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Lauri Myllyvirta, senior fellow at the Asia Society Policy Institute and senior analyst at the Center for Energy and Clean Air Research
China’s carbon dioxide (CO2) emissions fell by 1% in the 2024 quarter, the first quarterly decline since the country reopened following its “zero-Covid” lockdowns in December 2022.
Carbon Brief’s new analysis, based on official figures and industry data, shows that China remains on track to reach its annual emissions this year.
This annual outlook for a slowdown in electricity calls for expansion in the second half of the year, as expected in projections by the China Electricity Council’s industry group.
However, if the latest trends in energy demand and supply hold (if expansion demand continues to outpace pre-Covid trends), emissions would remain broadly strong in 2024.
Other key findings from the research include:
A series of recent political developments, summarized below, recommend that Beijing renew its energy and climate goals.
However, the exact timing and magnitude of China’s peak CO2 emissions, as well as the speed of upcoming reductions, remain fundamental uncertainties for global climate action.
China’s CO2 emissions fell by 1% in the 2024 quarter, the first quarterly decline since the country reopened after 0 Covid, as shown in the figure below.
In total, emissions from the electric power sector fell by 3%, cement production by 7% and oil consumption by 3%.
The relief of CO2 emissions has been driven by the sharp increase in blank energy additions, which is pushing back fossil fuels. (See: Clean energy additions on track to hit 2023 record. )
However, the immediate increase in energy demand in sectors such as the processing of coal into chemicals has diluted the effect of the adjustments in the electric power sector. (See: Rapid growth in energy demand).
New vacuum power additions in China have continued to increase this year.
China added 102 gigawatts (GW) of solar power and 26 GW of wind power in the first part of 2024, as shown in the figure below. Solar additions increased by 31% and wind increased by 12% compared to the first part of last year. China is on track to break last year’s installation record.
Thanks to the sharp increase in capacity, and despite poor wind conditions, solar and wind power have covered 52% of the increase in electricity demand in the first part of 2024 and 71% since March. NASA’s MERRA-2 averaged the knowledge for all of China. )
In fact, the increase in electrical energy generation from the sun and wind reported through the National Energy Administration in the first part of the year, to 171 terawatt hours (TWh), exceeded the total electrical energy source of the United Kingdom of 160 TWh in the first part of the year. 2023.
The immediate increase in demand in January-February, of 11%, even exceeded the blank energy additions. But combined with a rebound in hydroelectric power generation, the accumulation of non-fossil electric energy sources outpaced the expansion of electric power demand. between March and June.
These adjustments are illustrated in the figure below, which illustrates how the expansion of the blank force has begun to outpace the demand for electric power expansion in months, pushing the coal and fuel force to reverse.
After blocking knowledge of capacity use through generation in May, the National Energy Administration revealed knowledge of capacity use through generation of renewable resources (solar, wind, hydro and biomass) in July.
NEA data show that renewable electricity generation covers 35% of demand in the first half of 2024 and grows by 22% year-on-year. This figure is much higher than the figures previously published by the Office for National Statistics. – which underestimates the output of wind power and especially solar – but is very much in line with estimates published in the past through Carbon Brief.
As for other blank energy technologies, the production of electric vehicles, batteries and solar cells (the “new three” due to their recently acquired economic importance) continued to grow strongly in the first part of the year, by 34%. %, 18% and 37%, respectively.
This increase in production indicates demand from China and abroad. However, the increase in the production of solar mobiles stopped in June.
While blank generation continues to expand in China, energy consumption has also continued to grow at an immediate rate relative to GDP. This indicates that the trend of energy-intensive expansion followed in China during the zero Covid era continues.
In the second quarter of 2024, total energy consumption increased by 4. 2%, while GDP increased by 4. 7%, representing an increase in energy intensity of 0. 5%. This expansion of demand for power is much faster than the pre-Covid trend.
China’s target is an annual improvement of 2. 9%, a rate that was consistently exceeded until Covid-era economic policies replaced the country’s pattern of expansion. The economic expansion and after the Covid-19 crisis has been based on energy-intensive production industries.
The main structural drivers of the recent expansion in energy consumption have been commercial and coal to chemical demand for electric power and gas.
The coal-to-chemical industry produces petrochemicals from coal rather than oil, supporting China’s energy security goals, but at the expense of climate goals, as the processes of converting coal to chemicals coal-based production has a much larger carbon footprint.
Security efforts by China’s forces and falling coal costs relative to oil costs have led to a boom in this industry. When coal materials were limited in 2022-2023, the government controlled the use of coal by the chemical industry in order to build materials to force plants. The 2024 coal source scenario has allowed chemical coal processing plants to increase their output, and coal consumption in the chemical industry expanded by up to 21% in the first part of the year.
Gas consumption increased by 8. 7% in the first part of the year, and commercial and residential fuel consumption increased sharply, even as electric power generation from fuel declined. Residential demand, however, was stimulated more by the excessive harshness of the winter than by structural factors.
