Low-to-moderate-income (LMI) urban households and  and rural households.

China’s march toward its ambitious goals of peaking emissions before 2030 and achieving carbon neutrality before 2060 is largely driven by large-scale industrial and utility sector reforms. However, the next frontier—and the hardest to reach climate target group—lies within the nation’s low-to-moderate-income (LMI) and rural households. Successfully integrating this group into the climate transition is critical not just for meeting targets but also for achieving social equity.

Defining the Hardest-to-Reach Group

The group most challenged in contributing to household carbon reduction is characterized by a combination of economic status and geographic location.

• Who They Are: Rural Households and Low-Income Urban Households. This group is defined by their reliance on traditional, carbon-intensive energy for heating and cooking, and their limited ability to invest in clean technology upgrades. In rural areas, this includes older populations and those with limited off-farm income.
• Scope and Location:
  • China’s rural population still numbers hundreds of millions, primarily concentrated in the Central and Western regions where development lags the affluent East [^2.1^].
  • Many of these homes rely on scattered coal, straw, or biomass for heating and cooking, especially in the cold Northern provinces like Hebei, Shandong, and Heilongjiang, which contributes significantly to air pollution and household emissions [^3.1^].
  • While the national focus is often on mega-cities, county-level cities and rural areas contribute significantly to overall carbon inequality, underscoring the challenge of addressing dispersed emissions [^2.1^].

The Barrier: Access, Affordability, and Infrastructure

The core reason this group lags is not a lack of policy, but a disparity in purchasing power, infrastructure, and access to information.

• Affordability and Capital: LMI households lack the initial capital investment required for deep energy retrofits, purchasing efficient appliances (like modern heat pumps), or installing distributed renewable energy like rooftop solar [^3.2^]. While the central government provides some subsidies, they often favor large-scale, industrial projects, and the remaining costs are prohibitive for an average rural family.
• Infrastructure Gaps: In many rural areas, the power grid infrastructure is not yet robust enough to support widespread adoption of modern electric heating (like air-to-air heat pumps) or is simply too costly to upgrade at the household level [^3.2^].
• Information and Trust: Complex government incentive programs and emerging clean technologies are often poorly communicated to rural communities. Decisions on energy consumption are heavily influenced by peer effects and local norms, which can sometimes slow the adoption of new, unfamiliar clean technologies [^2.2^].

🚀 Two Cost-Effective Proposals for Enabling Contribution

To empower this group, the focus must shift from blanket subsidies to targeted, systemic interventions that lower the cost and simplify the adoption process.

1. The Rural “Clean Energy Lease-to-Own” (CELO) Program

• What it Is: A subsidized, zero-interest, lease-to-own program for high-efficiency heating systems (e.g., air-source heat pumps) and solar PV installations, managed by local state-owned enterprises (SOEs) like the State Grid. The lease payments would be structured to be less than the monthly savings on traditional fuel bills, making the technology cash-flow positive from Day 1.
• Why it Will Make a Difference: It eliminates the prohibitively high upfront capital cost, which is the single largest barrier. By guaranteeing monthly savings, it becomes a financial benefit, not a burden, directly tackling energy poverty while replacing high-carbon fuels (coal/biomass) [^3.4^].
• Implementation (1-3 Years):
  • Year 1: Lead: National Development and Reform Commission (NDRC), in conjunction with the National Energy Administration (NEA). NDRC issues a directive and allocates a national revolving fund. Involved: State Grid (responsible for procurement and installation through local contractors) and the China Development Bank (to manage the revolving loan fund).
  • Years 2-3: Pilot the program in 10-15 high-carbon Northern rural provinces. Target installations in 500,000 households.
• Measurement:
  • Outcome 1 (Emissions): Measure the tonnes of CO2 reduced by comparing baseline coal/biomass consumption to post-installation electricity usage, verified via smart meters.
  • Outcome 2 (Cost-Effectiveness): Track the average net household energy cost reduction (lease payment subtracted from utility savings).

2. Localized “Energy Efficiency Micro-Upgrades” Initiative

• What it Is: A rapid, localized program focused on inexpensive, high-impact residential energy efficiency measures: simple insulation upgrades (window sealing, wall foam) and efficient lighting/appliance replacement (e.g., induction cooktops).
• Why it Will Make a Difference: These are low-cost, high-return investments that require minimal skilled labor and generate immediate energy savings, building trust and familiarity with the clean energy transition. This paves the way for the larger, more expensive CELO program later.
• Implementation (1-3 Years):
  • Year 1: Lead: Ministry of Housing and Urban-Rural Development (MOHURD), leveraging its existing rural housing and poverty alleviation networks. Involved: Local township governments (responsible for identifying and approving LMI homes) and vocational schools/local construction teams (for training and installation). Fund with local government subsidies and micro-grants.
  • Years 2-3: Launch and scale across all Western and Central provinces, aiming to complete 5 million homes.
• Measurement:
  • Outcome 1 (Emissions/Efficiency): Measure the percentage reduction in total household energy consumption (electricity/gas/fuel) for a control group versus the upgraded homes.
  • Outcome 2 (Process): Track the average cost per home of the micro-upgrade package to ensure cost-effectiveness.

Decision Maker for Implementation

To implement these systemic, nationwide proposals, leadership from a central planning body with authority over both finance and policy is essential.

Name: He Lifeng (何立峰) Title: Vice Premier of the State Council (and former Chairman of the National Development and Reform Commission – NDRC) Role: As a key member of the Politburo and the central coordination body for national economic policy, Vice Premier He is directly in a position to allocate the necessary central government funding, issue directives to the NDRC, NEA, and relevant Ministries (MOHURD, MOF), and integrate these social equity initiatives into the next Five-Year Plan. Contact Email: Contact would be through the official National Development and Reform Commission (NDRC) channels, or the General Office of the State Council. (e.g., Official Inquiries/General Contact: ndrc@ndrc.gov.cn [^4.2^])

This Post was submitted by Climate Scorecard China Country, Manager Vincent Mao.

Learn More Resources

[^1^]: China Sets 7-10% Carbon Reduction Target – Breaking Down the 2035 Climate Pledges. China Briefing. https://www.china-briefing.com/news/breaking-down-chinas-2035-climate-pledges/ [^2.1^]: Exploring Inequality: A Multi-Scale Analysis of China’s Consumption Carbon Footprint. MDPI. https://www.mdpi.com/2220-9964/14/2/49 [^2.2^]: Peer effects on rural household carbon emissions in China. PubMed. https://pubmed.ncbi.nlm.nih.gov/40413223/ [^3.1^]: Costs and health benefits of the rural energy transition to carbon neutrality in China. NIH. https://pmc.ncbi.nlm.nih.gov/articles/PMC10541415/ [^3.2^]: Energy development in rural China toward a clean energy system: utilization status, co-benefit mechanism, and countermeasures. Frontiers. https://www.frontiersin.org/journals/energy-research/articles/10.3389/fenrg.2023.1283407/full [^3.4^]: Powering Rural Prosperity: How Clean Energy Adoption Transforms Comprehensive Welfare of Rural Residents in China. ResearchGate. https://www.researchgate.net/publication/388986093_Powering_Rural_Prosperity_How_Clean_Energy_Adoption_Transforms_Comprehensive_Welfare_of_Rural_Residents_in_China [^4.2^]: National Development and Reform Commission Report (2025)_Submitted Version. NPC Observer. https://npcobserver.com/wp-content/uploads/2025/03/2025-NDRC-Report_NON-FINAL_EN.pdf