# Evolution of China's Building Energy Service Industry Based on Synergetic Theory
## 6 Discussions and Policy Implications
### Explaining the Developmental History of BESI  
In the initial stage of an industry, regulations and economic incentives are always utilized to promote industrial development [48]. Since being introduced into China in 1998, several schemes have been launched to demonstrate and promote the EPC mode, including establishing various types of new energy service companies, testing the feasibility of Energy Performance Contracts (EPC) in China, and forming China's energy service industries [16; 39]. Moreover, it can attract financial support from all types of investors and promote the development of the energy service industry. In the first phase of the project, three demonstrative energy service companies (ESCOs) were set up. Since then, the BESI has witnessed rapid growth, with three turning points in 2006, 2010, and 2014 (Figure 9).  
As revealed by historical developments, financial support, defined as the main order parameter, is the main impetus of the BESI industry in the beginning stage. From 2003, a great deal of financial support was provided by the central government, banks, and NGOs [39]. In addition, during the seven years of the project's implementation, the project saved 35.33 million tons of standard coal, reducing CO2 emissions by 23.42 million tons. At the end of the second phase of the project, a sustainable ESCO industry is expected to be formed in China. In addition, the Energy Management Compan  
Figure 9: Investment trend of ESCO industry.  
established in 2003 under the supervision of the China Energy Conservation Association. Since then, the EMCA has played a critical role in promoting ESCOs in China through the setting of industry standards, knowledge sharing, research, and capability building. In 2006, the China Utility-Based Energy Efficiency Finance Program (CHUEE) was implemented under the leadership of the Chinese government, with support from the GEF, Finland, and Norway. Since 2006, CHUEE has enabled key players in China's economy--banks, utility companies, government agencies, and suppliers of energy efficiency equipment and services--to collaborate, for the first time, in creating a sustainable financing model. These two grant programs have provided enough funding for the development of the BESI. Companies are profit-oriented, so financing support is always an attraction for them to enter into the industry. However, as more players participate in the market, more support should be provided aside from solely financial support.  
With the size of the BESI market increasing, the industry standards gradually played the main role in regulating the market and encouraging the implementation of EPC, e.g., the Notice of the State Council on Resource Conservation Activities, the Notice of the State Council on the Recent Focus on the Construction of a Conservation-Oriented Society, the 11 th Five-Year Plan, the Comprehensive Energy Conservation Program of Work Notice Embodiments, and others.  
In 2010, the General Office of the State Council forwarded the \"Notice on Accelerating the Implementation of Energy Performance Contracting and Promoting the Development of the Energy Service Industry\", jointly issued by the National Development and Reform Commission, the Ministry of Finance, the State Administration of Taxation, and the People's Bank of China. This notice is a milestone in the BESI, providing guidelines on subsidies, tax, accounting, and financial products for the BESI. Following this notice, a series of policies were launched to foster the development of the BESI, mainly including financial support and industry standards, such as Contract energy management Projects Financial Incentives, Fund Management Interim Measures, and Energy Development of the 12 th Five-Year Plan.