China’s recent alteration in defining energy intensity has prompted discussions within the energy sector, altering the trajectory of climate targets and policy evaluation. The subtle technical change, overlooked by many, has significant implications for the country’s energy landscape and global climate commitments.
According to data released by the National Bureau of Statistics, China noted a paradoxical increase in energy consumption alongside a 0.5% reduction in energy intensity. This anomaly stems from the government’s decision to redefine “energy intensity,” now focusing solely on fossil-fuel consumption while excluding renewable energy and nuclear power.
While reducing energy intensity remains a cornerstone of China’s economic plans and climate pledges, this shift in focus towards “fossil fuel intensity” could signal a step forward in controlling carbon emissions. However, critics argue that the adjustment lacks ambition, allowing for higher emissions under existing targets.
The change impacts China’s key energy target for 2024, calling for a 2.5% reduction in energy intensity. Under the new definition, this target permits a potential increase of up to 2.4% in CO2 emissions this year, assuming GDP growth remains on track. Such a scenario would necessitate unprecedented progress in 2025 to fulfill climate commitments.
China’s economic growth, particularly driven by energy-intensive industries during and post its zero-COVID policy, has contributed to accelerated energy consumption and CO2 emissions. As a result, improvements in energy and carbon intensity have slowed, falling short of targets set for 2025.
Energy intensity, traditionally defined as energy consumption per unit of GDP, has been a focal point of China’s energy policies for over a decade. Achieving reductions in energy intensity involves enhancing energy efficiency and restructuring the economy towards less energy-intensive sectors.
While progress has been made in energy efficiency, recent years have seen a reversal in structural changes towards less energy-intensive sectors. Notably, 2023 marked the first year since 2005 where energy consumption outpaced GDP growth, leading to an increase in energy intensity.
The redefinition of energy intensity has not gone unnoticed. The exclusion of non-fossil energy sources from intensity calculations, though technical, has significant implications. This alteration, listed as the first accomplishment in the National Development and Reform Commission’s annual plan, lowers the bar for meeting energy-intensity targets.
Local governments, incentivized by the new policy, are now encouraged to prioritize clean energy projects to offset energy-intensive industries. This has fueled China’s recent surge in clean energy initiatives, particularly solar power.
As China navigates its energy transition, questions arise about the alignment of targets with international climate commitments. The redefined energy intensity target underscores the challenges and complexities in balancing economic growth with environmental sustainability.