in the 1980s under the planning system, still bear the hallmarks of the command economy and are not entirely appropriate to the reformed economic environment. In the final sections of this paper we treat the challenges China faces in continuing to promote efficiency improvements, which are vital to the country’s continued economic growth and environmental well-being, in the transition to a market-based economy.
Section snippets
Energy savings since 19802
China’s macroeconomic energy intensity has declined since the late 1970s, contrary to the experience of developing countries at similar stages of industrialization.3
Causes of Energy Intensity Declines
Difficult as it is to analytically separate the factors that contributed to China’s falling intensity, it is even harder to quantify the role of the causes behind those factors. Which aspects of the economic system reforms were responsible for changes in the sectoral structure of the economy and for shifts in product mix? To what extent was better technical efficiency due to “natural” change in the stock of energy-using equipment (eg replacement of obsolete equipment and construction of new
Major Efficiency Policies and Programs15
Chinese energy researchers and planners realized late in the 1970s that future energy supplies would be insufficient to meet the needs of economic development unless the efficiency of energy end-uses were improved significantly.16
Challenges to continued efficiency improvements in the transitional economy
The upheavals of China’s economic system are reflected in its landscape. In the cities and in much of the countryside, sprawling construction sites crowd views with no apparent coordination, and the old and new are everywhere squeezed together in inharmonious juxtaposition. In its current state of transition, China’s economic system is host simultaneously to features of the centrally planned command economy of the recent past and to elements of a regulated, market-based system. In this world of
Recommendations
The challenges China faces in reorienting its efforts to ensure that efficiency improvements continue are not small. With many seemingly more pressing matters occupying the country’s leaders – threatened declines in agricultural productivity, water shortages, underemployment of a huge and growing population, and political pressures, to name a few – energy issues, and particularly demand-side issues may not receive full attention. Under these circumstances, it is crucial to conduct well-focused
References (47)
Industry energy use and structural changea case study of the People’s Republic of China
Energy Economics
(1993)China’s power industry, 1989–1990price reform and its effect on energy efficiency
Energy
(1992)- et al.
100 million improved cookstoves in ChinaHow was it done?
World Development
(1993) Energy conservation in ChinaAn international perspective
Energy Policy
(1995)Organizational behavior and energy conservation decision making
Proceedings from the ACEEE 1990 Summer Study on Energy Efficiency in Buildings, Vol. 2, Human Dimensions
(1990)- China Energy Project data files, Energy Analysis Program, Lawrence Berkeley National...
- China Energy Research Society and China Information Press (CERSCIP) (1989). Quanguo dazhongxing gongye qiye nengyuan...
- China News Digest (Electronically distributed daily news magazine) 26 July 1995 and 17 August...
China’s industrial performance since 1978
The China Quarterly
(1992)- Greening, L A, Davis, W B, Schipper, L and Krushch, M (1996). Comparison of six decomposition methods: application to...
The energy situation in China
The China Quarterly
‘Behavioral determinants of energy use in small commercial buildingsimplications for energy efficiency
Energy Systems And Policy
Declining energy intensity in China’s industrial sector
The Journal of Energy and Development
Industrial Sector Energy Conservation Programs in the People’s Republic of China during the Seventh Five Year Plan (1986–1990)
Fueling One BillionAn Insider’s Story of Chinese Energy Policy Development
Least-Cost Utility PlanningA Handbook for Public Utility Commissioners, Vol. 2, The Demand Side: Conceptual and Methodological Issues
Growing Out of the PlanChinese Economic Reform, 1978–1993
Cited by (102)
Government intervention in energy conservation: Justification and warning
2020, Energy EconomicsCan energy saving policies drive firm innovation behaviors? - Evidence from China
2020, Technological Forecasting and Social ChangeComparisons of CO<inf>2</inf> emission performance between secondary and service industries in Yangtze River Delta cities
2019, Journal of Environmental ManagementThe role of government in industrial energy conservation in China: Lessons from the iron and steel industry
2017, Energy for Sustainable DevelopmentCitation Excerpt :The corporatization greatly increased the autonomy of these state-owned iron and steel enterprises and gradually concluded the government's direct intervention into internal economic and energy activities (Yu, 2010). As a result, the level of government investment and regulation in energy efficiency declined dramatically despite the introduction of the Energy Conservation Law in 1997 (Sinton et al., 1998; Liu, 2010). Financial support for energy conservation also diminished greatly as tax rate reductions for efficient technology development and investment projects were all abolished in 1994 due to tax reform (Sinton et al., 1998).