China needs an eye-watering investment of more than $5 trillion to reach carbon-neutrality by 2060, according to analysis from Wood Mackenzie.
This would help finance an 11-fold increase in wind, solar and storage capacities to 5,040GW by 2050.
The energy and research consultancy confirmed its breakdown figures for power capacity by 2050 as 2,238GW for wind, 1,905GW for solar and 896GW in storage capacity.
Speaking to Windpower Monthly, Wood Mackenzie's Asia Pacific head of markets and transitions, Prakash Sharma said that China's transmission network remains a significant challenge to the country hitting its targets to integrate such a vast amount of renewables capacity to the power grid.
Sharma said: "The transmission challenges could be overcome using battery storage and pumped hydro facilities. Some of the renewable capacity would also be used to produce green hydrogen.”
The analysis found that US$5 trillion of investments would be needed to pay for additional power generation capacity for the growth in electrification expected by 2050.
Sharma added: “It is definitely a colossal task for a country using 90% hydrocarbons in its energy mix and annually producing more than 10 billion tonnes of CO2-e, and in addition, accounting for 28% of global total emissions.
“In our Accelerated Energy Transition (AET-2) scenario, China’s emissions peak immediately and enter a period of rapid decline, reaching net-zero slightly after 2050. This is achieved by widescale electrification of transport, heating and industry as well as the deployment of carbon capture use and storage (CCUS).”
In its projections, Wood Mackenzie estimates solar, wind and storage capacities will have to increase 11 times to 5,040GW by 2050 compared to 2020, while coal-fired power capacity would drop by half, with gas at the same level as in 2019.
This would come alongside an expansion of total power output to 18,835TWh by 2050 – 2.5 times today's levels.
Sharma said: “The most challenging part of the shift is not the investment or magnitude of renewable capacity additions but the social transition that comes with it. Halving coal capacity will result in loss of coal mining jobs, affecting provinces that depend on its revenues and employment generation.
“We expect the government to retrofit coal-fired power plants with CCS to retain coal mining activity in key provinces. This approach aligns with China’s strategy to optimise domestic coal resources to improve energy security.”
As well as major challenges of transmission of power from new installations, China’s carbon-neutral goal also faces a lack of scalable low-carbon alternatives in transport and industrial sectors.
In 2019, China’s carbon emissions from both sectors have hit 5.7 billion tonnes, about the same as the combined total emissions of both the UK and US.
The research consultancy said that it believes both sectors will need government subsidies and carbon pricing to decarbonise.
Wood Mackenzie said it expects carbon price support in China to reach US$109 per tonne by 2030, in the AET-2 scenario.
Sharma added: “Given China’s large heavy industry and machinery sector, it is crucial that China masters the use of CCS and forest sinks to offset the remaining emissions. Without it, China’s pledge to become carbon-neutral is nearly impossible.”
The outlook would mean China’s road transport would have to be fully electrified, meaning a totally new stock of electric vehicles would rise to 325 million units by 2050, compared to four million now.
It would mean a collapse in oil demand collapses to below 7 million barrels per day by 2050.
The scenario would also require industries like steel, cement, refining and chemical to look to hydrogen and Carbon Capture Storage (CCS) as mainstream fuel with supply options to tackle emissions.