China Renewable Energy Outlook (CREO) published by CNREC and the World Energy Outlook by the IEA are must read publications for understanding the development of China energy system and the challenges and opportunities herein.
This month (April 2019), modelling teams from China National Renewable Energy Centre (CNREC) and their international partners met with the International Energy Agency’s (IEA’s) World Energy Outlook (WEO) team to compare scenarios, assumptions and methodologies for describing China’s energy future.
Reading the reports together accentuates key points on the road forward.
The direction of China’s Energy Transition is clear
- The political vision of an Ecological Civilization enshrines the policy direction.
- The energy policy imperatives require a Clean, Safe, Low-carbon and Efficient energy system.
- The strategy promotes an Energy Production and Consumption Revolution.
CREO’s Below 2 degrees scenario and the IEA’s Sustainable Development scenario each offer perspective of this development.
The scenarios broadly align on the decarbonization approach needed
- Coal’s dominance of the energy system must be broken.
- Further scaling of RE, especially the world’s large wind and solar market.
- Vigorous pursuit of energy efficiency – final energy consumption at 2017 levels in 2040.
- Intense electrification in all sectors, e.g. transport electrification rate of ~30% in 2040.
Key differences between IEA and CNRECs scenarios remain
- CREO details an energy system with variable RE at the core.
- WEO projects a role for natural gas, absent in CREO from economic and security reasons.
- WEO projects a role for CCS absent in CREO due to cost and technology uncertainty.
- WEO’s expansion of nuclear goes further, including inland development, while CREO does not.
Scenarios highlight substantial societal benefits and challenges
The transition contributes to sustainable economic development, technological progress and improved environment. But revolution is never painless and there will be winners and losers. Incumbent energy industries face mounting pressure to completely transform their businesses. Meanwhile, the authorities must manage economic and social issues arising from the fossil industry decline often concentrated in important regions.
Naturally, there are vast uncertainties when looking 23-33 years to the future, and both organisation’s scenarios will continue to evolve.
Common issues in scenario design for China remain:
- The data challenge – Both teams make herculean efforts to assemble and use the best available data, but there are issues of data availability, quality, interpretation and consolidation.
- Policy interpretation – The vision and policy extrapolation process allow for a multitude of interpretations, while policies and priorities are continuously updated.
- The CO2 emission envelope for a single country in context of the Paris agreement is uncertain, political and contentious. Scenario studies need to address this to guide policy makers.
CNREC and the IEA will in the coming year work together to provide input to Chinese policy makers in the National Development and Reform Commission (NDRC) on the scenario foundation for concrete energy policy development in China.