China's ongoing energy efficiency drive: Origins,progress and prospects

In 2004 China's government launched a vigorous programme to reverse the trend of rising national energy intensity and to reduce intensity by 20% over the period 2006–2010. The aim of this paper is to examine this programme in the context of nearly 30 years of measures to enhance energy efficiency in China, and thus to evaluate the likelihood that today's policies will yield improvements over a longer period. The country achieved a sustained decline of energy intensity in the period 1980–2001 but this trend was reversed in 2002. This reversal arose from a shift in the structure of the economy to more energy-intensive industries and from a decline in the rate of technical innovation. The measures taken since 2003 have been directed principally at energy-intensive industries, but have also addressed other sectors of the economy. Though the energy intensity target for the year 2010 may be achieved, greater efforts will be needed to address a number of constraints which include: the reluctance to use economic and financial instruments; the dependency of energy policy on industrial and social policies; the nature of political decision-making and of public administration; a shortage of skills; and social attitudes to energy.     

Taking out 1 billion tons of CO2: The magic of China's 11th Five-Year Plan?

China's 11th Five-Year Plan (FYP) sets an ambitious target for energy-efficiency improvement: energy intensity of the country's gross domestic product (GDP) should be reduced by 20% from 2005 to 2010 [National Development and Reform Commission (NDRC), 2006. Overview of the 11th Five Year Plan for National Economic and Social Development. NDRC, Beijing]. This is the first time that a quantitative and binding target has been set for energy efficiency, and signals a major shift in China's strategic thinking about its long-term economic and energy development. The 20% energy-intensity target also translates into an annual reduction of over 1.5 billion tons of CO₂ by 2010, making the Chinese effort one of the most significant carbon mitigation efforts in the world today. While it is still too early to tell whether China will achieve this target, this paper attempts to understand the trend in energy intensity in China and to explore a variety of options toward meeting the 20% target using a detailed end-use energy model.     

Energy conservation and circular economy in China's process industries

Since energy consumption in process industries accounts for a great proportion of China's total energy consumption, energy conservation becomes the practical choice to reduce the conflict between energy demand and energy supply in China, and therefore, promoting energy conservation is the long-term solution to China's energy and environment problems from the source. In this paper, based on the introduction of the concept of energy consumption status in China's key energy-consuming process industries, the main technical bottlenecks and resource-environment problems were analyzed with special emphasis on energy utilization efficiency, energy consumption mode, and waste emission. As for the measures to resolve these problems, at the policy level, policies and programs of Chinese government related to energy conservation were introduced in combination with China's circular economy structure. At the technical level, the key technologies and research progress to improve energy utilization efficiency, reducing energy consumption, as well as utilizing the resource of discharged wastes were reviewed. Finally, three typical cases of the development of circular economy at three levels, namely the chemical industry, metallurgical industry, and electric power industry, were studied for the enforcement of circular economy and energy conservation in China's process industries.     

Estimates of the potential for energy conservation in the Chinese steel industry

The study evaluates the energy saving potential of the Chinese steel industry by studying its potential future energy efficiency gap. In order to predict the future energy efficiency gap, a multivariate regression model combined with risk analysis is developed to estimate future energy intensity of China's steel industry. It is found that R&D intensity, energy saving investment, labor productivity and industry concentration are all important variables that affect energy intensity. We assess the possible measures as to how China's steel industry can narrow the energy efficiency gap with Japan by means of scenario analysis. Using Japan's current energy efficiency level as baseline, the energy saving potential of China's steel industry is more than 200 million ton coal equivalent in 2008, and it would fall to zero in 2020. However, if greater efforts were made to conserve energy, it would be possible to narrow down the energy efficiency gap between China and Japan by around 2015. Finally, using the results of the scenario analysis, future policy priorities for energy conservation in China's steel industry are assessed in this paper.     

The impacts of removing energy subsidies on economy-wide rebound effects in China: An input-output analysis

Facing with the increasing contradiction of economic growth, energy scarcity and environmental deterioration, energy conservation and emissions abatement have been ambitious targets for the Chinese government. Improving energy efficiency through technological advancement is a primary measure to achieve these targets. However, the existence of energy rebound effects may completely or partially offset energy savings associated with technological advancement. This paper adopted a modified input-output model to estimate the economy-wide energy rebound effects across China's economic sectors with the consideration of energy subsidies. The empirical results show that the aggregate rebound effect of China is about 1.9% in 2007–2010, thus technological advancement significantly restrains energy consumption increasing. Removing energy subsidies will cause the aggregate rebound effect declines to 1.53%. Specifically, removing subsidies for coal and nature gas can reduce the rebound effects signifcantly, while removing the subsidies for oil products has a small impact on rebound effect. The existence of rebound effects implies that technological advancement should be cooperated with energy price reform so as to achieve the energy saving target. In addition, the government should consider the diversity of economic sectors and energy types when design the reform schedule.     

