China’s energy policies and strategies for climate change and energy security

Abstract

National energy security, parallel with the ultimate goal of emissions reductions, is of utmost priority for the Chinese government. In order to comply with the requirements set by the Kyoto Protocol, the Chinese government announced, on 25 November 2009, that 2020’s CO₂ emissions would be reduced by 40–45 per cent in accordance with the data collected from 2005. Said goal was met three years ahead of schedule. Even in light of such an accomplishment, however, commentators suggest that the overall nationally determined contributions (NDCs) made by the Parties belonging to the Paris agreement are not enough to reduce global warming by even 2°C.

This article focuses on the concept of energy security in assessing whether, and how, the priorities related to climate change are gradually changing. After analysing climate change’s impact on China, conducted via an analysis of the study’s available literature and through the support of international data, this article mainly focuses on the concept of energy security, itself. Under the second section, based on the examination of China’s efforts to transition towards a low-carbon economy, the authors provide a holistic definition of energy security through the lens of three dimensions: energy supply security, energy economy and energy ecological security. The third section, in turn, addresses the relationship between energy security and climate change. The results presented in the conclusion insist that, in order to strengthen environmental protection in China, it is crucial to reform the highly inefficient and strictly regulated national energy market. In doing so, China’s transition to a low-carbon society and economy could prove less painful, as China’s available resources offer the potential for a strengthened ecological dimension and sustained socio-economic development.

1. THE OVERALL SITUATION CONFRONTED BY CHINA’S CLIMATE CHANGE AND ENERGY SECURITY

The impact of climate change on China

Through the lens of global warming, it is important to note¹ that climate change has severely impacted China.² It is important to note that China’s annual mean surface temperature has increased by 0.3 degrees Celsius, an average higher than the typical rate of global warming over the past two decades.³ Similarly, the surface air temperature, primarily due to the country’s rapid industrialization, is also rising. According to available data, such a trend may result in an average temperature increase from 1.3°C to 2.1°C in 2020, 1.5°C to 2.8°C in 2030 and 2.3°C to 3.3°C in 2050.⁴ The national average rainfall may also be similarly affected, with a projected increase of 2–3 per cent by 2020, and of 5–7 per cent by 2050.⁵ Such increased precipitation would almost certainly fall unevenly, with Northern China seeing significant increases in precipitation—the exact opposite of the southern region. Thus, desertification certainly becomes a looming possibility.⁶ Contrarily, China’s most economically developed regions, the Yangtze and Pearl River Delta regions, could be threatened by rising sea levels. These regions may suffer from extreme weather such as storm surges, and available statistics reveal that China’s coastal sea levels may rise from 0.01 to 0.16 m by 2030, triggering incalculable physical and economic loss.⁷ Furthermore, because of the nation’s rapid industrialization, both agricultural and industrial water consumption is increasing.⁸ Northern rivers and lakes are drying up, while other areas around the country are at a high risk of desertification as a result of both groundwater exploitation and climate change. The interconnection between water and energy has been extensively studied by the Chinese government, and the shift from a rural to industrial usage of water has significantly impacted the nation’s energy consumption.⁹ In 2006, China was responsible for the world’s largest CO₂ emissions with a total of 9839 MtCO₂. In 2017, China accounted for almost 40 per cent of worldwide emissions.¹⁰ Per capita emissions of greenhouse gases (GHGs) is also on the rise, with China globally ranking 16th in 2017.¹¹ The warming of the north, the cooling of the south, the movement of climactic zones, the north–south temperature differentiation, a decline in precipitation in middle latitudes, and extreme weather are only a few of the aspects that need to be addressed in formulating a sound environmental and energy policy related to climate change and energy security.¹²

The status of the energy security in China

By the 1990s, both ecologic and economic dimensions gradually cemented their presence in China’s energy security and supply.¹³ The ‘traditional’ conception of energy security, rooted in securing the nation’s energy supply and in reducing dependency upon imported energy, was considered inefficient, limiting the possibility of adapting to the changing circumstances brought forth by sustainable development.¹⁴

