Status Report on Energy Efficiency Policy and Programs in China

China's activities in promoting energy efficiency may have played a role in the reduction in total energy consumption in the country since 1996. The decline in China's output and consumption of primary energy has been driven by changes in China's most important fuel, coal. Estimated total primary energy use in 1999 will be nearly 6% below the 1997 peak. Meanwhile, consumption of oil and electricity have continued to grow. On the supply side, China has undertaken a campaign to close or curtail production at thousands of coal mines. On the demand side, available evidence is not conclusive and data not always reliable, but indicates that slowing economic growth and reform in the state-owned sector has led demand in industrial sectors users to drop due to closures and reductions in output. Households have continued their rapid switch from coal to gas fuels and electricity. The average quality of coal may be increasing, allowing end users to use less. Moreover, across all sectors, equipment turnover has continuously raised efficiency.

Many factors are behind the improvements in energy efficiency, including rising energy prices and general economic growth stimulating purchases of new equipment. An essential element has been the continuing commitment of the Chinese government to promoting energy efficiency, which is devoting considerable energy to developing new policies and programs that will be effective under the changing conditions of China's transforming political economy. This paper describes developments in energy efficiency policy in China over the past several years, particularly since the passage of the Energy Conservation Law (ECL) in 1997.