Assessment of China's energy-saving and emission-reduction accomplishments and opportunities during the 11th Five Year Plan

From 1980 to 2002, China experienced a 5% average annual reduction in energy consumption per unit of gross domestic product (GDP). With a dramatic reversal of this historic relationship, energy intensity increased 5% per year during 2002–2005. China's 11th Five Year Plan (FYP) set a target of reducing energy intensity by 20% by 2010. This paper assesses selected policies and programs that China has instituted to fulfill the national goal, finding that China made substantial progress and many of the energy-efficiency programs appear to be on track to meet – or in some cases exceed – their energy-saving targets. Most of the Ten Key Projects, the Top-1000 Program, and the Small Plant Closure Program will meet or surpass the 11th FYP savings goals. China's appliance standards and labeling program has become very robust. China has greatly enhanced its enforcement of new building energy standards but energy-efficiency programs for buildings retrofits, as well as the goal of adjusting China's economic structure, are failing. It is important to maintain and strengthen the existing energy-saving policies and programs that are successful while revising programs or adding new policy mechanisms to improve the programs that are not on track to achieve the stated goals.     

A hybrid modelling approach to develop scenarios for China's carbon dioxide emissions to 2050

This paper describes a hybrid modelling approach to assess the future development of China's energy system, for both a “hypothetical counterfactual baseline” (HCB) scenario and low carbon (“abatement”) scenarios. The approach combines a technology-rich integrated assessment model (MESSAGE) of China's energy system with a set of sector-specific, bottom-up, energy demand models for the transport, buildings and industrial sectors developed by the Grantham Institute for Climate Change at Imperial College London. By exploring technology-specific solutions in all major sectors of the Chinese economy, we find that a combination of measures, underpinned by low-carbon power options based on a mix of renewables, nuclear and carbon capture and storage, would fundamentally transform the Chinese energy system, when combined with increasing electrification of demand-side sectors. Energy efficiency options in these demand sectors are also important.     

Can China achieve its 2030 energy development targets by fulfilling carbon intensity reduction commitments?

China has proposed carbon intensity targets and energy development targets for 2030. This study investigates the linkages between these targets and assesses if China can achieve its energy development targets by fulfilling its carbon reduction commitments. To this end, it quantitatively evaluates the impact of carbon emission controls on the Chinese economy using a dynamic computable general equilibrium model. The results show that China's carbon abatement pledge cannot guarantee achievement of all energy objectives. China is likely to reach the upper limit of its carbon intensity target in 2020 and the lower limit in 2030 if current abatement efforts are maintained. To achieve the upper limit in 2030, the carbon price will be CNY 83/tCO₂. The energy consumption target for 2020 is likely to be realized but the 2030 target is not. A more stringent price constraint on carbon emissions would be helpful to the achievement of the non-fossil energy target in 2030, but would have a limited promoting effect on natural gas development. Our results reveal the linkages between China's energy targets and carbon emission targets, which is valuable to the cost-effective dual control of energy consumption and carbon emission.     

Exploring the impacts of a carbon tax on the Chinese economy using a CGE model with a detailed disaggregation of energy sectors

This paper applies a computable general equilibrium model to investigate the impacts of a carbon tax on China's economy and carbon emissions based on China's 2010 Input–Output Table. To obtain robust simulation results, we further disaggregate the energy sectors into eight departments according to energy use characteristics. The empirical results indicate that a moderate carbon tax would significantly reduce carbon emissions and fossil fuel energy consumption and slightly reduce the pace of economic growth. However, a large carbon tax has a significantly negative impact on China's economy and social welfare. Moreover, a large carbon tax would entail marked price changes in China. Of the fossil fuels in use, reducing coal consumption would have the greatest impact on reducing carbon emissions, and the ad valorem duty rate for coal would be the highest after levying a carbon tax because it has the highest carbon emission coefficient. Therefore, China should strive to promote clean coal technology, which may be crucial to reducing carbon emissions. Moreover, levying a carbon tax would improve the use of clean energy, which would be an effective means of reducing carbon emissions. Therefore, the Chinese government should formulate the regulations for and pass a carbon tax as early as possible to achieve its carbon emission abatement target and further contribute to mitigating climate change.     

Determinants of China's energy imports: An empirical analysis

Sustained economic growth in China has triggered a surge of energy imports, especially oil imports. This paper investigates the determinants of China's energy import demand by using cointegraiton and VECM techniques. The findings suggest that, in the long run, growth of industrial production and expansion of transport sectors affect China's oil imports, while domestic energy output has a substitution effect. Thus, as the Chinese economy industrializes and the automotive sector expands, China's oil imports are likely to increase. Though China's domestic oil production has a substitution effect on imports, its growth is limited due to scarce domestic reserve and high exploration costs. It is anticipated that China will be more dependent on overseas oil supply regardless of the world oil price.     

