Home Energy system China’s climate goals need $14 billion for power and transport, World Bank says

China’s climate goals need $14 billion for power and transport, World Bank says

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World Bank report says China will need power and transport investments estimated at $14 billion to meet Beijing’s goal of net-zero emissions by 2060, as party congress in power this week reinforced its commitment to a “green energy revolution”.

China’s decarbonization plan is expected to decouple economic growth and emissions at a faster pace and at a lower level of income than advanced economies, the bank warned, as it made “significant investments in massive green infrastructure and scaling up technology”.

But China could also reap some benefits, the World Bank said, such as its position at the forefront of advancing low-carbon technologies. China is already home to a third of the world’s installed wind power and a quarter of its solar capacity.

In his congress opening speech, President Xi Jinping emphasized his plan to “fundamentally eliminate” pollution, despite the emergence of a central message on energy security, food security and other key supplies that fuel the Chinese economy, the independent China Dialogue reported.

State media also quoted Chinese Foreign Ministry spokesperson Wang Wenbin as saying that China hopes “countries can overcome the difficulties as soon as possible and get back on the right track of low-carbon development.” and green, in order to jointly achieve the objectives of the Paris Agreement”.

Chart showing China's decarbonization requires $14 billion for power and transportation

China, the world’s largest producer of greenhouse gases each year, is “severely affected” economically by global warming, the World Bank noted. Its low-lying coastal cities, which account for a third of China’s gross domestic product, are affected by rising sea levels, storm surges and coastal erosion.

China’s northern and western inland provinces are increasingly prone to heat waves and drought, intensifying the risk of water shortages and affecting rural farmers.

Ilaria Mazzocco, a member of the chair of Chinese business and economic administration at CSIS, a Washington-based think tank, told Beijing it was “understood that by reforming their energy system, they can become a more efficient economy.

President Xi has pledged in 2020 for China to reach its peak CO₂ emissions by 2030 and reach net zero emissions by 2060. To achieve this goal, China’s demand for coal would have to be reduced. , which represents half of world consumption, to a level close to zero.

According to China’s National Bureau of Statistics, coal accounted for 56% of China’s energy consumption in 2021.

Graph showing that energy-related emissions account for most of China's total GHG emissions

Lockdowns to contain the coronavirus have depressed industrial demand in China and coal consumption fell 3% in the first half of 2022, the International Energy Agency estimated.

Power outages in early summer during bouts of extreme heat led Beijing to offer additional aid to coal-fired power plants to help maintain electricity supplies as demand for electricity increased.

Beijing has made “serious efforts” to reduce its dependence on coal, said Jennifer Turner, director of the Wilson Center’s China Environmental Forum. “But you have to look at this as an attempt to turn the Titanic around, right?”

China’s power sector – the biggest source of Chinese carbon emissions – would need to be decarbonized first to achieve the rapid emissions decline needed over the next two decades, the World Bank said, energy investments solar and wind steadily reducing the use of coal.

Electrification and increased energy efficiency would boost the decarbonization of Chinese industry in the short term, the World Bank said.

Continued investment in mass public transport systems and electrification would reduce emissions from this sector.

Of the $14 billion in additional investment estimated to be needed by 2060 for power and transport, the bank said the majority should be concentrated upstream to avoid locking in carbon-intensive assets.

Public investment would be “necessary but not sufficient to meet overall investment needs,” the World Bank said in its report. “They will need to be complemented by good sectoral policies, wide-ranging regulatory reform and new standards to unlock the full potential and encourage private sector investment and innovation in these sectors.”

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