China- renewables to expand even more?

Renewables have been accelerating ahead in China, which is adding far more capacity each year than any other country, with over 760GW installed so far.  By contrast, the EU has only managed 500GW, the USA 250 GW.  However, the pace of expansion in China has slowed of late.  Annual onshore wind capacity additions in China are expected to fall by over 16% to 19 GW from 2020 to 2021, given the Chinese government’s decision to end subsidies, say analysts Wood Mackenzie.  

Even so, over the next decade Wood Mac expect 250 GW of wind capacity to be added, with repowering opportunities onshore and growth potential offshore. Indeed, some see the latter booming dramatically. So, while wind subsidies will fall by 3.2%, wind capacity will still grow, and PV solar seem likely to do even better: incentives for PV will rise by 14%, with some seeing solar as the major growth area longer term, helping China get 62% of its power from non-fossil sources by 2030.  

Whether that is achieved or not may depend on what happens on relation to its economic stimulus plans following Covid-19. Although, as in most places, emissions fell during the lockdown, afterwards they went back up and, initially at least, it looked like China was not going flat out for a green energy-based recovery plan as some had hoped. Instead it was seeking a balanced economic response, with no Carbon/GDP target set.  

So, while a repeat of recovery measures focused on high-emissions infrastructure that followed the 2008 global recession did not seem to be on the cards, neither was a Chinese Green New Deal. Certainly, much investment is still flowing to fossil fuel industries, whilst, according to one review, new support policies for renewable energy industries were absent from Beijing’s recovery programme. And it was still mining more coal - a big urgent issue in terms of air quality and health in urban areas, and also, longer term, climate change. All very worrying. 

Choices ahead  

However, in late Sept, came a surprise announcement. President Xi told the United Nations: ‘We aim to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060.’ To that end, he pledged that China would ‘scale up’ its commitment to the Paris Agreement by ‘adopting more rigorous policies and measures.’

While not everyone was convinced, some saws this as hopefully a radical shift, although it does open up a number of strategic questions and choices e.g. can it phase out coal and can it expand renewables even more rapidly?  On coal, it faces major issues and there has not been much progress on coal plant carbon capture and storage in China, or anywhere in the world. Indeed, the USA’s flagship 240 MW Petra Nova project in Texas has been abandoned.  So CCS does not seem likely to be a major option. China does have a nuclear programme, but it’s far smaller that its renewables programme, which, with hydro included, is generating nearly 7 times more power than nuclear. With renewable costs falling, they really ought to be pushed even more. 

That does seem possible. Tsinghua University’s Institute of Energy, Environment, and Economy, which works closely with the Chinese government’s Ministry of Ecology and Environment, has produced a blueprint for an energy transition with coal, gas and oil cut back very dramatically and renewables supplying about 65% of power by 2060.  Solar energy generation would increase by a massive 587% between 2025-2060, while wind would expand by 346%, both of them by then overtaking hydro. On present performance, that seems just about credible, although the proposed 382% expansion of nuclear may arguably be less so. 

Nevertheless, there may be constraints on rapid renewable expansion. As I reported in an earlier post, the long term potential for renewables in China is vast, but there have been issues with grid connections. The expansion of capacity, often in remote areas, was initially too fast, leading to very high level of curtailment – costly, wasted potential power. Given that there were also concerns about the cost to consumers, the government throttled back of growth by limiting the subsidies available for new projects.  As in the Western economies, the argument was that, since renewables were getting cheaper, they did not need extra help. And the slow down also meant there was more time to develop the grid system.

That is being done with new supergrids being introduced, and it may also be possible for renewables to expand in response to normal market pressures. However, the pace of market-led expansion post-Covid may be relatively slow, and some say it needs to be very much higher if climate change is to be limited and air pollution reduced. We will have to wait to see if the new carbon policy will keep China in the lead globally on renewables 

China’s hegemony 

Back in 2009, President Barak Obama said that ‘the country that harnesses the power of the clean, renewable energy will lead the twenty- first century’. Since then it has become something of a technology race, as part of the wider battle for dominance.  China has evidently been seeking various levels of political and economic hegemony regionally and maybe globally, and has been doing well on green energy technology, leading the world in national capacity terms and also exporting a lot of cheap PV solar cells. Of late it has also started to take a lead in the use of Electric Vehicles, and possibly soon in their export. 

Interestingly China was No1 in Ernst and Young’s global attractiveness league for renewable investment last year, but has be pushed to No. 2 by the USA, where, despite Trumps policies, low cost renewables have begun to boom, replacing coal and nuclear capacity. However, the US economy has suffered from Covid 19, arguably worsened by Trumps poor responses, and much now depends on how the recovery is framed.  Bernie Sander’s Green New Deal proposals may have been sidetracked, but Biden’s version is still quite radical, so that, if he wins the presidential election, the USA may start to catch up with China on renewables in output terms, as well as in investment terms. Renewables currently generate about 18% of power in the US, although coming up to 28% in China. 

There are also other players. Like China, most of the rest of Asia, India apart, handled Covid 19 better than did the USA. Although China is the clear leader in terms of renewables, South Korea is also accelerating ahead, with a $95bn green project-based Covid 19 recovery programme, while there is pressure for India to double its zero-carbon electricity generation share. Oddly though, for a country so focused on technology, Japan does not look likely to become much of a rival to China in this area, having adopted a fairly unambitious renewables and climate programme. It still seems to be hoping that it can get more of its old nuclear plants restarted.  Meanwhile, the EU is pushing ahead is a quite ambitious renewables programme with, interestingly, nuclear excluded from support in its Covid 19 recovery programme.  

What’s the bottom line? Post Covid 19, China may have to slow technology and economic growth down a little nationally, but it seems unlikely to give up on its wider hegemonic aims or its promotion of renewables. Indeed, the new carbon policy seems to suggest it will try harder, with the aim of getting coal use down dramatically. However, with coal still its major energy source, it will continue to be the worlds largest annual CO2 emitter for some while yet- though in terms of total cumulative emissions, the US still leads by far.