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The Real Reason China Is Betting Big On Renewables

China

The energy and environmental sectors are still abuzz with the ambitious carbon neutrality plan announced by Beijing almost a month ago. Chinese President Xi Jinping announced that China would double down on its climate commitments and reduce its massive carbon footprint to net zero emissions by just 2060. At the U.N. general assembly, Xi announced that in addition to this extremely ambitious goal, his country would also reach peak emissions in just a decade, by 2030.  While the rhetoric around this decision is largely based on climate change and reducing negative environmental externalities, however, the target set by China may actually have more to do with China’s energy security than anything else. “Debate over energy policy in China centers around the country’s resilience against supply chain uncertainties,” World Politics Review reported last week, referring to energy security as China’s “fundamental domestic objective.”

Supporting this assertion, earlier this year the Chinese government released a first-time “high-level” policy document which laid out in extreme detail plans for protecting the nation’s energy security going forward. According to that document, China is set to pursue a strategy that involves significantly increasing domestic power production. This is not an entirely new strategy for Beijing, which has pushed for the increase of solar and wind power in China in recent years and has also invested so much into domestic nuclear power production that the country is now on track to become the biggest nuclear power producer in the world. “GlobalData Plc predicts that China will pass France as the world’s No. 2 nuclear generator in 2022 and claim the top spot from the U.S. four years after that,” Bloomberg Green reported in June.

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As part of China’s two-pronged initiative to lower its carbon footprint and shore up its energy security, the country will have to overcome a lot of barriers to scale up its renewable energy industries. While Beijing has thrown a lot of money at solar and wind in the past, it has often rushed into these ventures without fully considering the obstacles. The renewable energy industries in China are largely located in more rural areas in Northern and Western China, but the demand is far away in the major cities. Because of this gap, “the energy generated either wasn’t fully used, or many plants didn’t reach their full capacity and, therefore, profitability,” reportes World Politics Review. 

“Bridging that gap throws up difficulties that are geographical, and political,” the report continues. “Powerful interest groups in China, like grid companies, the renewable energy industry and local governments, have their own priorities that don’t always align. Insiders at the State Grid Corporation of China, the state-owned electric utility, who favor coal, have nicknamed wind and solar “garbage electricity” due to their unreliability. While storage and ultra-high voltage transmission could help resolve those issues, they raise other questions about when construction of that infrastructure should start, and who should pay for it.”

Ironically, the same energy security concerns that are pushing China toward decarbonization and ramping up renewable energy are the very same concerns that are pushing the country back toward coal. This contradiction is illustrative that China’s main objective is security and economy, not climate change or other environmental concerns. In fact, it may just be because China has become a net importer of coal that they have finally decided to move past the cheap and abundant fossil fuel. 

The track that China decides to take in its perusal of energy sovereignty and security will have considerable impact on the rest of the world, especially considering that “China will export whatever it develops.” China is the world’s second-biggest economy and one of the world’s biggest polluters and biggest contributors to global greenhouse gas emissions. But when it comes down to it, whether China decarbonizes for security or for environmental health, the result is the same: it’s a new positive for the planet. The question is whether Beijing will make good on its lofty carbon neutrality promise, or if the allure of cheap and dependable coal will be too powerful in the end. 

By Haley Zaremba for Oilprice.com 

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