China has announced plans for new subsidies for energy-efficient appliances including desktop computers, household air conditioners, and more. China’s Ministry of Finance recently notified Chinese news source Xinhua of the planned subsidies – more than $2 billion has been earmarked for just one year of subsidies.
The intended effect is to increase domestic demand for more energy-efficient appliances – which will be much more attractive and competitive at the lower subsidized price point. An equally important goal of the program is to replace older or more inefficient appliances with energy-efficient models that can have a huge impact on energy savings for the life of the appliance.
Policymakers also hope that the subsidized appliance program might have an additional benefit in the form of increased spending in a down economy. Six specific product categories are included in the subsidy program: air conditioners, fans, desktop computers, water pumps, transformers, and compressors.
China Daily quoted an unnamed official on the energy savings potential of the subsidy program: ”The subsidy program will help save 31.3 billion kWh of electricity every year and drive sales of the energy-saving products by 155.6 billion yuan”.
This is not the first energy efficiency subsidy program for China – past programs included products such as light bulbs, water heaters, and televisions. Can such a subsidy program really have such a strong impact on consumer demand, economic growth, replacement of old devices, and long term electricity savings?