听- The Writer holds听an MSc in Eurasian Political Economy & Energy听from King鈥檚 College London and听also an听MA in European Studies from Sabanc谋 University.
The dramatic increase in China鈥檚 energy consumption over the last two decades has come to a halt with the growth downturn in gross domestic products (GDP) and the slowdown in overall energy consumption. China鈥檚 economy has recently been evolving to more services and high technology-based structure from a coal-based, heavy industrial manufacturing and energy-intensive industries.
Between 2000 and 2010, the Chinese economy grew at an average rate of 10.5 percent year-on-year, and only in 2015 dropped for the first time to a single digit of 7 percent. In 2016, a recorded growth rate of 6.7 percent followed. The economic growth model pursued in the 1970鈥檚 up until the 2010鈥檚 mainly focused on strong exports, high savings and investments, with which poverty alleviation and job creation were targeted.听听 听
To supply heavy manufacturing industries such as the steel, cement and aluminum sectors, a great number of coal-fired power plants were constructed throughout the country, which inevitably fuelled environmental and public health problems for ordinary Chinese citizens.
The high-level growth achieved over the last three decades in China became an issue that forced policymakers to reconsider this economic model as such a growth rate was increasingly seen as neither sustainable nor desirable in the long term. The economic growth model of cheap labor and low value-added exports began to fail because of a higher rate of decline in the working age population and rising pressure for higher wages amid the global financial crises with weakened world economies that stunted demand.
Following the adoption of energy efficiency targets, particularly in energy-intensive industries along with higher growth in the service economy, the energy required to produce a unit of GDP in China fell. This transformation resulted in the steady decline in coal consumption since 2013, a year marked as the plateauing of carbon emissions. To reinvigorate economic growth in China, policy makers began to redirect China鈥檚 economy towards a growth model based on higher quality with lower growth rates, thereby creating value by investing in services, technological innovation and sustainable development.
The greater reliance on imported fossil fuels and the increasing domestic and international pressure over China鈥檚 heavily polluted air paved the way for policy makers in China to take strong policy measures to diversify China鈥檚 energy mix away from coal-based power generation. In 2016, the share of renewable energy out of China鈥檚 total power generation represented approximately 25 percent, or equal to 1,488 terawatt-hours. And in 2016, an extra 190 terawatt-hours was added through wind, 66 terawatt-hours from solar and 140 terawatt-hours from nuclear energy. Between 2010 and 2016, 120 Gigawatts (GW) of wind, 115 GW of hydro and approximately 80 GW of solar photovoltaic power were connected to China鈥檚 electricity grid, which inevitably contributed to a major change in China鈥檚 power generation mix.
In the last two years, the share of coal-fired power plants in power generation has decreased, causing a remarkable turnaround in China鈥檚 coal consumption. In comparison to any other sources used for power generation in China in 2016, the lowest increase came from coal, with a 1.3 percent increase. Coal production fell by 2.5 percent in 2014 to 3.3 percent in 2015 and coal imports dropped by approximately 11 percent in 2013 and 30 percent in 2015. Additionally, in 2016 the Chinese government set new rules for coal-fired power generation, stating that less efficient coal-fired power plants have to undergo major upgrades while also specifying that the capacity of newly-planned power plants cannot exceed 200 GW.听 This new regulation raises hopes that China could reach its carbon target prior to its scheduled year of 2030.
Given the importance of heavy industries, which have driven China鈥檚 economic growth for the last two decades, the gradual reduction in the share of these sectors will be challenging for the economy requiring a redeployment of workers.
Due to the reshuffling of the economic growth model in recent years, many workers employed in heavy industries that led to the creation of economic activity in industrial regions will gradually diminish. This shift will require urgent restructuring. Aware of this fact, Chinese authorities have announced a supply-side reform in 2016 to address these challenges. Although this restructuring would, to a certain extent, prove to be an effective policy option, the gradual phasing out of these very established heavy industries and the creation of alternative employment for these employees will not be an easy task.听
Despite China鈥檚 decades-long double-digit economic growth that was inextricably linked to its high-energy consumption, the adoption of the 13th Five Year Plan from 2016 to 2020, in which the Chinese government targeted 6.5 percent GDP growth, will inevitably result in less energy dependency. Due to greater investments in technological innovation, better energy efficiency measures and with the adoption of a higher quality, slower economic growth model, China鈥檚 overall energy consumption will lessen in the years ahead.
Transitioning away from coal and moving towards a zero carbon economy has become an essential part of the green industrial policy worldwide. Given the accomplishments in recent years in the field of renewable energy and institutional restructuring, which aims to help the shift towards slower and higher quality economic growth, it has come at a time when more stringent climate, energy and innovation policies are needed. 听Challenges and risks along the road will be numerous, however, profound opportunities are also plentiful while serving China鈥檚 strategic and distinctive direction.
- Opinions expressed in this piece are the author鈥檚 own and do not necessarily reflect Anadolu Agency's editorial policy.