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Green Energy in China: Facts and Trends

Green Energy in China: Facts and Trends

The Chinese government has been making systematic efforts towards greater sustainability for several years. Article XXVIII of the 14th Five-Year Plan, which has been in place since 2021, reinforces the goal of COneutrality by 2060 and substantiates the Chinese State Council’s targets for the economy. Meanwhile China’s energy matrix is still dominated by fossil fuels, especially coal. 

President XI Jinping coined the phrase “new normality” – xín cháng tài 新常态. as early as 2014, likely in part due to pressure from a growing and politically influential middle class demanding cleaner air and better environmental standards. According to this edict, China’s future growth rates would “only” lie between 6.5% and 7%. The Chinese economy is also to be transformed and produce higher-value goods, with a special focus on advanced technology in a defined list of sectors. The service sector’s share of the economy is to significantly increase and domestic consumption, rather than exports, is to drive growth. This fundamental change of direction, however, means that productivity increases are essential. China’s economy was and is after all much more energy-intensive compared to other economies, albeit that it is continuously improving. 

The “new normal” therefore necessitates a restructuring of China’s energy system and a general increase in efficiency in energy and raw material use. Building on the 12th Five-Year Plan (2011-2015), the 13th Five-Year Plan (2016-2020) has set a clear direction for this. 

Leading role in climate protection 

On 22.9.2020 in his statement to the UN General Assembly, President Xi Jinping announced that China aims to be climate neutral by 2060. Against this backdrop, the president called for an energy revolution, the fight against environmental pollution and the transition to a service-oriented economy. In energy policy, the focus is primarily on electricity, natural gas and cleaner, highly efficient and digitalised technologies. China’s growing energy demand is increasingly met by renewable energy, which – due to the immense size of the Chinese market – has significant influence on the global development of renewable energy. 

Here are some important facts from the “Global Status Report on Renewables” by the international policy network REN21: 

  • Due to China’s approach, global investment (28% came from China) in renewables was larger than investment in oil and gas for the first time in 2020. 
  • In the context of China’s major external strategy “Belt and Road”, more than half of Chinese investments in 2020 were in solar energy, wind and hydropower. Admittedly, 72% of all coal-fired power plants built outside China were financed by China (USD 50 billion for a planned 53 GW of installed coal-fired power). 
  • China has set itself the ambitious goal of being CO2 neutral by 2060. However, it has not set a specific quota for the share of renewables in its overall energy portfolio – and is thus in good company with most other G20 countries. Currently, the share of renewables in China is 10% of total energy consumption. 

The role of Chinese cities 

Globally, 75% of energy-related greenhouse gas emissions originate from cities, which are now home to 55% of the world’s population. Cities account for about three-quarters of global final energy consumption. China alone has more than 100 cities with over 1 million inhabitants and the urbanisation rate is currently over 60%. How Chinese cities position themselves for the future is therefore of particular relevance. 

Chinese cities operate within nationally prescribed rules and objectives (keyword: five-year plan): 

  • China’s leadership in the electrification of public transport (in all modalities), especially electric vehicles, is internationally recognised. About 98% of the world’s e-buses are found in Chinese public transport. In 2019, the majority of electric cars were sold in major cities in China (Shenzhen: circa 81,000; Beijing circa 81,000, Guangzhou circa 72,000). 
  • China is the second largest producer of district heating. Currently, most district heating is still produced from fossil sources – but cities are starting to use more solar thermal and geothermal energy. 
  • Also worth mentioning is the financing with “green bonds” at the local level to the tune of USD 17.5 billion, some of which went into renewable projects (for example wind or green hydrogen in Zhangjiakou and Datang). 
  • The international policy network REN21 currently counts 25 Chinese cities (with a total population of around 320 million people) with quantitative targets for renewable energy. 
  • “Low emission zones” are active in Beijing, Shanghai, Hong Kong and Suzhou. 
  • Bio-fuels and green hydrogen are gaining momentum, for example in Hong Kong, Shanghai, Zhangjiakou (where the 2022 Winter Games will be held), Guangzhou and Kunshan. 
  • Public-private funds, such as the Shandong Green Development Fund (USD 1.5 billion), contribute to overcoming climate finance weaknesses in China. 
  • “Shenzhen International Low Carbon City” is a large-scale demonstration project for sustainable and climate-neutral urbanisation. 

AUTHOR:

MMag. Dr. Irene Giner-Reichl, Botschafterin a.D., Senior Expert Counsel at LANSKY, GANZGER + partner

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