China seeks right mix for energy-intensive economy it yearns
- Legislation finally being reviewed by Beijing not only addresses power generation and climate change, but also security and self-reliance amid rivalry with West
For 18 years, China has been drafting legislation to govern security, innovation and corporate activity in the energy sector as it orchestrates a shift to low-carbon power and sustainable development.
Long stalled by vested traditional energy interests, the State Council has finally sent a draft to the National People’s Congress (NPC) Standing Committee for review.
The slow and incremental action belies the rapid advances taking place in the sector aimed at helping China meet its net-zero emissions by 2060, when it plans on having 80 per cent of its energy mix coming from non-fossil fuel. It had already surpassed 50 per cent by the end of last year.
It is not just about climate change. Beijing also wants to improve security, reduce reliance on energy imports, and become more self-reliant in the face of a growing rivalry with the West, led by the United States.
Regarding China as a strategic competitor, Washington has contested Chinese steel imports and banned high-end semiconductor exports.
China’s new-energy exports have not been spared from tensions – the US has complained about overcapacity in solar panels, electric vehicles and lithium-ion batteries.
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Beyond emissions targets, China is driven by a desire to reduce its reliance on energy imports. Beijing has taken note of Russia managing to weather heavy sanctions over its war with Ukraine – in no small part because of Moscow’s energy self-sufficiency.
China, which already boasts the most electrified economy, also sees its strategy as a way to power the economy to the next phase while pursuing growth in new sectors with higher quality growth potential such as green energy, technology and innovation.
Unlike the US, which as a developed economy sees demand for power split basically into even thirds between residential, commercial and industrial, some 80 per cent of Chinese power goes to the latter two.
To become more self-reliant China must diversify its energy mix. Green energy isn’t always reliable − solar cells do not work at night and winds can die down leaving turbines dormant.
So Beijing is aggressively pursuing hydrogen power and nuclear energy as well. Additionally, China is spending heavily to modernise and add artificial intelligence to help drive its power generation network.
Its transformation is not without challenges. Hydroelectric power generation, for instance, suffers during extreme drought. And while power tariffs are among the lowest in the world, they will need to remain so as China installs power-hungry data centres needed to shift the economy towards high-quality hi-tech and innovation.
China’s future economy will not only be knowledge intensive, it will also be energy intensive. This, combined with its desire for self-reliance, is the spark behind the rapid growth of its energy sector.
