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China green shift global impact greater than COP

Expectations for COP29 in Azerbaijan, based COP28 in the United Arab Emirates?

The light getting in though the cracks is few countries are immune to competition with China’s sweeping expeditious green transition.

China’s brisk energy transition intentions are three-fold, decarbonization of its economy, domination of global clean tech manufacturing and reduced dependence on imported fossil fuels.

Renewables

The COP28 final statement calls for a tripling of renewables capacity by 2030.  China had an objective to triple renewables capacity by 2030 too, but China will meet its 2030 renewables target in 2025. The country will continue to increase capacity sharply thereafter.  By 2030, the forecast is for China is to hit 3.9 terawatts (TW).  The aforementioned COP28 global ambition was for 11 TW by the end of the decade.

According to the IEA, China now accounts for 60% of global renewables capacity installed in 2023 and this will carry over into 2024.  The expansion of capacity is outpacing rising demand.  For 2023, China investments in renewables will attain the summit of US$177 billion.

For 2023, BloombergNEF projected China solar capacity additions to reach 208 gigawatts (GW), twice the entire U.S. solar capacity.

China’s new wind and solar capacity installations for 2023 may amount to 300 GW, astronomical compared to the global capacity increase of 338 GW in 2022.

By September 2023, total installed wind and solar capacity was 400 GW and 520 GW, respectively.  To put this in perspective, Hydro-Québec, one of the largest utility companies in North America, has a total production capacity of 47.5 GW.

All together, China is installing 20 GW of wind and solar per month.

By the third quarter of 2023, 53% of China’s power sources were wind, solar, hydro and nuclear.  That’s a giant leap from 2011 when coal accounted for 80% of the country’s power supply.

The scale of some of the renewables projects is staggering.  The Golmud Solar Park in Qinghai, the world’s largest solar park, has a capacity of 2.8 GW with 7 million solar panels spread over sands.  Even that is just the beginning.  The plan calls for expanding this park 6-fold in the next 5 years.

In 2022, plans were announced for 500 GW of onshore solar and offshore wind projects for Gobi Desert across Xinjiang, Inner Mongolia, and Gansu provinces.

To transport gargantuan new capacity, ultrahigh-voltage (UHV) lines projects are eye-popping.  State Grid Corp of China, the country’s largest State-owned utility, has started construction on 13 UHV lines covering 30,000 km.

China catapults economy-wide electrification

China is electrifying its economy at a mind-boggling rate, with 1.1 million electric buses and trucks; two-thirds of the global market for light EVs; electric subways and light rail; and 42,000 km of electric high speed passenger and freight rail.

Consequently, China’s Sinopec, a large petroleum refiner and distributor, anticipates peak gasoline will occur in 2023.

Coal

China’s electric power carbon emissions will peak in 2023 or 2024, ahead of the 2030 target, plateau for a while, and then enter an exponential decline.  This is attributable to mindboggling increases in renewables capacity, and an uptake in hydro capacity.

True, China has the world’s largest coal power plant fleet.  Yet, the opening of 2 coal plants per week or 106 GW of new power plants in 2022, responds to peaking requirements only.  While China reached 1,100 GW of coal power plants functioning in 2022, 775 GW of operational coal plants were shut down or were projects that never made it to construction.

Consequently, coal plants in China on average run 50% of the time.  Carbon Tracker has divulged that 40% of China’s coal plants are losing money.  The 5 major state-owned coal power plant companies are also experiencing heavy losses.

The capacity usage will fall further to 25% over the next two decades.

These contradictions are largely the result of provincial governments supporting their local coal enterprises and jobs.

A forthcoming plateau in infrastructure projects translates into less coal for cement production, a 2.7% reduction in 2023 and 61% reduction by 2036.  Likewise, petrochemical and aluminium production drops will contribute to lower demand for coal.

These factors should result in a decline in coal demand by 2024, as alluded above.  Not only many coal plants permitted up to 2023 will never get built, but also many existing coal plants will become stranded assets.

In China, likewise for Europe and India, 90% of coal plants will be uncompetitive by 2025.

EVs

The BloombergNEF Electric Vehicle Outlook 2023 reported that EV growth rates for 2022 were 62% world-wide and 95% in China.

In 2022, China had 600,000 electric buses on the road, at least 99% of the world total.  That year, it manufactured 138,000 e-buses for the domestic market.

There were 400,000 electric trucks on China’s roads in 2022.

China’s rate of light-duty EV growth is 4 times that of the U.S.  Total EVs sold in China are greater than in the rest of the world.  For the end of 2023, it is projected plug-ins will have reached 38% of sales.

