Energy Subsidies in China

This report presents the first detailed estimate of subsidies to coal production in China, identifying an estimated USD 5.8 billion in in government support in 2013.

This study reviews deployment subsidies for onshore wind in two countries, Germany and China. Its primary goal is to better inform debates about cost-effectiveness by exploring the methods required to assess cost-effectiveness and by estimating the general magnitude and range of benefits in several key areas.

When it comes to phasing out subsidies to the production of polluting oil, gas and coal—something G-20 leaders have committed to every year since 2009—we’re seeing little progress. In fact, as fossil fuel prices have fallen, some countries have even increased subsidies in response.

The cost to society of coal use includes the financial cost of providing subsidies to the coal industry in addition to the cost of externalities. This report explores the cost of coal in terms of subsidies and externalities and discusses the extent to which coal subsidies act as a barrier to the development of renewable energy. It finds that China is supporting the coal industry through the provision of billions of dollars’ worth of subsidies to consumers and producers. In addition to the financial cost, these subsidies increase the consumption of coal, producing externalities including air pollution and greenhouse gas emissions.

Beijing—September 16—The first estimate of subsidies to coal producers in China, totaling CNY35.7 billion (US$5.6 billion) in 2013, has been revealed by the Global Subsidies Initiative (GSI) at the Coal and Renewable Energy event held in Beijing on 16 September 2015.

Jointly prepared by IISD, OCI and ODI, this country study and accompanying data sheet compiles publicly available information on fossil fuel production subsidies in China in 2013 and 2014. It is a background paper to the report Empty promises: G20 subsidies to oil, gas and coal production and provides a baseline to track progress on the phase-out of such subsidies as part of a wider global energy transition.

Because electricity is an essential commodity for everyday life, the Chinese government mostly regulates its retail price. This paper reviews and evaluates the TEP reform, examining the impacts on equity, efficiency and subsidy expenditure. It also looks at how problems associated with the reform were addressed, and the form and mode of communication with stakeholders.

This report from the Global Subsidies Initiative of IISD was launched in conjunction with the Asia Europe Foundation, at a conference exploring the financing of future Sustainable Development Goals (September 29–30, 2014).