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The Hidden Motive of China’s Zero Emissions Pledge: Energy Security

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The Hidden Motive of China’s Zero Emissions Pledge: Energy Security

China’s embrace of electric vehicles and the hydrogen economy is also about reducing its reliance on foreign energy sources.

The Hidden Motive of China’s Zero Emissions Pledge: Energy Security
Credit: Pixabay

Judging from moves made by countries throughout the world in the past two years, the global economy (including the automobile industry and energy industry, among others) has picked up amazing momentum in the transition and shift toward new sources of energy. In the past, such measures were either taken halfheartedly or merely discussions that did not result in any action, but they are now being rapidly implemented at all costs. Environmental protection and ecology are, of course, an all-too-common universal reason, but in our opinion, this reason is still secondary. The real motives are in fact, all based on geopolitical considerations. Every country is hoping to avoid major energy risks in the future – by undergoing an energy transition, they want to prevent energy insecurity.

Based on the same reasoning, we have vigorously advocated for China to build a “hydrogen energy society” in recent years. Pursuing new energy vehicles is not an end in itself, but a means to avoid energy risks and prevent national policies from being hijacked by energy issues. In that sense, geopolitical considerations will build one of the foundations for China’s development of hydrogen energy. Hydrogen energy is significantly different from conventional energy sources and will provide structural support for China’s energy security. It appears that other countries are now also starting to attach great importance to new energy as a mean of pursuing energy security – just look at Germany’s extremely generous $1.2 billion in subsidies to Tesla for the production of power-cell batteries.

As the world’s largest energy consumer, China faces the world’s most severe energy security threat. Chinese President Xi Jinping’s pledge to the world that China will achieve an emissions peak by 2030 and carbon neutrality by 2060 serves not only to demonstrate the country’s contribution to climate change mitigation and its responsibility as a major country, but also provides a solution to the issue of energy security that China faces.

China’s current energy consumption is facing severe threats both in terms of scale and composition. Its economic growth in 2019 was 6 percent, and the total energy consumption in the same period was 4.86 billion tons of standard coal equivalent (TCE), an increase of 3.3 percent over the previous year. Also in 2019, coal accounted for 57.7 percent of China’s total energy consumption (a decrease of 1.5 percentage points from the previous year), oil accounted for about 19.3 percent, natural gas 8.3 percent, and primary power as well as other non-fossil fuel energy sources (including hydropower, nuclear power, wind power, and other clean energy) 14.9 percent.

In 2020, affected by the COVID-19 pandemic, China’s economic growth rate dropped to 2.3 percent. However, last year’s energy consumption remained strong. According to preliminary estimates, China’s total energy consumption in 2020 increased by 2.2 percent over the previous year. While the economic growth rate has dropped by 3.6 percentage points compared to 2019, the energy consumption growth rate only dropped by 1.1 points. This shows that the Chinese economy has strong inertia and high energy consumption.

In order to support the sustainable development of the economy and industry as well as to meet the continuous growth of residential energy consumption, China needs to consume a high level of energy. This however, has caused China to face great pressure in energy security.

Since joining the WTO in 2001, China has gradually strengthened its status as the “world’s factory,” which has also required the country build a diversified portfolio of global energy sources. China’s most important energy imports are oil, natural gas, and goal. In 2019, China imported 506 million tons of oil, a surge of 9.5 percent over the same period last year, setting a record high for the 17th consecutive year. In 2020, China imported 542 million tons of crude oil, and its dependence on foreign oil reached 73 percent. Next is natural gas. In 2019, China imported 96.56 million tons of natural gas (equivalent to 135.2 billion cubic meters), an increase of 6.9 percent year-on-year. Of that, pipeline gas imports accounted for 36.31 million tons and about 50.08 billion cubic meters, or 37.6 percent of the total; LNG imports came to 60.25 million tons, accounting for 62.4 percent. In recent years, China’s coal imports have also been increasing. In 2019, China imported nearly 300 million tons of coal, an increase of 6.3 percent year-on-year, making China the world’s largest coal importer.

As countries and industries around the world have adjusted the composition of their energy consumption in order to reduce energy security risks, the pressures and risks China faces in terms of energy security have become more prominent. Therefore, strategic level policies such as changing the composition of energy consumption and building a hydrogen energy society show their overall importance. It should be emphasized that this pressure is not a long-term one but rather an imminent risk.

Countries around the world are turning to new energy sources not only based on industry and market considerations, but also because of the geopolitical complications to the energy security situation. China, as the world’s largest energy consumer, will be the first to bear the brunt of the pressure on energy security, hence it should immediately implement strategic policy adjustments.