China’s Energy Transition is Critical to the World’s Future
by Bob Shively, Enerdynamics President and Lead Facilitator
“No matter where you live, China’s energy transition affects us all.”
These were the opening words to a recent webinar by consulting firm DNV. China makes up 26% of world primary energy use and 33% of world energy-related carbon emissions. China also leads the world in solar installations, electric vehicle (EV) production and sales, and manufacturing of solar panels and wind turbines.
The following statistics demonstrate the scale of China’s leadership:
- By the end of 2023. China had 609 GW of utility-scale solar energy capacity – this compares to 179 GW in the U.S.
- In 2023 alone, China installed 217 GW of solar energy compared to 32 GW in the U.S.
- By the end of 2023 China had 441 GW of wind energy capacity compared to 148 GW in the U.S.
- China currently has 16 million EV and plug-in electric hybrid (PHEV) vehicles compared to 3.5 million in the U.S.
- For the first time in April 2024, EV and PHEV sales in China exceeded gasoline-powered car sales.
- China's market share in all the manufacturing stages of solar panels in the world exceeds 80%.
- China’s market share in manufacturing wind turbines is at least 60%.
- The top-selling EV brand in the world is China’s BYD, which recently overtook Tesla.
We often hear that China continues to build coal power plants, that coal makes up nearly 60% of China’s power generation, and that China consumes half of the world’s coal production. So, is China really transitioning to a clean energy economy? The DNV analysis, outlined in its recent report Energy Transition Outlook China 2024, resoundingly says yes. This is driven by four key factors discussed in the report:
- China depends on nationwide holistic planning and innovation driven by the central government – this allows change to happen quickly as levers of policy, planning, and investment are all directed toward national goals.
- Self-reliance and economic development are overriding policy motives – most fossil fuels must be imported by China while renewables can be manufactured domestically with highly controlled supply chains. Meanwhile, excess manufacturing capability allows China to develop its economy by supplying renewable technology and EVs to the world.
- Increasing environmental issues impacting China’s citizens have led China to focus on strengthening environmental protection at home – the concepts of sustainable economic development and reversing degradation of air, water, and soil have become cornerstones of national policy.
- China has made global commitments to a dual-carbon goal – the dual goal is for carbon emissions to peak before 2030 and to achieve carbon neutrality before 2060.
According to DNV’s forecast China’s energy transition over the next 25 years will be unprecedented:
1. The energy mix will change dramatically with zero carbon supply displacing significant amounts of fossil fuels
Figure 1: DNV Energy Transition Outlook China 2024, p. 4
2. Overall energy consumption will decline due to a shrinking population and increasing energy efficiency and electrification
Figure 2: DNV Energy Transition Outlook China 2024, p. 4
3. Solar and wind coupled with storage will dominate electric generation
Figure 2: DNV Energy Transition Outlook China 2024, p. 4
The result according to DNV is that China carbon emissions will peak by 2026 and thereafter will decline by 66% by 2060. And despite a current trend toward protectionism in the U.S. and Europe, DNV believes China will continue to be the world leader in manufacturing of green technology and EVs. This analysis by DNV makes it clear that if we want to understand where the world energy transition is going, we must keep our eyes on China.
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