China and the Green Transition

In western media, energy reporting often focuses on the US and Europe. Meanwhile, China, the world’s second largest economy, its charting its own way. Haiying Yuan provides an inside view on China’s strategy for implementing its energy transition and, thereby, tackling Climate Change.

Under the United Nations Framework Convention on Climate Change, China is fulfilling its “common but differentiated responsibilities”. China will, together with the other member states, reduce and eventually stop greenhouse gas emissions into the atmosphere to achieve zero emissions.

China is committed to working toward the “dual carbon” goal of achieving carbon peak by 2030 and carbon neutrality by 2060. To accomplish this, China will accelerate the green transition of its development over the course of the next five years to promote green and low-carbon economic and social development.

The Chinese Green Transition

China will speed up the adjustment and optimization of its structure of industry, energy, and transportation. It will also develop green and low-carbon industries, accelerate the R&D and application of energy-saving and carbon-reducing advanced technologies, as well as advocate for green consumption by promoting green and low-carbon production and lifestyle.

Among the green transition, energy transformation will play an important role. China is launching a new round of its energy revolution, which is characterized by high efficiency and low carbon emission. This is complemented by a new industrial revolution of high quality and high efficiency, which will become the mainstream of China’s industrial energy development. China will make its contribution towards the reduction of emissions by conscientiously fulfilling its international obligations.

Chinese Energy in numbers

China’s energy supply has steadily expanded, accelerating the green and low-carbon transformation. China is a country with more coal, less oil and less natural gas. Coal, accounting for nearly 70% of energy production, is still in a dominant position in China’s disposable energy structure, despite the development of many oil and gas fields and the import of oil and gas.

Energy security has become an important part of China’s national security. In order to ensure energy supply and promote a green and low-carbon energy transition, China is continuing its structural optimization of energy production and consumption. According to Report on China Energy Development 2022 (hereinafter “the Report”) published by the China Electric Power Planning and Engineering Institute, in 2021, the proportion of clean energy production and non-fossil energy increased by 0.8% per annum and 0.7% respectively. Both the intensity of energy consumption and the intensity of carbon emissions have been falling, with the former reducing by 2.7% and the latter by 3.8%.

R&D drives the Chinese Green Transition

To ensure energy security, China is dedicated to developing renewable energy sources such as wind, solar, nuclear, biomass, hydrogen, and wave power. According to Liu Shiyu, Assistant Director of the China Electric Power Planning and Engineering Institute, China has continued the improvement of energy technology, including offshore wind power, advanced photovoltaic power generation, hydrogen production, superconducting power transmission, and compressed air energy storage which have all made significant progress. It is worth noting that Chinese independent nuclear power technology is among the best in the world.

A number of other major innovative projects have advanced successfully, for instance, on December 25th, 2021, Rudong offshore wind power flexible direct current (DC) transmission project designed by Central Southern China Electric Power Design Institute went into full operation. This is the first offshore wind power flexible DC transmission project in Asia and has the world’s largest capacity and highest voltage level of any such project.

China has deepened its energy cooperation with Russia to ensure energy supply

Market Reforms and International Cooperation

While developing technology, the market-oriented reform of China’s energy system continues at pace. According to the National Development and Reform Commission, electricity market-based transactions increased by 17.2% per annum, accounting for 44.6% of society’s overall electricity usage. The electricity price system was further improved, and the on-grid electricity price for coal-fired power generation has been fully liberalized.

China has deepened its energy cooperation with Russia to ensure energy supply through sufficient use of external resources. In the long run, the import of natural gas from Russia into China will help reduce China’s dependence on coal, thus helping to achieve the “dual carbon” goal that China has committed to the international community and buying time for China to make a smooth transition from traditional energy sources to renewable energy sources. However, it remains to be seen whether China will be able to achieve this strategic goal, given the geopolitical uncertainty caused by the Russia-Ukraine conflict.

The Future of Chinese Energy

Regarding how to build a future-oriented modern energy system, Chinese experts put forward three prescriptions:

1. To achieve “carbon peak”, more attention to energy consumption is required. Energy conservation and efficiency improvement are key measures to achieve the goal of “carbon peak”.
2. The low-carbon energy transformation should progress in a scientific and orderly manner. From 2020 to 2040, China’s energy transformation will generally be in a stage of actively replacing traditional energy with new energy; from 2040 to 2060, the energy transformation will enter its “accelerated replacement stage”.
3. “Green hydrogen” and its derivatives will become crucial strategic technologies to tackle major challenges. It is, therefore, necessary to break down the current policy obstacles to promote the large-scale development of the hydrogen energy industry as soon as possible.