{"id":1750,"date":"2019-07-04T07:09:03","date_gmt":"2019-07-04T06:09:03","guid":{"rendered":"https:\/\/sarasinandpartners.com\/za\/think\/chinas-green-electricity-revolution\/"},"modified":"2020-05-06T08:38:39","modified_gmt":"2020-05-06T07:38:39","slug":"chinas-green-electricity-revolution","status":"publish","type":"post","link":"https:\/\/sarasinandpartners.com\/za\/think\/chinas-green-electricity-revolution\/","title":{"rendered":"China’s green electricity revolution"},"content":{"rendered":"

China\u2019s going need a lot more electricity. The good news is that this boosts the renewables sector and other potentially fast growing opportunities. The bad news is that Chinese companies remain hard to invest in, chiefly because they fail to achieve levels of governance we would find acceptable.<\/span><\/p>\n

Over next three decades, demand for electricity in the People\u2019s Republic of China is forecast to grow by 55% 2017 to 2050.<\/p>\n

This rapid increase is driven by the nation\u2019s transition towards higher per capita consumption, to match levels in more developed economies. And this trend will be amplified by the requirement to manage climate change.<\/p>\n

As a signatory of The Paris Climate Accord of 2015, China is required to reduce greenhouse gas materially over forthcoming decades, before bringing emissions to a net zero position.<\/p>\n

One way to achieve these goals is to use electrified solutions. For example, transport systems which currently use fossil fuels could run electricity, or hydrogen. And industrial processes could run on electricity rather than gas. Both of these could help the country to achieve its zero emission targets.<\/p>\n

Break with the past<\/h2>\n

Future high demand comes after decades of increased power use. The nation\u2019s growth in gross domestic product over the past four decades has resulted in a significant increase in electricity demand.<\/p>\n

As heavy industry and domestic consumption grew, electricity consumption rose from 1,355 TWh1<\/sup><\/span>\u00a0\u00a0in 2000 to 6,495 TWhin 2017.2\u00a0<\/sup>This has made China the world\u2019s largest consumer (25.4%), surpassing the United States (16.8%) and the European Union (15%).<\/p>\n

In the future, we anticipate demand for electricity will be decoupled from economic growth. This will primarily be the consequence of a continued shift from industrial to service economies and a marked increase in energy efficiency. This trend is already in evidence in developed nations.<\/p>\n

Towards renewables<\/h2>\n

China has long relied on domestic coal resources to meet electricity consumption. It is the dominant fuel in the country\u2019s power system, accounting for 62% of capacity and 71% of generation in 2017.3<\/sup><\/p>\n

In recent years, however, Chinese policies have increasingly focused on the environmental and economic costs of coal . This is due to negative health effects from localised pollution \u2013 because burning coal has created 1.16 million tonnes of sulphur dioxide (SO2) and 1.11 of nitrogen oxides (NOx) emissions.<\/p>\n

The impact of China\u2019s power generation on global CO2 contributions is immense. The sector is the country\u2019s largest source of emissions, accounting for 40% of total emissions, and for 11.1% of the world\u2019s total CO2 contributions.<\/p>\n

To reduce both localised pollution and the nation\u2019s contribution to global greenhouse gas levels, there has been a structural transformation of the power system.<\/p>\n

The Chinese government has created incentives to support the development of clean energy sources, and coal\u2019s share of the power mix has fallen from 81% in 2007 to 65.5% in 2017. These enticements have played an important role in the green transition. As the cost of renewable energy generation has fallen, the capacity of solar, wind and hydro capacities have grown.<\/p>\n

China has developed the largest installed capacity of renewable energy globally. This is forecast to grow further with green technologies accounting for an ever-increasing share of the power generation.<\/p>\n

Thematically positive, but this is China<\/h2>\n

We have a high degree of confidence that:<\/p>\n