China mandates energy efficiency compliance for 9 heavy industries by 2028: report

China has set a strict 2028 deadline for nine key industries to meet specified energy-efficiency benchmarks, China's state-owned news agency Xinhua reported June 15, citing the National Development and Reform Commission.

Notice No. 698, issued June 15, targets the steel, electrolytic aluminum, cement, flat glass, oil refining, ethylene, ammonia, methanol and coal-fired power generation sectors --- the heavy greenhouse gas emitters, it said.

The development signals a shift from voluntary decarbonization to mandatory compliance, an S&P Global Energy analyst said.

"This is more like a cap and trade for existing heavy carbon emission industries project, said Jingze Zhu, analyst for hydrogen at S&P Global Energy Horizons, said June 16.

"The policy enforces a strict deadline -- by the end of 2028, the nine key industries must comply with designated energy efficiency benchmarks."

Currently, less than 30% of the production capacity in these heavy sectors meets top-tier energy standards, Zhu said.

To bridge this decarbonization gap, the framework uses a multi-pronged approach -- central government subsidies covering up to 20% of project capital expenditures; and differential electricity pricing adding up to Yuan 100/MWh ($14.8/MWh) on a market-trading basis, Zhu said.

It also includes a carbon emission quota swap system, she added.

This swap system allows enterprises to leverage verified emissions reductions from retrofitted existing facilities as offsets to secure local government approvals for new projects, she said.

China has been taking several steps to reduce emissions across all sectors.

A subsidiary of the China Energy Group achieved a 50% cofiring ratio of renewable hydrogen in its 40-megawatt boiler at the Clean Combustion Engineering Laboratory, a step toward decarbonizing the power sector, according to CHN Energy Newspaper, a publication of the state-owned CHN Energy Group, on June 8.

According to data from S&P Global Energy, China's greenhouse gas emissions are seen falling from 14.37 billion metric tons of CO2 equivalent in 2025 to 13.14 mtCO2e in 2030 including CCUS, in a base case scenario.