China’s clean energy boom ‘an example to the entire world’, IEA analyst says
IEA has simply lost all of its credibility with pieces like this.
China’s clean energy boom ‘an example to the entire world’, IEA analyst says
Renewable capacity is expanding at an unprecedented pace, with China’s solar PV installations last year equal to the world’s total in 2022, report says
Nation also dominates in solar manufacturing, which has pushed down the cost of modules by more than 80 per cent in a decade, according to analyst
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China has emerged as a leader in renewable energy with production capacity expanding at an unprecedented pace, which an International Energy Agency analyst says will benefit not just the nation but the planet.
What China has achieved is “an example to the entire world”, according to Heymi Bahar, a senior analyst with the IEA.
He made the remarks after the IEA released its annual renewable outlook report earlier this month.
According to the report, China’s renewable energy capacity expansion last year was driven by solar photovoltaic installations, which were equal to the total solar capacity added by the rest of the world in 2022.
Bahar said China was also the biggest producer of solar PV modules, manufacturing around 80 per cent of the modules worldwide.
That had led to a decline in solar module prices of more than an 80 per cent over the last decade, he said.
Other countries are trying to compete against China in solar manufacturing. In the last few years, the United States and European Union have sought to encourage domestic manufacturing, including by offering subsidies for green tech such as solar energy.
India is also seeking to expand domestic solar production capacity. As a result, imports of Chinese solar modules fell by 76 per cent in the first half of 2023 from a year earlier, according to a report by UK-based climate think tank Ember.
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Bahar said lower prices for solar modules helped “all countries in the world to expand solar PV deployment”.
Imports could also be vital to meet the global target for renewable energy capacity.
In its report, the IEA said expansion of renewable energy capacity would have to be accelerated worldwide to meet the goal of tripling capacity by 2030 set during the Cop28 UN climate summit last month.
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While countries like the United States and Brazil had record increases in their renewable energy capacity last year, China’s additions were far greater.
Bahar said China was “key” to meeting the Cop28 pledge to triple capacity globally, as it accounted for “almost 40 per cent of cumulative installed renewable capacity worldwide”.
In the report, the IEA said that from 2023 to 2028, “China will deploy almost four times more renewable capacity than the European Union and five times more than the United States”.
It said China could even reach its 2030 target of installing a total of 1,200 gigawatts of wind and solar capacity this year – “six years ahead of schedule”.
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The report also noted that China’s solar PV manufacturing capacity “now strongly exceeds both local and global demand, which has driven module prices down significantly”.
Elsewhere, manufacturing costs are significantly higher. In 2023, it cost an estimated 30 per cent more to make a polysilicon PV module in the US than it did in China, according to the report. In India, the manufacturing cost was 10 per cent higher than in China, and it was 60 per cent higher in the EU.
The IEA expected the price gap to continue widening. It estimated that from 2023 to 2028 it would cost US$12 billion to replace Chinese PV imports with domestically made modules in the United States. The figure was US$8 billion for both the EU and India.
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Growth in China’s solar and wind capacity is being driven by a supportive policy environment and the economic attractiveness of renewable technology in the country, according to the report.
It said an estimated 96 per cent of new utility-scale onshore wind and solar PV last year “had lower generation costs than new coal and natural gas plants”. And around 75 per cent of new wind and solar facilities provided cheaper power than existing fossil fuel plants.
China rolled out a “green electricity certificate” scheme nationwide last year as a way to encourage the use of renewable energy and power trading from resource-rich provinces to others.
The programme aligns with “a more market-oriented approach to increase renewable energy integration”, according to Zhang Hao, an associate professor of law at Chinese University of Hong Kong.
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He said it could help overcome provincial barriers to trading renewable energy. It might also replace mandates like provincial targets which he said were “unsustainable due to weak regulatory capacities at the central level”.
Zhang said renewable energy would continue to be a policy priority but noted that decentralisation of energy governance complicated Beijing’s control over the sector’s development.
“Addressing vulnerabilities in the supply chain and shifting the focus from capacity addition to integration are crucial needs that deserve attention in the regulatory and policy framework,” he said.
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Prior to joining SCMP in 2023, Victoria received her Bachelor’s degrees in Environmental Health and Environmental Studies from the University of Rochester, where she also worked in a Biochemistry lab. She holds a Master's in Public Policy from Peking University.