In the 1990s, Joseph J. Room suggested that the goal of energy security could only be reached through boosting economic competition and decreasing environmental deterioration, ensuring adequate and reliable energy services.¹⁵ Thus, protecting the environment is a major initiative in China’s more holistic approach to energy security.¹⁶ The 1997 Kyoto Protocol allowed developing and least developed countries, through Clean Development Mechanism (CDM) and other forms of financing, to participate in the ‘fight’ against climate change, bringing climate change issues to the height of global security.¹⁷ In the light of the Kyoto Protocol, China established market-based mechanisms to strengthen environmental protection such as the emission trading scheme and was the country that attracted the highest number of CDM projects.¹⁸ The Protocol greatly stressed the inclusion of an ecological dimension to energy security through promoting the development and utilization of clean energy sources, and the general regulation of energy consumption.¹⁹ In that same vein, China strongly supports and develops renewable energy, and for this reason China has also adopted its first Renewable Energy Law, which was first passed on 28 February 2005, and took effect on 1 January 2006 (Renewable Energy Law, 2005).²⁰ This law was later amended and revised in 2009 and entered into effect on 1 April 2010 (Renewable Energy Law, 2009). In addition to this dimension, this article examines efficiency under the holistic notion of energy security, integrating the fact that the energy sector—especially in China—is dominated by institutions that intervene in the energy market. Therefore, the following sections first analyse the current state of the three dimensions of China’s energy security: the security of energy supply, the energy economy and ecological energy security.

Security of energy supply

The lack of a sustainable supply of conventional fossil fuel energy, along with its excessive demand, has put China’s external energy dependence in critical condition.²¹ China, therefore, is placing great importance on energy security, and is actively working to guarantee an adequate energy supply. By 2020, China’s aims to ensure that their energy self-sufficiency rate will remain above 80 per cent.²² In 2018, China’s total coal imports were 281.23 million tons, around fifty times its entire exports. Similarly, in 2018, China’s international dependence for oil and gas reached a new high with their oil dependence reached 70 per cent, and their natural gas reaching 45.3 per cent.²³ Such dependency exposes China to the volatility of international energy prices that directly affect the national economy, further exposing the country to an energy crisis.

Apart from the nation’s dependence upon energy imports, China faces another serious problem: the security of energy routes. Energy security and in particular the need to secure energy routes is central for the Belt and Road Initiative (BRI), China’s flagship developmental initiative.²⁴ More specifically, China’s main oil imports stem from the Middle East, Africa, the Asia-Pacific region, Russia and Central Asia. According to data from 2018, crude oil imports from the Middle East accounted for 102.6 million tons (Saudi Arabia 17.1 per cent, Iraq 14.1 per cent and Oman 8.8 per cent), 40 per cent of China’s total crude oil imports.²⁵ Therefore, China’s current and future reliance on oil imports from the Middle East cannot be underestimated.²⁶ Crude oil’s transportation comes with significant political and security-related costs. Considering that much of China’s crude oil is transported through the Persian Gulf, the Strait of Hormuz, the Strait of Malacca and the Taiwan Strait, risks like terrorism could endanger China’s energy supply.²⁷ In efforts to better secure their energy supply, and reduce their high external energy dependence, the Chinese government is seeking to strengthen relations with both African and Latin American nations, while also increasing oil imports from both Russia and Central Asia.²⁸ China has also sought to improve the infrastructure through which oil is transported, in turn improving relations with neighbouring nations and reducing the dangers of shipping oil.²⁹ China has also promoted the stability of oil supply pipeline from Kazakhstan to China. Additionally, China is investing in both scientific and technological research on the development and utilization of unconventional fossil fuels,³⁰ renewable energy, and deep-sea oil and gas to both address energy shortages and increase energy diversification.

