China released its 14th Five-Year Plan (FYP) for renewable energy on June 1, outlining the country’s renewable energy roadmap for the five years 2021-2025.
This is the first sub-sector plan released since the 14FYP for a modern energy system, released earlier this year. Of all the documents China has released as part of the so-called “1+N” policy to enforce its climate commitments, the energy plan and its sub-sector plan on renewable energy could be the most fundamental for the decarbonization of China. China.
China’s climate pledge (its “nationally determined contribution,” or NDC) targeted 1,200 gigawatts (GW) of wind and solar power capacity by 2030, and that 25% of energy consumption be met by non-fossil fuels by 2030. Meeting these targets should ensure that China’s carbon dioxide (CO2) emissions peak before 2030, but not achieve carbon neutrality.
Therefore, to the extent that the new 14FYP for renewable energy can meet or exceed its targets, it would also contribute to China’s efforts to reach an early peak in carbon emissions and help close the emission reduction gap. world towards a trajectory of 1.5C.
What’s in the Renewable Energy Plan?
The 14th FYP for Renewable Energy sticks to the previously announced vision of 25% of China’s energy coming from non-fossil sources by 2030. To increase the share from 15.9% in 2020 to 20% by 2025, the plan establishes a framework with a series of objectives and actions.
More specifically, they cover: renewable energy production in million tonnes of coal equivalent (Mtce), overall and for non-electric supplies; production of renewable electricity in terawatt hours (TWh); and the share of renewable energies in the network (%), overall and for non-hydraulic sources. The details of each of the targets are presented in the table below.
| Actual end of 2020 | Goal 2025 in 14FYP | NDC 2030 target | |
|---|---|---|---|
| Share of non-fossil fuels in total energy consumption | 15.9% | 20% | 25% |
| Renewable energy production | 680 Mtce | 1,000MTCe | Wind and solar capacity 1,200 GW |
| Renewable energy (excluding electricity) | 60 Mtce | 60 Mtce | |
| Renewable electricity | 2,210 TWh | 3,300 TWh | |
| Share of renewable electricity | 28.8% | 33% | |
| Share of non-hydro renewable electricity | 11.4% | 18% |
Unlike the renewable energy development plans of the last decade, the new version abandons the mandatory targets for increasing generation capacity, which were the focus of the two previous renewable FYPs.
For example, the 13th FYP for renewable energy aimed for renewable energy capacity, in total, to reach 680 GW by 2020 – and for wind to reach 210 GW.
But, in some ways, the new plan increases ambition. For example, this requires “a further increase in the production of renewable energy [to] represent more than 50% of the additional electricity consumption” – in other words, that at least half of the increase in demand is covered by renewable energies.
Based on estimated demand growth and projected expansion of nuclear and hydropower, our analysis suggests that this target means that wind and solar power generation should increase by around 150 TWh per year in during the period of the 14th FYP from 2021 to 2025.
This can be compared to the 100 TWh average annual increase in wind and solar seen during the 13th FYP period – and the 255 TWh increase recorded in 2021.
Will China Exceed Its Renewable Energy Targets?
China has a track record of outperforming renewable energy development targets over the past three FYPs. Since China first included a renewable energy target in its energy plan during the 11th FYP period, most of the sector’s quantitative development targets have outperformed, especially the growth targets. of total wind and solar capacity.
This is illustrated in the figure below, where the wind and solar capacity targets for the 11th (2006-2010), 12th (2011-2015) and 13th FYP (2016-2020) are represented by blue bars and the actual growth of China’s capacity is indicated. in red. The figure also shows the FYP targets for the share of total energy consumption from fossil fuels (grey line, right axis) versus the actual share in red.
Left axis and bars: Wind and solar capacity in China, gigawatts, according to FYP targets (blue) and actual results (red). Axis and straight lines: Share of energy consumption from non-fossil fuels, %, according to targets (grey) and actual results (red). Source: iPIB analysis. Chart by Carbon Brief using Highcharts.
