Why has the Energy Law been conspicuously absent since 2006?

On April 10, 2020, the highly anticipated first draft of the Energy Law of the People’s Republic of China was released for public comment. In fact, for a long time, China has lacked a foundational law governing the energy sector. As early as January 2006, a drafting task force for the Energy Law was established; however, legislative progress subsequently stalled for various reasons. In 2017, under the guidance of the former Legislative Affairs Office of the State Council and the Ministry of Justice, the National Development and Reform Commission and the National Energy Administration convened expert panels and working groups to undertake the drafting and revision of this version of the Energy Law.

Why has the promulgation of the Energy Law been repeatedly delayed, now stretching over 15 years? We believe that the Energy Law embodies the overarching direction of China’s energy development and addresses numerous major issues of a systemic, comprehensive, and strategic nature. As an exceptionally important piece of legislation, it demands the utmost care and deliberation, while also taking into account the many complex challenges involved.

(1) The international landscape continues to evolve, with strategic competition among nations—particularly between China and the United States—intensifying. Issues related to climate change and carbon reduction have undergone significant shifts over the years. Following the expiration of the first commitment period under the Kyoto Protocol in 2012, it was not until the Paris Agreement in December 2015 that clear targets were established. Subsequently, the Trump administration withdrew from the Paris Agreement, and a host of challenges stemming from Sino‑U.S. trade tensions emerged.

(2) The energy sector encompasses numerous fields and departments, and at the institutional and managerial levels, the state requires robust capacity for overall coordination and balanced consideration. At different stages of development, the scale, roles, and status of various energy sources also differ markedly. Moreover, the emergence of new energy sources represents, to a certain extent, a revolution against traditional energy systems, necessitating careful balancing of the interests of diverse stakeholders. As for China’s current stage of development, many of these issues have gradually become clearer over time and through historical experience. Leveraging this opportune window to advance the drafting and promulgation of the Energy Law aligns with future energy‑development trends and the nation’s overarching strategic objectives, while also contributing to the refinement of existing sector‑specific laws.

This time, the National Energy Administration has released the “Energy Law of the People’s Republic of China (Draft for Public Comment),” which spans over 14,000 characters. The legislation clearly sets out its core objectives: ensuring energy security as the top priority, followed by optimizing the energy mix, and then enhancing energy efficiency.

The Energy Law of the People’s Republic of China (Draft for Public Comment) sets out development directions for energy exploration and processing across various sectors: The state encourages the efficient, clean, and sustainable exploitation and utilization of energy resources; supports the prioritized development of renewable energy; promotes the rational development of fossil energy resources; fosters the localized development of distributed energy systems; advances the substitution of fossil fuels with non‑fossil energy sources and of high‑carbon energy with low‑carbon alternatives; and supports the research, development, and application of new fuels and industrial feedstocks that can replace petroleum and natural gas.

The “Energy Law of the People’s Republic of China (Draft for Public Comment)” employs carefully chosen terminology in its specific provisions:

(1) In the fossil energy sector: for instance, the prudent development of coal-to-fuels and chemical feedstocks to some extent reflects the state’s stance on coal‑chemicals; oil and natural gas exploration and production continue to give equal priority to onshore and offshore operations, with accelerated development of offshore oil and gas fields underscoring the importance of offshore resource exploitation; allowing market entities that meet准入 requirements to participate in oil and gas exploration and production indicates that market‑oriented reform in the oil and gas sector is a key direction; and in the natural gas domain, rational development—aimed at increasing natural gas’s share in primary energy consumption—places particular emphasis on “rationality.”

(2) Non-fossil energy sector: It has been clarified that priority should be given to developing and accelerating the development of non-fossil energy sources such as renewable energy and nuclear power. At the same time,

1) Strengthened the performance assessment of binding indicators in the annual plan;

2) Minimum target for the share of renewable energy in total energy consumption, along with a market-based quota-trading system;

3) It also calls for the power grid to expand the deployment of renewable energy and to develop smart grids and energy storage technologies. These measures are aimed at addressing the specific challenges facing the development of renewable energy, which the state is progressively tackling.

In the areas of wind and solar power generation, development will follow the principle of simultaneously promoting both centralized and distributed approaches, while integrating local consumption with transmission to other regions. As for hydropower development, large-scale hydropower bases will be advanced in an orderly manner, with moderate development of small and medium-sized hydropower stations. Nuclear power development will adhere to the principle of safety first, and the State Council will establish regulations governing investment and market access for nuclear power operations.

In addition, the Draft Energy Law of the People’s Republic of China seeks to guide energy development and utilization through strategic planning and coordinated policy frameworks, thereby promoting clean and low-carbon energy development; to advance energy development and infrastructure construction in a scientifically sound manner, thus enhancing energy supply capacity; and to support reforms of the energy system and mechanisms, comprehensively advancing the marketization of the energy sector.