Energy economy (prices and the market)

China’s energy supply, as a result of specific re-organization efforts, has been greatly improved in terms of energy diversification.³¹ That said, the national energy market remains heavily driven and controlled by overregulated state-owned enterprises (SOEs), greatly affecting pricing mechanisms that create barriers for entrance into the foreign market.³² As a result, there is little regulatory framework for facilitating and promoting trade in energy with foreign counterparts.³³ President Xi Jinping’s initiative to ‘make the skies blue again’, an effort to combat environmental crises and initiate an energy revolution, brought the need for such comprehensive regulation to national attention. This new approach to energy garnered considerable attention, culminating with the release by the China’s National Development and Reform Commission (NDCR) of the ‘Energy Production and Consumption Revolution Strategy’.³⁴ One of the document’s main priorities is to ‘Build an effective competitive energy market system’. In particular, this Strategy suggests to ‘adhere the direction of economic reform to the socialist market economy, accelerate the formation of an independent business and consumer free choice energy market system in which products and elements are free to flow’.³⁵

Existing government regulations, and the SOEs’ oligopolistic position over the generation and distribution of energy, do not adequately address China’s scarcity of resources and their demand in the market, resulting in lacking non-governmental capital in preserving and facilitating energy efficiency.³⁶ Such an approach is not conducive to an ‘energy revolution’.³⁷ Price distortions are caused by price controls, which are harmful to effective market mechanisms and the allocation of resources. In other words, because of price regulations, energy prices are divorced from the global market, impelling the government to subsidize certain industries, in turn wasting financial budgets and worsening financial burdens.

Ecological energy security

Chinese industries consume the largest amounts of national electricity, in turn emitting large amounts of greenhouse gases that lead to air pollution, seen as a result of an inefficient industrial process and low energy efficiency.³⁸ Thus, China is forced to utilize even more energy to create the same GDP output so as to keep pace with other countries.³⁹ Such a need for competition only worsens the amount of greenhouse gases and other pollutants released into the atmosphere.

The ecological energy security focuses on protecting the environment in each of the steps of energy consumption. With the implementation of China’s energy reform policy, coal consumption has begun to decline. In 2018, coal consumption accounted for 59 per cent of the nation’s total energy consumption.⁴⁰ That said, China’s goal of reducing coal consumption to below 60 per cent, as outlined in their Five-Year Plan, has already been met.⁴¹ By comparison, however, the global average of coal-generated power still only accounts for 38 per cent, well under China’s national average.⁴²

2. THE STATUS OF CHINA’S ENERGY SECURITY REGULATION, STRATEGIES AND POLICIES

The Chinese government has enacted several policies, strategies and action plans meant to assist with the legal enforcement of both environmental protection and energy security. In the following sections, policies, laws and regulations related to Chinese energy security, notably from the perspective of energy supply security, economic security and ecological security, are analysed to expose their regulatory frameworks.

Addressing the security of energy supply

In order to establish a secure energy supply, China’s regulators have enacted several laws and regulations. These policies have been influenced through international cooperation and by international environmental law. Chinese energy authorities, in order to reduce international energy dependence and to strengthen China’s energy security, have implemented a wide array of laws and regulations mostly focused on efficient energy use, energy diversification, and the establishment of a strategic energy reserve system.

Enhancing efficiency through energy conservation

In 1997, the National People’s Congress enacted the Energy Conservation Law⁴³ with the aim of ‘promoting energy conservation in the whole society, improving energy utilization and economic performance, protecting the environment, ensuring national socio-economic development and satisfying the requirements of people’s livelihood’.⁴⁴ The Energy Conservation Law focused on the conservation and improvement of energy use in productive processes particularly through the implementation of energy efficiency measures. A 2007 amendment improved the enforcement mechanisms of the Energy Conservation Law, and included provisions focused on supervision and inspection,⁴⁵ incentivizing the deployment of renewable energy and energy-efficient materials,⁴⁶ and promoting industry reconstruction.⁴⁷ The amendment further specified that industries should abide by all agreed upon energy conservation commitments. Regarding this latter aspect, the amended law concerns the following industries: construction,⁴⁸ transportation,⁴⁹ high energy consumption companies⁵⁰ and public institutions.⁵¹ Additionally, the revised Energy Conservation Law provides clear obligations, pertaining to the various administrative departments, to strengthen the enforcement of the law.⁵² In order to encourage private capital investment in the field of energy saving, the 2007 Energy Conservation Law also took incentive mechanisms into consideration. In following the examples set by the 2007 amendment, the Energy Conservation Law was revised in 2016,⁵³ and again in 2018. These recent revisions of the Energy Conservation Law placed emphasis on the role of market mechanisms and are aimed to ensure effective administrative approaches in ensuring energy security.