The new renewables plan aims for total renewable energy generation of at least 1,000 Mtce by 2025, up from 680 Mtce in 2020, meaning that an annual increase of at least 64 Mtce is needed.
To generate that much power, based on the current energy mix, at least 100 GW of wind and solar capacity must be added every year over the next five years. That’s more than the more than 75GW annual increase from 2021 to 2030 needed to meet China’s NDC target of 1,200GW of wind and solar power by 2030 – meaning the renewable plan is likely to lead to outperformance.
Ambitious implementation at the local level could also contribute to outperformance at the national level. Looking at the 14th FYPs for energy development issued by each province, 23 out of 34 regions and zones have set targets for wind and solar capacity growth, amounting to more than 120 GW per year between 2021 and 2025.
(Analysis published by Carbon Brief in May found that at least 570 GW of capacity is expected to be built during 14FYP, while the recent Press articles suggest that more than 150 GW could be built this year.)
The economic impact of renewable investments
China is experiencing an economic slowdown that has seen carbon dioxide (CO2) emissions fall for three consecutive quarters, a trend that is set to deepen due to strict Covid lockdowns.
China’s cabinet, the State Council, has issued a package of measures aimed at stabilizing economic performance. Premier Li Keqiang stressed that “the Chinese economy faces greater challenges than [in] 2020”.
Nevertheless, the development of renewable energy in China is expected to continue to soar.
In the same week as the Economic Stabilization Package, the Department of Finance released what Reuters described as “fiscal and tax policies to support the transition to carbon neutrality,” with support for the implementation of the 14th FYP for a modern energy system as the main action.
Investment in renewable energy has been an important economic driver in China and will play an even more important role than before in reviving the economy, at a time when China is facing the economic impact of Covid and the uncertainties caused by the Ukrainian crisis.
In 2021, China’s investment in clean energy accounted for more than 30% of total global investment, according to the International Energy Agency, and this trend will continue.
Implications for the global energy transition
Cheap renewable energy offers an answer to climate change, the energy crisis and inequality. Investments in China’s renewable energy will help increase the sector’s energy production, while offering the potential to drive national and global economic growth, reducing wind and solar costs and creating economic opportunities in manufacturing and deployment.
After dominating the solar panel market, Chinese companies now dominate the global electric vehicle (EV) and battery markets. Chinese companies CATL and BYD are responsible for producing batteries for 39% of the global electric vehicle fleet.
The Global Wind Energy Council’s 2022 report indicates that China has recently exceeded the United Kingdom and Germany in offshore wind, becoming the largest offshore wind market in the world, accounting for 40% of total global installed capacity.
According to the new 14th FYP for renewable energy, China has pledged to build offshore energy “bases” in five regions. Energy development plans for six coastal provinces indicate a total growth in offshore wind capacity of 32 GW in the 14th FYP period 2021-2025, which would represent an increase of more than 60% compared to the 2020 level.
China’s ambitious development plan means a growing market for all offshore turbine manufacturers, with Western companies still holding the largest market share.
The challenges of decarbonizing the energy mix
The success of the renewable energy plan will strongly depend on the construction of large-scale renewable energy bases and the creation of market mechanisms that take advantage of the integration of renewable energies into the grid.
At the same time, the growing penetration of wind and solar in China’s electricity mix will require flexible resources that can balance and adapt to fluctuations in renewable energy production. These resources include energy storage, demand side management and flexible operation of fossil fuel power plants.
Prioritizing clean, low-cost ways to balance renewable energy, in support of China’s climate goals, rather than the conventional fossil fuel approach that has been used in the past, will only be possible. only with smart policy design and well-designed price signals.
The 14FYP on Renewable Energy includes measures promoting pumped hydropower and other energy storage approaches. The National Energy Administration also announced that permits for new coal-fired power plants would only be issued if the projects are complementary to renewables.
Despite all these efforts, however, there is always a risk that China’s growing coal capacity could run counter to the country’s efforts to decarbonize its energy mix.
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