According to a research report, the National Development and Reform Commission and other departments have issued a notice regarding a three-year action plan for energy conservation and carbon reduction upgrades in key industries. This notice clarifies the targets and implementation pathways for these upgrades, which is expected to accelerate the achievement of the "dual-carbon" strategic goals. Simultaneously, a differentiated electricity pricing mechanism will help provide more stable financial support for mechanisms such as coal power capacity fees and new energy contract-for-difference schemes, thereby rationalizing the cost-sharing mechanism within the context of the energy structure transition. Investment opportunities are seen for high-quality coal power enterprises and clean energy operators against the backdrop of an optimized industry supply structure.
Event: Recently, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and other departments jointly issued the "Notice on Carrying Out the Three-Year Action for Energy Conservation and Carbon Reduction Upgrades in Key Industries." The notice proposes that starting from 2026, a comprehensive three-year energy conservation and carbon reduction upgrade will be implemented focusing on nine industries, including steel and electrolytic aluminum. From 2028 onwards, the scope will be further expanded based on practical conditions to include other industries in a staggered manner.
The main viewpoints are as follows:
Setting Clear Overall Targets and Key Industry Tasks to Advance Coal Power Energy Conservation and Carbon Reduction Upgrades
Regarding energy conservation and carbon reduction upgrades for key industries, the notice specifies that by the end of 2028, the proportion of production capacity in key industrial sectors such as steel and electrolytic aluminum that meets the current energy efficiency benchmark level should increase by an average of 20 percentage points, with the coal power industry aiming for an increase of 15 percentage points. For the coal power industry, it will promote energy conservation and carbon reduction upgrades for existing coal-fired power units above 300,000 kilowatts. Post-upgrade, the coal consumption for power supply per unit is targeted to decrease by more than 5 grams of standard coal per kilowatt-hour. It also pushes for comprehensive retrofits to enhance the flexible regulation capability of coal power and encourages the integrated development of coal power and new energy.
The notice defines quantitative targets and implementation pathways for coal power energy conservation and carbon reduction upgrades. It is anticipated that the continuous decline in coal consumption per unit of electricity generated by existing coal-fired units will likely drive an accelerated peak in China's total coal power generation. Concurrently, the enhancement of flexible regulation capabilities in coal-fired units will further improve the operational stability of the power system and expand the accommodation space for new energy.
Refining Price Guidance and Adjustment Mechanisms to Facilitate Reasonable Allocation of System Operation Costs
The notice proposes improving safeguard measures such as price guidance and adjustment mechanisms. Regions may consolidate existing differential electricity pricing, tiered pricing, and punitive pricing policies into a unified differentiated electricity pricing mechanism. An additional charge of no more than 0.1 yuan per kilowatt-hour can be added on top of the market trading electricity price, with the revenue from this surcharge used to offset system operation costs.
Current power system operation costs primarily include coal power capacity fees and new energy contract-for-difference settlement costs, which are used to share the specialized costs of ensuring the safe and stable operation of the power system. The differentiated electricity pricing policy requires high-emission entities to bear a greater share of the energy costs arising from the energy structure transition. This helps enhance the power system's ability to allocate these operational costs and promotes increased enthusiasm for carbon reduction on the user side.
Accelerated Implementation of Dual-Carbon Goals to Benefit High-Quality Coal Power and Clean Energy Operators
In September 2020, the "dual-carbon" strategic goal was formally proposed. In March 2026, the government work report set an annual binding target of reducing carbon emission intensity by 3.8%, marking a gradual entry into a phase of total emission control for carbon reduction efforts. The current notice further specifies quantitative indicators for energy conservation and carbon reduction upgrades in key industries, driving the in-depth implementation of the "dual-carbon" strategy.
With the phasing out of outdated capacity, the continuous advancement of coal power energy-saving upgrades, and the increase in the proportion of green electricity consumption, China's energy structure transition process is expected to accelerate. Against the backdrop of an optimized industry supply structure, high-quality thermal power operators with advantages in unit scale and leading coal consumption levels, as well as clean energy operators endowed with prominent resource advantages, are poised to benefit sustainably.
Risk factors include: Policy implementation progress falling short of expectations; electricity demand falling short of expectations; new energy installation capacity falling short of expectations; a significant decline in market-based electricity prices; and power market reform progress lagging behind expectations.
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