Law and Policy on the Development and Promotion of the New Energy Vehicle (NEV) Market in China
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Journal of Asian Electric Vehicles, Volume 16, Number 1, June 2018 Law and Policy on the Development and Promotion of the New Energy Vehicle (NEV) Market in China Dennis Nikolaus Blatt KoGuan Law School, Shanghai Jiao Tong University, [email protected] Abstract China’s commitment towards becoming more innovative and environmentally-friendly, has led to the implementa- tion of a myriad of policies to fulfill future development plans; which has subsequently allowed the New Energy Vehicle (NEV) market to thrive. The NEV market has benefitted from policies which incentivize and prioritize in- dustries in the field of innovation and environmental technology, in addition to policies providing generous sub- sidies specifically towards the manufacturing and sales of NEVs. As China’s NEV market continues to grow at a rapid pace, this paper will analyze the significance played by policies implemented at various government levels, towards facilitating the development and promotion. Keywords ly, it removes skepticism over the lack of facilities, as China, policies, development, promotion, new energy subsidies are also provided to manufacturers of charg- vehicle ing facilities. The NEV market has also benefitted through certain restrictions placed on their emission- 1. INTRODUCTION based counterparts, thus creating a market-friendly China is currently the world’s largest electric vehicle environment for NEVs. market, and having set a sales target of 5 million New Currently, the Chinese NEV market is a subsidy driven Energy Vehicles (NEVs) by 2020, has led to the im- market, and has surpassed the United States in terms plementation of policies at various government levels, of sales volume, by achieving a sales total of 336,000 to help facilitate further advancements towards the NEVs in 2016, according the statistics provided by development and promotion of the NEV market. The the International Energy Agency [International Energy NEV market plays an integral role in China’s future Agency, 2017]. According to a report published on development, as the 13th 5-Year Plan (2016-2020) September 2017 by Bloomberg New Energy Finance, has emphasized the importance towards innovation domestic NEV manufacturers such as BYD and BAIC and transitioning into a Green Economy; as the targets fared better than their foreign counterparts, with both provided in China’s 5-Year Plans aren’t policies them- manufacturers accounting for roughly 40 % of the selves, they require policies to help facilitate achiev- market, whereas Tesla accounts for 9 % of the market ing such targets. and is the only foreign NEV manufacturer holding a China’s commitment towards positioning themselves respectable share of China’s NEV market [Bloomberg, as global powerhouse in the fields of environmental 2017]. China’s NEV market can be categorized into development and innovation, has resulted in the nation three types of vehicles; them being, battery electric shifting towards eco-friendly and innovative industries vehicles (BEV), plug-in hybrid vehicles (PHEV), and to help achieve future targets [Zheng et al., 2012]; fuel cell vehicles (FCEV). thus, allowing the NEV market to thrive. China’s Although the NEV market is currently a subsidy-driv- NEV market has had a positive impact towards help- en market, the State Council has announced that all ing achieve such targets, as the market has facilitated NEV subsidies would be slowly phased out by the end such areas as reducing urban air pollution and carbon of 2020; hence, making the amendment and imple- emissions, reducing the nation’s dependence of oil, in mentation of certain NEV-related policies inevitable. addition to strengthening the labor market by provid- ing more jobs and increasing the demand for special- 2. HISTORY ized talents. 2.1 Early stages (Developing NEVs) The current policies are a clear indication of China’s The source of China’s earliest NEV-related strategies strong commitment towards their NEV market. Poli- can be traced back to the period of China’s 8th 5-Year cies regarding the issuance of subsidies, allows eligi- Plan, which proposed a plan to develop electric ve- ble NEVs to be sold at competitive prices; additional- hicles; resulting in the introduction of government- 1781 D. N. Blatt: Law and Policy on the Development and Promotion of the New Energy Vehicle (NEV) Market in China sponsored programs to financially support institutions 2015, which initiates a strategy to upgrade the qual- engaging in such research. ity of locally produced products and compete at an Having laid the foundation, a bigger emphasis would international standard by 2025; which could result be placed towards R&D for electric vehicles, during in Chinese