context: Beijing altered the definition of energy intensity to exclude non-fossil energy and raw materials consumption in February 2024. The new definition means that only fossil-energy intensity will be measured, aligning with the long-promised shift to dual control of carbon emissions and making it easier to meet at least one of the 14th 5-year plan carbon targets. While the move encourages provinces to continue to develop renewables at pace (as they are excluded from the energy intensity target), it also allows scope for higher emissions. Authorities have previously stated that local governments will be able to meet up to 50 percent of the target through green electricity certificate trading.
Premier Li Qiang 李强 delivered the 2025 Government Work Report at the 14th National People's Congress on 5 March. A key target within the report is to reduce energy intensity (energy consumption per unit of GDP) by 3 percent in 2025. Under revised calculation methods excluding non-fossil energy and raw material consumption, the target aligns with the PRC's 14th FYP (5-year plan) goal of a 13.5 percent reduction in energy intensity, reports Yicai.
Over the first three years of the 14th FYP, energy intensity declined by 7.3 percent, according to the NDRC (National Development and Reform Commission). However, official statistics from NBS (National Bureau of Statistics) show much lower annual reductions, with a decrease of 2.7 percent in the first year, followed by 0.1 and 0.5 percent in subsequent years. Meanwhile, carbon intensity declined by 3.8 percent, before falling only 0.8 percent and remaining flat in 2023.
Recently released NBS data indicates that energy intensity decreased by 3.8 percent y-o-y, surpassing the annual target of 2.5 percent. If one goes by the NDRC figures of a 7.3 percent decline over the first three years and a 3.8 percent reduction in 2024, a 3 percent reduction in 2025 will mean the 14th FYP target of 13.5 percent can still be achieved. Following the announcement that last year's energy intensity target had been exceeded, NDRC emphasised the need to make every effort to achieve 5-year plan targets.
Over 20 provincial governments have explicitly committed to achieving energy and carbon reduction targets this year. Many have also set energy intensity targets. Heilongjiang aims for a 3.5 percent reduction, Xinjiang 3 percent, Chongqing 2.5 percent, Jiangsu and Jilin around 2 percent.
In the final year of the 14th FYP, achieving energy and carbon intensity goals should follow two basic approaches, according to Lin Boqiang 林伯强 Xiamen University China Institute for Studies in Energy Policy director
- local governments must focus on expanding supply by increasing renewable energy development, utilisation and storage
- they must also adhere to cutting demand by implementing strict energy-saving measures and controlling the expansion of high-energy-consuming projects
After adjusting for raw material and non-fossil fuel consumption, the PRC is highly likely to meet 14th FYP energy and carbon intensity reduction targets, according to Lin Weibin 林卫斌 China Energy Research Society Policy director. Energy intensity may even decline by more than 3 percent if hydropower conditions are favourable. However, local governments must implement measures in a targeted manner to ensure economic stability and avoid restrictive policies such as energy consumption restrictions on firms.