Energy Efficiency Gains Momentum in China Policy

With demand for millions of units of new housing each year, China 's use of energy for heating, cooling and lighting buildings has skyrocketed. However, according to Chinese government statistics, only 3.5 percent of urban homes include energy saving devices, and less that 10 percent of all new buildings are considered energy efficient. China 's Vice Minister of Construction added that China consumes 2-3 times more energy to heat its buildings than all other developed countries.

China 's central government recognizes the dangers of its country's over reliance on imported energy and considers the adoption of energy efficiency technologies urgent and vital to China 's continued economic growth and domestic security. In the 11th Five Year Projection of Economic and Social Development (2006-10) the central government enacted a number of policies to reduce total energy consumption per unit of domestic GDP by 20 percent over the next five years. The first year of the program was considered a failure when energy consumption fell only 1.23 percent in 2006, far less than the goal of 4 percent per year.

According to industry experts, the failure added a sense of urgency for the government to reduce energy consumption and the International Finance Corp, the World Bank's private investment arm, expects to provide over $600 million in funding in 2007 to help China reduce its energy consumption. In response to the initial ineffectiveness of the program, the central government is also strengthening the enforcement of existing programs and instituting specific programs to curb energy consumption. Since housing accounts for 28 percent of China 's total energy consumption, residential construction is central to the government's energy efficiency policies and programs. The central government predicts that if energy use continues at its current level, by 2020, energy consumption will increase three times faster than its current rate.

One regulation central to energy efficiency regulations is the Building Energy Efficiency Administration Regulation” (BEEAR). BEEAR mandates that all new buildings follow government energy efficiency standards in their design, construction, operation, and renovation. The regulation requires that all wall materials, insulation, doors, windows, lighting, and heating and air conditioning systems have an inspection certificate, product specification, and product label that certifies that the product meets local energy efficiency standards. Once installed, the products must be tested on site and the results sent to a local quality testing institute. Provincial and local governments have also adopted policies to require developers to adopt energy efficient technologies in their projects.

Opportunities for energy efficient building materials and construction technologies in China are some of the most promising for US companies. Over the next five years, one-quarter of China's existing buildings will be retrofitted to include energy saving technologies, products, and designs, creating opportunities for US suppliers of energy efficient lighting, heating ventilation and cooling equipment, insulation, energy efficient windows, heat reflective coatings, and a host of other energy saving devices and engineering and consulting services. This program alone is expected to reach minimum of $252 billion in investment.

The central government's push to promote energy efficiency is in the early stages, and a number of consumers are more interested in affordable housing than energy efficiency. Government officials however, have introduced an array of programs to raise public awareness and enforce regulations. In Beijing , the city government blacklists the 10 buildings with the lowest energy efficiency. Shenzhen's city government implemented a policy in November 2006 that imposed a complete ban on the construction of energy inefficient housing. The regulation also requires de elopers of all new housing under 12 stories to install solar water heating systems unless specifically exempted.

While China 's progress reducing energy consumption and enforcing new regulations has been slow, the government has a clear interest in improving China 's energy efficiency. According to conversations with developers, consumers, interested in reducing energy bills, are also demanding products that will lower energy bills and improve their home's comfort. US companies are recognized as world leaders in energy efficient technologies and suppliers of high quality building materials. Market opportunities for building materials that will improve housing performance, improve homeowner's comfort, and reduce natural resource consumption are destined to be a growth industry in China .

FOCAL POINT: China Edition, Evergreen Building Products Association