China’s Remarkable Success in Developing ESCOs: Current Status, Policy Drivers, and Prospects

Xianli Zhu

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China accounts for around 59% of the global ESCO market. The history of the Chinese ESCO market goes back to 1998, over a decade after the appearance of ESCOs in the US and other parts of the developed world. The rapid increases in
the number of ESCOs in the market and their growth in market revenue make China a remarkable success story in using ESCO business models as an important instrument for improvements to energy efficiency in industry, commercial and public buildings, and public facilities. This article examines the status of the ESCO market in China, the policies that drive it and their evolution. China has set itself the ambitious target of peaking its energy consumption and GHG emissions by 2030 and achieving carbon neutrality by 2060. The national strategy to develop a green and circular economy promises enormous potential for the further development of ESCOs as effective market mechanisms inimplementing energy efficiency projects. The article also offers an assessment of the remaining barriers to ESCO development in China and makes some recommendations for how to address them. China’s approaches to developing an ESCO market and experiences with it can provide useful advice and examples to many other countries in their efforts for develop ESCO markets and devise the associated policies.
Original languageEnglish
Title of host publicationIncorporating Energy Service Companies in Nationally Determined Contributions - The potential of ESCOs for meeting the climate goals in the Paris Agreement.
Publication date2020
Article number10
ISBN (Print)978-87-93458-93-2
Publication statusPublished - 2020


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