Energy Subsidies in China

The Chinese government has responded to the challenge of increasing energy consumption and environmental pollution with ambitious targets for renewable energy generation; 15 per cent of primary energy is to be generated from renewable sources by 2015. This report discusses the trends in renewable energy investment, the role of public finance in the renewable energy industry, the impact of renewable energy subsidies and the international experience of raising revenues from carbon pricing mechanisms to promote renewable energy.

China's economy continues to grow rapidly with corresponding increases in both energy consumption and environmental pollution.

Reuters reports that China's National Development & Reform Commission (NDRC), the country's top economic policy planner, has submitted plans to the State Council to revamp the fuel price setting system to better reflect market costs.

This March, investigative journalist Yuan Ying won the ‘most influential’ category at the China Environment Press Awards with an article on the failure of China’s photovoltaic (PV) subsidy program ‘Golden Sun’.

In the past two months, the U.S. Congress has decided to continue paying Brazilian cotton farmers US$ 147 million a year; speculation intensifies as the United States enters into consultations with China over subsidies for wind energy; and the American Soybean Association makes noises about the potential trade impacts of the European Union’s Renewable Energy Directive.

The People's Republic of China has agreed to end dozens of controversial subsidies under its World Top Brand, Famous Export Brand and China Name Brand programs that the United States claimed were supporting Chinese exports of a variety of goods, ranging from electronic appliances to apparel and agricultural products.

Three recent reports by the Global Subsidies Initiative (GSI) survey subsidy policies for biofuels in China, Malaysia and Indonesia. The reports marks a shift in focus for the GSI’s “Biofuels At What Cost?” series, from biofuel subsidy policies in OECD countries—which account for the lions share of global government support for biofuels—to that of certain developing countries that have stood poised to capitalize on heightened interest in these renewable fuels.

The Global Subsidies Initiative (GSI) has published a report revealing that China provided a total of RMB 780 million (US$ 115 million, roughly US$ 0.40 per litre) in biofuel subsidies in 2006. Total support is expected to reach approximately RMB 8 billion (US$ 1.2 billion) by 2020, according to official sources.