- As part of its commitment to achieving a carbon peak by 2030, the Chinese government announced the target of lowering energy consumption per GDP unit by 13.5 percent during the 14th Five-Year Period, translating into a 3 percent reduction annually from 2021 to 2025.
- However, the government deviated from its previous commitment and announced lowered targets during the Two Sessions in 2023 (2 percent) and 2024 (2.5 percent).
- It also canceled the target for the year 2022 to prioritize energy security and economic growth amid Covid disruptions.
- According to the National Bureau of Statistics, China failed to meet the updated targets in each of the last three years. Energy intensity was reduced by only 0.1 percent in 2022 and 0.5 percent in 2023.
- In addition, the reduction in energy intensity in 2023 was supported by a statistical trick: The use of renewable energy, which accounts for a growing proportion of total energy consumption, is excluded from the scope of calculation.
- This casts doubt on the Chinese government’s commitment to implement its decarbonization agenda. At the current pace, China is likely to miss the overall reduction target for the entire five-year period.
- Overall, China has been slow to phase out energy-intensive industrial production, in contrast to the rapid ramping up of renewable energy and electric vehicles. As the Chinese economy faces one of the greatest challenges in recent decades, carbon neutrality will likely give way to other policy priorities, at least in the short term.
- The slowdown in decarbonization in China will not only affect companies’ sustainability initiatives but also impact the competitiveness of goods produced in China under more stringent trade regulations based on carbon footprint.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.