The 12th Five-Year Guideline for National Economic and Social Development⁵⁴ contained energy-binding goals for the period of 2011–2015, including the 3.1 per cent increase of non-fossil fuel energy in primary energy consumption, and a 17 per cent decrease of CO₂ emissions per unit of GDP. The plan stressed the issue of energy conservation as outlined under the guiding principles, recognizing energy conservation and environmental protection as ‘Strategic Emerging Industries’.⁵⁵ In particular, in a transition to a low-carbon economy and with a paradigm shift of the definition of what is economic development, the importance of building a resource-saving and environment-friendly society has been a key priority to reduce greenhouse emissions and actively tackle global climate change.

Similarly, the State Council Information Office released the ‘2012 China’s Energy Policy White Paper’ (Energy White Paper)⁵⁶ that introduced multiple targets, including the quality and intensity control of energy in turn striving to build energy-efficient production and consumption systems, enhancing the reconstruction of economic and consumptive patterns, and accelerating the construction of energy-efficient countries and a conservation-oriented society. The 2012 Energy White Paper stressed the improvement of clean low-carbon fossil energy, raising the proportion of non-fossil energy, and vigorously facilitating the clean use of coal.

The 13th Five-Year Plan for National Economic and Social Development (2016–2020) ensures that the energy situation outlined during the 12th Five-Year Plan has been improved. The plan outlines additional and updated energy goals for the country.⁵⁷

Promoting the diversification of energy types

Alongside the work on energy efficiency, the Chinese government enacted several laws and regulations promoting the diversification of energy sources. As mentioned before, the ‘Renewable Energy Law (REL)’⁵⁸ was enacted in 2005 to support the development and deployment of renewable energy sources in China.⁵⁹ The State Council, and other relevant governmental institutions and agencies, issued a series of plans and regulations meant for the implementation and enforcement of the law. The REL is aimed at ‘promoting the development and utilization of renewable energy, increasing the supply of energy, improving the structure of energy, safeguarding the safety of energy, protecting environment and realizing a sustainable economic and social development’.⁶⁰ More specifically, the law created the basic legal framework for the promotion of renewable energy.⁶¹ It enumerates the government’s specific obligations pertaining to the energy transition. As for central and local governments, they should provide: the basic conditions for the development of the industry,⁶² the census and planning of resources,⁶³ industry guidance and technical support;⁶⁴ marketing and applications,⁶⁵ price management and cost-sharing⁶⁶ and economic measures for the development and utilization of renewable energy.⁶⁷ Through pushing for the increase of the deployment and utilization of renewable energy resources, the REL is directly linked with the diversification of the energy necessary, as noted above, to accommodate the security of an energy supply. The REL’s 2009 revision introduced the goals of coordinating a renewable energy development plan, a new strategy for national energy, aligning both local and national action initiatives, strengthening the government’s ability to regulate the renewable energy market through a minimum quota of guaranteed purchases.⁶⁸ A government-regulated renewable energy fund has been introduced, as well.⁶⁹

Under the 2012 ‘Twelfth Five-Year Plan for Renewable Energy’, the National Energy Administration (NEA) signaled that China’s renewable energy sector would enter a new stage of large-scale deployment. Hydro, wind, solar and biomass are individually classified into four planning areas with specific goals to be reached, as outlined in the plan.⁷⁰ The ‘13th Five-Year Plan’ for renewable energy was released in 2016, updating the 2012 document, indicating the need to accelerate the development of geothermal energy, promote the demonstration of ocean-powered energy technology and promote the need for energy storage technology.⁷¹

