China’s Energy Law 2025: Highlights for Renewables, Energy Security, and Private Companies

China's Energy Law 2025, which came into effect on January 1, 2025, is a comprehensive piece of legislation designed to promote renewable energy development, enhance energy security, and advance the country's energy transition. This landmark policy is pivotal for achieving China’s carbon neutrality goals and balancing fossil fuel reliance with non-fossil energy sources. This framework is expected to shape the future policies of the world's largest energy producer and consumer.

Read on to learn about the key highlights of the law, its implications for China’s energy sector, and implications for private companies.

China’s Energy Law 2025: A Long Journey Unfolding

China's Energy Law underwent a lengthy legislative process, with its first draft released for public consultation by the Office of the National Energy Leading Group in 2007. Following this, the National Energy Administration (NEA) launched a public consultation on the law's second draft in 2020. It was not until April 2024 that the law underwent a first review by the NPC Standing Committee, followed by a second review in September, and was finally approved at its third reading on November 8, 2024.

In the past, China has enacted laws targeting distinct energy subsectors, including coal, electricity, oil and gas, nuclear, energy conservation, and renewable energy. Against this backdrop, the law stands out as a unified legislation aiming to guide the energy sector as a whole. 

The swift passage of the law highlights the government's urgency in addressing crucial energy sector issues. Additionally, its overarching nature signals the need further to regulate emerging energy sources, such as hydrogen, to address China's energy priorities effectively.

China’s Renewable Energy Goals in 2025: A Step Toward Carbon Neutrality and Energy Security

The swift passage of China’s Energy Law is a clear signal of the government’s commitment to its ambitious 'dual carbon' goals. These ambitious targets, set by President Xi Jinping at the 75th session of the United Nations General Assembly in September 2020, include reaching a carbon emissions peak before 2030 and achieving carbon neutrality by 2060. The law places a strong emphasis on developing renewable energy sources such as solar, wind, and hydrogen energy to reduce dependence on fossil fuels and promote energy security.

Under the law, non-fossil energy sources include nuclear, solar, wind, biomass, geothermal, and ocean. Notably, once classified as a hazardous chemical, hydrogen is now an energy source. This shift in classification reflects that China recognises the importance of regulating new energy sources and diversifying its energy mix.

The text requires the state to establish long-term renewable energy development goals and monitor annual progress and utilisation of non-fossil energy sources to support renewable energy development. It also calls on the government to accelerate the construction of wind and solar energy facilities while expanding both onshore and offshore installations. In addition, the law introduces a chapter focusing on scientific and technological innovation, requiring the government to support the development of cutting-edge technologies in renewable energy, hydrogen, energy storage, and conservation fields.

National energy authorities must set a minimum target for the proportion of renewable energy in total energy consumption. The law also introduces mechanisms to encourage renewable energy use, such as green electricity certificates. Finally, it calls on public institutions to prioritise the procurement and use of clean, low-carbon energy like renewable sources and energy-saving products and services.

Fossil Fuels in China’s Energy Strategy

While prioritising the development of renewable energy sources, the law acknowledges the key role of fossil fuels in maintaining energy supply and enhancing energy security. To do so, the law promotes the “reasonable” development of coal, oil, and natural gas. The emphasis on energy security reflects China's priority to increase its energy self-reliance while protecting its energy sector from external risks, including global price shocks and geopolitical tensions.

China is the world leader in both coal production and consumption, home to half of the world's coal power plants. For this reason, China’s government considers it essential to support the country’s energy system, as emphasised in the 14th Five Year Plan for the energy sector released in 2022. In this context, the law requires the state to optimise coal development while encouraging  “clean and efficient” coal utilisation. This involves reducing pollutants and carbon emissions across the industry chain through advanced technologies. Additionally, the law supports the development and construction of coal-fired power generation plants.

China is also the second-largest consumer and the sixth-largest oil and gas producer globally. As a major consumer, the country heavily relies on oil imports from countries such as Australia, Malaysia, Qatar, and Russia. To meet its growing demand, the text promotes the exploration and development of oil and gas. This includes developing onshore and offshore oil and gas projects and exploring unconventional oil and gas resources, such as tight oil and gas.

Amidst global geopolitical tensions, the law introduces a key provision enabling Beijing to take retaliatory measures against countries that enforce discriminatory policies on China in renewable and other energy sectors. The clause reflects Beijing's greater efforts to develop legal tools for responding to restrictive trade measures, particularly those imposed by Washington.

The emphasis on fossil fuel development clashes with the commitment to achieving carbon neutrality and emissions peak. However, it also underscores that energy security is paramount for the government, particularly in the face of increased perceived risks from the external environment.

Implications of China’s Energy Law for Private Companies

The law promotes creating an energy market system that is more competitive and transparent. In addition, it calls on “all types of business entities” to invest in energy development and utilisation, as well as energy infrastructure construction. Finally, the text requires energy network operators to ensure fair business access.

For private companies, the law's push towards a competitive market and renewable energy development presents a wealth of opportunities. These opportunities, especially in areas like renewable energy infrastructure and green technologies, can be a source of optimism and growth.

China holds immense significance in today's global landscape, shaping energy, technology, trade, and international relations trends. By leveraging FiscalNote's comprehensive policy analysis, you can gain crucial insights and updates to navigate the complex Chinese policy landscape and inform your decisions.