Energy, Resources and Infrastructure in China

Energy in China: the legal and policy landscape

Energy in China is governed by a framework that has changed more in the past two years than in the previous decade. The Energy Law, the country's first comprehensive energy statute, took effect on 1 January 2025. A revised Mineral Resources Law took effect on 1 July 2025. Pricing for new wind and solar projects moved to market-based mechanisms from 1 June 2025, and a draft revision of the Renewable Energy Law was submitted to the NPC Standing Committee for first reading in November 2026.

The direction is consistent: a larger role for markets in electricity and gas, continued state control over grids, pipelines and strategic resources, rapid build-out of renewables and storage, and stronger supply-security tools. China's 2035 nationally determined contribution, announced in September 2025, includes a target of 3,600 GW of installed wind and solar capacity and a commitment to cut economy-wide net greenhouse gas emissions from their peak. For investors, lenders, equipment suppliers and offtakers, this means opportunity in volume, but also tighter competition, price risk and a compliance burden that differs by sub-sector.

This page gives an overview of the legal and regulatory environment for energy in China as at November 2026, as general information with a cross-border perspective. It introduces the main laws and regulators, explains where foreign investment is open or restricted, summarises the market reforms that drive project economics, and links to our detailed pages on each part of the sector.

Key laws and regulators

Energy regulation is shared among several authorities. The National Development and Reform Commission (NDRC) sets macro policy, pricing frameworks and approval rules for major projects. The National Energy Administration (NEA), under the NDRC, regulates power, oil, gas, coal and renewables, including market rules and licences. The Ministry of Natural Resources (MNR) administers mineral and land rights; the Ministry of Ecology and Environment (MEE) handles environmental impact assessment and the national carbon market; the State-owned Assets Supervision and Administration Commission oversees the central state-owned energy groups that dominate the sector.

Beneath these laws sits a dense layer of administrative rules: project approval and filing catalogues, grid connection rules, environmental and safety standards, energy-efficiency requirements and local policies. Provincial authorities play a large role in implementation, from renewable pricing auctions to land use. As a result, two identical projects in different provinces can face different economics.

Foreign investment in energy in China: what is open

Most of the energy sector is open to foreign investment. Under the national negative list (2024 edition, in force since 1 November 2024), the main energy-related restrictions are that the construction and operation of nuclear power plants must be controlled by Chinese investors, and that exploration, mining and processing of rare earths, radioactive minerals and tungsten are prohibited to foreign investors. Wind, solar, storage, hydrogen, gas distribution, thermal power, oil and gas exploration and most utilities are not on the list.

Openness on paper does not mean easy access in practice. Grids and long-distance pipelines are run by state-owned companies, many projects are allocated through local competitive processes, and central and local state-owned enterprises are frequent partners or competitors. Foreign investors also need to consider the foreign investment security review regime, which can cover investments in important energy and resources sectors where actual control is acquired, and merger control filings for joint ventures and acquisitions. See foreign investment security review.

The 2025 edition of the Catalogue of Industries for Encouraging Foreign Investment, effective 1 February 2026, continues to include energy conservation and environmental protection among its priority fields. Encouraged status can bring tariff exemptions for imported equipment and, in some regions, land and tax benefits. A practical checklist for inbound energy investors includes:

• Confirm the activity is not restricted or prohibited, and whether encouraged status is available.
• Map project approvals, grid connection rights and land use rights before committing capital.
• Assess pricing exposure under current market rules, not only historical tariffs.
• Consider security review and merger control early, especially with state-owned partners.
• Plan dispute resolution and exit, including approval requirements for transfers.

Market reform and pricing

The single most important commercial change for energy in China is the move from administered prices to markets. In electricity, the government's goal of a national unified power market reached its first-stage target in 2025, according to official reporting: provincial spot markets now cover almost the whole country, cross-grid trading has begun and a framework of basic market rules is largely in place. Medium- and long-term contracts remain the bulk of traded volume, with spot markets setting marginal prices.

