Bernstein: How the "15th Five-Year Plan" Will Impact China's Energy Industry | Industry Report

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Safety and Green Competition: Setting the New Agenda for the 14th Five-Year Plan

As China approaches the critical window for the 2030 carbon peak target during the 14th Five-Year Plan (2026-2030), the logic of its energy policy is undergoing profound reshaping.

Against the macro backdrop of surging electricity demand driven by artificial intelligence and global energy market fluctuations, Bernstein has published “Bernstein Energy: China’s 14th Five-Year Plan and Its Impact on the Energy Sector,” exploring how China seeks strategic balance between high-level safety assurance and deep decarbonization.

Below are the core conclusions of the report:

1. Steady Expansion of Total Energy Consumption

By 2030, China’s primary energy demand is expected to reach 6.95 billion tons of standard coal. Although the average annual growth rate is projected at 2.6%, emerging demands such as AI may push actual growth beyond expectations.

2. Energy Security Elevated to a Strategic Priority

China aims to increase domestic energy comprehensive production capacity to 580 million tons of standard coal and strengthen reserves, building a solid self-supply defense line against external risks.

3. Green Transition Accelerated

The plan sets a firm target for non-fossil energy to account for 25% of primary energy consumption by 2030, and promotes large-scale cluster development of wind, solar, hydro, and nuclear through the “Non-Fossil Energy Doubling Action.”

4. Rise of New Power System Infrastructure

Energy storage and smart grids are elevated as system pillars, with plans to add 100 GW of pumped storage and increase inter-regional “West-to-East” power transmission capacity to over 420 GW.

5. Structural Reshaping of Energy Roles

Coal shifts strategically toward flexible regulation resources; natural gas plays a bridging role; while nuclear and hydrogen become leading technologies in strategic emerging industries.

01

Reshaping the Energy Landscape through Balance of Total Growth and Intensity Reduction

During the 14th Five-Year Plan (2026-2030), a key window for reaching the 2030 carbon peak, China’s energy policy centers on balancing economic growth with deep transformation of the energy system.

The report notes that energy security has been elevated to a core national strategic pillar, while decarbonization remains vigorous.

Total Energy Consumption: Moderate Growth with Unexpected Potential

By 2030, China’s total primary energy demand is projected to reach about 6.95 billion tons of standard coal (TCE), a 14% increase over the 2025 baseline, with a compound annual growth rate (CAGR) of approximately 2.6%.

While this growth is relatively moderate, considering that during the 14th Five-Year Plan period energy consumption actually grew by 22% (far exceeding the initial 14% target), and factoring in explosive growth in electricity demand from AI, actual energy consumption may surpass current official forecasts.

Energy Intensity Control: More Practical Constraints

The plan sets a binding target to reduce energy consumption per unit of GDP by 10% by 2030 compared to 2025. Compared to the 13.5% reduction goal during the 14th Five-Year Plan, this slowdown aligns more closely with the 9% actual reduction achieved during that period.

This reflects a pragmatic policy balance between industrial upgrading and maintaining economic efficiency, guiding China toward a more efficient, technology-driven economic transformation through a dual control system of energy intensity and consumption.

Growth Drivers and Policy Guidance

With an expected average GDP growth of 4.8% annually, China is ensuring structural declines in energy intensity through digitalized grids, upgrading high-value industries, and demand-side management.

The policy shift indicates that over the next five years, focus will not only be on total volume limits but also on qualitative improvements in energy utilization, supporting the nation’s solemn commitment to peak carbon emissions before 2030.

02

Defending Energy Sovereignty through Self-Supply and “Production-Storage-Consumption” Systems

In the face of complex international environments, energy security has been elevated to a core national strategic pillar. China will strengthen domestic resource development and improve reserves to build a resilient energy security line.

To match sustained growth in energy consumption and reduce dependence on imports, the plan explicitly sets hard targets for domestic energy production capacity.

By 2030, domestic energy capacity is to be significantly increased from 2025’s 510 million tons of standard coal (TCE) to 580 million TCE, a 13% rise. This aims to ensure that most energy supply growth is covered by domestic capacity, solidifying national energy independence.

In fossil fuels, the plan continues to emphasize the “ballast stone” role.

Oil production is targeted to remain stable around 200 million tons annually, ensuring basic oil security. Natural gas, as a key bridge to cleaner energy, will see increased output mainly from resource-rich basins like Ordos, Xinjiang, and Sichuan.

By intensifying development in these key energy bases, China aims to build a multi-point domestic supply pattern.

Security is not only about “production” but also “storage” and “supply.”

