Report: Renewables to dominate Chinese energy transformation

Date: 28/08/2013

Greenhouse gas emissions from China´s energy industry are likely to peak in 2027 as renewable energy and gas play an increasingly dominant role in the country´s energy mix.


That is the conclusion of a major new report from Bloomberg New Energy Finance (BNEF) that predicts renewables, including large-scale hydroelectric projects, will contribute more than half of new capacity through to 2030 as the country´s total power generation more than doubles.


The report predicts that under the most likely scenario for the country´s energy sector, dubbed the “New Normal”, more than 1,500GW of energy capacity will be added through to 2030 driven by investment totalling $3.9tr. Annually, 88GW of new capacity will be added each year – equivalent to the total generating capacity of the UK.
 
Renewables are expected to continue to dominate the market, accompanied by an increased reliance on natural gas, meaning that emissions from the sector are expected to peak in 2027 as coal´s share of the energy mix falls from 67 per cent in 2012 to 44 per cent in 2030.
 
However, in conclusions that should serve to further highlight the serious risk to the climate posed by Chinese coal-fired power plants the report predicts investment in new coal capacity will still continue to grow rapidly through to 2022 as 38GW of new capacity is added each year, equivalent to three large coal plants a month.
 
The report predicts the growth of the Chinese coal sector will slow down through the 2020s, but it warns that efforts to tackle rising greenhouse gas emissions and deadly levels of air pollution are likely to take 10 to 15 years to prove successful.
 
“China has started to change course towards a cleaner future,” said Jun Ying, country manager and head of research for China at BNEF, in a statement. “But despite significant progress in renewable energy deployment, coal looks set to remain dominant to 2030. More support for renewable energy, natural gas and energy efficiency will be needed if China wants to reduce its reliance on coal more quickly.”
 
The report does map out a number of alternative scenarios, including one where progress on clean energy proves slower than expected and two where barriers to the adoption of clean technologies are removed enabling a faster low carbon transition.
 
It argues that under the most ambitious scenario, dubbed “Barrier Busting with Carbon Price”, the adoption of a national emissions trading scheme (ETS) from 2017 would help ensure emissions from the energy sector peak in 2023.
 
BNEF calculates that in order to ensure the Chinese government´s planned ETS is consistent with its stated emissions reductions goals it would need to deliver an average carbon price of CNY 99/tCO2e ($16/tCO2e), which would result in 23 per cent fewer coal-fired power plants being built compared to the central scenario.
 
Milo Sjardin, head of Asia Pacific at Bloomberg New Energy Finance, said the Chinese energy sector was facing “extreme uncertainty”.
 
“The future depends on a number of big questions, questions on which one can still only speculate: the cost at which China may be able to extract its shale gas reserves, the potential impact on fracking and thermal generation of water constraints; and potential accelerations in climate and environmental policy, including a potential price on carbon,” he said in a statement.
 
Michael Liebreich, chief executive of Bloomberg New Energy Finance, added that the policy choices made in China would have major repercussions for the entire global economy. “It is hard to underestimate the significance of China´s energy consumption growth and its evolving generation mix,” he said. “The impacts will reach far beyond China and have major implications for the rest of the world, ranging from coal and gas prices to the cost and market size for renewable energy technologies – not to mention the health of the planet´s environment.”


Source: BusinessGreen