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9STRUCTURAL CHANGES IN CHINA'S ENERGY SECTOR: TRENDS AND PROJECTIONS
Abstract: China announced the transition to a new stage of development - the construction of an ecological civilization by 2050. The most important role in this endeavor should be played by "new energy" based on renewable energy sources (RES). The article considers the forecasts of energy development and replacement of fossil energy sources with alternative ones.
Keywords: renewable energy sources, energy balance, hydropower, solar energy, wind energy, fossil energy sources, forecast, China.
Recently, alternative sources of energy have begun to play a significant role in the global energy balance. Hydropower accounts for more than half of the renewable capacity. Wind and solar power are the next most common sources of energy. One of the leaders in the development of renewable energy sources (RES) is China. In this country, particularly significant shifts in the energy balance are forecasted due to increased use of alternative sources of energy.
Increasing the use of renewable energy sources is one of the ways to address environmental problems that have become urgently evident in China due to the high rate of economic development.
Like most developing countries, China faces two types of environmental problems on its path to economic reform. The first is due to agrarian overpopulation, massive poverty and economically induced environmental damage. The most typical examples of this type of problems are deforestation, dehydration of wetlands and reduction of the area of lakes, plowing of mountain slopes, overgrazing in steppes, etc.
The second type of environmental problem is closely related to industrialization and the increasing use of fossil fuels. These problems have a long history of study in developed countries, and since the 70s of the last century they have been firmly on the international agenda - it is enough to mention the Stockholm Conference of the United Nations Environment Protection in 1972 and the report to the Rome Club "Limits to Growth", published in the same year.
It can be noticed that now China has mainly solved environmental problems related to the mass poverty of the rural population. In the first decade of reforms, the restrictions of birth and migration to the cities, the manufac-torization of the village, public environmental protection works (especially mass afforestation), public education, etc. played a positive role. In the sphere of energy consumption, successful solution of the first type of environmental
* Chesnokova S. V. - Research associate, Economic Research Department of the IOS RAS.
problems can be rightfully associated with a significant reduction in the use of traditional fuel (firewood, etc.)1.
As for the second type of problems, in the initial period of market reforms, China had to follow the priority of industrialization over environmental protection. The desire to create a full-scale industry with a powerful heavy industry, and even self-reliance, did not help to solve the problems of environmental protection and resource saving.
China's energy sector has developed in line with general economic trends. The leading role in the country's energy balance has been played and is played by fossil energy sources, especially coal, which accounted for about 66% of the country's energy balance in 20172.
In the 10th, 11th and 12th Five-Year Plans (2000-2015), coal and oil were actively promoted as the main fuel for China's economic development. Coal-fired power plants were spoilt by favorable conditions and access to cheap capital, which was encouraged by state companies and local authorities. Industry has been allowed to increase coal consumption without taking into account environmental concerns, and the rapid growth of the transport sector has brought fuel consumption to a situation where two-thirds of oil consumption is imported.
The accelerated build-up of fossil fuels in the energy system, while contributing to economic growth, has caused serious environmental problems.
However, with the rapid changes in China's economy in recent decades, there has come a fairly timely mass awareness of the damage caused by the "dirty" path. The state and society began to gradually turn to energy efficiency and environmental pollution issues.
In addition, the industrial leap has also prepared a rapid consumer revolution. And its component part, as it was in its time and in developed countries, is the ecological revolution.
The energy sector has become the driving force behind environmental change. China today is a recognized leader in the development of so-called "green" or "new" energy, in which renewable energy plays a key role. China is ahead of the world's leading countries in terms of the rate of growth in the use of renewable energy sources.
Today, China accounts for almost half of the world's renewable energy generation capacity growth. In 2017, China produced about 130 GW of solar energy. This is 36 times more than in 2012 and exceeded the government's 2020 target. The Chinese hydropower industry's capacity has increased by 36% since 2012.
So far, the share of renewable energy in the country's energy consumption is relatively small (about 7%) and "green energy" only complements traditional sources. However, growth rates, party directives and forecasts suggest that the
1 Salitzky A., Chesnokova S., Shakhmatov A. China: Powerful start to environmental revolution. Perspectives. Network edition of the Center for Research and analysis of the Foundation for Historic Perspective. 23/03/2015. http://www.perspektivy.info/history/kitaj_moshhnyj_start_ekologicheskoj_rev-olucii_2015-03-23.htm.
2 China Renewable Energy Outlook 2018. 29.11. 2018, p. 1.
country's energy mix will shift in favor of renewable energy in the near future (see Figure 1 and Table 1).