Strategic energy reserve

The 1973 energy crisis, and the establishment of the International Energy Association (IEA), revealed the need for an energy reserve to guarantee general energy security. Finally, such a reserve has come to fruition. According to Article 2 of the Agreement on an International Energy Programme, members should maintain oil reserves so as to sustain 90 days’ worth of consumption without any oil imports whatsoever.⁷² In the event of a severe energy crisis, members should work collaboratively to ensure both the security and stability of energy prices.⁷³ Under the '1996 National Economic 9th Five Year Plan’, China proposed a national strategic oil reserve with the intent of safeguarding national security.⁷⁴ Similarly, ‘the 2011 Five Year Plan’ emphasized the accelerated construction of transportation facilities responsible for energy storage, in turn enhancing the capacity of reserved support. There is not, however, any current legal system regulating China’s strategic energy reserves.⁷⁵ That said, both central and local governments—as well as SOEs—have established national oil reserves that guarantee up to 80 days’ worth of sustainability. Such initiatives came as early as the 1990s.⁷⁶

Transportation safety

The 2012 Energy White Paper insisted that, in efforts to address the poor regional energy infrastructure, China should ‘expand (their) range of international energy cooperation channels vigorously and raising the standard of imports and exports’. Chinese projects that intensify collaboration with energy-exporting nations and regions, including Africa and Russia, could reduce Chinese dependence on the Middle East for oil, in turn solidifying relationships with the aforementioned nations.⁷⁷ The China’s BRI addresses such a cooperative regional approach to energy,⁷⁸ serving as an example of how China could strengthen their energy security by improving cooperation, rather than competition, with neighbouring countries.⁷⁹ China is also actively engaged in a regionally established forum aimed at securing transport infrastructures in efforts to protect the stability of energy supplies. As examples, China joined several energy cooperation initiatives such as the Electricity Working Group in Mekong region and ASEAN 10 + 3 (South East Asia); a special working group in energy cooperation of the Shanghai Cooperation Organization (Eurasia); and the Sino-Arab Energy Cooperation forum (Middle East). In recent years, China has also increased efforts to cooperate with, and co-host, several energy conferences and alliances to strengthen their relations with the international energy community. These organizations include the Organization of the Petroleum Exporting Countries (OPEC), the Association of Southeast Asian Nations (ASEAN), the League of Arab States, the five nation energy ministers conference and the Conference of the World Energy Charter among many others.⁸⁰

The security of energy passageways is also guaranteed through military cooperation carried out under the framework of the Shanghai Cooperation Organization (SCO), ⁸¹ via an increase of Chinese presence, military bases, and diplomatic cooperation in rational regions.⁸²

Response to the monopoly in energy market and administrative price guide

China’s lack of competition in the energy market, inefficient enterprises and scarce technological innovations unfortunately create for an unbalanced and unfair allocation of resources, all at the expense of social wealth. Price mechanisms for energy, and the oligopolistic position of Chinese SOEs over the energy sector, are only some of the factors under scrutiny by the Chinese government.⁸³ Chinese authorities have claimed that, in several instances,⁸⁴ market mechanisms should play a pivotal role for the reform of the energy sector. Since the initial reform, the energy sector’s administrative structure has been subjected to massive yet ongoing reform.⁸⁵ A commentator pointed out that the inadequacy of China’s energy administration is the main reason for which effective market-based reforms are still ongoing.⁸⁶ Reform of the Chinese energy sector is further complicated by the fact the reform’s main authority, the NEA, is subjected to oversight from the NDRC, not to mention that SOEs are still controlled by both central and local governing bodies. Relations between China’s central and local governments further complicate such efforts, as well.⁸⁷

Contrarily, the urgency to face internal energy challenges are clear, both at the State Council level and by the dominant party. The 2012 Government Work Report emphasized that China would steadily advance the reform of electricity, consummating the pricing mechanisms of hydropower, nuclear power, and renewable energy. The government would also rectify subsistent price relationships in both coal and electricity, gradually advancing the reform of oil and natural gas prices. In 2017, President Xi Jinping committed to an energy revolution and in following this intention it has been released an action strategy that calls for the establishment of a ‘market-oriented system for energy production, distribution, and transaction management’.⁸⁸