On the other hand, demand for petroleum products continued to fall, with a 3% drop in the second quarter accelerating over the summer.
Several points point to this reduction: the shift to electric vehicles is contributing to the decline, with the percentage of electric vehicles in cumulative vehicle sales over the last 10 years – an indicator of the total number of vehicles in circulation – reaching 11. 5 %. in June. Array compared to 7. 7% a year ago. This means that the rise of electric vehicles has reduced demand for transportation fuels by about 4%.
The continued contraction of structural volumes, which is manifested through the decline in cement production, is also affecting oil demand, with the structures sector being the main demand for petroleum products for the transportation of goods and machinery. .
Another key factor is the low demand for oil as a petrochemical feedstock, which the growing production of coal to convert into chemicals must catch up with the use of coal, although at the cost of higher CO2 emissions.
The contraction in real estate volumes, triggered by the slowdown in real estate activity that began in 2021, is weighing on demand for cement and steel. In addition to the direct effect of a reduction in real estate activity, local authorities’ revenues are penalized by the decline in land sales, affecting their ability to engage in infrastructure structure.
These energy adjustments can be seen in the figure below, which shows the contributions to China’s CO2 emissions in the second quarter of this year.
Although CO2 emissions fell in the second quarter, the pace of improvement in CO2 emissions intensity failed to meet China’s 2025 carbon intensity commitment.
The country’s goal is to reduce emissions relative to GDP by 18% between 2020 and 2025, and progress through 2023 will fall short of the target.
While reported GDP expansion slowed to 4. 7% in the second quarter and CO2 emissions declined by 1%, CO2 emissions intensity advanced by 5. 5%, below the 7% annual improvement in 2024-2025 to return to normal.
Improvements are also less difficult to achieve this year than in 2025, as the recovery of hydropower from its low availability in 2022-2023 is helping to reduce emissions. This is an exceptional tailwind that will not be provided in 2025.
One of the energy-intensive industrial sectors that China is relying on to drive economic expansion is the production of clean energy technologies. In response, some commentators have exaggerated the effect of CO2 on Chinese factories making solar panels, electric vehicles and batteries. .
But in reality, the manufacturing of those goods was responsible for 1. 6% of China’s electricity consumption and 2. 9% of its emissions in the first part of 2024, according to publicly available calculations.
The same calculations show that its CO2 emissions and electricity consumption increased by about 27% over the same period, contributing to a 0. 6% increase in China’s total fossil CO2 emissions and a 0. 4% increase in electricity consumption.
For the rest of the year, the expansion of energy consumption is expected to slow. The China Electricity Council forecasts an expansion in electricity demand of 5% in the second part of the year, up from 8. 1% in the first part of the year, and the National Energy Administration expects fuel demand for the full-year expansion to moderate to 6. 5-7. 7% from 8. 7% in the first part of the year.
If those projections are accurate, then the continued expansion of blank energy consumption would be enough to lower China’s CO2 emissions this year.
However, a faster-than-expected expansion in energy demand in the early part of the year is diluting emissions discounts from the country’s record blank power additions and adding uncertainty about whether China’s emissions will decline in 2024 compared to 2023.
If the rates of expansion of force demand, across fuels and sector, observed in the second quarter of this year continue in the third and fourth quarters, with continuity in the expansion rates of non-fossil power generation, then China’s emissions would remain robust in 2024. as a whole.
The expansion of energy consumption could also be moderated by a new policy orientation towards energy and climate objectives. In May this year, the State Council, China’s most sensible administrative body, issued an action plan on energy saving and CO2 emission relief by 2024. 2025.
This plan is notable for its timeline, covering the final two years of the plan’s five-year period, and for its high-level nature: energy savings would generally fall within the purview of energy and application regulators. environment, instead of the Council of State.
This suggests that the government is acknowledging the failure to meet the carbon intensity and energy intensity targets for 2025. The action plan calls for achieving any of these objectives and lists the measures that will be taken in response.
However, the plan did set numerical targets for 2024 that would be consistent with achieving the 2025 targets, which can be seen as simply a covert technique to encourage more movements without ensuring that sufficient effects are achieved.
Another plan drawn up by the Council of State, published at the end of July, calls for speeding up the creation of a “dual control system” of global CO2 emissions and their intensity. (Historically, China has never set numerical targets for global CO2 emissions, aiming only to restrict CO2 intensity. )
According to the July statement, the XV Five-Year Plan will set a binding carbon intensity target for the period 2026-30, in line with previous five-year plans. For the first time, there will also be an “additional” non-binding target for China’s absolute emissions point in 2030. Then, for the following five-year periods, there will be a binding absolute emissions target.
After the shortfall in the 2025 intensity target, the 15th Five-Year Plan will have to set a not easy intensity target to meet China’s 2030 commitments in the Paris Agreement.
