The limit of energy saving and emission reduction is approaching, and the incentive mechanism has yet to be diversified

Energy Saving and Reduction of Emission: Stimulation Mechanism in the Last Edge

With the emergence of global climate change and its effects on economies, countries are urgently seeking ways to save energy and reduce emissions. China is no exception. In order to resolve air and water pollution, which have caused severe public health problems, the Chinese government and relevant departments have put into effect policies and laws to reduce emissions and promote energy efficiency. In the face of various limitations, how to further motivate enterprises, especially small and medium-sized enterprises to actively respond to energy saving and emission reduction has become an increasingly important task.

At present, the stimulation mechanism of energy saving and emission reduction in China mainly includes macro-level market-based policy tools and micro-level institutional support.

At the macro level, the key content is to build a regulatory system and a system of incentives and subsidies. This has included the introduction of compulsory energy efficiency standards, released in articles 8 and 9 of the Energy Conservation Law, ‘Three Fixations and One Optimization’ on energy efficiency and provincial/ministry-level emission reduction targets and subsidies, as well as the use of market-priced environmental pollution permits implemented by the Ministry of Finance, Ministry of Environmental Protection, State Administration of Taxation and other related departments.

At the micro level, measures to improve the efficiency and effectiveness of energy use have included technical advice on a range of topics, from improved building insulation to boiler technology and improved manufacturing processes. Additionally, in China’s financial sector personalized financing business, evidenced by the China Banking Regulatory Commission’s move to introduce energy-saving services and establish energy-saving service companies, energy service companies (ESCs) and low-carbon investment lenders, has increased the attractiveness of investment in energy-saving and emission-reduction projects.

In addition, with the release of the 2016 revision of the Renewable Energy Law, local governments have introduced subsidies and penalty programs to encourage the progressive adoption of renewable energy. To further improve the efficiency of energy use and the implementation of emission reduction projects, the Chinese Government has encouraged residents and enterprises to adopt different energy-saving methods, including energy generation through the development of renewable sources such as solar and wind power, and household and commercial-scale energy storage devices.

While these measures have shown promise, there is still a great need for further diversification and alignment of the existing incentive mechanisms. This includes introducing more incentive measures such as tax cuts and deductions, green credit policies, and stakeholder-based approaches to conservation and emissions reduction. To foster innovation and promote participation in energy efficiency projects, there is a need to introduce standardised assessment criteria and management systems to accurately assess impacts and serve as a basis for funding decisions.

Furthermore, there is a great need to accelerate the efficiency of energy use, promoting the development of energy-saving technologies and more. The Chinese Government should actively support the development of new energy-saving technologies by increasing investment in R&D, establish efficient systems for the transfer, exchange and application of existing technologies, and encourage the development and use of green products. To further promote energy-saving and emission-reduction projects, the government should promote public-private partnerships (PPPs), enabling businesses, individuals and organizations to share the costs of energy-saving projects.

In order to more effectively promote energy saving and reduce emissions in the future, China must provide timely, effective and diversified incentives for energy saving and emission reduction at the macro as well as micro level. To do this, the Government must continue to improve energy efficiency and emissions standards, introduce long-term energy-saving and emissions reduction targets, implement market-based policies and subsidies, review the impact of existing initiatives, and diversify and align existing incentives in order to attract greater investment in energy-saving and emissions reduction projects.

With the depletion of petroleum resources and the increasingly serious problem of air pollution brought about by emissions, energy conservation and emission reduction is an important issue that needs attention in our daily life. With the implementation of various national policies, energy conservation and emission reduction work have been progressing. But unfortunately, due to the lack of long-term and secure effective policy incentives, the current implementation of energy conservation and emission reduction projects still faces obstacles.

The lack of long-term incentives has caused energy conservation and emission reduction to fail to be effectively implemented for a long time. “One size fits all” incentives simply cannot keep up with the rapid development of the industry and achieve long-term motivation. Therefore, diversifying incentive mechanisms and introducing a variety of incentive methods are particularly important. On the one hand, we need to introduce more market-oriented incentives, such as giving tax reduction or exemption for enterprises that participate in energy conservation and emission reduction projects, relaxing the thresholds for financing and making financing more convenient, granting subsidies to projects that meet national standards, allowing enterprises to make more profits from green business models, etc.; On the other hand, government should strengthen legal and administrative sanctions to companies that have failed to meet energy conservation and emission reduction standards, so that they can not escape legal punishment in order to save costs.

Therefore, in order to successfully achieve energy conservation and emission reduction targets, we need to diversify and coordinate multiple incentives, ensure the implementation of long-term and secure incentives, and realize the energy conservation and emission reduction objectives through market-oriented and law enforcement-oriented measures.