Figure 1
Total primary energy demand in PRC (mtce) 1990-20163
mtce
1990 !995 2000 2005 2010 2015
Table 1
Electricity generation by different energy sources 2012-2017 (TVTh)4
2012 2013 2014 2015 2016 2017
Total 4987 5372 5680 5740 6023 6417
Share of renewable energy sources* 19.9% 20.0% 22.7% 24.2% 25.7% 26.4%
Coal 3713 3981 4027 3898 3946 4150
Gas 110 116 133 167 191 205
Oil 6 5 4 4 3 Н/Д
Other fossil fuels 97 119 139 162 191 Н/Д
Nuclear power 98 112 133 171 213 248
Hydropower 856 892 1060 1113 1175 1195
Wind energy 103 138 160 186 241 303
Sular energy 4 8 24 39 67 117
Biomass 30 37 44 53 65 79
Other renewable 0.48 0.28 0.54 0.15 0.12 Н/Д
* Renewable sources of energy include hydropower, wind energy, solar energy and biomass. Biomass includes stover, biogas and wastes.
3 China Renewable Energy Outlook 2018. 29 November, 2018, p. 1.
4 China Renewable Energy Outlook 2018. 29 November, 2018, p. 54.
The concept of "Beautiful China"
In October 2017, at the 19th Communist Party of China Congress, Xi Jinping, Chairman of the People's Republic of China, outlined the stages of further modernization of the country. "At the first stage, from 2020 to 2035, we will build up the base of the middle income society and, thanks to 15 more years of hard work, we will generally achieve modernization," said Xi Jinping. At the second stage, explained Xi Jinping, from 2035 to the middle of the XXI century, "the party will work hard for another 15 years to turn China into a rich, powerful, democratic, harmonious, civilized modernized socialist state5.
At the same time, the leader of the People's Republic of China set the task of "speeding up the transition to an ecological civilization and building a "beautiful China"6.
Xi Jinping stated that "priority should be given to saving resources, protecting and restoring the natural environment, and to developing spatial architectures, production structures, production methods and lifestyles that can save resources and protect the environment in order to restore the peace, harmony and beauty of nature".
The report of the President of the PRC sets out the following objectives:
1. Stimulate green development. Along with the accelerated creation of a legal framework and policies focused on green production and consumption, it is necessary to create and improve the economic system of green, low-carbon and recycling development.
2. Concentrate efforts on solving acute environmental problems. It is necessary to stand firmly on the position of nationwide participation in the prevention and elimination of pollution at its source, to continue work on the prevention and elimination of atmospheric pollution in order to win the fight for the "blue sky".
3. To strengthen the dynamics of environmental protection. It is necessary to implement the most significant projects on protection and restoration of important ecological systems, optimize the system of ecological protection barrier, create ecological corridors and biodiversity protection network, to improve the quality and sustainability of ecosystems.
4. Reform the environmental monitoring and control system. In order to intensify the overall design, organization and guidance in the field of environmental civilization development, it is necessary to establish bodies for the management of state natural resources assets and monitoring and control of natural ecosystems.
It appears that the advancement of the "Beautiful China" concept marks a new stage in the country's development, in which renewable energy sources will evolve from complementary sources into substitutes over time.
5 Full text of Xi Jinping's report at 19th CPC National Congress. http://www.xinhuanet.com/english/spe-cial/2017-11/03/c_136725942.htm .
6 Xi underlines perseverance in building beautiful China http://www.xinhuanet.com/english/2019-08/22/c_138329035.htm.
The National Energy Administration of China (NEA), within the framework of the Beautiful China concept, aims to move towards a clean, low-carbon, safe and efficient energy system. The PRC government plans to change the energy mix by reducing coal consumption and increasing the use of clean energy. The restructuring of the industry will require an increase in the use of renewable energy sources (RES) and increased economic efficiency.
Trends and forecasts
Energy Research Institute of China Academy of Macroeconomic Research /China National Development and Reform Commission) has released a report "China Renewable Energy Outlook 2018 (CREO 2018)". It discusses the current problems of the Chinese energy sector and presents forecasts for the development of renewable energy in 2020, 2035 and 2050.
The authors of the forecast believe that by 2050 the Chinese energy sector will correspond to the parameters formulated in the 13th Five-Year Plan and in the concept of environmental civilization, presented at the XIX Party Congress:
• Clean energy that minimizes air, water and soil pollution from activities at all stages of the energy supply chain, from mining to waste disposal. This implies a sharp reduction in coal production outside the electricity sector, a reduction in coal production and the efficient use of flue gas treatment in the electricity sector.
• Low carbon energy, as a result of the transition from fossil fuels to non-fossil fuels. To reduce CO2 emissions, not only coal but also oil and gas consumption is limited.
