Enhancing China’s energy efficiency: the policy challenges Philip Andrews-Speed Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee

Energy supply & demand

Energy intensity

Questions How do energy conservation and energy efficiency fit with wider energy policy making and implementation? What is the past record of the government in this field? What is the outlook?

Apparent energy policy

Energy policy-making and implementation Nature of policy: –Disjointed, industry-specific, target focused –Lacking coherence and specific measures –Focus on energy supply Policy making –Driven by industry players and interests –No powerful government agency for energy Policy implementation –Shortage of resources; institutional weaknesses –Resistance from vested interests

Energy efficiency: the record late 1990s –Substantial investment, in industry –Quotas of energy supply to industry –Energy conservation technology centres –Financial incentives –Structural shifts –Reduced investment and incentives –Growth of energy intensive industry

Why is continued energy inefficiency so costly? Cost to the national economy and competitiveness Drain on domestic primary energy resources Energy import requirement: forex and implications for international markets Security of energy supply Environmental damage: local, regional, global Enhancing efficiency is cheaper than producing more energy

What are the requirements? Indirect: structural changes in industry, shift industries ‘offshore’ Appliance standards and labelling Public transport policy; building standards Economic signals: especially end-user pricing Guidance, information centres Other incentives to invest in energy efficiency appliances: tax, subsidies, DSM Massive investment: 10’s billions RMB p.a.

What are the potential obstacles? Policy framework: coherence Social policy: pricing Institutional: structures and political power Vested interests: energy companies, local government Resources: agencies and direct investment Legal: allocation of responsibility; penalties Incentives: suppliers and users Regional disparities Lack of real commitment and funding

Target of 20% energy intensity reduction by 2010 ESCOs established, and ‘Guiding Committee’ New standards for buildings, lighting & air- conditioners New supervisory mechanisms for major energy users ‘Green power’ mechanism Energy conservation products ‘licensing’ What has been started in Shanghai in 2006 and 2006?

Reasons for favourable outlook in Shanghai? Administratively concentrated Rich –can afford costs –nature of the energy demand Education level Reputation risk as international city