China Targets Nine Industrial Sectors in Green Energy Efficiency Push
China has launched an ambitious three-year campaign to overhaul energy efficiency across nine of its most energy-intensive industrial sectors, aiming to eliminate substandard capacity and achieve cumulative energy savings of over 100 million tons of standard coal by the end of 2028. The initiative, spearheaded by the National Development and Reform Commission (NDRC) and four other central government departments, targets a reduction of more than 200 million tons of carbon dioxide emissions.
A Sweeping Industrial Transformation
The NDRC, jointly with the Ministry of Industry and Information Technology, Ministry of Ecology and Environment, State-owned Assets Supervision and Administration Commission, and the National Energy Administration, issued the “Notice on Carrying Out the Three-Year Action Plan for Energy Saving and Carbon Reduction Transformation in Key Industries” (Document No. 698) on May 18, 2026. The plan focuses on steel, electrolytic aluminum, cement, flat glass, oil refining, ethylene, synthetic ammonia, methanol, and coal power.
According to the NDRC official Q&A, the action plan builds on directives from the Central Economic Work Conference and the 15th Five-Year Plan, which incorporated energy-saving and carbon-reduction in key industries into 109 major projects. “The Notice is based on the key industries’ energy-saving and carbon-reduction transformation, using three years to promote enterprises to complete all necessary transformations,” an NDRC spokesperson said.
Ambitious Targets by 2028
The plan sets clear quantitative benchmarks. For industrial sectors, the proportion of capacity meeting current energy efficiency benchmark levels must increase by an average of 20 percentage points. The coal power sector is expected to improve by 15 percentage points. Critically, all capacity operating below baseline energy efficiency levels must be essentially eliminated.
These nine industries represent a significant portion of China’s energy footprint. According to research cited in the plan, less than 30% of capacity in crude steel, electrolytic aluminum, cement clinker, and flat glass currently meets benchmark efficiency levels, while some sectors still have over 10% of capacity below baseline levels.
Expert Perspectives on the Challenge
Yan Yongzhe (闫勇哲), Deputy Director of the National Energy Conservation Center, told People’s Daily that these nine industries have high energy consumption and emissions with great potential for improvement. “Making them the focus of the three-year campaign, while clarifying that from 2028 the scope can be expanded based on actual conditions, ensures both the focus and penetration of the current campaign,” he said.
Xiao Bangguo (肖邦国), President of the Metallurgical Industry Planning and Research Institute, emphasized the competitive implications. “Implementing the three-year action plan will force the elimination of capacity below baseline levels and significantly increase the proportion of capacity reaching benchmark levels,” he said. “This is conducive to further enhancing the overall competitiveness of the industry.”
Technical Pathways and Innovation
Each sector has a tailored set of technical pathways. The steel industry will focus on high-proportion pellet smelting, hydrogen metallurgy, and waste heat recovery. Electrolytic aluminum producers will adopt new steady-flow insulation cells and graphitized cathodes. The cement sector will deploy six-stage preheaters and kiln oxygen-enriched combustion, while coal power plants will implement flow-through retrofits and high-efficiency combustion to reduce coal consumption by 5 grams of standard coal per kilowatt-hour.
A notable case study is the PetroChina Dushanzi Petrochemical Tarim ethylene project, which uses China’s first low-concentration CO₂ capture and chemical utilization technology. The project has built an integrated “carbon capture + chemical utilization + oilfield oil displacement” solution, reducing ethylene plant carbon intensity by 42% and cutting 1.37 million tons of CO₂ annually.
Policy Support and Market Mechanisms
The plan deploys a comprehensive suite of policy tools to incentivize compliance. The central government will cover 20% of total investment for eligible projects, with priority given to those reaching benchmark efficiency levels. A unified differential electricity pricing policy will impose surcharges of up to 0.1 yuan per kilowatt-hour on inefficient producers.
Carbon market mechanisms also play a key role. CO₂ reductions from retrofits can be used as carbon replacement for new “two high” (high energy, high emission) industrial projects, while a combined free-and-paid carbon quota allocation system rewards efficient enterprises.
Li Yongliang (李永亮), Director of the Science and Technology and Equipment Department of the China Petroleum and Chemical Industry Federation, noted in People’s Daily that new technologies have been rapidly applied in recent years, “promoting the industry’s transformation from scale expansion to quality and efficiency improvement.”
Broader Implications
The action plan represents a significant step in China’s dual carbon goals of peaking emissions before 2030 and achieving carbon neutrality by 2060. Beyond environmental benefits, the initiative is framed as an economic opportunity—stimulating investment in industrial upgrading and creating demand for skilled labor in energy efficiency technologies.
Ling Yiqun (凌逸群), Vice President of the China Petroleum and Chemical Industry Federation, described the plan as “not only a concrete measure to implement the carbon peak and carbon neutrality goals, but also an important starting point to effectively manage high-energy-consuming and high-emission projects.”
What to Watch
Implementation will be closely watched for its impact on global commodity markets, particularly steel, aluminum, and cement. The plan’s success depends on coordination across five central departments and local governments, as well as the willingness of enterprises to finance the remaining 80% of investment costs. From 2028, the scope may expand to additional industries, potentially broadening the transformation across China’s entire industrial landscape.
Reporting based on official documents from the Chinese government, NDRC policy interpretations, Xinhua News Agency, People’s Daily, and Yicai (First Financial).