China's energy legislation fosters eco-friendly shift, international energy management
China's energy law will come into effect on January 1, 2025. This legislation aims to strike a balance between energy security, green development, and market regulation, while also boosting China's global competitiveness and providing valuable insights and leadership in the ongoing energy transformation worldwide.
TroibNews 
**Editor's note:** Guo Bowei is an associate professor at the School of Applied Economics at Renmin University of China, and Zhan Xuhao is a PhD student at the same institution. The article reflects the authors' opinions and not necessarily the views of CN.
On November 8, 2024, China enacted its inaugural comprehensive energy law, marking a significant response to escalating domestic energy demands, environmental issues, and global energy governance trends. This law will take effect on January 1, 2025, establishing a strong legal framework aimed at guiding China's long-term energy strategy and supporting the nation's dual carbon goals along with its pursuit of high-quality development.
Energy laws worldwide influence policy directions and cater to regional needs. The United States focuses on energy security, pricing dynamics, and industrial competitiveness; the European Union emphasizes climate initiatives and green growth; Australia primarily aims to protect its energy supply.
China's energy law mirrors these global frameworks by addressing vital aspects such as energy security, market oversight, and ecological transformation. Yet, it distinguishes itself as a sweeping institutional declaration oriented towards long-term objectives, allowing for detailed implementation through later regulations and policies. This forward-thinking approach highlights the law's adaptability, granting China the ability to modify its energy governance amidst a swiftly changing environment while providing a stable foundation for future planning.
The energy law encompasses a wide range of stakeholders, including government agencies, businesses, regulators, and consumers.
It delineates a clear legal framework for governmental energy planning and supervision. The central government is tasked with defining sector-specific and regional energy development objectives, while local governments must align their policies with these national strategies. Responsibilities for local authorities include promoting clean energy initiatives, securing an environmentally friendly energy supply, and adjusting regional energy structures based on local conditions. Moreover, the law intensifies regulatory oversight across all phases of the energy sector—from production and distribution to consumption and storage—aiming to mitigate natural monopolies, bolster market stability, and enhance emergency response systems to facilitate smooth market operations.
On the supply front, the law prioritizes optimizing the energy mix. Coal remains classified as an essential energy source, with an emphasis on efficiency and cleaner usage. The development of renewable energy continues to receive robust support through tax incentives, subsidies, and promotion of innovation, with hydrogen energy integrated into China's energy management framework for the first time. On the demand side, there are significant efforts to promote renewable energy consumption. Policies featuring minimum consumption ratios for renewables and green power certificates encourage businesses and consumers to embrace clean energy. Collectively, these measures aim to facilitate the green transition from both supply and demand angles.
**Addressing energy security challenges**
As the most significant energy consumer globally, China confronts substantial challenges in securing reliable energy supplies. In 2023, the nation consumed 5.72 billion tonnes of standard coal equivalent, with its oil import dependence surpassing 70 percent. The energy law lays out a comprehensive approach to bolster energy security, calling for intensified exploration and extraction of local oil and gas reserves, diversification of alternative fuels, and the establishment of a strong energy reserve system that combines governmental and corporate efforts. These actions aim to enhance China's resilience against supply shocks and price volatility, ensuring stable functionality amid global market uncertainties.
**Driving green transformation**
China's goal of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060 is a significant contribution to global climate efforts. However, the shift from fossil fuels to renewable energy entails various structural and systemic challenges.
The energy law offers essential support by outlining clear objectives for renewable energy growth and creating pathways to phase out high-emission energy sources. It encourages a transition from traditional energy consumption controls to a focus on controlling carbon emissions, reinforcing a legal framework conducive to green transformation.
**Strengthening market oversight**
Energy markets tend to exhibit monopolistic behaviors due to their unique characteristics. In the absence of adequate regulation, market failures can result in extreme price fluctuations and inefficiencies. The energy law bolsters regulatory frameworks concerning market entry, competition, and service standards to tackle potential market failures.
Furthermore, the law promotes public participation in energy policy formulation, facilitating a societal shift towards low-carbon energy practices. By enhancing awareness and incentivizing eco-friendly choices through pricing mechanisms and subsidies, the law nurtures public backing for the green transition.
