BEIJING (REUTERS) – China’s goal to become carbon neutral in 2060 will require US$6.4 trillion (S$8.58 trillion) of investment in new power generating capacity, leading to a tectonic shift in manufacturing and commodity imports while boosting its energy security, consultancy Wood Mackenzie said on Thursday (March 18).
China has been grappling with rising oil and gas import dependency while facing increasing geo-political tensions that threaten its energy security. Its plans to shift to renewable energy would greatly enhance its independence from foreign energy sources while ensuring that the energy transition is stamped “Made in China”, Wood Mackenzie’s analysts Huang Miaoru and Zhou Yanting said in a report. “China’s dependence on hydrocarbons proves a hard habit to break, but the pursuit of carbon neutrality makes it possible,”they said.
Oil demand in the world’s largest importer could fall by half by 2040 compared with its base case, and nearly eliminate the country’s need for the fossil fuel by 2050, they said, enhancing its energy security. Without carbon-reduction goals, China’s oil-import dependency would exceed 80 per cent by 2030, while half of its natural gas supply would be imported,
Woodmac said. China’s oil demand will peak at 17 million barrels per day in early 2030s and decline to 16 million bpd in 2040 and 14 million bpd in 2050, according to Woodmac’s base case. The world’s top energy consumer and second-largest economy could see a 75 per cent increase in electricity demand, with growth primarily in solar, wind and storage, while nuclear power will also have a role to play.
China could add 6,870 gigawatt (GW) of electricity demand from Woodmac’s base case scenario if it was to become carbon neutral by 2060, they said. As China expands renewable power generation, the leading supplier of solar panels, wind turbines and batteries will also consolidate its position in the renewable energy sector.
However, its ambitions of grasping a bigger share of the clean power supply chain could be impeded by access to five metals – copper, aluminium, nickel, cobalt and lithium. “China’s dependence on foreign miners for its copper supply is a major concern,” Woodmac’s Zhou said, adding that this has fuelled the country’s determination to seek greater control of other raw materials.
China controls just 16 per cent of its copper supply needs, leaving it short of a net 7.5 million tonnes a year at current demand levels, according to Woodmac.
“If China can replicate its current global market share in battery and solar-panel production across the entire future value chain of clean energy, it would transform global energy supply, trade and industry,” Zhou said.
“Just as the rest of the globe will need China to help it decarbonise, China will need others to support its transition.”
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