Towards a sustainable society: the status and future of energy performance contracting in China

•Investigated the role of EPC for energy-saving and pollutant reduction.•Examined the evolution of policies related to EPC in China.•Identified the three levels of policy landscape for promoting EPC.•Highlighted critical issues associated with the EPC industry.

Associated with the rapid economic growth, last decades have witnessed significant increases of both energy production and energy consumption in China. It is also recognized that the air pollutants emissions brought by excessive fossil energy consumptions have caused serious environmental problems. It is imperative to save energy and reduce emissions in China. As an innovative market mechanism, Energy Performance Contracting (EPC) can effectively reduce the energy consumption. China has released a series of laws, polices, regulations, and plans that include EPC related contents. Due to the massive demand as well as the facilitation efforts from the governments, EPC has developed rapidly in China. For instance, the number of employees, the aggregate investment, and the total output value of energy service companies increased by 31.8 times, 56 times and 73.2 times between 2005 and 2013. The evolution of policy system of EPC in China is examined in this study. The results show that legal protection, policy guidance and fiscal incentives are main measures to promote the development of EPC. These policies showcase China's efforts on achieving energy conservation, enhancing energy efficiency and improving environmental performance by encouraging the implementation of EPC. However, the analysis also reveals some existing issues. Further development of EPC depends on a number of factors such as a complete legal security system, a mature market mechanism, flexible economic incentives and the specific development plan for EPC. The experiences gained in China are helpful for promoting the development of EPC industry, especially in the developing countries.