Is Energy Efficiency China’s Best Bet to Combat Air Pollution?

Can Energy Efficiency Help Chinese Cities Beat Air Pollution

Environmental Leader, February 17, 2016. Image credit: Peggy_Marco

It has been a decade since China’s leaders made improving energy efficiency a top priority. In the 11th Five-Year Plan they set ambitious national targets for lowering the energy intensity – the measure of energy efficiency of the country’s economy – 20 percent from 2006 levels by the end of 2010. They also launched an aggressive campaign to pressure the country’s top 1,000 energy-intensive industries to step up their energy-saving efforts.

Beijing updated the target in the 12th Five-Year Plan, aiming to cut energy consumption per unit of GDP an additional 16 percent below 2010 levels. By the end of 2015, the country had not only realized but exceeded the new goal with an extra 3.7 percent drop in energy intensity. At the 2015 National People’s Congress, Premier Li Keqiang further stressed that the government is committed to intensifying improvements in energy efficiency.

During President Xi’s first visit to the United States in September 2015, he announced a new commitment to meet China’s CO2 reduction goals by creating a national emissions trading system by 2017. This trading system could provide a significant market push for key industrial sectors in China – iron and steel, power generation, chemicals, building materials, papermaking, and nonferrous metals – to boost their investments in energy efficiency or be forced to close down.

Demand Response Programs

Shanghai, one of the pilot cities for the national emissions trading system, has been a very progressive city on clean energy, but it also maintains a fleet of inefficient and dirty coal-fired power plants to meet its massive energy peaks in the hot summer and cold winter months. It was the need to solve the significant peak-valley energy load problems that prompted the city to work with the Natural Resources Defense Council (NRDC)’s Beijing office and launch China’s first demand response pilot project in 2014.

By the end of 2014, Shanghai’s municipal government had recruited 31 industrial and 33 residential building clients for the project, which aims to better balance energy supply and demand during peak periods. Many of these are state-owned enterprises that were required to reduce their electricity demand during designated peak times and in return received 2 RMB for every kilowatt-hour saved. On August 29, 2014, for example, 27 building customers and 7 industrial customers reduced their consumption by 10 percent on average during a two-hour peak time.

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