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E4 Country Profile: Energy Efficiency in China

Energy Efficiency in Emerging Economies (E4) programme findings and work

As the world’s largest energy consumer, China’s efforts to improve energy efficiency are crucial to global energy and climate landscapes. In 2018, China alone accounted for 22% of global energy consumption and 29% of total CO2 emissions from fuel combustion. China's progress in implementing mandatory energy efficiency policies over the past decade has made it the world’s energy efficiency heavyweight.

China has made huge strides in technical energy efficiency. Without the energy efficiency improvements that have been made since 2010, China would have used 25% more energy in 2018.

The evolution of China's economy, transitioning from energy-intensive sectors, mainly heavy industry, to the service sector, created structural changes that also helped reduce energy demand.

Decomposition of energy use in China between 2010-2014 and 2010-2018

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The majority of efficiency gains were achieved in the industrial sector.

Savings from energy efficiency in China, 2014–2018

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The substantive gains in technical energy efficiency can be attributed to innovative energy efficiency programmes, such as digital energy labelling and reinforcement of the mandatory TOP 10 000 scheme in the industrial sector, which have been applauded by the international community. These are key policies that make China’s energy efficiency policy coverage well above the global average.

Percentage of energy use covered by mandatory energy efficiency policies in China, 2010-2018

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Policy coverage for buildings includes China’s building codes and comprehensive appliance standards. These have been crucial to limiting the increase in energy use resulting from high rates of construction and higher rates of appliance ownership. 

China has enormous energy efficiency improvement potential according to the IEA’s Efficient World Scenario (EWS). Ensuring that China seizes all efficiency opportunities in a cost-effective manner will be crucial for both China and the world’s transition to low-carbon energy.

Energy consumption could reach a peak by 2030 and save 16 EJ - the equivalent of France and Germany’s energy use - by 2040 compared to current trends. These savings would come from the industrial (41%) and transport (30%) sectors.

Energy savings by sector in China in the Efficient World Scenario (EWS) vs the New Policies Scenario (NPS), 2012-2040

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Moreover, CO2 emissions could fall 26% below current levels, preventing 2 Gt CO2-eq additional emissions by 2040 compared to current trends.

Avoided CO2 emissions in China in the Efficient World Scenario (EWS) vs the New Policies Scenario (NPS), 2012-2040

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The opportunities to increase energy efficiency based on the Efficient World Scenario are:

  • In industry, where most of the energy savings in the EWS can be found, China could ramp up its coverage of less energy-intensive manufacturing sectors. Currently, the Top 10 000 Programme is only applicable to energy-intensive industrial sectors. Improving the efficiency of motor-driven systems will be central to realising efficiency gains in less energy-intensive manufacturing. Currently, China is working on improving its motors standards from IE2 to IE3.
  • In transport, which represents over 30% of the energy savings potential in the EWS, China has the opportunity to further strengthen the policies it has put in place, and to increase stock turnover to improve the efficiency of its fleet. China is already one of only five countries with fuel efficiency standards for both cars and trucks.
  • In buildings, MEPS will continue to be a central energy efficiency policy for China. With new standards introduced to cover additional appliances and equipment, including air purifiers, data centres and dust collectors, ensuring the effective implementation of these policies will be key to fully realising their benefits.

Given China’s progress in energy efficiency, the E4 programme focuses on strategic development and identification of new energy efficiency challenges. 

IEA collaboration with China’s G20 presidency resulted in the development of a 2050 energy efficiency roadmap and a 2016 Energy Efficiency Market Report special feature. The next stage in this collaboration will aim to strengthen the role of energy efficiency in the 14th Five Year Plan (2021-25) and beyond – notably in the carbon neutrality 2060 roadmap.

IEA has been working on heating and cooling in China, which has included contributions to work on district energy systems and the publication, The Future of Cooling in China. This piece of analysis was key to China’s first national action plan on cooling - the Green Action Cooling Plan.

As China intends to foster a market-driven environment that involve more commercial banks and private investments, the E4 programme is providing more analysis on innovative energy efficiency business and financing models, including energy service companies (ESCOs) and green bonds and how these can be used to scale up investments in energy efficiency.

Building on IEA’s growing focus on linking digitalisation with energy efficiency, the E4 programme is supporting China’s ambition to transform into a modernised, digital economy in the most efficient and sustainable way possible by highlighting all the potential energy system benefits.