China currently faces three main challenges in achieving carbon neutrality: rigid energy growth, a coal-dominated energy structure, and a 30-year carbon neutrality timeframe. First is the rigid growth of China's energy sector.
Many developed countries show a trend of per capita energy consumption first rising and then declining as per capita GDP rises, with the turning point occurring when per capita GDP is about $20,000–30,000 per person (see Figure 1). China has rigid energy demand, and per capita energy consumption increases with per capita GDP (see Figure 2). Although the growth rate has significantly slowed, it is expected that the trend of per capita energy consumption increasing alongside per capita GDP will continue until 2030. Therefore, it is difficult for China to seek emission reductions by lowering energy demand.
Figure 1: Diagram illustrating the relationship between per capita GDP and per capita energy consumption in some developed countries
Figure 2: Diagram illustrating the relationship between per capita GDP and per capita energy consumption in China
The second challenge is China's coal-dominated energy structure. Coal and oil are the main sources of CO2 emissions from fossil fuels. In terms of primary energy consumption (2019 data), China accounts for 77%, the United States 48%, Germany 51%, and the UK 38%. Therefore, a coal-based energy system is a fundamental national condition for China and also determines the difficulty of achieving carbon neutrality.
The third major challenge is that China's intensity and speed of carbon reduction are unprecedented. In terms of carbon peak timing, the UK and Germany achieved carbon neutrality in the 1970s and 1980s, respectively; The United States reached its peak carbon emissions in 2007 and plans to reach carbon neutrality by 43 years, requiring an annual emission reduction of 140 million tons; China has pledged to peak by 2030 and aims to achieve carbon neutrality by 30 years, requiring an annual reduction of 350 million tons. Therefore, the intensity and speed of carbon reduction are unprecedented.
To this end, on the afternoon of April 30, the Political Bureau of the CPC Central Committee held its 29th collective study session on strengthening China's ecological civilization under the new circumstances. During the study, General Secretary Xi Jinping of the CPC Central Committee pointed out that achieving carbon peaking and carbon neutrality is a solemn commitment our country has made to the world, as well as a broad and profound economic and social transformation that cannot be easily realized. Party committees and governments at all levels must demonstrate the determination to leave marks on iron, clarify timetables, roadmaps, and construction plans, and promote economic and social development based on efficient resource utilization and green, low-carbon development. High energy-consuming and high-emission projects that do not meet requirements must be resolutely eliminated.
2. China's main pathways to achieve carbon neutrality
China's main path to achieving carbon neutrality can be summarized as: two wheels driven, two major sectors making efforts, and one core lever. The "two wheels drive" refers to the roles of government and market. The government mainly plays a guiding role and is especially important at the initial stage, but its role is also a double-edged sword: it must prevent one-size-fits-all and layered intensification, and prevent the political movement of carbon neutrality. On July 30, 2021, the Central Political Bureau meeting also specifically criticized treating "carbon reduction" as a political task that overwhelms all short-term tasks, achieving goals through vigorous "movements" rather than advancing "carbon reduction" in a gradual and orderly manner. Moreover, as the main actor, the market must play its role as an "invisible hand" in the long run. The "two major sectors of effort" refers to the simultaneous development of emission reduction and absorption. In terms of emission reduction, the primary energy mix should be adjusted, clean energy should be vigorously developed, and the proportion of fossil energy should be reduced, with fossil energy expected to increase from 84% to 20% by 2060; Steel, transportation, construction, and other sectors should also be adjusted, industrial processes transformed, and electrification achieved. Electricity consumption is expected to increase from the current 24% to 80% by 2060. In terms of absorption, the focus will mainly be on developing the carbon sink potential of terrestrial and marine ecosystems, while also advancing CCUS/CCS technology and direct CO2 utilization technologies. The "one core lever" refers to policies such as carbon pricing, carbon trading, and carbon taxes. Currently, there are 61 carbon pricing mechanisms being implemented or planned worldwide, of which 31 belong to carbon emission trading systems and 30 to carbon taxes, covering about 12 billion tons of CO2 and accounting for approximately 22% of global greenhouse gas emissions (World Bank, 2020). In 2021, with the launch of the "Administrative Measures for Carbon Emission Trading (Trial)" issued by the Ministry of Ecology and Environment, China's national carbon emissions trading market has been fully launched. This market-based carbon pricing mechanism aims to promote a continuous reduction in carbon intensity by raising the carbon emission costs of multiple carbon-intensive industries.
