renewable energy in China

Renewable energy in China: Finding the path to carbon neutrality by 2060

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China is the leading investor in renewable energy in the world.  In 2019, for example, the global renewable energy investment was 282 billion US dollars and China invested 87 billion US dollars. These investments help develop renewable energy in China while meeting increasing energy needs. Over the past decade, China has become a world leader in wind and solar energy, but will it achieve its goal to be carbon neutral by 2060?

Investments in renewable energy, by country

Data Source: Bloomberg, designed by daxue consulting, Investments in renewable energy, by country

As the situation for green energy is different in every one of China’s provinces, it is hard to track how renewable energy is distributed between industries, households, agriculture and transportation. Some provinces have higher rates of using green energy in China. For example, Inner Mongolia’s industries and buildings use 30.1% of solar energy, as the population there is not very high.

op Chinese provinces using renewable energy sources

Data Source: Nature, designed by daxue consulting, Top Chinese provinces using renewable energy sources

China is the largest country contributing to CO2 emissions

China is the largest contributor to global CO2 emissions, currently accounting for about 30% of global emissions. The main cause of anthropogenic CO2 emissions is the combustion of fossil fuels for energy. There is a positive correlation between per-capita GDP and per capita energy consumption. According to the greenhouse gas emissions data, China emits more than 10 billion tons of carbon dioxide into the atmosphere each year. 

As for energy structure, China’s coal consumption accounted for 59% of energy consumption in 2018, a decrease of 1.4% from the previous year. This is the first time that China’s coal consumption accounted for less than 60% of primary energy consumption. 

While in 2019, renewable energy in China (hydropower, wind power, nuclear power, natural gas, etc.) accounted for 26% of total energy consumption.

China Electricity Council, designed by daxue consulting, electricity production in China by fuel 2019

Data Source: China Electricity Council, designed by daxue consulting, electricity production in China by fuel 2019

Renewable energy in China under the Energy Revolution Strategy

In 2014, President Xi Jinping announced an “energy revolution.” This program aims to limit energy consumption by reducing the share of coal and increasing the share of green energy in China. The official paper published in 2017 is the Energy Revolution Strategy (ERS). It outlines the key goals and strategies for China’s energy sector by 2030, with the goal to “make the sky blue again”. This document includes roadmaps for 2020 and 2030, as well as a strategy for 2050.

China’s goal for  2020 was to limit its fossil energy consumption to 5 billion tons of coal equivalent (BTCE), reducing the share of coal to 58%. The share of green energy in China was to be no less than 15% of the overall energy consumption. As we saw above, China achieved this goal.

The roadmap for 2030 includes a 60% reduction in CO2 emissions from 2005 levels. The share of gas in the energy structure should be 15%, and the share of other non-fossil fuels up to 20%.

By 2050, the strategy plans that green energy in China will account for more than half of the total energy consumption. China can achieve energy efficiency improvements and economic restructuring. It will also have a positive impact on China’s Belt and Road Initiative. This would eliminate the lack of trust between the global energy community and China.

China’s plan to achieve carbon neutrality before 2060

In 2020, Chinese President Xi Jinping announced to the United Nations General Assembly that China is committed to achieving carbon neutrality by 2060.

Chinese experts predict that China’s CO2 emissions will peak around 2030. Achieving these goals will require drastic reductions in the use of fossil fuels in transportation and manufacturing. In September 2020, a research team from Tsinghua University unveiled a 15 trillion US$ 30-year strategy to meet these goals. It calls for an end to the use of coal for power generation by around 2050. It also highlights the importance of using nuclear and green energy in China. Recent advances in the renewable energy in China have made coal swapping easier, which could help the country achieve its goals.

What are the sources of renewable energy in China and how do they work?

Hydropower: reduces coal consumption, but devastating effect on China’s largest rivers

Hydropower is China’s second largest energy source after coal. In fact, more than half of the world’s dams are located in China. If China exploits its hydropower resources at full capacity, it can meet a fifth of China’s energy demand and replace about 1.3 billion tons of coal. Hydropower generates far less CO2 emissions than coal, but it is not without consequences.

daxue consulting analysis, China’s hydro power investments

Data Source:  China Electricity Council, daxue consulting analysis, China’s hydro power investments

While the active use of hydropower will make the air cleaner for the inhabitants of China’s east coast,  the large number of dams creates additional risks. For example, a new round of dams in China’s environmentally vulnerable Tibetan regions will destroy river ecosystems and fish habitats. People living in the southwest, where 80% of new dams are constructed, will pay the environmental price as well.

The concentration of dams on the Jinsha River (upper Yangtze) is especially high. These dams increase the risk of large sedimentation in the Yangtze Delta and flooding in major cities such as Shanghai. In addition, for every new hydropower plant in southwest China, there is an additional coal-fired power plant in reserve.

China’s hydropower stations 2019

Source: Oil Price, China’s hydropower stations 2019

China: top wind installer in the world

China ranks first in the world for the installation of wind turbines. The main problem with wind turbines in China is that they mostly are in the South China Sea provinces. In the northern regions, coal is still the number one energy source, although wind energy has huge potential there.

