Decoding China's massive green energy boom Analysis by OilPrice

As China continues to accelerate its green transition, the rest of the world should pay attention and follow its model for rapidly growing its renewable energy capacity, Felicity Bradstock opines in her latest think piece for OilPrice.

Largely thanks to strong government policies on expanding the energy mix to include a range of renewable energy sources over the last decade, China is growing its green energy capacity at the fastest rate of any country in the world. And while it still relies heavily on the dirtiest fossil fuel – coal, other countries may be able to undergo a green transition much faster if they follow China’s example when it comes to renewables. 

Despite its continual reliance on fossil fuels to meet its energy needs, China is currently adding new renewable energy capacity at around the same speed as the rest of the world combined. In 2020, it added three times the wind and solar power as the U.S. And in the first half of last year, it invested $100 billion in more wind and solar projects. This will be followed by the addition of a record quantity of added wind and solar capacity this year. China’s grid was 33 percent carbon-free in 2020. And based on its rate of renewable energy capacity growth, China is on its way to achieving 80 percent carbon-free electricity by 2035 – yet it is unlikely to make the shift away from coal that it perhaps could by this time. 

China is viewed as the world leader in green energy expansion. The Asian superpower plans to continue using fossil fuels to meet its growing energy demand while also expanding its renewable energy sector to reach peak emissions “in a well-planned and phased way.” But China is now far surpassing expectations. Mike Hemsley, deputy director at the Energy Transitions Commission think tank, explained “China is building renewables at such a staggering rate [that] it is said to outperform the targets they have set themselves.” 

If it continues at the pace we’re currently seeing, China could achieve 1,800 GW of total renewable energy capacity by the end of the decade. That’s around 50 percent higher than President Xi Jinping’s 2030 target of 1,200 GW. In fact, China could achieve the initial 1,200 GW goal by as early as 2025. At this rate, it could reach peak emissions before 2030, perhaps around the mid-decade. 

The rapid expansion of China’s renewable energy sector is largely thanks to strong government policies on creating a diverse energy mix to include a range of green alternatives and innovative technologies. At a time when many state governments were only just beginning to consider the need to respond to climate change, China was already well on its way to becoming a renewable energy powerhouse. The Chinese government began to fund solar and wind power over a decade ago, seeing the potential to become a world leader in renewables. This also helped the country reduce the worsening air pollution across some of its major cities. 

During this time, China supported funding from private companies in green energy, providing credit and subsidies to encourage the use of green alternatives in industrial operations. And the expansion of its renewable energy sector supported energy and economic stability during the pandemic. BloombergNEF (BNEF) head of China analysis 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.” 

While China’s emissions are still huge, its carbon output remained relatively flat in 2022, decreasing by 0.2%, according to the International Energy Agency (IEA). This figure is largely owing to the ongoing Covid restrictions seen last year but can also be partially contributed to its growing green energy capacity. However, while praising its renewable energy sector, it is important not to overlook the significant role coal plays in China’s energy and economic security. 

Flora Champenois, a research analyst at Global Energy Monitor, stated “China continues to be the glaring exception to the ongoing global decline in coal plant development. The speed at which projects progressed through permitting to construction in 2022 was extraordinary, with many projects sprouting up, gaining permits, obtaining financing and breaking ground apparently in a matter of months. This kind of a process leaves little room for proper planning or consideration of alternatives.” China approved the highest number of new coal-fired plants since 2015 in 2022, increasing the new coal power capacity by 106 GW. This was largely approved due to shortages following a historic drought and heatwave last summer.

The rapid development of China’s renewable energy is extremely promising, particularly considering the high level of carbon emissions it continues to emit. Thanks to strong government policies, financial support for private investment and ambitious capacity targets – that it continues to surpass, China is keeping its title as the world’s renewable energy leader. This is certainly a model that other governments around the world should follow if they hope to achieve their climate goals and reduce the effects of climate change. However, it is also important to put pressure on the Asian superpower to make a meaningful shift away from fossil fuels in a green transition.