China is the world’s largest energy consuming nation. Coal dominates its energy supply, resulting in the highest CO₂ emissions globally. As a result, Chinese energy and climate policies have a profound impact on the world.
 

The country has had carbon emission controls as a policy objective since 2009. However, new national targets of CO₂ emissions peaking at the latest by 2030, and carbon neutrality by 2060 at the latest, were announced by Chinese President Xi Jinping at the 75th Session of the United Nations General Assembly in 2020.
 

To achieve this, China will need to radically transform its energy system. The direction and speed of this energy transition will have implications for a range of important themes, from the global supply and demand of critical materials, to technology development and applications, and the new paradigm of global energy geopolitics. A particular feature of the Chinese energy system is the importance of energy-intensive industries, with a significant share of products destined for export.

Planning a new energy system for China 
China has witnessed a quadrupling of its renewable electricity generation capacity over the past decade and the emergence of a strong national renewable energy manufacturing industry. This has provided a sound basis for a set of ambitious, but attainable, renewable energy targets that can provide the backbone for the country’s future energy supply.

However, how to move from the current energy supply structure to a renewables-based future, by 2060 at the latest, needs to be further understood. For example, reliable operation of the future energy system must be ensured at all times, and everywhere, as China increases its reliance on variable solar and wind electricity (VRE) generation.

In 2021, renewable power generation reached 44.8% of total installed power generation capacity in China. Renewables accounted for nearly 30% of the country’s total electricity generation. The VRE share has been increasing rapidly and is expected to provide the bulk of electricity generation around mid-century. By 2030, China’s official target is to install 1,200 GW of solar photovoltaics (PV) and wind turbines. However, industry and energy experts expect this target may be substantially exceeded by around 50% (up to 1,800 GW), if advanced energy storage, hydrogen and vehicle-to-grid (V2G) technologies are scaled up in an affordable manner.

These technologies – included in the Chinese Ministry of Science and Technology’s Strategic Innovation in Science and Technology 2022 R&D programme – along with other key grid technologies, will play a pivotal role in advancing the pace of China’s energy transition towards carbon neutrality. This is well exemplified in the Zhangjiakou national demonstration project, in which massive multi-GW solar and wind development in combination with electricity storage and end-use electrification transformations are being showcased and tested. The project shows the direction for the country as a whole.

There is no shortage of modelling and scenario studies relating to China’s energy future. But official Chinese energy planning is still based on its well-established ‘Five-Year Plans’. The span of 40 years (2020–2060) is short for the country’s planned massive energy transition, which involves a lot of uncertainties, and the key question is how to use scenarios and planning tools to provide valuable inputs to inform the policy debate in China.

IRENA’s advice to China
For the past couple of years, the International Renewable Energy Agency (IRENA) has operated a long-term energy scenarios initiative for the Clean Energy Ministerial (CEM) – a high-level global forum focused on promoting policies and programmes that advance clean energy technology, to share lessons learned and best practices, and to encourage the transition to a global clean energy economy – developing renewable energy roadmaps through its REmap programme.

Achieving carbon neutrality is bound to require changes in almost every aspect of how China consumes energy and produces goods. Substantial analysis and a coordinated effort will be needed in the next few years to shape the path to 2060. For the first time, the country has developed and issued a dedicated five-year plan to address climate change, in addition to an energy development plan. This will help China to align its strategic policy objectives – building a new modern energy system that can deliver climate security without compromising its continued economic development.

China has many strengths and some unique challenges that will impact which pathway it takes. However, the country is also not alone in striving to reach a net zero goal, as most major economies are now embarking on a similar journey. As such, while China’s energy transition is unique, it will share many common features with others, so the opportunities for mutual learning are large.

For example, integration of VRE, electrification and reduction of energy intensity through efficiency best practice are core elements of any mitigation strategy, while the perspectives are more nuanced regarding the role of bioenergy, carbon capture and storage (CCS) and nuclear energy. Also, the geopolitics of energy may change as trade in fossil fuel dwindles as new clean energy commodities such as green hydrogen and renewable ammonia develop their market share.

In a Chinese context, renewable methanol deserves special attention as the country is the world’s largest methanol consumer for petrochemical production and for transportation fuel.  Meanwhile, China is also already the world’s largest battery producer for electric vehicles (EVs) and smart charging will be critical to VRE integration. With this in mind, the State Grid Corporation of China and IRENA jointly published a report on smart electrification earlier this year, while international best practices have been identified for re-organising power systems for the transition.

As a next step in energy transition dialogue, IRENA recently issued a report – China’s route to carbon neutrality: Perspectives and the role of renewables – that draws on the best practices from its 168 member countries and technology-focused analyses of power sector flexibility, hydrogen and the sustainable use of biomass, as well as forward-looking studies of global energy transitions such as the World Energy Transitions Outlook (WETO), Reaching Zero with Renewables, and Innovation Landscape for a Renewable-Powered Future.

Key insights with strong relevance to China were identified – working in close collaboration with the Energy Research Institute of the Chinese Academy of Macroeconomic Research, a governmental think-tank providing technical and policy advice to the Chinese central-level decision makers in the energy regime – with the aim of informing the further work needed to chart the path to carbon neutrality in China by 2060.

Given the scale of China’s energy transition and various existing conflicting priorities, the country’s strategic actions must be carefully balanced to ensure systemic coherence over time. The IRENA report provides high-level strategic guidance on many complex topics and offers the country 13 specific recommendations for stronger actions. They include:  

• Developing and delivering an integrated long-term energy plan.
• Maintaining energy efficiency improvements as a priority.
• Accelerating the phase-down of coal consumption.
• Accelerating the transition towards renewable power.
• Reforming power networks.
• Increasing the electrification of end-use sectors.
• Expanding the direct use of renewables, particularly biomass for energy purposes.
• Scaling up the production and use of hydrogen and synthetic fuels.
• Supporting cities as champions of low carbon living.
• Continuing progress in light-duty transport and broadening to heavy-duty and long-haul modes.
• Laying the groundwork for industrial sectors to achieve net zero emissions.
• Continuing to support technology research, development and demonstration (RD&D) and broader systemic innovation.
• Deepening global engagement. 
   

These recommendations also serve as an essential set of the key enabling technologies and effective measures to adopt in the process of formulating China’s energy transition strategies.

Some of them are instrumental for putting in place systemic innovations – an approach to facilitate the development and diffusion of innovative technologies to address the flexibility challenges while integrating more variable renewable electricity in the power mix. Systemic innovation combines four elements: new technologies, the redesign of markets and regulations, changes in operational practices, and new business models.

The flexibility required for reliable power system operation at different geographic and temporal scales would arguably be the most critical element in building the Chinese future power system – a decisive step to ensuring success of the transition towards a future powered by high-shares of renewables.

The way ahead
IRENA, in its role as the inter-governmental body for global energy transition, can support China in both learning from others and sharing Chinese experience with the world. The Agency’s recent report provides some key insights based on its work with countries around the world and on its analysis of global and regional energy transitions.

China is a fast learner and an efficient doer. This makes the country a constructive player that can both benefit from, and contribute to, global actions to advance the energy transition. By doing so, China will be better equipped to deliver on its own commitment to achieve carbon neutrality by 2060.