What do we expect from the Energy Act?

On January 5, 2024, the executive meeting of the State Council deliberated and passed the Energy Law of the People's Republic of China (Draft) and decided to submit it to the Standing Committee of the National People's Congress for deliberation.

Since January 24, 2006, the drafting group of the Energy Law, composed of 15 units, including the former National Energy Office and the National Development and Reform Commission, was formally established, and now it has "stepped out" of the State Council and submitted to the Standing Committee of the National People's Congress for deliberation. The Energy Law, as the basic law in the energy sector, has been attracting much attention.

Now, what role will the "Energy Law" play in the development of China's energy industry, and what is the special significance of the "Energy Law" in the context of carbon peak and carbon neutrality? Focusing on related issues, this reporter recently interviewed Chen Xinghua, associate professor of North China University of Technology and deputy secretary general of the Energy Law Research Society of the China Law Society; Zhang Xiaoping, associate professor of the Central University of Finance and Economics and deputy secretary general of the Energy Law Research Society of the China Law Society; and Su Miaohan, associate professor of Tongji University and director of the Energy Law Research Society of the China Law Society. They have been involved in the drafting of the Energy Law at various stages.

Provide targeted institutional design for energy development

China Environment News: On January 5, 2024, the executive meeting of the State Council decided to submit the Energy Law of the People's Republic of China (Draft) to the Standing Committee of the National People's Congress, what is the significance of the country's introduction of the Energy Law in the context of carbon peak and carbon neutrality?

Zhang Xiaoping:The Action Plan for Carbon Peaking Before 2030 issued by the State Council in October 2021 regards "improving laws, regulations and standards" as a "policy guarantee" to achieve the goal of peaking carbon emissions before 2030, and one of its specific contents is to "promote the formulation and revision of the Energy Law, the Energy Conservation Law, the Electricity Law, the Coal Law, the Renewable Energy Law, the Circular Economy Promotion Law, and the Cleaner Production Promotion Law". The promulgation of the Energy Law is an important part of building a legal system conducive to green and low-carbon development, and is of great significance for promoting the realization of the dual carbon goals on the track of the rule of law, implementing the new strategy of energy security, promoting high-quality energy development, and promoting green and low-carbon transformation.

Chen Xinghua:At present, the modern energy industry has entered a period of innovation and upgrading, showing the characteristics of diversified iteration of the energy system, intelligent upgrading of the energy industry, and multi-polar pattern of energy supply and demand, which requires further enhancing the security and stability of the energy supply chain, promoting the green and low-carbon transformation of energy production and consumption patterns, and improving the modernization level of the energy industry chain. The new situation faced by the energy sector requires an Energy Law to give a stable legal status to the direction of strategic objectives, and provide targeted institutional design for energy development, so as to bring effective legal support.

At the same time, the effectiveness of carbon emissions in the energy sector directly determines whether the dual carbon goals can be successfully achieved. The indirect emission reduction effect brought about by the energy transition and the direct emission reduction measures carried out in the energy sector require an "Energy Law" to play its comprehensive and coordinated function, linking the relevant legislation of the ecological environment, so as to achieve institutional synergies, the "Energy Law" has been drafted since 2006 for nearly 20 years, and now it has finally "stepped out" of the State Council and submitted to the Standing Committee of the National People's Congress for review, which can be said to have made substantial progress.

Su Miaohan:To achieve the policy goals of carbon peak and carbon neutrality, it is necessary to comprehensively use a variety of policy tools. The Interim Regulations on the Administration of Carbon Emission Trading, adopted at the 23rd executive meeting of the State Council on January 5, 2024, strengthen the control of greenhouse gas emissions by regulating carbon emission trading and related activities. However, as a policy tool, carbon emission trading also has its limitations, and can only be applied to specific types of greenhouse gases, industry scopes, and key emitting units.

Considering that the consumption of fossil fuels is an important source of greenhouse gas emissions, energy policies need to be coordinated with climate change policies. The relevant provisions of the Energy Law on improving energy efficiency, developing clean and low-carbon energy sources such as renewable energy, nuclear energy, and hydrogen energy, and promoting the adjustment of energy structure can be an important driving force for addressing climate change, covering both the energy industry and many other industries that consume energy, as well as key emitting enterprises and ordinary users.

Provide a comprehensive and comprehensive response to the emerging problems faced by the energy industry

China Environment News: In the past 20 years, there has been no "Energy Law", and China's energy industry has also made great achievements in development. So, does the development of the energy industry need an "Energy Law"?

Chen Xinghua:The development of the energy industry is inseparable from legislative support. However, we should also note that the long-term absence of the Energy Law, which has a basic and comprehensive status, has become an obvious defect in China's energy legal system, restricting the function of the energy legal structure itself. The development of the energy industry in the past two decades has relied more on the dividends released by the reform of the energy system. As the reform enters the deep waters, the interests of all parties are more complex, coupled with the more comprehensive problems brought about by the modern energy system and the new challenges posed by carbon peak and carbon neutrality, all of which urgently call for an Energy Law to provide a comprehensive and comprehensive response to the new problems facing the energy industry.

Zhang Xiaoping:This question involves an understanding of the relationship between the development of the energy sector and energy law. Comparative studies around the world have shown that a policy-oriented development model can emerge when the energy sector is a relatively centralized structure. If the energy industry is a fragmented structure, it needs to be supported by a legal system.

The development of China's energy industry has different degrees of industry concentration in different energy types or different energy sectors. For example, in sectors that were subject to market-oriented reforms earlier, such as coal, there was a Coal Law at an early stage, and in sectors where a centralized system is still maintained, such as oil, there is still no unified or specific Petroleum Law. From this point of view, the reason why an "Energy Law" is needed is at least based on two reasons: first, as the overall market-oriented reform of the energy industry has passed a certain critical point, the policy-led industry development model is unsustainable, and there is an urgent need for law to stabilize expectations, benefit the long-term, consolidate the fundamentals, coordinate various complex interests in energy development, and rationally allocate relevant rights and obligations; The overall problem and the coordination of the relationship between the various individual laws must be solved by a special basic law on energy.

Su Miaohan:China has become the world's largest energy producer and consumer. At present, the expression of national energy strategy and policy mainly exists in administrative regulations, the level of norms is not high, the "visibility" is not high for the main body of energy development and utilization, and the function of behavioral guidance is not sufficient.

While China's total energy consumption is increasing, energy dependence on foreign countries is also increasing. China is the world's second largest oil consumer and the third largest natural gas consumer, with a foreign dependence of more than 70% on crude oil and more than 40% on natural gas. Energy security is directly related to economic security and national security, so it is necessary to take precautions in the legal system and prevent energy supply interruptions through the design of energy reserves, forecasting and early warning, and emergency response.

China Environment News: What is the general review process of the Standing Committee of the National People's Congress, and how soon is the Energy Law expected to be formally promulgated?

Su Miaohan:According to the provisions of the Legislation Law, the legislative procedure is divided into two types: the legislative procedure of the National People's Congress and the legislative procedure of the Standing Committee of the National People's Congress. The former applies to the "basic laws", that is, criminal, civil, state organs, and other basic laws enacted and amended by the National People's Congress; the latter applies to the enactment and amendment of other laws, or to the partial supplementation and amendment of the "basic laws." The procedures to which energy law applies need to vary depending on its positioning. If it is a basic law, it is necessary to apply the legislative procedures of the NPC, and otherwise, the legislative procedures of the NPC Standing Committee shall apply. The procedure to which the Energy Law applies depends on its legal position. Personally, I believe that it is more likely to apply the legislative procedures of the NPC Standing Committee.

Zhang Xiaoping:In addition to the procedural provisions in the Legislation Law, it is also necessary to pay attention to one place: according to the Rules of Procedure of the Standing Committee of the National People's Congress, "the Standing Committee of the National People's Congress generally meets once every two months". In other words, the Standing Committee meets six times a year. Therefore, it is expected that the Energy Law will be formally enacted in a relatively short period of time, unless there are still huge issues that require further study and are not voted on for the time being.

Chen Xinghua:In the smoothest case, the Energy Law was passed by a vote of three times, ranging from six months to two years, judging from the cycle of the third review and approval of most draft laws. There are also special circumstances, such as the draft energy conservation law was deliberated at the fourth meeting of the Standing Committee and took two and a half years to vote and pass. At the same time, it should also be noted that, theoretically, there is also the possibility that the Energy Law may be terminated. In August 2023, the fifth meeting of the Standing Committee of the National People's Congress deliberated and adopted the report of the Constitution and Law Committee of the National People's Congress on terminating the review of the draft amendment to the Administrative Litigation Law. Historically, in April 1999, at the closing session of the Ninth Session of the Standing Committee of the Ninth National People's Congress, the draft decision on amending the Highway Law was not adopted because it did not receive a majority of votes in favor.

Legislative declarations on the development direction of energy transition and other developments

China Environment News: What impact will the upcoming Energy Law have on the ongoing revision of the Renewable Energy Law and the codification of the Ecological Environment Code?

Chen Xinghua:The Energy Law stipulates macro matters in the energy field, and the provisions are relatively principled, and there will be duplication with various special legislation if necessary, but there will be no conflict. If the amendments to the Renewable Energy Law, the Energy Conservation Law, the Electricity Law, the Coal Law and other laws can be completed before the promulgation of the Energy Law, then the Energy Law can be adjusted accordingly. If these legal changes are made after the introduction of the Energy Law, then they will also need to be adjusted accordingly.

