This year’s Government Work Report delivered a very important message to investment promotion professionals across the country:
Energy intensity targets will be evaluated holistically throughout the 14th Five-Year Plan period, with appropriate flexibility allowed, and new renewable energy and energy used as feedstock will not be included in the total energy consumption cap. Efforts will be made to shift from the "dual control" of energy consumption to the "dual control" of carbon emissions in terms of both total volume and intensity.
Against the backdrop of “stabilizing economic growth,” energy consumption policies are undergoing a subtle shift. The “iron-clad thresholds” of energy consumption indicators—which have long been a headache for investment promoters—are expected to adopt more refined calculation methods, opening up greater possibilities for project approvals.
With energy consumption policies evolving, what are the implications?
In fact, the Central Economic Work Conference held on December 8, 2021, had already proposed:
Evaluation should be conducted scientifically; new renewable energy and energy used as feedstock should not be included in total energy consumption controls; conditions should be created to transition from “dual control” of energy consumption to “dual control” of carbon emissions volume and intensity as soon as possible; and mechanisms for incentivizing and constraining pollution and carbon reduction should be accelerated, while preventing simplistic, tier-by-tier breakdowns.
Shortly thereafter, on January 21, the Henan Provincial Development and Reform Commission issued the “Notice on Strengthening Energy Consumption and Coal Quota Guarantees to Support Major Project Construction,” taking the lead in releasing implementation guidelines:
I. Optimize the dual-control management of energy consumption intensity and total volume. Localities within the province that have met the provincially set energy consumption intensity reduction targets will no longer be subject to total energy consumption assessments. Localities must not restrict the construction of new projects that meet the requirements on the grounds of having met total energy consumption control targets.
2. Newly added renewable energy and energy used as feedstock shall not be included in the control scope. Using 2020 renewable energy electricity consumption as the baseline, the annual increase in renewable energy electricity compared to the previous year during the 14th Five-Year Plan period shall not be included in the total energy consumption control. Energy used as feedstock in the production of olefins, aromatics, fertilizers, pesticides, alcohols, and other products shall not be included in the dual-control assessment for energy consumption, and coal used as feedstock shall not be included in the assessment for total coal consumption control.
III. Strengthen the coordinated allocation of regional coal consumption quotas. Coal consumption quotas shall prioritize the support of coal-related projects with high output efficiency and strong supporting functions.
IV. Coal Consumption Quotas Will Transfer Across Regions Along with Production Capacity.
V. Implement provincial-level coordination of energy consumption and coal quotas for major projects. Energy consumption and coal quotas for major projects designated by the Provincial Development and Reform Commission under the 14th Five-Year Plan shall be listed separately; the additional energy consumption and coal consumption of these separately listed projects shall be deducted from the region’s quotas.
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“Rich in coal but poor in oil and natural gas” is a reality of China’s national conditions; the coal-dominated energy structure is unlikely to undergo fundamental change in the short term.
Therefore, at this stage, new energy industries represented by photovoltaic and wind power still find it difficult to completely break free from their reliance on traditional energy sources. If “new renewable energy consumption” were to be included in the total energy consumption control at this time, it would be somewhat of an overcorrection.
“Energy used as feedstock,” on the other hand, refers to energy consumption used as raw materials—where petroleum, coal, and natural gas are not used as fuels but as raw materials, including in sectors such as coal chemical and petrochemical industries.
For example, in the process of cracking naphtha to produce ethylene, which is then used to make polyethylene and ultimately plastic products, energy consumed as a raw material accounts for 60%–65% of total energy consumption.
Another example is the coal chemical industry: coal fed into boilers for power generation constitutes fuel energy consumption, whereas coal fed into gasifiers constitutes feedstock energy consumption.
With the implementation of “refined” statistics, the pressure on carbon emissions for enterprises using fossil fuels as raw materials is expected to be alleviated to some extent. This aligns with the goal of “clean and efficient coal utilization” and represents a positive development for the coal chemical and petrochemical industries.
Meanwhile, the statement in the Government Work Report that “energy intensity targets will be assessed in a coordinated manner throughout the 14th Five-Year Plan period, with appropriate flexibility allowed” implies that the frequency of energy intensity assessments will be optimized, enabling enterprises to avoid energy consumption restrictions resulting from short-term exceedances of energy consumption targets.
Such coordinated assessment benefits industries such as coal-fired power, petrochemicals, chemicals, steel, non-ferrous metal smelting, and building materials. A more flexible approach to energy consumption management will help these sectors conduct their production and operations in an orderly manner.
"Local Consumption" Becomes a Hot Topic
How Can Investment Promotion Keep Pace with the “Dual Carbon” Goals?
As the “Dual Carbon” initiative advances, local governments across the country are increasingly feeling the tightening constraints of energy consumption quotas and energy-saving policies. Building upon the implementation of national policies, expanding energy utilization space and boosting economic development have become key priorities for local authorities.
Although Henan’s new “dual-control” policy appears to be a head start, it is believed that new “dual-control” policies from various provinces and cities will soon follow.
This is certainly good news.
However, in the face of subtle shifts in “dual-control” policies, how to swiftly adapt and make timely adjustments to an industrial park’s sectoral positioning and investment promotion plans may become a major challenge for investment promoters.
On that note, allow me to insert a timely advertisement:
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Traditional consulting firms often suffer from a disconnect between industrial consulting and actual investment promotion activities. While their proposals may be highly specialized, they lack practicality, making it difficult to successfully implement projects.