NEV manufacturers placing a bigger the span of China’s 10th 5-Year Plan (2001-2005), emphasis towards the exportation of their NEVs. Ad- which saw a total of RMB 880 million being invested ditionally, the decentralization of policies and enforce- towards the development of the industry [Chinese ability would ensure that the national targets would Academy of Sciences, Chinese Academy of Engineer- be achieved within the given timeframe, as the Mu- ing, National Academy of Engineering, National Re- nicipal, Provincial and City level governments started search Council, 2004; Zhou et al., 2004; Zhang et al., to issue NEV-related policies, corresponding to the 2014]. policies set forth at the national level. Under the 13th 5-Year Plan (2016-2020), China has 2.2 Current stage (Developing and subsidizing the listed the development of innovative standards and NEV market) transitioning into a Green Economy as a few of their Energy conservation was a focal point of the 11th top priorities, hence solidifying their commitment to- 5-Year Plan (2006-2010), thus resulting in the imple- wards developing and promoting the NEV market; as mentation of policies to heavily develop and promote of July 2017, NEVs are required to comply with the the usage of NEVs. In 2009, the Ministry of Finance manufacturing standard set forth in the “Access Man- and the Ministry of Science and Technology provided agement Rules for New Energy Vehicle Production a strategy and proposal for the adoption of NEVs, Enterprises and Products”, thus ensuring that future through the publication of the “Circular on Launching NEVs adhere to an adequate safety standard. Further- the Pilot Demonstration Program for Energy Con- more, China’s commitment towards their environmen- servation and New Energy Vehicles” which resulted tal targets has resulted in harsher restrictions being in the introduction of the Ten Cities, Thousand Vehi- placed on emission-based vehicles, creating a more cles Program during the same year. The Ten Cities, favorable environment for NEVs. Thousand Vehicles Program would include 10 more cities each year and stipulated that each city would be 3. NATIONAL LEVEL required to produce one thousand NEVs, in hopes of 3.1 Development and promotion having NEVs account for 10 % of the domestic auto- The beginning stages regarding the development and mobile market by 2012 [Gong et al., 2013; Marquis et promotion of the NEV market occurred during the al., 2013]. 11th 5-Year Plan, when the government proposed The targets set forth in the 12th 5-Year Plan (2011- a strategy for technology in the industry of energy 2015) would lead to an accelerated development of conservation. As the integration of such technologies NEVs and the NEV market. Under the previous plan, were fairly new, the policies regarding development the intention of developing the NEV market was due and promotion, were tested as pilot programs in se- to the many benefits it had towards reducing problems lected cities, before introducing the policy nationwide. concerning the conservation of energy and the reduc- The targets provided in the “Energy-Saving and New tion emission rates; the plan continued to develop the Energy Vehicle Industry Development Plan (2012- NEV market on the basis of environmental protection, 2020)” would serve as a basis for forthcoming poli- in addition to their new concept of developing the cies, such as the “Guiding Opinions on Accelerating NEV market as a means to improve the current state the Promotion of the Application of New Energy of the automobile industry. Vehicles”, which was published by the State Council The introduction of the State Council’s publication of in 2014. The policy provided subsidies towards differ- the “Energy-Saving and New Energy Vehicle Industry ent forms of NEV-related activities, with the issuance Development Plan (2012-2020)” in 2012, provided a of subsidies corresponding with supporting policies strategy to ensure a stable development of the NEV that were implemented in accordance with the “Guid- market, additionally the plan provided sales targets ing Opinions on Accelerating the Promotion of the of 5 million NEVs by 2020. These targets led to the Application of New Energy Vehicles”. For example, promulgation of policies regarding subsidies towards the “Announcement on the Exemption of Vehicle buyers and manufacturers of NEVs and NEV-related Purchase Tax on New Energy Vehicles” published by technology, thus transforming the NEV market into a the Ministry of Finance, the State Administration of subsidy-driven market. Chinese branded NEVs will Taxation and the Ministry of Industry and Information also be expected to compete at an international level, Technology in 2014, stipulates that subsidies will only with the introduction of “Made in China 2025” in be provided to NEVs whom are listed on the most