Energy Subsidies in China

China is the world’s most populous country and in 2016, the world’s #1 in coal consumption and production; # 2 in the consumption and production of oil products; and #3 in natural gas consumption. Energy is a key issue in China’s policies, and government support has played an important role steering the development of the energy sector. China is determined to shift to a low-carbon economy: the country has committed to reach the peak of GHG emissions around 2030 and  “to phase out inefficient fossil fuel subsidies” as both a G-20 and APEC member.

This report summarizes the policy efforts that the country is undertaking to meet its NDC targets and the related expected health co-benefits, based on recent scientific literature. It compares public budget allocations to health, climate change-related measures and subsidies to fossil fuels.

The boom and eventual bust of resource-dependent regions has played out across the world many times over the last 50 years. As extractive industries go into decline due to resource exhaustion, competition from elsewhere or changing consumption of energy, demands are made for subsidies to revive the industry and maintain jobs. Concurrently, policy-makers, realizing that the decline of a resource extraction industry will cause social and economic hardship, begin the search for new industries to replace lost jobs and maintain economic development.

Poor air quality has become a major political concern in both countries. In the 1990s, India had some success in improving air quality in Delhi through higher emissions standards for vehicles. But in the 21st century, air quality in India nationwide has continued to deteriorate, and some reports now suggest that it is discernibly worse than in China.