China’s energy transition: Renewables to dominate by 2050
Projections from energy forecasters indicate that China is on a significant path towards renewable energy, moving away from its heavy reliance on coal. According to the latest report from DNV, titled “Energy Transition Outlook China 2024 — A National Forecast to 2050,” China is expected to dramatically increase its renewable energy capacity and reduce its dependence on fossil fuels over the next few decades.
China, which accounts for 18% of the world’s population and 33% of energy-related CO2 emissions, is crucial to the global energy transition. In 2022, China contributed 35% of the world’s new solar power capacity and 40% of new wind power capacity. By 2050, DNV projects that China will quintuple its renewable energy installations, with renewables providing 88% of the country’s power generation by mid-century. Solar power is anticipated to account for 38% of power generation, with wind power matching this share.
China is set to become the second most electrified region globally, with electricity meeting 47% of its final energy demand by 2050. This shift is expected to have a significant impact on oil consumption, which is projected to peak in 2027 and then halve by 2050. Although oil will remain relevant for heavy transport and petrochemicals, the overall reliance on oil is set to diminish substantially.
Challenges and strategic shifts
Despite the move towards renewables, China remains the largest consumer of coal, accounting for more than half of the world’s consumption. Recent policies indicate an intention to expand coal usage to reduce reliance on imported oil and gas, balancing economic growth and energy security with environmental goals. Natural gas usage is expected to peak in the 2030s and then slightly decline, while nuclear power installations are set to double, albeit contributing only 5% to power production by 2050.
Carbon capture, utilisation, and storage (CCUS) technology is emerging as a pivotal tool in mitigating the environmental impact of coal. China’s policies focus on pilot projects and demonstrations of CCUS, aiming for scalability through carbon pricing and low-cost loans. Additionally, new dependencies may arise, such as the import of ammonia, as part of China’s decarbonisation journey.
Economic and demographic considerations
China’s economic growth is expected to cool from its historic highs, with an average GDP growth of 2.5% per year through 2050. The country faces demographic challenges, including an estimated population reduction of 100 million and a shrinking workforce, which will impact productivity. Despite these challenges, rising prosperity among Chinese households is anticipated, significantly affecting the transport sector with an increase in electric vehicle (EV) adoption.
By 2050, China’s vehicle fleet is expected to be 18% larger, and passenger flights will triple. EVs are set to dominate the market, contributing to half of new passenger vehicle sales by 2027 and comprising half of the entire passenger fleet by 2035. This shift will lead to a 94% reduction in oil demand in China’s road sector, significantly affecting domestic oil production and imports.
Conclusion
The DNV report underscores the need for China to accelerate its decarbonisation efforts to achieve its net-zero goals by 2060. While the transition presents challenges, such as balancing climate and energy security with economic growth, the shift towards renewable energy is critical for global sustainability. China’s progress in renewable energy adoption and efficiency improvements highlights its pivotal role in the global energy landscape.
To read the full version of this article, check out the digital edition of the Q3 2024 issue of F+L Magazine.