The effect of increasing exports on industrial energy intensity in China

Given China's heavy reliance on fuel energy and the dominance of its industrial sector in the economy, improving energy efficiency remains one of the practical means for the country to decrease energy intensity and to fulfill its commitment made at the Copenhagen Climate Change Conference to achieve a 40–45 percent reduction in CO₂ emission intensity by 2020. This study investigates the impact of exports on industrial energy intensity to explore the possibility of reducing energy intensity through greater exports. A panel varying-coefficient regression model with a dataset of China's 20 industrial sub-sectors over 1999–2007 suggests that in general, greater exports aggravate energy intensity of the industrial sector and that great divergences exist in the impact of exports on energy intensity across sub-sectors. A panel threshold model further estimates the thresholds for the major determinants of energy intensity: exports, input in technological innovations, and Foreign Direct Investment (FDI) intensity. Given the great differences in specific sub-sector characteristics and the changing roles played by different factors across sub-sectors, there is no general export policy that would work for all sub-sectors in reducing sub-sector energy intensity. Instead, policies and measures aiming to encourage more efficient use of energy should take into full consideration the characteristics and situations of individual sub-sectors.     

A harmonized calculation model for transforming EU bottom-up energy efficiency indicators into empirical estimates of policy impacts

This study is an impact analysis of European Union (EU) energy efficiency policy that employs both top-down energy consumption data and bottom-up energy efficiency statistics or indicators. As such, it may be considered a contribution to the effort called for in the EU's 2006 Energy Services Directive (ESD) to develop a harmonized calculation model. Although this study does not estimate the realized savings from individual policy measures, it does provide estimates of realized energy savings for energy efficiency policy measures in aggregate. Using fixed effects panel models, the annual cumulative savings in 2011 of combined household and manufacturing sector electricity and natural gas usage attributed to EU energy efficiency policies since 2000 is estimated to be 1136 PJ; the savings attributed to energy efficiency policies since 2006 is estimated to be 807 PJ, or the equivalent of 5.6% of 2011 EU energy consumption. As well as its contribution to energy efficiency policy analysis, this study adds to the development of methods that can improve the quality of information provided by standardized energy efficiency and sustainable resource indexes.     

Multiple timescale analysis and factor analysis of energy ecological footprint growth in China 1953–2006

Scientific analysis of energy consumption and its influencing factors is of great importance for energy strategy and policy planning. The energy consumption in China 1953–2006 is estimated by applying the energy ecological footprint (EEF) method, and the fluctuation periods of annual China's per capita EEF (EEF_cpc) growth rate are analyzed with the empirical mode decomposition (EMD) method in this paper. EEF intensity is analyzed to depict energy efficiency in China. The main timescales of the 37 factors that affect the annual growth rate of EEF_cpc are also discussed based on EMD and factor analysis methods. Results show three obvious undulation cycles of the annual growth rate of EEF_cpc, i.e., 4.6, 14.4 and 34.2 years over the last 53 years. The analysis findings from the common synthesized factors of IMF1, IMF2 and IMF3 timescales of the 37 factors suggest that China's energy policy-makers should attach more importance to stabilizing economic growth, optimizing industrial structure, regulating domestic petroleum exploitation and improving transportation efficiency.     

What induced China's energy intensity to fluctuate: 1997–2006?

China is the second largest energy consumer in the world. During 1997–2002, China's energy intensity declined by 33%. However, it rose by 10.7% over 2003–2005, and declined by 1.2% in 2006. What induced China's energy intensity to fluctuate so drastically? Industry accounts for approximately 70% of the total energy consumption in China. In this paper, we decompose China's industrial energy intensity changes between 1997 and 2002 into sectoral structural effects and efficiency effects (measured by sectoral energy intensities at two-digit level and including the shifts of product mix in the sub-sector or firm level), using Törnqvist and Sato–Vartia Index methods. The results show that in this period, efficiency effects possibly contributed to a majority of the decline, while the contribution from structural effects was less. During 2003–2005, the excessive expansion of high-energy consuming sub-sectors and the high investment ratio were foremost sources of the increasing energy intensity. Attributed to the government efforts, the energy intensity has started to decline slightly since July 2006. In future, to save more energy, in addition to technical progress, China should attach more importance to optimizing its sectoral structure, and lowering its investment ratio.     