For renewables, Document 136 requires new wind and solar output to enter the market, with a provincial mechanism price that settles the difference between market prices and a bid-determined level for a defined period. Thermal power receives capacity payments under a coal power capacity price mechanism that took effect on 1 January 2024. Green electricity certificates are now the main instrument for proving renewable consumption, and the national carbon emissions trading market expanded in 2025 to cover steel, cement and aluminium smelting in addition to power.

Natural gas pricing is also partly liberalised, with city-gate prices, market-based pricing for some supplies and pass-through mechanisms for end users that vary by city. Pipeline infrastructure was consolidated under PipeChina in 2019, separating transport from production and supply and creating a framework for third-party access.

Our energy sector coverage

The pages below look at each part of the energy, resources and infrastructure sector in more detail.

Power and electricity

Generation, transmission and supply, market trading, spot markets, capacity payments, distribution reform and power purchase agreements. The page explains how provincial spot markets, medium- and long-term contracts and ancillary service markets interact, and what large energy users and generators should negotiate. See power and electricity.

Renewables and clean energy

Wind, solar, hydro and biomass projects, Document 136 pricing, distributed solar rules, green certificates and the Renewable Energy Law revision. It also covers offshore wind, green electricity direct supply to industrial users, and the trade and supply chain issues facing Chinese clean energy manufacturers abroad. See renewables and clean energy.

Oil, gas and petrochemicals

Upstream exploration and production, LNG import and regasification, pipeline access, refining and petrochemical investment, and trading. It considers crude import quota rules, the role of state-owned majors as partners, and the safety and environmental permits that dominate downstream projects. See oil, gas and petrochemicals.

Hydrogen, ammonia and energy storage

Green hydrogen and ammonia projects, the treatment of hydrogen as energy under the Energy Law, new-type energy storage business models and safety rules. Since 2025, storage can no longer be imposed as a precondition for renewable approval or grid connection, so storage projects must stand on market revenues, capacity arrangements or customer contracts. See hydrogen, ammonia and energy storage.

Mining and minerals

The revised Mineral Resources Law, mining rights, foreign investment limits on strategic minerals, export controls and outbound mining investment. It also looks at offtake and streaming arrangements and the scrutiny Chinese mining investments face abroad. See mining and minerals.

PPP projects

The new public-private partnership mechanism introduced in 2023, concessions under the 2024 measures, risk allocation, financing and disputes. The 2023 reforms shifted PPP towards user-pays projects and gave priority to private capital in many sectors, which changes both bankability and government support. See PPP projects.

Water, waste and public utilities

Water supply and treatment, waste-to-energy, district heating and gas distribution concessions, tariffs and environmental compliance. Tariff adjustment mechanisms and the creditworthiness of local government counterparties are the recurring issues for investors. See water, waste and public utilities.

The cross-border dimension

Energy in China is closely tied to global supply chains. Chinese manufacturers lead in solar modules, batteries, wind turbines and electrolysers, and Chinese developers and contractors build projects across Asia, the Middle East, Africa, Latin America and Europe. That exposes them to trade remedies, foreign subsidy reviews, local content rules and supply chain due diligence laws abroad, as well as to Chinese outbound investment filing requirements at home.

Several policy shifts deserve attention. China cancelled export VAT rebates for photovoltaic products from 1 April 2026 and is cutting the rebate for batteries from 9% to 6% for the rest of 2026 before removing it from 1 January 2027, which changes export pricing. The EU applies its Carbon Border Adjustment Mechanism, Foreign Subsidies Regulation and forced labour rules to imports and investments; the United States restricts certain Chinese components and investors in clean energy supply chains. China, for its part, has expanded export controls on certain critical minerals and related technologies. See rare earths and critical minerals controls and international projects and overseas EPC.

For foreign groups in China, the cross-border issues run the other way: technology licensing and transfer, export control classification of equipment and software, data from smart grids and connected assets, and sanctions screening of counterparties. Hong Kong remains a common platform for holding structures, green finance and arbitration.