The Gobi Desert, near the Mongolian border, is an important destination for China’s wind power industry. This is where the Jiuquan wind power base is located. Construction began in 2009, but some turbines stopped operation due to low demand. The strong desert winds simply produce too much energy for the surrounding rural villages. This wind energy could go to better use if the government  were to succesfully build cables for transmission over a thousand miles, but it has not reached success yet.

off-shore wind turbines in Shanghai

Source: Renewablesnow, off-shore wind turbines in Shanghai

In 2015, China decided to focus on offshore wind energy. Strong winds along the east coast create energy for industrial cities with large economies.

 2019 wind capacity (GW) by province

Source: China National Energy Administration, 2019 wind capacity (GW) by province

China has the largest solar energy market in the world

China has become a leader in the installation and the manufacturing of solar photovoltaic panels. The country has the largest solar energy capacity in the world of over 205 TWh, and iIn 2015, it opened one of the world’s largest solar power plants in the Tibetan province of Qinghai. The station cost  2.2 billion US$, with an extra 3.2 billion US$ for a high voltage line that carries electricity to more densely populated areas of China. This is the first line in the country to provide 100% renewable energy transmission over long distances.

Solar power in China: renewable energy in China

Data Source: NEA 2020, Solar power in China

China is in the need of cloud risk reducing systems

Solar panels also have disadvantages. For example, they are ineffective in areas with a lot of annual cloud cover, which is a problem in much of the contry.

However, the Chinese company Supcon Solar has created systems to reduce the risk of cloudiness. They are already in use at the Delingha solar thermal power plant. Despite the harsh weather conditions, it took only 18 months to finish the plant’s construction and reach full capacity in April 2019. Because of its location, Delingha has to withstand temperature extremes and frequent clouds.

Thanks to new technologies, the power plant can provide stable electricity during a short cloudy period.

In winter, China’s skies turn gray due to smog. This also reduces the amount of sunlight reaching the solar panels. In the most polluted regions of China, solar energy generated by the panels falls by 35 percent, or 1.5 kilowatt-hours per square meter per day.

 Solar PV installed capacity by province: renewable energy in China

Source: China’s National Energy Administration, Solar PV installed capacity by province

New mines for rare earth mineral are important for the renewable energy in China

The development of solar energy depends on an adequate supply of rare earth minerals. These include neodymium, terbium, indium, dysprosium and praseodymium and are used for the production of solar panels. China currently produces 80% of the world’s rare earth minerals, and Europe and the United States depend on rare earth minerals from China.

China’s switch to renewable energy sources could create a shortage of these minerals for export. Another problem is that the opening of new mines requires huge investments and at least 10-20 years.

Rare earth minerals are also used for developing batteries for new energy vehicles and smartphones. While these minerals help build green technology, rare earth mineral mining does cause environmental risks such as producing toxic waste. This is why rare earth mining is greatly restricted in other countries, and one of the reasons why China has become one of the main exporters.

China’s biofuel market

China’s car market is one of the largest in the world, which  leads to an increase of greenhouse gas emissions. To address this issue, China’s State Council approved a strategic plan to use bioethanol derived from agricultural residues as gasoline for cars.

In 2020, the Swiss company Clariant and the American company Chemtex have teamed up to increase biofuel production in China. They plan to introduce second generation biofuels. Under the contract, in Fuyang City, Anhui Province, the companies will build a 50,000-ton-per-year commercial plant to produce cellulosic ethanol using Clariant solar fluid technology.

Biofuel production in China: renewable energy in China

Data Source: BP Statistical Review of World Energy, Biofuel production in China

China’s demand to diversify feedstock for biofuel production

Although China tries to move from grain biofuels to non-food biofuels, it is difficult to expand bioethanol production from cassava and sweet sorghum. The main raw material for biodiesel is vegetable oil. For the procurement of these raw materials, it is necessary to have large cultivated areas. In turn, this has a negative impact on food prices and creates a conflict between biofuels and food production in China.

Initially, the Chinese government planned to use obsolete corn stocks for ethanol production. However, these stocks quickly ran out and producers had to turn to fresh corn. Biofuel producers began to compete with food crops for land and undermine China’s food security. The rise in vegetable oil prices from biodiesel production has hit China particularly hard. In response, the government has suspended construction of new corn-based ethanol plants. The lack of accessible land is the most serious obstacle to the expansion of biofuel production in China.

What is the future for renewable energy in China

China can reap significant benefits by switching to green energy sources, but the difficult part is finding solutions that do not harm the environment in other ways. These solutions will help not only prevent climate change, but also meet the growing global demand for solar panels and wind turbines. Government incentives and subsidies will play a key role in the development of renewable energy in China. This will make China a market leader in green energy technologies.

However, a trade war with the United States could hinder the development of green energy in China. The Chinese government is tightening its spending and subsidy policies. As a result, wind and solar installations must now compete directly in auctions with other forms of electricity generation.

In the 2020s, the energy industry will see an accelerated shift towards large and small green energy projects in China. Thus, in the future, renewable energy companies will have more opportunities to expand their business. These industries welcome foreign investors. Foreign investment can contribute to the industrial and technological development of renewable energy in China.

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