3. Optimization of pathways to achieve carbon neutrality
Optimizing the path to carbon neutrality involves many factors and is a systematic project. In terms of carbon reduction, while achieving the transition from fossil to non-fossil energy, national resource endowment, energy security, GDP growth, employment rate, and costs should be comprehensively considered. Preliminary research estimates that if fossil energy accounts for 40%, carbon emissions would be about 3.2 billion tons; if more than 3.2 billion tons of CO2 could be absorbed, carbon neutrality could still be achieved.
In terms of carbon absorption, although currently estimated at 1-1.5 billion tons per year, it is still possible to consider increasing sink absorption, expanding, and biosequestration through terrestrial ecosystem restoration, which could increase carbon emissions to 2 to 3 billion tons or even higher. Considering artificial CCUS/CCS technology applications, carbon absorption could even reach 3-4.5 billion tons of CO2 per year. Currently, China's proposal to develop CCUS technology centered on "U" (Figure 3) to promote industrial growth—namely CO2 capture, transport, utilization, and storage technologies—has been widely accepted by the international community. According to IEA estimates, CCUS will contribute 17.4% to global net-zero emissions targets by 2060 and over 20% by 2070. Large-scale deployment of CCUS technology will effectively enhance the economic viability of achieving carbon neutrality in China, with burial sites and long-term secure storage being key. Currently, the number of large-scale CCS/CCUS demonstration projects worldwide (Figure 4) has grown significantly over the past three years. By the end of 2020, there were 65 large-scale projects worldwide, of which 26 were operational, 2 were suspended, and 37 were under construction or planning. Annual CO2 capture and storage of about 40 million tons of CO2 in operating projects, with 77.8% of projects used for CO2 flooding to improve recovery rates. In contrast, China's CO2 geological storage (Figure 5) is mainly focused on improving recovery rates, with only small-scale demonstrations conducted in saline aquifers, coalbed methane, and in-situ leaching uranium, leaving considerable room for development.
Figure 3: CCUS System Engineering (Top) and CCUS Industry Chain (Bottom)
Figure 4 Current Status of Global CCS/CCUS Large-scale Demonstration Project Construction and Operation (GCCSI, 2020)
Figure 5 Distribution of CO2 Geological Buried Projects in China (China CCUS Technology Progress, 2019)
The second question about path optimization is that by 2060, terminal electricity consumption will account for 80% of energy consumption. Is a higher proportion always better? According to State Power Investment Corporation's forecast, it accounts for 60-70%. First, by re-electrifying the three major sectors of industry, transportation, and construction, it is expected that total electricity consumption will double from 7.5 trillion kWh in 2020 to 15 to 18 trillion kWh in 2060. In addition, there are improvements in energy storage technology and user-side coordination, but all of these remain highly uncertain. Finally, carbon neutrality involves all aspects of society as a whole, and considering issues from a single sector such as technology, energy, or ecological environment is one-sided. The design of carbon neutrality pathways should properly handle five major relationships: first, the relationship between stable economic and social development and energy transition, with stable development as the primary goal; Second, properly handle the relationship between national-level emission reduction targets and those of provinces, cities, and enterprises, as well as roadmaps, and actively coordinate at the national level; Third, it is necessary to properly handle the relationship between traditional fossil energy companies and new energy companies. At the national level, emphasize balance and synergy between industries; Fourth, handle the relationship between the immediate and long-term well, focus on the long term, tackle the near term, actively cultivate disruptive technologies, change the energy landscape with technology, and create future energy through technology; Fifth, handle China's relationship with the global world well, both keeping pace with or leading the trends of the times while preventing foreign restrictions on our development.
(This article is compiled from the live speech records and PPTs)
Compiled by:
Yang Weidong, Intern at Peking University Energy Research Institute
Li Shiyun, PhD student of the 2020 cohort at the Center for Urban Development and Land Policy Research, Lincoln Institute, Peking University