Too, China is now the world’s largest exporter of EVs.  For 2022, exports from China acquired 11% of the European market.  An irony of sorts, Tesla’s Shanghai factory is China’s largest EV exporter.

North America is vulnerable to an invasion of EVs from China too.  China’s BYD will soon launch the BYD Seal in North America to compete with the Tesla Model 3.  Other Chinese EV brands are planning international expansion.  By contrast, North American EV and battery investments related to the U.S. Inflation Reduction Act and Canada’s Budget 2023 await production start-up dates.

Fascinating is the electrification of the three-wheelers for which China and India account for 90% of the global fleet.   There were 117 million 3-wheelers on the roads in the world by 2022, 70% of which were electric, though most with lead-acid batteries.  That jumps to 300 million if two-wheelers are included.

The 3-wheeler sales in 2022 were over 12 million units encompassing a major migration to lithium-ion batteries.  For the short-term, it is the two- to three-wheelers that will generate a noticeable decline in oil consumption.

The global share of EVs in two- and three-wheeler sales increased from 34% in 2015 to 49% in 2022.

Clean tech manufacturing

China has 9 of the 13 largest solar manufacturers in the world and 7 of the top 10 global wind manufacturers are in China.

Solar panels production was 310 GW in 2022; were about 500 GW for 2023; and 1000 GW in 2025, the latter 4 times the output worldwide.

Energy storage battery capacity to accommodate intermittent renewables power will go from 550 GWh in 2022; to 800 GWh in 2023, and 3,000 GWh in 2025.

By early 2022, China accounted for 80 percent of global battery production capacity.

China had 125 battery factories in 2022 and more than double are in the planning or construction phases  This despite, China having only 10% of lithium raw material, while Australia has 50%.

Lower battery prices give China an EV edge in global markets.  The average price of a Chinese EV battery is US$26,500.  That is one third of the transaction price in Europe and half that of the U.S.

An astonishing next generation battery head start is that of China’s BYD breaking ground in January 2024 for the first sodium-ion gigafactory, a technology still in the development stage for most. Sodium-ion batteries are composed of abundant iron and sodium, free the more expensive lithium plus nickel, cobalt and graphite.  This technology replaces lithium cathode material and can be combined with hard carbon anode.  It is less vulnerable to cold weather.  BYD will initially use these batteries for scooters and micro-vehicles.

Also, China’s leadership comprises a long-term view, having issued rules that all battery powered vehicle manufacturers must be responsible for battery recycling.  The policy also directs that the design of batteries facilitates recycling.  China is experimenting with a battery recycling framework.

Decarbonization

By far, China dominates global industrial production, 61% of global steelmaking, 57% aluminium manufacturing and 52% cement output, collectively more than half of global production.  The chemical and paper sectors represent 40% of the global share in these sectors.

China’s wide array of state-owned enterprises (SOEs) are pillars for backing a decarbonization goal under the umbrella of China’s 14th 5-year plan.  Under this plan, carbon neutrality will be accomplished by 2060, CO2 emissions will peak by 2030 and 50% of increased energy consumption will stem from renewables by 2025.

As for energy SOEs, they are immune to the straitjacket of oil and gas companies, incapable of changing their increased fossil fuel trajectories.   In this regard, SOEs are diversifying their portfolios, with a strong push for renewables and massively investing in research and development and innovation of clean technologies.

Belt and Road Initiative (BRI)

BRI is by far the most ambitious global economic development program involving over 115 countries.

From 2013 to 2022, fossil fuel infrastructure accounted for two-thirds of BRI power sector investments.

In September 2021, China announced it will not support new coal plants abroad, though not all new coal projects were shut down.

China has since established the BRI International Green Development Coalition with 134 international partners.  UN Environment will facilitate BRI recipients to achieve UN Sustainable Development Goals including green finance and energy, plus energy efficiency.

For the first half of 2023, 56% of the US$12.3 billion in BRI energy investments were allotted to renewables.  Colour coded prioritization of projects favours green ones. 

China emissions to-date 

There are those who suggest China must act first before their own countries take action on climate change and China is addicted to coal.  China is acting first, leaving no excuses for the climate naysayers.

Granted, China emitted 31% of global emissions, 11,397 metric tonnes (Mt) in 2022.  This is more than twice as much as the U.S. for 2022 at 13.6%, with 5057 Mt.

This does not tell all.  On a per capita basis, China’s emissions are half that of the U.S.  Since 1751, China is responsible for  half the cumulative emissions as the U.S.

But this is history, China is migrating into a green transition quicker than most can assimilate.

