China pivots on renewables in strategic drive towards energy independence, finds DNV report

China's profound influence on the global energy transition is undeniable, given its substantial shift towards green energy despite contributing 33% to global emissions.

According to DNV's Energy Transition Outlook 2024, China is poised to make remarkable strides in renewable energy, with plans to increase capacity fivefold.

Furthermore, it aims to transform its power mix from the current 30% renewables to a staggering 88% by mid-century.

Impressively, China has already escalated its solar power generation from 1% to 5% within a decade, with projections indicating that this will surge to 38% of electricity production by 2050, as predicted by the report.

This ambitious trajectory is expected to result in a reduction of annual emissions by 8 gigatons between now and 2050, surpassing Europe's emission reduction efforts by threefold.

Energy independence as a strategic goal

China's policy is centred around the overall strategic aim of national energy security, although the government has not yet achieved it, according to the report.

“We find that this [energy independence] is only partly achieved by mid-century, when China will still be importing sizeable quantities of oil and gas, Remi Erikson, Group President and CEO at DNV said, adding that, “In our view, there is potential for China to accelerate its transition to reduce its reliance on these sources further and faster — and to bring China closer to net-zero emissions by 2050.”

The country is growing its energy independence through energy conservation and energy switching, as well as strengthening domestic energy supply capacities. These strategies are supported by nationally regulated supply chains for technology and domestic resource bases, as much as possible.

The power sector is a key driver for this transition by substituting domestically produced coal for imported coal. By 2050, domestic coal production will meet the needs of the other coal-consuming sectors.

Meanwhile, the use of gas and oil will always be dependent on imports. According to the report, oil will continue to be used in petrochemicals and heavy transportation (shipping and aviation) even if consumption is predicted to cut in half by 2050 from its peak in 2027.

In addition, imports will account for 84% of the oil used. Whereas the amount of natural gas consumed will not decrease from 2022 levels in 2050, with 58% coming from imports, the report stated.

Nevertheless, replacing the use of gas in buildings and power generation would further energy independence, pushing a faster transition to net zero in 2050.

Similarly, replacing oil and gas with renewable energy or nuclear power would put China on a steadier path towards energy independence.

A shift towards cleaner power generation

China's energy consumption is expected to peak by 2030 and then drop dramatically by 20% by 2050, because of electrification and efficiency measures, alongside a decrease in the population of 100 million people.

China is already ranked sixth out of the ten globe regions in our estimate for electrification of demand.

The country is expected to rise to the top spot by 2050, accounting for 47% of final energy consumption, surpassing both North America and Europe and just falling short of OECD Pacific, the report highlighted.

Enhancing energy efficiency is a key component of Chinese energy strategy, and it is clear that the country wants to reduce energy intensity.

By 2035, energy supplied to the economy per unit value is expected to decrease by a 33% decrease to 3.4 MJ/USD. It is expected to drop further to 2.2 MJ/USD by 2050, the report said.

These efforts are strengthened by legislative frameworks such as the Renewable Energy Law and the Energy Conservation Law.

Sectoral evaluations project more than double the efficiency in buildings by 2050, as a result of the widespread use of heat pumps and air conditioners.

While the transportation industry expects a moderate growth to 75% in efficiency by 2050, the manufacturing sector is showing gradual gains.

The report said that China's comprehensive approaches are noteworthy since they go beyond specific industries and include recycling, insulation, and environmentally friendly transportation to reduce total energy use.

Investing in renewable energy

In 2023, China accounted for one-third of global CO2 emissions related to energy. Most of these emissions came from burning coal. By 2050, that proportion will drop to 22%.

“Nevertheless, DNV finds emissions likely to peak by 2026, well in line with the official target of peaking ‘before 2030’, thereafter gradually declining by two-thirds by 2050,” the report stated.

China was in charge of adding 35% of the world's solar power capacity and 40% of its wind power capacity in 2022.

Furthermore, it will maintain a high proportional contribution of new renewable capacity until the middle of the century.

In addition to benefiting the people of China, the introduction of efficient, clean green electricity will have a significant influence on the worldwide movement toward clean energy.

China will rise from its current sixth-place position to rival OECD Asia Pacific as the world's most electrified area over the course of the next three decades.

Even though Chinese families are becoming more affluent, continued electrification and a policy-driven push for energy efficiency will cause the final energy consumption to peak in 2030 and decline by 20% by 2050.