China on a renewable energy course. Seaports and maritime transport will benefit

By Marek Grzybowski

China has 18% of the world’s population, consumes 26% of the world’s primary energy, emits 33% of the world’s energy-related CO2, and is by far the leading country in the installation of renewable energy sources. The energy transition in China is of key importance for China’s future and the success of the global energy transformation – emphasize DNV experts, authors of the “Energy Transition Outlook China 2024” report.
It should be emphasized that the beneficiaries of the dynamic development of the Chinese renewable energy industry are also consumers of European countries, and the losers are the industry. A spectacular example is the virtually complete disappearance of the production of photovoltaic panels. EU companies limit themselves to assembling panels imported from China, often with mounting structures and additional equipment.
The trend towards renewable energy is also reflected in the transfer of orders by European operators from EU shipyards to China. Offshore wind farm vessels are also increasingly being built in China. This country’s shipyards have already taken over the market of large jack-ups and cranes, as we wrote about here.

Remi Eriksen: Clear skies in China
– No one who has visited China regularly over the last decade, like me, will notice that the sky over the cities is becoming more and more transparent and the streets are becoming more and more filled with electric cars and buses – notes Remi Eriksen, Group President,  CEO, DNV, in the introduction to the report.
He notes that “These are visible signs of the broad-based decarbonization efforts underway in China. From a position where China was responsible for one third of global energy-related CO2 emissions in 2023, this share will be reduced to one fifth by 2050.”
In fact, China’s CO2 emissions are decreasing at an incredible rate. This is mainly due to the replacement of coal with renewable energy sources in the energy mix and the electrification of entire segments of the industrial and consumer markets. Emissions in China are expected to peak in 2026 and their share will decline thereafter. By 2040 they will decrease by 30%. The Chinese government’s program is consistently implemented and assumes a 65% reduction in carbon dioxide emission intensity per unit of GDP by 2030 compared to the 2005 level.

DNV, analyzing its implementation, forecasts a reduction of only 59%. The report notes that “in the long term, China is close to achieving its goal of carbon neutrality by 2060.” The condition for achieving this goal is to accelerate processes supporting the decarbonization of the economy. Currently, China is responsible for 33% of global CO2 emissions. In 2050 it should decrease to 22%.
This is possible, based on the assessment of data from recent years. Because in 2022, China was responsible for 35% of the increase in the capacity of solar power plants and 40% of the increase in the capacity of wind farms installed around the world. Based on the growing potential of factories operating in the renewable energy industry, it can be assumed that the high relative share in increasing renewable capacity will continue until the mid-21st century.

Electrification in the factory and in the household
Energy consumption in China will peak by 2030 and will decrease by 20% by 2050. This will be the result of large-scale electrification and, importantly, improved energy efficiency. The authors of the report predict that “in 2050, China will rival the OECD in the Pacific region as the most electrified region in the world, where electricity covers 47% of final energy demand.” As a result of the electrification of the country, in 2035 energy intensity will decrease by one third, and in 2050 by half compared to the current level, reaching 2.2 MJ/USD.

 

The US agency EIA predicts that China plans to reach the highest level of CO2 emissions by 2030 and become carbon neutral by 2060. As part of this goal, China will increase the total installed capacity of wind and solar power plants to 1,200 GW by 2030 . At the end of 2022, wind and solar power plants had a total installed capacity of 758 GW. In 2023, China added more than 95 GW to 120 GW of solar power, and as of May 2023, 61 GW has already been added. BloombergNEF found that China added 64 GW of installed wind capacity in 2023, including 56 GW onshore and 8 GW offshore.
This is important information for industries and countries of the EU and the United States, which defend their markets by increasing tariffs and introducing non-tariff restrictions. This is a path leading to more expensive production and worsening competition on the international market. And the number of EU and US competitors is growing rapidly. In addition to China, Turkey and the Republic of Korea have already entered the world market with their high-quality products, followed by India, Vietnam and other Asian countries. African countries are getting involved, strongly supported by Chinese investments.
— Over the next three decades, China will rise in the rankings from its current sixth place to rival the OECD Asia-Pacific region as the most electrified region in the world, notes Remi Eriksen. The country’s electrification will have consequences in reaching peak final energy demand in 2030.
But in the following years it will lead to a decline of 20% by 2050. This will be due to the impact of the popularization of solutions increasing energy efficiency. And this trend will not be changed by the consumer market and the growing prosperity of Chinese households. Structural economic change towards a more automated production base and a larger service sector will also impact the nature and scale of energy demand.