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China’s clean energy sectors were the biggest drivers of its GDP growth in 2023: CREA
China’s clean energy sectors, like renewables, nuclear power, energy storage, EVs and railways, account for all investment growth in the economy in 2023, CREA report says
Report warns that China’s clean-energy investment growth and its investment-driven economic model portend overcapacity and weakening profitability risks
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Published: 4:30pm, 25 Jan, 2024
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Sectors related to clean energy were the biggest contributors to China’s economic growth in 2023, accounting for around 40 per cent of China’s GDP expansion last year, which analysts say is a “major pivot” in the world’s second-biggest economy.
China invested an estimated 6.3 trillion yuan (US$890 billion) in clean energy in 2023, a 40 per cent year-on-year increase, an amount equivalent to the global investment in fossil fuels last year, according to an analysis published by the Helsinki-based Centre for Research on Energy and Clean Air (CREA).
“China’s reliance on the clean technology sectors to drive growth and achieve key economic targets boosts their economic and political importance. It could also support an accelerated energy transition,” the researchers said in the report.
Investments in China grew by just 1.5 trillion yuan in 2023 overall with sectors such as real estate witnessing a decline in investments, clean energy sectors, including renewables, nuclear power, electricity grids, energy storage, electric vehicles (EVs) and railways, accounted for all of the investment growth across the Chinese economy, the report said.
Including the value of goods and services, clean-energy sectors contributed 11.4 trillion yuan to the Chinese economy in 2023, up 30 per cent year-on-year and representing 40 per cent of the country’s GDP expansion, CREA’s analysis of official figures, industry data, and analyst reports showed.
The boom in clean-energy investments, particularly in solar power, electric vehicles (EVs) and batteries, came as China’s real-estate sector, once the country’s key economic driver, shrank for the second year in a row. Without the contribution of clean energy sectors, China’s GDP would have missed the government’s growth target of around 5 per cent, rising by only 3 per cent instead of 5.2 per cent, according to CREA.
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The shift in investment flows towards clean-energy sectors is a result of not just China’s energy focus and its climate efforts, but also changes in its broader economic and industrial policy, the researchers said.
However, they warned that China’s clean-energy investment growth and its investment-driven economic model cannot continue indefinitely, as overcapacity and weakening profitability could hinder the clean-energy industry’s healthy development.
Despite China leading the global renewables market with record-breaking installations, its solar photovoltaics (PV) and wind turbine manufacturers are struggling with losses due to overcapacity and price wars.
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The EV industry also faces intense domestic competition, and there are risks of headwinds in the overseas market following the European Union’s decision to impose tariffs targeting China-made EVs and the enactment of the United States Inflation Reduction Act, which seeks to reduce reliance on China to support its own EV supply chain.
In 2023, China commissioned as much solar PV capacity as the entire world did in 2022, while its wind turbine capacity also grew by 66 per cent year on year, according to data released by the International Energy Agency (IEA) last week. The country currently accounts for almost 60 per cent of new renewable capacity that is expected to become operational globally by 2028, and is seen accelerating the expansion of its renewable capacity, according to IEA.
Even if the frenetic expansion pace of 2023 is not repeated, the investment in clean energy and the value of the economic output of the clean energy sectors are expected to continue to grow this year, according to Lauri Myllyvirta, lead analyst at CREA.
“There is still a lot of investment in the pipeline,” he said. “Even as the demand for clean energy technology grows, it seems inevitable that the manufacturing overcapacity issue will worsen as more production capacity comes online rapidly.”
The oversupply provides a tailwind for end users and helps in China’s energy transition, as it will continue to push down prices, but it also means more manufacturers and investors in the clean energy sectors will suffer from weakening profitability, he said.
However, there is still enormous “undercapacity” in the clean electricity and transport sectors, as China still has a long way to go in delivering its goal of sourcing 80 per cent of its total energy mix from non-fossil fuel by 2060, the year the country aims to achieve net-zero greenhouse gas emissions.
“The major investment that China has made into manufacturing capacity should be an additional motivation to ensure healthy growth of the domestic market for clean electricity, grid-connected batteries, electric vehicles and other essential technology of the zero-carbon energy system,” said Myllyvirta.
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No, it was published South China publication.
Is this a spoof? Nope April 1 is still a ways off. Wow 😮