Powering China’s energy transition

March 8, 2022 CEN_com Energy & Climate Change~, Geopolitics & Multipolarity~ 0

China is increasingly looking to secure its future energy needs with sustainable alternatives. In accordance with the 2016 Paris Agreement, China committed to make non-fossil fuel energy 20 percent of its energy supply by 2030 and to peak CO2 emissions by 2030. Chinese President Xi Jinping expanded on that commitment in a speech to the United Nations in September 2020 when he announced that China aims to achieve carbon neutrality by 2060.

Ahead of the late 2021 UN Climate Change Conference in Glasgow, China pledged to “strictly limit” the increase of domestic coal consumption, increase the share of non-fossil fuels in primary energy consumption to around 25 percent, and bring China’s total installed capacity of wind and solar power to over 1.2 billion kilowatts by 2030. On the sidelines of the Glasgow summit, China also signed a joint declaration with the United States that included various measures for cooperating on climate-related issues, most notably reducing methane gas emissions.

Amid efforts to pivot to cleaner energy, China has emerged as the world’s single largest investor in clean energy transition. In 2021, China invested $266 billion in energy transition measures, accounting for more than one-third of the global total ($755 billion). The United States invested the second-largest amount, at $114 billion, followed by Germany ($47 billion), the United Kingdom ($31 billion), and France ($27 billion).

A large-scale wind and solar farm in Jiangsu, China.
Source: Yaorusheng/Moment via Getty Images
Global leader in hydro, solar and wind power

Due to large-scale investments in massive infrastructure projects, hydroelectric power has become China’s main source of renewable energy production. The Three Gorges Dam, completed in 2012 at a cost of over $37 billion, is the largest hydroelectric dam in the world and boasts a generation capacity of 22,500 megawatts (MW). The dam generates 60 percent more electricity than the second-largest hydropower dam, the Itaipu Dam in Brazil and Paraguay.

Including the Three Gorges Dam, China has constructed 4 of the top 10 largest energy-producing hydroelectric dams in the world. From 2000 to 2019, China’s generation of hydroelectricity grew nearly sixfold from 222.4 terawatt-hours (TWh) to 1,304.4 TWh. As a result of the Three Gorges Dam and other projects, China became the world leader in hydropower in 2014, and as of 2019, it accounted for 30.1 percent of global hydroelectricity generation.

Over the past decade, China has also emerged as a global leader in wind and solar photovoltaic (PV) energy. China’s electricity generated by wind power accounted for just 2.1 percent of its total consumption in 2012, compared to 3.7 in the United States and 9.4 percent in Germany. By 2019, however, China’s wind-energy generation surged to 406 TWh, well ahead of the United States (298 TWh). As a result, China accounted for roughly 28.4 percent of global wind-energy production in 2019. In solar PV, China is both the leading supplier and consumer. Due to rapidly decreasing costs, aggressive policy incentives, and low-interest loans from local governments, China is home to two-thirds of the world’s solar-production capacity.

China is also turning to nuclear power to reduce its reliance on fossil fuels. As of January 2022, China operated 53 nuclear power reactors, which generated a total of 50,769 MW of energy. Since 2019, China has trailed only France and the United States in terms of nuclear electricity generation. China’s national economic blueprint, the 14th Five Year Plan, reaffirmed the country’s commitment to nuclear energy and outlined plans to increase the installed capacity of operating nuclear power plants to 70,000 MW by 2025. 

Securing China’s Energy Needs

While China is massively expanding its renewable energy capacity to meet its 2030 and 2060 climate goals, natural gas will remain a significant energy transition fuel for China.

Natural gas is less carbon-intensive than coal when efficiently combusted, emitting up to 60 percent less CO2. In 2019, natural gas made up 8.1 percent of China’s total energy consumption, a notable increase from a decade earlier, when just 3.5 percent of China’s energy consumption was from natural gas. To further promote natural gas consumption, China pledged to source 10 percent of its energy demands from natural gas by 2020.

Despite measures to rely more on renewable energies, much of China’s energy supply comes from foreign countries in politically unstable regions and must travel through narrow straits and contested waterways before reaching China. Securing guaranteed access to foreign sources of energy is vital for China’s ongoing growth and development.

China holds the world’s largest shale gas reserves, but the amount of natural gas readily available for extraction is much lower due to geographical complexities. In 2019, 42.6 percent of China’s natural gas needs were met by foreign sources.

China currently relies on foreign natural gas delivered via land pipelines and carriers in the form of liquefied natural gas (LNG). Two existing pipelines supplied 46 percent of China’s natural gas imports in 2017, with three-quarters of this coming from Turkmenistan. The share of overland energy sources is likely to increase in the coming years. In 2014, China and Russia signed a 30-year, $400 billion deal to deliver Russian natural gas to China, and in December 2019, the $55 billion Power of Siberia pipeline sent its first shipments of natural gas from Russia to China.

In February 2022 China National Petroleum Corporation (CNPC) and Russia’s Gazprom signed a long-term sales and purchase agreement for natural gas to be supplied via the Far Eastern route. Once the project reaches full capacity, the volume of Russian pipeline gas supplies to China will grow by 10 billion cubic meters, totaling 48 billion cubic meters per year. The deal is valued at $117.5 billion.

Russian oil producer Rosneft also signed a deal with CNPC in Feb 2022 to supply a total of 100 million tons of oil through Kazakhstan over 10 years with the crude oil to be processed at factories in northwest China to meet the country’s needs for petroleum products.

In 2021 Russia replaced Qatar to became China’s third largest gas supplier, and it is also China’s No.2 crude oil supplier. The Febuary 2022 agreement is seen an important step towards further strengthening the mutually beneficial cooperation between Russia and China in the gas sector. China also imports LNG from several other countries, including Australia, Qatar, and Malaysia. In 2021 China also became the world’s largest importer of Liquified Natural Gas, overtaking Japan.

Conclusion: Energy, security and US superpower hegemony

As much as many Western environmentalists like to ignore the realities of global politics, these realities shape the response to the climate crisis. The preceeding information helps illustrate why China’s energy security is in part linked to the long term US attempt to destabilize the Russia’s energy industry, and in particular to politically sabotage the Nord Stream 2 gas pipeline from Russia to Germany. It highlights the need to understand the US’s “triple prong energy war” – weakening Russia’s competitiveness in energy, undermining China’s energy security, and finally weakening the European Union by making it more dependent on the US through both depriving it of reasonably priced energy, and forcing it to help fund the US military budget through its vassal NATO. It is an audacious strategy whereby the US seeks to maintain its global hegemony by undermining its two key economic competitors – China and the European Union – and at the same mobilizing NATO to strategically strangle its major nuclear rival. The US, unable to successully compete against China in world trade, resorts to classic imperialist strategies of trade wars and aggressive military alliances.

Sources: