China must expand renewable energy faster to reach climate goals and maintain economic growth, analysts say

China has set a goal for total wind and solar power capacity to reach 1,200GW by 2030, almost double the 635GW capacity in place at the end of last year
However, Hong Kong’s WaterRock and Helsinki-based CREA say total installed solar and wind capacity must be much higher

Business of climate change

Yujie Xuein Shenzhen

Published: 7:30am, 9 Dec 2022

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China will need to raise its 2030 renewable energy expansion targets if it wants to reach its goal of sourcing a quarter of its energy demand from non-fossil-fuel sources and to stay on track for its carbon-neutrality goal, climate analysts said.

This will be especially important if Beijing wants to maintain the country’s economic growth trajectory, they added.

China has set a goal for the total installed capacity of wind and solar power to reach 1,200 gigawatts (GW) by 2030, almost double the 635GW capacity in place at the end of last year, to support its goals of peaking carbon dioxide emissions before 2030 and reaching carbon neutrality by 2060.

Chinese President Xi Jinping also announced in 2020 that non-fossil fuels would account for around 25 per cent of the country’s energy mix by 2030, up from the previous commitment of 20 per cent by 2030 made as part of the 2015 Paris agreement on climate change.

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According to Lauri Myllyvirta, lead analyst at the Helsinki-based Centre for Research on Energy and Clean Air (CREA), China will need around 1,700GW of wind and solar capacity, over 40 per cent more than the planned 1,200GW, just to hit its target of 25 per cent non-fossil-fuel energy in 2030.

“This will only be sufficient for getting on track to carbon neutrality, if energy demand growth slows down significantly from the rate seen in the past few years,” he said. “However, if China returns to the energy-intensive growth of the past years, even more clean energy will be needed to both cover the growth in demand and to start displacing existing coal use.”

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It is hard to make a forecast, as the required clean power capacity is highly sensitive to energy-demand growth, which in turn is determined by the economic policies Beijing chooses, he added.

Fossil fuels have powered much of China’s rapid economic growth in the past year, making it the world’s second-largest economy and the largest greenhouse gases (GHG) emitter. The country especially relies on coal, the dirtiest fossil fuel, which accounted for more than 60 per cent of its electricity generation in 2020 and has been largely consumed by key industries – steel, cement and chemical production – that have driven its economic growth.

To slash GHG emissions, Xi announced last April that China would start phasing down coal use from 2026, and strictly limit the increase in coal consumption over the 2021 to 2025 period. However, China’s slowing economic growth and power shortages this summer, resulting from heatwaves and droughts in hydropower-reliant provinces of central China, especially Sichuan, have led to speculation that China is considering going back to coal, as Beijing has announced several measures to support coal production to ensure power security and to keep factories running.

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The expansion rate of solar and wind capacity needs to be one-and-a-half to two times the expansion rate seen in 2016 to 2020 to help bend the carbon emissions profile from China’s heaviest emitting power sector, according to Lucas Zhang Liutong, director of Hong Kong-based consultancy WaterRock Energy Economics.

It means the total installed solar and wind capacity must be 1,500 to 1,800GW by 2030, according to WaterRock’s estimation.

Zhang was not worried about Beijing’s conservative renewable expansion targets. “Based on its track record, it is common that the actual solar and wind capacity expansion is higher than the government goal,” he said.

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It is essential for China to improve coordination between economic and energy policies to make sure that enough clean energy is installed to achieve rapid emissions reductions during this decade, and also to ensure that excess capacity is not built in fossil-fuel-based industries in anticipation of future growth, which will not materialise under the carbon neutrality goal, said CREA’s Myllyvirta.