Renewable Energy Law country's green transition spur

This year marks the 20th anniversary of China's Renewable Energy Law coming into force. What began as a policy experiment — tilted deliberately in favor of rapid deployment over efficiency — has evolved into one of the most consequential legislative frameworks in the global energy transition. As countries across the Global South seek to build sustainable energy systems, the evolution of China's landmark law offers replicable lessons in achieving high-quality development.

The REL serves as a statutory foundation for green growth. Twenty years ago, China's energy system was overwhelmingly dependent on coal. The REL was transformative because it shifted the basis for renewable energy from early-stage investments to providing a strict statutory mandate. Article 4 of the law, for the first time, explicitly listed renewable energy as a priority area for national energy development. This legal milestone marked the definitive beginning of China's structural shift away from coal reliance, sending a clear signal to markets that clean energy was a permanent national priority.

Crucially, Article 14 introduced the "full purchase requirement", mandating that grid companies buy all the electricity generated from renewable sources. For a nascent industry, this eliminated the risk of curtailed power and created the stable, legally certain market expectations necessary for explosive industry growth.

The evolving mechanisms of the law provide a blueprint for emerging markets. A key takeaway for developing nations is that legislation must be dynamic. By systematically moving from fixed tariffs aimed at building initial capacity to auctions seeking to increase competition and finally to grid parity to achieve market self-sufficiency, the law successfully guided a heavily subsidized sector into becoming a globally competitive, independent powerhouse.

The law's 2009 amendment established a centralized renewable energy development fund. This legally protected fixed feed-in tariffs and provided the ultimate "safety net" that made early, expensive green projects bankable for investors.

As manufacturing scaled and technology matured, maintaining high fixed subsidies became financially unsustainable for the national fund. Consequently, the mechanism evolved into competitive bidding, forcing supply chains to innovate and slash costs rapidly to secure projects.

The ultimate objective of any renewable energy policy is "grid parity" — the pivotal moment when the cost of generating renewable electricity equals or falls below the cost of traditional fossil fuels, eliminating the need for subsidies. By 2021, China's aggressive scaling and auction mechanisms successfully drove costs down enough to achieve grid parity for new utility-scale solar and onshore wind projects. Today, these new installations compete purely on market fundamentals, receiving the same benchmark electricity price as local coal-fired power plants.

Beyond macro-grids, the law also recognized the diverse geographic realities of a vast nation. By explicitly encouraging standalone, off-grid renewable power systems in remote areas, the REL provided a blueprint for rural electrification. Today, these decentralized solar and wind models are meeting the needs of developing nations, connecting seamlessly with China's practical capacity-building projects under the Belt and Road Initiative.

As China prepares to revise the law once again in 2026, the challenge is no longer how to scale renewables, but how to optimize a system where they dominate. Managing the systemic risks of high renewable penetration requires robust legal incentives for energy storage, demand-side response and flexible electricity pricing. It also calls for clearly defining coal's future role — not as a base-load cornerstone, but as a flexible, transitional resource that will gradually be phased down.

To ensure that green funds are directed toward truly sustainable life cycles, the law must supplement circular economy provisions, specifically regulating the recycling and repurposing of retired solar panels and wind turbine blades.

Finally, true green development requires that rapid renewable deployment not come at the expense of local ecosystems. Statutory requirements must ensure that project planning strictly evaluates harmful biodiversity impacts, such as the disruption of migratory bird routes and underwater habitats.

In 2025, clean energy sectors drove more than a third of China's total GDP growth. By decoupling economic growth from fossil fuel reliance, China has significantly mitigated its exposure to global energy price volatility — a powerful lesson in energy security for other nations navigating unpredictable global markets. In 2025 alone, China deployed an estimated 434 gigawatts of solar and wind power capacity — more than the rest of the world combined.

Driven by relentless improvements in manufacturing efficiency, the global cost per kilowatt of solar panels has plummeted by more than 90 percent in the past decade. Without China's legislative innovation and clean energy breakthroughs, the global energy transition would undoubtedly be more expensive, less efficient and take much longer.

China's REL demonstrates how the legal system can provide the enabling conditions not just for a technological transformation, but also an institutional one. China's 20-year legal journey provides inspiration and a practical road map for a more sustainable future for all. Keep watching this space, as we expect the legal system to play an even stronger role in China's climate action in the coming years and decades.

Fan Danting is a climate and finance lawyer at ClientEarth, and Huw Slater is a climate and energy specialist at the same institution.

The views don't necessarily represent those of China Daily.

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