Despite big talk from the West, China is pumping huge amounts of funding into its renewable energy sector as it seeks to become competitive in its green energy operations. Heavy investment in research and development has helped China develop several innovative technologies to support its renewable energy rollout. In addition, government subsidies on electric vehicles (EVs) have helped to increase uptake and build a strong consumer market.
The U.S. has just passed its biggest climate change bill, with $370 billion in subsidies going toward solar and wind energy development, electric vehicles, and other clean energy projects. The U.S. introduced the bill to help it reach its ambitious emissions targets between 2030 and 2050. The other benefit of boosting its renewable energy industry is the ability to become more competitive with other major world powers, such as China.
However, China achieved $380 billion in public and private sector clean energy investments in 2021 alone. In addition, thanks to its strong manufacturing and construction industries, China can build large-scale wind and solar farms at a rapid pace. And this is just the latest in China’s green energy achievements, having been investing in clean energy for years. This is not to say that China isn’t still a massive polluter. In 2021, China’s carbon emissions exceeded those of all developed nations combined. But its contribution to the development of the global renewable energy sector is substantial.
The Chinese government started pumping funds into solar and wind power over a decade ago, seeing the potential for green investments to make it a world leader in renewables, as well as helping it alleviate some of the worsening air pollution being seen across major cities. China supported private companies investing in renewables by extending credit and introducing several subsidies to encourage green energy use over coal. Now, China provides nearly half of the world’s renewable energy capacity, as home to the world’s largest solar plant and further planned construction meaning its solar capacity could double this year. China continues to dramatically outpace the U.S in its solar and wind energy output. China has used its renewable energy industry to support its economy, making it more competitive with other major powers at a time when everyone’s transitioning to green. BloombergNEF (BNEF) head of China analysist Nannan Kou stated “Green infrastructure is the most important investment area that China is relying on to boost its weak economy in the second half of 2022.” China has seen $41 billion in solar investments in the first six months of 2022, supporting its goal of 1,200 GW of wind and solar capacity by 2030. By comparison, the U.S. invested $7.5 billion in solar over the same period.
While several clean energy bills driven by the Democrats were halted in the U.S., particularly Obama’s Clean Energy Plan which was quashed under Trump, China has been passing green bills for years. Last year it introduced its 14th five-year plan, from 2021-2025, in which it makes several ambitious targets including deriving 25 percent of China’s energy from non-fossil fuel resources by the end of the decade and supplying at least half of the electricity demand increase by renewables. China has exceeded its energy targets in the past three five-year-plans and is expected to continue excelling in renewable energy.
Innovative technologies are helping China to advance its renewable energy sector with digitalization technologies such as 5G, smart grids, and distributed energy resources, and the electrification of end uses helping to provide the structural change China requires to transition from a fossil fuel-driven energy industry to green powered. The electrification of China’s power system will help increase demand, and the rollout of new digital technologies is expected to contribute to developing a more decentralized system.
But all this green energy investment has not meant a huge reduction in the country’s emissions, with China still having a long way to go to achieve its emissions peak in 2030 before trending downwards. Last year, ahead of the COP26 climate summit, China set a target to peak its carbon dioxide emissions before 2030, also aiming to decrease its “carbon intensity” (measuring its emissions per unit of GDP) by 25 percent by this date, compared to 2005 levels.
Many world powers have criticized China for not being ambitious enough in its carbon targets. In addition, China still relies heavily on coal. China pledged last year that it would no longer construct overseas coal plants, making many think it may be turning its back on coal, only to double down on several domestic coal developments. At present, China continues to be the world’s biggest emitter, responsible for around 27 percent of global emissions. And despite its renewable energy developments, this issue is expected to continue without greater efforts to transition nationally away from coal, oil, and gas to greener alternatives. Yet, the U.S. will certainly have to reconsider the quantity of renewable energy funding required to knock China off the top spot.
By Felicity Bradstock for Oilprice.com