A new report from Wood Mackenzie suggests that China’s 2060 carbon neutrality target can complement both energy security and economic goals.
Wood Mackenzie research director Miaoru Huang said: “When President Xi Jinping announced the country’s carbon neutrality goal, he was not simply saying that China would adjust its energy mix to reduce emissions.
“He was giving notice of the complete transformation of its economy and how it produces, transports, and consumes energy.
“This transformation or ‘dual circulation’ is the pivot point to China’s balancing act on its climate change goals, energy security concerns and economic ambitions.”
On its current trajectory (not accounting for carbon neutrality), China’s oil-import dependency would exceed 80% by 2030, while half of its natural gas supply would be imported.
Wood Mackenzie highlighted that the pursuit of carbon neutrality halves China’s oil demand by 2040 compared with Wood Mackenzie’s base case, with demand almost eliminated by 2050.
For China to meet its carbon neutral goal, it will need a 75% increase in electricity demand, compared to Wood Mackenzie’s base case, to replace fossil fuels, equal to $6.4trn investment in new power generation capacity.
Growth will primarily come from solar, wind and storage, with a role for nuclear.
For China, building the production capacity is the easy part, the report stated.
The country is already the world’s largest manufacturer of wind turbines and dominates global solar module production, with around two-thirds of photovoltaic panels produced domestically.
In addition, Chinese manufacturers own “significant capacity” overseas.
China also leads the supply and processing of most of the raw materials needed for batteries and other zero carbon technologies.
Three-quarters of global lithium-ion battery production, half of the world’s electric vehicles and almost 70% of all solar panels are made in China.
Huang said: “China is changing the world. A decade of state-directed investment has already put China at the front of the grid when it comes to the critical resources and technologies essential to zero-carbon electricity and mobility.
“And, just as the rest of the globe will need China to help it decarbonise, so China will need others to support its transition.”