In July, the highest political assembly of the year, the “third plenum” of the Central Committee of the Communist Party, took office. Assembly ministers mention reducing carbon emissions for the first time, but do not sign any movement to boost consumption. This may have simply led to less emissions-intensive economic growth, reducing reliance on more carbon-intensive infrastructure production or expansion.
The main objective of the assembly is the promotion of “new quality productive forces”, i. e. complex production and innovation. In practice, this will probably mean proceeding to place emphasis on the productive sector, with the option of proceeding with the energy-intensive economic expansion model.
Another indication that carbon emissions are receiving increased political attention is that the government appears to have stopped allowing new coal-based metal production projects since early 2024.
Hundreds of coal-based “upgrade” projects have been legalized in recent years, upgrading up to 40% of China’s existing steel capacity with new furnaces.
The move away from new coal-based capacity is in line with China’s purpose to expand the use of arc furnaces; however, progress towards this purpose has lagged behind.
On coal power, the government issued a new policy on the “low-carbon transformation” of coal-fired power plants, aiming to launch “low-carbon” modernization projects of a batch of coal-fired power plants. by 2025, with the aim of reducing CO2 emissions. Emissions from those plants will be 20% lower than the average for similar plants in 2023, and the batch in 2027 aims for emission degrees to be 50% lower than the 2023 average.
This transformation plan aims to achieve emissions discounts at targeted coal-fired power plants by “co-firing” coal with biomass or “green” ammonia derived from renewable hydrogen, or by adding capture, Carbon utilization and storage (CCUS).
However, there are no targets for how many coal-fired power plants deserve to be upgraded, nor what the incentives will be to do so, which will clearly determine the direct effect of this policy.
The impact may be small as the source of biomass is limited, while ammonia and CCUS prices are high. For example, the International Energy Agency, one of the most positive on biomass power generation, forecasts that its percentage will increase by 2% in 2022. to 4. 5% by 2035, if China meets its IEA strength and climate commitments.
In addition, much of China’s coal-fired power generation is no longer profitable, with nearly a portion of the sector’s corporations operating at a loss, even before taking costly new measures.
The policy, however, represents Beijing’s first attempt to reconcile the recent wave of approvals for new coal-fired power plants with its aim to limit CO2 emissions until 2030 and seek an early shutdown or reduction in emissions. -Use of at least one component of the coal-fired electric power park. Formation
China’s emissions fell year-over-year in March and the second quarter, as I projected in my study for Carbon Brief last year.
However, the faster-than-expected increase in coal demand for the chemical industry, as well as commercial demand for electric power and gas, diluted emissions reductions in the energy sector, making the decline in emissions smaller than expected.
However, China is still on track to start a structural decrease in its emissions in 2024, making 2023 the year of maximum CO2 emissions.
In order for this projection to bear out in reality, clean energy growth would need to continue and the expected cooling in energy demand growth in the second half of the year would need to materialise, with the new policy focus on energy savings and carbon emissions proving lasting.
The trends that could upset this projection come from the emphasis of economic policy on production and the expansion of the coal industry into chemicals.
The increase in the use of coal to convert it into chemicals also demonstrates that even if emissions from the force sector begin to decline, as long as China’s climate commitments allow emissions to increase, there is scope for breakthroughs that allow emissions to increase in other sectors.
China has pledged to update its 2030 climate targets and new 2035 targets early next year. These targets will be key to consolidating peak emissions and specifying the target rate of relief from post-peak emissions, any of which have seismic implications for the trajectory of global emissions and the point at which temperatures can stabilize.
The knowledge for the research was gathered from official knowledge of China’s National Bureau of Statistics, China’s National Energy Administration, China’s Electricity and Customs Council, as well as WIND Information, an industry knowledge provider.
Wind and solar generation, as well as thermal energy allocation through fuel, were calculated by multiplying the electric power generation capacity at the end of each month by monthly usage, the China Electricity Council reported via Wind FinancialTerminal.
Total thermal, hydroelectric and nuclear energy production is taken from the monthly publications of the National Statistics Office.
As monthly usage data is not available for biomass, the annual average of 52% for 2023 was applied. The coal consumption of the power sector was estimated on the basis of coal-fired electricity generation and the average warming rate of coal-fired power plants each month, in order to prevent official coal consumption figures from affecting recent knowledge.
Where knowledge was gained from resources, other resources were cross-referenced and official resources were used wherever possible, adjusting overall consumption to accommodate the expansion of consumption and changes in the energy mix reported through the National Office’s statistics for the first quarter and first half. of the year. The effect of the changes is less than 1% for all energy resources, and the conclusion that emissions decreased in the second quarter holds with and without this adjustment.
The CO2 emission estimates are based on the predetermined calorific values of fuels from the National Bureau of Statistics and the emissions of China’s latest national greenhouse gas emissions inventory for the year 2018. CO2 emissions from cement are in annual estimates until 2023.
In the case of oil consumption, the obvious consumption is calculated from the refinery performance, subtracted from the exports of petroleum products.
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