The Standing Committee of the 14th National People's Congress (NPC) has included the compilation of the "Ecological and Environmental Code" in its legislative plan. At present, the Standing Committee of the National People's Congress is steadily and orderly actively studying and promoting the compilation of the "Ecological Environment Code". The Energy Law and the Eco-Environmental Code are very different from each other in terms of legislative objectives and adjustments, so the promulgation of the Energy Law does not have much impact on the compilation of the Eco-Environmental Code. However, if the Energy Law is successfully promulgated, any part of the Eco-Environmental Code that deals with energy will need to be adjusted according to the latest law.

Zhang Xiaoping:Theoretically, there is a clear distinction between energy law and environmental law from a functional point of view. However, in view of the huge impact of energy activities on the environment, in recent years, there has been a "greening" trend in the energy law, to which some provisions on cleaner production and clean consumption have been added. In particular, the "dual carbon" goal itself contains a strong connotation of environmental protection and response to climate change, so it is an inevitable choice to stipulate clean production and clean consumption of energy in the Energy Law. In the "Ecological Environment Code", which is being drafted, a special section on "green and low-carbon development" has been set up, which makes systematic provisions on cleaner production, green circulation and green consumption. The provisions of the Ecological Environment Code and the relevant provisions of the Energy Law shall be the relationship between general law and special law.

Su Miaohan:The Renewable Energy Law (Amendment) is submitted to the National People's Congress (NPC) and the State Council is the State Council. Because it was not drafted by the same entity, how the Energy Law (Draft) and the Renewable Energy Law (Amendment) are coordinated in terms of legal provisions may be variable due to the different agendas of the Standing Committee of the National People's Congress. If the amendment to the Renewable Energy Law is only a minor amendment (i.e., an "amendment") rather than a comprehensive amendment (i.e., an "amendment"), and the Energy Law may be difficult to be promulgated quickly, the Standing Committee of the National People's Congress may arrange for the revision of the Renewable Energy Law to be reviewed first, in which case the enactment of the Energy Law will have a relatively limited impact on the revision of the Renewable Energy Law.

The Energy Law is more likely to be completed in the current Standing Committee of the National People's Congress than the codification of the Ecological and Environmental Code. At present, there is a relatively mature draft of the Energy Law, while the Ecological and Environmental Code is still in the active research stage. Moreover, the compilation of the Eco-Environmental Code requires a systematic combing and integration of the existing eco-environmental legal system, and the workload of codification may be much greater than that of the formulation of the Energy Law.

China Environment News: After the promulgation of the Energy Law, which subjects will be affected?

Chen Xinghua:The Energy Law regulates a wide range of subjects, including relevant government departments, relevant enterprises and other market entities, as well as the general public. For example, for the relevant government departments, the Energy Law gives the government departments corresponding management (macro) and regulatory (micro) powers on the one hand, and on the other hand, it will also set corresponding responsibilities and obligations on the government departments. For relevant enterprises, the Energy Law has made a legislative declaration on the direction of energy development such as energy transition and the construction of a modern energy system, and has legislated and confirmed the principle of fair competition in the energy market and the protection of investment property rights, which will point out a stable target direction for the development of enterprises. At the same time, the Energy Law will also set up mandatory provisions for relevant enterprises, and different enterprises need to bear their own legal obligations in accordance with the law, such as some enterprises need to bear the obligation of universal service, and some enterprises need to bear the obligation of energy storage.

Zhang Xiaoping:As the basic law on energy, the Energy Law contains a large number of highly generalized general provisions, covering all aspects of the energy sector and affecting all participants in the energy industry, including government departments, energy companies, and the public as consumers and supervisors. At the same time, the general provisions of the Energy Law often need to be concretized through administrative regulations, departmental rules and normative documents. Therefore, the impact of the Energy Law on the rights and obligations of the subject is indirect.

Su Miaohan:The introduction of the energy law will affect every individual and organization. First of all, all walks of life in the national economy are involved in the development and utilization of energy, and all kinds of enterprises in the energy industry will be adjusted by the "Energy Law" in terms of market access and market competition. Secondly, energy is an important material basis for the survival and development of every individual. The State shall improve the universal energy service mechanism to ensure that citizens have access to basic energy supply and services。 Finally, the supervision and management of energy development and utilization activities also need to be carried out in accordance with the law. From the formulation of national energy strategies, policies and plans, to access permits, price setting, market supervision, and related supervision and enforcement measures, the Energy Law outlines a complete institutional framework.