Energy savings potential in China's industrial sector: From the perspectives of factor price distortion and allocative inefficiency

China's industrial energy consumption accounted for 70.82% of national and 14.12% of world energy usage in 2011. In the context of energy scarcity and environmental pollution, the industrial sector in China faces unsustainable growth problems. By adopting the stochastic frontier analysis (SFA) framework, this paper analyzes the factor allocative efficiency of China's industrial sector, and estimates the energy savings potential from the perspective of allocative inefficiency. This paper focuses on three issues. The first is examining the factor allocative inefficiency of China's industrial sector. The second is measuring factor price distortion by the shadow price model. The third is estimating the energy savings potential in China's industrial sector during 2001–2009. Major conclusions are thus drawn. First, factor prices of capital, labor and energy are distorted in China due to government regulations. Moreover, energy price is relatively low compared to capital price, while is relatively high compared to labor price. Second, the industry-wide energy savings potential resulted from energy allocative inefficiency was about 9.71% during 2001–2009. The downward trend of energy savings potential implies the increasing energy allocative efficiency in China's industrial sector. Third, a transparent and reasonable pricing mechanism is conducive to improving energy allocative efficiency.     

Energy efficiency improvement in China: a significant progress for the 11th Five Year Plan

It is suggested in the proposal of the 11th Five Year Plan (from 2006 to 2010) that the total reduction rate of energy intensity per GDP (2005–2010) should be 20%. The annual reduction rate of energy intensity between 2005 and 2010 must reach 4.3% to meet this goal, and the elasticity of energy consumption should be less than 0.5. However, given that in 2000–2005 the average elasticity of energy consumption was as high as 1.084, it will be a great challenge to achieve the goal. We characterize the progress on energy efficiency in the context of the overall Chinese energy system, including both government policies and business efforts. When reviewing recent progress made (until 2007), major energy efficiency improvements can be observed. China is now adopting best efficiency practice in its newly installed capacity. This paper presents the policy packages and efficiency achievements in industry and other sectors.     

Path towards achieving of China's 2020 carbon emission reduction target—A discussion of low-carbon energy policies at province level

Following the announcement of the China's 2020 national target for the reduction of the intensity of carbon dioxide emissions per unit of GDP by 40–45% compared with 2005 levels, Chinese provincial governments prepared to restructure provincial energy policy and plan their contribution to realizing the State reduction target.     

Current situation of energy consumption and measures taken for energy saving in the iron and steel industry in China

A survey of the key issues associated with the development in the Chinese iron and steel industry and current situations of energy consumption are described in this paper. The apparent production of crude steel in China expanded to 418.78 million tonnes in 2006, which was about 34% share of the world steel production. The iron and steel industry in China is still one of the major high energy consumption and high pollution industries, which accounts for the consumption of about 15.2% of the national total energy, and generation of 14% of the national total wastewater and waste gas and 6% of the total solid waste materials. The average energy consumption per unit of steel is about 20% higher than that of other advanced countries due to its low energy utilization efficiency. However, the energy efficiency of the iron and steel industry in China has made significant improvement in the past few years and significant energy savings will be achieved in the future by optimizing end-use energy utilization. Finally, some measures for the industry in terms of the economic policy of China's 11th five-year plan are also presented.     

Investigation of China's bio-energy industry development modes based on a SWOT–PEST model

Today more than ever before, the issues of energy shortage, global warming and climate change bound with greenhouse effect are dominating the international agenda, causing an increased interest in the renewable and alternative energy sector. With the development of the Chinese economy and scientific technology, the contradiction between energy, environment and economic growth has become ever-increasingly evident. Bio-energy, as an emerging and promising energy type, is of pretty importance for China's energy development from the strategic perspective. In this paper, the strategic analysis tools stemming from the SWOT (Strengths, Weaknesses, Opportunities, and Threats)–PEST (political, economic, social and technological) model have been adopted to explore the development modes of China's bio-energy industry. Afterwards, on the basis of the mode analysis, several corresponding recommendations have been put forward in an attempt to achieve the rapid and sound development of China's bio-energy industry.     

Economic and environmental gains of China's fossil energy subsidies reform: A rebound effect case study with EIMO model

Energy consumption and efficiency emerged as the hottest topic in the context of China's sustainable development. Energy subsidies and “rebound effect” were closely related to this topic while few combinative studies on them with a focus on China. This paper employed a co-thinking approach, focusing on how the energy subsidies reform could mitigate the rebound effect in China, and how to achieve an “economic and environmental gains” that reduced pecuniary spending, improved the distorted energy market and reduced energy consumption simultaneously. Firstly, with price-gap approach we calculated the total energy subsidies scale of China in 2007, which amounted to582.0 billion CNY; then we detected and identified rebound effect of China energy consumption with the features. Furthermore, based on China 2007 monetary input–output table and energy flow analysis, we compiled a hybrid physical energy input and monetary output model (EIMO) to simulate the mitigation effect of subsidies reform. Results showed that removing energy subsidies would decrease ultimate demand of different economy sectors and reduce the accumulatively physical consumption of coal, oil, natural gas and electricity by 17.74, 13.47, 3.64 and 15.82 million tce, respectively. Finally we discussed relevant policy issues on China's energy subsidies reform in depth.