Using Financial and Market-based Mechanisms to improve Building Energy Efficiency in China
Beijing, 08.04.2009 - James Smith
Following an 18 month REEEP-funded study to investigate the potential for using financial and market-based mechanisms to improve energy efficiency in building in China, a final report has been published by Camco Advisory China and the Energy Research Institute of China.
Buildings in China currently account for over 40% of China’s total energy use, and this is expected to rise as a result of increased urbanization and increased demand for energy services (principally heating, cooling and appliances). Compared with Europe and the US, the amount of energy used in some sectors (for example in residential buildings and general public buildings such as hospitals, shops and schools) is still low but is starting to grow at a rapid rate.
China has stretching targets to reduce energy consumption per unit GDP and tackling energy efficiency in buildings will be a key route to achieve these targets. Significant progress has already been made, for example current building codes stipulate that energy consumption in new residential buildings should be 50% less than the level of buildings designed in 1980-81. As China already has a number of such ‘command and control’ measures, this study focused on identifying market-based and financial instruments such as carbon and energy taxes, soft loans and subsidies, internal energy saving trading systems (‘White Certificates’) and the CDM and voluntary carbon markets.
The report identifies areas for improvement, such as district heating in buildings in northern regionsand reductions in energy wastage in large-scale public and commercial buildings (especially air conditioning and lighting systems).
It goes on to make recommendations for short and long term actions and potential uses of the Clean Development Mechanism in demand-side energy management and energy efficiency improvements to buildings. Methodologies exist for CDM projects in this area, but there are currently significant barriers in accessing CDM finance for these kinds of projects in terms of setting a baseline, monitoring and verification of emission savings and demonstrating the additionality of projects.
Other actions recommended include: complete energy price reforms, including completing the implementation and promotion of heating/cooling quantity-based charging mechanisms; establishing a system for building energy data collection and making this information freely available to all stakeholders; as well as longer term actions such as changing the method of building energy efficiency improvement from a measures-based approach to an energy efficiency index approach.
To download the full report (available in Chinese and English), click here. You will also find presentations from the final workshop held in February as part of the project. For further information on the project, please contact Rachel Child: rachel.child@camcoglobal.com