China Rolls Out Three-Year Retrofit Campaign for Nine High-energy Industrial Sectors to Lift Energy Efficiency

Per official releases from the National Development and Reform Commission dated 15 June, five central authorities including the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Ecology and Environment, State-owned Assets Supervision and Administration Commission and National Energy Administration have jointly issued a circular launching a three-year intensive campaign for energy-saving and carbon-cutting industrial retrofits. 

The policy framework targets nine core industrial segments starting in 2026, covering steel, electrolytic aluminium, cement, flat glass, oil refining, ethylene, synthetic ammonia, methanol and coal-fired power. All industrial operators within these sectors will carry out full-scale technical upgrades over the three-year window to maximise improvements in energy and carbon efficiency across the whole industrial landscape.

Officials from the National Development and Reform Commission note that these nine industries register massive energy consumption and carbon emission volumes, placing them at the centre of national work to boost energy utilisation efficiency, curb coal use and lower greenhouse gas output. Industrial association surveys confirm less than 30 per cent of production capacity in crude steel, electrolytic aluminium, cement clinker and flat glass lines currently meets top-tier energy efficiency benchmarks, while over 10 per cent of operational capacity in certain sectors fails to hit basic minimum efficiency thresholds, leaving extensive room for technological retrofits and emission reduction gains.

Quantified performance milestones are set for completion by the end of 2028. For the eight manufacturing-focused industries excluding coal power, the average share of production lines reaching official top energy efficiency benchmarks will rise by 20 percentage points. Coal-fired power plants will target a 15 percentage point uplift in benchmark-compliant capacity. Facilities operating below baseline efficiency standards will be phased out or fully upgraded. Collective implementation of the retrofit drive is projected to deliver energy savings equivalent to more than 100 million tonnes of standard coal and cut carbon dioxide emissions by over 200 million tonnes across the three years.

The circular breaks down sector-specific retrofit priorities into three core workstreams for industrial execution. Operators will roll out widespread deployment of cutting-edge energy-efficient and low-carbon machinery and technical equipment. Production lines and key processing units will undergo comprehensive renovation and performance upgrades. Enterprises will also reshape their overall energy consumption structure to adopt cleaner, low-carbon power and fuel supplies across daily manufacturing workflows.

A full suite of supporting policy mechanisms will underpin delivery of the retrofit targets, spanning capital grants, electricity price adjustments, incentive frameworks and national energy efficiency standards. Central government investment funding will be scaled up to back eligible upgrade projects, with direct subsidies covering 20 per cent of verified total project investment. Priority funding access will be granted to schemes that lift facility performance to the highest efficiency benchmarks after reconstruction.

Revised tiered electricity pricing rules form a core market-based regulatory lever under the new guidelines. Regional authorities may consolidate existing tiered, differential and punitive electricity charges into a unified differentiated pricing regime. The additional unit charge levied on low-efficiency industrial users may not exceed 0.1 yuan per kilowatt-hour on top of market transaction electricity prices, with all surcharge revenue channelled to offset grid system operational costs.

Green finance institutions across the country are aligning lending products with the three-year action roadmap, expanding tailored credit facilities for medium and large-scale industrial retrofit projects. Carbon trading mechanisms will also align with the campaign; verified emission reductions generated through factory upgrades can serve as carbon offset quotas for new high-energy industrial developments within each jurisdiction. Operators with carbon intensity readings better than baseline levels stand to secure stable returns from carbon allowance trading platforms.

Industry service bodies have begun rolling out free energy audits and technical diagnosis services for manufacturing plants to identify untapped efficiency gains. Equipment manufacturers are accelerating mass production of low-energy processing gear tailored to steel, chemical and building materials production lines to satisfy rising market demand for retrofit hardware over the coming three years.