China can ensure a 1.5C world – and continue to dominate the global clean energy supply chain

“There is no plausible path to limiting the global temperature rise to 1.5 degrees Celsius without China,” notes the first line of a landmark report published by the International Energy Agency (IEA) which claims to map a route to net zero for the world’s largest greenhouse gas emitting nation.

An Energy Sector Roadmap to Carbon Neutrality in China considers two possible paths to achieving the climate change ambitions announced by Chinese president Xi Jinping last year: An ‘announced policy scenario’ (APS) based on stated government ambitions, and a more ambitious ‘accelerated transition scenario’ (ATS) which illustrates the potential for China to turbocharge its net zero goal.

Interestingly, while the report repeatedly emphasizes the importance of China working hand in hand with its global partners to combat climate change, the section devoted to persuading Beijing decision-makers to go for the raised ambitions of the ATS route, dangles the carrot of continued global domination of the clean energy sector.

“China’s central role in the global clean energy technology value chains, as both a technology developer and producer, as well as user, will be strengthened by a faster energy transition,” states the IEA document, before adding, China’s dominance of the world’s solar and battery manufacturing industries can be replicated in areas such as fuel cell and electrolyzer technology, if the nation opts for a faster race to net zero.

On the subject of raw materials sourcing and processing, which has so vexed policymakers in Europe and the U.S., the 304-page study adds: “China’s vast resources of critical minerals, from which metals required for the manufacturing of those technologies can be extracted, gives it a large competitive advantage over other countries.”

Those are sentiments likely to be less welcome in European capitals than the prospect the IEA holds out of a faster energy transition offering a net gain of 1.3 million high-quality jobs for China – some 900,000 more than is estimated to be on offer from the APS outlook modeled.

Solar

Such an approach would be undeniably good for Chinese solar companies, with the ATS path – which would focus on net zero by mid century, rather than the 2060 mark currently envisaged – adding up to 1.4 TW of solar and wind generation capacity in 29 years’ time. Even the APS model estimates 200 GW of solar would be added annually from 2030 to 2060 – plus 57 GW per year of wind farms – although that power source would arrive alongside four 1 GW nuclear reactors per annum from last year, to ensure the world’s biggest nuclear fleet by 2060.

By 2060, the report states, almost half of Chinese PV will be on buildings with that volume of facade and rooftop solar panels accounting for 2.2 TW of generation capacity. If 60% of that building-based PV is used for self-consumption, the report’s authors calculate, some 2-3 TWh of surplus electricity will be available to the grid daily – which will be important, given the projected development of green hydrogen.

If ambition can be raised – with the help of a beefed-up emissions trading scheme (ETS) and accelerated liberalization of the electricity market – the renewables revolution can start even earlier, with around $125 billion invested into solar and wind facilities from 2025-30, securing around 160 GW of generation capacity during that period, compared to the 40 GW per year envisaged in the APS model.

On the green hydrogen front, the IEA notes China has plans to develop more than 2 GW of electrolyzer capacity with the 30 MW facility operating at Ningxia Baofeng Energy Group‘s coal-to-olefins operation in Ningxia set to be expanded to 100 MW this year, in a move which would see it become the world’s largest dedicated hydrogen-production electrolyzer.

The relative youth of the nation’s natural gas network offers an obvious opportunity to plan for national hydrogen distribution, states the study, although the IEA expects green hydrogen, at a price of $1.30-1.80/kg, to only become competitive with the natural gas-plus-carbon capture ‘blue’ version of the gas, and coal-plus carbon capture option, by 2050.

The development of solid state batteries will see cell-level energy density double this decade, states the study, helping China maintain its global leadership of the battery storage industry.

Unease

The opportunity for continued Chinese dominance of global supply chains, the emphasis on nuclear and carbon capture and storage roll-out, and the continuing use of coal-fired power generation are likely to cause disquiet among various commentators but the central importance of China’s climate change ambitions in keeping the global temperature rise this century below 1.5C is repeatedly emphasized.

Simply maintaining the use of China’s existing fossil fuel assets – without any new plants – will consume about a third of the ‘carbon budget’ a 1.5C world is estimated to have up to 2060, note the authors of the report.

Returning to the issue of global co-operation in a line from the report which may already appear dated amid fresh diplomatic tensions with the U.S. and Australia, the IEA document notes combating climate change “is a race against time, not against each other.”