Outbound projects by Chinese energy companies raise their own sequence of issues. At home, investments generally need NDRC and MOFCOM outbound filings and foreign exchange registration through banks. In the host country, the investor faces licensing, local content and foreign investment screening, and often negotiates a host government agreement or power purchase agreement with a state utility. Bilateral investment treaties can provide protection against expropriation and unfair treatment, and lenders such as multilateral development banks bring their own integrity and environmental standards. See ODI approvals.

Worked example: acquiring an operating renewables portfolio

Assume a foreign infrastructure fund plans to buy a portfolio of operating wind and solar projects in three provinces from a private developer. A disciplined process for energy in China would run as follows.

1. Structure. Decide whether to buy the project companies directly through a foreign-invested holding company or offshore, and model tax, foreign exchange and future exit routes, including a possible China REIT.
2. Approvals and title. Verify project approvals or filings, land and sea use rights, construction and completion documents, and grid connection agreements for each asset.
3. Revenue. Classify each project as existing or new under Document 136, check the provincial mechanism price, its remaining term and the share of output covered, and analyse curtailment history and spot price exposure.
4. Green attributes. Confirm who owns green certificates and whether any have been pre-sold to corporate buyers.
5. Clearances. Assess merger control and whether security review could be relevant; obtain any lender and counterparty consents.
6. Documents. Negotiate warranties on approvals, subsidies and receivables, specific indemnities for known compliance gaps, and price adjustment for revenue changes before completion.

Two issues often decide value. The first is legacy subsidy receivables for older projects, which may depend on the project's inclusion in official subsidy lists and on any compliance reviews. The second is title: in a fast-built portfolio, approvals or land documents are sometimes held by an affiliate or remain incomplete. Both can be managed through conditions, escrow and indemnities if identified early.

What to watch in 2027

Several developments will shape energy in China over the next twelve months. The Renewable Energy Law revision will move through further readings, and its final text on market trading, the price settlement mechanism, consumption responsibility weights and green certificates will matter for every renewable investor. Provinces will continue to refine mechanism price auctions and spot market rules, with more spot markets moving to formal operation in 2026 and beyond.

Investors should also watch implementing rules under the Energy Law and the revised Mineral Resources Law, the evolution of capacity mechanisms for storage and flexible generation, the further expansion of the national carbon market, and trade measures affecting clean energy supply chains in the EU, the US and emerging markets. The 15th Five-Year Plan period, which began in 2026, sets the policy frame for these changes.

Contracts, financing and disputes

Project documentation for energy in China follows familiar international patterns, but with local features. Engineering, procurement and construction contracts often use domestic forms, and performance guarantees, liquidated damages and change-in-law clauses need to be calibrated to market-based pricing. Power purchase agreements, whether with the grid, through market trading or with corporate buyers, must address curtailment, settlement, green attributes and the consequences of rule changes. See corporate power purchase agreements.

Financing ranges from onshore bank loans and green bonds to infrastructure REITs, which now include energy and utility assets, and offshore financing for outbound projects. Lenders focus on security over tariff receivables, the transferability of approvals and the robustness of revenue under market pricing. See project finance and China REITs.

Disputes commonly arise from delayed grid connection, curtailment, equipment defects, price adjustments, government counterparty performance in PPP projects and joint venture deadlock. Arbitration through institutions such as CIETAC, the Shenzhen Court of International Arbitration or the Hong Kong International Arbitration Centre is common for contracts with a foreign element, and arbitration clauses should be checked for validity and enforceability. See construction and infrastructure disputes.

Common mistakes include signing project acquisition agreements without verifying that approvals, land rights and grid connection documents are in the project company's name, assuming that a historical fixed tariff will continue after a sale, and relying on a local government letter of support as if it were a binding payment obligation.

How TRW & Co helps with energy in China

We advise international energy companies, investors, lenders, equipment suppliers and Chinese energy groups on cross-border matters involving energy in China and overseas. Our work includes inbound and outbound investment structuring, joint ventures and M&A, project and financing documentation under the laws where our lawyers are qualified, power purchase and supply agreements, trade and export control strategy, and dispute strategy for international arbitration. Where PRC legal advice, approvals and filings, or court and arbitration representation in China are required, we work with licensed PRC law firms and coordinate the overall workstream. To discuss a project, contact us.