On January 1, 2025, China's first foundational and overarching legal framework for the energy sector, the Energy Law, will come into effect. This legislation provides robust legal backing for green and low-carbon development, elevating China's "dual carbon" commitments from policy to legal mandate. The law offers clearer legal guidelines for investing in green energy projects, thereby reducing the risks associated with policy fluctuations.
Energy security remains a prerequisite for the green and low-carbon transition. Fossil fuels are essential for energy security, yet their gradual replacement by clean energy sources is inevitable. It is important to secure the supply chain by enhancing domestic production, encouraging long-term contracts, optimizing external procurement strategies, and expanding reserve capacities. For oil and gas, this involves promoting production increases and supporting energy substitution. Clean and efficient utilization of coal as well as its regulatory role within the power system is emphasized. Despite a restriction on fossil energy consumption, there is still investment potential in the energy reserve and clean technology sectors - such as methane emissions reduction and carbon capture, utilization and storage (CCUS) for oil and gas, and low-carbon transition for coal and coal-fired power.
While non-fossil energy development continues to be encouraged, the law emphasizes a balanced approach to development and utilization, ensuring a secure and stable energy transition. This focus supports enhanced market-driven consumption trends, benefiting green power and green electricity certificate (GEC) trading markets. The role of new energy storage solutions as regulatory resources is further solidified.
The promotion of the hydrogen industry development is strongly encouraged, though market investment guided by policy-directed incentives remains cautious. According to OilChem, between January and November 2024, there were 11 new green hydrogen projects commissioned nationwide, with 102 in construction and planning, slightly fewer than the total additions in 2023.
The energy law also addresses dispute resolution within the energy sector, providing higher-level legal guidance. It emphasizes ensuring fair competition and participation for enterprises in competitive energy business activities. Key areas of focus include equal market access for state-owned and private enterprises, equitable competition opportunities, fair resource allocation, and legal protection, as well as administrative dispute resolution concerning local governments and energy and chemical enterprises.
The above content is the major conclusions and highlights extracted from China (Energy Transition) Policy Perspective. To get detailed full text, send an email to glconsulting@mysteel.com.
The original text of the policy can be accessed via the following link:
https://www.gov.cn/yaowen/liebiao/202411/content_6985761.htm