The plan calls for further improvement of the energy “production-supply-storage-sales” system, especially accelerating strategic reserves. This includes expanding large-scale crude and refined oil reserves and enhancing peak-shaving natural gas storage.

A systematic layout aims to enhance the resilience and recovery capacity of the energy system under extreme external shocks, ensuring continuous and safe economic operation.

03

Targeting 25% Non-Fossil Energy Share, Accelerating Decarbonization

As China approaches the decisive stage of 2030 carbon peak, the 14th Five-Year Plan sets a clear and ambitious roadmap for green transformation. The report emphasizes that China will deepen low-carbon energy restructuring to meet climate commitments on schedule.

The plan explicitly states that by 2030, non-fossil energy will account for 25% of primary energy consumption. This goal is not only to fulfill international climate commitments but also a key milestone in shifting energy structure from “coal-dominant” to “multi-energy complementarity.”

Simultaneously, carbon intensity will be further reduced by 17% from 2025 levels through institutionalized carbon constraints, pushing industries to upgrade.

To support the 25% share, the plan launches the “Non-Fossil Energy Doubling Action.”

In spatial deployment, China will continue advancing large-scale wind and solar bases mainly in the “Three North” regions, and coordinate the integrated development of hydropower, wind, and solar in the southwest.

Offshore wind power will expand from near-shore to deep-sea areas. This large-scale layout aims to leverage the marginal cost advantages of renewables to substantially replace fossil energy stock with green incremental supply.

Nuclear power, as a zero-carbon base load source, will see its strategic position further elevated during the 14th Five-Year period.

The plan projects that by 2030, China’s nuclear capacity will reach 110 GW, with a focus on coastal nuclear bases. Besides traditional second- and third-generation pressurized water reactors, commercialization of fourth-generation reactor technology will be prioritized as a technological high ground.

Accelerated nuclear development will provide necessary inertia support for the grid and balance the variability of renewable energy.

04

Rise of Energy Storage and Smart Grids: Building the Heart of a New Energy System

Power grids and energy storage are no longer just auxiliary facilities but are elevated to the “foundation pillars” of the new energy system. With the rapid increase in the share of non-fossil energy, infrastructure upgrades are critical to solving power absorption and system stability.

The plan explicitly emphasizes energy storage as a core infrastructure for China’s energy transition. Major renewable energy bases—especially in deserts, Gobi, and southwest water-wind-solar clusters—must be equipped with storage facilities.

Pumped storage is highly anticipated, with a target to expand capacity by an additional 100 GW beyond existing levels. This large-scale deployment aims to enhance grid flexibility and reduce curtailment.

To address the geographic mismatch between energy production and consumption, the plan continues to increase investment in UHV (Ultra High Voltage) transmission and smart grids.

By 2030, China’s “West-to-East” power transmission capacity will be raised from 340 GW in 2025 to over 420 GW. This not only physically expands transmission capacity but also enables efficient cross-regional clean energy allocation through digital dispatch platforms, ensuring that green power from the west reaches eastern load centers precisely.

Hardware upgrades complemented by software optimization will establish a unified national electricity spot market, improving auxiliary service rules through market-based pricing.

Meanwhile, AI control and big data technologies will digitize urban and rural distribution networks, building the “soul” of smart energy to support seamless integration of massive renewable energy sources.

05

From Fossil Fuel Backstop to Multi-Point Growth in Strategic Emerging Industries

The 14th Five-Year Plan emphasizes not only green “increment” but also the structural reshaping of traditional energy stocks and proactive deployment of strategic emerging industries, aiming to build a modern energy system with multi-energy complementarity and risk hedging.

During this period, the role of coal will fundamentally shift. The report states that coal will transition from a primary provider of base load to a clean, efficient, and flexible regulation resource.

The core of this shift involves retrofitting existing coal units for flexibility, transforming them into “regulators” and “back-up power” capable of supporting large-scale wind and solar integration, ensuring system safety while gradually reducing fossil fuel consumption.

The plan adopts differentiated strategies for fossil fuel development. Oil production is set around 200 million tons annually at a breakeven point to ensure basic energy security.

In contrast, natural gas is explicitly positioned as a key “bridge fuel” for transitioning to a zero-carbon system. By increasing output in basins like Sichuan and Ordos, China aims to leverage gas-fired power’s quick response and low carbon emissions to balance renewable variability.

Nuclear and hydrogen are the most promising strategic sectors during the 14th Five-Year period. The plan reaffirms nuclear’s role as a backbone for base load power, targeting 110 GW of capacity by 2030.

Meanwhile, hydrogen, as a strategic emerging industry, will focus on green hydrogen production and decarbonization applications in heavy industry and transportation. This forward-looking technological layout aims to position China as a leader in next-generation energy standards.