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Energy Investment

The long-standing government policy on energy gives equal role to both development of energy supply and to efficiency, and places greater emphasis on efficiency. However, in 2002, investment in energy supply was 18 times greater than investment in efficiency.

Energy Efficiency Investment has Declined as a Proportion of Total Energy Investment

Illustration of annual investment in energy efficiency in China as percent of total investment in the energy sector, from a high of about 13% in 1983 to about 4.5% in 2003.

This disparity is seen as the continuation of a trend that became particularly pronounced after 1996. As a percent of energy supply investment, energy efficiency investment fell from a high of 13% in 1982 to a low of about 3% in 1996, with only a slight rebound since then.

So how much investment is needed to make a difference? We calculate that about 25 billion a year invested in energy efficiency would turn the current trend around, assuming a long-term growth rate of 7% and a target of shaving energy demand growth to 3.5%. Of course, these are just rough calculations, but the key comparison to make is with current spending, which is only about $3 billion per year.