Three key policy areas in urgent need of improvement for advancing China's energy transition

Abstract

Over the past two decades, the industry policy framework centered on the Renewable Energy Law has effectively facilitated the leapfrog development of China's new energy sector. During this period, policy incentives were primarily focused on promoting the rational scaling of the industry, thereby driving rapid technological upgrades and iterations. This, in turn, enabled a significant reduction in the cost of new energy power generation. In this process, policy played a pivotal role in two key areas: first, by providing per-kilowatt-hour subsidies to bridge the cost gap between new energy and conventional power sources; and second, by exempting the system cost of new energy grid-connected operation through a full guaranteed purchase system.