A new report from the Shell-funded Energy Transitions Commission has concluded that there is nothing standing in the way of China becoming a rich developed economy while also achieving the goal of net-zero emissions.
The new report concluded that there is no technical or economic impediment if strong policy support, accelerated innovation, and expanded investment are brought online to cut the country’s final energy demand – so much so, in fact, that the Commission believes China could treble its GDP per capita.
When the Energy Transitions Commission launched in 2015, supported by Shell and BHP Billiton, it was originally criticised as lacking credibility and appearing not to take seriously the need to limit climate change under the Paris Agreement.
“We question the credibility and independence of an Energy Transitions Commission funded by fossil fuel incumbents,” said Anthony Hobley, CEO of independent financial think-tank Carbon Tracker in September 2015.
“Shell’s track record on climate change does not inspire us with confidence and plans that would see half our power generated by fossil fuels in 2050 risk seeing us go way over the UN’s 2˚C climate change target.”
The Commission’s new report, however, is given a greater air of legitimacy by its partnership with the Rocky Mountain Institute (RMI), an independent, nonpartisan non-profit dedicated to transforming global energy usage.
This makes it even more important to take seriously the report’s conclusion that it is technically and economically feasible for China to simultaneously become a fully developed economy and reach net-zero carbon emissions by mid-century.
The report shows that the necessary investment to reach net-zero emissions is well within China’s reach given its high savings and investment rate, while the impact on China’s GDP per capita in 2050 would be minimal.
Further, committing to achieve a net-zero emissions target by 2050 would spur investment and innovation as well as delivering large improvements in local air quality and helping China to establish technological leadership across a range of industries.
“For the world to deliver the Paris Climate objectives, it is vital that China has a strategy to achieve net-zero emissions by mid-century,” said Adair Turner, Chair of the Commission.
“Given China’s central role in the global economy, its vast renewable energy resources, and its technological leadership in key industries, China is uniquely positioned to lead the global energy transition and to decarbonize its economy completely by 2050.
This report shows how it is technically and economically possible and describes the actions which policy makers and companies need to take to seize the opportunity.”
“The report reflects six months of work and covers all sectors of the Chinese economy,” added Chen Ji, Principal of RMI, lead for the Chinese secretariat of the Commission.
“It draws upon previous analyses from the ETC and broader literature review. It also integrates feedback from several rounds of consultation with representatives of Chinese companies, academia and institutions as well as global companies and institutions operating in China.”
The new report, entitled “China 2050: A Fully Developed Rich Zero-Carbon Economy,” lays out the pathway for how China can reduce its final energy demand while simultaneously helping living standards to continue to grow.
Actions can be taken to reduce demand for steel and cement, introduce a more circular use of all materials – especially plastics – and the inherent energy efficiency advantages achieved by the electrification of surface transport and building heating are just some of the steps laid out.
At the same time, however, China would be able to create GDP per capita and standard of living three times the current levels while reducing final energy demand from 88 exajoules (EJ) today to 64 EJ in 2050.
Unsurprisingly, as is necessary most places, the industry sector would experience the greatest reduction of 30% but would nevertheless continue to account for 60% of final energy demand 2050.
Overall, China’s total primary energy demand could fall by 45% from 132 EJ today to 73 EJ in 2050.
This larger fall in primary energy demand than in final energy demand largely reflects the elimination of the energy losses involved in today’s thermal electricity production system due to a huge change in sources of energy – with fossil fuel demand dropping by over 90% and non-fossil energy expanding by 3.4 times.
Quoting from the Commission’s announcement, the report highlights the following key sectoral actions necessary achieve net-zero emissions:
Accelerate massive increase of renewable electricity generation with capacity improvement on storage, flexibility and demand response.
The use of electrification, hydrogen, carbon capture and storage (CCS) and bioenergy to achieve full decarbonization of heavy industries such as steel, cement and chemicals (ammonia, methanol and high-value chemicals [HVCs]).
Total electrification of surface transport (road and rail services) while supporting a threefold increase in transport use to typical European levels.
The use of biofuels, synthetic fuels, hydrogen or ammonia to drive decarbonization of long-distance international aviation and shipping, combined with the use of battery electric hydrogen and hybrid options over short distances.
A shift toward a more circular economy, with far more efficient use and greater recycling of key materials such as steel, cement, fertilizers and plastics.
The wider deployment of advanced heat pump technologies plus state-of-the-art building insulation to deliver heating and cooling to houses and offices in a zero-carbon fashion, with long-distance industrial waste heat transportation and biomass also playing a role in specific circumstances.
The report also highlights clear targets and necessary public policies required to achieve net-zero emissions. Key policy levers to accelerate the transition should include:
Clear policies to support increased investment in a zero-carbon electricity system, including generation, transmission, distribution and energy storage systems.
A national carbon price system to drive decarbonization across the whole economy and particularly in heavy industry.
Strong regulations to drive the electrification of surface transport and building heating, and to ensure ever-improving standards of building insulation.
Regulations and incentives to support an increasingly circular economy of materials recycling and reuse, particularly in the plastics sector.
Government procurement to stimulate demand for low-carbon products.
Public support for the development and early deployment of the new technologies required to build a zero-carbon economy.
“China has the institutional, financial and technological advantages of ‘concentrating resources to accomplish large undertakings,’ which makes it well placed to stimulate long-term and large-scale investment once setting up strategic goals,” concluded Jules Kortenhorst, CEO of the Rocky Mountain Institute.
“This helps lay a solid foundation for China to pursue zero-carbon objectives by 2050 and gain the economic and environmental advantages which would result.”