Industrial Energy Intensity Benchmarking and Energy Transition in Inner Mongolia

The Inner Mongolia Autonomous Region has significant energy resources in terms of coal, iron ore, wind, solar, and minerals. It is one of the major energy-producing provinces in China and will continue to play an important role in China’s energy transition. During the 13th Five-Year Plan (FYP) (2016–2020), Inner Mongolia failed to achieve its “Dual Control” targets, which included a required energy intensity reduction and a cap on increased energy consumption set by the central government. It is critical for Inner Mongolia to identify gaps and potential areas to improve its energy intensity.

The goals of this project are to provide a technical analysis of the industrial sector in Inner Mongolia, including conducting an energy intensity benchmark analysis in Inner Mongolia’s iron and steel industry and aluminum smelting industry and providing information on major industrial corporations’ decarbonization commitments to inform Inner Mongolia’s long-term direction on carbon neutrality.

Our analysis shows that Inner Mongolia has significant potential to reduce its steel energy intensity (3-20% higher than the Chinese national average of key enterprises). It has a comparable electricity intensity in primary aluminum smelting to the China national average (in the range of 1.3% lower to 2.7% higher). But compared to international practical minimum energy intensities, Inner Mongolia still has substantial potential to improve in both industries. The local and central government can use a range of policy measures, such as regulatory requirements to conduct energy assessments and energy-efficiency retrofits, fiscal and financial incentives, and information on technologies and practices, to promote the adoption of energy-efficiency technologies in the steel industry. For improving aluminum smelting electricity intensity, policies on improving recycling collection and sorting, connecting participants along the supply chain, and implementing extended producer responsibility schemes could be considered.

Energy intensity benchmarking is the first step to identifying potential energy-saving and emission-reduction potentials. It can be followed up with more detailed energy assessments, retrofits, and/or adopting energy-efficient and low-carbon technologies. Many commercialized and cost-effective technologies and measures can be taken to improve the energy performance in the steel and aluminum industries in Inner Mongolia.