China’s accession into the World Trade Organization (WTO)⁸⁹ has also played a crucial role in reforming the energy sector.⁹⁰ Though China has historically maintained strict control over the strategic sectors of their national economy, accession into the WTO and the need to reduce GHGs have brought positive changes. On the one hand, the changes have partly liberalized the market, while on the other, renewable energy has been integrated into the national grid. China’s commitments under the WTO regarding the energy sector are, however, limited. Natural resources such as copper, tungsten, zinc and lead ore are subjected, under Annex VI of Accession of the People’s Republic of China, to export duty.⁹¹ However, raw energy materials are not part of this list.⁹² That said, China has actually violated said commitment through implementing export quotas for both coal and oil products, ultimately creating export restrictions. Article 35 of the 2002 ‘Regulation of the People’s Republic of China on the Administration of the Import and Export of Goods’⁹³ provided that, in some circumstances, certain goods shall be limited in exportation, pertaining mostly to raw materials.⁹⁴ This provision clashes with Article XI of the 1994 GATT, which states that, ‘No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.’ As a consequence of this violation, the USA, the EU and Mexico filed a 2009 complaint against China, before the Dispute Settlement Mechanism (DSM), regarding the export restriction of nine industrial raw materials.⁹⁵ As a result of these rulings, Chinese export duties have been eliminated with the promulgation of the 2013 Catalogue of Goods Subject to Export Licensing.

Since 2018, restrictions on foreign investment in the energy sector have been subjected to reform and have gradually been lifted. This partial liberalization also aligns with the objectives of the new Foreign Investment Law⁹⁶ recently amended as of 1 January 2020. For the first time, under Article 30 of the Foreign Investment Law,⁹⁷ the national treatment of foreign enterprises operating in sectors affected by licenses has finally been granted.⁹⁸

Restriction of industry monopoly in natural gas and the reform of oil pricing

Internal characteristics of the Chinese legal and economic system have dampened liberalized efforts to improve the nation’s energy situation, as made evident by the attempt to first restrict foreigner competition and then regulate fossil fuel exploration.

The 1998 ‘Mineral Resources Exploration Block Regulation’ caps oil and gas exploration projects, following the ratio of stimulating competition in the mining industry to 25,000 units. Such a provision was violated from the very beginning, however, as SOEs under the direct supervision of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) now detain an overwhelming majority of exploration blocks, in turn creating a de facto industrial oligopoly. Additionally, a lack of regulatory enforcement involving these specific Chinese SOEs indicates that there are no direct incentives for other companies to innovate also because of high barriers to entry in this sector. The favour of the SASAC for SOEs is also having serious consequences on environmental protection in the country.⁹⁹

In 2009, the NDRC issued the first specialized administrative regulation regarding domestic oil prices: ‘The Management Approach of Oil Prices (Trial)’. The regulation sought to standardize the domestic transparency and rationalization of oil pricing, as well as to promote oil prices that parallel the international market. However, China’s refined oil prices, as set forth under the regulation, are still in a transitionary phase and are applied on ad hoc bases. Although the approach achieved limited results in targeted areas, the regulation has failed to increase consumers’ protection with a reduction in oil prices triggered by competition, mainly due to the regulation’s inability to be applied at a national level.¹⁰⁰

Until 2019, the exploration and development of energy was labelled a restricted industry by the NDRC. In 2019, the NDRC removed the restriction placed on the exploration and development of oil and natural gas. Now, the upstream exploration and development of oil and gas is theoretically open to both foreign and private enterprises, not only enabling joint ventures, but also allowing for entirely foreign-owned enterprises. The necessary regulations, in order to fully enable the participation of foreign enterprises, have not been published yet.

Energy ecological security situation

The ecological dimension of energy security can be found in various pieces of Chinese legislation, yet comes without proper organization. The Draft of the ‘Energy Basic Law’ (EBL Draft),¹⁰¹ still in the formulation process, seeks to finally resolve this issue by providing a comprehensive vision for China’s energy policy. This section relies on the draft law, and on additional policy documents and action plans related to climate change, to understand the relationship between the environment and energy security.

Relevant laws

The EBL Draft establishes, as a core element, the principle of coordinated development between energy and the environment centred around clean energy, energy conservation and ecological environmental compensation.

