ChinaFAQs: An Intense Push for Energy Efficiency

Key Points

  • Although a dominant image of China’s economic boom has been billowing smokestacks from burning coal, its efforts to increase energy efficiency are noteworthy.
  • China is on track to meet a goal of reducing national energy intensity by 20% by 2010. This target, set in 2005, is the cornerstone of a set of policies to cut energy and emissions growth.
  • As a direct result of policies, greenhouse gas emissions are measurably lower today than under the “business as usual” scenario. These gains suggest that real progress is possible in the future.

National Energy Efficiency Targets and Policies in China

Over the past few years, China has been pursuing one of the world’s most ambitious programs to improve energy efficiency.

The effort, launched in 2005, was prompted by warnings that changes in China’s economy were rapidly undoing the effects of policies that had previously led to improvement in national energy efficiency.i Between 1980 and 2000, China’s economy quadrupled in size while energy consumption had only doubled, a sign of continually improving energy efficiency.ii

Yet, in the early 2000s, an array of factors — including fast growth in exports and heavy industries — began to reverse the trend of efficiency gains. Overall energy use, air pollution, and greenhouse gas emissions soared.

In 2005, China’s leaders formally recognized that the reversal posed a serious problem, and issued a high-level directive: a mandatory goal to reduce by 20% the energy intensity (energy consumption per unit GDP) of China’s economy by 2010.iii Only by lowering the amount of energy required for economic output, China’s leaders decided, could investment from capital-intensive energy supply products be devoted to more balanced, environmentally favorable, and sustainable economic growth.

Reducing Energy Intensity Growth: 20% by 2010

The initiative launched an array of energy saving efforts, some echoing the measures that produced the economy-wide efficiency gains of the 1980s and 1990s. This time, however, changes in China’s economy and political culture often restrained the central government’s ability to simply order curbs in energy demand. Instead, officials turned to policies that included both “sticks” and “carrots,” ranging from new regulations and taxes to incentive programs for companies that reduced energy use (see ChinaFAQs: Efficiency, A Thousand Companies at a Time).

The new efficiency push has paid off. In 2006, China’s energy intensity decreased by 1.8%—the first improvement since 2001.iv That gain in energy intensity was followed in 2007 by a 4% improvement and, in 2008, by a further reduction of 4.6%. Preliminary statistics suggests efficiency gains could be even greater in 2009.v

China appears to be on track to meet its 20% reduction target for 2010, which would reduce warming emissions by some 1.5 billion metric tons of CO2.vi This reduction is approximately equal to the total annual CO2 emissions of Texas, California, Florida, and Ohio combined.vii By any measure, China’s reductions are massive and may be the largest national mitigation effort currently underway globally.viii

For further reading:
China FAQs: “Efficiency, A Thousand Companies at a Time” (WRI, 2009); Levine et al., “The Greening of the Middle Kingdom” (LBNL, 2009); and Lin et al., “Achieving China’s Target for Energy Intensity Reduction in 2010” (LBNL, 2006)

Notes and References
i Lin J., N. Zhou, M. Levine, and D. Fridley, “Taking out 1 billion tons of CO2: The magic of China’s 11th Five-Year Plan?” Energy Policy 36 (2008), 945-970
ii Lu, Y. 1993. Fueling One Billion: An Insider’s View. London, U.K.: Paragon Press.
iii China’s National People’s Congress. 2005. 11th Five-Year Development Program.
iv Although this was below the level on track to reach a 20% reduction by 2010. Levine, MD., Zhou, N. , and Price, L. (Summer 2009), “The Greening of the Middle Kingdom: The Story of Energy Efficiency in China.” The Bridge, National Academies of Engineering, Volume: 39, Number: 2
v National Development and Reform Commission (NDRC). 2009. “National and Provincial Development and Reform Commissions Held a Meeting on Resources Conservation and Environmental Protection in Xi’an, March 31, 2009.” http://hzs.ndrc.gov.cn/newgzdt/t20090331_270198.htm
vi The reductions are relative to a base case with 2005 energy intensity. Levine et al. (2009), “Greening of the Middle Kingdom.”
viiBased on annual totals for 2005. Climate Analysis Indicators Tool (CAIT US) version 3.0. (Washington, DC: World Resources Institute, 2009). Available at http://cait.wri.org.
viii Lin J., N. Zhou, M. Levine, and D. Fridley, “Taking out 1 billion tons of CO2: The magic of China’s 11th Five-Year Plan?” Energy Policy 36 (2008), 945-970