• Safe energy, which is less dependent on external factors, primarily fuel imports. It follows that the use of oil and natural gas must be reduced, as domestic resources are limited.
• Efficient energy with low energy losses and high energy efficiency in end-use sectors. It is also a cost-effective and optimized energy system in which market forces play a crucial role.
The report presents two projection scenarios:
• Stated Policies scenario, which assumes the implementation of the goals and objectives outlined in the 13th Five-Year Plan and the decisions of the XIX CPC Congress;
• Below 2 °C scenario, which adds to the Declared policy scenario strict limits on emissions of harmful substances introduced under the Paris Agreement on Climate7.
7 The aim of the 2015 Paris Climate Agreement is to "accelerate the implementation" of the United Nations Framework Convention on Climate Change, in particular to keep global average temperature increases "well below" 2 °C and to "make efforts" to limit temperature increases to 1.5 °C.
Renewable energy sources
In analyzing the transition of China's energy system from fossil sources to renewable energy sources, it is necessary to take into account factors such as resource potential, political priorities, economic and technological factors. This applies to both the main renewable energy sources, wind, solar and hydroelectric power plants, as well as smaller-scale technologies, especially in the areas of fuel storage for transport and energy supply, biomass and tidal energy. The main predictions are as follows:
Hydropower: According to the Stated Policies scenario, by 2050, the capacity of China's hydropower plants, already the largest in the world, will be increased by 70% due to the commissioning of new capacities in Southwest China. Hydropower will essentially reach the limit of its technical and resource potential.
Wind power: Both CREO scenarios predict that wind is becoming the leading source of electricity generation in China. The costs of onshore and offshore wind technology are decreasing and can compete with the costs of building a new coal-fired power plant. The projected scenarios differ mainly in terms of wind resources and the complexity of construction and maintenance:
• Wind energy increases from 328 TWh in 2016 to 1801 TWh in 2030 in the Stated Policies scenario and to 3,336 TWh in the below 2 °C scenario.
• In the Stated Policies scenario, wind power produces 5955 Twh in 2050 and 7612 Twh in the below 2 °C scenario.
Solar energy: In both CREO scenarios, solar energy is growing rapidly, both for power generation and for direct use of solar power, such as heating. The Stated Policies scenario assumes an increase in installed photovoltaic capacity of 1,364 GW by 2035 and 2,034 GW by 2050, for the production of 1858 TWh of electricity in 2035 and 2694 TWh by 2050. The Below 2 °C scenario envisages even faster growth, up to 2000 GW by 2035 and up to 2836 GW by 2050. Heat use of solar energy (e. g. heating) will quadruple by 2050 in the Stated Policies scenario, and seven times in the below 2 °C scenario.
Biomass: According to CREO forecasts, biomass for electricity and fuel production is growing, albeit severely limited by raw material resources and economic considerations. As a result, biomass is the smallest of the three renewable energy sources (solar energy, wind energy, biomass). The energy capacity of biomass will increase from 15 GW in 2017 to 54 GW in 2050 in the Stated Policies scenario and slightly above 57 GW in the Below 2 °C scenario. Under the Stated Policies scenario, by 2050 biomass energy will produce 255 TWh of electricity, mainly from waste and straw incineration at CHP plants. Bioethanol production will grow rapidly in the short term. The growth will be followed by a decrease in its production due to the conversion of part of the transport to electric traction.
Shifts in the energy balance
Both scenarios suggest significant shifts in the energy balance of the country. The most important aspect is a sharp decrease in coal use in the energy sector since 2020 and its replacement by renewable energy sources.
Despite the growth of the country's motorization, it is also expected that the share of oil in the energy balance will decrease. This is due to the expected increase in the share of electric transport in the car fleet.
The role of natural gas differs in the scenarios. In the Below 2 °C scenario, the share of natural gas is at first stable, but by 2050 it falls to a minimum. The Stated Policies scenario assumes a sufficiently high level of natural gas consumption.
Both scenarios provide for a significant increase in the share of renewable energy, especially wind and solar energy. At the same time, these forecast options have different degrees of radicalism. The Below 2 °C scenario is more radical and assumes that the share of renewable energy sources (including hydropower) in energy demand will increase to 57% by 2035, while the Stated Policies scenario is "only" to 39%.
Thus, China has set itself ambitious plans to crowd out fossil fuels and massively replace them with renewable energy sources. It seems that these plans are only at first glance overly ambitious and utopian. Taking into account the experience, speed and depth of Chinese reforms, the possibility of their implementation cannot be ruled out. It is possible to discuss specific figures, but there is less and less doubt that China's energy balance will change significantly in favor of clean energy in the next few decades.
