China’s net-zero target of 2060 is hugely challenging — not least because the country’s economy and energy demand will continue to grow.
The shift from fossil fuels to renewable energy for electricity networks and hydrogen for heavy industry is also costly and technically complex.
Bioenergy and carbon capture and storage are also in the country’s transition plans.
President Xi Jinping has called for co-ordinated efforts to increase the proportion of green and low-carbon energy while strictly curbing the expansion of energy-intensive, high-emission and low-standard projects.
Xi has urged accelerated development of new energy sources — such as wind, solar, biomass and hydrogen — and called for fully leveraging market mechanisms, improving carbon pricing and strengthening co-ordination in trading electricity, carbon emission rights and energy.
A recent report issued by European supermajor Shell says that China was responsible for 27% of global emissions in 2019, and that to reach its net-zero targets in 2060, it will need to reduce carbon emissions at a pace faster than any other country. China National Petroleum Corporation (CNPC) says China’s carbon dioxide emissions will peak at 10.6 billion tonnes in 2030. Last year, CO2 emissions rose to more than 11.9 billion tonnes, accounting for 33% of the global total, according to the International Energy Agency.
Decarbonising China will require substantially increasing solar and wind generation from 10% today to 80% by 2060.
Solar and wind will surpass coal to become the largest sources of electricity by 2034, Shell says.
China is already a world leader in renewables deployment.
In 2021, power generation capacity fuelled by renewables increased by 11.6% year on year to about 1000 gigawatts — about 43% of China’s total power generation capacity, with electricity generated by renewables rising 11.4% year on year to 2459 terawatt hours, 30% of the country’s total electricity generated.
Of the around 1000 GW renewable power generation capacity, 345 GW is hydropower, 331 GW wind power, 306 GW solar and 35 GW bioenergy.
According to a CNOOC Energy Economics Institute forecast, in 2022 the country’s renewable power generation capacity will rise 10.8% to 1107 GW, including 352 GW of hydropower, 383.8 GW of wind power and 345.6 GW of solar power.
Generation from renewables is expected to increase 8.1% to 2658 terawatt hours, accounting for 31% of China’s total power generation.
Much of China’s industrial capacity relies on coal and will require significant investments to switch to lower-carbon production processes, technologies and fuels if the country is to achieve its decarbonisation objectives while avoiding costly early retirement of these industrial assets.
China’s energy transition will require a $12.5 trillion investment in building and retrofitting energy infrastructure related to bioenergy, hydrogen and CCUS technologies, Shell says, adding that early infrastructure investments this decade will also help China’s economic recovery.
Sectors such as heavy-duty road transport, shipping and aviation, as well as heavy industries such as steel and chemicals, which currently rely on fossil fuels, will have to transform to new lower-carbon energy sources in the future.
Shell warns that China’s energy system transformation will need to occur against a backdrop of growing energy demand. Electricity for hydrogen production, for example, will add 25% to electricity demand by 2060, when the overall electricity system will be almost four times the size it is today.
The share of hydrogen will rise from negligible levels today to more than 17 exajoules, or 580 million tonnes of coal equivalent per year, by 2060.
It will represent 16% of total energy consumption then, mainly due to its use as a fuel for industry and long-distance transport, according to Shell.
In addition to increased spending, China will require policy frameworks and sustained commitment from government, business and society more broadly to make progress.
“Not only will China need to change how energy is produced, the way energy is transported and consumed will also have to be transformed,” Shell says. “This will involve developing new energy sources combined with new technologies. New economic and commercial models will also be needed to enable their adoption into industries that directly use energy, as well as the transport and buildings sectors.”
The electricity mix will need to shift from around 65% generated by fossil fuels to one dominated by renewables — 80% of which will be generated by wind and solar — by 2060.
Any remaining fossil fuels in power generation will be fitted with CCUS.
By transforming its energy system, China has an opportunity to become a prosperous pioneer in deploying clean energy technologies and fuels, the report concludes.
Sinopec is leading China’s hydrogen drive.
The company has formed a joint venture with the US’ Cummins, which will kick-start its operations in China with a $47 million investment that will see the construction of a green hydrogen manufacturing plant in Foshan.
The Foshan plant is expected to produce 500 megawatts per annum of green hydrogen once completed in 2023.
Over the long run, the joint venture Cummins Enze aims for the plant to produce 1 GW per annum of green hydrogen.
Sinopec produces more than 3.5 million tonnes per annum of hydrogen, the equivalent of 14% of China’s annual hydrogen production.