The takeaway

The U.S.$369 billion Inflation Reduction Act (IRA) which is spurring a tsunami of investments in clean tech plus manufacturing of EVs and batteries is largely about closing the green economy gap with China.  One year after the IRA passage, in August 2023, private sector investment announcements in U.S. clean tech projects totaled up to US$278 billion and 170,000 jobs.

The domino effect on the European Union is such that it is exploring how to close the clean tech investment gap with the U.S.  The EU “lost” its solar industry in favour of China, European wind manufacturers are struggling to compete with lower cost Chinese turbines and 11% of the European EV market is represented by Chinese imports.

China’s march to dominate the green economy suggest a green transition will become a global competition imperative.

China will change the course of the global energy geopolitical titanic.

By contrast, the inclusion of reducing fossil fuels in the COP28 final statement is not a milestone.

Investing responsibly, in the Canadian green economy, not easy: Policy solutions

Canada compares poorly in buttressing clean tech firms.

Reliable standards for environmentally sound investments do not exist and very few Canadian clean tech firms are listed on a stock exchange.  Too often, Canadian clean tech firms must go outside Canada for financial support and/or to enter the stock market.  This article presents solutions for investors and clean tech companies alike, but these solutions require government action. 

Green economy: Financial sector zigzags

Green financing improves but has a long way to go

BlackRock, the world’s largest investment firm, has indicated that those that don’t tackle climate change will lose money in 5 years. Some financial institutions have made multi-trillion commitments from now to 2030 to invest in the green economy while still focusing the majority of investments in fossil fuels. Canadian banks are among the global top fossil fuel investors.

Fossil fuel sector contrasts: Green transition engaged, but not enough

Not all fossil fuel companies the same

Not all Big Oil firms are alike. Some are engaged in a rapid green migration, many are sitting on the fence and others are still in climate denial. Meanwhile, the value of fossil fuel assets are declining but the industry is camouflaging this by selling assets and debt financing to keep shareholders happy.

Want to invest in Canada’s clean economy? Good luck

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As of last year, close to one thousand institutions with three per cent of global savings under management have engaged in some form of divestment from fossil fuels.

In June 2019, Norway’s parliament unanimously voted in favour of directing its $1.06 trillion Government Pension Global Fund (GPGF), the Norges Bank, to divest more than $13 billion from fossil fuels while dedicating more investments to clean technologies.

The caveat is that this will apply only to companies that are exclusively in the business of upstream oil and gas production and some coal sector investments. The GPGF is Norway’s sovereign fund derived from oil industry revenues to assure Norway has a steady source of revenues in the post-oil world.

Shell has expressed concern that the growing fossil fuel divestment movement could impact on the company’s performance.

Trudeau Bet On A Pipeline At A Time When Batteries Are The New Oil

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The prime minister’s dead-end investment of $4.5 billion would have been better spent catching up to competitors in the global green economy.

Trudeau’s True Colours: Trans Mountain Support Meets Greenwashing Of Bill C-69

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Taken together, the Liberals’ approach to each of these items demonstrate that their mindset rests with yesterday’s resource-based economy.

As Big Oil tanks, why is Canada so slow to adapt?

The business model of Big Oil has already started to collapse.  The model is premised on strong growth to fuel high prices and render economically viable the exploitation of expensive-to-develop, non-conventional fossil fuels, including the tar sands and shale oil and gas.

Note to Justin: Pipelines don’t help transition to green economy

When Justin Trudeau talks of oil pipeline projects as part of an energy transition, what exactly is he talking about?

That we will be on the path to reducing our dependency on fossil fuels by increasing our oil dependency in the short term? And that by immaculate conception we will reduce these very same dependencies over the long term? Supposedly, we will switch to a green economy sometime between now and when we are all dead, with the help of Adam Smith’s “invisible hand”.

Canada’s Green Economy needs public investment

Both the Intergovernmental Panel and Climate Change and the International Energy Agency have concluded that public policies, rather than the availability of resources, are among the key determinants for a shift from fossil fuels to clean technology development and deployment.  Public banks are critical agents for change along these lines.

Public financial institutions and the green economy around the world

Starting with some of the largest public banks, in July 2013, both the World Bank and the European Investment Bank announced that they will limit to the bare minimum investments in fossil fuel projects, while shifting the lion’s share of their respective energy investments to renewables.

With Justin Trudeau, Canada now has two Conservative parties

With so many Canadians eagerly awaiting the end of the anti-democratic, unaccountable Harper regime, some seem to be inclined to support any alternative that may stand a chance for replacing the Cons in 2015, after the next federal election.  But maybe we should take a pause to think this through just a little more.  Canadian Idol Trudeau, though he hasn’t said that much so far, has already shown that he shares many of the policy positions of Harper.  This is where things get scary.