China's energy law: A milestone in global energy governance and green transition

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 School of Applied Economics at Renmin University of China. The article reflects the authors' opinions and not necessarily the views of CGTN.

China enacted its first comprehensive energy law on November 8, 2024, a landmark move in response to growing domestic energy demand, environmental challenges, and global energy governance trends. Effective from January 1, 2025, the law establishes a robust legal framework to address China's long-term energy strategy, setting the stage for achieving its dual carbon goals and high-quality development.

Globally, energy laws shape policy direction and address regional priorities. The US emphasizes energy security, pricing, and industrial competitiveness, the European Union prioritizes climate action and green growth, while Australia focuses on safeguarding its energy supply. 

China's energy law shares similarities with these frameworks in addressing critical areas such as energy security, market regulation, and green transformation. However, it stands apart as a broad institutional declaration with a long-term orientation, leaving room for detailed implementation through subsequent regulations and policies. This strategic foresight underscores the law's flexibility, enabling China to adapt its energy governance in a rapidly evolving landscape while maintaining a stable framework for long-term planning.

The energy law integrates multiple stakeholders, including government bodies, enterprises, regulators, and consumers.

The law provides a clear legal framework for government energy planning and oversight. It mandates the central government to set sector-specific and regional energy development goals, and requires local governments to align their policies with national strategies. Local governments are tasked with promoting clean energy projects, ensuring secure and environmentally friendly energy supply, and adjusting regional energy structures to reflect local conditions. Additionally, the law enhances regulatory oversight, covering every stage of the energy industry - from production and distribution to consumption and storage. It aims to reduce natural monopolies, strengthen market stability and improve emergency response mechanisms to ensure smooth market functioning.

On the supply side, the law emphasizes energy structure optimization. Coal is redefined as a foundational energy source, with a focus on efficiency and cleaner usage. Renewable energy development receives continued support through tax incentives, subsidies, and innovation encouragement, with hydrogen energy included for the first time in China's energy management system. On the demand side, renewable energy consumption is actively promoted. Policies such as minimum consumption ratios for renewables and green power certificates incentivize enterprises and consumers to adopt clean energy. These measures aim to accelerate green transformation from both supply and demand perspectives.

Addressing energy security challenges

As the world's largest energy consumer, China faces immense challenges in securing stable energy supplies. In 2023, its energy consumption reached 5.72 billion tonnes of standard coal equivalent, of which the external dependence for oil was above 70 percent. The energy law offers a long-term roadmap to enhance energy security. It calls for intensified exploration and development of domestic oil and gas resources, diversification of alternative fuels, and a robust energy reserve system combining government and enterprise efforts. These measures strengthen China's resilience to supply disruptions and price fluctuations, ensuring stable operations under global market uncertainties.

Driving green transformation

China's commitment to peaking carbon emissions by 2030 and achieving carbon neutrality by 2060 represents a pivotal contribution to global climate action. However, transitioning from fossil fuels to renewable energy presents structural and systemic challenges.

The energy law provides critical support by setting explicit goals for renewable energy development and establishing pathways to phase out high-emission energy sources. It advocates for a shift from energy consumption "dual control" (energy use intensity and total consumption) to carbon emission control, ensuring a cohesive legal foundation for green transformation.

Strengthening market oversight

Energy markets often exhibit monopolistic tendencies due to their unique characteristics. Without proper regulation, market failures can lead to extreme price volatility and inefficiency. The energy law enhances regulatory measures on market entry, competition, and service standards, addressing potential market failures.

Additionally, the law ensures public participation in energy policymaking, fostering a societal shift toward low-carbon energy consumption. By raising awareness and incentivizing green choices through pricing and subsidies, the law cultivates public support for the green transition.

To conclude, China's energy law injects vitality into its energy sector, balancing energy security, green development, and market regulation. It establishes a unified and coordinated legal system, providing clear guidance for enterprises and boosting investor confidence. As the law takes effect, it is poised to enhance China's global competitiveness, contributing valuable insights and leadership to the world's energy transformation. By embedding sustainability and innovation into its energy framework, China demonstrates its resolve to forge a cleaner, more secure energy future for itself and the world.