The EBL Draft clearly intends to encourage and incentivize the development and deployment of renewable energy sources at the expense of fossil fuels, as aligned with China’s efforts to tackle climate change. Improving the efficiency of traditional energy sources is also emphasized so as to reduce greenhouse gas emissions and environmental pollution. Article 42 of the EBL Draft calls for the national establishment of a mechanism for ecological compensation. On the one hand, this mechanism attempts to perfect the cooperation between the entities that utilize energy in China, while on the other, seeks to clarify the responsibilities of private enterprises.

Other legislation regarding energy ecological security, including the ‘Environmental Protection Law’,¹⁰² Solid ‘Waste Pollution Prevention Law’,¹⁰³ ‘Air Pollution Prevention Law’¹⁰⁴ and ‘Cleaner Production Promotion Law’¹⁰⁵ confirm that China’s environmental protection is logically linked to boosting energy efficiency and decreasing energy consumption. In China, the government plays a central role in the transition towards a low carbon economy through guiding energy use and consumption patterns.

Administrative statutory documents

The ecological dimension of energy security has already been included in several documents that signal the importance, for both the government and the leading party, to address environmental degradation while simultaneously enhancing energy conversion efficiency.¹⁰⁶

Furthermore, China’s 2012 Energy White Paper already clarified that China’s future energy policies would place environmental protection of the utmost importance, and that the development and utilization of energy sources should parallel the requirements of an ecologically focused society.¹⁰⁷

‘The Government Work Report’, delivered at the Fifth Session of the Eleventh National People’s Congress on 5 March 2012, implied that future energy security would seek to better address energy conservation and environmental protection, optimize the energy structure, increase the efficient use of traditional energy sources (also by working on shale gas)¹⁰⁸ and of nuclear power, and strengthen the regulatory framework for responding to environmental catastrophes.¹⁰⁹

In addition to macro-regulations in various government programmes, the ‘2011 China’s Policies and Actions for Addressing Climate Change Information Office of the State Council White Paper’ (Addressing Climate Change White Paper)¹¹⁰ proposed the main objectives:

(i) to strengthen the legal system and its strategic planning; (ii) to accelerate economic restructuring; (iii) to optimize the energy structure and the development of clean energy; (iv) to continuously implement energy-saving projects; and to (v) gradually establish a carbon emissions trading market.¹¹¹

3. THE DEVELOPMENTAL TRENDS OF POLICIES IN CHINA’S ENERGY SECURITY AND CLIMATE CHANGE

The analysis of the ‘2011 Addressing Climate Change White Paper’,¹¹² the first policy document clearly establishing the link between national climate change and energy security, confirms that national climate change policy initially follows China’s development interests. The gradual approach to China’s energy transition also addresses socio and economic development, at its core, by aligning itself to the shift of the international community (from mitigation to adaptation to climate change).

The latest ‘Addressing Climate Change White Paper’ released in 2019 places great emphasis on the importance for China to proactively participate in global climate governance.¹¹³

China is the world’s largest developing country, with a large population, insufficient energy resources, complex climate and fragile eco-environment. It has not yet completed the historical task of industrialization and urbanization and its development is unbalanced. By the UN standard for poverty, China still has a poverty-stricken population of over 100 million, thus it faces an extremely arduous task in developing its economy, eliminating poverty and improving the people’s livelihood. In addition, China is one of the most vulnerable countries to the adverse effects of climate change. Climate change generates many negative effects on China’s economic and social development, posing major challenges to the country’s overall sustainable development. Climate change not only affects the environment, but also affects the nation’s economic development¹¹⁴ (agriculture, manufacturing, etc.) and political stability. The overall effects of climate change are uneven, mostly impacting rural areas. Agricultural vulnerability to climate change,¹¹⁵ a shortage of water and energy resources, land desertification, and drought in rural China are elements that shape citizens’ decisions to move to more urbanized areas, in turn creating a vast array of social problems. For instance, in Ningxia—since 1983—more than 1.11 million residents migrated because of climate change.¹¹⁶ Climate change migration does not yet maintain a specific legal status, and the government has not yet been able to address the peculiarity of such a phenomenon.

