In November of 2022, NDRC and NBS issued two detailed policies on energy consumption assessment - "Notice on Exempting Feedstock-use Energy from Total Energy Consumption Cap Control" and "Notice on Exempting Renewable Energy from Total Energy Consumption Cap Control", both are specific arrangement to implement the requirements of the Central Economic Work Conference in December 2021 and the State Council's "14FYP Working Plan for Energy Conservation and Emission Reduction" in January. The new policy provides an important guarantee for the industrial structure transition and securing the rationality of fossil-based feedstock for high-quality project.
- After deducting the feedstock volume, the energy consumption per unit of GDP during the 13FYP period (2015-2020) drops by 13.8%, which is 1.6 percentage points lower than the original caliber, according to GL Consulting calculation.
- Petrochemical and coal chemical industries most benefit from new assessment standards, while encouraging high-value-added products.
- The proportion of feedstock used in total petroleum consumption was as high as 22% in 2020. The new policy will enlarge the flexibility of energy use quota for petchem and coal-to-chemical projects, especially for petchem transformation projects (oil product to petrochemical shift).
- NDRC emphasized that the new assessment measures are not to encourage energy-intensive projects, industrial policies are consistent in curbing the high energy consumption, emission-intensive, and low-end projects.
- Renewable energy that exempt from the total energy consumption cap mainly includes the following renewable power sources: wind, solar, hydro, biomass, and geothermal.
- All increment renewable energy use can be deducted from the energy consumption volume cap assessment, but still, be included in the energy intensity assessment. Compared with previous policies issued in 2019-2021, the latest one is more lenient (as shown below).
- The new policy will activate the demand for green power certification held by renewable generators on the energy-using side, and increase the incentive for green power trading in power markets. The policy specifies that green power certification is the basic credential to identify renewable energy consumption, which can be transferred to the market.
Written by the GL Consulting team (Mysteel's consultancy arm on energy transition): glconsulting@mysteel.com
Edited by Navy Liu: liuchuanjun@mysteel.com
