Business Case for Energy Efficiency in Support of Climate Change Mitigation, Economic and Societal Benefits in China

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This study seeks to provide policymakers and other stakeholders with actionable information towards a road map for reducing energy consumption cost-effectively. We focus on individual end use equipment types (hereafter referred to as appliance groups) that might be the subject of policies — such as labels, energy performance standards, and incentives — to affect market transformation in the short term, and on high-efficiency technology options that are available today.

As the study title suggests, the high efficiency or Business Case scenario is constructed around a model of cost-effective efficiency improvement. Our analysis demonstrates that a significant reduction in energy consumption and emissions is achievable at net negative cost, that is, as a profitable investment for consumers. Net savings are calculated assuming no additional costs to energy consumption such as carbon taxes. Savings relative to the base case as calculated in this way is often referred to as "economic savings potential".

Chinese energy demand has grown dramatically over the last few decades. While heavy industry still plays a dominant role in greenhouse gas emissions, demand from residential and commercial buildings has also seen rapid growth in percentage terms. In the residential sector this growth is driven by internal migration from the countryside to cities. Meanwhile, income in both urban and rural subsectors allows ownership of major appliances. While residences are still relatively small by U.S. or European standards, nearly all households own a refrigerator, a television and an air conditioner. In the future, ownership rates are not expected to grow as much as in other developing countries, because they are already close to saturation. However, the gradual turnover of equipment in the world's largest consumer market provides a huge opportunity for greenhouse gas mitigation. In addition to residences, commercial floor space has expanded rapidly in recent years, and construction continues at a rapid pace. Growth in this sector means that commercial lighting and HV AC will play an increasingly important role in energy demand in China.

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