Forests have been designated special statuses in response to climate change, granting strategic priority to the development of forestry to address climate change. Under the Paris Agreement, the country pledged to increase forest coverage by 40 million hectares, and forest stock volume by 1.3 billion cubic meters by 2020 (as compared to 2005 levels). The reform of national forest policies bring positive effects for climate change, and improves national forests concerning both coverage and stock volume.¹¹⁷ Since the 11th Five-Year Plan period, the Chinese government has focused on the adaptation of key national sectors, mainly agriculture, water and marine resources, public health and meteorology to combat climate change. As an example, in the field of public health, China has issued the ‘Emergency Response Plan against High-temperature Heat-stroke (Trial)’¹¹⁸ and ‘Healthy China 2030’,¹¹⁹ focusing on adapting public health to climate change. The Chinese government has mandated research efforts pertaining to various public health concerns brought on by the conditions of climate change, including the quality of drinking water, the impacts of air pollution, infectious diseases caused by climatic factors, the impacts of climate change on vector-borne parasitic diseases, as well as many others. These studies have established the foundations, and provided technical support, for several regulations focused on adaptation to climate change. In order to boost the development and deployment of the renewable industry, and to limit GHG emissions, China encouraged private intervention through using policy mechanisms including subsidies and tax breaks.¹²⁰ Article 6 of the ‘Interim Measures for Funds Management of Wind Power Equipment’ is an example of such initiatives to favour locally favoured enterprises and manufactured products.¹²¹ In addition, ‘the Measures for the Management of Funds for Researches and Developments of Export Products’,¹²² issued by the Chinese Ministry of Finance, accounted for more than 50 per cent of the total sales revenue, exceeding over 15 million US dollars, as funding indicates. In fact, that export performance as a condition for obtaining the subsidies is aligned with the requirement of export subsidies.

4. CONCLUSIONS

Energy security is shifting towards a more pronounced prioritization of its ecological dimension in China. In order to reach this aim, it is essential for the country to address the three main shortcomings of the energy industry: energy supply channels, competitions and regulations within the energy market, and the very sustainable development of the energy market. China’s BRI initiative aims to diversify the nation’s energy supply channels, with most ongoing projects concentrated within Central Asia (northwest), Russia (northeast) and the general southeast for the transport of both oil and gas. The international trade of energy products strengthens the opportunities for both energy imports and exports, encouraging domestic enterprises to export and invest in the global competition and trade. The financial sector equally supports the increase in supply diversification by exerting both futures trading, and intermediary trade and barter, to increase diversified modes of energy trading mechanisms. Contrarily, the energy market’s liberalization is in its infancy. The complete opening-up to foreign enterprises in oil and gas exploration, as announced under the revised version Foreign Investment Law¹²³ (although a good sign of the intention of the government), is only in the letter of the law, and not necessarily of the actual norm. In addition to the energy market, research indicates that transitioning to a low-carbon economy could find a great ally in the legal system.¹²⁴ In previous decades, energy legislation was short-sighted, in general, providing solutions to rather specific and contingent issues rather than providing long-term relief.¹²⁵ The ‘Energy Basic Law’ (EBL Draft), the ‘Oil and Gas Law’,¹²⁶ and the ‘Atomic Energy Law’¹²⁷—even if not yet enacted—and possible environmental-friendly amendments of the ‘Coal Law’¹²⁸ and ‘the Electricity Act’¹²⁹ are good steps towards establishing a modern set of laws intended to adapt to the changing energy panorama.

Haifeng Deng’s research was supported by Science and Technology Projects of the State Grid Corporation of China: 1200-201999500A-0-0-00 and National Social Science Fund of China: 19BFX214.

Founder, President, Director, Principal Investigator and Senior Research Fellow at gLAWcal—Global Law Initiatives for Sustainable Development. Senior Fellow at the IIEL—Institute of International Economic Law, Georgetown University Law Center (USA). Scientific Vice-Coordinator and Co-Principal Investigator of EU commission Marie Curie Project POREEN at gLAWcal—Global Law Initiatives for Sustainable Development (United Kingdom). Dual PhD in International Law from Aix-Marseille University (France) and University of Milan (Italy), LLM in European Legal Studies from the College of Europe in Bruges (Belgium), Maitrise (JD) in International and European Law from Paris Ouest La Defense Nanterre University (France).

Footnotes

Author notes