In contrast, the Guichuan Industrial Research Institute closely integrates “industrial planning” with “investment attraction implementation.” Leveraging Guichuan United’s 13 years of hands-on experience in the investment promotion sector, it provides governments and industrial parks with precise and actionable “industrial chain research and investment attraction” solutions.On one hand, the industrial parks most directly affected by this adjustment to the “dual-control” policy are those focused on developing coal chemical and petrochemical industries.
Following the implementation of “refined” statistics, the energy consumption quotas required for various chemical projects will decrease significantly (as energy used for raw materials is excluded from total energy consumption controls), opening new possibilities for the approval of certain large-scale projects.
How can industrial positioning be redefined and investment attraction strategies for industrial chains be formulated in light of changes to the “dual-control” policy, while maximizing investment outcomes within limited energy consumption quotas?
How can preferential policies be formulated, physical spaces designed, and the park’s image packaged to attract leading enterprises in the coal chemical and petrochemical industries to invest and establish factories?
How can we seize the opportunity presented by leading chemical companies entering the new energy materials sector, leveraging local resource endowments and industrial foundations to promote the transformation of dominant industries toward new energy?
These are key issues that industrial parks must prioritize in their research.
On the other hand, the 14th Five-Year Plan outlines the construction of nine large-scale clean energy bases, seven of which are located in the western regions.
The “East Data, West Computing” initiative proposes the construction of 10 national data center clusters, 6 of which are in the western regions. It is clear that both major initiatives are centered on the transformation of the national energy structure. The “local consumption” of new energy sources such as solar and wind power is not only more cost-effective than the “West-to-East Power Transmission” scheme but also drives economic development in central and western China.
Resource-based cities in central and western China, such as Yulin and Ordos, should seize this opportunity for “local consumption” to achieve mutual synergy between new energy and new industries, thereby transforming new energy resources into a driving force for transformation and development.
The prerequisite is that investment promoters must have a clear understanding of the local resource endowment, industrial foundation, and investment environment, and have a well-defined plan for industrial positioning, industrial chain investment promotion strategies, and methods for attracting key enterprises.
Faced with an increasingly complex development environment, engaging third-party professional agencies to assist with industrial positioning planning has become a key strategy for many governments and industrial parks to enhance the quality and efficiency of their investment promotion efforts.
Zero-Carbon Industrial Parks Emerge
"Dual Carbon" Strategy as a Catalyst for Common Prosperity
Against the backdrop of the “Dual Carbon” goals, new energy is transitioning from a supporting force to a leading force. Green development not only brings new opportunities for coordinated development between eastern and western regions but will also guide China toward common prosperity.
During this year’s Two Sessions, Representative Zhang Lei submitted a proposal titled “Making Zero-Carbon Industrial Parks a Key Vehicle for the Green Industrial Revolution to Promote Balanced Regional Development and Common Prosperity.”
The proposal states:
Establishing zero-carbon industrial parks in western regions to foster a new green industrial system can resolve the mismatch between new energy production and consumption, thereby promoting balanced regional development and common prosperity.
Furthermore, this would help reduce the operating costs of the national economy as a whole, decrease reliance on imported fossil fuels, and enhance the green competitiveness of Chinese products to overcome future carbon tariff barriers.
A "zero-carbon industrial park" refers to a facility that achieves absolute zero carbon emissions in energy, construction, industry, and transportation without relying on carbon sinks for offsetting.
For example, Ordos’s national-level zero-carbon industrial park—the first of its kind in China—derives 80% of its energy directly from wind power, solar power, and energy storage. The remaining 20% is addressed through a model where “excess electricity is sold to the grid when production exceeds demand and retrieved from the grid when needed,” thereby achieving a 100% zero-carbon energy supply.
In terms of industrial synergy, the park focuses on developing hydrogen energy and new fuel cell industries, replacing the local fleet of 330,000 diesel trucks used for coal transportation with low-carbon, environmentally friendly hydrogen-powered heavy-duty trucks. This is expected to reduce Ordos’s greenhouse gas emissions by 15% annually.
Zero-carbon industrial parks can facilitate the relocation of energy-intensive industries from the eastern regions to industrial parks in the west. By directly supplying green electricity generated from wind and solar power, and leveraging advanced technologies such as smart IoT and energy storage, these parks can not only ensure a comprehensive green energy supply but also foster the development of new industries in western regions.
New industries will emerge not only from the relocation of energy-intensive industries from the east but also from a range of green industries driven by the "Dual Carbon" strategy, such as clean energy hydrogen production and CCUS (Carbon Capture, Utilization, and Storage).
With the development of new energy and new industries, the exchange of talent, technology, and opportunities between the east and west will become increasingly frequent. Through such exploration, the entire nation will move ever closer to common prosperity.
Coal made Britain great, and oil made America great. China’s achievements in new energy, however, will be transformative. For they belong not only to China but to all of humanity.
In the coming decades, new energy, new technologies, and new industries will give rise to even more innovations and ideas, reshaping both our production and daily lives. With new opportunities on the horizon, local governments and industrial parks in central and western China must plan ahead and secure their strategic positioning early.
Guchuan United will also closely follow global economic trends and changes in the investment environment, continuously enhancing our professional capabilities and innovative efficiency as an “external brain,” and building a comprehensive global investment promotion framework with a global perspective.