In conclusion, China's energy law revitalizes its energy sector by balancing energy security, sustainable development, and regulatory oversight. It establishes a cohesive legal system that provides clear direction to enterprises while enhancing investor confidence. As the law comes into force, it is set to bolster China's global competitiveness and offer valuable insights and leadership in the global energy transition. By embedding sustainability and innovation within its energy framework, China reinforces its commitment to achieving a cleaner and more secure energy future for both itself and the global community.
Anna Muller for TROIB News
On November 8, 2024, China enacted its inaugural comprehensive energy law, marking a significant response to escalating domestic energy demands, environmental issues, and global energy governance trends. This law will take effect on January 1, 2025, establishing a strong legal framework aimed at guiding China's long-term energy strategy and supporting the nation's dual carbon goals along with its pursuit of high-quality development.
Energy laws worldwide influence policy directions and cater to regional needs. The United States focuses on energy security, pricing dynamics, and industrial competitiveness; the European Union emphasizes climate initiatives and green growth; Australia primarily aims to protect its energy supply.
China's energy law mirrors these global frameworks by addressing vital aspects such as energy security, market oversight, and ecological transformation. Yet, it distinguishes itself as a sweeping institutional declaration oriented towards long-term objectives, allowing for detailed implementation through later regulations and policies. This forward-thinking approach highlights the law's adaptability, granting China the ability to modify its energy governance amidst a swiftly changing environment while providing a stable foundation for future planning.
The energy law encompasses a wide range of stakeholders, including government agencies, businesses, regulators, and consumers.
It delineates a clear legal framework for governmental energy planning and supervision. The central government is tasked with defining sector-specific and regional energy development objectives, while local governments must align their policies with these national strategies. Responsibilities for local authorities include promoting clean energy initiatives, securing an environmentally friendly energy supply, and adjusting regional energy structures based on local conditions. Moreover, the law intensifies regulatory oversight across all phases of the energy sector—from production and distribution to consumption and storage—aiming to mitigate natural monopolies, bolster market stability, and enhance emergency response systems to facilitate smooth market operations.
On the supply front, the law prioritizes optimizing the energy mix. Coal remains classified as an essential energy source, with an emphasis on efficiency and cleaner usage. The development of renewable energy continues to receive robust support through tax incentives, subsidies, and promotion of innovation, with hydrogen energy integrated into China's energy management framework for the first time. On the demand side, there are significant efforts to promote renewable energy consumption. Policies featuring minimum consumption ratios for renewables and green power certificates encourage businesses and consumers to embrace clean energy. Collectively, these measures aim to facilitate the green transition from both supply and demand angles.
**Addressing energy security challenges**
As the most significant energy consumer globally, China confronts substantial challenges in securing reliable energy supplies. In 2023, the nation consumed 5.72 billion tonnes of standard coal equivalent, with its oil import dependence surpassing 70 percent. The energy law lays out a comprehensive approach to bolster energy security, calling for intensified exploration and extraction of local oil and gas reserves, diversification of alternative fuels, and the establishment of a strong energy reserve system that combines governmental and corporate efforts. These actions aim to enhance China's resilience against supply shocks and price volatility, ensuring stable functionality amid global market uncertainties.
**Driving green transformation**
China's goal of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060 is a significant contribution to global climate efforts. However, the shift from fossil fuels to renewable energy entails various structural and systemic challenges.
The energy law offers essential support by outlining clear objectives for renewable energy growth and creating pathways to phase out high-emission energy sources. It encourages a transition from traditional energy consumption controls to a focus on controlling carbon emissions, reinforcing a legal framework conducive to green transformation.
**Strengthening market oversight**
Energy markets tend to exhibit monopolistic behaviors due to their unique characteristics. In the absence of adequate regulation, market failures can result in extreme price fluctuations and inefficiencies. The energy law bolsters regulatory frameworks concerning market entry, competition, and service standards to tackle potential market failures.
Furthermore, the law promotes public participation in energy policy formulation, facilitating a societal shift towards low-carbon energy practices. By enhancing awareness and incentivizing eco-friendly choices through pricing mechanisms and subsidies, the law nurtures public backing for the green transition.
In conclusion, China's energy law revitalizes its energy sector by balancing energy security, sustainable development, and regulatory oversight. It establishes a cohesive legal system that provides clear direction to enterprises while enhancing investor confidence. As the law comes into force, it is set to bolster China's global competitiveness and offer valuable insights and leadership in the global energy transition. By embedding sustainability and innovation within its energy framework, China reinforces its commitment to achieving a cleaner and more secure energy future for both itself and the global community.
Anna Muller for TROIB News
