China’s first comprehensive energy law, ‘Energy Law of the People’s Republic of China (中华人民共和国能源法), entered into force on 1 January 2025 (“Energy Law”). This marks a pivotal reform in the national energy governance by establishing an overarching legal framework for China’s energy sector with a view to bolster energy security and drive a green transition.
Overview of China’s New Energy Law (2025)
- Consolidation of Energy Legislation (Articles 1, 3 & 15)
The Energy Law consolidates a previously fragmented legal framework governing the energy sector, which included the Electric Power Law 1995, Coal Law 1996, Energy Conservation Law 1997 and Renewable Energy Law 2005. These laws were administered by various authorities across the local to provincial levels, resulting in regulatory inconsistencies and gaps. The Energy Law aims to unify the energy sector under guiding principles that promote green development, energy security, and national coordination.1
- Shift from Energy Consumption to Carbon Emission Control (Articles 1, 5, 34 & 35)
The Energy Law marks a shift in China’s energy policy – from managing energy consumption to directly addressing carbon emissions.2 This transition aligns with China’s dual carbon goals of peaking emissions before 2030 and achieving carbon neutrality by 2060.3 These goals are now embedded in the law’s overarching purpose of supporting green development and carbon reduction.4
- Emphasis on Market-Based Mechanisms (Article 6, 42, 44, 45)
The Energy Law establishes a unified and competitive national energy market, guided by principles of openness, equal participation, and legal supervision.5 It promotes the development of trading platforms for electricity, coal, oil, and gas to facilitate more dynamic market transactions.6 Enterprises are encouraged to enter long-term contracts to stabilise risk and improve coordination across the supply chain.7 Pricing of energy products is set to become increasingly market-driven based on the factors, such as cost, supply and demand, and sustainability.8
- Grid Stability and the Continuing Role of Fossil Fuels (Articles 28, 30, 31, 32)
While promoting renewable energy, the Energy Law affirms the ongoing role of coal in ensuring system stability, emphasising “clean and efficient” use.9 It supports flexible coal-fired power generation to help maintain secure electricity supply during the energy transition.10 The Energy Law also mandates investment in smart grids infrastructure and coordination between power generation and transmission systems to support higher volumes of renewable power.11 In addition, it promotes the development of new energy storage technologies and pumped-hydro facilities to improve grid responsiveness.12
- International Cooperation and Trade (Articles 10, 46, 77 & 78)
The Energy Law promotes international energy cooperation based on equality, mutual benefit, and shared development goals.13 It encourages foreign investment and cross-border trade while requiring mechanisms to manage risks in international energy markets.14 China also reaffirms its commitment to international treaty obligations, except in cases where reservations have been declared.15
- Export and Trade Provisions (Articles 46, 77, 78 & 79)
The Energy Law supports international investment and prohibits discriminatory practices in energy trade.16 It confirms, where applicable, international treaty obligations take precedence – unless China has made formal reservations.17 In cases where foreign countries implement discriminatory or restrictive measures against China’s energy industry, the Energy Law authorises the use of reciprocal countermeasures.18 It also provides a legal basis for action against foreign individuals or organisations that endanger China’s national energy security.19
Implications for Global and Australian Renewable Supply Chains
The Energy Law is poised to have a significant impact on global renewable energy supply chains. The Energy Law sets legally binding targets for renewable energy use, requiring greater deployment of clean energy technologies. This deployment and standardisation of green technologies is expected to drive up demand for raw materials, such as lithium, copper, and rare earths.20 At the same time, China’s move towards market-based pricing and trading may lead to greater price volatility in global commodities markets.21 Developers and suppliers should prepare for possible delays or cost changes, especially if China expands its strategic reserves, which may disrupt global supply and availability during the periods of instability.22
For Australia, the Energy Law presents both opportunities and challenges. Exports of critical mineral may benefit from stronger Chinese demand, but they may also face risks from price volatility or shifts in China’s purchasing patterns.23
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
1 中华人民共和国能源法 [Energy Law of the People’s Republic of China] (People’s Republic of China) National People’s Congress Standing Committee, 8 November 2024, art 1.
2 Ibid art 5.
3 Hongqiao Liu et al., The Carbon Brief Profile: China (Web Page) https://interactive.carbonbrief.org/the-carbon-brief-profile-china/index.html.
4 中华人民共和国能源法 [Energy Law of the People’s Republic of China] (People’s Republic of China) National People’s Congress Standing Committee, 8 November 2024, art 1.
5 Ibid art 6.
6 Ibid art 42.
7 Ibid art 44.
8 Ibid art 45.
9 Ibid art 28.
10 Ibid art 30.
11 Ibid art 31.
12 Ibid art 32.
13 Ibid art 10.
14 Ibid art 46.
15 Ibid art 47.
16 Ibid art 46.
17 Ibid art 77.
18 Ibid art 78.
19 Ibid art 79.
20 International Renewable Energy Agency, Geopolitics of the Energy Transition: Critical Minerals (Web Page) https://www.irena.org/Digital-Report/Geopolitics-of-the-Energy-Transition-Critical-Materials#:~:text=LFP%20=%20lithium%20iron%20phosphate;%20LMO,sodium%20(IRENA%2C%20forthcoming).
21 International Energy Agency, Solar PV Global Supply Chains (Web Page) https://www.iea.org/reports/solar-pv-global-supply-chains/executive-summary.
22 Huan Zhang, China’s Strategic Petroleum Reserve Expansion Amid Global Oil Market Volatility (Web Page) https://www.ctol.digital/news/china-boosts-strategic-petroleum-reserve-record-oil-purchase/.
23 Reserve Bank of Australia, Behind the Great Wall: China’s Post-pandemic Policy Priorities (Web Page) https://www.rba.gov.au/publications/bulletin/2025/jan/behind-the-great-wall-chinas-post-pandemic-policy-priorities.html#:~:text=This%20will%20affect%20Australia%20primarily%20via%20China’s,exports%20and%20therefore%20our%20terms%20of%20trade.&text=Chinese%20demand%20for%20Australia’s%20iron%20ore%20has,exports%20to%20the%20rest%20of%20the%20world..
