China, the Cleantech Capital

China consumes around 26% of the annual global energy supply, with its per year energy needs more than tripling since the turn of the century. This has resulted in tremendous growth… at a staggering cost.

China remains the world’s largest greenhouse gas emitter, relying heavily on fossil fuels to meet its population’s growing energy demands.

As the global community grows progressively more committed to tackling the climate crisis, it becomes increasingly clear that there is no meaningful way forward unless China plays ball and also commits towards net zero.

The good news? It seems like China’s already on the same page.

CHINA’S ENERGY CRISIS

China is not energy secure: it relies heavily on imported oil and gas, has a longstanding pollution problem and is prone to countrywide power outages.

These problems, which have plagued China for decades, have prompted policymakers to consider radically transforming the way the country operates.

In recent years, President Xi Jinping outlined plans to peak the country’s carbon emissions this decade, after which the country aims to gradually move towards the high-level goal of becoming carbon neutral by 2060.

This gives China a 40-year window to accomplish something no other country has managed, let alone at a scale comparable to the size of the country.

The world is beginning to transition away from fossil fuel and China is making significant moves towards becoming the global authority in cleantech and green energy, not only through transforming its own national energy system, but also by developing a supply chain that could leave the rest of the world dependent on China for its energy needs in the future.

THE SHIFT

China was on the cusp of an economic revolution at the end of the last century. In 1990, its GDP was only 6% that of the United States and its energy needs was only 34% by comparison.

This all began to change in the 1980’s, when economic reforms began the process of privatizing industry and opening up Chinese markets to global trade.

By the time China joined the World Trade Organization in 2001, China was well on its way to becoming the world’s factory, with booming energy needs to match. This shift saw dramatic changes in China’s energy consumption, particularly the addition of coal-fired plants to meet energy demands.

From a climate perspective, China held that it was simply “catching up” to the West, and that its emissions were no different from those associated with the industrial revolution experienced by Western countries decades before.

But even this perspective shifted in 2008, coinciding with an increased awareness of air pollution. Beijing infamously held the title of the world’s most polluted city for almost a decade.

This helped make it clear to Chinese leaders that the country’s continued growth would be unsustainable in its current state, not just from an emissions perspective, but from an awareness that much of the fossil fuel consumption needed will have to be imported. China did not want to be energy dependent on other countries.

Starting in 2010, China increased its commitment to the deployment of renewables. Like the rest of the world, it initially faced the non-competitive cost economics for solar and wind technologies.

However, unlike other countries, China had the capacity to subsidize key technological components, allowing the country to invigorate the renewable market and drive the supply chain in such a way that China positioned itself as the preeminent source for cleantech.

China’s investment in renewables help drive astonishing price drops across the industry, leading to record levels of new wind and solar installations all over the globe. Thanks to China’s production capacities, wind and solar helped generate more than 10% of the world’s electricity in 2021.

Despite this exponential growth, renewables still only make up a tiny fraction of China’s energy mix. The country remains overwhelmingly dependent on fossil fuels, with coal in particular representing roughly 60% of China’s energy use.

SOLVING THE TRANSPORT DILEMMA

China’s decarbonization plan ramps up with a gradual increase in fossil fuel emissions up until 2030, at which point the country’s outlined a target to achieve net zero by 2060.

China aims to have 80% of its energy come from carbon free sources. This 30-year plan will be a massive undertaking, involving renewable mega-projects on a scale that the world has never seen before.

By 2030, China plans to scale up to 1.2 terawatts of wind and solar capacity, enough to meet all of the United States’ electricity needs. However, it’s not enough just to generate that power: getting the power where it needs to go is a mega-project in itself.

In order to transmit electricity, China has built a huge network of ultra-high voltage power lines, designed to get energy from large-scale production facilities in the west, to population and industrial centres in the east. Power lines may seem like a mundane piece of infrastructure, but in actuality, they represent a crucial piece of the decarbonization puzzle.

For context, a conventional alternating current cable (think you’re run of the mill power line) loses a significant amount of electricity over the course of hundreds of miles, hence necessitating the use of different, specialized direct current lines.

These specialized cables are more efficient and reduce wastage on the way to transport electricity. They are currently only in use in two countries: Brazil, which has two, and China, which boasts 25.

THE SEARCH FOR FIRM CLEAN POWER

As China progresses towards a net zero goal, its leadership has recognized that there is no way to achieve its goals without having something known as firm clean power.

Firm clean power refers to the ability to generate energy when needed, without having to wait for the sun to shine or the wind to blow.

The way to achieve firm clean power? Nuclear.

Nuclear power satisfies these conditions quite well, but is a contentious topic in most countries, where the nuclear industry is struggling due to huge upfront costs, regulatory hurdles and negative public opinion.

Still, nuclear represents a carbon free source of firm clean power and many environmental advocates see it as key to the energy transition- as does China’s leadership.

China plans to build 150 new nuclear reactors in the next 15 years, which is more than the entire world has built in the last 35 years. That leaves Chinese policymakers with the difficult economics of nuclear, or the high upfront costs of building new reactors. Well, if there’s one thing we know, it’s that China excels at building huge infrastructure, quickly and efficiently.

The country’s efforts to decarbonize are likely to have many positive effects on its domestic energy supply, but the country’s decision to go all in on cleantech is not only based in the desire to achieve net zero.

China also wants to make a lot of money exporting its technologies. China is incredibly important when we think of the supply chain for the green economy, whether it’s solar panels, turbines or even the processing of elements. In fact, China alone accounts for 75% of the world’s supply chain for solar energy.

THE ROAD AHEAD

Recently, China has had to deal with flashbacks to the bad old days of rolling blackouts and power rationing, due to a sudden spike in the price of coal, which left the government little choice but to ration electricity and ramp up coal production.

This reflects a flaw in China’s ambitious decarbonization plan: despite adding historic levels of renewable power to the global supply, China effectively cancels its green energy gains through adding just as significant levels of new fossil fuel emissions to the atmosphere.

As China’s economy continues to grow and its renewable capacity increases, the country will still need to depend partly on coal to power its cities and keep the lights on. This is the problem that Chinese policymakers need to tackle, if they are to achieve their ambitious targets of net zero by 2060.