First energy law seen empowering network
China's first energy law, which took effect on Jan 1, marks a milestone in the country's energy transition. It signifies the establishment of a foundational legal framework for the energy sector with the energy law as its cornerstone, supported by specific laws such as the electricity law, coal law, renewable energy law and energy conservation law, alongside administrative regulations.
Furthermore, the energy law elevates crucial measures for promoting the energy sector's "four revolutions and one cooperation" strategy from 2014 into law, acknowledging the strategy's decade-long efficacy.
The "four revolutions" cover curbing unreasonable energy consumption; establishing a diversified supply system; promoting the energy technology revolution to drive industrial upgrades; and promoting the energy system revolution to facilitate fast-track energy development.
The "one cooperation" refers to comprehensively enhancing international cooperation.
The energy law is an institutional guarantee to further drive energy transition, and is a crucial means of support for achieving the goals of peaking carbon emissions before 2030 and carbon neutrality before 2060.
The energy law delineates clear objectives and responsibilities for the energy sector's green development. It focuses on three critical mechanisms, with the first being establishing a dual control mechanism for total carbon emissions and emission intensity. Second, energy regulatory authorities should take the lead in formulating medium to long-term goals for non-fossil energy development and utilization, with annual monitoring and public disclosure of implementation progress. Third, energy regulatory authorities should be at the forefront in setting the minimum proportion of renewable energy in total energy consumption, and ensuring that power supply companies, electricity suppliers and electricity users fulfill their responsibilities for consuming power generated from renewable sources.
Additionally, it outlines policy directions for the development and utilization of various renewable energy types. Considering the broader context of energy resource availability, economic and social progress, as well as environmental preservation, the law precisely outlines the criteria for harnessing a range of renewable energy resources like hydro, wind, solar, biomass, and geothermal energy. Notably, it explicitly endorses the decentralized development and use of wind and solar power, setting a legal framework for novel initiatives such as decentralized power trade and microgrid systems.
The energy law also reinforces institutional measures to support green energy consumption. It mandates the establishment of a new type of power system, enhancing the coordinated development of power generation enterprises and grid companies while boosting the grid's ability to incorporate, distribute and manage power generated from renewable sources. In addition, it rolls out a few regulations for the development of energy storage, requiring that both conventional pumped storage hydropower plants and new types of power storage systems such as compressed air energy storage play a regulatory role in the power network. Additionally, it advocates for the establishment of a mechanism to promote green energy consumption through initiatives like green electricity certificates, encouraging energy consumers to prioritize the utilization of renewable and other environmentally friendly, low-carbon energy resources.
While green development lays the foundation for energy transition and energy security, a stable and sufficient resource supply is a prerequisite. Achieving a balance between green development and a secure transformation without creating an either-or scenario necessitates legal protections. The energy law emphasizes the role of planning in guiding and regulating energy development. Given the substantial investments and long-term nature of energy projects, scientific planning is essential to ensure a stable supply-demand balance and prevent drastic fluctuations. The law details the content and procedures for energy planning at various levels.
The energy law also mandates specific requirements for the safe development of coal, oil and gas, highlighting the foundational role of coal in the energy supply system and the importance of enhancing exploration and development of petroleum and natural gas resources. It further underlines the importance of promoting the clean and efficient development of coal-fired power generation.
Moreover, the law elaborates on the management of energy reserves in case of emergencies, recognizing the inevitability of energy imbalances or operational incidents due to natural disasters or other reasons. It sets stringent standards for establishing efficient and coordinated energy reserve systems, enhancing energy forecasting and warning systems, and establishing a unified structure for coordinated emergency management.
Aligned with the comprehensive reforms outlined in the third plenary session of the 20th Central Committee of the Communist Party of China in July 2024, the energy law emphasizes advancing market-oriented reforms in certain sectors and improving regulatory mechanisms. Additionally, the law involves progressing price reforms within the energy sector by enhancing tiered electricity and gas pricing for residential consumers, as well as improving the pricing structure for refined oil products.
Furthermore, it aims to deepen reforms in the energy management system by establishing a unified national electricity market and optimizing scheduling mechanisms for oil and gas as well as power distributions. These reform efforts directly target the challenges and obstacles in advancing energy transition to achieve China's green targets.
The upcoming phase of energy reform is expected to progress smoothly, with the energy law facilitating the establishment of a unified national energy trading market encompassing coal, electricity, oil and natural gas. By integrating legal provisions with directives from the third plenary session of the 20th Central Committee of the Communist Party of China, the energy law ensures a coherent relationship between reform and the rule of law, providing a solid legal basis for major reforms.
With the energy law taking effect this year, the energy industry will see concerted efforts to push cleaner fossil fuel energy, the expansion of clean energy, the integration of diverse energy resources and the smart utilization of energy assets. This year, China is expected to achieve an installed capacity of approximately 1.6 billion kilowatts for wind and solar power. The proportion of non-fossil energy consumption is expected to surpass 21 percent by end-2025 and exceed 25 percent by 2030. China is on track to achieve its goals of peaking carbon emissions before 2030 and achieving carbon neutrality before 2060.
In the near to medium term, there will be a noticeable shift toward electrification in end-use energy consumption. Over the long term, there will be a transition toward hydrogen plus electrification. Future energy use will witness accelerated electrification across industries, construction, transportation, agriculture and other sectors, with end-use electrification levels projected to reach nearly 30 percent by 2025 and 34 percent by 2030. Electricity is set to emerge as the predominant form of end-use energy. Looking ahead, hydrogen energy presents huge development potential and scalable application scenarios, with its share in end-use energy consumption expected to rise, transitioning from a primary reliance on electricity to a diverse array of clean alternatives like electricity, hydrogen and ammonia.
Energy investments and operations are set to become more market-driven, offering substantial commercial prospects. With the backing of legal frameworks, the country is encouraging and guiding various entities to invest in energy development and infrastructure construction in accordance with the law. Over the next decade, investments in pivotal energy projects are expected to remain in the trillions of yuan. The entire energy industrial chain, spanning resource exploration, design and construction, equipment manufacturing, project financing, distribution, trade and information services, will continue to be active in the coming years.
By 2030, China is expected to see the establishment of a unified national electricity market, with the proportion of market-based electricity transactions projected to increase from 63 percent in 2024 to 75 percent in 2030.
The views do not necessarily reflect those of China Daily.
The writer is a professor at the North China Electric Power University.