Energy independence – a strategic goal
Energy independence is a key guideline of China’s energy policy strategy. In the energy sector, domestically produced coal is increasingly being replaced by domestically produced renewable energy sources. DNV experts forecast that “Most oil and gas will continue to be imported, although by 2050 oil consumption will have halved from its peak in 2027. Natural gas consumption will remain high until 2050.”
China, which already leads in renewable energy investments, will have expanded its renewable energy installations fivefold by 2050. As a result, China’s energy market will change radically in the 21st century. The share of renewable energy supplied to enterprises and households will increase from 30% currently to 55% in 2035 and 88% in 2050. Data obtained from government sources show that the number of nuclear installations will double in absolute terms, but the share of nuclear energy in energy production remains small and will amount to approximately 5% in 2050.
In 2023, EIA reported that in 2022, production from ecological sources, including hydropower, recorded the highest dynamics. Wind energy production increased the fastest in 2022, by 24% compared to 2021. Its share in the total national electricity production also increased, from 8% to 9%. Energy production from solar panels increased by 22%. Its share in total electricity production increased from 4% in 2021 to 5% in 2022. Hydropower production increased by 2% despite droughts that hampered the stable operation of hydroelectric plants. However, total hydropower capacity of 1,300 terawatt hours was still slightly below the peak reached in 2020.
China is very active in ensuring stabilization in the energy supply market. For this purpose, they rely on energy storage. One of the strategic activities is the construction of pumped storage power plants. Their goal is to help maintain the network’s resilience to supply fluctuations from rapidly expanding wind and solar power plants.
– With a capacity of 50 GW, China has 30% of the world’s operational capacity. An additional 89 GW of capacity is currently under construction, and another 276 GW of capacity is in various stages of development, EIA reports and emphasizes that “China is also investing in battery-based storage and plans to add approximately 100 GW of storage capacity by 2030.”
Economies of scale will mean that this mass production related to the dissemination of renewable energy technologies in China will have a global dimension. Because not only China will benefit from its extensive production and logistics potential. Undoubtedly, products from China related to energy based on renewable sources, like solar panels, will conquer the world, including the EU market.

DNV predicts that “Solar and wind will provide approximately 38% of electricity by mid-century. For solar, more than a third of installed capacity will use storage.”
Dynamically developing wind energy will provide 77% of the energy produced by on-shore installations. In the mid-21st century, 20% of electricity will be supplied by stationary hydropower plants. Meanwhile, 3% of the energy will be provided by floating offshore wind farms. The dynamics of the increase in the use of solar and wind energy results from the systematic reduction of production costs. Both technologies are expected to become the cheapest energy sources in 2050 in China. Or also in Europe?
The technological progress in the production of cells and complete onshore and offshore wind farms achieved by China must have an economic impact in the European Union and on the American continent. We will not avoid importing products from China, which has access to strategic raw materials and technologies and is able to use them more cost-effectively.
Maritime transport and ports will benefit from economies of scale in the production of renewable energy generation systems. Mass import of products for renewable energy sources and, in the near future, hydrogen installations will generate a new mass of oversized cargo and containerized cargo. Connections between Chinese and EU ports will certainly come to life. The energy transformation in China will indirectly contribute to the revival of maritime transport and seaport terminals.

sources: BloombergNEF, DNV, EIA