Profiting from innovation, energy productivity

China has demonstrated that setting economy-wide targets for boosting the share of renewables as a share of total energy sources is a vital platform for business innovation. Chinese companies are already global market leaders in solar power, rechargeable batteries for mobile phones and electric cars.

Today's new frontier is energy efficiency. Encouraged by the government's aim of raising the energy efficiency of the economy overall by 20 percent by 2010, Chinese business has a major opportunity to carve out significant global business in energy efficiency products and services.

While China has put in place a substantive policy framework designed to boost energy efficiency, research by the McKinsey Global Institute (MGI), McKinsey & Co's economics research arm, shows that China could capture an even greater prize through an economy-wide effort to boost energy productivity-the level of output achieved from the energy consumed.