China’s president Xi Jinping used his speech on 22 September, at the general debate of the 75th session of the United Nations General Assembly, to set out China’s position on climate change and outline government proposals expected to be included in the next Five Year Plan, due in 2021. He sent a clear signal that China wants to become a world leader in renewable energy.
“COVID-19” he said, “reminds us that humankind … can no longer afford to ignore the repeated warnings of Nature and go down the beaten path of extracting resources without investing in conservation, pursuing development at the expense of protection, and exploiting resources without restoration. The Paris Agreement on climate change charts the course for the world to transition to green and low-carbon development. It outlines the minimum steps to be taken to protect the Earth … and all countries must take decisive steps to honour this Agreement. China will scale up its Intended Nationally Determined Contributions by adopting more vigorous policies and measures. We aim to have carbon dioxide emissions peak before 2030 and achieve carbon neutrality before 2060. We call on all countries to pursue innovative, co-ordinated, green and open development for all, seize the … opportunities presented by the new round of scientific and technological revolution and industrial transformation [and] achieve a green recovery of the world economy in the post-COVID era.”
By some measures China already is the world leader. It has more installed onshore wind (231 GW) than the rest of the world's top five, more onshore wind connected to the grid in 2019 (23.8 GW) than the rest of last year's top ten, and more offshore wind (2.4 GW) connected to the grid in 2019 than any other country. It’s a similar story in solar, where it has 213GW installed and dominates the solar manufacturing industry.
But when China’s fuel consumption and population are taken into account the picture looks rather different. China still generates 85% of its energy from fossil fuels, it is still the world’s greatest importer of oil and natural gas, and it still emits more greenhouse gases than any other country.
So its lead in some key renewables metrics has to be measured against its less desirable attributes as a huge user of fossil fuels and the statistics as applied on a ‘per head of population’ basis.
To achieve the goals outlined by president Xi Jinping the country would have to embrace a green revolution that would spark huge investment in renewables, primarily wind and solar.
The president’s speech included few details. These are likely to feature in China’s next five-year development plan, covering the period from 2021 to 2025. But analyst IHS Markit has estimated that meeting the stated goal will require China to achieve 1700 GW of wind and 2200 GW of solar capacity by 2060, while the cost of moving China to carbon neutrality within 40 years could cost around $5.5 trillion. Expanding the wind component to 1700 GW by 2060 would require 36.7 GW of wind installations each year.
But it also represents a turnaround for China in its climate thinking. Its past policies have put industrial expansion ahead of climate responsibility; and the country has also spent most of the last four years in a trade war with the USA. This has caused uncertainty about whether China and the US would put trade war victory ahead of concerns over green standards.
But Jinping’s commitment could changes the political dynamics by increasing the pressure on the USA to upgrade federal support for renewables, and will play well in the EU with its Green New Deal.
Some detail is yet to be disclosed or clarified – such as clarity on carbon offsetting, and the peak emissions target in 2030 that has been criticised as far too late by some analysts. But if the promises come true then renewables investors should see more activity, as well as enormously increased competition from China’s indigenous turbine manufacturers which could prove formidable opponents to established European and US companies. It may also mean fierce competition for the raw materials required in solar energy and energy storage.